----

| DELAWARE                                                                                             |                                                   | 41-1505029                              |
|------------------------------------------------------------------------------------------------------|--------------------------------------------------------|-----------------------------------------|
| (State or other jurisdiction ofincorporation or organization)                                        |                                                   | (I.R.S. Employer Identification Number) |
|                                                                                                 |                                                   |                                    |
|           29 Emmons Drive, Suite C-10Princeton, NJ |                                                   |  08540                             |
| (Address of principal executive offices)                                                             |                                                   | (Zip Code)                              |
|                                                                                                 | (609) 538-8200                                         |                                    |
|                                                                                                 | (Issuer’s telephone number, including area code) |                                    |

| Large accelerated filer  o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company x |
|---------------------------------|---------------------|-------------------------|-----------------------------|

----

| Item    | Description                                                                                 | Page   |
|---------|---------------------------------------------------------------------------------------------|--------|
|    |                                                                                        |   |
| Part I  | FINANCIAL INFORMATION                                                                       |   |
| 1.      | Consolidated Financial Statements                                                           | 3      |
| 2.      | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16     |
| 3.      | Quantitative and Qualitative Disclosure About Market Risk                                   | 24     |
| 4.      | Controls and Procedures                                                                     | 24     |
|    |                                                                                        |   |
| Part II | OTHER INFORMATION                                                                           |   |
| 2.      | Unregistered Sales of Equity Securities and Use of Proceeds                                 | 25     |
| 5.      | Exhibits                                                                                    | 25     |
|    |                                                                                        |   |

----

|                                                                                                                                                                                                                                  |   |   | September 30, 2009                                      |     |   |   |   |    | December 31, 2008                                                  |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------|----------|--------|--------|--------|---------|--------------------------------------------------------------------|---------|
|                                                                                                                                                                                                                                  |   |   | (Unaudited)                                             |     |   |   |   |    |                                                               |    |
| AssetsCurrent assets:                                                                                                                                                                                                                 |   |   |                                                    |     |   |   |   |    |                                                               |    |
|         Cash and cash equivalents                                                                                                                                                             |   | $      | 7,487,317                                               |     |   |   |   | $       | 1,475,466                                                          |    |
|         Grants receivable                                                                                                                                                                     |   |   | 762,246                                                 |     |   |   |   |    | 278,316                                                            |    |
|         Inventory, net                                                                                                                                                                        |   |   | 109,043                                                 |     |   |   |   |    | 82,182                                                             |    |
|         Prepaid expenses                                                                                                                                                                      |   |   |         162,994 |     |   |   |   |    |           86,837 |    |
| Total current assets                                                                                                                                                                                                                  |   |   | 8,521,600                                               |     |   |   |   |    | 1,922,801                                                          |    |
|                                                                                                                                                                                                                                  |   |   |                                                    |     |   |   |   |    |                                                               |    |
| Office and laboratory equipment, net                                                                                                                                                                                                  |   |   | 25,609                                                  |     |   |   |   |    | 21,217                                                             |    |
| Intangible assets, net                                                                                                                                                                                                                |   |   |      1,431,648                 |     |   |   |   |    |      1,418,717                            |    |
| Total assets                                                                                                                                                                                                                          |   | $      |      9,978,857                 |     |   |   |   | $       |      3,362,735                            |    |
|                                                                                                                                                                                                                                  |   |   |                                                    |     |   |   |   |    |                                                               |    |
| Liabilities and shareholders’ equity                                                                                                                                                                                            |   |   |                                                    |     |   |   |   |    |                                                               |    |
| Current liabilities:                                                                                                                                                                                                                  |   |   |                                                    |     |   |   |   |    |                                                               |    |
|         Accounts payable                                                                                                                                                                      |   | $      | 1,491,008                                               |     |   |   |   | $       | 1,015,005                                                          |    |
|         Accrued compensation                                                                                                                                                                  |   |   |        222,835       |     |   |   |   |    |         370,614            |    |
|  Total current liabilities                                                                                                                                                                                                       |   |   | 1,713,843                                               |     |   |   |   |    | 1,385,619                                                          |    |
| Commitments and contingencies                                                                                                                                                                                                         |   |   |                                                    |     |   |   |   |    |                                                               |    |
| Shareholders’ equity:                                                                                                                                                                                                           |   |   |                                                    |     |   |   |   |    |                                                               |    |
|         Preferred stock; 5,000,000 shares authorized; none issued or outstanding        Common stock, $.001 par value; 400,000,000 shares authorized; |   |   |                                                    | -   |   |   |   |    |                                                               |  - |
|             185,501,158 shares and 118,610,704 shares issued and outstanding in 2009 and 2008, respectively                                                               |   |   | 185,501                                                 |     |   |   |   |    | 118,610                                                            |    |
|        Additional paid-in capital                                                                                                                                                                  |   |   | 115,987,637                                             |     |   |   |   |    | 104,176,253                                                        |    |
|        Accumulated deficit                                                                                                                                                                         |   |   | (107,908,124                                            | )        |   |   |   |    | (102,317,747                                                       | )       |
| Total shareholders’ equity                                                                                                                                                                                                      |   |   |      8,265,014                 |     |   |   |   |    |      1,977,116                            |    |
|                                                                                                                                                                                                                                  |   |   |                                                    |     |   |   |   |    |                                                               |    |
| Total liabilities and shareholders’ equity                                                                                                                                                                                      |   | $      |      9,978,857                 |     |   |   |   |  $ |      3,362,735                            |    |
|                                                                                                                                                                                                                                  |   |   |                                                    |     |   |   |   |    |                                                               |    |

