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| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES   EXCHANGE ACT OF 1934 |
|--------|------------------------------------------------------------------------------------------------|

|  ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES   EXCHANGE ACT OF 1934 |
|--------|-------------------------------------------------------------------------------------------------|

| Delaware                                                       |         | 94-3306718                           |
|----------------------------------------------------------------|--------------|--------------------------------------|
| (State or other Jurisdiction of Incorporation or Organization) |    | (I.R.S. Employer Identification No.) |

| 4800 Montgomery Lane, Suite 800          |         | 20814      |
|------------------------------------------|--------------|------------|
| Bethesda, Maryland 20814                 |         | (Zip Code) |
| (Address of Principal Executive Offices) |    |       |

| Large accelerated filer   ̈ | Accelerated filer   ̈ | Non-accelerated filer   ̈                                          | Smaller reporting company  þ |
|------------------------------------------------|-------------------------------------|----------------------------------------------------------------------------------|-------------------------------------------------------|
|                                      |                           | (do not check if a smaller reporting company) |                                                  |

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|                                                                                                                                                                                             |   | Page   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| PART I — FINANCIAL INFORMATION                                                                                                                                                             |   |   |
|                                                                                                                                                                                             |   |   |
| Item 1. Financial Statements                                                                                                                                                                     |   |   |
|                                                                                                                                                                                             |   |   |
| Condensed Consolidated Balance Sheets as of December 31, 2009 and September 30, 2010 (unaudited)                                                                                                 |   | 4      |
|                                                                                                                                                                                             |   |   |
| Condensed Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2009 and 2010 and the period from March 18, 1996 (inception) to September 30, 2010 |   | 5      |
|                                                                                                                                                                                             |   |   |
| Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2009 and 2010 and the period from March 18, 1996 (inception) to September 30, 2010           |   | 6      |
|                                                                                                                                                                                             |   |   |
| Notes to Condensed Consolidated Financial Statements                                                                                                                                             |   | 7      |
|                                                                                                                                                                                             |   |   |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                                                              |   | 20     |
|                                                                                                                                                                                             |   |   |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk                                                                                                                               |   | 25     |
|                                                                                                                                                                                             |   |   |
| Item 4. Controls and Procedures                                                                                                                                                                  |   | 26     |
|                                                                                                                                                                                             |   |   |
| PART II — OTHER INFORMATION                                                                                                                                                                |   |   |
|                                                                                                                                                                                             |   |   |
| Item 1. Legal Proceedings                                                                                                                                                                        |   | 28     |
|                                                                                                                                                                                             |   |   |
| Item 1A. Risk Factors                                                                                                                                                                            |   | 28     |
|                                                                                                                                                                                             |   |   |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                              |   | 28     |
|                                                                                                                                                                                             |   |   |
| Item 3. Defaults Upon Senior Securities                                                                                                                                                          |   | 29     |
|                                                                                                                                                                                             |   |   |
| Item 4. (Removed and Reserved)                                                                                                                                                                   |   | 29     |
|                                                                                                                                                                                             |   |   |
| Item 5. Other Information                                                                                                                                                                        |   | 29     |
|                                                                                                                                                                                             |   |   |
| Item 6. Exhibits                                                                                                                                                                                 |   | 30     |
|                                                                                                                                                                                             |   |   |
| SIGNATURES                                                                                                                                                                                       |   | 31     |
|                                                                                                                                                                                             |   |   |
| INDEX TO EXHIBITS                                                                                                                                                                                |   | 32     |

