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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended September 30, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to            .
 Commission File Number 001-33451
 BIODEL INC.
 (Exact Name of Registrant as Specified in Its Charter)
 Delaware
    
    90-0136863(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification No.)100 Saw Mill RoadDanbury, CT
    
    06810(Address of Principal Executive Offices)
    
    (Zip Code)
 Registrants telephone number, including area code  (203) 796-5000  Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredCommon Stock, par value $0.01 per share
    
    The NASDAQ Global Market
 Securities registered pursuant to Section 12(g) of the Act:
None
 o þ
 o þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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BIODEL INC.
INDEX TO REPORT ON FORM 10-K
 PagePART IItem 1: Business
    
    
    2Item 1A: Risk Factors
    
    
    15Item 1B: Unresolved Staff Comments
    
    
    28Item 2: Properties
    
    
    28Item 3: Legal Proceedings
    
    
    28Item 4: Submission of Matters to Vote of Security Holders
    
    
    28PART IIItem 5: Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    29Item 6: Selected Financial Data
    
    
    30Item 7: Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    31Item 7A: Quantitative and Qualitative Disclosures About Market Risk
    
    
    41Item 8: Financial Statements and Supplementary Data
    
    
    41Item 9: Changes in and Disagreements With Accountants on Accounting and Financial Disclosures
    
    
    41Item 9A: Controls and Procedures
    
    
    41Item 9B: Other Information
    
    
    44PART IIIItem 10: Directors, Executive Officers and Corporate Governance
    
    
    45Item 11: Executive Compensation
    
    
    45Item 12: Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    45Item 13: Certain Relationships and Related Transactions, and Director Independence
    
    
    45Item 14: Principal Accountant Fees and Services
    
    
    45PART IVItem 15: Exhibits and Financial Statement Schedules
    
    
    45EX-10.19EX-10.20EX-10.22EX-21.1EX-23.1EX-31.01EX-31.02EX-32.01




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FORWARD-LOOKING STATEMENTS
   
    
    our ability to secure approval by the U.S. Food and Drug Administration, or FDA, for our
product candidates under Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act, or
FFDCA;
    
    our ability to file our planned New Drug Application, or NDA, for VIAject® in December
2009 and, once filed, the length of time that will elapse before our NDA is fully reviewed
by the FDA;
    
    our ability to secure approval by the FDA for VIAject® without conducting additional
pivotal clinical trials;
    
    our ability to market, commercialize and achieve market acceptance for VIAject®;
    
    the progress, timing or success of our product candidates, particularly VIAject®, and
that of our research, development and clinical programs, including any resulting data
analyses;
    
    our ability to enter into collaboration arrangements for the commercialization of our
product candidates and the success or failure of any such collaborations into which we
enter, or our ability to commercialize our product candidates ourselves;
    
    our ability to enforce our patent for VIAject® and our ability to secure additional
patents for VIAject® and for our other product candidates;
    
    our ability to protect our intellectual property and operate our business without
infringing upon the intellectual property rights of others;
    
    the degree of clinical utility of our products;
    
    the ability of our major suppliers, including suppliers of insulin, to produce our
product or products in our final dosage form;
    
    our commercialization, marketing and manufacturing capabilities and strategies; and
    
    our ability to accurately estimate anticipated operating losses, future revenues,
capital requirements and our needs for additional financing.
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PART I
 
 ITEM 1: BUSINESS
 Overview
 ®
   ® ® ® ® ® ®
 ® ® ® ®
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Our Strategy
  
    
    Obtain Regulatory Approval for VIAject®.Our current focus is to seek regulatory
approval for VIAject® in the major world markets starting with the United States.
    
    Continue the Development of VIAjects® commercial profile.We plan to conduct
additional clinical trials of VIAject®designed to enhance the product candidates
potential commercial differentiation compared to other leading meal-time insulin products.
    
    Commercialize our Product Candidates Through Strategic Collaborations.We intend to
fund our clinical trial programs through at least proof-of-concept by ourselves. However,
because our product candidates target large primary care markets, we intend to maximize the
commercial potential of our product candidates by selectively entering into strategic
arrangements with leading pharmaceutical or biotechnology companies for the
commercialization of our product candidates. Because we are focusing on therapeutic
indications in large markets, we believe that these larger companies have the marketing,
sales and financial resources to maximize the commercial potential of our products.
    
    Focus on the Section505(b)(2)Regulatory Approval Pathway.Using our VIAdel
technology, we seek to reformulate existing drugs with ingredients that are generally
regarded as safe by the FDA. We believe that this approach to drug development will allow
us to use the abbreviated development pathway of Section 505(b)(2) of the FFDCA, which can
result in substantially less time and cost in bringing a new drug to market. We intend to
continue to focus our efforts on reformulating new product candidates for which we will be
able to seek regulatory approval pursuant to Section 505(b)(2) NDAs.
    
    Pursue Additional Product Candidates.In addition to our pivotal Phase 3 clinical
trials of VIAject®, we have conducted a Phase 1 clinical trial of VIAtab, our sublingual
insulin product candidate. In 2010 we may allocate limited resources to developing our
VIAtab formulation.
 Diabetes and the Insulin Market
 Diabetes Overview
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New England Journal of Medicine
 First Phase Insulin Release
 
 Current Treatments for Diabetes and their Limitations
     ® ® ®
 The Biodel Solution
 ®
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® ®
 VIAject®
 ® ® ®
 Potential Advantages of VIAject® over Existing Insulin Treatments
 ®
 
    
    In our Phase 1 clinical trial in volunteers without diabetes, and in our Phase 1/2
clinical trials in patients with Type 1 diabetes, VIAject® reached the blood and exerted
blood glucose lowering activity more rapidly than the rapid-acting insulin analog,
Humalog®, and the regular human recombinant insulin, Humulin® R. Accordingly, we believe
VIAject® more closely mimics the first-phase insulin release of healthy individuals at the
beginning of a meal, which we believe reduces the risks of hyperglycemia and hypoglycemia.
    
    In our analysis of the data from of our pivotal Phase 3 clinical trial in patients with
Type 1 diabetes, we found that patients receiving VIAject®, when compared to those
receiving Humulin® R, experienced fewer severe hypoglycemic events and did not gain weight,
while those receiving Humulin® R did. In our analysis of the data from our pivotal Phase 3
clinical trial in patients with Type 2 diabetes, we found that patients receiving VIAject®,
when compared to those receiving Humulin® R, experienced fewer mild and moderate, or
non-severe, hypoglycemic events and gained less weight. Accordingly, we believe VIAject®
may be a safer form of mealtime insulin therapy than is currently available to patients
with Type 1 or Type 2 diabetes.
 Clinical Trials of VIAject®
 Phase 1 and Phase 2 Clinical Trials. ® ® ® ®
 ® ® ® ® ® ® ® ® ® ®
 ® ® ® ® ®
 ® ® ® ® ® ® ® ® ® ® ® ®
 Pivotal Phase 3 Clinical Trials. ® ® ® ®
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® ®
 ® ®
 ® ®
 ® ® ® ® ® ®
 ® ® ® ® ® ® ® ®
 ® ® ® ® ®
 ®
 Bioequivalence and Tolerability Trials. ® ® ®
 ® ®
 ® ® ® ® ® ®
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® ®
 Regulatory Status. ® ® ® ®
 Additional Pipeline Opportunities
 in vitro
 Our VIAdel Technology
    Government Regulation
  United States Government Regulation
  
    
    completion of extensive nonclinical laboratory tests, animal studies and formulation
studies, all performed in accordance with the FDAs Good Laboratory Practice, or GLP,
regulations;
    
    submission to the FDA of an IND which must become effective before human clinical trials
may begin;
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
    
    for some products, performance of adequate and well-controlled human clinical trials in
accordance with the FDAs regulations, including Good Clinical Practices, to establish the
safety and efficacy of the product candidate for each proposed indication;
    
    submission to the FDA of an NDA;
    
    satisfactory completion of an FDA preapproval inspection of the manufacturing facilities
at which the product is produced to assess compliance with current Good Manufacturing
Practice, or cGMP, regulations; and
    
    FDA review and approval of the NDA prior to any commercial marketing, sale or shipment
of the drug.
   Clinical Trials.
  
    
    Phase 1 clinical trials typically involve the initial introduction of the product
candidate into healthy human volunteers. In Phase 1 clinical trials, the product candidate
is typically tested for safety, dosage tolerance, absorption, metabolism, distribution,
excretion and pharmacodynamics.
    
    Phase 2 clinical trials are conducted in a limited patient population to gather evidence
about the efficacy of the product candidate for specific, targeted indications; to
determine dosage tolerance and optimal dosage; and to identify possible adverse effects and
safety risks.
    
