##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 
 FORM 10-Q
 
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 For the quarterly period ended September 30, 2008
 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 0-6533
 
 ALSERES PHARMACEUTICALS, INC.
 (Exact Name of Registrant as Specified in Its Charter)
 
 Delaware
    
    87-0277826(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (IRS Employer
Identification No.)239 South Street, Hopkinton, Massachusetts
    
    01748(Address of Principal Executive Offices)
    
    (Zip Code)
 (508) 497-2360
(Registrants Telephone Number, Including Area Code)
 None
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
 
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




---



##### 



ALSERES PHARMACEUTICALS, INC.
 INDEX TO FORM 10-Q
 PagePart I Financial InformationItem 1 Financial Statements (Unaudited)Condensed Consolidated Balance Sheets as of September 30, 2008 and December 31, 2007
    
    
    3Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2008 and 2007, and for the period from inception (October 16, 1992) to September 30, 2008
    
    
    4Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2008 and 2007, and for the period from inception (October 16, 1992) to September 30, 2008
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16Item 3 Quantitative and Qualitative Disclosures About Market Risk
    
    
    26Item 4T Controls and Procedures
    
    
    26Part II Other InformationItem 1A Risk Factors
    
    
    27Item 6 Exhibits
    
    
    47SIGNATURESEX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEOEX-32.2 SECTION 906 CERTIFICATION OF THE CFO
  ® ® ®
 2




---



##### Table of Contents



Part I  Financial Information
 
 Item 1  Financial Statements
 Alseres Pharmaceuticals, Inc.
 
  (Unaudited)September 30,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,335,562
    
    
    $
    2,933,292Marketable securities
    
    
    
    
    
    
    1,240,543Prepaid expenses and other current assets
    
    
    414,797
    
    
    
    1,018,459Total current assets
    
    
    1,750,359
    
    
    
    5,192,294Fixed assets, net
    
    
    199,039
    
    
    
    88,484Other assets
    
    
    368,609
    
    
    
    342,899Total assets
    
    $
    2,318,007
    
    
    $
    5,623,677LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Accounts payable and accrued expenses
    
    $
    4,150,320
    
    
    $
    3,726,478Accrued lease (Note 6)
    
    
    48,592
    
    
    
    43,929Total current liabilities
    
    
    4,198,912
    
    
    
    3,770,407Convertible notes payable (Note 5)
    
    
    33,291,302
    
    
    
    23,335,110Accrued interest payable (Note 5)
    
    
    1,877,089
    
    
    
    740,417Accrued lease, excluding current portion (Note 6)
    
    
    157,822
    
    
    
    192,214Total liabilities
    
    
    39,525,125
    
    
    
    28,038,148Commitments and contingencies (Note 7)Stockholders deficit:Preferred stock, $.01 par value; 1,000,000
shares authorized; 25,000 shares designated
Convertible Series A, 500,000 shares
designated Convertible Series D, and 800
shares designated Convertible Series E; no
shares issued and outstanding at September
30, 2008 and December 31, 2007
    
    
    
    
    
    
    Common stock, $.01 par value; 80,000,000
shares authorized; 20,855,645 and 20,778,217
shares issued and outstanding at September
30, 2008 and December 31, 2007, respectively
    
    
    208,556
    
    
    
    207,782Additional paid-in capital
    
    
    142,188,242
    
    
    
    140,420,314Accumulated other comprehensive income
    
    
    
    
    
    
    9,310Deficit accumulated during development stage
    
    
    (179,603,916
    )
    
    
    (163,051,877
    )Total stockholders deficit
    
    
    (37,207,118
    )
    
    
    (22,414,471
    )Total liabilities and stockholders deficit
    
    $
    2,318,007
    
    
    $
    5,623,677
  3




---



##### Table of Contents



Alseres Pharmaceuticals, Inc.
 
 
 From Inception(October 16,Three months ended September 30,
    
    
    Nine months ended September 30,
    
    
    1992) to2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    September 30, 2008Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    900,000Operating expenses:Research and development
    
    
    2,818,398
    
    
    
    2,511,154
    
    
    
    9,107,664
    
    
    
    7,768,339
    
    
    
    110,035,869General and administrative
    
    
    1,703,609
    
    
    
    1,959,883
    
    
    
    5,906,849
    
    
    
    6,025,890
    
    
    
    57,549,134Purchased in-process
research and development
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,146,544Total operating expenses
    
    
    4,522,007
    
    
    
    4,471,037
    
    
    
    15,014,513
    
    
    
    13,794,229
    
    
    
    179,731,547Loss from operations
    
    
    (4,522,007
    )
    
    
    (4,471,037
    )
    
    
    (15,014,513
    )
    
    
    (13,794,229
    )
    
    
    (178,831,547
    )Other expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,582,878
    )Interest expense, net
    
    
    (609,817
    )
    
    
    (327,871
    )
    
    
    (1,610,314
    )
    
    
    (437,569
    )
    
    
    (6,878,552
    )Investment income
    
    
    20,509
    
    
    
    63,585
    
    
    
    72,788
    
    
    
    122,585
    
    
    
    7,689,061Net loss
    
    
    (5,111,315
    )
    
    
    (4,735,323
    )
    
    
    (16,552,039
    )
    
    
    (14,109,213
    )
    
    
    (179,603,916
    )Preferred stock
beneficial conversion
feature
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,062,712
    )Accrual of preferred
stock dividends and
modification of
warrants held by
preferred stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,229,589
    )Net loss attributable
to common stockholders
    
    $
    (5,111,315
    )
    
    $
    (4,735,323
    )
    
    $
    (16,552,039
    )
    
    $
    (14,109,213
    )
    
    $
    (188,896,217
    )Basic and diluted
net loss
attributable to
common stockholders
per share
    
    $
    (0.25
    )
    
    $
    (0.23
    )
    
    $
    (0.80
    )
    
    $
    (0.77
    )Weighted average common
shares outstanding
    
    
    20,811,819
    
    
    
    20,698,931
    
    
    
    20,808,966
    
    
    
    18,245,465
  4




---



##### Table of Contents



Alseres Pharmaceuticals, Inc.
 
