##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, DC 20549
       Form 10-K
   FOR ANNUAL AND TRANSITION
    REPORTS
    PURSUANT TO SECTIONS 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the year ended
    December 31, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number: 0-50440
  Micromet, Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

52-2243564(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)2110 Rutherford Road
    Carlsbad, CA(Address of principal
    executive offices)

92008(Zip
    Code)   (760) 494-4200
 (Registrants telephone number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
   Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, par value
    $0.00004 per share

Nasdaq Global Market   Securities registered pursuant to Section 12(g) of the
    Act:
    None
  o þ
  o þ
    þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
 o þ o
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




---



##### 



MICROMET,
    INC.
  ANNUAL
    REPORT ON
    FORM 10-K
 FOR THE
    YEAR ENDED DECEMBER 31, 2006
  
  Table of
    Contents
  PagePART IItem 1


Business


1Item 1A


Risk
    Factors


24Item 1B


Unresolved Staff
    Comments


42Item 2


Properties


42Item 3


Legal
    Proceedings


43Item 4


Submission of
    Matters to a Vote of Security Holders


44PART IIItem 5


Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


44Item 6


Selected Financial
    Data


47Item 7


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


48Item 7A


Quantitative and
    Qualitative Disclosures About Market Risk


60Item 8


Financial
    Statements and Supplementary Data


60Item 9


Changes in and
    Disagreements With Accountants on Accounting and Financial
    Disclosure


60Item 9A


Controls and
    Procedures


60Item 9B


Other
    Information


65PART IIIItem 10


Directors,
    Executive Officers and Corporate Governance


65Item 11


Executive
    Compensation


65Item 12


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


65Item 13


Certain
    Relationships and Related Transactions and Director
    Independence


65Item 14


Principal
    Accountant Fees and Services


66PART IVItem 15


Exhibits and
    Financial Statement Schedules


66Signatures


71EX-4.1EX-4.8EX-4.10EX-4.11EX-4.12EX-4.13EX-4.14EX-10.1EX-10.20EX-10.21EX-10.22EX-10.23EX-10.25EX-10.26EX-10.30EX-10.34EX-10.35EX-10.36EX-10.37EX-10.38EX-10.39EX-10.40EX-10.41EX-10.42EX-10.46EX-10.48EX-10.50EX-10.51EX-21.1EX-23.1EX-31.1EX-31.2EX-32




---



##### Table of Contents



PART I  Item 1.
    Business  INFORMATION
    REGARDING MICROMETS BUSINESS
  Company
    Overview
  ®
    Corporate
    History
        
    CancerVax Corporation or CancerVax
    refers to the business, operations and financial results of
    CancerVax Corporation prior to the closing of the merger between
    CancerVax Corporation and Micromet AG on May 5, 2006, at
    which time CancerVaxs name was changed to Micromet,
    Inc.;
    Micromet AG refers to the business, operations and
    financial results of Micromet AG, a privately-held German
    company, prior to the closing of the merger and after the
    merger, as the context requires; and
    Micromet, we, our, or
    us refers to the operations and financial results of
    Micromet, Inc. and Micromet AG on a consolidated basis after the
    closing of the merger, and Micromet AG prior to the closing of
    the merger, as the context requires. 1




---



##### Table of Contents



Market
    Overview
      Immunotherapy
    for the Treatment of Cancer
    cell-to-cell
      Types of
    Cancer
    Non-Hodgkins
    Lymphoma
  Overview
    and Current Therapies
   2




---



##### Table of Contents



® and/or and/or
    Our
    Approach
  co-receptor ® ®
  Breast
    Cancer and Other EpCAM-Positive Solid Tumors
  Overview
    and Current Therapies
   3




---



##### Table of Contents



®
  + + - - ®
  Unmet
    Medical Needs
    
    More effective therapies (defined as prolonged survival and
    improved quality of life) for patients with stage IV
    disease, whose cancer has metastasized to another area of the
    body;
    Less toxic, more convenient secondary therapies to prolong time
    to disease progression, reduce disease-related symptoms, and
    improve quality of life; and
    Therapies that increase the overall survival of patients with
    stage II/III disease, such as neo-adjuvant treatment
    regimens.  Our
    Approach
  and/or
  Other
    EpCAM-Positive Solid Tumors
   4




---



##### Table of Contents



® ®
  Our
    Product Pipeline
    Product Candidate

Primary Indication

Collaborator

StatusBiTE®
    MT103

Non-Hodgkins Lymphoma

MedImmune

Clinical Phase 1BiTE®
    MT110

Adenocarcinoma



Pre-clinicalBiTE® 
    EphA2

Selected Cancers

MedImmune

Pre-clinicalBiTE® 
    CEA

Selected Cancers

MedImmune

Pre-clinicalAdecatumumab (MT201)

Metastatic Breast Cancer and other
    Adenocarcinoma

Merck Serono

Clinical Phase 2aMetastatic Breast Cancer in
    Combination with Docetaxel



Clinical Phase 1bAntibody D93

Cancer



Open INDAntibody MT203

Inflammatory Diseases



Pre-clinicalAntibody MORAb28

Melanoma

Morphotek

Pre-clinicalAntibody MT204

Inflammatory Diseases



Pre-clinical   MT103
      Mechanism
    of Action
     5




---



##### Table of Contents



Clinical
    Trials
  Clinical
    Trial
    MT103-104
    (Relapsed-refractory NHL)
    2
  Side
    Effect Profile of MT103 as Observed in Early Clinical
    Trials
     6




---



##### Table of Contents



CNS-related
  Regulatory
    Pathway
      MT110
    Mechanism
    of Action and Preclinical Activities
      Regulatory
    Pathway
    BiTE
    molecules targeting EphA2 and CEA
   7




---



##### Table of Contents



Mechanisms
    of Action and Preclinical Activities
      Adecatumumab
    (MT201)
    60-minute
    Clinical
    Trials
    Number ofPhase of Clinical Trial

Indication

Status

SubjectsPhase 2 (adecatumumab
    monotherapy)

Metastatic breast cancer

Completed

112Phase 2 (adecatumumab
    monotherapy)

Prostate cancer

Completed

84Phase 1 (adecatumumab plus
    docetaxel)

Metastatic breast cancer

Ongoing

Up to 36Phase 1 (adecatumumab
    monotherapy)

Adenocarcinomas

PlannedPhase 1 (adecatumumab
    monotherapy)

Hormone refractory prostate cancer

Completed

20  8




---



##### Table of Contents



Phase 2
    Clinical Trial  Patients with Metastatic Breast
    Cancer (Adecatumumab monotherapy)
      Treatment Groups