    Phase 3 clinical trials are undertaken to evaluate clinical efficacy and to test for
safety in an expanded patient population at geographically dispersed clinical trial sites.
The size of Phase 3 clinical trials depends upon clinical and statistical considerations
for the product candidate and disease, but sometimes can include several thousand patients.
Phase 3 clinical trials are intended to establish the overall risk-benefit ratio of the
product candidate and provide an adequate basis for product labeling.
  New Drug Applications.
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Section 505(b)(2) NDAs.
  Patent Protections.
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Marketing Exclusivity.
   Other Regulatory Requirements.
 
    
    record-keeping requirements;
    
    reporting of adverse experiences with the drug;
    
    providing the FDA with updated safety and efficacy information;
    
    reporting on advertisements and promotional labeling;
    
    drug sampling and distribution requirements; and
    
    complying with electronic record and signature requirements.
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New Legislation.
  Regulations Outside the United States
   Competition
  ® ® ® ®
 ® ® ® ® ® ®
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®
  Intellectual Property and Proprietary Technology
  ®
 ®
  
    
    one granted United States patent, one foreign patent, and several pending United States
patent applications and corresponding foreign and international patent applications
relating to our VIAject® and VIAtab technology;
    
    one foreign patent and pending foreign patent applications relating to our technology
for enhancing delivery of drugs in a form for absorption through the skin into the blood, a
process known as transdermal drug delivery;
    
    one foreign patent, two pending United States patent applications and corresponding
foreign patent applications relating to sublingual and/or oral delivery devices that can be
used to deliver the certain insulin based products; and
    
    several United States patent applications and a corresponding international patent
applications relating to other early stage product candidates.
  ®
  Manufacturing
 ®
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® ®
 Sales and Marketing
 ®
  Employees
  Additional Information
 www.biodel.com. www.sec.gov.
 Executive Officers of the Registrant
  Name
    
    Age
    
    PositionDr. Solomon S. Steiner
    
    72
    
    Chairman, President and Chief Executive OfficerGerard Michel
    
    46
    
    Chief Financial Officer, Vice President, Corporate Development and TreasurerErik Steiner
    
    43
    
    Vice President, OperationsDr. Alan Krasner
    
    46
    
    Chief Medical OfficerPaul Bavier
    
    37
    
    General Counsel and Secretary
 Dr. Solomon S. Steiner
 Mr. Gerard Michel
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Mr. Erik Steiner
 Dr. Alan Krasner
 Mr. Paul Bavier
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PART II-OTHER INFORMATION
 
 ITEM 1A. RISK FACTORS
 Risks Related to Our Financial Position and Need for Additional Capital
 We have incurred significant losses since our inception. We expect to incur losses for the
foreseeable future and may never achieve or maintain profitability.
 ® ® ®
 
    
    submit our NDA for VIAject® in December 2009;
    
    continue our clinical trial extension program for the pivotal Phase 3 clinical trials of
VIAject®, which is designed to run through February 2010;
    
    conduct additional clinical trials of VIAject® to support our commercialization efforts
and, potentially, FDA approval;
    
    produce required validation batches of VIAject® vials, cartridges, and disposable pens
to support our NDA for VIAject®;
    
    purchase recombinant human insulin and other materials to build commercial supply
inventory for VIAject®; and
    
    conduct additional clinical development of our other product candidates.
  We will need substantial additional funding and may be unable to raise capital when needed, which
would force us to delay, reduce or eliminate our product development programs or commercialization
efforts.
 ®
 ® ® ® ®
  
    
    our ability to secure approval by the FDA for VIAject® under Section 505(b)(2) of the
FFDCA;
    
    our ability to file our NDA for VIAject® in December 2009 as planned and, once filed,
the length of time that will elapse before our NDA is fully reviewed by the FDA;
    
    the costs associated with preparing and submitting our Market Authorization Application,
or MAA, for VIAject® to the European Medicines Agency, or EMEA;
    
    our ability to market, commercialize and achieve market acceptance for product
candidates, particularly VIAject®;
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
    
    our ability to secure approval by the FDA for VIAject® without conducting additional
pivotal clinical trials;
    
    the FDAs findings regarding data anomalies observed in India in our Phase 3 clinical
trial of VIAject® for patients with Type 1 diabetes and the impact of those findings on the
timing of a regulatory approval;
    
    the size, endpoints and duration of additional clinical trials of VIAject® in patients
with Type 1 diabetes to support our commercialization efforts and, potentially, FDA
approval;
    
    the cost to fully develop the 100 IU/cc liquid formulation of VIAject®;
    
    our ability to establish that the 100 IU/cc liquid formulation of VIAject® is
well-tolerated in chronic use;
    
    the cost to develop an insulin pen program for use with VIAject®;
    
    the cost of purchasing recombinant human insulin and other materials to build commercial
supply inventory for VIAject®, taking into account currency exchange rate fluctuations;
    
    the costs of preparing, filing and prosecuting patent applications and maintaining,
enforcing and defending intellectual property-related claims;
    
    the cost associated with qualifying and obtaining regulatory approval of suppliers of
insulin and manufacturers of our product candidates;
    
    our ability to establish and maintain collaborations and the terms and success of the
collaborations, including the timing and amount of payments that we might receive from
potential strategic collaborators; and
    
    the continued participation of patients in our VIAject® Phase 3 clinical trial extension
program, which is designed to run through February 2010.
  Our short operating history may make it difficult for you to evaluate the success of our business
to date and to assess our future viability.
   Risks Related to the Development and Commercialization of Our Product Candidates
 We depend heavily on the success of our most advanced product candidate, VIAject®. The results
from our completed pivotal Phase 3 clinical trials of VIAject® may not be sufficient to file an
NDA for VIAject® or to obtain marketing approval from the FDA. If we are unable to commercialize
VIAject® or experience significant delays in doing so, our business will be materially harmed.
 ® ® ® ® ® ® ®
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We may never reinitiate significant expenditures on our earlier stage product candidates.
 ® ®
 The results of clinical trials do not ensure success in future clinical trials or commercial success.
 ® ® ® ®
 
    
    successful completion of preclinical development and clinical trials;
    
    our ability to identify and enroll patients who meet clinical trial eligibility
criteria;
    
    receipt of marketing approvals from the FDA and similar regulatory authorities outside
the United States, including for the liquid formulation of VIAject®;
    
    establishing that our liquid formulation of VIAject® is well-tolerated in chronic use;
    
    establishing commercial manufacturing capabilities through arrangements with third-party
manufacturers;
    
    launching commercial sales of the products, whether alone or in collaboration with
others;
    
    competition from other products; and
    
    a continued acceptable safety and tolerability profile of the products following
approval.
 If the FDA does not approve our NDA, or if our clinical trials are delayed or do not produce
positive results, we may incur additional costs and ultimately be unable to commercialize our
product candidates.
 ® ®
 
    
    the FDA may require us to conduct additional clinical trials of VIAject® prior to
accepting our NDA for filing or following its review of our NDA based on data from India in
one of our pivotal Phase 3 clinical trials that we found to be anomalous when compared to
data from the United States and Germany for the same clinical trial;
    
    the number of patients required for our clinical trials may be larger than we
anticipate, enrollment in our clinical trials may be slower than we currently anticipate,
or participants may drop out of our clinical trials at a higher rate than we anticipate,
any of which would result in significant delays;
    
    our third-party contractors may fail to comply with regulatory requirements or meet
their contractual obligations to us in a timely manner;
    
    we might have to suspend or terminate our clinical trials if the participants are being
exposed to unacceptable health risks;
    
    regulators or institutional review boards may require that we hold, suspend or terminate
clinical research for various reasons, including noncompliance with regulatory
requirements;
    
    the cost of our clinical trials may be greater than we anticipate;
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
    
    the supply or quality of our product candidates or other materials necessary to conduct
our clinical trials may be insufficient or inadequate; and
    
    the effects of our product candidates may not be the desired effects or may include
undesirable side effects or the product candidates may have other unexpected
characteristics.
  
    
    be delayed in obtaining marketing approval for our product candidates;
    
    not be able to obtain marketing approval;
    
    obtain approval for indications that are not as broad as intended; or
    
    have the product removed from the market after obtaining marketing approval.
  If our product candidates are found to cause undesirable side effects we may need to delay or
abandon our development and commercialization efforts.
  
    
    a change in the labeling statements or withdrawal of FDA or other regulatory approval of
the product;
    
    a change in the way the product is administered; or
    
    the need to conduct additional clinical trials.
  ® ® ® ®
 The commercial success of any product candidates that we may develop, including VIAject® and
VIAtab  will depend upon the degree of market acceptance by physicians, patients, healthcare
payors and others in the medical community.
 ® ®
  
    
    the willingness and ability of patients and the healthcare community to adopt our
technology;
    
    the ability to manufacture our product candidates in sufficient quantities with
acceptable quality and to offer our product candidates for sale at competitive prices;
    
    the perception of patients and the healthcare community, including third-party payors,
regarding the safety, efficacy and benefits of our product candidates compared to those of
competing products or therapies;
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
    
    the convenience and ease of administration of our product candidates relative to
existing treatment methods, such as our ability to gain regulatory approval for our liquid
100 IU/cc formulation of VIAject® and the degree to which injection site discomfort may be
associated with this formulation;
    
    the label and promotional claims allowed by the FDA, such as, in the case of VIAject®,
claims relating to glycemic control, hypoglycemia, weight gain, injection site discomfort,
expiry dating and required handling conditions;
    
    the pricing and reimbursement of our product candidates relative to existing treatments;
and
    
    marketing and distribution support for our product candidates.
 If we fail to enter into strategic collaborations for the commercialization of our product
candidates or if our collaborations are unsuccessful, we may be required to establish our own
sales, marketing, manufacturing and distribution capabilities which will be expensive, require
additional capital we do not currently have, and could delay the commercialization of our product
candidates and have a material and adverse affect on our business.
   If we are unable to obtain adequate reimbursement from governments or third-party payors for any
products that we may develop or if we are unable to obtain acceptable prices for those products,
they may not be purchased or used and our revenues and prospects for profitability will suffer.
  
    
    a covered benefit under its health plan;
    
    safe, effective and medically necessary;
    
    appropriate for the specific patient;
    
    cost-effective; and
    
    neither experimental nor investigational.
  We are subject to pricing pressures and uncertainties regarding Medicare reimbursement and reform.
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Governments outside the United States tend to impose strict price controls, which may adversely
affect our revenues, if any.
   Product liability lawsuits against us could cause us to incur substantial liabilities and to limit
commercialization of any products that we may develop.
  
