##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 
 FORM 10-Q
 
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 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 0-6533
 
 ALSERES PHARMACEUTICALS, INC.
 (Exact Name of Registrant as Specified in Its Charter)
 
 Delaware
    
    87-0277826(State or Other Jurisdiction of
    
    (IRS EmployerIncorporation or Organization)
    
    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
 o 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




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##### 



ALSERES PHARMACEUTICALS, INC.
FORM 10-QTABLE OF CONTENTS
 PagePart I FINANCIAL INFORMATIONItem 1 Financial Statements (Unaudited)Condensed Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008
    
    
    3Condensed Consolidated Statements of Operations for the three months ended March 31,
2009 and 2008, and for the period from inception (October 16, 1992) to March 31, 2009
    
    
    4Condensed Consolidated Statements of Cash Flows for the three months ended March 31,
2009 and 2008, and for the period from inception (October 16, 1992) to March 31, 2009
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 3 Quantitative and Qualitative Disclosures About Market Risk
    
    
    27Item 4T Controls and Procedures
    
    
    27Part II OTHER INFORMATIONItem 1 Legal Proceedings
    
    
    28Item 1A Risk Factors
    
    
    28Item 5 Other Information
    
    
    29Item 6 Exhibits
    
    
    30SIGNATURES
    
    
    31EX-10.6 SECURITIES PURCHASE AGREEMENT ROBERT L. GIPSONEX-31.1 SECTION 302 CERTIFICATION OF CEOEX-31.2 SECTION 302 CERTIFICATION OF CFOEX-32.1 SECTION 906 CERTIFICATION OF CEOEX-32.2 SECTION 906 CERTIFICATION OF CFO
  ® ®
 2




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##### Table of Contents



Part I  FINANCIAL INFORMATION
  Item 1  Financial Statements
 Alseres Pharmaceuticals, Inc.
   (Unaudited)March 31,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    502,275
    
    
    $
    73,974Security deposits
    
    
    69,079
    
    
    
    79,728Prepaid expenses and other current assets
    
    
    263,692
    
    
    
    163,706Total current assets
    
    
    835,046
    
    
    
    317,408Fixed assets, net
    
    
    159,275
    
    
    
    178,643Indemnity fund
    
    
    115,705
    
    
    
    115,462Security deposits and other assets
    
    
    198,069
    
    
    
    233,737Total assets
    
    $
    1,308,095
    
    
    $
    845,250LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Accounts payable and accrued expenses
    
    $
    4,818,266
    
    
    $
    4,895,799Notes payable (Note 5)
    
    
    1,000,000
    
    
    
    Accrued lease (Note 6)
    
    
    42,136
    
    
    
    45,425Total current liabilities
    
    
    5,860,402
    
    
    
    4,941,224Convertible notes payable (Note 5)
    
    
    33,625,253
    
    
    
    33,456,374Accrued interest payable (Note 5)
    
    
    2,758,486
    
    
    
    2,313,090Accrued lease, excluding current portion (Note 6)
    
    
    137,644
    
    
    
    147,923Total liabilities
    
    
    42,381,785
    
    
    
    40,858,611Commitments and contingencies (Note 8)Series F convertible redeemable preferred stock,
$.01 par value; 200,000 shares designated; 40,000
and 0 shares issued and outstanding at March 31,
2009 and December 31, 2008, respectively (liquidation
preference and redemption value of $1,000,000 at
March 31, 2009)
    
    
    974,812
    
    
    
    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 March 31, 2009 and
December 31, 2008, respectively
    
    
    
    
    
    
    Common stock, $.01 par value; 80,000,000
shares authorized; 23,055,645 and 21,399,123
shares issued and outstanding at March 31,
2009 and December 31, 2008, respectively
    
    
    230,556
    
    
    
    213,991Additional paid-in capital
    
    
    145,968,634
    
    
    
    143,671,984Deficit accumulated during development stage
    
    
    (188,247,692
    )
    
    
    (183,899,336
    )Total stockholders deficit
    
    
    (42,048,502
    )
    
    
    (40,013,361
    )Total liabilities and stockholders deficit
    
    $
    1,308,095
    
    
    $
    845,250
  3




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##### Table of Contents



Alseres Pharmaceuticals, Inc.
  