 
 From Inception(October 16,1992) toNine Months Ended September 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (16,552,039
    )
    
    $
    (14,109,213
    )
    
    $
    (179,603,916
    )Adjustments to reconcile net loss to net cash
used for operating activities:Purchased in-process research and development
    
    
    
    
    
    
    
    
    
    
    12,146,544Write-off of acquired technology
    
    
    
    
    
    
    
    
    
    
    3,500,000Interest expense settled through issuance of
notes payable
    
    
    
    
    
    
    
    
    
    
    350,500Non-cash interest expense
    
    
    469,019
    
    
    
    95,522
    
    
    
    2,339,217Loss on disposal of fixed assets
    
    
    
    
    
    
    19,054
    
    
    
    Non-cash charges related to options, warrants
and common stock
    
    
    1,266,161
    
    
    
    1,259,882
    
    
    
    9,090,618Amortization and depreciation
    
    
    33,502
    
    
    
    73,721
    
    
    
    2,699,495Changes in operating assets and liabilities:Decrease (increase) in prepaid
expenses and other current assets
    
    
    569,456
    
    
    
    (665,772
    )
    
    
    409,960Increase (decrease) in accounts
payable and accrued expenses
    
    
    423,842
    
    
    
    (6,844,348
    )
    
    
    3,377,655Increase in accrued interest payable
    
    
    1,136,672
    
    
    
    
    
    
    
    1,877,089(Decrease) increase in accrued lease
    
    
    (29,729
    )
    
    
    (22,575
    )
    
    
    206,414Net cash used for operating activities
    
    
    (12,683,116
    )
    
    
    (20,193,729
    )
    
    
    (143,606,424
    )Cash flows from investing activities:Cash acquired through Merger
    
    
    
    
    
    
    
    
    
    
    1,758,037Purchases of fixed assets
    
    
    (144,057
    )
    
    
    (54,839
    )
    
    
    (1,653,059
    )(Increase) decrease in other assets
    
    
    (4,331
    )
    
    
    31,838
    
    
    
    (649,556
    )Purchases of marketable securities
    
    
    
    
    
    
    (3,359,879
    )
    
    
    (132,004,923
    )Sales and maturities of marketable securities
    
    
    1,231,233
    
    
    
    1,035,366
    
    
    
    132,004,923Net cash provided by (used for) investing activities
    
    
    1,082,845
    
    
    
    (2,347,514
    )
    
    
    (544,578
    )Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    2,541
    
    
    
    6,102
    
    
    
    63,731,339Proceeds from issuance of preferred stock
    
    
    
    
    
    
    
    
    
    
    35,022,170Preferred stock conversion inducement
    
    
    
    
    
    
    
    
    
    
    (600,564
    )Proceeds from issuance of promissory notes
    
    
    10,000,000
    
    
    
    27,000,000
    
    
    
    51,585,000Proceeds from issuance of convertible debentures
    
    
    
    
    
    
    
    
    
    
    9,000,000Principal payments of notes payable
    
    
    
    
    
    
    
    
    
    
    (7,146,967
    )Dividend payments on Series E Cumulative
Convertible Preferred Stock
    
    
    
    
    
    
    
    
    
    
    (516,747
    )Payments of financing costs
    
    
    
    
    
    
    (57,722
    )
    
    
    (5,587,667
    )Net cash provided by financing activities
    
    
    10,002,541
    
    
    
    26,948,380
    
    
    
    145,486,564Net (decrease) increase in cash and cash equivalents
    
    
    (1,597,730
    )
    
    
    4,407,137
    
    
    
    1,335,562Cash and cash equivalents, beginning of period
    
    
    2,933,292
    
    
    
    1,508,665
    
    
    
    Cash and cash equivalents, end of period
    
    $
    1,335,562
    
    
    $
    5,915,802
    
    
    $
    1,335,562Supplemental cash flow disclosures:Non-cash transactions (see Note 5)Cash paid for interest
    
    $
    
    
    
    $
    
    
    
    $
    628,406
  5




---



##### Table of Contents



Alseres Pharmaceuticals, Inc.
 