    
    decreased demand for any product candidates or products that we may develop;
    
    injury to our reputation;
    
    withdrawal of clinical trial participants;
    
    costs to defend the related litigation;
    
    substantial monetary awards to trial participants or patients;
    
    loss of revenue; and
    
    the inability to commercialize any products that we may develop.
 ®
 We face substantial competition in the development of our product candidates which may result in
others developing or commercializing products before or more successfully than we do.
 ® ® ® ® ® ® ® ®
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
    
    significantly greater financial, technical and human resources than we have and may be
better equipped to discover, develop, manufacture and commercialize product candidates;
    
    more extensive experience in preclinical testing and clinical trials, obtaining
regulatory approvals and manufacturing and marketing pharmaceutical products;
    
    product candidates that have been approved or are in late-stage clinical development; or
    
    collaborative arrangements in our target markets with leading companies and research
institutions.
 Our product candidates may be rendered obsolete by technological change.
  Our business activities involve the storage and use of hazardous materials, which require
compliance with environmental and occupational safety laws regulating the use of such materials.
If we violate these laws, we could be subject to significant fines, liabilities or other adverse
consequences.
  Risks Related to Our Dependence on Third Parties
 Use of third parties to manufacture our product candidates may increase the risks that we will not
have sufficient quantities of our product candidates or such quantities at an acceptable cost, or
that our suppliers will not be able to manufacture our products in their final dosage form. In any
such case, clinical development and commercialization of our product candidates could be delayed,
prevented or impaired.
 ®
 ®
  
    
    reliance on the third party for regulatory compliance and quality assurance;
    
    the possible breach of the manufacturing agreement by the third party because of factors
beyond our control; and
    
    the possible refusal by the third party to support our manufacturing programs, based on
its own business priorities, at a time that is costly or inconvenient for us.
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We rely on third parties to conduct our clinical trials and those third parties may not perform
satisfactorily, including failing to meet established deadlines for the completion of such trials.
  If our suppliers, principally our sole insulin supplier, fail to deliver materials and provide
services needed for the production of VIAject® and VIAtab in a timely and sufficient manner, or
if they fail to comply with applicable regulations, clinical development or regulatory approval of
our product candidates or commercialization of our products could be delayed, producing additional
losses and depriving us of potential product revenue.
  ®
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Risks Related to Our Intellectual Property
 If we are unable to protect our intellectual property rights, our competitors may develop and
market similar or identical products that may reduce demand for our products, and we may be
prevented from establishing collaborative relationships on favorable terms.
  
    
    receiving patent protection for our product candidates;
    
    maintaining our trade secrets;
    
    not infringing on the proprietary rights of others; and
    
    preventing others from infringing our proprietary rights.
  ®
 ®
   We may become involved in lawsuits and administrative proceedings to protect, defend or enforce
our patents that would be expensive and time-consuming.
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Claims by other parties that we infringe or have misappropriated their proprietary technology may
result in liability for damages, royalties, or other payments, or stop our development and
commercialization efforts.
     Risks Related to Regulatory Approval of Our Product Candidates
 If we fail to submit our NDA for VIAject® as we intend, or if we are unable to obtain required
regulatory approvals, we will not be able to commercialize VIAject® as planned, or at all, and our
ability to generate revenue will be materially impaired.
 ® ® ®
 ® ® ® ® ® ®
 If the FDA does not believe that our product candidates satisfy the requirements for the Section
5 05(b)(2) approval procedure, the approval pathway will take longer and cost more than anticipated
and in either case may not be successful.
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®
  ®
 Any product for which we obtain marketing approval could be subject to restrictions or withdrawal
from the market and we may be subject to penalties if we fail to comply with regulatory
requirements or if we experience unanticipated problems with our products, when and if any of them
are approved.
   
    
    restrictions on such products manufacturers or manufacturing processes;
    
    restrictions on the marketing or distribution of a product;
    
    warning letters;
    
    withdrawal of the products from the market;
    
    refusal to approve pending applications or supplements to approved applications that we
submit;
    
    recall of products;
    
    fines, restitution or disgorgement of profits or revenue;
    
    suspension or withdrawal of regulatory approvals;
    
    refusal to permit the import or export of our products;
    
    product seizure;
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
    
    injunctions; or
    
    imposition of civil or criminal penalties.
 Legislation may make it more difficult and costly for us to obtain regulatory approval of our
product candidates and to produce, market and distribute our existing products.
   Failure to obtain regulatory approval in international jurisdictions would prevent us from
marketing our products abroad.
  Reports of side effects or safety concerns in related technology fields or in other companies
clinical trials could delay or prevent us from obtaining regulatory approval or negatively impact
public perception of our product candidates.
  Risks Related to Employee Matters and Managing Growth
 Our future success depends on our ability to retain our chief executive officer and other key
executives and to attract, retain and motivate qualified personnel.
   We may expand our development, regulatory and sales and marketing capabilities, and as a result,
we may encounter difficulties in managing our growth, which could disrupt our operations.
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®
 Risks Related to Our Common Stock
 Our executive officers, directors and principal stockholders have significant ability to control
all matters submitted to stockholders for approval.
  Provisions in our corporate charter documents and under Delaware law could make an acquisition of
us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our
stockholders to replace or remove our current management.
   
    
    establish a classified board of directors such that not all members of the board are
elected at one time;
    
    allow the authorized number of our directors to be changed only by resolution of our
board of directors;
    
    limit the manner in which stockholders can remove directors from the board;
    
    establish advance notice requirements for stockholder proposals that can be acted on at
stockholder meetings and nominations to our board of directors;
    
    require that stockholder actions must be effected at a duly called stockholder meeting
and prohibit actions by our stockholders by written consent;
    
    limit who may call stockholder meetings;
    
    authorize our board of directors to issue preferred stock without stockholder approval,
which could be used to institute a stockholder rights plan or poison pill that would work
to dilute the stock ownership of a potential hostile acquirer, effectively preventing
acquisitions that have not been approved by our board of directors; and
    
    require the approval of the holders of at least 75% of the votes that all our
stockholders would be entitled to cast to amend or repeal certain provisions of our charter
or bylaws.
  If our stock price is volatile, purchasers of our common stock could incur substantial losses.
  
    
    results of clinical trials of our product candidates or those of our competitors;
    
    regulatory or legal developments in the United States and other countries;
    
    variations in our financial results or those of companies that are perceived to be
similar to us;
 27




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##### Table of Contents




    
    developments or disputes concerning patents or other proprietary rights;
    
    the recruitment or departure of key personnel;
    
    changes in the structure of healthcare payment systems;
    
    market conditions in the pharmaceutical and biotechnology sectors and issuance of new or
changed securities analysts reports or recommendations;
    
    general economic, industry and market conditions; and
    
    the other factors described in this Risk Factors section.
 We have never paid any cash dividends on our capital stock and we do not anticipate paying any
cash dividends in the foreseeable future.
  A significant portion of our total outstanding shares are restricted from immediate resale but may
be sold into the market in the near future. This could cause the market price of our common stock
to drop significantly, even if our business is doing well.
  We incur substantial costs as a result of operating as a public company, and our management is
required to devote substantial time to comply with public company regulations.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
   
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
  28




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##### Table of Contents



PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 Market Information
   Quarter Ended
    
    High
    
    LowDecember 31, 2008
    
    $
    4.99
    
    
    $
    1.62March 31, 2009
    
    $
    6.00
    
    
    $
    3.29June 30, 2009
    
    $
    6.02
    
    
    $
    3.64September 30, 2009
    
    $
    5.48
    
    
    $
    4.46
  Holders
  Dividends
  Equity Compensation Plan Information
  Issuer Purchases of Equity Securities
  29




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##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA
  Year Ended September 30,2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009(In thousands, except share and per share amounts)Statement of operations data:Revenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating expenses:Research and development
    
    
    2,666
    
    
    
    5,987
    
    
    
    15,939
    
    
    
    32,554
    
    
    
    32,325General and administrative
    
    
    724
    
    
    
    1,548
    
    
    
    8,386
    
    
    
    14,800
    
    
    
    10,994Total operating expenses
    
    
    3,390
    
    
    
    7,535
    
    
    
    24,325
    
    
    
    47,354
    
    
    
    43,319Other (income) and expense:Interest and other income
    
    
    (9
    )
    
    
    (182
    )
    
    
    (1,902
    )
    
    
    (3,010
    )
    
    
    (386
    )Interest expense
    
    
    
    
    
    
    78
    
    
    
    
    
    
    
    
    
    
    
    Loss on settlement of debt
    
    
    
    
    
    
    627
    
    
    
    
    
    
    
    
    
    
    
    Operating loss before tax provision
(benefit)
    
    
    (3,381
    )
    
    
    (8,058
    )
    
    
    (22,423
    )
    
    
    (44,344
    )
    
    
    (42,933
    )Tax provision (benefit)
    
    
    2
    
    
    
    10
    
    
    
    125
    
    
    
    (983
    )
    
    
    337Net loss
    
    
    (3,383
    )
    
    
    (8,068
    )
    
    
    (22,548
    )
    
    
    (43,361
    )
    
    
    (43,270
    )Charge for accretion of beneficial
conversion rights
    
    
    
    
    
    
    (603
    )
    
    
    
    
    
    
    
    
    
    
    Deemed dividend  warrants
    
    
    
    
    
    
    
    
    
    
    (4,457
    )
    
    
    
    
    
    
    Net loss applicable to common
stockholders
    
    $
    (3,383
    )
    
    $
    (8,671
    )
    
    $
    (27,005
    )
    
    $
    (43,361
    )
    
    $
    (43,270
    )Net loss per share  basic and diluted
    
    $
    (0.56
    )
    
    $
    (1.05
    )
    
    $
    (1.76
    )
    
    $
    (1.94
    )
    
    $
    (1.82
    )Weighted average shares outstanding 
basic and diluted
    
    
    6,080,746
    
    
    
    8,252,113
    
    
    
    15,354,898
    
    
    
    22,390,434
    
    
    
    23,746,598As of September 30,2005
    
    2006
    
    2007
    
    2008
    
    2009(In thousands)Balance sheet data:Cash, cash equivalents and marketable
investment securities
    
    $
    368
    
    
    $
    17,539
    
    
    $
    80,022
    
    
    $
    90,283
    
    
    $
    54,640Working capital (deficit)
    
    
    (98
    )
    
    
    15,307
    
    
    
    75,244
    
    
    
    84,377
    
    
    
    46,787Total assets
    
    
    1,195
    
    
    
    18,659
    
    
    
    82,506
    
    
    
    97,511
    
    
    
    59,625Deficit accumulated during the development stage
    
    
    (4,157
    )
    
    
    (12,828
    )
    
    
    (39,833
    )
    
    
    (83,194
    )
    
    
    (126,464
    )Total stockholders equity
    
    
    654
    
    
    
    16,348
    
    
    
    77,223
    
    
    
    88,487
    
    
    
    50,538
 30




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##### Table of Contents



ITEM 7.
    
    MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 You should read the following discussion and analysis of our financial condition and results
of operations together with our financial statements and the related notes and other financial
information included elsewhere in this Form 10-K . Some of the information in this discussion and
analysis or set forth elsewhere in this Form 10-K , including our plans and strategies for our
business, includes forward-looking statements which involve risks and uncertainties. Please review
the Forward-Looking Statements and the Risk Factors sections of this Form 10-K for a discussion
of important factors that could cause actual results to materially differ from those anticipated or
implied by the forward-looking statements contained in the following discussion and analysis.
 Overview
 ®
 ® ® ® ® ®
 ® ® ® ®
 ®
    Financial Operations Overview
 Revenues
  31




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##### Table of Contents



Research and Development Expenses
  
    
    external research and development expenses incurred under agreements with third-party
contract research organizations and investigative sites, third-party manufacturing
organizations and consultants;
    
    employee-related expenses, which include salaries and benefits for the personnel
involved in our preclinical and clinical drug development and manufacturing activities; and
    
    facilities, depreciation and other allocated expenses, which include direct and
allocated expenses for rent and maintenance of facilities, depreciation of leasehold
improvements and equipment and laboratory and other supplies.
 ®
 
    
    continue our clinical trial extension program for the pivotal Phase 3 clinical trials of
VIAject®, which is designed to run through February 2010;
    
    conduct additional clinical trials of VIAject® to support our commercialization efforts
and, potentially, FDA approval; and
    
    purchase recombinant human insulin and other materials to build commercial supply
inventory for VIAject®.
 ® ®
 ®
  December 3,2003(Inception) toYear Ended September 30,
    
    
    September 30,2007
    
    
    2008
    
    
    2009
    
    
    2009(In thousands)Research and development expenses:Pre-clinical expenses
    
    $
    1,983
    
    
    $
    4,230
    
    
    $
    2,709
    
    
    $
    12,253Manufacturing expenses
    
    
    2,141
    
    
    
    6,728
    
    
    
    11,674
    
    
    
    22,061Clinical/regulatory expenses
    
    
    11,815
    
    
    
    21,596
    
    
    
    17,942
    
    
    
    55,737Total
    
    $
    15,939
    
    
    $
    32,554
    
    
    $
    32,325
    
    
    $
    90,051
  
    
    our ability to secure approval by the FDA for our product candidates under Section
505(b)(2) of the Federal Food, Drug and Cosmetic Act, or the FFDCA;
    
    our ability to file our NDA for VIAject® in December 2009 as planned and, once filed,
the length of time that will elapse before our NDA is fully reviewed by the FDA;
    
    the costs associated with preparing and submitting our MAA for VIAject® to the EMEA;
    
    our ability to market, commercialize and achieve market acceptance for product
candidates, particularly VIAject®;
    
    our ability to secure approval by the FDA for VIAject® without conducting additional
pivotal clinical trials;
 32




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##### Table of Contents




    
    the FDAs findings regarding data anomalies observed in India in our Phase 3 clinical
trial of VIAject® for patients with Type 1 diabetes and the impact of those findings on the
timing of a regulatory approval;
    
    the size, endpoints and duration of additional clinical trials of VIAject® to support
our commercialization efforts and, potentially, FDA approval;
    
    the cost to fully develop the 100 IU/cc liquid formulation of VIAject®;
    
    our ability to establish that the 100 IU/cc liquid formulation of VIAject® is
well-tolerated in chronic use;
    
    the cost to develop an insulin pen program for use with VIAject®;
    
    the costs of pre-commercialization activities, including increased insulin purchases;
    
    the costs associated with qualifying and obtaining regulatory approval of suppliers of
insulin and manufacturers of our product candidates;
    
    the costs of preparing, filing and prosecuting patent applications and maintaining,
enforcing and defending intellectual property-related claims;
    
    the emergence of competing technologies and products and other adverse market
developments; and
    
    our ability to establish and maintain collaborations and the terms and success of the
collaborations, including the timing and amount of payments that we might receive from
potential strategic collaborators.
 ® ®
 General and Administrative Expenses
  ® ®
 Marketable Securities
  Pre-Launch Inventory
 ® ®
 Comprehensive Income (Loss)
  33




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##### Table of Contents



Interest Income
  ®
 Exercise of Warrants
    Critical Accounting Policies and Significant Judgments and Estimates
   Preclinical Study and Clinical Trial Accruals
  
    
    fees paid to contract research organizations in connection with preclinical and
toxicology studies and clinical trials;
    
    fees paid to investigative sites in connection with clinical trials;
    
    fees paid to contract manufacturers in connection with the production of clinical trial
materials; and
    
    professional service fees.
 
 34




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##### Table of Contents



Stock-Based Compensation
      Income Taxes
   35




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##### Table of Contents



Results of Operations
 Year Ended September 30, 2009 Compared to Year Ended September 30, 2008
 Revenue.
 Research and Development Expenses.
 Year EndedSeptember 30,
    
    
    Decrease2008
    
    
    2009
    
    
    $
    
    
    %In thousands, except per share amountsResearch and Development
    
    $
    32,554
    
    
    $
    32,325
    
    
    $
    229
    
    
    
    0.7
    %Percentage of net loss
    
    
    75.1
    %
    
    
    74.7
    %
 ® ®
 ® ® ®
 General and Administrative Expenses.
 Year EndedSeptember 30,
    
    
    Decrease2008
    
    
    2009
    
    
    $
    
    
    %In thousands, except per share amountsGeneral and Administrative
    
    $
    14,800
    
    
    $
    10,994
    
    
    $
    3,806
    
    
    
    25.7
    %Percentage of net loss
    
    
    33.1
    %
    
    
    25.5
    %
  ® ®
 36




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##### Table of Contents



Interest and Other Income.
 Year EndedSeptember 30,
    
    
    Decrease2008
    
    
    2009
    
    
    $
    
    
    %In thousands, except per share amountsInterest and Other Income
    
    $
    3,010
    
    
    $
    386
    
    
    $
    2,624
    
    
    
    87.2
    %Percentage of net loss
    
    
    6.8
    %
    
    
    0.9
    %
  Interest Expense.
 Net Loss and Net Loss per Share.
 Year EndedSeptember 30,
    
    
    Decrease2008
    
    
    2009
    
    
    $
    
    
    %In thousands, except per share amountsNet loss
    
    $
    (43,361
    )
    
    $
    (43,270
    )
    
    $
    91
    
    
    
    0.2
    %Net loss per share
    
    $
    (1.94
    )
    
    $
    (1.82
    )
 ® ®
 Year Ended September 30, 2008 Compared to Year Ended September 30, 2007
 Revenue.
 Research and Development Expenses.
 Year EndedSeptember 30,
    
    
    Increase2007
    
    
    2008
    
    
    $
    
    
    %In thousands, except per share amountsResearch and Development
    
    $
    15,939
    
    
    $
    32,554
    
    
    $
    16,615
    
    
    
    104.2
    %Percentage of net loss
    
    
    70.7
    %
    
    
    75.1
    %
 ® ®
 37




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##### Table of Contents



General and Administrative Expenses.
 Year EndedSeptember 30,
    
    
    Increase2007
    
    
    2008
    
    
    $
    
    
    %In thousands, except per share amountsGeneral and Administrative
    
    $
    8,386
    
    
    $
    14,800
    
    
    $
    6,414
    
    
    
    76.5
    %Percentage of net loss
    
    
    37.2
    %
    
    
    33.1
    %
  Interest and Other Income.
 Year EndedSeptember 30,
    
    
    Increase2007
    
    
    2008
    
    
    $
    
    
    %In thousands, except per share amountsInterest and Other Income
    
    $
    1,902
    
    
    $
    3,010
    
    
    $
    1,108
    
    
    
    58.3
    %Percentage of net loss
    
    
    8.4
    %
    
    
    6.8
    %
  Interest Expense.
 Deemed Dividend  Warrants.
 Net Loss Applicable to Common Stockholders and Net Loss per Share.
 Year EndedSeptember 30,
    
    
    Increase2007
    
    
    2008
    
    
    $
    
    
    %In thousands, except per share amountsNet loss applicable to common stockholders
    
    $
    (27,005
    )
    
    $
    (43,361
    )
    
    $
    16,356
    
    
    
    60.6
    %Net loss per share
    
    $
    (1.76
    )
    
    $
    (1.94
    )
  38




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##### Table of Contents



Liquidity and Capital Resources
 Sources of Liquidity and Cash Flows
      ®
   Funding Requirements
 ®
  
    
    our ability to secure approval by the FDA for VIAject® under Section 505(b)(2) of the
FFDCA;
    
    our ability to file our NDA for VIAject® in December 2009 as planned and, once filed,
the length of time that will elapse before our NDA is fully reviewed by the FDA;
 39