EpCAM Expression

MT201 DosingGroup I

Moderate EpCAM Expression on
    Primary Tumor

2 mg/kgGroup II

Moderate EpCAM Expression on
    Primary Tumor

6 mg/kgGroup III

High EpCAM Expression on Primary
    Tumor

2 mg/kgGroup IV

High EpCAM Expression on Primary
    Tumor

6 mg/kg   follow-up
    time-to-progression
  CTC-AE)
 9




---



##### Table of Contents



Phase 2
    Clinical Trial  Patients with Prostate Cancer
    (Adecatumumab as a Single Agent)
    follow-up follow-up 3
  sub-group sub-group
    Phase 1
    Clinical Trial  Patients with Metastatic Breast
    Cancer (Adecatumumab in Combination with Docetaxel)
    Phase 1
    Clinical Trial  Patients with Hormone Refractory
    Prostate Cancer (Adecatumumab monotherapy)
  2
 10




---



##### Table of Contents



Additional
    Phase 1 Clinical Trial (Adecatumumab monotherapy)
    MT203
    Mechanism
    of Action and Preclinical Activities
  ® ® ®
  MT204
  ® ®
  Mechanism
    of Action and Preclinical Activities
  ® ® ®
  D93
   11




---



##### Table of Contents



Mechanism
    of Action and Preclinical Activities
          Product
    Candidates Targeting the EGF Receptor Signaling
    Pathway
    MORAb28
   12




---



##### Table of Contents



Our
    Business Strategy
    
    Co-develop Compounds with Established Pharmaceutical and
    Biopharmaceutical Companies.  We are working with
    Merck Serono and MedImmune to complete ongoing clinical trials
    and enter into the next stage of clinical development for two of
    our product candidates.
    Maintain Commercialization Opportunities in
    Collaborations.  We have retained an option to
    co-promote adecatumumab in Europe and the U.S., and have full
    commercialization rights for MT103 outside of
    North America. We intend to continue to pursue this
    partnering strategy in future collaborations.
    Advance the Development of Our Preclinical Product
    Candidates.  We have initiated the production of
    clinical trial-grade material for MT110, and we plan to commence
    clinical trials upon the availability of such material and the
    approval of an IND or IMPD.
    Pursue Additional Collaborations for Our Product
    Candidates.  We will continue to seek strategic
    collaborations for some or all of the product candidates in our
    product portfolio.
    Leverage Our Internal Pipeline Generating
    Capabilities.  Our current pipeline of BiTE
    molecules as well as human IgG1 antibodies have all been
    generated by personnel employed by us, with the exception of D93
    and MORAb28, which were in-previously in-licensed by CancerVax.
    We will continue to leverage that capability for our early-stage
    development collaborations, as well as for generating additional
    product candidates for our own pipeline, especially new product
    candidates based on the proprietary BiTE development platform.  Intellectual
    Property
                   13




---



##### Table of Contents



continuations-in-part
  License
    Agreements and Collaborations
    Agreements
    Relevant for the Generation of Antibodies and for the BiTE
    Platform in General
  License
    Agreement with Isogenis/Biohybrid
  Hybrid Ligand Directed to Activation of
    Cytotoxic Effector Lymphocytes and Associated Target
    Antigens
    License
    Agreement with Roche
    Purchase
    Agreement with Curis
   14




---



##### Table of Contents



Research
    and License Agreement with Merck KGaA/Biovation
    License
    Agreement with Enzon
        License
    Agreement with Cambridge Antibody Technology and Enzon
       15




---



##### Table of Contents



Agreements
    Relevant for MT103
    Collaboration
    Agreement with MedImmune
      Transfer
    Agreements around MT110
    Agreements
    Relevant for EphA2 BiTE and CEA BiTE
  BiTE
    Research Collaboration Agreement with MedImmune
    Licensing
    of Single-Chain Antibody Patents
  Exclusive
    IP Marketing Agreement with Enzon
     16




---



##### Table of Contents



License
    Agreements with Various Parties pursuant to the Exclusive IP
    Marketing Agreement
    Agreements
    Relevant for Adecatumumab (MT201)
  Transfer
    Agreement with Inventors
    License
    Agreement with Dyax
    License
    Agreement with Cambridge Antibody Technology
    Manufacturing
    and Supply Agreement with Boehringer Ingelheim
     17




---



##### Table of Contents



Collaboration
    Agreement with Merck Serono
    and/or and/or
    Agreements
    Relevant for D93
  License
    Agreement with the University of Southern California
    Collaboration
    Agreement with Applied Molecular Evolution/Eli Lilly
   18




---



##### Table of Contents



License
    Agreement with Tracon Pharmaceuticals
    Agreements
    Relevant for MT203
  License
    Agreement with Enzon
    License
    agreement with Cambridge Antibody Technology
    Agreements
    Relevant for MT204
  License
    Agreement with Enzon
   19




---



##### Table of Contents



Agreements
    Relevant for the Antibody MORAb28
  License
    Agreement with M-Tech
  M-Tech M-Tech M-Tech M-Tech
  Sublicense
    Agreement with Morphotek
    Agreements
    Relevant for the EGF, TGF-alpha and HER-1 Vaccine
    Programs
  License,
    Development, Manufacturing and Supply Agreement with CIMAB and
    YM BioSciences
    Other
    Licensing and Research and Development Agreements
  and/or
 20




---



##### Table of Contents



Manufacturing
    and Supply
    Government
    Regulation and Product Approval
  General
    FDA
    Approval Process
       21




---



##### Table of Contents



Ongoing
    Regulatory Requirements
    direct-to-consumer
    Competition
    Non-Hodgkins
    Lymphoma
    ®
 22




---



##### Table of Contents



®
    
    Biogen Idecs Ibritumomab tiuxetan
    (Zevalin®),
    a murine labeled with yttrium-90 (murine CD20 antibody);
    GlaxoSmithKlines tositumomab
    (Bexxar®),
    labeled with
    iodine-131(murine
    CD20 antibody);
    Zevalin®
    is marketed for the radioimmunotherapy of relapsed/refractory
    low-grade (indolent) CD20-positive NHL; and
    Bexxar®
    is marketed for the treatment of low-grade (indolent) NHL.    ® BMS-354825)
  Breast
    Cancer
  , /
  
    Neoadjuvant therapy (prior to surgery) to reduce tumor size and
    facilitate surgery;
    Adjuvant therapy (postsurgery) to prevent recurrence (both local
    and distant); and
    Palliative treatment of metastatic disease, which is not
    considered to be curable, where it might be used to prolong
    survival.  and/or
  and/or
  ®
   23




---



##### Table of Contents



®
  
    AstraZenecas ZD-6474;
    EntreMeds 2-methoxyestradiol (2-ME2); and
    Bayer/Onyxs sorafenib (BAY-43-9006).  Employees
    Available
    Investor Information
  Form 10-K, Form 10-Q, Form 8-K, (760) 494-4235
  Item 1A.
    Risk
    Factors  The following information sets forth factors that could cause
    our actual results to differ materially from those contained in
    forward-looking statements we have made in this report and the
    information incorporated herein by reference and those we may
    make from time to time. Certain factors individually or in
    combination with others may have a material adverse effect on
    our business, financial condition and results of operations and
    you should carefully consider them.
  Risks
    Relating to Our Financial Results, Financial Reporting and Need
    for Financing
  We
    have a history of losses, we expect to incur substantial losses
    and negative operating cash flows for the foreseeable future and
    we may never achieve profitability.
   24