 
 1. Basis of Presentation
       6




---



##### Table of Contents



2. Net Loss Per Share
   3. Comprehensive Loss
  4. Accounting for Stock-Based Compensation
     Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Research and development
    
    $
    122,819
    
    
    $
    145,844
    
    
    $
    398,517
    
    
    $
    376,226General and administrative
    
    
    242,536
    
    
    
    254,227
    
    
    
    782,501
    
    
    
    879,739$
    365,355
    
    
    $
    400,071
    
    
    $
    1,181,018
    
    
    $
    1,255,965Impact on basic and
diluted net loss
attributable to common
stockholders per share
    
    $
    (0.02
    )
    
    $
    (0.02
    )
    
    $
    (0.06
    )
    
    $
    (0.07
    )
 7




---



##### Table of Contents



Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,2008
    
    2007
    
    2008
    
    2007Expected term
    
    
    
    
    
    6 years
    
    5 years
    
    6 yearsRisk-free interest rate
    
    
    
    
    
    
    4.1% - 4.3
    %
    
    
    2.5% - 3.7
    %
    
    
    4.1% - 5.0
    %Stock volatility
    
    
    
    
    
    
    90
    %
    
    
    76
    %
    
    
    90
    %Dividend yield
    
    
    
    
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
       Nine months ended
    
    
    Nine months endedSeptember 30, 2008
    
    
    September 30, 2007Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding at beginning of year
    
    
    4,457,965
    
    
    $
    3.37
    
    
    
    3,512,704
    
    
    $
    3.46Granted
    
    
    78,000
    
    
    
    2.39
    
    
    
    1,085,000
    
    
    
    2.85Exercised
    
    
    (1,100
    )
    
    
    2.31
    
    
    
    (19,709
    )
    
    
    2.31Forfeited and expired
    
    
    (334,656
    )
    
    
    8.99
    
    
    
    (194,874
    )
    
    
    2.37Outstanding at end of period
    
    
    4,200,209
    
    
    $
    2.90
    
    
    
    4,383,121
    
    
    $
    3.36Options exercisable at end of period
    
    
    2,900,799
    
    
    $
    2.99
    
    
    
    2,501,608
    
    
    $
    3.79
   Options Outstanding
    
    
    Options ExercisableWeighted-
    
    
    
    
    
    
    
    
    
    
    Weighted-Average
    
    
    Weighted-
    
    
    
    
    
    
    Average
    
    
    Weighted-Remaining
    
    
    Average
    
    
    
    
    
    
    Remaining
    
    
    AverageNumber
    
    
    Contractual
    
    
    Exercise
    
    
    Number
    
    
    Contractual
    
    
    ExerciseRange of Exercise Prices
    
    Outstanding
    
    
    Life
    
    
    Price
    
    
    Exercisable
    
    
    Life
    
    
    Price$1.35 - $2.00
    
    
    100,500
    
    
    6.9 years
    
    $
    1.97
    
    
    
    100,500
    
    
    6.9 years
    
    $
    1.97$2.01 - $3.00
    
    
    2,871,106
    
    
    7.3 years
    
    
    2.55
    
    
    
    1,713,050
    
    
    6.9 years
    
    
    2.50$3.10 - $4.65
    
    
    1,178,363
    
    
    6.8 years
    
    
    3.56
    
    
    
    1,037,009
    
    
    6.6 years
    
    
    3.59$4.99 - $6.96
    
    
    28,500
    
    
    5.3 years
    
    
    5.47
    
    
    
    28,500
    
    
    5.3 years
    
    
    5.47$8.95 - $13.06
    
    
    8,740
    
    
    3.0 years
    
    
    10.55
    
    
    
    8,740
    
    
    3.0 years
    
    
    10.55$15.62 - $22.36
    
    
    13,000
    
    
    1.6 years
    
    
    17.09
    
    
    
    13,000
    
    
    1.6 years
    
    
    17.094,200,209
    
    
    7.2 years
    
    $
    2.90
    
    
    
    2,900,799
    
    
    6.7 years
    
    $
    2.99
 8




---



##### Table of Contents



5. Notes Payable and Debt
 Convertible Notes Payable to Significant Stockholders
     Purchase Agreements
  9




---



##### Table of Contents



10




---



##### Table of Contents



6. Exit Activities
  11




---



##### Table of Contents



CashPayments,Accrual at
    
    
    Net of Sublease
    
    
    Accrual atDecember 31, 2007
    
    
    Receipts 2008
    
    
    September 30, 2008Lease Amendment
    
    $
    236,143
    
    
    $
    29,729
    
    
    $
    206,414Short-term portion of lease accrual
    
    
    43,929
    
    
    
    
    
    
    
    48,592Long-term portion of lease accrual
    
    $
    192,214
    
    
    
    
    
    
    $
    157,822
  7. Commitments and Contingencies
  License Agreements
   12




---



##### Table of Contents



Contingencies
  Guarantor Arrangements
 13




---



##### Table of Contents



Lease Commitment
  8. Income taxes
    9. Fair Value Measurements
  14




---



##### Table of Contents



Fair Value Measurement at Reporting Date UsingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantCarrying Value at
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    Unobservable InputsDescription
    
    September 30, 2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Cash and money
market funds 
current assets
    
    $
    1,335,562
    
    
    $
    1,335,562
    
    
    $
    
    
    
    $
    Money market
funds  long
term assets
    
    $
    114,901
    
    
    $
    114,901
    
    
    $
    
    
    
    $
    Total
    
    $
    1,450,463
    
    
    $
    1,450,463
    
    
    $
    
    
    
    $
    
  10. New Accounting Pronouncements
   15




---



##### Table of Contents



Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
 Description of Company
  
    
    Molecular imaging program focused on the diagnosis of i) Parkinsonian Syndromes, or PS,
including Parkinsons Disease, or PD, and ii) Dementia with Lewy Bodies, or DLB;
    
    Regenerative therapeutics program, primarily focused on nerve repair and restoring
movement and sensory function in patients who have had significant loss of CNS function
resulting from trauma such as spinal cord injury, or SCI, stroke, traumatic brain injury,
or TBI, neurodegenerative disorders such as PD, Alzheimers disease and optic nerve damage
utilizing technology referred to as axon regeneration; and
    