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##### Table of Contents




    
    the costs associated with preparing and submitting our MAA for VIAject® to the EMEA;
    
    our ability to market, commercialize and achieve market acceptance for product
candidates, particularly VIAject®;
    
    our ability to secure approval by the FDA for VIAject® without conducting additional
pivotal clinical trials;
    
    the FDAs findings regarding data anomalies observed in India in our Phase 3 clinical
trial of VIAject® for patients with Type 1 diabetes and the impact of those findings on the
timing of a regulatory approval;
    
    the size, endpoints and duration of additional clinical trials of VIAject® in patients
with Type 1 diabetes to support our commercialization efforts and, potentially, FDA
approval;
    
    the cost to fully develop the 100 IU/cc liquid formulation of VIAject®;
    
    our ability to establish that the 100 IU/cc liquid formulation of VIAject® is
well-tolerated in chronic use;
    
    the cost to develop an insulin pen program for use with VIAject®;
    
    the cost of purchasing recombinant human insulin and other materials to build commercial
supply inventory for VIAject®, taking into account currency exchange rate fluctuations;
    
    the costs of preparing, filing and prosecuting patent applications and maintaining,
enforcing and defending intellectual property-related claims;
    
    the cost associated with qualifying and obtaining regulatory approval of suppliers of
insulin and manufacturers of our product candidates;
    
    our ability to establish and maintain collaborations and the terms and success of the
collaborations, including the timing and amount of payments that we might receive from
potential strategic collaborators; and
    
    the continued participation of patients in our VIAject® Phase 3 clinical trial extension
program, which is designed to run through February 2010.
   40




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##### Table of Contents



Off-Balance Sheet Arrangements
  Contractual Obligations
  Less Than
    
    
    
    
    
    
    
    
    
    
    More ThanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsOperating lease obligations
    
    $
    2,563
    
    
    $
    537
    
    
    $
    1,561
    
    
    $
    465
    
    
    $
    Purchase commitments
    
    
    12,268
    
    
    
    5,025
    
    
    
    7,243
    
    
    
    
    
    
    
    Total fixed contractual obligations
    
    $
    14,831
    
    
    $
    5,562
    
    
    $
    8,804
    
    
    $
    465
    
    
    $
    
 Recent Accounting Pronouncements
   
 ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES
 Managements Evaluation of Disclosure Controls and Procedures
  41




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##### Table of Contents



Managements Annual Report on Internal Control over Financial Reporting
  
    
    pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the company;
    
    provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and
    
    provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the companys assets that could have a material effect
on the financial statements.
     42




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal Control  Integrated
Framework
      
 Changes in Internal Control over Financial Reporting
  43




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##### Table of Contents



ITEM 9B.
    
    OTHER INFORMATION
  44




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##### Table of Contents



PART III
  
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  www.biodel.com.
 
 ITEM 11.
    
    EXECUTIVE COMPENSATION
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  
 ITEM 13.
    
    CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 PART IV
 
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    45




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##### Table of Contents



SIGNATURES
  BIODEL INC.By:
    /s/   Solomon S. SteinerDr. Solomon S. SteinerPresident and Chief Executive Officer
Date: December 14, 2009  Signature
    
    Title
    
    Date/s/ Solomon S. Steiner

Solomon S. Steiner
    
    Chairman of the
Board, President
and Chief Executive
Officer (Principal
Executive Officer)
    
    December 14, 2009/s/ Gerard Michel

Gerard Michel
    
    Chief Financial
Officer, Vice
President,
Corporate
Development and
Treasurer
(Principal
Financial and
Accounting Officer)
    
    December 14, 2009/s/ Barry Ginsberg

Barry Ginsberg
    
    Director
    
    December 14, 2009/s/ David Kroin

David Kroin
    
    Director
    
    December 14, 2009/s/ Ira W. Lieberman

Ira W. Lieberman
    
    Director
    
    December 14, 2009/s/ Daniel Lorber

Daniel Lorber
    
    Director
    
    December 14, 2009/s/ Brian J.G. Pereira

Brian J.G. Pereira
    
    Director
    
    December 14, 2009/s/ Charles Sanders

Charles Sanders
    
    Director
    
    December 14, 2009/s/ Scott A. Weisman

Scott A. Weisman
    
    Director
    
    December 14, 2009
 46




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##### Table of Contents



Exhibits Index
 ExhibitNumber
    
    Description of Document3.1
    
    Registrants Second Amended and Restated Certificate
of Incorporation (Incorporated by reference to the
exhibits to the Registrants Registration Statement
on Form S-1 (333-140504)).3.2
    
    Registrants Amended and Restated Bylaws
(Incorporated by reference to the exhibits to the
Registrants Registration Statement on Form S-1
(333-140504)).4.1
    
    Specimen Common Stock Certificate (Incorporated by
reference to the exhibits to the Registrants
Registration Statement on Form S-1 (333-140504)).4.2
    
    Form of Warrant issued to Scott Weisman and McGinn
Smith Holdings LLC to Purchase Shares of Series A
convertible preferred stock (Incorporated by
reference to the exhibits to the Registrants
Registration Statement on Form S-1 (333-140504)).4.3
    
    Form of Subscription and Rights Agreement by and
among the Registrant and the holders of the Series A
convertible preferred stock (Incorporated by
reference to the exhibits to the Registrants
Registration Statement on Form S-1 (333-140504)).4.4
    
    Amended and Restated Registration Rights Agreement,
dated September 19, 2006, by and among the
Registrant and other parties named therein
(Incorporated by reference to the exhibits to the
Registrants Registration Statement on Form S-1
(333-140504)).10.1
    
    Form of Indemnity Agreement entered into between the
Registrant and each of Albert Cha, Robert Feldstein,
David Kroin, Daniel Lorber, Ira Lieberman, Charles
Sanders, Roderike Pohl, and Solomon Steiner, Paul
Sekhri, Erik Steiner, Samuel Wertheimer, R. Timmis
Ware, Andreas Pfützner, and Scott Weisman
(Incorporated by reference to the exhibits to the
Registrants Registration Statement on Form S-1
(333-140504)).10.2
    
    Amended and Restated 2004 Stock Incentive Plan
(Incorporated by reference to the exhibits to the
Registrants Registration Statement on Form S-1
(333-140504)).10.3
    
    2005 Employee Stock Purchase Plan (Incorporated by
reference to the exhibits to the Registrants
Registration Statement on Form S-1 (333-140504)).10.4
    
    2005 Non-Employee Directors Stock Option Plan
(Incorporated by reference to the exhibits to the
Registrants Registration Statement on Form S-1
(333-140504)).10.5
    
    Amended and Restated Employment Agreement, dated
March 20, 2007, as amended November 20, 2007,
between the Registrant and Solomon S. Steiner
(Incorporated by reference to the Registrants
Current Report on Form 8-K filed on November 20,
2007).10.7
    
    Amended and Restated Consulting Agreement entered
into on November 13, 2007, effective June 5, 2007,
between the Registrant and Dr. Andreas Pfützner
(Incorporated by reference to the Registrants
Current Report on Form 8-K filed on November 14,
2007).10.8
    
    Manufacturing Agreement, dated December 20, 2005
between the Registrant and Cardinal Health  PTS,
LLC (Incorporated by reference to the exhibits to
the Registrants Registration Statement on Form S-1
(333-140504)).10.9
    
    Change of Control Agreement entered into between the
Registrant and certain of its executive officers
(Incorporated by reference to the exhibits to the
Registrants Registration Statement on Form S-1
(333-140504)).10.10
    
    Executive Severance Agreement entered into between
the Registrant and certain of its executive officers
(Incorporated by reference to the exhibits to the
Registrants Registration Statement on Form S-1
(333-140504)).10.11
    
    Lease Agreement, dated February 2, 2004, between the
Registrant and Mulvaney Properties, LLC and
amendment thereto dated September 29, 2006
(Incorporated by reference to the exhibits to the
Registrants Registration Statement on Form S-1
(333-140504)).10.12
    
    Commercial Lease, dated July 23, 2007, by and
between the Registrant and Mulvaney Properties LLC.
(Incorporated by reference to the Registrants
Current Report on Form 8-K filed on July 27, 2007).
 47




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##### Table of Contents



ExhibitNumber
    
    Description of Document10.13
    
    Lease Amendment, dated October 1, 2007, between the Registrant and
Mulvaney Properties LLC (Incorporated by reference to the Registrants
Current Report on Form 8-K filed on October 4, 2007).10.14
    
    Amendment to Lease Agreement, dated February 2, 2004, as amended, by and
between the Registrant and Mulvaney Properties LLC. (Incorporated by
reference to the Registrants Current Report on Form 8-K filed on July 27,
2007).10.15
    
    Severance Agreement, dated November 14, 2007, by and between the
Registrant and F. Scott Reding (Incorporated by reference to the
Registrants Current Report on Form 8-K filed on November 14, 2007).10.16
    
    Offer Letter, dated November 12, 2007, by and between the Registrant and
Gerard J. Michel. (Incorporated by reference to the Registrants Current
Report on Form 8-K filed on November 14, 2007).10.17
    
    Form of Incentive Stock Option Agreement for 2004 Amended and Restated
Stock Incentive Plan. (Incorporated by reference to the Registrants
Annual Report on Form 10-K filed on December 21, 2007).10.18
    
    Form of Option Agreement for 2005 Non-Employee Directors Stock Option
Plan. (Incorporated by reference to the Registrants Annual Report on Form
10-K filed on December 21, 2007).10.19
    
    Base salaries of Executive Officers of the Registrant.10.20
    
    Summary of the Registrants Non-Employee Director Compensation.10.21
    
    Supply Agreement, dated July 7, 2008, between the Registrant and N.V.
Organon (Incorporated by reference to the Registrants Quarterly Report on
Form 10-Q filed on August 11, 2008).10.22*
    
    Letter Agreement, dated November 12, 2009, between the Registrant and N.V.
Organon, amending the Supply Agreement, dated July 7, 2008, between the
parties.21.1
    
    Subsidiaries of the Registrant.23.1
    
    Consent of BDO Seidman, LLP, Independent Registered Public Accounting Firm.24.1
    
    Powers of Attorney (included on signature page).31.01
    
    Chief Executive Officer  Certification pursuant to Rule 13a-14(a) or
Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.31.02
    