---



##### Table of Contents



We
    will require additional financing, which may be difficult to
    obtain and may dilute your ownership interest in us. If we fail
    to obtain the capital necessary to fund our operations, we will
    be unable to develop or commercialize our product candidates and
    our ability to operate as a going concern may be adversely
    affected.
    
    continued progress in our research and development programs, as
    well as the scope of these programs;
    our ability to establish and maintain collaborative arrangements
    for the discovery, research or development of product candidates;
    the timing, receipt and amount of research funding and
    milestone, license, royalty and other payments, if any, from
    collaborators;
    the timing, receipt and amount of sales revenues and associated
    royalties to us, if any, from our product candidates in the
    market;
    our ability to sell shares of our common stock under our
    committed equity financing facility, or CEFF, with Kingsbridge
    Capital Limited, or Kingsbridge;
    the costs of preparing, filing, prosecuting, maintaining,
    defending and enforcing patent claims and other patent-related
    costs, including litigation costs and technology license fees;
    costs associated with litigation; and
    competing technological and market developments.     25




---



##### Table of Contents



Our
    committed equity financing facility with Kingsbridge may not be
    available to us if we elect to make a draw down, may require us
    to make additional blackout or other payments to
    Kingsbridge and may result in dilution to our
    stockholders.
    
    a minimum price for our common stock that is not less than 85%
    of the closing price of the day immediately preceding the
    applicable
    eight-day
    pricing period, but in no event less than $2.00 per share;
    the accuracy of representations and warranties made to
    Kingsbridge;
    our compliance with all applicable laws which, if we failed to
    so comply, would have a Material Adverse Effect (as that term is
    defined in the purchase agreement with Kingsbridge); and
    the effectiveness of a registration statement registering for
    resale the shares of common stock to be issued in connection
    with the CEFF.        eight-day
  Our
    quarterly operating results and stock price may fluctuate
    significantly.
    
    the status of development of our product candidates;
    the time at which we enter into research and license agreements
    with strategic collaborators that provide for payments to us,
    and the timing and accounting treatment of payments to us, if
    any, under those agreements; 26




---



##### Table of Contents




    whether or not we achieve specified research, development or
    commercialization milestones under any agreement that we enter
    into with collaborators and the timely payment by commercial
    collaborators of any amounts payable to us;
    the addition or termination of research programs or funding
    support;
    the timing of milestone payments under license agreements,
    repayments of outstanding amounts under loan agreements, and
    other payments that we may be required to make to
    others; and
    variations in the level of research and development expenses
    related to our product candidates or potential product
    candidates during any given period.    If the
    estimates we make and the assumptions on which we rely in
    preparing our financial statements prove inaccurate, our actual
    results may vary significantly.
    Changes
    in, or interpretations of, accounting rules and regulations,
    such as expensing of stock options, could result in unfavorable
    accounting charges or require us to change our compensation
    policies.
    Our
    operating and financial flexibility, including our ability to
    borrow money, is limited by certain debt
    arrangements.
      
    our ability to obtain additional financing, if necessary, for
    working capital, capital expenditures, acquisitions or other
    purposes may be impaired or such financing may not be available
    on favorable terms;
    payments on our indebtedness will reduce the funds that would
    otherwise be available for our operations and future business
    opportunities; 27




---



##### Table of Contents




    we may be more highly leveraged than our competitors, which may
    place us at a competitive disadvantage; and
    our debt level may reduce our flexibility in responding to
    changing business and economic conditions.  We
    have determined and further received an opinion from our
    independent registered public accounting firm in connection with
    our year-end audit for 2006 that our system of internal control
    over financial reporting does not meet the requirements of
    Section 404 of the Sarbanes-Oxley Act of 2002. As a result,
    investors could lose confidence in the reliability of our
    internal control over financial reporting, which could have a
    material adverse effect on our stock price.
        Risks
    Relating to Our Common Stock
  Substantial
    sales of shares may adversely impact the market price of our
    common stock and our ability to issue and sell shares in the
    future.
   28




---



##### Table of Contents



Our
    stock price may be volatile, and you may lose all or a
    substantial part of your investment.
    
    our ability to upgrade and implement our disclosure controls and
    our internal control over financial reporting;
    our ability to successfully raise capital to fund our continued
    operations;
    our ability to successfully develop our product candidates
    within acceptable timeframes;
    changes in the regulatory status of our product candidates;
    changes in significant contracts, new technologies,
    acquisitions, commercial relationships, joint ventures or
    capital commitments;
    the execution of new contracts or termination of existing
    contracts related to our clinical or preclinical product
    candidates or our BiTE technology platform;
    announcements of the invalidity of, or litigation relating to,
    our key intellectual property;
    announcements of the achievement of milestones in our agreements
    with collaborators or the receipt of payments under those
    agreements;
    announcements of the results of clinical trials by us or by
    companies with product candidates in the same therapeutic
    category as our product candidates;
    events affecting our collaborators;
    fluctuations in stock market prices and trading volumes of
    similar companies;
    announcements of new products or technologies, clinical trial
    results, commercial relationships or other events by us, our
    collaborators or our competitors;
    our ability to successfully complete sublicensing arrangements
    with respect to our product candidates that target the EGFR
    signaling pathway, denatured collagen, GM-CSF and interleukin-2;
    variations in our quarterly operating results;
    changes in securities analysts estimates of our financial
    performance or product development timelines;
    changes in accounting principles;
    sales of large blocks of our common stock, including sales by
    our executive officers, directors and significant stockholders;
    additions or departures of key personnel; and
    discussions of Micromet or our stock price by the financial and
    scientific press and online investor communities such as chat
    rooms.  If our
    officers and directors choose to act together, they can
    significantly influence our management and operations in a
    manner that may be in their best interests and not in the best
    interests of other stockholders.
   29




---



##### Table of Contents



Our
    stockholder rights plan, anti-takeover provisions in our
    organizational documents and Delaware law may discourage or
    prevent a change in control, even if an acquisition would be
    beneficial to our stockholders, which could affect our stock
    price adversely and prevent attempts by our stockholders to
    replace or remove our current management.
    
    dividing our board of directors into three classes serving
    staggered three-year terms;
    prohibiting our stockholders from calling a special meeting of
    stockholders;
    permitting the issuance of additional shares of our common stock
    or preferred stock without stockholder approval;
    prohibiting our stockholders from making certain changes to our
    amended and restated certificate of incorporation or amended and
    restated bylaws except with
    662/3%
    stockholder approval; and
    requiring advance notice for raising matters of business or
    making nominations at stockholders meetings.    We may
    become involved in securities class action litigation that could
    divert managements attention and harm our business and our
    insurance coverage may not be sufficient to cover all costs and
    damages.
    Risks
    Relating to Our Collaborations and Clinical Programs
  We are
    dependent on collaborators for the development and
    commercialization of many of our product candidates. If we lose
    any of these collaborators, or if they fail or incur delays in
    the development or commercialization of our current and future
    product candidates, our operating results would
    suffer.
    