    Neurodegenerative disease program focused on treating the symptoms of PD and slowing or
stopping the progression of PD.
    16




---



##### Table of Contents



Purchase Agreements
     17




---



##### Table of Contents



Product Development
 Molecular Imaging Program
 P o E T
  18




---



##### Table of Contents



Regenerative Therapeutics Program  Nerve Repair
      ASIA Grade A Subjects with Improvement to ASIA Grade C (or better) by Dose - 6 and 12 months (Intent to Treat populationLast Observation Carried Forward)Dose (mg)
    
    Cervical
    
    Thoracic0.3
    
    
    1 of 3
    
    0 of 61
    
    
    1 of 4
    
    1 of 63
    
    
    2 of 3
    
    0 of 6
 19




---



##### Table of Contents



ASIA Grade A Subjects with Improvement to ASIA Grade C (or better) by Dose - 6 and 12 months (Intent to Treat populationLast Observation Carried Forward)Dose (mg)
    
    Cervical
    
    Thoracic6
    
    
    1 of 3
    
    1 of 6Total
    
    5 of 13
    
    2 of 24
  Mean Change in Motor Score from Baseline (Intent to Treat population  Last Observation Carried Forward)Cervical
    
    ThoracicDose (mg)
    
    
    
    6 Months
    
    12 Months
    
    6 Months
    
    12 Months0.3
    
    
    
    
    
    11.3
    
    
    
    11.0
    
    
    
    0.0
    
    
    
    0.01
    
    
    
    
    
    15.8
    
    
    
    16.3
    
    
    
    2.7
    
    
    
    3.23
    
    
    
    
    
    19.7
    
    
    
    27.3
    
    
    
    0.0
    
    
    
    0.06
    
    
    
    
    
    9.7
    
    
    
    11.0
    
    
    
    5.2
    
    
    
    5.7
    Regenerative Therapeutics Program Bone Repair
 in vitro
 Neurodegenerative Disease Program
 in vitro in vitro
 Sales and Marketing and Government Regulation
  20




---



##### Table of Contents



Research and Development
  For the Three
    
    For the Nine
    
    From InceptionMonths Ended
    
    Months Ended
    
    (October 16, 1992) toProgram
    
    September 30, 2008
    
    September 30, 2008
    
    September 30, 2008Molecular imaging
    
    $
    589,000
    
    
    $
    1,371,000
    
    
    $
    26,166,000Regenerative therapeutics
    
    $
    1,131,000
    
    
    $
    4,266,000
    
    
    $
    28,265,000Neurodegenerative disease
    
    $
    
    
    
    $
    20,000
    
    
    $
    1,111,000
  Critical Accounting Policies and Estimates
  Marketable Securities
  Research Contracts
 21




---



##### Table of Contents



Fair Value and Classification of Equity Instruments
    Lease Accrual
  Stock-Based Compensation
  Results of Operations
 Three Months Ended September 30, 2008 and 2007
 22




---



##### Table of Contents



Nine months ended September 30, 2008 and 2007
    23




---



##### Table of Contents



Liquidity and Capital Resources
    Date
    
    Net Proceeds Raised
    
    Securities or Debt Instrument IssuedJune 2008
    
    $
    5.0 million
    
    
    Convertible Promissory NotesMarch 2008
    
    $
    5.0 million
    
    
    Convertible Promissory NotesAugust 2007
    
    $
    10.0 million
    
    
    Convertible Promissory NotesMay 2007
    
    $
    6.0 million
    
    
    Convertible Promissory NotesMarch 2007
    
    $
    9.0 million
    
    
    Convertible Promissory NotesFebruary 2007
    
    $
    2.0 million
    
    
    Convertible Promissory Notes(1)October 2006.
    
    $
    6.0 million
    
    
    Convertible Promissory Notes(1)August 2006
    
    $
    2.0 million
    
    
    Convertible Promissory Notes(1)
 
 (1)
    
    Converted to shares of our common stock in June 2007.   24




---



##### Table of Contents



Contractual Obligations and Commitments
      25




---



##### Table of Contents



Recent Accounting Pronouncements
    
 Item 3  Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4T  Controls and Procedures
 26




---



##### Table of Contents



Part II  Other Information
 
 Item 1A  Risk Factors
   Risks Related to our Financial Results and Need for Additional Financing
 WE ARE A DEVELOPMENT STAGE COMPANY. WE HAVE INCURRED LOSSES FROM OUR OPERATIONS SINCE INCEPTION
AND ANTICIPATE LOSSES FOR THE FORESEEABLE FUTURE. WE WILL NOT BE ABLE TO ACHIEVE PROFITABILITY
UNLESS WE OBTAIN REGULATORY APPROVAL AND MARKET ACCEPTANCE OF OUR PRODUCT CANDIDATES. WE WILL NEED
SUBSTANTIAL ADDITIONAL FUNDING IN ORDER TO CONTINUE OUR BUSINESS AND OPERATIONS. IF WE ARE UNABLE
TO SECURE SUCH FUNDING ON ACCEPTABLE TERMS, WE WILL NEED TO CEASE OPERATIONS, SIGNIFICANTLY
REDUCE, DELAY OR CEASE ONE OR MORE OF OUR RESEARCH OR DEVELOPMENT PROGRAMS, OR SURRENDER RIGHTS TO
SOME OR ALL OF OUR TECHNOLOGIES. IF WE VIOLATE A DEBT COVENANT OR DEFAULT UNDER OUR DEBT
AGREEMENTS, WE MAY NEED TO CEASE OPERATIONS OR REDUCE, CEASE OR DELAY ONE OR
 27




---



##### Table of Contents



MORE OF OUR RESEARCH OR DEVELOPMENT PROGRAMS, ADJUST OUR CURRENT BUSINESS PLAN AND MAY NOT BE ABLE
TO CONTINUE AS A GOING CONCERN.
   