    Chief Financial Officer  Certification pursuant to Rule 13a-14(a) or
Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.32.01
    
    Chief Executive Officer and Chief Financial Officer  Certification
pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange
Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
 
 
    
    Confidential treatment granted with respect to certain portions of
this exhibit. Omitted portions have been filed separately with the
Securities and Exchange Commission.*
    
    Portions of this exhibit (indicated by asterisks) have been omitted
pursuant to a request for confidential treatment and have been filed
separately with the Securities and Exchange Commission. 48




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##### Table of Contents



BIODEL INC.
 INDEX TO FINANCIAL STATEMENTS
 PageReport of independent registered public accounting firm
    
    
    F-2Balance sheets
    
    
    F-3Statements of operations
    
    
    F-4Statements of stockholders equity
    
    
    F-5Statements of cash flows
    
    
    F-7Notes to financial statements
    
    
    F-8
 F-1




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
   ,
 Internal Control  Integrated Framework
  
 F-2




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 
 Balance Sheets
(In thousands, except share and per share amounts)
 September 30,2008
    
    
    2009ASSETSCurrent:Cash and cash equivalents
    
    $
    64,731
    
    
    $
    54,640Marketable securities, available for sale
    
    
    25,552
    
    
    
    Taxes receivable
    
    
    1,988
    
    
    
    752Prepaid and other assets
    
    
    1,130
    
    
    
    482Total current assets
    
    
    93,401
    
    
    
    55,874Property and equipment, net
    
    
    3,931
    
    
    
    3,695Intellectual property, net
    
    
    59
    
    
    
    56Other assets
    
    
    120
    
    
    
    Total assets
    
    $
    97,511
    
    
    $
    59,625LIABILITIES AND STOCKHOLDERS EQUITYCurrent:Accounts payable
    
    $
    813
    
    
    $
    1,007Accrued expenses:Clinical trial expenses
    
    
    4,163
    
    
    
    5,647Payroll and related
    
    
    1,420
    
    
    
    1,117Accounting and legal fees
    
    
    509
    
    
    
    325Severance
    
    
    268
    
    
    
    183Other
    
    
    839
    
    
    
    643Income taxes payable
    
    
    1,012
    
    
    
    165Total current liabilities
    
    
    9,024
    
    
    
    9,087CommitmentsStockholders equity:Preferred stock, $.01 par value; 50,000,000 shares authorized, none outstanding
    
    
    
    
    
    
    Common stock, $.01 par value; 100,000,000 shares authorized; 23,698,558 and
23,803,672 issued and outstanding
    
    
    237
    
    
    
    238Additional paid-in capital
    
    
    171,506
    
    
    
    176,764Accumulated other comprehensive loss
    
    
    (62
    )
    
    
    Deficit accumulated during the development stage
    
    
    (83,194
    )
    
    
    (126,464
    )Total stockholders equity
    
    
    88,487
    
    
    
    50,538Total liabilities and stockholders equity
    
    $
    97,511
    
    
    $
    59,625
  F-3




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 
 Statements of Operations
(In thousands, except share and per share amounts)
 December 3,2003(Inception) toYear Ended September 30,
    
    
    September 30,2007
    
    
    2008
    
    
    2009
    
    
    2009Revenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating expenses:Research and development
    
    
    15,939
    
    
    
    32,554
    
    
    
    32,325
    
    
    
    90,051General and administrative
    
    
    8,386
    
    
    
    14,800
    
    
    
    10,994
    
    
    
    36,645Total operating expenses
    
    
    24,325
    
    
    
    47,354
    
    
    
    43,319
    
    
    
    126,696Other (income) and expense:Interest and other income
    
    
    (1,902
    )
    
    
    (3,010
    )
    
    
    (386
    )
    
    
    (5,489
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78Loss on settlement of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    627Operating loss before tax provision
(benefit)
    
    
    (22,423
    )
    
    
    (44,344
    )
    
    
    (42,933
    )
    
    
    (121,912
    )Tax provision (benefit)
    
    
    125
    
    
    
    (983
    )
    
    
    337
    
    
    
    (508
    )Net loss
    
    
    (22,548
    )
    
    
    (43,361
    )
    
    
    (43,270
    )
    
    
    (121,404
    )Charge for accretion of beneficial
conversion rights
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (603
    )Deemed dividend  warrants
    
    
    (4,457
    )
    
    
    
    
    
    
    
    
    
    
    (4,457
    )Net loss applicable to common
stockholders
    
    $
    (27,005
    )
    
    $
    (43,361
    )
    
    $
    (43,270
    )
    
    $
    (126,464
    )Net loss per share  basic and diluted
    
    $
    (1.76
    )
    
    $
    (1.94
    )
    
    $
    (1.82
    )Weighted average shares outstanding 
basic and diluted
    
    
    15,354,898
    
    
    
    22,390,434
    
    
    
    23,746,598
  F-4




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 
 Statements of Stockholders Equity
(In thousands, except share and per share amounts)
 DeficitAccumulated
    
    
    AccumulatedCommon Stock
    
    
    Series A Preferred stock
    
    
    Series B Preferred stock
    
    
    Additional
    
    
    Other
    
    
    During the
    
    
    Total$01 Par Value
    
    
    $.01 Par Value
    
    
    $.01 Par Value
    
    
    Paid in
    
    
    Comprehensive
    
    
    Development
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Income (loss)
    
    
    Stage
    
    
    EquityShares issued to employees
    
    
    732,504
    
    
    $
    7
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    (7
    )
    
    $
    
    
    
    $
    
    
    
    $
    January 2004 Proceeds from sale of common stock
    
    
    4,581,240
    
    
    
    46
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,308
    
    
    
    
    
    
    
    
    
    
    
    1,354Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (774
    )
    
    
    (774
    )Balance, September 30, 2004
    
    
    5,313,744
    
    
    
    53
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,301
    
    
    
    
    
    
    
    (774
    )
    
    
    580Additional stockholder contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    514
    
    
    
    
    
    
    
    
    
    
    
    514Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    353
    
    
    
    
    
    
    
    
    
    
    
    353Shares issued to employees and directors for services
    
    
    42,656
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    61July 2005 Private placement  Sale of Series A preferred stock, net of issuance costs of $379
    
    
    
    
    
    
    
    
    
    
    569,000
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    2,460
    
    
    
    
    
    
    
    
    
    
    
    2,466Founders compensation contributed to capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63
    
    
    
    
    
    
    
    
    
    
    
    63Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,383
    )
    
    
    (3,383
    )Balance, September 30, 2005
    
    
    5,356,400
    
    
    
    54
    
    
    
    569,000
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    4,751
    
    
    
    
    
    
    
    (4,157
    )
    
    
    654Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,132
    
    
    
    
    
    
    
    
    
    
    
    1,132July 2006 Private placement  Sale of Series B preferred stock, net of issuance costs of $1,795
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,380,711
    
    
    
    54
    
    
    
    19,351
    
    
    
    
    
    
    
    
    
    
    
    19,405July 2006  Series B preferred stock units issued July 2006 to settle debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    817,468
    
    
    
    8
    
    
    
    3,194
    
    
    
    
    
    
    
    
    
    
    
    3,202Shares issued to employees and directors for services
    
    
    4,030
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    23Accretion of fair value of beneficial conversion charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    603
    
    
    
    
    
    
    
    (603
    )
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,068
    )
    
    
    (8,068
    )Balance, September 30, 2006
    
    
    5,360,430
    
    
    
    54
    
    
    
    569,000
    
    
    
    6
    
    
    
    6,198,179
    
    
    
    62
    
    
    
    29,054
    
    
    
    
    
    
    
    (12,828
    )
    
    
    16,348May 2007 Proceeds from sale of common stock
    
    
    5,750,000
    
    
    
    58
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78,697
    
    
    
    
    
    
    
    
    
    
    
    78,755Conversion of preferred stock on May 16, 2007
    
    
    6,407,008
    
    
    
    64
    
    
    
    (569,000
    )
    
    
    (6
    )
    
    
    (6,198,179
    )
    
    
    (62
    )
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,224
    
    
    
    
    
    
    
    
    
    
    
    4,224Shares issued to employees, non-employees and directors for services
    
    
    2,949
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    16Stock options exercised
    
    
    3,542
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    5March 2007 Warrants exercised
    
    
    2,636,907
    
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    397
    
    
    
    
    
    
    
    
    
    
    
    423Deemed dividend  warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,457
    
    
    
    
    
    
    
    (4,457
    )
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,548
    )
    
    
    (22,548
    )Balance, September 30, 2007
    
    
    20,160,836
    
    
    
    202
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    116,854
    
    
    
    
    
    
    
    (39,833
    )
    
    
    77,223Proceeds from sale of common stock
    
    
    3,260,000
    
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,785
    
    
    
    
    
    
    
    
    
    
    
    46,817Issuance of restricted stock
    
    
    9,714
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    172
    
    
    
    
    
    
    
    
    
    
    
    172Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,503
    
    
    
    
    
    
    
    
    
    
    
    6,503Stock options exercised
    
    
    174,410
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    901
    
    
    
    
    
    
    
    
    
    
    
    902Warrants exercised
    
    
    79,210
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    111
    
    
    
    
    
    
    
    
    
    
    
    112Net unrealized (loss) on Marketable Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (62
    )
    
    
    
    
    
    
    (62
    )Proceeds from sale of stock  ESPP
    
    
    14,388
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    180
    
    
    
    
    
    
    
    
    
    
    
    181Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,361
    )
    
    
    (43,361
    )Balance, September 30, 2008
    
    
    23,698,558
    
    
    $
    237
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    171,506
    
    
    $
    (62
    )
    
    $
    (83,194
    )
    
    $
    88,487
  F-5




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 Statements of Stockholders Equity
(In thousands, except share and per share amounts)
 DeficitAccumulated
    