 From Inception(October 16,Three Months Ended March 31,
    
    
    1992) to2009
    
    
    2008
    
    
    March 31, 2009Revenues
    
    $
    
    
    
    $
    
    
    
    $
    900,000Operating expenses:Research and development
    
    
    1,828,015
    
    
    
    2,658,974
    
    
    
    113,608,064General and administrative
    
    
    1,970,122
    
    
    
    2,244,371
    
    
    
    61,471,375Purchased in-process research and development
    
    
    
    
    
    
    
    
    
    
    12,146,544Total operating expenses
    
    
    3,798,137
    
    
    
    4,903,345
    
    
    
    187,225,983Loss from operations
    
    
    (3,798,137
    )
    
    
    (4,903,345
    )
    
    
    (186,325,983
    )Other income (expense)
    
    
    65,000
    
    
    
    
    
    
    
    (1,517,878
    )Interest expense, net
    
    
    (618,551
    )
    
    
    (459,418
    )
    
    
    (8,102,452
    )Investment income
    
    
    3,332
    
    
    
    36,825
    
    
    
    7,698,621Net loss
    
    
    (4,348,356
    )
    
    
    (5,325,938
    )
    
    
    (188,247,692
    )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
    
    
    (4,348,356
    )
    
    
    (5,325,938
    )
    
    
    (197,539,993
    )Basic and diluted net loss attributable to
common stockholders per share
    
    $
    (0.19
    )
    
    $
    (0.26
    )Weighted average common shares outstanding
    
    
    22,712,553
    
    
    
    20,806,874
  4




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##### Table of Contents



Alseres Pharmaceuticals, Inc.
  
 From Inception(October 16,1992) toThree Months Ended March 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (4,348,356
    )
    
    $
    (5,325,938
    )
    
    $
    (188,247,692
    )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
    
    
    173,153
    
    
    
    133,961
    
    
    
    2,681,718Non-cash charges related to options, warrants
and common stock
    
    
    1,313,217
    
    
    
    513,089
    
    
    
    10,893,012Amortization and depreciation
    
    
    19,368
    
    
    
    10,406
    
    
    
    2,738,314Changes in operating assets and liabilities:(Increase) decrease in prepaid expenses
and other current assets
    
    
    (99,986
    )
    
    
    (667,831
    )
    
    
    458,874(Decrease ) increase in accounts payable
and accrued expenses
    
    
    (77,533
    )
    
    
    776,065
    
    
    
    4,045,601Increase in accrued interest payable
    
    
    445,396
    
    
    
    320,834
    
    
    
    2,758,486(Decrease) increase in accrued lease
    
    
    (13,568
    )
    
    
    (7,173
    )
    
    
    179,780Net cash used for operating activities
    
    
    (2,588,309
    )
    
    
    (4,246,587
    )
    
    
    (148,494,863
    )Cash flows from investing activities:Cash acquired through Merger
    
    
    
    
    
    
    
    
    
    
    1,758,037Purchases of fixed assets
    
    
    
    
    
    
    (4,455
    )
    
    
    (1,652,114
    )Decrease (increase) in security deposits and
other assets
    
    
    42,041
    
    
    
    26,478
    
    
    
    (454,456
    )(Increase) in indemnity fund
    
    
    (243
    )
    
    
    (795
    )
    
    
    (115,705
    )Purchases of marketable securities
    
    
    
    
    
    
    
    
    
    
    (132,004,923
    )Sales and maturities of marketable securities
    
    
    
    
    
    
    1,231,233
    
    
    