    
    The scope, rate of progress and cost of our clinical trials and other research and
development activities;
    
    Future clinical trial results;
    
    The terms and timing of any collaborative, licensing and other arrangements that we may
establish;
    
    The cost and timing of regulatory approvals and of establishing sales, marketing and
distribution capabilities;
    
    The cost of establishing clinical and commercial supplies of our product candidates and
any products that we may develop;
    
    The cost of obtaining and maintaining licenses to use patented technologies;
    
    The effect of competing technological and market developments; and
    
    The cost of filing, prosecuting, defending and enforcing any patent claims and other
intellectual property rights and other patent-related costs, including litigation costs and
the results of such litigation.
    28




---



##### Table of Contents



OUR ESTIMATES OF OUR LIABILITY UNDER OUR BOSTON, MASSACHUSETTS LEASE MAY CHANGE.
  Risks Related to Commercialization
 OUR SUCCESS DEPENDS ON OUR ABILITY TO SUCCESSFULLY DEVELOP OUR PRODUCT CANDIDATES INTO COMMERCIAL
PRODUCTS.
  29




---



##### Table of Contents



EVEN IF WE RECEIVE APPROVAL TO MARKET OUR DRUG CANDIDATES, THE MARKET MAY NOT BE RECEPTIVE TO OUR
DRUG CANDIDATES UPON THEIR COMMERCIAL INTRODUCTION, WHICH COULD PREVENT US FROM SUCCESSFULLY
COMMERCIALIZING OUR PRODUCTS AND FROM BEING PROFITABLE.
  
    
    The timing of our receipt of any marketing approvals, the terms of any approval and the
countries in which approvals are obtained;
    
    The safety, efficacy and ease of administration of our products;
    
    The competitive pricing of our products;
    
    The success of our education and marketing programs;
    
    The sales and marketing efforts of competitors; and
    
    The availability and amount of government and third-party payor reimbursement.
  ACQUISITIONS PRESENT MANY RISKS, AND WE MAY NOT REALIZE THE ANTICIPATED FINANCIAL AND STRATEGIC
GOALS FOR ANY SUCH TRANSACTIONS.
  
    
    We may find that the acquired company or assets do not further our business strategy,
or that we overpaid for the company or assets, or that economic conditions change, all of
which may generate a future impairment charge;
    
    We may have difficulty integrating the operations and personnel of the acquired
business, and may have difficulty retaining the key personnel of the acquired business;
    
    We may have difficulty incorporating the acquired technologies;
    
    We may encounter technical difficulties or failures with the performance of the
acquired technologies or drug products or may experience unfavorable results in the
clinical studies related to such technologies or products;
    
    We may face product liability risks associated with the sale of the acquired companys
products;
    
    Our ongoing business and managements attention may be disrupted or diverted by
transition or integration issues and the complexity of managing diverse locations;
    
    We may have difficulty maintaining uniform standards, internal controls, procedures and
policies across locations;
 30




---



##### Table of Contents




    
    The acquisition may result in litigation from terminated employees or third-parties;
and
    
    We may experience significant problems or liabilities associated with product quality,
technology and legal contingencies.
   Risks Related to Regulation
 IF OUR PRECLINICAL TESTING AND CLINICAL TRIALS ARE NOT SUCCESSFUL, WE WILL NOT OBTAIN REGULATORY
APPROVAL FOR COMMERCIAL SALE OF OUR PRODUCT CANDIDATES.
       31




---



##### Table of Contents




    
    Ongoing discussions with the FDA or comparable foreign authorities regarding the scope
or design of our clinical trials;
    
    Delays in enrolling patients and volunteers into clinical trials;
    
    Lower than anticipated retention rate of patients and volunteers in clinical trials;
    
    Negative or inconclusive results of clinical trials or adverse medical events during a
clinical trial could cause a clinical trial to be repeated or a program to be terminated,
even if other studies or trials related to the program are successful;
    
    Insufficient supply or deficient quality of drug candidate materials or other materials
necessary for the conduct of our clinical trials;
    
    Serious and unexpected drug-related side-effects experienced by participants in our
clinical trials; or
    
    The placement of a clinical trial on hold.
 OUR PRODUCT CANDIDATES ARE SUBJECT TO RIGOROUS REGULATORY REVIEW AND, EVEN IF APPROVED, REMAIN
SUBJECT TO EXTENSIVE REGULATION.
     32




---



##### Table of Contents




    
    Regulatory approvals may impose significant limitations on the uses for which any
approved products may be marketed;
    
    Any marketed product and its manufacturer are subject to periodic reviews and audits,
and any discovery of previously unrecognized problems with a product or manufacturer could
result in suspension or limitation of approvals;
    