    
    AccumulatedCommon Stock
    
    
    Series A Preferred stock
    
    
    Series B Preferred stock
    
    
    Additional
    
    
    Other
    
    
    During the
    
    
    Total$01 Par Value
    
    
    $.01 Par Value
    
    
    $.01 Par Value
    
    
    Paid in
    
    
    Comprehensive
    
    
    Development
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Income (loss)
    
    
    Stage
    
    
    EquityBalance, September 30, 2008
    
    
    23,698,558
    
    
    $
    237
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    171,506
    
    
    $
    (62
    )
    
    $
    (83,194
    )
    
    $
    88,487Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,064
    
    
    
    
    
    
    
    
    
    
    
    5,064Stock options exercised
    
    
    17,661
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    25Net unrealized gain on
Marketable Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62
    
    
    
    
    
    
    
    62Proceeds from sale of stock 
ESPP
    
    
    87,453
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    169
    
    
    
    
    
    
    
    
    
    
    
    170Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,270
    )
    
    
    (43,270
    )Balance, September 30, 2009
    
    
    23,803,672
    
    
    $
    238
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    176,764
    
    
    $
    
    
    
    $
    (126,464
    )
    
    $
    50,538
  F-6




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 
 Statements of Cash Flows
(In thousands, except share and per share amounts)
 December 3, 2003(Inception) toSeptember 30,2007
    
    
    2008
    
    
    2009
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (22,548
    )
    
    $
    (43,361
    )
    
    $
    (43,270
    )
    
    $
    (121,404
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    254
    
    
    
    567
    
    
    
    877
    
    
    
    2,149Founders compensation contributed to capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    271Share-based compensation for employees and directors
    
    
    3,567
    
    
    
    6,434
    
    
    
    4,970
    
    
    
    15,204Share-based compensation for non-employees
    
    
    657
    
    
    
    241
    
    
    
    94
    
    
    
    2,325Loss on settlement of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    627Write-off of capitalized patent expense
    
    
    
    
    
    
    208
    
    
    
    
    
    
    
    208Write-off of loan to related party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41(Increase) decrease in:Prepaid expenses and other assets
    
    
    (430
    )
    
    
    (745
    )
    
    
    768
    
    
    
    (482
    )Income taxes receivable
    
    
    
    
    
    
    (1,988
    )
    
    
    1,236
    
    
    
    (752
    )Increase (decrease) in:Accounts payable
    
    
    830
    
    
    
    (1,374
    )
    
    
    194
    
    
    
    1,007Income tax payable
    
    
    255
    
    
    
    917
    
    
    
    (847
    )
    
    
    165Deferred compensation
    
    
    (500
    )
    
    
    
    
    
    
    
    
    
    
    Accrued expenses and other liabilities
    
    
    2,406
    
    
    
    4,198
    
    
    
    715
    
    
    
    8,133Total adjustments
    
    
    7,039
    
    
    
    8,458
    
    
    
    8,007
    
    
    
    28,896Net cash used in operating activities
    
    
    (15,509
    )
    
    
    (34,903
    )
    
    
    (35,263
    )
    
    
    (92,508
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (1,315
    )
    
    
    (2,769
    )
    
    
    (637
    )
    
    
    (5,809
    )Purchase of marketable securities
    
    
    
    
    
    
    (25,614
    )
    
    
    
    
    
    
    (25,614
    )Sale of marketable securities
    
    
    
    
    
    
    
    
    
    
    25,614
    
    
    
    25,614Capitalized intellectual properties
    
    
    (66
    )
    
    
    (17
    )
    
    
    
    
    
    
    (298
    )Loan to related party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (41
    )Net cash provided by (used in) investing activities
    
    
    (1,381
    )
    
    
    (28,400
    )
    
    
    24,977
    
    
    
    (6,148
    )Cash flows from financing activities:Options exercised
    
    
    5
    
    
    
    902
    
    
    
    25
    
    
    
    932Warrants exercised
    
    
    423
    
    
    
    112
    
    
    
    
    
    
    
    535Deferred public offering costs
    
    
    (1,268
    )
    
    
    
    
    
    
    
    
    
    
    (1,458
    )Stockholder contribution
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,660Net proceeds from sale of Series A preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,466Net proceeds from employee stock purchase plan
    
    
    
    
    
    
    181
    
    
    
    170
    
    
    
    351Net proceeds from sale of common stock
    
    
    80,213
    
    
    
    46,817
    
    
    
    
    
    
    
    127,030Proceeds from bridge financing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,575Net proceeds from sale of Series B preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,205Net cash provided by financing activities
    
    
    79,373
    
    
    
    48,012
    
    
    
    194
    
    
    
    153,295Net increase (decrease) in cash and cash equivalents
    
    
    62,483
    
    
    
    (15,291
    )
    
    
    (10,091
    )
    
    
    54,640Cash and cash equivalents, beginning of period
    
    
    17,539
    
    
    
    80,022
    
    
    
    64,731
    
    
    
    Cash and cash equivalents, end of period
    
    $
    80,022
    
    
    $
    64,731
    
    
    $
    54,640
    
    
    $
    54,640Supplemental disclosures of cash flow information:Cash paid for interest and income taxes was:Interest
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    9Income taxes
    
    
    44
    
    
    
    88
    
    
    
    111
    
    
    
    246Non-cash financing and investing activities:Settlement of debt with Series B preferred stock
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    3,202Accrued expenses settled with Series B preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150Deemed dividend  warrants
    
    
    4,457
    
    
    
    
    
    
    
    
    
    
    
    4,457Accretion of fair value of beneficial charge on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    603Conversion of convertible preferred stock to common stock
    
    
    68
    
    
    
    
    
    
    
    
    
    
    
    68
  F-7




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 
 Notes to Financial Statement
(In thousands, except share and per share amounts)
 1. Business and Basis of Presentation
 Business
 ®
 Basis of Presentation
   2. Summary of Significant Accounting Policies
 Research and Development Costs
  Use of Estimates
  Cash and Cash Equivalents
  Marketable securities
  F-8




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 Notes to Financial Statement  (Continued)
(In thousands, except share and per share amounts)
 Fair Value of Financial Instruments
  Pre-Launch Inventory
 ® ®
 Intellectual Property
 ®
 Property and Equipment
  Impairment of Long-Lived Assets
  Comprehensive Income (Loss)
  Income Taxes
  F-9




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 Notes to Financial Statements  (Continued)
(In thousands, except share and per share amounts)
  Concentration of Risks and Uncertainties
  ® ®
   Share-Based Compensation
     F-10




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 Notes to Financial Statements  (Continued)
(In thousands, except share and per share amounts)
 Year Ended September 30,2007
    
    
    2008
    
    
    2009Expected life (in years)
    
    
    5.25
    
    
    
    5.25
    
    
    
    5.25Expected volatility
    
    
    60 - 70
    %
    
    
    57 - 60
    %
    
    
    59 - 68
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Risk-free interest rate
    
    
    4.23% - 4.96
    %
    
    
    2.36% - 4.42
    %
    
    
    1.00% - 3.19
    %Weighted-average grant date fair value
    
    $
    11.09
    
    
    $
    13.92
    
    
    $
    2.69
 Subsequent Events
  Recent Accounting Pronouncements
    F-11




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 Notes to Financial Statements  (Continued)
(In thousands, except share and per share amounts)
 3. Marketable Securities
      September 30, 2008Amortized
    
    
    Gross Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueShort term marketable securitiesCommercial paper
    
    $
    998
    
    
    $
    
    
    
    $
    (1
    )
    
    $
    997Certificates of deposits
    
    
    1,999
    
    
    
    1
    
    
    
    
    
    
    
    2,000US government agency securities
    
    
    10,170
    
    
    
    
    
    
    
    (54
    )
    
    
    10,116Corporate and agency bonds
    
    
    4,010
    
    
    
    
    
    
    
    (8
    )
    
    
    4,002Discount and bank notes
    
    
    8,437
    
    
    
    
    
    
    
    
    
    
    
    8,437Total
    
    $
    25,614
    
    
    $
    1
    
    
    $
    (63
    )
    
    $
    25,552
 F-12




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 Notes to Financial Statements  (Continued)
(In thousands, except share and per share amounts)
  4. Net Loss per Share
   Year Ended September 30,2007
    
    2008
    
    2009Common shares underlying warrants for Series A Preferred Stock
    
    
    198,025
    
    
    
    118,815
    
    
    
    118,815Stock options
    
    
    1,685,974
    
    
    
    3,135,390
    
    
    
    3,407,633
 5. Property and equipment
  September 30,2008
    
    
    2009Furniture and fixtures
    
    $
    313
    
    
    $
    318Leasehold improvements
    
    
    1,546
    
    
    
    1,549Construction-in-progress
    
    
    121
    
    
    
    15Laboratory equipment
    
    
    1,381
    
    
    
    1,612Manufacturing equipment
    
    
    144
    
    
    
    372Facility equipment
    
    
    50
    
    
    
    50Device development
    
    
    
    
    
    
    157Computer equipment and other
    
    
    1,150
    
    
    
    1,270Sub-Total
    
    
    4,705
    
    
    
    5,343Less: Accumulated depreciation and amortization
    
    
    774
    
    
    
    1,648Total
    
    $
    3,931
    
    
    $
    3,695
  6. Related Party Transactions
  Consulting and Clinical Research Services
  F-13




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 Notes to Financial Statements  (Continued)
(In thousands, except share and per share amounts)
   Issuance of Series A Convertible Preferred Stock
     Bridge Financing
   Issuance of Series B Convertible Preferred Stock
   F-14