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|   | · | our Condensed Consolidated Balance Sheet as of December 31, 2009 by increasing amounts reported in additional paid-in capital and accumulated deficit. The Condensed Consolidated Balance Sheet as of September 30, 2010 was restated to include a reclassification between notes payable and convertible notes payable, an increase in debt discount and embedded derivative liability. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our Condensed Consolidated Statement of Operations for the three and nine month periods ended September 30, 2009 by increasing amounts reported in General and administrative expenses to reflect a change in valuation of certain equity issuances during the quarters ended March 31, September 30 and December 31, 2009.  The Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2010, includes adjustments to interest expense.  Also, the amounts reported in Loss from operations, Net loss and net loss per share – basic and diluted, for all periods have been adjusted. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (1) | Common stock issued for consulting services related to financing activities.  Based on our initial review of the relevant accounting guidance, we determined the fair value for the stock issued for these services using the price of the stock issued to arms length, non-affiliated sophisticated investors in financing transactions concluded during the term of the consulting agreements.  Following discussion with the Securities & Exchange Commission (the “Commission”) and reviewing the literature cited by the Commission we have determined that the fair value of the stock issued for these consulting services should be the closing price of the stock on the date the stock was issued.  This restatement records the change in valuation. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | On July 14, 2010 the Company entered into a loan agreements in the amount of $1,750,000 with three private unaffiliated investors.  Subsequent to the filing of the quarterly report on form 10-Q for the quarter ended September 30, 2010 the Company’s management was informed that a representative of the Company had  negotiated and secured another note which effectively replaced the notes from these investors with a note from another unaffiliated investor (“Replacement Note”) on significantly different terms. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3)  | Subsequent  to filing the quarterly report on Form 10-Q for the quarter ended September 30, 2010 the Company’s management was informed that a representative of the Company had negotiated and secured another note which effectively replaced a portion of the note executed on July 14, 2010 described above. On September 28, 2010 the Company entered into unsecured 6% Loan Agreements and Promissory Notes (the “September Notes”) with private lenders in the amount of $350,000 and used the proceeds to partially repay the Replacement Notes. The notes had a term of 60 (sixty) days and were convertible into shares of the Company’s common stock at $0.75 per share. The intrinsic value of the convertible notes resulted in a beneficial conversion feature amounting to $161,000 which was recorded as a debt discount to be amortized over the term of the notes. The September Notes also carried 100% warrant coverage with an exercise price of $0.83 per share. The warrants also featured price protection in that if the Company issues stock or warrants at a price lower than the $0.83 per share during the 1-year period following the effective date of these notes, the price of the September Note warrants will be reset to such lower price (other than on issuances, if any, pursuant to arrangements entered into reported prior to the effective date).  In the event that lower priced stock or warrants are issued during the protected period all the September warrants will be repriced but no additional warrants will be due.  The Company determined that the warrants should be accounted for as an embedded derivative. The derivate was valued at $189,000 and accounted for as an embedded derivative liability with the offsetting charge recorded as a debt discount. |
|--------|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                                                                                                                                                                                                                                                                                        |   | December 31,2009 |     |   | September 30,2010 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|----------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                        |   |             |     |   | (Unaudited)       |   |
|                                                                                                                                                                                                                                                                                                                        |   | (Restated)       |     |   | (Restated)        |   |
| Assets                                                                                                                                                                                                                                                                                                                      |   |             |     |   |              |   |
|                                                                                                                                                                                                                                                                                                                        |   |             |     |   |              |   |
| Current assets:                                                                                                                                                                                                                                                                                                             |   |             |     |   |              |   |
| Cash                                                                                                                                                                                                                                                                                                                        |   | $                | 65       |   |              | $      | 80 |   |
| Prepaid expenses and other current assets                                                                                                                                                                                                                                                                                   |   |             | 36       |   |              |   | 151 |   |
| Total current assets                                                                                                                                                                                                                                                                                                        |   |             | 101      |   |              |   | 231 |   |
|                                                                                                                                                                                                                                                                                                                        |   |             |     |   |              |   |   |   |
| Property and equipment:                                                                                                                                                                                                                                                                                                     |   |             |     |   |              |   |   |   |
| Laboratory equipment                                                                                                                                                                                                                                                                                                        |   |             | 29       |   |              |   | 29 |   |
| Office furniture and other equipment                                                                                                                                                                                                                                                                                        |   |             | 82       |   |              |   | 123 |   |
|                                                                                                                                                                                                                                                                                                                        |   |             | 111      |   |              |   | 152 |   |
| Less accumulated depreciation and amortization                                                                                                                                                                                                                                                                              |   |             | (111     | )      |              |   | (113 | ) |
| Property and equipment, net                                                                                                                                                                                                                                                                                                 |   |             | -        |   |              |   | 39 |   |
| Deposit and other non-current assets                                                                                                                                                                                                                                                                                        |   |             | 2        |   |              |   | 16 |   |
| Total assets                                                                                                                                                                                                                                                                                                                |   | $                | 103      |   |              | $      | 286 |   |
|                                                                                                                                                                                                                                                                                                                        |   |             |     |   |              |   |   |   |
| Liabilities And Stockholders’ Equity (Deficit)                                                                                                                                                                                                                                                                        |   |             |     |   |              |   |   |   |
|                                                                                                                                                                                                                                                                                                                        |   |             |     |   |              |   |   |   |
| Current liabilities:                                                                                                                                                                                                                                                                                                        |   |             |     |   |              |   |   |   |
| Accounts payable                                                                                                                                                                                                                                                                                                            |   | $                | 3,249    |   |              | $      | 3,083 |   |
| Accounts payable, related party                                                                                                                                                                                                                                                                                             |   |             | 6,328    |   |              |   | 6,575 |   |
| Accrued expenses                                                                                                                                                                                                                                                                                                            |   |             | 1,874    |   |              |   | 2,416 |   |
| Accrued expenses, related party                                                                                                                                                                                                                                                                                             |   |             | 1,329    |   |              |   | 1,023 |   |
| Notes payable                                                                                                                                                                                                                                                                                                               |   |             | 2,650    |   |              |   | 1,650 |   |
| Note payable to related parties                                                                                                                                                                                                                                                                                             |   |             | 4,000    |   |              |   | 4,000 |   |
| Convertible notes payable, net                                                                                                                                                                                                                                                                                              |   |             | -        |   |              |   | 2,454 |   |
| Embedded derivative liability                                                                                                                                                                                                                                                                                               |   |             | -        |   |              |   | 189 |   |
| Total current liabilities                                                                                                                                                                                                                                                                                                   |   |             | 19,430   |   |              |   | 21,390 |   |
|                                                                                                                                                                                                                                                                                                                        |   |             |     |   |              |   |   |   |
| Long term liabilities:                                                                                                                                                                                                                                                                                                      |   |             |     |   |              |   |   |   |
| Convertible notes payable, net                                                                                                                                                                                                                                                                                              |   |             | 1,061    |   |              |   | 961 |   |
| Convertible notes payable to related party, net                                                                                                                                                                                                                                                                             |   |             | 298      |   |              |   | 785 |   |
| Total long term liabilities                                                                                                                                                                                                                                                                                                 |   |             | 1,359    |   |              |   | 1,746 |   |
| Total liabilities                                                                                                                                                                                                                                                                                                           |   |             | 20,789   |   |              |   | 22,947 |   |
|                                                                                                                                                                                                                                                                                                                        |   |             |     |   |              |   |   |   |
| Stockholders’ equity (deficit):                                                                                                                                                                                                                                                                                       |   |             |     |   |              |   |   |   |
| Preferred stock, $0.001 par value; 20,000,000 shares authorized and none issued and outstanding Common stock, $0.001 par value; 150,000,000 shares authorized at December 31, 2009 and September 30, 2010 58,877,087 and 71,476,700 shares issued and outstanding at December 31, 2009 and September 30, 2010, respectively |   |             | 58       |   |              |   | 72 |   |
| Additional paid-in capital                                                                                                                                                                                                                                                                                                  |   |             | 170,885  |   |              |   | 188,729 |   |
| Deficit accumulated during the development stage                                                                                                                                                                                                                                                                            |   |             | (191,580 | )      |              |   | (211,533 | ) |
| Cumulative translation adjustment                                                                                                                                                                                                                                                                                           |   |             | (49      | )      |              |   | (118 | ) |
| Total stockholders’ equity (deficit)                                                                                                                                                                                                                                                                                  |   |             | (20,686  | )      |              |   | (22,850 | ) |
| Total liabilities and stockholders’ equity (deficit)                                                                                                                                                                                                                                                                  |   | $                | 103      |   |              | $      | 286 |   |