    Changes in existing regulatory requirements, or the enactment of additional regulations
or statutes, could prevent or affect the timing of our ability to achieve regulatory
compliance. Federal and state laws, regulations and policies may be changed with possible
retroactive effect, and how these rules actually operate can depend heavily on
administrative policies and interpretation over which we have no control, and we may
possess inadequate experience to assess their full impact upon our business; and
    
    The approval may impose significant restrictions on the indicated uses, conditions for
use, labeling, advertising, promotion, marketing and/or production of such product, and may
impose ongoing requirements for post-approval studies, including additional research and
development and clinical trials.
 OUR PRODUCTS 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;
    
    Warning letters;
    
    Withdrawal of the products from the market;
    
    Refusal to approve pending applications or supplements to approved applications that we
submit;
    
    Recall;
    
    Fines;
    
    Suspension or withdrawal of regulatory approvals;
    
    Refusal to permit the import or export of our products;
    
    Product seizure; and
    
    Injunctions or the imposition of civil or criminal penalties.
 33




---



##### Table of Contents



FAILURE TO OBTAIN REGULATORY APPROVAL IN FOREIGN JURISDICTIONS WOULD PREVENT US FROM MARKETING
OUR PRODUCTS ABROAD.
  FOREIGN GOVERNMENTS TEND TO IMPOSE STRICT PRICE CONTROLS WHICH MAY ADVERSELY AFFECT OUR REVENUES,
IF ANY.
  Risks Related to our Intellectual Property
 IF WE ARE UNABLE TO SECURE ADEQUATE PATENT PROTECTION FOR OUR TECHNOLOGIES, THEN WE MAY NOT BE
ABLE TO COMPETE EFFECTIVELY AS A BIOTECHNOLOGY COMPANY.
   
    
    Our ability to protect our technologies could be delayed or negatively affected if the
United States Patent and Trademark Office, or USPTO, requires additional experimental
evidence that our technologies work;
    
    Our competitors may develop similar technologies or products, or duplicate any
technology developed by us;
    
    Our competitors may develop products which are similar to ours but which do not
infringe our patents or products;
    
    Our competitors may successfully challenge one or more of our patents in an
interference or litigation proceeding;
 34




---



##### Table of Contents




    
    Our technologies may infringe the patents or rights of other parties who may decide not
to grant a license to us. We may have to change our products or processes, pay licensing
fees or stop certain activities because of the patent rights of third parties which could
cause additional unexpected costs and delays;
    
    Patent law in the fields of healthcare and biotechnology is still evolving and future
changes in such laws might conflict with our existing and future patent rights, or the
rights of others;
    
    Our collaborators, employees and consultants may breach the confidentiality agreements
that we enter into to protect our trade secrets and proprietary know-how. We may not have
adequate remedies for such breach; and
    
    There may be disputes as to the ownership of technological information developed by
consultants, scientific advisors or other third parties which may not be resolved in our
favor.
 WE IN-LICENSE A SIGNIFICANT PORTION OF OUR INTELLECTUAL PROPERTY AND IF WE FAIL TO COMPLY WITH OUR
OBLIGATIONS UNDER ANY OF THE RELATED AGREEMENTS, WE COULD LOSE LICENSE RIGHTS THAT ARE NECESSARY
TO DEVELOP OUR PRODUCT CANDIDATES.
   IF WE BECOME INVOLVED IN PATENT LITIGATION OR OTHER PROCEEDINGS RELATED TO A DETERMINATION OF
RIGHTS, WE COULD INCUR SUBSTANTIAL COSTS AND EXPENSES, SUBSTANTIAL LIABILITY FOR DAMAGES OR BE
REQUIRED TO STOP OUR PRODUCT DEVELOPMENT AND COMMERCIALIZATION EFFORTS.
   35




---



##### Table of Contents



CONFIDENTIALITY AGREEMENTS WITH EMPLOYEES AND OTHERS MAY NOT ADEQUATELY PREVENT DISCLOSURE OF
TRADE SECRETS AND OTHER PROPRIETARY INFORMATION.
  Risks Related to our Dependence on Third Parties
 IF ANY COLLABORATOR TERMINATES OR FAILS TO PERFORM ITS OR THEIR OBLIGATIONS UNDER AGREEMENTS WITH
US, THE DEVELOPMENT AND COMMERCIALIZATION OF OUR PRODUCT CANDIDATES COULD BE DELAYED OR
TERMINATED.
   
    
    Larry I. Benowitz, Ph.D., Director, Laboratories for Neuroscience Research in
Neurosurgery, Childrens Hospital, Boston; Associate Professor of Neurosurgery, Harvard
Medical School.
    
    Joseph R. Bianchine, M.D., Ph.D., F.A.C.P., F.A.C.C.P., Scientific Advisory Board
Member, Alseres Pharmaceuticals, Inc.; former Senior Scientific Advisor, Schwarz Pharma AG.
 36




---



##### Table of Contents




    
    Zhigang He, Ph.D., BM, Research Associate, Department of Neurology, Childrens Hospital
Boston; Associate Professor of Neurology, Department of Neurology, Harvard Medical School.
    
    Robert S. Langer, Jr., Sc.D., Director, Alseres Pharmaceuticals, Inc., Institute
Professor of Chemical and Biomedical Engineering, Massachusetts Institute of Technology.
    
    Peter Meltzer, Ph.D., President, Organix, Inc., Woburn, MA.
    