    Each of our collaborators has significant discretion in
    determining the efforts and resources that it will apply to the
    collaboration. The timing and amount of any future royalty and
    milestone revenue that we may receive under such collaborative
    arrangements will depend on, among other things, such
    collaborators efforts and allocation of resources.
    All of our strategic collaboration agreements are for fixed
    terms and are subject to termination under various
    circumstances, including, in some cases, on short notice without
    cause. If either Merck Serono or MedImmune were to terminate its
    agreement with us, we may attempt to identify and enter into an
    agreement with a new collaborator with respect to the product
    candidate covered by the terminated agreement. If we are not
    able to do so, we may not have the funds or capability to
    undertake the 30




---



##### Table of Contents



development, manufacturing and commercialization of that product
    candidate, which could result in a discontinuation or delay of
    the development of that product candidate.  
    Our collaborators may develop and commercialize, either alone or
    with others, products and services that are similar to or
    competitive with the product candidates and services that are
    the subject of their collaborations with us.
    Our collaborators may discontinue the development of our product
    candidates in specific indications, for example as a result of
    their assessment of the results obtained in clinical trials, or
    fail to initiate the development in indications that have a
    significant commercial potential.
    Pharmaceutical and biotechnology companies from time to time
    re-evaluate their research and development priorities, including
    in connection with mergers and consolidations, which have been
    common in recent years in these industries. The ability of our
    partnered product candidates to reach their potential could be
    limited if, as a result of such changes, our collaborators
    decrease or fail to increase spending related to such product
    candidates, or decide to discontinue the development of our
    product candidates and terminate their collaboration agreement
    with us.  We may
    not be successful in establishing additional strategic
    collaborations, which could adversely affect our ability to
    develop and commercialize product candidates.
    If the
    combination of adecatumumab (MT201) with cytotoxics, such as
    docetaxel, is not tolerable or safe, if higher serum levels of
    adecatumuab cannot be administered safely, or if sufficient
    anti-tumor activity cannot be shown, we and our collaborator
    Merck Serono may decide to abandon all or part of the
    development program, and we could experience a material adverse
    impact on our results of operations.
    We
    previously terminated three phase 1 trials involving
    short-term infusion regimens of MT103 due to adverse side
    effects and a lack of perceived tumor response, and there can be
    no assurance that our current continuous infusion phase 1
    clinical trial of MT103 will produce a different
    outcome.
   31




---



##### Table of Contents



Changes
    in the laws or regulations of the United States or Cuba related
    to the conduct of our business with CIMAB may adversely affect
    our ability to sublicense or otherwise transfer our rights to
    SAI-EGF and our two other product candidates that we have
    licensed from that company.
       32




---



##### Table of Contents



U.S.-Cuba
  Risks
    Relating to Our Operations, Business Strategy, and the Life
    Sciences Industry
  We
    face substantial competition, which may result in our
    competitors discovering, developing or commercializing products
    before or more successfully than we do.
      We may
    not be successful in our efforts to expand our portfolio of
    product candidates.
    The
    product candidates in our pipeline are in early stages of
    development and our efforts to develop and commercialize these
    product candidates are subject to a high risk of delay and
    failure. If we fail to successfully develop our product
    candidates, our ability to generate revenues will be
    substantially impaired.
     33




---



##### Table of Contents



sub-indications sub-indication
      We
    rely heavily on third parties for the conduct of preclinical and
    clinical studies of our product candidates, and we may not be
    able to control the proper performance of the studies or
    trials.
    Even
    if we complete the lengthy, complex and expensive development
    process, there is no assurance that we or our collaborators will
    obtain the regulatory approvals necessary for the launch and
    commercialization of our product candidates.
   34




---



##### Table of Contents



We and
    our collaborators are subject to governmental regulations other
    than those imposed by the FDA and EMEA, and we or our
    collaborators may not be able to comply with these regulations.
    Any
    non-compliance
    could subject us or our collaborators to penalties and otherwise
    result in the limitation of our or our collaborators
    operations.
    Our
    growth could be limited if we are unable to attract and retain
    key personnel and consultants.
      If our
    third-party manufacturers do not follow current good
    manufacturing practices or do not maintain their facilities in
    accordance with these practices, our product development and
    commercialization efforts may be harmed.
   35




---



##### Table of Contents



Even
    if regulatory authorities approve our product candidates, we may
    fail to comply with ongoing regulatory requirements or
    experience unanticipated problems with our product candidates,
    and these product candidates could be subject to restrictions or
    withdrawal from the market following approval.
    The
    procedures and requirements for granting marketing approvals
    vary among countries, which may cause us to incur additional
    costs or delays or may prevent us from obtaining marketing
    approvals in different countries and regulatory
    jurisdictions.
    If we
    fail to obtain an adequate level of reimbursement for any
    approved products by third-party payers, there may be no
    commercially viable markets for these products or the markets
    may be much smaller
 36




---



##### Table of Contents



than expected. The continuing efforts of the government,
    insurance companies, managed care organizations and other payers
    of health care costs to contain or reduce costs of healthcare
    may adversely affect our ability to generate revenues and
    achieve profitability, the future revenues and profitability of
    our potential customers, suppliers and collaborators, and the
    availability of capital.
      If
    physicians and patients do not accept the product candidates
    that we may develop, our ability to generate product revenue in
    the future will be adversely affected.
    
    our ability to provide acceptable evidence of safety and
    efficacy;
    convenience and ease of administration;
    prevalence and severity of adverse side effects;
    availability of alternative treatments;
    cost effectiveness;
    effectiveness of our marketing and pricing strategy for any
    product candidates that we may develop;
    publicity concerning our product candidates or competitive
    products; and
    our ability to obtain third-party coverage or reimbursement. 37




---



##### Table of Contents



We
    face the risk of product liability claims and may not be able to
    obtain insurance.
    Our
    operations involve hazardous materials and we must comply with
    environmental laws and regulations, which can be
    expensive.
    Risks
    Relating to Our Intellectual Property and Litigation
  We may
    not be able to obtain or maintain adequate patents and other
    intellectual property rights to protect our business and product
    candidates against competitors.
     38




---



##### Table of Contents



We may
    incur substantial costs enforcing our patents against third
    parties. If we are unable to protect our intellectual property
    rights, our competitors may develop and market products with
    similar features that may reduce demand for our potential
    products.
      If we
    are not able to protect and control our unpatented trade
    secrets, know-how and other technological innovation, we may
    suffer competitive harm.
   39