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|                                                                                                      |   | Three months ended   |    |   | Nine months ended |   |   | Period fromMarch 18,1996(Inception)to |   |
|----------------------------------------------------------------------------------------------------------------|--------|--------------------------------|---------|--------|-----------------------------|--------|--------|-------------------------------------------------|--------|
|                                                                                                           |   | September   30, |    |   | September 30,          |   |   | September                                       |   |
|                                                                                                           |   | 2009                           |    |   | 2010                        |   |   | 2009                                            |   |   | 2010 |   |   | 30, 2010 |   |
|                                                                                                           |   | (Restated)                     |    |   | (Restated)                  |   |   | (Restated)                                      |   |   | (Restated) |   |   | (Restated) |   |
| Revenues:                                                                                                      |   |                           |    |   |                        |   |   |                                            |   |   |   |   |   |   |   |
| Research material sales                                                                                        |   | $                              | 10      |   |                        | $      | 10     |                                            |   | $ | 10 |   |   | $ | 10 |   |   | $ | 570 |   |
| Contract research and development from related parties                                                         |   |                           | -       |   |                        |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | 1,128 |   |
| Research grants and other                                                                                      |   |                           | -       |   |                        |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | 1,061 |   |
| Total revenues                                                                                                 |   |                           | 10      |   |                        |   | 10     |                                            |   |   | 10 |   |   |   | 10 |   |   |   | 2,759 |   |
| Operating cost and expenses:                                                                                   |   |                           |    |   |                        |   |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of research material sales                                                                                |   |                           | -       |   |                        |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | 382 |   |
| Research and development                                                                                       |   |                           | 2,465   |   |                        |   | 1,606  |                                            |   |   | 7,437 |   |   |   | 4,791 |   |   |   | 71,704 |   |
| General and administration                                                                                     |   |                           | 3,952   |   |                        |   | 1,412  |                                            |   |   | 6,115 |   |   |   | 4,680 |   |   |   | 61,206 |   |
| Depreciation and amortization                                                                                  |   |                           | -       |   |                        |   | 2      |                                            |   |   | - |   |   |   | 2 |   |   |   | 2,353 |   |
| Loss on facility sublease                                                                                      |   |                           | -       |   |                        |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | 895 |   |
| Asset impairment loss and other (gain) loss                                                                    |   |                           | -       |   |                        |   | -      |                                            |   |   | 389 |   |   |   | - |   |   |   | 2,445 |   |
| Total operating costs and expenses                                                                             |   |                           | 6,417   |   |                        |   | 3,020  |                                            |   |   | 13,941 |   |   |   | 9,473 |   |   |   | 138,895 |   |
| Loss from operations                                                                                           |   |                           | (6,407  | )      |                        |   | (3,010 | )                                               |   |   | (13,931 | ) |   |   | (9,463 | ) |   |   | (136,226 | ) |
| Other income (expense):                                                                                        |   |                           |    |   |                        |   |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Warrant valuation                                                                                              |   |                           | -       |   |                        |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | 6,759 |   |
| Loan conversion inducement                                                                                     |   |                           | (5,617  | )      |                        |   | -      |                                            |   |   | (5,617 | ) |   |   | (4,522 | ) |   |   | (10,139 | ) |
| Gain on sale of intellectual property and property and equipment                                               |   |                           | -       |   |                        |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | 3,664 |   |
| Interest expense                                                                                               |   |                           | (1,813  | )      |                        |   | (2,371 | )                                               |   |   | (3,004 | ) |   |   | (5,968 | ) |   |   | (32,000 | ) |
| Interest income and other                                                                                      |   |                           | -       |   |                        |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | 1,218 |   |
| Net loss                                                                                                       |   |                           | (13,837 | )      |                        |   | (5,381 | )                                               |   |   | (22,552 | ) |   |   | (19,953 | ) |   |   | (166,724 | ) |
| Issuance of common stock in connection with elimination of Series A and Series A-1 preferred stock preferences |   |                           | -       |   |                        |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | (12,349 | ) |
| Modification of Series A preferred stock warrants                                                              |   |                           | -       |   |                        |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | (2,306 | ) |
| Modification of Series A-1 preferred stock warrants                                                            |   |                           | -       |   |                        |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | (16,393 | ) |
| Series A preferred stock dividends                                                                             |   |                           | -       |   |                        |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | (334 | ) |
| Series A-1 preferred stock dividends                                                                           |   |                           | -       |   |                        |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | (917 | ) |
| Warrants issued on Series A and Series A-1 preferred stock dividends                                           |   |                           | -       |   |                        |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | (4,664 | ) |
| Accretion of Series A preferred stock mandatory redemption obligation                                          |   |                           | -       |   |                        |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | (1,872 | ) |
| Series A preferred stock redemption fee                                                                        |   |                           | -       |   |                        |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | (1,700 | ) |
| Beneficial conversion feature of Series D preferred stock                                                      |   |                           | -       |   |                        |   | -      |                                            |   |   | - |   |   |   | - |   |   |   | (4,274 | ) |
| Net loss applicable to common stockholders                                                                     |   | $                              | (13,837 | )      |                        | $      | (5,381 | )                                               |   | $ | (22,552 | ) |   | $ | (19,953 | ) |   | $ | (211,533 | ) |
| Net loss per share applicable to common stockholders — basic and diluted                                 |   | $                              | (0.31   | )      |                        | $      | (0.08  | )                                               |   | $ | (0.51 | ) |   | $ | (0.31 | ) |   |   |   |   |
| Weighted average shares used in computing basic and diluted net loss per share                                 |   |                           | 45,276  |   |                        |   | 70,413 |                                            |   |   | 44,583 |   |   |   | 65,361 |   |   |   |   |   |