    
    Childrens Hospital in Boston, Massachusetts where certain of our collaborating
scientists perform their research efforts;
    
    Harvard Medical School in Boston, Massachusetts where certain of our collaborating
scientists perform their research efforts;
    
    MDS Nordion in Vancouver, British Colombia which manufactures the Altropane molecular
imaging agent; and
    
    Organix, Inc. in Woburn, Massachusetts which provides non-radioactive Altropane for FDA
mandated studies and synthesizes our compounds for the treatment of PD and for axon
regeneration.
     IF WE ARE UNABLE TO MAINTAIN OUR KEY WORKING RELATIONSHIPS WITH OUR LICENSORS, INCLUDING
BIOAXONE, HARVARD AND ITS AFFILIATES AND CMCC, WE MAY NOT
 37




---



##### Table of Contents



BE SUCCESSFUL SINCE SUBSTANTIALLY ALL OF OUR CURRENT TECHNOLOGIES WERE LICENSED FROM SUCH
LICENSORS.
  
    
    Cethrin compositions and methods of use;
    
    Altropane molecular imaging agent compositions and methods of use;
    
    Technetium-based molecular imaging agent compositions and methods of use;
    
    Inosine methods of use; and
    
    DAT blocker compositions and methods of use.
   
    
    An initial licensing fee payment upon the execution of the agreement and annual license
maintenance fee;
    
    Reimbursement payments for all patent related costs incurred by the licensor, including
fees associated with the filing of continuation-in-part patent applications;
    
    Milestone payments as licensed technology progresses through each stage of development
(filing of IND, completion of one or more clinical stages and submission and approval of an
NDA); and
    
    Royalty payments on the sales of any products based on the licensed technology.
   38




---



##### Table of Contents



IF WE ARE UNABLE TO ESTABLISH, MAINTAIN AND RELY ON NEW COLLABORATIVE RELATIONSHIPS, THEN WE MAY
NOT BE ABLE TO SUCCESSFULLY DEVELOP AND COMMERCIALIZE OUR TECHNOLOGIES.
  
    
    We will be able to enter into such collaborations on economically feasible and
otherwise acceptable terms and conditions;
    
    Such collaborations will not require us to undertake substantial additional obligations
or require us to devote additional resources beyond those we have identified at present;
    
    Any of our collaborators will not breach or terminate their agreements with us or
otherwise fail to conduct their activities on time, thereby delaying the development or
commercialization of the technology for which the parties are collaborating; and
    
    The parties will not dispute the ownership rights to any technologies developed under
such collaborations.
 IF ONE OF OUR COLLABORATORS WERE TO CHANGE ITS STRATEGY OR THE FOCUS OF ITS DEVELOPMENT AND
COMMERCIALIZATION EFFORTS WITH RESPECT TO OUR RELATIONSHIP, THE SUCCESS OF OUR PRODUCT CANDIDATES
AND OUR OPERATIONS COULD BE ADVERSELY AFFECTED.
 39




---



##### Table of Contents




    
    The amount and timing of resources that our collaborators may devote to the product
candidates;
    
    Our collaborators may experience financial difficulties;
    
    We may be required to relinquish important rights such as marketing and distribution
rights;
    
    Should a collaborator fail to develop or commercialize one of our product candidates,
we may not receive any future milestone payments and will not receive any royalties for the
product candidate;
    
    Business combinations or significant changes in a collaborators business strategy may
also adversely affect a collaborators willingness or ability to complete its obligations
under any arrangement;
    
    A collaborator may not devote sufficient time and resources to any collaboration with
us, which could prevent us from realizing the potential commercial benefits of that
collaboration;
    
    A collaborator may terminate their collaborations with us, which could make it
difficult for us to attract new collaborators or adversely affect how we are perceived in
the business and financial communities; and
    
    A collaborator could move forward with a competing product candidate developed either
independently or in collaboration with others, including our competitors.
  Risks Related to Competition
 WE ARE ENGAGED IN HIGHLY COMPETITIVE INDUSTRIES DOMINATED BY LARGER, MORE EXPERIENCED AND BETTER
CAPITALIZED COMPANIES.
  
    
    Many of our potential competitors in the field of CNS research have significantly
greater experience than we do in completing preclinical and clinical testing of new
pharmaceutical products, the manufacturing and commercialization process, and obtaining FDA
and other regulatory approvals of products;
    
    Many of our potential competitors have products that have been approved or are in late
stages of development;
    
    Many of our potential competitors may develop products or other novel technologies that
are more effective, safer or less costly than any that we are developing;
    
    Many of our potential competitors have collaborative arrangements in our target markets
with leading companies and research institutions;
 40




---



##### Table of Contents




    
    The timing and scope of regulatory approvals for these products;
    
    The availability and amount of third-party reimbursement;
    
    The strength of our patent position;
    
    Many of our potential competitors are in a stronger financial position than us, and are
thus better able to finance the significant cost of developing, manufacturing and selling
new products; and
    
    Companies with established positions and prior experience in the pharmaceutical
industry may be better able to develop and market products for the treatment of those
diseases for which we are trying to develop products.
   IF WE ARE UNABLE TO COMPETE EFFECTIVELY, OUR PRODUCT CANDIDATES MAY BE RENDERED NONCOMPETITIVE OR
OBSOLETE.
  IF THIRD-PARTY PAYORS DO NOT ADEQUATELY REIMBURSE OUR CUSTOMERS FOR ANY OF OUR PRODUCTS THAT ARE
APPROVED FOR MARKETING, THEY MIGHT NOT BE ACCEPTED BY PHYSICIANS AND PATIENTS OR PURCHASED OR
USED, AND OUR REVENUES AND PROFITS WILL NOT DEVELOP OR INCREASE.
  41