----

|                                                                     |   |    | 2009                                                                              |   |    | 2008                                                                                                          |     |
|--------------------------------------------------------------------------|--------|---------|-----------------------------------------------------------------------------------|--------|---------|---------------------------------------------------------------------------------------------------------------|---------------|
|                                                                     |   |    |                                                                              |   |    |                                                                                                          |          |
| Revenues, principally from grants                                        |   | $       |   766,645                                                                    |   | $       |   605,736                                                                                                |          |
| Cost of revenues                                                         |   |    |      (584,329                                            | )      |    |     (538,182                                                                              | )             |
|       Gross profit                              |   |    | 182,316                                                                           |   |    | 67,554                                                                                                        |          |
|                                                                     |   |    |                                                                              |   |    |                                                                                                          |          |
| Operating expenses:                                                      |   |    |                                                                              |   |    |                                                                                                          |          |
|   Research and development                                          |   |    |   1,109,333                                                                  |   |    |   60,238                                                                                                 |          |
|   General and administrative                                   |   |    |        617,735                                 |   |    |  410,336                                                                                                 |          |
|   Stock-based compensation - research and development          |   |    |   25,314                                                                     |   |    |   39,584                                                                                                 |          |
|   Stock-based compensation - general and administrative        |   |    |         90,922                            |   |    |         36,792                                                        |          |
|       Total operating expenses                  |   |    |    1,843,304                                                       |   |    |       546,950                                                                   |          |
|                                                                     |   |    |                                                                              |   |    |                                                                                                          |          |
| Loss from operations                                                     |   |    |  (1,660,988                                                                  | )      |    | (479,396                                                                                                      | )             |
|                                                                     |   |    |                                                                              |   |    |                                                                                                          |          |
| Other income:                                                            |   |    |                                                                              |   |    |                                                                                                          |          |
|   Interest income, net                                              |   |    |              611 |   |    |           3,695                                             |          |
|                                                                     |   |    |                                                                              |   |    |                                                                                                          |          |
| Net loss                                                                 |   |  $ |   (1,660,377                                                            | )      |  $ |      (475,701                                                                        | )             |
|                                                                     |   |    |                                                                              |   |    |                                                                                                          |          |
| Basic and diluted net loss per share                                |   | $       |           ( 0.01                | )      | $       |                   - |          |
|                                                                     |   |    |                                                                              |   |    |                                                                                                          |          |
| Basic  Basic and diluted weighted average common shares outstanding |   |    | 168,093,600                                                                       |   |    | 102,767,174                                                                                                   |          |

----

|                                                                     |   |    | 2009                                                                     |   |    | 2008                                                               |     |
|--------------------------------------------------------------------------|--------|---------|--------------------------------------------------------------------------|--------|---------|--------------------------------------------------------------------|---------------|
|                                                                     |   |    |                                                                     |   |    |                                                               |          |
| Revenues, principally from grants                                        |   | $       |   1,629,277                                                         |   | $       |   1,771,620                                                   |          |
| Cost of revenues                                                         |   |    |    (1,255,503                                             | )      |    |   (1,459,206                                             | )             |
|       Gross profit                              |   |    | 373,774                                                                  |   |    | 312,414                                                            |          |
|                                                                     |   |    |                                                                     |   |    |                                                               |          |
| Operating expenses:                                                      |   |    |                                                                     |   |    |                                                               |          |
|   Research and development                                          |   |    |   3,835,246                                                         |   |    |   1,403,841                                                   |          |
|   General and administrative                                   |   |    |        1,728,400                      |   |    |  1,812,972                                                    |          |
|   Stock based compensation - research and development          |   |    |   157,391                                                           |   |    |   118,750                                                     |          |
|   Stock based compensation - general and administrative        |   |    |          261,331            |   |    |       110,378                        |          |
|       Total operating expenses                  |   |    |     5,982,368                                        |   |    |    3,445,941                                        |          |
|                                                                     |   |    |                                                                     |   |    |                                                               |          |
| Loss from operations                                                     |   |    |  (5,608,594                                                         | )      |    | (3,133,527                                                         | )             |
|                                                                     |   |    |                                                                     |   |    |                                                               |          |
| Other income:                                                            |   |    |                                                                     |   |    |                                                               |          |
|   Interest income, net                                              |   |    |          18,217             |   |    |         29,948             |          |
|                                                                     |   |    |                                                                     |   |    |                                                               |          |
| Net loss                                                                 |   |  $ |    (5,590,377                                             | )      |  $ | (3,103,579                                                         | )             |
|                                                                     |   |    |                                                                     |   |    |                                                               |          |
| Basic and diluted net loss per share                                |   | $       |            ( 0.03 | )      | $       |           ( 0.03 | )             |
|                                                                     |   |    |                                                                     |   |    |                                                               |          |
| Basic  Basic and diluted weighted average common shares outstanding |   |    | 161,446,898                                                              |   |    | 100,478,733                                                        |          |