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|                                                                                                           |   | Nine Months EndedSeptember 30, |    |   | Period fromMarch 18,1996(Inception) toSeptember 30, |   |
|----------------------------------------------------------------------------------------------------------------|--------|--------------------------------|---------|--------|-----------------------------------------------------|--------|
|                                                                                                           |   | 2009                           |    |   | 2010                                                |   |   | 2010 |   |
|                                                                                                           |   | (Restated)                     |    |   | (Restated)                                          |   |   | (Restated) |   |
| Cash Flows from Operating Activities:                                                                          |   |                           |    |   |                                                |   |   |   |   |
| Net Loss                                                                                                       |   | $                              | (22,552 | )      |                                                | $      | (19,953 | ) |   | $ | (166,724 | ) |
| Reconciliation of net loss to net cash used in operating activities:                                           |   |                           |    |   |                                                |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                                  |   |                           | -       |   |                                                |   | 2 |   |   |   | 2,353 |   |
| Amortization of deferred financing costs                                                                       |   |                           | -       |   |                                                |   | - |   |   |   | 320 |   |
| Amortization debt discount                                                                                     |   |                           | 819     |   |                                                |   | 2,853 |   |   |   | 22,554 |   |
| Accrued interest converted to stock                                                                            |   |                           | -       |   |                                                |   | 1,047 |   |   |   | 1,307 |   |
| Accreted interest on convertible promissory note                                                               |   |                           | -       |   |                                                |   | - |   |   |   | 1,484 |   |
| Stock-based compensation costs                                                                                 |   |                           | 1,815   |   |                                                |   | 1,512 |   |   |   | 10,922 |   |
| Stock and warrants issued for services and other expenses                                                      |   |                           | 4,310   |   |                                                |   | 3,593 |   |   |   | 8,369 |   |
| Loan conversion inducement                                                                                     |   |                           | 5,617   |   |                                                |   | 4,522 |   |   |   | 10,139 |   |
| Warrant valuation                                                                                              |   |                           | -       |   |                                                |   | - |   |   |   | (6,759 | ) |
| Asset impairment loss and loss (gain) on sale of properties                                                    |   |                           | 389     |   |                                                |   | - |   |   |   | (936 | ) |
| Loss on facility sublease                                                                                      |   |                           | -       |   |                                                |   | - |   |   |   | 895 |   |
| Increase (decrease) in cash resulting from changes in assets and liabilities:                                  |   |                           |    |   |                                                |   |   |   |   |   |   |   |
| Prepaid expenses and other current assets                                                                      |   |                           | 956     |   |                                                |   | (129 | ) |   |   | 559 |   |
| Accounts payable and accrued expenses                                                                          |   |                           | 444     |   |                                                |   | 380 |   |   |   | 5,425 |   |
| Related party accounts payable and accrued expenses                                                            |   |                           | 4,222   |   |                                                |   | (59 | ) |   |   | 7,598 |   |
| Accrued loss on sublease                                                                                       |   |                           | -       |   |                                                |   | - |   |   |   | (265 | ) |
| Deferred rent                                                                                                  |   |                           | -       |   |                                                |   | - |   |   |   | 410 |   |
| Net Cash used in Operating Activities                                                                          |   |                           | (3,980  | )      |                                                |   | (6,232 | ) |   |   | (102,349 | ) |
| Cash Flows from Investing Activities:                                                                          |   |                           |    |   |                                                |   |   |   |   |   |   |   |
| Purchase of property and equipment, net                                                                        |   |                           | (2      | )      |                                                |   | (41 | ) |   |   | (5,044 | ) |
| Proceeds from sale of property and equipment                                                                   |   |                           | -       |   |                                                |   | - |   |   |   | 258 |   |
| Proceeds from sale of intellectual property                                                                    |   |                           | -       |   |                                                |   | - |   |   |   | 1,816 |   |
| Proceeds from sale of marketable securities                                                                    |   |                           | -       |   |                                                |   | - |   |   |   | 2,000 |   |
| Refund of security deposit                                                                                     |   |                           | -       |   |                                                |   | - |   |   |   | (3 | ) |
| Transfer of restricted cash                                                                                    |   |                           | -       |   |                                                |   | - |   |   |   | (1,035 | ) |
| Net Cash used in Investing Activities                                                                          |   |                           | (2      | )      |                                                |   | (41 | ) |   |   | (2,008 | ) |
| Cash Flows from Financing Activities:                                                                          |   |                           |    |   |                                                |   |   |   |   |   |   |   |
| Proceeds from issuance of note payable                                                                         |   |                           | -       |   |                                                |   | - |   |   |   | 4,710 |   |
| Proceeds from issuance of convertible notes payable to related parties                                         |   |                           | 1,340   |   |                                                |   | 2,667 |   |   |   | 3,967 |   |
| Proceeds from issuance of note payable to related parties                                                      |   |                           | 1,375   |   |                                                |   | - |   |   |   | 11,250 |   |
| Repayment of note payable to related party                                                                     |   |                           | -       |   |                                                |   | - |   |   |   | (6,700 | ) |
| Proceeds from issuance of convertible promissory note and warrants, net of issuance costs                      |   |                           | -       |   |                                                |   | - |   |   |   | 13,099 |   |
| Repayment of convertible promissory note                                                                       |   |                           | -       |   |                                                |   | - |   |   |   | (119 | ) |
| Borrowing under line of credit, Northwest Hospital                                                        |   |                           | -       |   |                                                |   | - |   |   |   | 2,834 |   |
| Repayment of line of credit, Northwest Hospital                                                           |   |                           | -       |   |                                                |   | - |   |   |   | (2,834 | ) |
| Payment on capital lease obligations                                                                           |   |                           | -       |   |                                                |   | - |   |   |   | (323 | ) |
| Payments on note payable                                                                                       |   |                           | -       |   |                                                |   | - |   |   |   | (420 | ) |
| Proceeds from issuance preferred stock, net                                                                    |   |                           | -       |   |                                                |   | - |   |   |   | 28,708 |   |
| Proceeds from exercise of stock options and warrants                                                           |   |                           | -       |   |                                                |   | - |   |   |   | 228 |   |
| Proceeds from issuance common stock, net                                                                       |   |                           | 1,394   |   |                                                |   | 3,690 |   |   |   | 53,426 |   |
| Payment of preferred stock dividends                                                                           |   |                           | -       |   |                                                |   | - |   |   |   | (1,251 | ) |
| Series A preferred stock redemption fee                                                                        |   |                           | -       |   |                                                |   | - |   |   |   | (1,700 | ) |
| Deferred financing costs                                                                                       |   |                           | -       |   |                                                |   | - |   |   |   | (320 | ) |
| Net Cash provided by Financing Activities                                                                      |   |                           | 4,109   |   |                                                |   | 6,357 |   |   |   | 104,555 |   |
| Effect of exchange rates on cash                                                                               |   |                           | (28     | )      |                                                |   | (69 | ) |   |   | (118 | ) |
| Net increase in cash                                                                                      |   |                           | 99      |   |                                                |   | 15 |   |   |   | 80 |   |
| Cash at beginning of period                                                                                    |   |                           | 16      |   |                                                |   | 65 |   |   |   | - |   |
| Cash at end of period                                                                                          |   | $                              | 115     |   |                                                | $      | 80 |   |   | $ | 80 |   |
|                                                                                                           |   |                           |    |   |                                                |   |   |   |   |   |   |   |
| Supplemental disclosure of cash flow information — Cash paid during the period for interest              |   | $                              | -       |   |                                                | $      | - |   |   | $ | 1,879 |   |
| Supplemental schedule of non-cash financing activities:                                                        |   |                           |    |   |                                                |   |   |   |   |   |   |   |
| Equipment acquired through capital leases                                                                      |   | $                              | -       |   |                                                | $      | - |   |   | $ | 285 |   |
| Issuance of common stock in connection with elimination of Series A and Series A-1 preferred stock preferences |   |                           | -       |   |                                                |   | - |   |   |   | 12,349 |   |
| Issuance of common stock in connection conversion of notes payable and accrued interest notes                  |   |                           | 1,500   |   |                                                |   | 1,004 |   |   |   | 2,504 |   |
| Modification of Series A preferred stock warrants                                                              |   |                           | -       |   |                                                |   | - |   |   |   | 2,306 |   |
| Modification of Series A-1 preferred stock warrants                                                            |   |                           | -       |   |                                                |   | - |   |   |   | 16,393 |   |
| Warrants issued on Series A and Series A-1 preferred stock dividends                                           |   |                           | -       |   |                                                |   | - |   |   |   | 4,664 |   |
| Common stock warrant liability                                                                                 |   |                           | -       |   |                                                |   | - |   |   |   | 11,841 |   |
| Accretion of mandatorily redeemable Series A preferred stock redemption obligation                             |   |                           | -       |   |                                                |   | - |   |   |   | 1,872 |   |
| Debt discount on promissory notes                                                                              |   |                           | 2,028   |   |                                                |   | 2,490 |   |   |   | 13,327 |   |
| Conversion of convertible promissory notes and accrued interest to Series D preferred stock                    |   |                           | -       |   |                                                |   | - |   |   |   | 5,324 |   |
| Conversion of convertible promissory notes and accrued interest to Series A-1 preferred stock                  |   |                           | -       |   |                                                |   | - |   |   |   | 7,707 |   |
| Conversion of convertible promissory notes and accrued interest to common stock                                |   |                           | -       |   |                                                |   | - |   |   |   | 269 |   |
| Issuance of Series C preferred stock warrants in connection with lease agreement                               |   |                           | -       |   |                                                |   | - |   |   |   | 43 |   |
| Issuance of common stock for license rights                                                                    |   |                           | -       |   |                                                |   | - |   |   |   | 4 |   |
| Liability for and issuance of common stock and warrants to Medarex                                             |   |                           | -       |   |                                                |   | - |   |   |   | 840 |   |
| Issuance of common stock to landlord                                                                           |   |                           | -       |   |                                                |   | - |   |   |   | 35 |   |
| Deferred compensation on issuance of stock options and restricted stock grants                                 |   |                           | -       |   |                                                |   | - |   |   |   | 759 |   |
| Cancellation of options and restricted stock                                                                   |   |                           | -       |   |                                                |   | - |   |   |   | 849 |   |
| Financing of prepaid insurance through note payable                                                            |   |                           | -       |   |                                                |   | - |   |   |   | 491 |   |
| Stock subscription receivable                                                                                  |   |                           | -       |   |                                                |   | - |   |   |   | 480 |   |