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 Notes to Financial Statements  (Continued)
(In thousands, except share and per share amounts)
  Deferred Compensation
   7. Commitments
 Change of Control Agreements and Severance Agreements
   
    
    annual base salary earned through the termination date;
    
    in the event the executive officer satisfied the performance criteria for an annual
bonus prior to termination, a portion of the annual bonus based on the number of days
worked during the year;
    
    if the performance criteria were not fully satisfied, but the board of directors
determines that the criteria could have been satisfied had the executive officer remained
employed for the full fiscal year, an amount equal to the average of the annual bonus paid
to the executive officer over the last three fiscal years, portioned based on the number of
days worked during the year (the Average Annual Bonus);
    
    any compensation previously deferred by the executive officer and any accrued paid
time-off;
    
    annual base salary for a period of 18 months following the date of termination;
    
    health insurance and, under certain circumstances, life, disability and other insurance
benefits for a period of 18 months or until the executive officer qualifies for similar
benefits from another employer;
    
    150% of the Average Annual Bonus (paid in addition to the bonus described immediately
above);
 
 F-15




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 Notes to Financial Statements  (Continued)
(In thousands, except share and per share amounts)
 
    
    acceleration of all outstanding options; and
    
    extension of the exercisability of options.
   
    
    annual base salary earned through the termination date;
    
    in the event the executive officer satisfied the performance criteria for an annual
bonus prior to termination, a portion of the annual bonus based on the number of days
worked during the year;
    
    if the performance criteria were not fully satisfied, but the board of directors
determines that the criteria could have been satisfied had the executive officer remained
employed for the full fiscal year, the Average Annual Bonus;
    
    any compensation previously deferred by the executive officer and any accrued paid
time-off;
    
    annual base salary for a period of 18 months following the date of termination;
    
    health insurance for a period of 18 months or until the executive officer qualifies for
similar benefits from another employer;
    
    150% of the Average Annual Bonus (paid in addition to the bonus described immediately
above);
    
    acceleration of all outstanding options; and
    
    extension of the exercisability of the options.
  Former General Counsel Severance Agreement
  Former Chief Financial Officer Severance Agreement
  Leases
   F-16




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 Notes to Financial Statements  (Continued)
(In thousands, except share and per share amounts)
     Years Ending September 30,2010
    
    
    5372011
    
    
    5022012
    
    
    5192013
    
    
    5402014
    
    
    465Total
    
    $
    2,563
 Purchase Commitments
  Years Ending September 30,2010
    
    $
    5,0252011
    
    
    7,243Total
    
    $
    12,268
 8. Income Taxes
  F-17




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 Notes to Financial Statements  (Continued)
(In thousands, except share and per share amounts)
   Year Ended September 30,2007
    
    
    2008
    
    
    2009Balance, beginning of year
    
    $
    
    
    
    $
    75
    
    
    $
    988Increase related to current year tax position
    
    
    75
    
    
    
    913
    
    
    
    6Increase related to prior years tax position
    
    
    
    
    
    
    
    
    
    
    107Decrease related to prior years tax position
    
    
    
    
    
    
    
    
    
    
    (913
    )Balance, at end of year
    
    $
    75
    
    
    $
    988
    
    
    $
    188
   Year Ended September 30,2007
    
    
    2008
    
    
    2009Current expenseFederal
    
    $
    
    
    
    $
    
    
    
    $
    State
    
    
    125
    
    
    
    (983
    )
    
    
    337Deferred expense
    
    
    
    
    
    
    
    
    
    
    Actual tax provision (benefit)
    
    $
    125
    
    
    $
    (983
    )
    
    $
    337
  F-18




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 Notes to Financial Statement
(In thousands, except share and per share amounts)
  September 30,2008
    
    
    2009Deferred Tax AssetsNet operating losses
    
    $
    26,889
    
    
    $
    39,959Research and development credit
    
    
    1,652
    
    
    
    2,149Depreciation of fixed assets
    
    
    121
    
    
    
    284Other
    
    
    222
    
    
    
    802Total deferred tax asset
    
    
    28,884
    
    
    
    43,195Valuation Allowance
    
    
    (28,763
    )
    
    
    (43,195
    )Net Deferred Tax Assets
    
    
    121
    
    
    
    Deferred Tax LiabilitiesOther
    
    
    (121
    )
    
    
    Total deferred tax liabilities
    
    
    (121
    )
    
    
    Net Deferred Tax Asset (liabilities)
    
    $
    
    
    
    $
    
    Year EndedSeptember 30,2007
    
    
    2008
    
    
    2009Federal statutory rate
    
    
    34.00
    %
    
    
    34.00
    %
    
    
    34.00
    %Federal taxes at statutory rate
    
    $
    (9,080
    )
    
    $
    (15,077
    )
    
    $
    (14,597
    )Tax expense on permanent differences
    
    
    2,958
    
    
    
    2,293
    
    
    
    1,741Tax benefit on research and business credits
    
    
    (186
    )
    
    
    (325
    )
    
    
    (325
    )State taxes, net of federal tax effect
    
    
    33
    
    
    
    61
    
    
    
    43State benefit, net operating loss
    
    
    (1,877
    )
    
    
    (2,784
    )
    
    
    (1,249
    )Valuation allowance increase
    
    
    8,498
    
    
    
    14,972
    
    
    
    14,432Connecticut research and development refund
    
    
    
    
    
    
    (1,988
    )
    
    
    (40
    )Reserve for uncertain tax positions
    
    
    
    
    
    
    913
    
    
    
    6Other
    
    
    (221
    )
    
    
    952
    
    
    
    326Actual tax provision
    
    $
    125
    
    
    $
    (983
    )
    
    $
    337
 F-19




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 Notes to Financial Statement
(In thousands, except share and per share amounts)
 9. Stockholders Equity
 Common Stock
     Preferred Stock
  F-20




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 Notes to Financial Statements  (Continued)
(In thousands, except share and per share amounts)
 Series A Convertible Preferred Stock
  3 4
    Series B Convertible Preferred Stock
     F-21




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 Notes to Financial Statement
(In thousands, except share and per share amounts)
    Shares Reserved for Future Issuance
  2004 stock incentive plan
    
    
    4,700,0002005 employee stock purchase plan
    
    
    1,500,0002005 Non-employee directors stock option plan
    
    
    500,000Exercise of warrants issued to placement agent
    
    
    118,815Total
    
    
    6,818,815
 2004 Stock Incentive Plan, as amended
    2005 Employee Stock Purchase Plan
   F-22




---



##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 Notes to Financial Statement
(In thousands, except share and per share amounts)
  2005 Non-Employee Directors Stock Option Plan
    F-23




---



##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 Notes to Financial Statements  (Continued)
(In thousands, except share and per share amounts)
  Weighted Average
    
    
    AggregateNumber
    
    
    Exercise Price
    
    
    Intrinsic ValueBalance, September 30, 2004
    
    
    
    
    
    $
    Granted
    
    
    385,432
    
    
    
    1.41
    
    
    $
    1,526Outstanding balance, September 30, 2005
    
    
    385,432
    
    
    
    1.41
    
    
    $
    1,526Granted
    
    
    461,602
    
    
    
    5.65Forfeited, expired
    
    
    60,222
    
    
    
    3.40Outstanding balance, September 30, 2006
    
    
    786,812
    
    
    
    3.23
    
    
    $
    1,287Granted
    
    
    955,842
    
    
    
    13.96Exercised
    
    
    3,542
    
    
    
    1.41
    
    
    $
    14Forfeited, expired
    
    
    53,138
    
    
    
    5.65Outstanding balance, September 30, 2007
    
    
    1,685,974
    
    
    
    6.80
    
    
    $
    1,273Granted
    
    
    1,727,397
    
    
    
    16.88Exercised
    
    
    174,410
    
    
    
    5.18
    
    
    
    33Forfeited, expired
    
    
    103,571
    
    
    
    11.04Outstanding balance, September 30, 2008
    
    
    3,135,390
    
    
    $
    13.92
    
    
    $
    832Granted
    
    
    611,500
    
    
    
    2.69
    
    
    $
    1,682Exercised
    
    
    17,661
    
    
    
    1.41
    
    
    $
    70Forfeited, expired
    
    
    321,596
    
    
    
    13.88Outstanding balance, September 30, 2009
    
    
    3,407,633
    
    
    $
    11.81
    
    
    $
    2,514Exercisable shares, September 30, 2009
    
    
    1,818,056
    
    
    $
    10.66
    
    
    $
    1,464
 10. Employee Benefit Plan
  F-24




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 Notes to Financial Statements  (Continued)
(In thousands, except share and per share amounts)
 11. Reverse Split
  12. Summary Selected Quarterly Financial Data (Unaudited)
  Quarter Ended
(in thousands, except share and per share amounts)
 December 31,
    
    
    March 31,
    
    
    June 30,
    
    
    September 30,2008
    
    
    2009
    
    
    2009
    
    
    2009Revenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Net loss
    
    $
    (10,024
    )
    
    $
    (11,629
    )
    
    $
    (11,148
    )
    
    $
    (10,469
    )Basic and
diluted net loss
per common share
    
    $
    (0.42
    )
    
    $
    (0.49
    )
    
    $
    (0.47
    )
    
    $
    (0.44
    )Weighted
average common
shares basic and
diluted
    
    
    23,706,148
    
    
    
    23,717,800
    
    
    
    23,759,675
    
    
    
    23,802,286
 Quarter Ended
(in thousands, except share and per share amounts)
 December 31,
    
    
    March 31,
    
    
    June 30,
    
    
    September 30,2007
    
    
    2008
    
    
    2008
    
    
    2008Revenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Net loss
    
    $
    (11,025
    )
    
    $
    (9,557
    )
    
    $
    (10,114
    )
    
    $
    (12,665
    )Basic and
diluted net loss
per common share
    
    $
    (0.55
    )
    
    $
    (0.43
    )
    
    $
    (0.43
    )
    
    $
    (0.53
    )Weighted
average common
shares basic and
diluted
    
    
    20,198,829
    
    
    
    22,045,400
    
    
    
    23,653,956
    
    
    
    23,674,362
 13. Subsequent Event
  F-25