---



##### Table of Contents



If
    third parties claim that our product candidates or technologies
    infringe their intellectual property rights, we may become
    involved in expensive patent litigation, which could result in
    liability for damages or require us to stop our development and
    commercialization of our product candidates after they have been
    approved and launched in the market, or we could be forced to
    obtain a license and pay royalties under unfavorable
    terms.
         40




---



##### Table of Contents



Our
    success depends on our ability to maintain and enforce our
    licensing arrangements with various third party
    licensors.
    If
    licensees or assignees of our intellectual property rights
    breach any of the agreements under which we have licensed or
    assigned our intellectual property to them, we could be deprived
    of important intellectual property rights and future
    revenue.
    We may
    be subject to damages resulting from claims that we or our
    employees have wrongfully used or disclosed alleged trade
    secrets of their former employers.
    Risks
    Relating to Manufacturing and Sales of Products
  We
    depend on our collaborators and third-party manufacturers to
    produce most, if not all, of our product candidates and if these
    third parties do not successfully manufacture these product
    candidates our business will be harmed.
  scale-up
 41




---



##### Table of Contents




    we and our collaborators may not be able to initiate or continue
    clinical trials of product candidates that are under development;
    we and our collaborators may be delayed in submitting
    applications for regulatory approvals for our product
    candidates; and
    we and our collaborators may not be able to meet commercial
    demands for any approved products.  We
    have no sales, marketing or distribution experience and will
    depend significantly on third parties who may not successfully
    sell our product candidates following approval.
      
    we may not be able to attract and build a significant and
    skilled marketing staff or sales force;
    the cost of establishing a marketing staff or sales force may
    not be justifiable in light of the revenues generated by any
    particular product; and
    our direct sales and marketing efforts may not be successful.  Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties  10-year
 42




---



##### Table of Contents



10-year
      Item 3.
    Legal
    Proceedings  Cell
    Therapeutics Inc./Novuspharma S.p.A.
      Curis,
    Inc.
   43




---



##### Table of Contents



Patent
    Opposition in Europe
    Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
    High


LowYear Ended December 31,
    2005First Quarter

$
33.00


$
18.06Second Quarter

$
20.13


$
8.10Third Quarter

$
12.72


$
8.28Fourth Quarter

$
10.38


$
3.93Year Ended December 31,
    2006First Quarter

$
10.65


$
3.96Second Quarter

$
10.26


$
4.07Third Quarter

$
4.47


$
2.25Fourth Quarter

$
5.30


$
1.82     Dividend
    Policy
   44




---



##### Table of Contents



Comparative
    Stock Performance Graph
       ACADIA
    Pharmaceuticals, Inc.

 Dynavax Technologies
    Corporation Alnylam
    Pharmaceuticals, Inc.

 Immunogen Inc Anadys
    Pharmaceuticals, Inc.

 Immunomedics, Inc. Anesiva, Inc.

 Maxygen, Inc. Antigenics, Inc.

 Metabasis
    Therapeutics, Inc. Arqule, Inc.

 Neurogen Corporation Avant
    Immunotherapeutics, Inc.

 Panacos
    Pharmaceuticals, Inc. CombinatoRx, Inc.

 Renovis, Inc. Curagen Corporation

 Rigel Pharmaceuticals,
    Inc. Cyclacel
    Pharmaceuticals, Inc.

 Seattle Genetics, Inc. Cytokinetics,
    Incorporated

 Sunesis
    Pharmaceuticals, Inc. Dyax Corp.  45




---



##### Table of Contents



Form 10-K
  COMPARISON
    OF 39 MONTH CUMULATIVE TOTAL RETURN
    Among Micromet, Inc., The NASDAQ Composite Index,
    The NASDAQ Pharmaceutical Index and a Peer Group
  
  10/03


12/03


3/04


6/04


9/04


12/04


3/05


6/05


9/05


12/05


3/06


6/06


9/06


12/06Micromet,
    Inc.


$
100.00



$
79.00



$
88.42



$
63.42



$
67.50



$
90.42



$
54.92



$
23.75



$
28.67



$
11.50



$
23.58



$
11.89



$
7.42



$
8.33NASDAQ Composite


$
100.00



$
112.00



$
113.33



$
115.46



$
110.63



$
127.81



$
120.03



$
122.11



$
128.97



$
128.56



$
138.23



$
129.14



$
134.02



$
139.50NASDAQ Pharmaceutical


$
100.00



$
100.07



$
103.74



$
102.83



$
101.53



$
109.26



$
94.58



$
100.32



$
121.31



$
122.90



$
127.64



$
116.46



$
120.29



$
125.58Peer Group


$
100.00



$
105.88



$
107.05



$
97.39



$
86.42



$
98.78



$
65.13



$
71.38



$
84.13



$
73.76



$
89.27



$
65.00



$
60.91



$
70.24  46




---



##### Table of Contents



Item 6.
    Selected
    Consolidated Financial Data.    Form 10-K
  Years Ended December 31,2006

2005

2004

2003

2002(In thousands, except per share amounts)Consolidated Statement of
    Operations Data:RevenuesCollaboration agreements

$
25,449


$
23,130


$
14,530


$
14,844


$
License fees


1,959



2,482



2,103



57



Other


175



111



108



31



3,539Total revenues


27,583



25,723



16,741



14,932



3,539Operating expensesResearch and
    development(1)


28,252



28,579



33,084



29,630



21,215In-process research and development


20,890















General and
    administrative(1)


12,012



6,861



5,589



4,433



2,427Total operating expenses


61,154



35,440



38,673



34,063



23,642Loss from operations


(33,571
)


(9,717
)


(21,932
)


(19,131
)


(20,103
)Other income (expenses)Interest expense


(1,725
)


(5,176
)


(2,944
)


(2,346
)


(1,141
)Interest income


743



335



264



660



974Other income (expense)


561



288



(456
)


(640
)


(124
)Total other income (expense)


(421
)


(4,553
)


(3,136
)


(2,326
)


(291
)Net loss


(33,992
)


(14,270
)


(25,068
)


(21,457
)


(20,394
)Beneficial conversion charge on
    issuance of preferred shares






(4,780
)










Net loss attributable to common
    stockholders

$
(33,992
)

$
(19,050
)

$
(25,068
)

$
(21,457
)

$
(20,394
)Basic and diluted net loss per
    common share

$
(1.29
)

$
(3.70
)

$
(16.64
)

$
(14.25
)

$
(13.54
)Weighted average shares used to
    compute basic and diluted net loss per share


26,366



5,147



1,506



1,506



1,506     (1)
    
    Includes the following amounts related to stock-based
    compensation expense (in thousands):  Research and development