----

|   | · | our Condensed Consolidated Balance Sheet as of December 31, 2009 by increasing amounts reported in additional paid-in capital and accumulated deficit. The Condensed Consolidated Balance Sheet as of September 30, 2010 was restated to include a reclassification between notes payable and convertible notes payable, an increase in debt discount and embedded derivative liability. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our Condensed Consolidated Statement of Operations for the three and nine month periods ended September 30, 2009 by increasing amounts reported in General and administrative expenses to reflect a change in valuation of certain equity issuances during the quarters ended March 31, September 30 and December 31, 2009.  The Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2010, includes adjustments to interest expense.  Also, the amounts reported in Loss from operations, Net loss and net loss per share – basic and diluted, for all periods have been adjusted. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (1) | Common stock issued for consulting services related to financing activities.  Based on our initial review of the relevant accounting guidance, we determined the fair value for the stock issued for these services using the price of the stock issued to arms length, non-affiliated sophisticated investors in financing transactions concluded during the term of the consulting agreements.  Following discussion with the Securities & Exchange Commission (the “Commission”) and reviewing the literature cited by the Commission we have determined that the fair value of the stock issued for these consulting services should be the closing price of the stock on the date the stock was issued.  This restatement records the change in valuation. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | On July 14, 2010 the Company entered into a loan agreements in the amount of $1,750,000 with three private unaffiliated investors.  Subsequent to the filing of the quarterly report on form 10-Q for the quarter ended September 30, 2010 the Company’s management was informed that a representative of the Company had  negotiated and secured another note which effectively replaced the notes from these investors with a note from another unaffiliated investor (“Replacement Note”) on significantly different terms. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (3)  | Subsequent  to filing the quarterly report on Form 10-Q for the quarter ended September 30, 2010 the Company’s management was informed that a representative of the Company had negotiated and secured another note which effectively replaced a portion of the note executed on July 14, 2010 described above. On September 28, 2010 the Company entered into unsecured 6% Loan Agreements and Promissory Notes (the “September Notes”) with private lenders in the amount of $350,000 and used the proceeds to partially repay the Replacement Notes. The notes had a term of 60 (sixty) days and were convertible into shares of the Company’s common stock at $0.75 per share. The intrinsic value of the convertible notes resulted in a beneficial conversion feature amounting to $161,000 which was recorded as a debt discount to be amortized over the term of the notes. The September Notes also carried 100% warrant coverage with an exercise price of $0.83 per share. The warrants also featured price protection in that if the Company issues stock or warrants at a price lower than the $0.83 per share during the 1-year period following the effective date of these notes, the price of the September Note warrants will be reset to such lower price (other than on issuances, if any, pursuant to arrangements entered into reported prior to the effective date).  In the event that lower priced stock or warrants are issued during the protected period all the September warrants will be re-priced but no additional warrants will be due.  The Company determined that the warrants should be accounted for as an embedded derivative. The derivative was valued at $189,000 and accounted for as an embedded derivative liability with the offsetting charge recorded as a debt discount. |
|--------|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                             |   | As of December 31, 2009 |     |   | As of September 30, 2010 |   |
|--------------------------------------------------|--------|---------------------------------------------|----------|--------|----------------------------------------------|--------|
|                                             |   |                                        |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   | As Previously                          |     |   |                                         |   |   |   |   |   | As Previously |   |   |   |   |   |   |   |
|                                             |   | Reported                                    |     |   | Adjustments                                  |   |   | As Restated |   |   | Reported |   |   | Adjustments |   |   | As Restated |   |
| Convertible notes, net                           |   | $                                           | -        |   |                                         | $      | - |   |   | $ | - |   |   | $ | 1,054 |   |   | $ | 1,400 |   |   | $ | 2,454 |   |
| Embedded derivative liability                    |   |                                        | -        |   |                                         |   | - |   |   |   | - |   |   |   | - |   |   |   | 189 |   |   |   | 189 |   |
| Notes payable, net                               |   |                                        | -        |   |                                         |   | - |   |   |   | - |   |   |   | 1,676 |   |   |   | (1,676 | ) |   |   | - |   |
| Additional paid-in capital                       |   |                                        | 169,202  |   |                                         |   | 1,683 |   |   |   | 170,885 |   |   |   | 185,220 |   |   |   | 3,509 |   |   |   | 188,729 |   |
| Deficit accumulated during the development stage |   |                                        | (189,897 | )      |                                         |   | (1,683 | ) |   |   | (191,580 | ) |   |   | (208,111 | ) |   |   | (3,422 | ) |   |   | (211,533 | ) |

|                                                                |   | Three months ended September 30, 2009 |    |   | Nine months ended September 30, 2009 |   |
|--------------------------------------------------------------------------|--------|----------------------------------------------------------------|---------|--------|---------------------------------------------------------------|--------|
|                                                                     |   |                                                           |    |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   | As Previously                                             |    |   |                                                          |   |   |   |   |   | As Previously |   |   |   |   |   |   |   |
|                                                                     |   | Reported                                                       |    |   | Adjustments                                                   |   |   | As Restated |   |   | Reported |   |   | Adjustments |   |   | As Restated |   |
| General and administrative                                               |   | $                                                              | 2,356   |   |                                                          | $      | 1,596 |   |   | $ | 3,952 |   |   | $ | 4,475 |   |   | $ | 1,640 |   |   | $ | 6,115 |   |
| Loss from operations                                                     |   |                                                           | (4,811  | )      |                                                          |   | (1,596 | ) |   |   | (6,407 | ) |   |   | (12,291 | ) |   |   | (1,640 | ) |   |   | (13,931 | ) |
| Net loss                                                                 |   |                                                           | (12,241 | )      |                                                          |   | (1,596 | ) |   |   | (13,837 | ) |   |   | (20,912 | ) |   |   | (1,640 | ) |   |   | (22,552 | ) |
| Net loss applicable to common stockholders                               |   |                                                           | (12,241 | )      |                                                          |   | (1,596 | ) |   |   | (13,837 | ) |   |   | (20,912 | ) |   |   | (1,640 | ) |   |   | (22,552 | ) |
| Net loss per share applicable to common stockholders - basic and diluted |   |                                                           | (0.27   | )      |                                                          |   | (0.04 | ) |   |   | (0.31 | ) |   |   | (0.47 | ) |   |   | (0.04 | ) |   |   | (0.51 | ) |