----

|                                                                                |   | Common Stock                                                                                                       |   | Additional Paid-In                                                                   |   | Accumulated                                                                                                                          |   |                                                        |
|-------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------|
|                                                                                |   | Shares                                                                                                             |   | Par Value                                                                            |   | Capital                                                                                                                              |   | Deficit                                                     |   | Total |
|                                                                                |   |                                                                                                               |   |                                                                                 |   |                                                                                                                                 |   |                                                        |   |   |
| Balance, December 31, 2008                                                          |   | 118,610,704                                                                                                        |   | $118,610                                                                             |   | $104,176,253                                                                                                                         |   | ($102,317,747)                                              |   | $1,977,116 |
|  Issuance of common stock from private placements, net of expenses of $347,000 |   | 38,266,602                                                                                                         |   | 38,267                                                                               |   | 6,388,995                                                                                                                            |   |                                                        |   | 6,427,262 |
|  Issuance of common stock for collaboration and supply agreement to Sigma Tau  |   | 25,000,000                                                                                                         |   | 25,000                                                                               |   | 4,375,000                                                                                                                            |   |                                                        |   | 4,400,000 |
|  Issuance of common stock pursuant to equity line agreement                    |   | 554,427                                                                                                            |   | 554                                                                                  |   | 84,446                                                                                                                               |   |                                                        |   | 85,000 |
|  Issuance of common stock to vendors                                           |   | 2,500,000                                                                                                          |   | 2,500                                                                                |   | 297,500                                                                                                                              |   |                                                        |   | 300,000 |
|  Issuance of common stock warrants to vendors                                  |   |                                                                                                               |   |                                                                                 |   | 127,712                                                                                                                              |   |                                                        |   | 127,712 |
|  Issuance of common stock to former employee                                   |   | 569,425                                                                                                            |   | 570                                                                                  |   | 119,009                                                                                                                              |   |                                                        |   | 119,579 |
|                                                                                |   |                                                                                                               |   |                                                                                 |   |                                                                                                                                 |   |                                                        |   |   |
| Stock-based compensation expense                                                    |   |                                                                                                               |   |                                                                                 |   | 418,722                                                                                                                              |   |                                                        |   | 418,722 |
|                                                                                |   |                                                                                                               |   |                                                                                 |   |                                                                                                                                 |   |                                                        |   |   |
| Net loss                                                                            |   |                     |   |                |   |                        |   |  (      5,590,377)  |   | (5,590,377)  |
|  Balance, September 30, 2009                                                   |   | 185,501,158                                                                                                        |   | $185,501                                                                             |   | $115,987,637                                                                                                                         |   | ($107,908,124)                                              |   | $8,265,014 |