    132,004,923Net cash provided by (used for) investing activities
    
    
    41,798
    
    
    
    1,252,461
    
    
    
    (464,238
    )Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    1,000,000
    
    
    
    2,541
    
    
    
    65,731,339Proceeds from issuance of preferred stock
    
    
    1,000,000
    
    
    
    
    
    
    
    36,022,170Preferred stock conversion inducement
    
    
    
    
    
    
    
    
    
    
    (600,564
    )Proceeds from issuance of promissory notes
    
    
    1,000,000
    
    
    
    5,000,000
    
    
    
    52,585,000Proceeds 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
    
    
    (25,188
    )
    
    
    
    
    
    
    (5,612,855
    )Net cash provided by financing activities
    
    
    2,974,812
    
    
    
    5,002,541
    
    
    
    149,461,376Net increase in cash and cash equivalents
    
    
    428,301
    
    
    
    2,008,415
    
    
    
    502,275Cash and cash equivalents, beginning of period
    
    
    73,974
    
    
    
    2,933,292
    
    
    
    Cash and cash equivalents, end of period
    
    $
    502,275
    
    
    $
    4,941,707
    
    
    $
    502,275Supplemental cash flow disclosures:Non-cash transactions (see Notes 5 and 7)Cash paid for interest
    
    $
    
    
    
    $
    
    
    
    $
    628,406
  5




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##### Table of Contents



Alseres Pharmaceuticals, Inc.
 
   1. Basis of Presentation
      6




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##### Table of Contents



Reclassification
  2. Net Loss Per Share
   3. Comprehensive Loss
  4. Accounting for Stock-Based Compensation
     7




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##### Table of Contents



2009
    
    
    2008Research and development
    
    $
    446,776
    
    
    $
    144,549General and administrative
    
    
    666,439
    
    
    
    283,362$
    1,113,215
    
    
    $
    427,911Impact on basic and diluted net loss attributable to common stockholders per share
    
    $
    (0.05
    )
    
    $
    (0.02
    )
  2009
    
    2008Expected term
    
    5 years
    
    5 yearsRisk-free interest rate
    
    
    1.36
    %
    
    
    2.5
    %Stock volatility
    
    
    90
    %
    
    
    76
    %Dividend yield
    
    
    0
    %
    
    
    0
    %
       Three months ended March 31,2009
    
    
    2008Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding at beginning of year
    
    
    4,184,403
    
    
    $
    2.90
    
    
    
    4,457,965
    
    
    $
    3.37Granted
    
    
    2,732,500
    
    
    
    1.15
    
    
    
    8,000
    
    
    
    2.70Exercised
    
    
    
    
    
    
    
    
    
    
    (1,100
    )
    
    
    2.31Forfeited and expired
    
    
    (2,785,187
    )
    
    
    2.90
    
    
    
    (18,361
    )
    
    
    10.17Outstanding at end of period
    
    
    4,131,716
    
    
    $
    1.75
    
    
    
    4,446,504
    
    
    $
    3.34Options exercisable at end of period
    
    
    3,765,153
    
    
    $
    1.75
    
    
    
    2,861,275
    
    
    $
    3.64
   8




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##### Table of Contents



Options Outstanding
    
    
    Options ExercisableWeighted-




    
    
    WeightedAverage
    
    
    Weighted-
    
    
    
    
    
    
    Average
    
    
    Weighted-Remaining
    
    
    Average
    
    
    
    
    
    
    Remaining
    
    
    AverageNumber
    
    
    Contractual
    
    
    Exercise
    
    
    Number
    
    
    Contractual
    
    
    ExerciseRange of Exercise Prices
    
    Outstanding
    
    
    Life
    
    
    Price
    
    
    Exercisable
    
    
    Life
    
    
    Price$1.15  $1.36
    
    
    2,733,000
    
    
    4.4 years
    
    $
    1.15
    
    
    