|                                                                |   | Three months ended September 30, 2010 |   |   | Nine months ended September 30, 2010 |   |   | Inception to September 30, 2010 |   |
|--------------------------------------------------------------------------|--------|----------------------------------------------------------------|--------|--------|----------------------------------------------------------|--------|--------|-----------------------------------------------------|--------|
|                                                                     |   | As PreviouslyReported                                     |   |   | Adjustments                                              |   |   | As Restated                                    |   |   | As PreviouslyReported |   |   | Adjustments |   |   | As Restated |   |   | As PreviouslyReported |   |   | Adjustments |   |   | As Restated |   |
| General and administrative                                               |   | $                                                              | -      |   |                                                     | $      | -      |                                                |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 59,523 |   |   | $ | 1,683 |   |   | $  | 61,206 |   |
| Loss from operations                                                     |   |                                                           | -      |   |                                                     |   | -      |                                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (134,543 | ) |   |   | (1,683 | ) |   |   | (136,226 | ) |
| Interest expense                                                         |   |                                                           | (632   | )      |                                                     |   | (1,739 | )                                                   |   |   | (2,371 | ) |   |   | (4,229 | ) |   |   | (1,739 | ) |   |   | (5,968 | ) |   |   | (30,261 | ) |   |   | (1,739 | ) |   |   | (32,000 | ) |
| Net loss                                                                 |   |                                                           | (3,642 | )      |                                                     |   | (1,739 | )                                                   |   |   | (5,381 | ) |   |   | (18,214 | ) |   |   | (1,739 | ) |   |   | (19,953 | ) |   |   | (163,302 | ) |   |   | (3,422 | ) |   |   | (166,724 | ) |
| Net loss applicable to common stockholders                               |   |                                                           | (3,642 | )      |                                                     |   | (1,739 | )                                                   |   |   | (5,381 | ) |   |   | (18,214 | ) |   |   | (1,739 | ) |   |   | (19,953 | ) |   |   | (208,111 | ) |   |   | (3,422 | ) |   |   | (211,533 | ) |
| Net loss per share applicable to common stockholders - basic and diluted |   |                                                           | (0.05  | )      |                                                     |   | (0.03  | )                                                   |   |   | (0.08 | ) |   |   | (0.28 | ) |   |   | (0.03 | ) |   |   | (0.31 | ) |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                       |   | Nine months ended September 30, 2009 |    |   | Nine months ended September 30, 2010 |   |   | Inception to September 30, 2010 |   |
|-----------------------------------------------------------------|--------|---------------------------------------------------------------|---------|--------|---------------------------------------------------------------|--------|--------|-----------------------------------------------------|--------|
|                                                            |   |                                                          |    |   |                                                          |   |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                            |   | As PreviouslyReported                                    |    |   | Adjustments                                                   |   |   | As Restated                                    |   |   | As PreviouslyReported |   |   | Adjustments |   |   | As Restated |   |   | As PreviouslyReported |   |   | Adjustments |   |   | As Restated |   |
| Net loss                                                        |   | $                                                             | (20,912 | )      |                                                          | $      | (1,640 | )                                                   |   | $ | (22,552 | ) |   | $ | (18,214 | ) |   | $ | (1,739 | ) |   | $ | (19,953 | ) |   | $ | (163,302 | ) |   | $ | (3,422 | ) |   | $  | (166,724 | ) |
| Amortization of debt discount                                   |   |                                                          | -       |   |                                                          |   | -      |                                                |   |   | - |   |   |   | 1,114 |   |   |   | 1,739 |   |   |   | 2,853 |   |   |   | 20,815 |   |   |   | 1,739 |   |   |   | 22,554 |   |
| Stock-based compensation costs                                  |   |                                                          | 1,909   |   |                                                          |   | (94    | )                                                   |   |   | 1,815 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 11,016 |   |   |   | (94 | ) |   |   | 10,922 |   |
| Stock and warrants issued for services and other  expenses |   |                                                          | 2,576   |   |                                                          |   | 1,734  |                                                |   |   | 4,310 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 6,592 |   |   |   | 1,777 |   |   |   | 8,369 |   |
| Debt discount on promissory notes                               |   |                                                          | -       |   |                                                          |   | -      |                                                |   |   | - |   |   |   | 664 |   |   |   | 1,826 |   |   |   | 2,490 |   |   |   | 11,501 |   |   |   | 1,826 |   |   |   | 13,327 |   |

|   | · | Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; |
|--------|--------|----------------------------------------------------------------------------------------------------------|

|   | · | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Balance, January 1, 2010                                                   |   | $      | -       |   |
|----------------------------------------------------------------------------|--------|--------|---------|--------|
| Fair value upon issuance, Down-round protection on September Note warrants |   |   | 189,000 |   |
| Net change in fair value of derivative liabilities                         |   |   | -       |   |
| Balance at September 30, 2010                                              |   | $      | 189,000 |   |

----

|                           |   | Three months endedSeptember 30 |   |   | Nine Months endedSeptember 30 |   |
|--------------------------------|--------|-----------------------------------------------|--------|--------|----------------------------------------------|--------|
|                           |   | 2009                                          |   |   | 2010                                         |   |   | 2009 |   |   | 2010 |   |
| Research and development       |   | $                                             | 139    |   |                                         | $      | 163 |   |   | $ | 139 |   |   | $ | 525 |   |
| General and administrative     |   |                                          | 1,112  |   |                                         |   | 329 |   |   |   | 1,676 |   |   |   | 987 |   |
| Total stock-based compensation |   | $                                             | 1,251  |   |                                         | $      | 492 |   |   | $ | 1,815 |   |   | $ | 1,512 |   |

----

|   | • | an aggregate of 19,299,486 shares of Common Stock; |
|--------|---------|----------------------------------------------------|

|   | • | warrants to purchase 14,150,732 shares of Common Stock at an exercise price of $0.60 per share; and |
|--------|---------|-----------------------------------------------------------------------------------------------------|

|   | • | warrants to purchase 7,884,357 shares of Common Stock at an exercise price of $0.15 per share. |
|--------|---------|------------------------------------------------------------------------------------------------|

|   | • | an aggregate of 13,460,691 shares of Common Stock; |
|--------|---------|----------------------------------------------------|

|   | • | warrants to purchase 8,832,541 shares of Common Stock at an exercise price of $0.60 per share; |
|--------|---------|------------------------------------------------------------------------------------------------|

|   | • | warrants to purchase 513,841 shares of common stock at an exercise price of $0.41; |
|--------|---------|-----------------------------------------------------------------------------------------|

|   | • | warrants to purchase 132,500 shares of common stock at an exercise price of $0.40; |
|--------|---------|-----------------------------------------------------------------------------------------|

|   | • | warrants to purchase 86,667 shares of common stock at an exercise price of $0.75; and |
|--------|---------|--------------------------------------------------------------------------------------------|

|   | • | warrants to purchase 842,375 shares of common stock at an exercise price of $0.20. |
|--------|---------|-----------------------------------------------------------------------------------------|