$
2,574


$



$



$



$
General and administrative

$
3,032


$



$
2


$
20


$
   47




---



##### Table of Contents



As of December 31,2006


2005


2004


2003


2002Consolidated Balance Sheet Data
    (in thousands):Cash and cash equivalents

$
24,301


$
11,414


$
12,749


$
18,356


$
21,581Working capital


11,578



(10,407
)


(1,459
)


13,339



17,353Total assets


51,172



28,877



50,002



45,759



46,790Long-term debt, net of current
    portion


7,408



5,531



9,878



9,880



7,777Convertible notes, net of current
    portion






11,844



40,236



29,936



14,061Accumulated deficit


(144,807
)


(110,815
)


(91,768
)


(66,699
)


(45,242
)Total stockholders equity
    (deficit)


24,518



(14,533
)


(33,231
)


(5,250
)


15,105   Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  The following discussion contains forward-looking statements,
    which involve risks and uncertainties. Our actual results could
    differ materially from those anticipated in these
    forward-looking statements as a result of various factors,
    including those set forth in Part I 
    Item 1A above under the caption Risk Factors.
    This Managements Discussion and Analysis of Financial
    Condition and Results of Operations should be read in
    conjunction with our consolidated financial statements and
    related notes included elsewhere in this Annual Report on
    Form 10-K.
    Overview
    Merger
    of CancerVax Corporation and Micromet AG
    Ongoing
    Business Activities
   48




---



##### Table of Contents



®
         49




---



##### Table of Contents



Research
    and Development and In-Process Research and
    Development
    sub-licensed sub-licensing
             50




---



##### Table of Contents



Critical
    Accounting Policies and the Use of Estimates
    Revenue
    Recognition
          No. 00-21, Revenue Arrangements with Multiple Deliverables. No. 00-21
 51




---



##### Table of Contents



Purchase
    Price Allocation in Business Combinations
    Goodwill
  Goodwill and Other Intangible
    Assets
  Long-Lived
    and Intangible Assets
    Stock-Based
    Compensation
  Share-Based Payment Accounting for
    Stock-Based Compensation
 52




---



##### Table of Contents



at-the-money
  Recent
    Accounting Standards and Pronouncements
  Accounting for Uncertain Tax Positions Accounting for Income
    Taxes
  Considering the Effects of Prior Year Misstatements when
    Quantifying Misstatements in Current Year Financial
    Statements.
  Fair Value Measurements.
  Results
    of Operations
   53




---



##### Table of Contents



Comparison
    of the Years Ended December 31, 2006 and December 31,
    2005
  Revenues.
  For the Year EndedDecember 31,


December 31,2006


2005Merck Serono Revenue:Collaborative R&D revenue

$
8.1


$
13.4Milestone payment


10.0



Total revenue from Merck Serono


18.1



13.4MedImmune Revenue:Collaborative R&D revenue


3.7



5.7Milestone payment


1.6



Total revenue from MedImmune


5.3



5.7Other collaborative R&D
    revenue


1.9



4.0License revenue


2.0



2.5Other revenue


0.3



0.1Total revenues

$
27.6


$
25.7     Research and Development Expenses. in vitro in vivo
    In-Process Research and Development. sub-licensed
 54




---



##### Table of Contents



sub-licensing
  General and Administrative Expenses.
  U.S.-based
  Interest Expense.
  Interest Income.
  Other Income (Expense).
  Comparison
    of the Years Ended December 31, 2005 and December 31,
    2004
  Revenues.
  For the Year EndedDecember 31,


December 31,2005


2004Merck Serono collaborative R&D
    revenue

$
13.4


$
1.1MedImmune collaborative R&D
    revenue


5.7



6.9Enzon collaborative R&D revenue


4.0



3.3CTI/Novuspharma collaborative
    R&D revenue






3.2License revenue


2.5



2.1Other revenue


0.1



0.1Total revenues

$
25.7


$
16.7    55




---



##### Table of Contents



Research and Development Expenses.
      General and Administrative Expenses.
  Interest Expense.
  Interest Income.
  Other Income (Expense).
  Liquidity
    and Capital Resources
     56




---



##### Table of Contents



57




---



##### Table of Contents




    the progress of our clinical trials;
    the progress of our research activities;
    the number and scope of our research programs;
    the progress of our preclinical development activities; 58




---



##### Table of Contents




    the costs involved in preparing, filing, prosecuting,
    maintaining, enforcing and defending patent and other
    intellectual property claims;
    the costs related to development and manufacture of
    pre-clinical, clinical and validation lots for regulatory
    purposes and commercialization of drug supply associated with
    our product candidates;
    our ability to enter into corporate collaborations and the terms
    and success of these collaborations;
    the costs and timing of regulatory approvals; and
    the costs of establishing manufacturing, sales and distribution
    capabilities.  Contractual
    Obligations
    Payment Due by PeriodLess Than








More ThanContractual Obligations

Total


1 Year


1-3 Years


3-5 Years


5 YearsOperating leases

$
25,126


$
4,478


$
9,046


$
9,253


$
2,349Long-term debt 
    MedImmune


2,020











2,020



Silent partnership obligations


5,987



599



5,388







Contractual payments under
    licensing and research and development agreements


2,450



1,855



210



110



275Capital leases


135



76



59







Short-term note
    payable  Curis


1,320



1,320











$
37,038


$
8,328


$
14,703


$
11,383


$
2,624   and/or
  Cautionary
    Note Regarding Forward-Looking Statements
   59




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Interest
    Rates
    Exchange
    Rates
      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  Evaluation
    of Disclosure Controls and Procedures
   60




---



##### Table of Contents



Rules 13a-15(e) 15d-15(e)
    Form 10-K
  Managements
    Report on Internal Control Over Financial Reporting
     61




---



##### Table of Contents



Regulation S-K
  
    Inadequate Procedures Around Estimation and
    Accruals.  As a result of errors identified in
    estimates around accrued liability accounts, we have concluded
    that controls over our estimation and analyses processes were
    not effective and are indicative of a material weakness. We
    over-accrued certain research and development costs and we
    under-accrued travel, legal and certain research and development
    costs. The effect of these accrual errors required an audit
    adjustment to accruals that was material to the consolidated
    financial statements.
    Invoicing Error in Licensee Milestone.  A
    milestone invoice to one of our single-chain antibody licensees
    was prepared by our accounting staff in the wrong currency,
    approved and mailed to the licensee. As a result, we have
    concluded that the controls over the analysis and recording of
    revenue transactions with unusual terms were not effective, and
    are indicative of a material weakness in revenue accounting
    controls.
    Inadequate Management Review.  As a result of
    errors identified by our independent registered public
    accounting firm in our financial close process and disclosures
    and amounts in our annual report on
    Form 10-K
    subsequent to our financial statement review process but prior
    to filing of our Form
    10-K, we
    have concluded that controls over our financial statement close
    and reporting process are not effective, and are indicative of a
    material weakness.     62