----

|                                                                                                                |   | 2009     |                                                                                                                                                          | 2008    |     |
|---------------------------------------------------------------------------------------------------------------------|--------|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|----------|
| Operating activities:                                                                                               |   |     |                                                                                                                                                          |    |     |   |   |
|    Net loss                                                                                               |   | $        | (5,590,377                                                                                                                                                    | )       |  $  | (3,103,579 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities:                                         |   |     |                                                                                                                                                          |    |     |   |   |
|     Amortization and depreciation                                                                    |   |     | 126,411                                                                                                                                                       |    |     | 107,804 |   |
|     Stock or warrants issued in exchange for services                                                |   |     | 427,712                                                                                                                                                       |    |     | 394,161 |   |
|     Stock-based compensation                                                                    |   |     | 418,722                                                                                                                                                       |    |     | 229,128 |   |
|     Stock issued to former employee                                                             |   |     | 119,579                                                                                                                                                       |    |     | - |   |
| Change in operating assets and liabilities:                                                                         |   |     |                                                                                                                                                          |    |     |   |   |
|     Grants receivable                                                                                |   |     | (483,930                                                                                                                                                      | )  |     | (106,810 | ) |
|     Inventory                                                                                   |   |     | (26,861                                                                                                                                                       | )       |     | (83,182 | ) |
|     Prepaid expenses                                                                                 |   |     |  (74,657                                                                                                                                                 | )       |     |  (9,452 | ) |
|     Accounts payable                                                                                 |   |     | 476,003                                                                                                                                                       |    |     | 514,452 |   |
|     Accrued compensation                                                                             |   |     |    (147,778                                                                                                                                    | )       |     |     (67,784 | )  |
|         Total adjustments                                                        |   |     |     835,201                                                                                                                               |    |     |    978,317 |   |
|     Net cash used in operating activities                                                            |   |     | (4,755,176                                                                                                                                                    | )       |     | (2,125,262 | ) |
|                                                                                                                |   |     |                                                                                                                                                          |    |     |   |   |
| Investing activities:                                                                                               |   |     |                                                                                                                                                          |    |     |   |   |
|  Acquisition of intangible assets                                                                              |   |     | (132,754                                                                                                                                                      | )       |     | (191,350 | ) |
|  Proceeds from sale of equipment                                                                               |   |     | -                                                                                                                                                             |    |     | 500 |   |
|  Purchase of office equipment                                                                                  |   |     |     (10,981                                                                                                                               | )       |     |       (3,900 | ) |
|     Net cash used in investing activities                                                            |   |     | (143,735                                                                                                                                                      | )       |     | (194,750 | ) |
|                                                                                                                |   |     |                                                                                                                                                          |    |     |   |   |
| Financing activities:                                                                                               |   |     |                                                                                                                                                          |    |     |   |   |
|  Net proceeds from sale of common stock                                                                        |   |     | 10,825,762                                                                                                                                                    |    |     | 658,600 |   |
|  Proceeds from sale of common stock pursuant to equity line                                                    |   |     |       85,000                                                                                                                    |    |     |    127,500 |   |
|     Net cash provided by financing activities                                                        |   |     | 10,910,762                                                                                                                                                    |    |     | 786,100 |   |
|                                                                                                                |   |     |                                                                                                                                                          |    |     |   |   |
| Net increase (decrease) in cash and cash equivalents                                                                |   |     | 6,011,851                                                                                                                                                     |    |     | (1,533,912 | ) |
|     Cash and cash equivalents at beginning of period                                                 |   |     |  1,475,466                                                                                                                                               |    |     | 2,220,128 |   |
|     Cash and cash equivalents at end of period                                                       |   | $        |  7,487,317                                                                                                                                               |    | $        |    686,216 |   |
|                                                                                                                |   |     |                                                                                                                                                          |    |     |   |   |
|                                                                                                                |   |     |                                                                                                                                                          |    |     |   |   |
|                                                                                                                |   |     |                                                                                                                                                          |    |     |   |   |
|                                                                                                                |   |     |                                                                                                                                                          |    |     |   |   |
|                                                                                                                |   |     |                                                                                                                                                          |    |     |   |   |
|   Non-cash transactions:     Non-cash stock payment to an institutional investor |   |   $ |                          -  |    |   $ |     270,000 |   |
|                                                                                                                |   |     |                                                                                                                                                          |    |     |   |   |
|                                                                                                                |   |     |                                                                                                                                                          |    |     |   |   |
|                                                                                                                |   |     |                                                                                                                                                          |    |     |   |   |

----

----

| ·   | complete the pivotal Phase 3 confirmatory clinical trial for orBec® in the treatment of acute GI GVHD; |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | identify a development and marketing partner for orBec® for territories outside of North America, as we have granted an exclusive license to Sigma-Tau to commercialize orBec® in theU.S., Canada and Mexico; Sigma-Tau will pay us a 35% royalty (inclusive of drug supply) on net sales in these territories as well as pay for commercialization expenses, including launch activities; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | conduct a Phase 2 clinical trial of orBec® for the prevention of acute GVHD; |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | evaluate and initiate additional clinical trials to explore the effectiveness of oral BDP in other therapeutic indications involving inflammatory conditions of the gastrointestinal (“GI”) tract such as radiation enteritis, radiation injury and Crohn’s disease; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | reinitiate development of our other BioTherapeutics products, including LPM™ Leuprolide; |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | continue to secure additional government funding for each of our BioDefense programs, RiVax™ and BT-VACC™, through grants, contracts and procurements; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | convert our biodefense vaccine programs from early stage development to advanced development and manufacturing with the potential to collaborate and/or partner with other companies in the biodefense area; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | make orBec®  available worldwide through NPAP for the treatment of acute GI GVHD; |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | acquire or in-license new clinical-stage compounds for development; and |
|--------------------|-------------------------------------------------------------------------|

| ·   | explore other business development and acquisition strategies under which we may be considered to be an attractive acquisition candidate by another company. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Company has $9.7 million in active grant funding still available to support its ricin and botulinum toxin vaccine programs in 2009 and beyond.  Additionally, the Company has submitted additional grant applications for further support of these programs and others with various funding agencies, and received encouraging feedback to date on thelikelihood of funding. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Company has continued to use equity instruments to provide a portion of the compensation due to vendors and collaboration partners and expects to continue to do so for the foreseeable future. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | As discussed further in Note 5, the Company has approximately $7.8 million in available capacity under its Fusion Capital equity facility.  Although the Company has historically drawn amounts in modest amounts under this agreement, the Company could draw more within certain contractual parameters. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Company may seek additional capital in the private and/or public equity markets to continue its operations, respond to competitive pressures, develop new products and services, and to support new strategic partnerships. The Company is currently evaluating additional equity financing opportunities and may execute them when appropriate.  However,there can be no assurances that the Company can consummate such a transaction, or consummate a transaction at favorable pricing. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| ·   | a dividend yield of 0%; |
|--------------------|-------------------------|