----

----

| 7. | Notes Payable |
|----|---------------|

----

|                                                                                                                                                            |   | December 31,2009 |   |   | September 30,2010 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------|--------|--------|------------------------|--------|
| 12% note payable to Al Rajhi, due December 31, 2010                                                                                                             |   | $                     | 4,000  |   |                   | $      | 4,000 |   |
| 6% unsecured convertible note payable to Toucan Partners, due July, 2011 and November 2011, (net of discount of $1,002 and $515 in 2009 and 2010, respectively) |   |                  | 298    |   |                   |   | 785 |   |
|                                                                                                                                                            |   |                  | 4,298  |   |                   |   | 4,785 |   |
| Less current portion                                                                                                                                            |   |                  | (4,000 | )      |                   |   | (4,000 | ) |
| Long-term notes payable to related parties (net)                                                                                                                |   | $                     | 298    |   |                   | $      | 785 |   |

|                                                                                                                                                           |   | December 31,2009 |   |   | September 30,2010 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------|--------|--------|------------------------|--------|
| 12% unsecured note payable to SDS                                                                                                                              |   | $                     | 1,000  |   |                   | $      | 1,000 |   |
| 12% unsecured notes payable to SDS and Private Investors                                                                                                       |   |                  | 1,650  |   |                   |   | 650 |   |
| 6% unsecured convertible notes payable to Private Lenders, due in August and September 2011, (net of discount of $485 and $268 in 2009 and 2010, respectively) |   |                  | 95     |   |                   |   | 312 |   |
| 6% unsecured convertible notes payable to Private Lenders, due March 25, 2011, (net of discount of $46 and $18 in 2009 and 2010, respectively)                 |   |                  | 604    |   |                   |   | 632 |   |
| 6% unsecured convertible note payable to Private Lender, due March 25, 2011                                                                                    |   |                  | 110    |   |                   |   | 110 |   |
| 6% unsecured convertible notes payable to Private Lenders, due October, 2011, (net of discount of $194 and $114 in 2009 and 2010, respectively)                |   |                  | 21     |   |                   |   | 101 |   |
| 6% unsecured convertible notes payable to Private Lenders, due October and December 2011, (net of discount of $274 and $168 in 2009 and 2010, respectively)    |   |                  | 231    |   |                   |   | 337 |   |
| 6% unsecured convertible notes payable to Private Lenders, due between January and March 2012, (net of discount of $394 in 2010)                               |   |                  | -      |   |                   |   | 481 |   |
| 6% unsecured notes payable to Private Lenders, due September 14, 2010 (in default),                                                                            |   |                  | -      |   |                   |   | 1,400 |   |
| 6% unsecured convertible notes payable, due November 28, 2010 (net of discount of $350 in 2010)                                                                |   |                  | -      |   |                   |   | - |   |
| 6% unsecured convertible note payable, due March 18, 2012                                                                                                      |   |                  | -      |   |                   |   | 42 |   |
|                                                                                                                                                           |   |                  | 3,711  |   |                   |   | 5,065 |   |
| Less current portion                                                                                                                                           |   |                  | (2,650 | )      |                   |   | (4,104 | ) |
| Long-term notes payable (net)                                                                                                                                  |   | $                     | 1,061  |   |                   | $      | 961 |   |

| Notes payable                  |   | $      | 1,650 |   |
|--------------------------------|--------|--------|-------|--------|
| Convertible notes payable, net |   |   | 2,454 |   |
|                           |   | $      | 4,104 |   |

----

|                                     |   | Three Months Ended September 30 |   |   | Nine Months Ended September 30 |   |
|------------------------------------------|--------|-----------------------------------------------------|--------|--------|----------------------------------------------------|--------|
|                                     |   | 2009                                                |   |   | 2010                                               |   |   | 2009 |   |   | 2010 |   |
| Common stock options                     |   |                                                | 4,100  |   |                                               |   | 4,110 |   |   |   | 4,100 |   |   |   | 4,110 |   |
| Common stock warrants                    |   |                                                | 36,600 |   |                                               |   | 38,200 |   |   |   | 36,600 |   |   |   | 38,200 |   |
| Convertible notes                        |   |                                                | 4,600  |   |                                               |   | 20,000 |   |   |   | 4,600 |   |   |   | 20,000 |   |
| Excluded potentially dilutive securities |   |                                                | 45,300 |   |                                               |   | 62,310 |   |   |   | 45,300 |   |   |   | 62,310 |   |

----

----

----

----

|   | (1) | Common stock issued for consulting services related to financing activities.  Based on our initial review of the relevant accounting guidance, we determined the fair value for the stock issued for these services using the price of the stock issued to arms length, non-affiliated sophisticated investors in financing transactions concluded during the term of the consulting agreements.  Following discussion with the Securities & Exchange Commission (the “Commission”) and reviewing the literature cited by the Commission we have determined that the fair value of the stock issued for these consulting services should be the closing price of the stock on the date the stock was issued.  This restatement records the change in valuation. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | On July 14, 2010 the Company entered into a loan agreements in the amount of $1,750,000 with three private unaffiliated investors.  Subsequent to the filing of the quarterly report on form 10-Q for the quarter ended September 30, 2010 the Company’s management was informed that a representative of the Company had  negotiated and secured another note which effectively replaced the notes from these investors with a note from another unaffiliated investor (“Replacement Note”) on significantly different terms. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Subsequent  to filing the quarterly report on Form 10-Q for the quarter ended September 30, 2010 the Company’s management was informed that a representative of the Company had negotiated and secured another note which effectively replaced a portion of the note executed on July 14, 2010 described above. On September 28, 2010 the Company entered into unsecured 6% Loan Agreements and Promissory Notes (the “September Notes”) with private lenders in the amount of $350,000 and used the proceeds to partially repay the Replacement Notes. The notes had a term of 60 (sixty) days and were convertible into shares of the Company’s common stock at $0.75 per share. The intrinsic value of the convertible notes resulted in a beneficial conversion feature amounting to $161,000 which was recorded as a debt discount to be amortized over the term of the notes. The September Notes also carried 100% warrant coverage with an exercise price of $0.83 per share. The warrants also featured price protection in that if the Company issues stock or warrants at a price lower than the $0.83 per share during the 1-year period following the effective date of these notes, the price of the September Note warrants will be reset to such lower price (other than on issuances, if any, pursuant to arrangements entered into reported prior to the effective date).  In the event that lower priced stock or warrants are issued during the protected period all the September warrants will be re-priced but no additional warrants will be due.  The Company determined that the warrants should be accounted for as an embedded derivative. The derivate was valued at $189,000 and accounted for as an embedded derivative liability with the offsetting charge recorded as a debt discount. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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|   | · | Non recurrence of costs of $5.6 million incurred in connection with conversion of certain related party loans payable into equity.  In September 2009, Toucan Partners agreed to convert $1,156,718, representing principal and accrued interest (including a default penalty of 0.25% per month) outstanding on the $1.0 million loan made to the Company on August 19, 2008, and $552,738, representing principal and accrued interest (including a default penalty of 0.25% per month) outstanding on a loan made to the Company on December 22, 2008, into 8,547,280 shares of the Company’s common stock.  Additionally in connection with the conversions the Company issued Toucan Partners warrants to purchase 842,375 shares at an exercise price of $0.20 per share and warrants to purchase 513,841 shares at an exercise price of $0.41 per share. The value of the stock issued to Toucan Partners in excess of the carrying amount of the loans and accrued interest payable amounted to, $4,701,004, and together with the fair value of the warrants, of $916,716, was charged to loan conversion inducement expense in the accompanying consolidated statements of operations during the quarter ended September 30, 2009. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                             |   | Nine Months Ended |    |         |             |   |
|----------------------------------|--------|-----------------------------|---------|--------------|------------------|--------|
|                             |   | September30,2009            |    |         | September30,2010 |   |   | Change |   |
| Net cash provided by (used in):  |   |                        |    |         |             |   |   |   |   |
| Operating activities             |   | $                           | (3,980) |         |             | $      | (6,232 | ) |   | $ | (2,252 | )  |
| Investing activities             |   |                        | (2)     |         |             |   | (41 | )  |   |   | (39 | )  |
| Financing activities             |   |                        | 4,109   |         |             |   | 6,357 |   |   |   | 2,248 |   |
| Effect of exchange rates on cash |   |                        | (28)    |    |             |   | (69) |   |   |   | (41) |   |
| Increase in cash                 |   | $                           | 99      |         |             | $      | 15 |   |   | $ | (84) |   |