---



##### Table of Contents




    
    Significant uncertainty exists as to the reimbursement status of newly approved health
care products;
    
    Third-party payors are increasingly challenging the prices charged for medical products
and services;
    
    Adequate insurance coverage and reimbursement may not be available to allow us to
charge prices for products which are adequate for us to realize an appropriate return on
our development costs. If adequate coverage and reimbursement are not provided for use of
our products, the market acceptance of these products will be negatively affected;
    
    Health maintenance organizations and other managed care companies may seek to negotiate
substantial volume discounts for the sale of our products to their members thereby reducing
our profit margins; and
    
    In recent years, bills proposing comprehensive health care reform have been introduced
in Congress that would potentially limit pharmaceutical prices and establish mandatory or
voluntary refunds. It is uncertain if any legislative proposals will be adopted and how
federal, state or private payors for health care goods and services will respond to any
health care reforms.
     MEDICARE PRESCRIPTION DRUG COVERAGE LEGISLATION AND FUTURE LEGISLATIVE OR REGULATORY REFORM OF THE
HEALTH CARE SYSTEM MAY AFFECT OUR ABILITY TO SELL OUR PRODUCT CANDIDATES PROFITABLY.
 42




---



##### Table of Contents



WE HAVE NO MANUFACTURING CAPACITY AND LIMITED MARKETING INFRASTRUCTURE AND EXPECT TO BE HEAVILY
DEPENDENT UPON THIRD PARTIES TO MANUFACTURE AND MARKET APPROVED PRODUCTS.
    43




---



##### Table of Contents



USE OF THIRD PARTY MANUFACTURERS MAY INCREASE THE RISK THAT WE WILL NOT HAVE ADEQUATE SUPPLIES OF
OUR PRODUCT CANDIDATES.
  
    
    Reliance on the third party for regulatory compliance and quality assurance;
    
    The possible breach of the manufacturing agreement by the third party; and
    
    The possible termination or nonrenewal of the agreement by the third party, based on
its own business priorities, at a time that is costly or inconvenient for us.
  Risks Related to Employees and Growth
 IF WE ARE UNABLE TO RETAIN OUR KEY PERSONNEL AND/OR RECRUIT ADDITIONAL KEY PERSONNEL IN THE
FUTURE, THEN WE MAY NOT BE ABLE TO OPERATE EFFECTIVELY.
 44




---



##### Table of Contents



Risks Related to our Stock
 OUR STOCK PRICE MAY CONTINUE TO BE VOLATILE AND CAN BE AFFECTED BY FACTORS UNRELATED TO OUR
BUSINESS AND OPERATING PERFORMANCE.
  
    
    Announcements of technological innovations or new commercial products by our
competitors or us;
    
    Announcements in the scientific and research community;
    
    Developments concerning proprietary rights, including patents;
    
    Delay or failure in initiating, conducting, completing or analyzing clinical trials or
problems relating to the design, conduct or results of these trials;
    
    Announcement of FDA approval or non-approval of our product candidates or delays in the
FDA review process;
    
    Developments concerning our collaborations;
    
    Publicity regarding actual or potential medical results relating to products under
development by our competitors or us;
    
    Failure of any of our product candidates to achieve commercial success;
    
    Our ability to manufacture products to commercial standards;
    
    Conditions and publicity regarding the life sciences industry generally;
    
    Regulatory developments in the United States and foreign countries;
    
    Changes in the structure of health care payment systems;
 45




---



##### Table of Contents




    
    Period-to-period fluctuations in our financial results or those of companies that are
perceived to be similar to us;
    
    Departure of our key personnel;
    
    Future sales of our common stock;
    
    Investors perceptions of us, our products, the economy and general market conditions;
    
    Differences in actual financial results versus financial estimates by securities
analysts and changes in those estimates; and
    
    Litigation.
 46




---



##### Table of Contents



Item 6  Exhibits
 10.1
    
    Extension to Option Agreement, dated October 27, 2008, by and between
Alseres Pharmaceuticals, Inc. and BioAxone Therapeutic, Inc.
(incorporated by reference to our Current Report on Form 8-K filed
with the Securities and Exchange Commission on October 30, 2008).31.1
    
    Principal 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 2002.31.2
    
    Principal 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 2002.32.1
    
    Principal Executive 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 2002.32.2
    
    Principal 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.
 47




---



##### Table of Contents



SIGNATURES
  ALSERES PHARMACEUTICALS, INC.
(Registrant)DATE: November 14, 2008
    /s/ Peter G. SavasPeter G. SavasChief Executive Officer
(Principal Executive Officer)DATE: November 14, 2008
    /s/ Kenneth L. Rice, Jr.Kenneth L. Rice, Jr.Executive Vice President Finance and
Administration And Chief Financial Officer
(Principal Financial and Accounting Officer) 48




---



##### Table of Contents



Exhibits
 10.1
    
    Extension to Option Agreement, dated October 27, 2008, by and between
Alseres Pharmaceuticals, Inc. and BioAxone Therapeutic, Inc.
(incorporated by reference to our Current Report on Form 8-K filed
with the Securities and Exchange Commission on October 30, 2008).31.1
    
    Principal 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 2002.31.2
    
    Principal 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 2002.32.1
    
    Principal Executive 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 2002.32.2
    
    Principal 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.
 49