| ·   | an expected life of 4 years; |
|--------------------|------------------------------|

| ·   | volatilities of 125% and 120% for 2009 and 2008, respectively; |
|--------------------|----------------------------------------------------------------|

| ·   | and average risk-free interest rates of 3.8% and 3.7% in 2009 and 2008, respectively. |
|--------------------|---------------------------------------------------------------------------------------|

|                                                              | Three Months Ended |        | Three Months Ended |
|-------------------------------------------------------------------|--------------------|-------------|--------------------|
|                                                              | September 30, 2009 |        | September 30, 2008 |
|                                                              | Net Loss           | Shares      | EPS                |   | Net Loss | Shares | EPS |
|                                                              |               |        |               |   |   |   |   |
|        Basic & Diluted EPS | ($1,660,377)       | 168,093,600 | ($0.01)            |   | ($475,701) | 102,767,174 |            - |
|                                                              |               |        |               |   |   |   |   |
|                                                              | Nine Months Ended  |        | Nine Months Ended  |
|                                                              | September 30, 2009 |        | September 30, 2008 |
|                                                              | Net Loss           | Shares      | EPS                |   | Net Loss | Shares | EPS |
|                                                              |               |        |               |   |   |   |   |
|        Basic & Diluted EPS | ($5,590,377)       | 161,446,898 | ($0.03)            |   | ($3,103,579) | 100,478,733 | ($0.03) |
|                                                              |               |        |               |   |   |   |   |

----

|               | Weighted Average Amortization Period (years) |   Cost           |  AccumulatedAmortization |   Net Book Value |
|--------------------|----------------------------------------------|----------------------------|-------------------------------|----------------------------|
| September 30, 2009 |                                         |                       |                          |                       |
| Licenses           | 11.5                                         | $   462,234 | $   154,710    | $   307,524 |
| Patents            | 8.8                                          | 2,003,355                  | 879,231                       | 1,124,124                  |
| Total              | 9.3                                          | $2,465,589                 | $1,033,941                    | $1,431,648                 |
| December 31, 2008  |                                         |                       |                          |                       |
| Licenses           | 11.7                                         | $   462,234 | $   142,994    | $   319,240 |
| Patents            | 9.0                                          | 1,870,603                  | 771,126                       | 1,099,477                  |
| Total              | 9.5                                          | $2,332,837                 | $914,120                      | $1,418,717                 |

|   | Amortization Expense                  |
|--------|---------------------------------------|
| 2010   | $   165,000            |
| 2011   |      170,000 |
| 2012   |      175,000 |
| 2013   |      180,000 |
| 2014   |      185,000 |

|                                                           |                                                                                                                       |   |                                                                                                           |   |   |   |   |
|----------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
|                                                           | September 30, 2009                                                                                                         |   | December 31, 2008                                                                                              |   |
| Net operating loss carry forwards                              | $   32,025,000                                                                                              |   |   $ 26,300,000                                                                                       |   |
| Orphan drug and research and development credit carry forwards | 2,000,000                                                                                                                  |   | 2,000,000                                                                                                      |   |   |
| Other                                                          |        3,300,000                                                                        |   |         3,300,000                                                      |   |   |
| Total                                                          |   37,325,000                                                                                                     |   |   31,600,000                                                                                         |   |   |
| Valuation allowance                                            |   (37,325,000)                                                                                                   |   | (31,600,000)                                                                                                   |   |   |
| Net deferred tax assets                                        | $                    - |   | $                  - |   |   |