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm on Internal
    Control over Financial Reporting
               
    Controls over the Companys estimation and analyses
    processes for accruals were not effective and are indicative of
    a material weakness. We over-accrued certain research and
    development costs and we under-accrued travel, legal and other
    research and development costs. The effect of these accrual
    errors required an audit adjustment to accruals that was
    material to the financial statements.
    Controls over the analysis and recording of revenue transactions
    with unusual terms were not effective and are indicative of a
    material weakness.
    Controls over the Companys financial statement close and
    reporting process are not effective, and are indicative of a
    material weakness.   63




---



##### Table of Contents



Managements
    Remediation Plan
      
    hiring a chief financial officer with significant
    U.S. public company experience in October 2006;
    implementing additional preparation, review and approval
    procedures over estimations and accruals;
    improving our procedures for verifying and documenting contract
    terms and implementing of a company-wide contract management
    system to facilitate the flow of information amongst various
    functional departments;
    formalizing process and documentation related to financial
    statement closing and consolidation review, including more
    frequent interaction across all members of our financial staff
    involved in preparation of financial statements and a review of
    those financial statements by the entire staff as a group;
    formalizing and enhancing documentation, oversight and review
    procedures related to accounting records of Micromet AG to
    ensure compliance with U.S. generally accepted accounting
    principles;
    reviewing and making appropriate staffing adjustments at all
    company locations to enhance accounting expertise;
    supplementing our accounting staff to improve the breadth and
    depth of experience;
    engaging qualified accounting and tax consultants to aid us in
    the implementation of procedures and policies; and
    improving training for, and integration and communication among,
    accounting staff.   64




---



##### Table of Contents



Changes
    in Internal Control over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
  Item 9B.
    Other
    Information    Form 10-Q
 PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and
    Management    Item 13.
    Certain
    Relationships and Related Transactions and Director
    Independence   65




---



##### Table of Contents



Item 14.
    Principal
    Accountant Fees and Services   PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules and Reports on
    Form 8-K  ExhibitNumber

Description2
.1(13)

Agreement and Plan of Merger,
    dated as of January 6, 2006 and amended as of
    March 17, 2006, by and among CancerVax Corporation,
    Carlsbad Acquisition Corporation, Micromet, Inc., and Micromet AG3
.1(2)

Amended and Restated Certificate
    of Incorporation of the Registrant3
.2 (17)

Certificate of Amendment of the
    Amended and Restated Certificate of Incorporation of the
    Registrant3
.3(5)

Certificate of Designations for
    Series A Junior Participating Preferred Stock of the
    Registrant3
.4(11)

Second Amended and Restated Bylaws
    of the Registrant3
.5(17)

First Amendment to Second Amended
    and Restated Bylaws of the Registrant3
.6(18)

Second Amendment to Second Amended
    and Restated Bylaws of the Registrant4
.1

Form of Specimen Common Stock
    Certificate4
.2(1)

Warrant to Purchase Vendor
    Preferred Stock, Series 2, issued to Venture
    Lending & Leasing III, LLC, dated
    September 6, 20024
.3(5)

Rights Agreement, by and between
    the Registrant and Mellon Investor Services LLC, which includes
    the form of Certificate of Designations of the Series A
    Junior Participating Preferred Stock of the Registrant as
    Exhibit A, the form of Right Certificate as Exhibit B
    and the Summary of Rights to Purchase Preferred Shares as
    Exhibit C, dated as of November 3, 20044
.4(11)

First Amendment to Rights
    Agreement, by and between the Registrant and Mellon Investor
    Services LLC, dated as of March 17, 20064
.5(24)

Second Amended and Restated Note,
    in favor of MedImmune Ventures, Inc., dated as of
    December 27, 20064
.6(20)

Registration Rights Agreement, by
    and between the Registrant and Kingsbridge Capital Limited,
    dated as of August 30, 20064
.7(20)

Warrant to purchase
    285,000 shares of Common Stock, issued to Kingsbridge
    Capital Limited, dated August 30, 20064
.8

Form of Warrant to Purchase Common
    Stock, dated May 5, 20064
.9(18)

Form of Warrants to purchase an
    aggregate of 555,556 shares of Common Stock, in favor of
    funds affiliated with NGN Capital, LLC, dated July 24, 20064
.10(&)

Silent Partnership Participation
    Agreement (Beteiligungsvertrag) with tbg Technologie
    Beteiligungsgesellschaft mbH, dated March 2, 19994
.11(&)

Silent Partnership Participation
    Agreement (Beteiligungsvertrag) with tbg Technologie
    Beteiligungsgesellschaft mbH, dated March 2, 19994
.12(&)

Amendment to Silent Partnership
    Participation Agreements with tbg Technologie
    Beteiligungsgesellschaft mbH, dated February 6, 20064
.13(&)

Silent Partnership Participation
    Agreement (Beteiligungsvertrag) with Technologie
    Beteiligungsfond Bayern GmbH, dated January 17, 20004
.14(&)

Amendment to Silent Partnership
    Participation Agreement with Technologie Beteiligungsfond Bayern
    GmbH, dated February 6, 200610
.1(@)

Lease Agreement between Micromet
    AG and GEK Grundstücksverwaltungsgesellschaft
    mbH & Co. Objekt Eins KG, dated December 10, 2002,
    as amended 66




---



##### Table of Contents



ExhibitNumber

Description10
.2(1)

Standard Industrial/Commercial
    Single-Tenant Lease-Net, by and between the Registrant and
    Blackmore Airport Centre, dated August 31, 200110
.3(15)

Sublease Agreement, by and between
    the Registrant and Genoptix, Inc., dated as of April 26,
    200610
.4(1)

Lease, by and between Spieker
    Properties, L.P. and John Wayne Cancer Institute, made as of
    July 22, 199910
.5(1)

Agreement of Lease Assignment, by
    and between the Registrant and John Wayne Cancer Institute,
    dated as of August 4, 200010
.6(1)

First Amendment to Lease, by and
    between the Registrant (as successor in interest to John Wayne
    Cancer Institute) and EOP  Marina Business Center,
    L.L.C. (as successor in interest to Spieker Properties, L.P.),
    entered into as of October 1, 200110
.7(1)

Second Amendment to Lease, by and
    between the Registrant and EOP  Marina Business
    Center, L.L.C., entered into as of September 4, 200210
.8(8)

Third Amendment to Lease, by and
    between the Registrant and CA-Marina Business Center Limited
    Partnership, entered into as of November 14, 200310
.9(9)

Fourth Amendment to Lease, by and
    between the Registrant and Marina Business Center, LLC, entered
    into as of January 18, 200510
.10(17)

Fifth Amendment to Lease, by and
    among the Registrant, Marina Business Center, LLC, and American
    Bioscience, Inc., dated as of April 18, 200610
.11(14)