    2,473,000
    
    
    4.1 years
    
    $
    1.15$2.00  $3.00
    
    
    1,093,113
    
    
    6.0 years
    
    
    2.50
    
    
    
    1,040,613
    
    
    5.8 years
    
    
    2.47$3.10  $4.65
    
    
    255,363
    
    
    6.7 years
    
    
    3.40
    
    
    
    201,300
    
    
    6.4 years
    
    
    3.47$4.99  $6.96
    
    
    28,500
    
    
    4.0 years
    
    
    5.47
    
    
    
    28,500
    
    
    4.0 years
    
    
    5.47$8.95  $13.06
    
    
    8,740
    
    
    1.7 years
    
    
    10.55
    
    
    
    8,740
    
    
    1.7 years
    
    
    10.55$15.62  $22.36
    
    
    13,000
    
    
    0.4 years
    
    
    17.09
    
    
    
    13,000
    
    
    0.4 years
    
    
    17.094,131,716
    
    
    4.9 years
    
    $
    1.75
    
    
    
    3,765,153
    
    
    4.7 years
    
    $
    1.75
   5. Notes Payable and Debt
 Convertible Notes Payable to Significant Stockholders
     9




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##### Table of Contents



March 2008 Amended Purchase Agreement
      June 2008 Amended Purchase Agreement
  Beneficial Conversion Features
  10




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##### Table of Contents



Subsidiary Promissory Note
   11




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##### Table of Contents



6. Exit Activities
 Office Relocation
    CashPayments,Accrual at
    
    
    Net of Sublease
    
    
    Accrual atDecember 31, 2008
    
    
    Receipts 2009
    
    
    March 31, 2009Lease Amendment
    
    $
    193,348
    
    
    $
    13,568
    
    
    $
    179,780Short-term portion of lease accrual
    
    
    45,425
    
    
    
    
    
    
    
    42,136Long-term portion of lease accrual
    
    $
    147,923
    
    
    
    
    
    
    $
    137,644
  Terminations
  7. Stockholders Deficit
 Common Stock
  12




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##### Table of Contents



Preferred Stock
  Convertible Preferred Stock
  Dividend.
 Liquidation Preference.
 Voting Rights.
 13




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##### Table of Contents



Conversion.
 Redemption.
  8. Commitments and Contingencies
  License Agreements
     14




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##### Table of Contents



Contingencies
   9. Income taxes
   15




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##### Table of Contents



10. Fair Value Measurements
        Fair Value Measurement at Reporting Date UsingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantCarrying Value at
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    Unobservable InputsDescription
    
    March 31, 2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Money market
funds  current
assets
    
    $
    538,191
    
    
    $
    538,191
    
    
    $
    
    
    
    $
    Money market
funds  long
term assets
    
    $
    115,705
    
    
    $
    115,705
    
    
    $
    
    
    
    $
    Total
    
    $
    653,896
    
    
    $
    653,896
    
    
    $
    
    
    
    $
    
 16




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##### Table of Contents



11. New Accounting Pronouncements
      17




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##### 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, 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.
   18




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##### Table of Contents



Cost Reduction
  Product Development
 Molecular Imaging Program
  19




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##### Table of Contents



Regenerative Therapeutics Program  Nerve Repair
    20




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##### Table of Contents



Sales and Marketing and Government Regulation
  Research and Development
  For the Three
    
    From InceptionMonths Ended
    
    (October 16, 1992) toProgram
    
    March 31, 2009
    
    March 31, 2009Molecular imaging
    
    $
    368,000
    
    
    $
    27,019,000Regenerative therapeutics
    
    $
    242,000
    
    
    $
    28,828,000Neurodegenerative disease
    
    $
    20,000
    
    
    $
    1,131,000
  Critical Accounting Policies and Estimates
  Going Concern Basis of Accounting
  21




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##### Table of Contents



Research Contracts
  Fair Value and Classification of Financial Instruments
    Lease Accrual
  22