----

| ·   | In eight separate transactions during the nine months ended September 30, 2009, the Company issued an aggregate of 554,427 shares of common stock under its existing Fusion Capital equity facility. The Company received an aggregate of $85,000 in proceeds which approximated the shares’ fair market value on the date of issuance. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On September 28, 2009, the Company received $4,390,200 from the completed private placement of common stock and warrants to accredited investors. Under the terms of the agreements, the Company sold 17,352,567 common shares together with five year warrants to purchase up to 8,676,284 shares of the Company’s common stock at $0.278 per share, for anaggregate price of $4,390,200, or $0.253 per share, representing the market price as determined by the five-day average closing price of the Company’s common stock prior to the date of the agreements. The expiration date of the warrants can be accelerated if the Company's common stock meets certain price thresholds and the Company would receive additional gross proceeds of approximately $2,412,000 if they are all exercised. The Company’s North American collaboration partner, Sigma-Tau Pharmaceuticals,Inc., led this offering with an investment of $1 million. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In August 2009, 569,425 shares of the Company’s common stock were issued to the former controller, treasurer and secretary of the Company in partial settlement of certain compensation and severance liabilities pursuant to the employee’s employment agreement. The aggregate number of shares is subject to future adjustment for a six month periodfollowing the separation date should the market price fall below the original issuance price. The former employee was granted standard piggyback registration rights with respect to those shares. Compensation expense of  $119,579 was recorded in General & Administrative Expense for the three and nine months ended September 30, 2009 related to this issuance, representing the fair market value of the shares at the date of issuance. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On March 6, 2009, the Company issued 2,500,000 shares of common stock pursuant to the $400,000 ($300,000 of which was issued on this date) common stock equity investment agreement with its clinical trials management partner, Numoda Corporation (“Numoda”). These shares were priced at the then current market price of $0.12 per share. The remaining$100,000 investment will be completed in January 2010 and will either be paid in cash or in 833,334 shares of common if the market price falls below $0.12.  The investment follows the collaboration between the Company and Numoda announced on June 30, 2008 and represents partial payment by the Company under its collaboration agreement. The Company recognized $400,000 of research and development costs during March 2009 as a result of this transaction. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On February 11, 2009, the Company entered into a collaboration and supply agreement with Sigma-Tau for the commercialization of orBec®.In connection with the execution of the collaboration agreement, the Company entered into a common stock purchase agreement with Sigma-Tau pursuant to which the Company sold 25,000,000 shares of common stock to Sigma-Tau for $0.18 per share, representing an aggregate price of $4,500,000. The purchase price was equal to one hundred fifty percent (150%) of the averagetrading price of the Company’s common stock over the five trading days prior to February 11, 2009. As part of the transaction, the Company granted Sigma-Tau certain demand and piggy-back registration rights. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On January 20, 2009, the Company received $2,384,200 from the completed private placement of common stock and warrants to accredited investors. Under the terms of the agreement, the Company sold 20,914,035 common shares together with five year warrants to purchase up to 20,914,035 shares of the Company’s common stock at $0.14 per share, for an aggregateprice of $2,384,200, or $0.114 per share, representing a premium to the Company’s common stock market price on the date of the agreements. The expiration date of the warrants can be accelerated if the Company's common stock meets certain price thresholds and the Company would receive additional gross proceeds of approximately $2,900,000 if they are all exercised. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                        |   | Three Months EndedSeptember 30, |                            |
|---------------------------------------------|--------|---------------------------------|---------------------------------|
|                                        |   | 2009                            |                            | 2008 |   |
| Revenues, Principally from Grants           |   |                            |                            |   |   |   |   |
| BioDefense                                  |   | $                               | 742,645                         |   | $ | 565,118 |   |
| BioTherapeutics                             |   |                            |   24,000              |   |   |   40,618 |   |
|   Total                                |   | $                               | 766,645                         |   | $ | 605,736 |   |
|                                        |   |                            |                            |   |   |   |   |
| Loss from Operations                        |   |                            |                            |   |   |   |   |
| BioDefense                                  |   | $                               | 66,348                          |   | $ | 23,403 |   |
| BioTherapeutics                             |   |                            | (1,113,629                      | ) |   | (305,920 | ) |
| Corporate                                   |   |                            |   (613,707            | ) |   | (196,879 | ) |
|   Total                                |   | $                               | (1,660,988                      | ) | $ | (479,396 | ) |
|  Amortization and Depreciation Expense |   |                            |                            |   |   |   |   |
| BioDefense                                  |   | $                               | 24,594                          |   | $ | 17,462 |   |
| BioTherapeutics                             |   |                            | 20,594                          |   |   | 14,679 |   |
| Corporate                                   |   |                            |   1,188               |   |   |   1,159 |   |
|   Total                                |   | $                               | 46,376                          |   | $ | 33,300 |   |
|                                        |   |                            |                            |   |   |   |   |
| Interest Income, Net                   |   |                            |                            |   |   |   |   |
| Corporate                              |   |  $                         | 611                             |   |  $ | 3,695 |   |
|                                        |   |                            |                            |   |   |   |   |
| Stock-Based Compensation                    |   |                            |                            |   |   |   |   |
| BioDefense                                  |   |  $                         | 7,484                           |   |  $ | 19,517 |   |
| BioTherapeutics                        |   |                            | 17,830                          |   |   | 20,067 |   |
| Corporate                              |   |                            |      90,922 |   |   | 36,792 |   |
|    Total                     |   |  $                         | 116,236                         |   |  $ | 76,376 |   |
|                                        |   |                            |                            |   |   |   |   |