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| (i)  | The Company's process for internally reporting material information in a systematic manner to allow for timely filing of material information is ineffective, due to its inherent limitations from being a small company, and there exist material weaknesses in internal control over financial reporting that contribute to the weaknesses in our disclosure controls and procedures.  These weaknesses include the lack of: |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | appropriate segregation of duties; |
|--------|--------|------------------------------------|

|   | · | appropriate oversight and review; |
|--------|--------|-----------------------------------|

|   | · | internal accounting technical expertise; |
|--------|--------|------------------------------------------|

|   | · | preparation, review and verification of internally developed documentation; |
|--------|--------|-----------------------------------------------------------------------------|

|   | · | controls in place to insure that all material developments impacting the financial statements are reflected; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------|

|   | · | executed agreements for significant contracts. |
|--------|--------|------------------------------------------------|

| (ii)  | Lack of a sufficient number of independent directors for our board and audit committee.  We currently only have one independent director on our board, which is comprised of three directors, and on our audit committee.  Although we are considered a controlled company, whereby a group holds more than 50% of the voting power, and as such are not required to have a majority of our board of directors be independent it is our intention to have a majority of independent directors in due course. |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii)  | Lack of a financial expert on our audit committee.  We currently do not have an audit committee financial expert, as defined by SEC regulations on our audit committee as defined by the SEC. |
|-------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iv)  | Insufficient corporate governance policies.  Although we have a code of ethics which provides broad guidelines for corporate governance, our corporate governance activities and processes are not always formally documented.  Specifically, decisions made by the board to be carried out by management should be documented and communicated on a timely basis to reduce the likelihood of any misunderstandings regarding key decisions affecting our operations and management. |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (v)  | Inadequate approval and control over transactions and commitments made on our behalf by related parties.  Specifically, during the year certain related party transactions were not effectively communicated to all internal personnel who needed to be involved to account for and report the transaction in a timely manner.  This resulted in material adjustments during the quarterly reviews and annual audit, respectively, that otherwise would have been avoided if effective communication and approval processes had been maintained. |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 3.1    |   | Seventh Amended and Restated Certificate of Incorporation (3.1)(1)                                                                                                                                                                               |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                             |
| 3.2    |   | Third Amended and Restated Bylaws (3.1)(2)                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                             |
| 3.3    |   | Amendment to the Seventh Amended and Restated Certificate of Incorporation (3.2)(2)                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                             |
| 3.4    |   | Amendment to Seventh Amended and Restated Certificate of Incorporation (3.4)(3)                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                             |
| *31.1  |   | Certification of President (Principal Executive Officer and Principal Financial and Accounting Officer), Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|   |   |                                                                                                                                                                                                                                             |
| *32.1  |   | Certification of President, Chief Executive Officer and Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                               |

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| (1) | Incorporated by reference to the exhibit shown in the preceding parentheses filed with the Registrant’s registration statement Form S-1 (File No. 333-67350) on July 17, 2006. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Incorporated by reference to the exhibit shown in the preceding parentheses filed with the Registrant’s Current Report on Form 8-K on June 22, 2007. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Incorporated by reference to the exhibit shown in the preceding parentheses filed with the Post-Effective Amendment No. 2 to the Registrant’s Registration Statement on Form S-1 on January 28, 2008. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| * | Filed herewith. |
|---|-----------------|

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|               | NORTHWEST BIOTHERAPEUTICS, INC |
|--------------------|--------------------------------|
|               |                           |   |
| Dated: May 6, 2011 | By:                            | /s/ Alton L. Boynton |
|               |                           | Alton L. Boynton |
|               |                           | President and Chief Executive Officer |
|               |                           | Principal Executive OfficerPrincipal Financial and Accounting Officer |

| By:  | /s/ Linda M. Powers   |
|-----------|-----------------------|
|      | Linda m. Powers       |
|      | Director and Chairman |
|      |                  |
| By:  | /s/ Robert Farmer     |
|      | Robert Farmer         |
|      | Director              |

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| 3.1    |   | Seventh Amended and Restated Certificate of Incorporation (3.1)(1)                                                                                                                                                                               |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                             |
| 3.2    |   | Third Amended and Restated Bylaws (3.1)(2)                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                             |
| 3.3    |   | Amendment to the Seventh Amended and Restated Certificate of Incorporation (3.2)(2)                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                             |
| 3.4    |   | Amendment to Seventh Amended and Restated Certificate of Incorporation (3.4)(3)                                                                                                                                                             |
| *31.1  |   | Certification of President (Principal Executive Officer and Principal Financial and Accounting Officer), Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|   |   |                                                                                                                                                                                                                                             |
| *32.1  |   | Certification of President, Chief Executive Officer and Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                               |

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| (1) | Incorporated by reference to the exhibit shown in the preceding parentheses filed with the Registrant’s registration statement Form S-1 (File No. 333-67350) on July 17, 2006. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Incorporated by reference to the exhibit shown in the preceding parentheses filed with the Registrant’s Current Report on Form 8-K on June 22, 2007. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Incorporated by reference to the exhibit shown in the preceding parentheses filed with the Post-Effective Amendment No. 2 to the Registrant’s Registration Statement on Form S-1 on January 28, 2008. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| * | Filed herewith. |
|---|-----------------|

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