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##### Table of Contents



Stock-Based Compensation
  Marketable Securities
  Results of Operations
 Three Months Ended March 31, 2009 and 2008
     23




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##### Table of Contents



Liquidity and Capital Resources
     Date
    
    Net Proceeds Raised
    
    Securities or Debt Instrument IssuedMarch 2009
    
    $1.0 million
    
    Convertible Preferred StockFebruary 2009
    
    $0.2 million
    
    Common StockFebruary 2009
    
    $1.0 million
    
    Promissory NotesJanuary 2009
    
    $1.0 million
    
    Common StockNovember 2008
    
    $1.0 million
    
    Common StockJune 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




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##### Table of Contents



Contractual Obligations and Commitments
   25




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##### Table of Contents



Recent Accounting Pronouncements
 ,
     26




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##### Table of Contents



Item 3  Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4T  Controls and Procedures
  27




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##### Table of Contents



Part II  OTHER INFORMATION
 
 Item 1  Legal Proceedings
  
 Item 1A  Risk Factors
   Risks Related to our Intellectual Property
 WE HAVE AMENDED OUR CETHRIN LICENSE AGREEMENT WITH BIOAXONE AND CONSEQUENTLY WE WILL NOT CLINICALLY
DEVELOP CETHRIN AND PURSUANT TO THE TERMS OF THE AMENDMENT WE MAY NOT REALIZE ANY REVENUE FROM A
FUTURE LICENSING OF THE CETHRIN TECHNOLOGY.
  28




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##### Table of Contents



Risks Related to our Stock
 OUR COMMON STOCK IS SUSPENDED FROM TRADING ON, AND WILL BE DELISTED FROM, THE NASDAQ CAPITAL
MARKET.
     
 Item 5  Other Information
 
 29




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##### Table of Contents



Item 6  Exhibits
 4.1
    
    Certificate of Designations, Preferences, and Rights of Series F Convertible Preferred Stock (filed as Exhibit 4.1 to our Current Report on Form 8-K filed on March 25, 2009 and incorporated herein by reference)10.1
    
    Securities Purchase Agreement, dated January 8, 2009, by and between the Company and Robert L. Gipson (filed as Exhibit 10.33 to our Annual Report on Form 10-K filed on March 31, 2009 and incorporated herein by reference)10.2
    
    Promissory Note dated February 11, 2009 issued by Neurobiologics, Inc. to Robert L. Gipson (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on February 18, 2009 and incorporated herein by reference)10.3
    
    Securities Purchase Agreement, dated February 24, 2009, by and between the Company and Cato Holding Company (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on February 27, 2009 and incorporated herein by reference)10.4
    
    Letter Agreement, dated February 24, 2009, by and between the Company and Cato Holding Company (filed as Exhibit 10.2 to our Current Report on Form 8-K filed on February 27, 2009 and incorporated herein by reference)10.5
    
    Securities Purchase Agreement, dated March 19, 2009, by and between the Company and Robert L. Gipson (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on March 25, 2009 and incorporated herein by reference)10.6*
    
    Securities Purchase Agreement, dated March 31, 2009, by and between the Company and Robert L. Gipson31.1*
    
    Certification of the Chief Executive Officer pursuant to Section 1350 of Title 18, United States Code, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of the Chief Financial Officer pursuant to Section 1350 of Title 18, United States Code, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1*
    
    Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2*
    
    Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*  Filed herewith.
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##### Table of Contents



SIGNATURES
  ALSERES PHARMACEUTICALS, INC
(Registrant)DATE: May 15, 2009
    /s/ Peter G. SavasPeter G. SavasChief Executive Officer
(Principal Executive Officer)DATE: May 15, 2009
    /s/ Kenneth L. Rice, Jr.Kenneth L. Rice, Jr.Executive Vice President Finance and
Administration And Chief Financial Officer
(Principal Financial and Accounting Officer) 31