----

|                                  |   | Nine Months EndedSeptember 30, |                                 |
|---------------------------------------|--------|--------------------------------|--------------------------------------|
|                                  |   | 2009                           |                                 | 2008 |   |
| Revenues, Principally from Grants     |   |                           |                                 |   |   |   |   |
| BioDefense                            |   | $                              | 1,577,277                            |   | $ | 1,731,002 |   |
| BioTherapeutics                       |   |                           |      52,000 |   |   |      40,618 |   |
|   Total                          |   | $                              | 1,629,277                            |   | $ | 1,771,620 |   |
|                                  |   |                           |                                 |   |   |   |   |
| Loss from Operations                  |   |                           |                                 |   |   |   |   |
| BioDefense                            |   | $                              | (50,824                              | ) | $ | (151,938 | ) |
| BioTherapeutics                       |   |                           | (3,740,515                           | ) |   | (1,353,831 | ) |
| Corporate                             |   |                           | (1,817,255                           | ) |   | (1,627,758 | ) |
|   Total                          |   | $                              | (5,608,594                           | ) | $ | (3,133,527 | ) |
|                                  |   |                           |                                 |   |   |   |   |
| Amortization and Depreciation Expense |   |                           |                                 |   |   |   |   |
| BioDefense                            |   | $                              | 69,159                               |   | $ | 61,160 |   |
| BioTherapeutics                       |   |                           | 53,957                               |   |   | 42,671 |   |
| Corporate                             |   |                           |     3,295        |   |   |     3,973 |   |
|   Total                          |   | $                              | 126,411                              |   | $ | 107,804 |   |
|                                  |   |                           |                                 |   |   |   |   |
| Interest Income, Net             |   |                           |                                 |   |   |   |   |
| Corporate                        |   |  $                        | 18,217                               |   |  $ | 29,948 |   |
|                                  |   |                           |                                 |   |   |   |   |
| Stock-Based Compensation              |   |                           |                                 |   |   |   |   |
| BioDefense                            |   |  $                        | 58,898                               |   |  $ | 58,550 |   |
| BioTherapeutics                  |   |                           | 98,493                               |   |   | 60,200 |   |
| Corporate                        |   |                           | 261,331                              |   |   | 110,378 |   |
|    Total               |   |  $                        | 418,722                              |   |  $ | 229,128 |   |
|                                  |   |  As ofSeptember30, 2009   |                                 | As of December 31, 2008 |   |
|                                  |   |                           |                                 |   |   |   |   |
| Identifiable Assets                   |   |                           |                                 |   |   |   |   |
| BioDefense                            |   | $                              | 1,552,802                            |   | $ | 1,221,901 |   |
| BioTherapeutics                       |   |                           | 671,092                              |   |   | 310,535 |   |
| Corporate                             |   |                           | 7,754,963                            |   |   | 1,830,299 |   |
|   Total                          |   | $                              | 9,978,857                            |   | $ | 3,362,735 |   |
|                                  |   |                           |                                 |   |   |   |   |

----

| ·   | complete the pivotal Phase 3 confirmatory clinical trial for orBec® in the treatment of acute gastrointestinal Graft-versus-Host disease (“GI GVHD”); |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | identify a development and marketing partner for orBec® for territories outside of North America, as we have granted an exclusive license to Sigma-Tau to commercialize orBec® in theU.S., Canada and Mexico; Sigma-Tau will pay us a 35% royalty (inclusive of drug supply) on net sales in these territories as well as pay for commercialization expenses, including launch activities; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | conduct and complete a Phase 2 clinical trial of orBec® for the prevention of acute GVHD; |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | evaluate and initiate additional clinical trials to explore the effectiveness of oral BDP in other therapeutic indications involving inflammatory conditions of the gastrointestinal tract such as radiation enteritis, radiation injury and Crohn’s disease; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | reinitiate development of our other biotherapeutics products, including LPMTM Leuprolide; |
|--------------------|-------------------------------------------------------------------------------------------|

| ·   | continue to secure additional government funding for each of our BioDefense programs, RiVaxTM and BT-VACCTM, through grants, contracts and procurements; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | convert our biodefense vaccine programs from early stage development to advanced development and manufacturing with the potential to collaborate and/or partner with other companies in the biodefense area; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | make orBec®  available worldwide through the NPAP for the treatment of acute GI GVHD; |
|--------------------|------------------------------------------------------------------------------------------------------|

| ·   | acquire or in-license new clinical-stage compounds for development; and |
|--------------------|-------------------------------------------------------------------------|

| ·   | explore other business development and acquisition strategies under which we may be considered to be an attractive acquisition candidate by another company. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                         | Phase 3 Trial           | Phase 2 Trial           |
|----------------------------------------------|-------------------------|-------------------------|
|                                         | orBec®             | Placebo                 | orBec® | Placebo |
|  Number of patients randomized          |  62                |  67                |  31 |  29 |
|  Number (%) who died                    |  5 (8%)            |  16 (24%)          |  3 (10%) |  6 (21%) |
|  Hazard ratio (95% confidence interval) |  0.33 (0.12, 0.89) |  0.47 (0.12, 1.87) |
|  Death with infection*                  |  3 (5%)            |  9 (13%)           |  2 (6%) |  5 (17%) |
|  Death with relapse*                    |  3 (5%)            |  9 (13%)           |  1 (3%) |  4 (14%) |

----

----

----

----

----

| ·   | complete the pivotal Phase 3 confirmatory clinical trial for orBec® in the treatment of acute GI GVHD; |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | identify a development and marketing partner for orBec® for territories outside of North America, as we have granted an exclusive license to Sigma-Tau to commercialize orBec® in theU.S., Canada and Mexico; Sigma-Tau will pay us a 35% royalty (inclusive of drug supply) on net sales in these territories as well as pay for commercialization expenses, including launch activities; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | conduct and complete a Phase 2 clinical trial of orBec® for the prevention of acute GVHD; |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | evaluate and initiate additional clinical trials to explore the effectiveness of oral BDP in other therapeutic indications involving inflammatory conditions of the gastrointestinal (“GI”) tract such as radiation enteritis, radiation injury and Crohn’s disease; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | reinitiate development of our other BioTherapeutics products, including LPMTM Leuprolide; |
|--------------------|-------------------------------------------------------------------------------------------|

| ·   | continue to secure additional government funding for each of our BioDefense programs, RiVaxTM and BT-VACCTM, through grants, contracts and procurements; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | convert our biodefense vaccine programs from early stage development to advanced development and manufacturing with the potential to collaborate and/or partner with other companies in the biodefense area; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | make orBec®  available worldwide through the NPAP for the treatment of acute GI GVHD; |
|--------------------|------------------------------------------------------------------------------------------------------|

| ·   | acquire or in-license new clinical-stage compounds for development; and |
|--------------------|-------------------------------------------------------------------------|

| ·   | explore other business development and acquisition strategies under which we may be considered to be an attractive acquisition candidate by another company. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| ·   | We have $9.7 million in active grant funding still available to support our ricin and botulinum toxin vaccine programs in 2009 and beyond.  Additionally, we have submitted additional grant applications for further support of these programs and others with various funding agencies, and received encouraging feedback to date on the likelihood offunding. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We have continued to use equity instruments to provide a portion of the compensation due to vendors and collaboration partners and expect to continue to do so for the foreseeable future. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We have approximately $7.8 million in available capacity under our Fusion Capital equity facility.  Although we have historically drawn amounts in modest amounts under this agreement, we could draw more within certain contractual parameters. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We may seek additional capital in the private and/or public equity markets to continue our operations, respond to competitive pressures, develop new products and services, and to support new strategic partnerships. We are currently evaluating additional equity financing opportunities and may execute them when appropriate.  However,there can be no assurances that we can consummate such a transaction, or consummate a transaction at favorable pricing. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                |                       2009 |                    2008 |
|-------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------|
| Research & Development Expenses |                                                                                                                                     |                                                                                                                   |
| orBec®                         | $      3,098,212                                                                                           | $       884,341                                                                     |
| RiVax™                        | 573,575                                                                                                                                  | 249,318                                                                                                                |
| BT-VACC™                      | 151,228                                                                                                                                  | 154,795                                                                                                                |
| Oraprine™                     | 4,500                                                                                                                                    | 4,000                                                                                                                  |
| LPM™-Leuprolide               |                7,731                                          |           111,387                                                    |
|   Total                   | $      3,835,246                                                                                           | $     1,403,841                                                                               |
|                                |                                                                                                                                     |                                                                                                                   |
| Reimbursed under Grants             |                                                                                                                                     |                                                                                                                   |
| orBec®                         | $          32,024                                                                                | $          110,551                                                             |
| RiVax™                        | 1,223,479                                                                                                                                | 1,266,049                                                                                                              |
| BT-VACC™                      |                       -    |             82,606                                         |
|   Total                   | $     1,255,503                                                                                                 | $     1,459,206                                                                               |
|                                |                                                                                                                                     |                                                                                                                   |
| Grand Total                         | $     5,090,749                                                                                                      | $     2,863,047                                                                                    |

----

|  Year | Research and Development                         | Property andOther Leases                                                                    |  Total                                      |
|------------|--------------------------------------------------|---------------------------------------------------------------------------------------------|--------------------------------------------------|
| 2009       | $   740,910                       | $  23,512                                                                         | $764,422                                         |
| 2010       | 2,775,420                                        | 95,398                                                                                      | 2,870,818                                        |
| 2011       | 155,000                                          | 92,699                                                                                      | 247,699                                          |
| 2012       | 155,000                                          | 22,950                                                                                      | 177,950                                          |
| 2013       |        75,000 |                - |        75,000 |
| Total      | $3,901,330                                       | $234,559                                                                                    | $4,135,889                                       |

----

----

| 32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|------|-----------------------------------------------------------------------------------------------------|

----

| November 13, 2009 |   | by /s/ Christopher J. SchaberChristopher J. Schaber, Ph.D.President and Chief Executive Officer(Principal Executive Officer)                                   |
|-------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| November 13, 2009 |   | by /s/ Evan Myrianthopoulos Evan Myrianthopoulos Chief Financial Officer (Principal Financial Officer)                                          |
| November 13, 2009 |   | by /s/ Christopher P. Schnittker Christopher P. Schnittker, CPA Vice President of Administration and Controller (Principal Accounting Officer)  |

----

| 31.1 | Certification of Chief Executive Officer pursuant to Exchange Act rule 13(a)-14(a) (under Section 302 of the Sarbanes-Oxley Act of 2002). |
|------|-------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2 | Certification of Chief Financial Officer pursuant to Exchange Act rule 13(a)-14(a) (under Section 302 of the Sarbanes-Oxley Act of 2002). |
|------|-------------------------------------------------------------------------------------------------------------------------------------------|

----