Assignment and Assumption of
    Lease, by and between the Registrant and American Bioscience,
    Inc., effective as of May 1, 200610
.12(#)(6)

Amended and Restated Employment
    Agreement, by and between the Registrant and David F. Hale,
    dated as of November 15, 200410
.13(#)(10)

First Amendment to Amended and
    Restated Employment Agreement, by and between the Registrant and
    David F. Hale, dated as of October 14, 200510
.14(#)(12)

Second Amendment to Amended and
    Restated Employment Agreement, by and between the Registrant and
    David F. Hale, dated as of March 27, 200610
.15(#)(16)

Third Amendment to Amended and
    Restated Employment Agreement, by and between the Registrant and
    David F. Hale, dated as of May 4, 200610
.16(#)(21)

Compensation Arrangement with
    David F. Hale10
.17(#)(23)

Executive Employment Agreement, by
    and between the Registrant and Christian Itin, dated
    June 2, 200610
.18(#)(23)

Executive Employment Agreement, by
    and between the Registrant and Matthias Alder, dated
    July 1, 200610
.19(#)(22)

Executive Employment Agreement, by
    and between the Registrant and Christopher P. Schnittker, dated
    October 10, 200610
.20(#)

Executive Employment Agreement, by
    and between the Registrant and Carsten Reinhardt, dated
    June 2, 200610
.21(#)

Executive Employment Agreement, by
    and between the Registrant and Jens Hennecke, dated June 2,
    200610
.22(#)

Executive Employment Agreement, by
    and between the Registrant and Patrick Baeuerle, dated
    June 2, 200610
.23(#)

Separation Agreement with Gregor
    K. Mirow, dated as of December 22, 200610
.24(#)(21)

2006 Management Incentive
    Compensation Plan10
.25(#)

2007 Management Incentive
    Compensation Plan10
.26(#)

Non-Employee Director Compensation
    Policy10
.27(#)(1)

Third Amended and Restated 2000
    Stock Incentive Plan10
.28(#)(1)

2003 Employee Stock Purchase Plan 67




---



##### Table of Contents



ExhibitNumber

Description10
.29(#)(7)

Amended and Restated 2003 Equity
    Incentive Award Plan10
.30(#)

2006 Equity Incentive Award Plan10
.31(#)(17)

Form of Indemnification Agreement
    entered into by the Registrant with its directors and executive
    officers10
.32(20)

Common Stock Purchase Agreement,
    by and between the Registrant and Kingsbridge Capital Limited,
    dated as of August 30, 200610
.33(18)

Securities Purchase Agreement, by
    and among the Registrant and funds affiliated with NGN Capital
    LLC, dated as of July 21, 200610
.34(+)

Collaboration and License
    Agreement, by and between Micromet AG and Ares Trading S.A.,
    dated as of December 3, 2004, as amended on
    November 30, 200610
.35(+)

Research and License Agreement, by
    and between Micromet AG and Biovation Limited, dated
    August 14, 2001, as amended on September 26, 2002 and
    June 16, 200410
.36(+)

Research Cross-License Agreement
    by and among Micromet AG, Enzon Pharmaceuticals, Inc. and
    Cambridge Antibody Technology Limited, dated September 3,
    2003, as amended on March 17, 200510
.37(+)

Non-Exclusive Product License
    Agreement for MT201, by and between Micromet AG and Cambridge
    Antibody Technology Limited, dated September 3, 2003, as
    amended on March 17, 200510
.38(+)

Non-Exclusive Product License
    Agreement for MT203, by and between Micromet AG and Cambridge
    Antibody Technology Limited, dated September 3, 2003, as
    amended on March 17, 200510
.39(+)

Amended and Restated Cross-License
    Agreement, by and between Micromet AG and Enzon Pharmaceuticals,
    Inc., dated June 28, 2004, as amended on March 17, 200510
.40(+)

GM-CSF License Agreement, by and
    between Micromet AG and Enzon Pharmaceuticals, Inc., dated
    November 21, 200510
.41(+)

BiTE Research Collaboration
    Agreement, by and between Micromet AG and MedImmune, Inc., dated
    June 6, 200310
.42(+)

Collaboration and License
    Agreement, by and between Micromet AG and MedImmune, Inc., dated
    June 6, 200310
.43(%)(4)

Amended and Restated Collaboration
    Agreement, by and between Cell-Matrix, Inc., a wholly owned
    subsidiary of the Registrant, and Applied Molecular Evolution,
    dated as of October 15, 200410
.44(%)(19)

First Amendment to Amended and
    Restated Collaboration Agreement, dated as of June 10, 200610
.45(%)(1)

License Agreement, by and between
    the University of Southern California and Bio-Management, Inc.,
    dated September 19, 199910
.46(+)

First Amendment to License
    Agreement, by and between the University of Southern California
    and Cell-Matrix, Inc., dated as of February 23, 200710
.47(%)(3)

TGF-α HER-1 Vaccine License,
    Development, Manufacturing and Supply Agreement, by and among
    Tarcanta, Inc., Tarcanta, Ltd., CIMAB, S.A., YM BioSciences,
    Inc. and CIMYM, Inc., dated as of July 13, 200410
.48(+)

Letter Agreements, by and among
    Tarcanta, Inc., Tarcanta, Ltd. and CIMAB, S.A., dated as of
    October 6, 2006 and December 20, 200610
.49(%)(3)

EGF Vaccine License, Development,
    Manufacturing and Supply Agreement, by and among Tarcanta, Inc.,
    Tarcanta, Ltd. and CIMAB, S.A., dated as of July 13, 200410
.50(+)

Letter Agreement, by and among
    Tarcanta, Inc., Tarcanta, Ltd., CIMAB, S.A., YM Biosciences,
    Inc. and CIMYM, Inc. dated as of October 6, 200610
.51(+)

License Agreement, by and between
    Micromet AG and Dyax Corp., dated as of October 30, 2000 68




---



##### Table of Contents



ExhibitNumber

Description11
.1

Computation of Per Share Earnings
    (included in the notes to the audited financial statements
    contained in this report)21
.1

List of Subsidiaries23
.1

Consent of Independent Registered
    Public Accounting Firm24
.1

Powers of Attorney (included on
    signature page)31
.1

Certification of Principal
    Executive Officer pursuant to
    Rules 13a-14
    and 15d-14
    promulgated under the Securities Exchange Act of 193431
.2

Certification of Principal
    Financial Officer pursuant to
    Rules 13a-14
    and 15d-14
    promulgated under the Securities Exchange Act of 193432(*)


Certifications of Principal
    Executive Officer and Principal Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002     (1)
    
    Incorporated by reference to the Registrants Registration
    Statement on
    Form S-1
    filed with the Securities and Exchange Commission on
    October 24, 2003.(2)
    
    Incorporated by reference to the Registrants Quarterly
    Report on Form
    10-Q filed
    with the Securities and Exchange Commission on December 11,
    2003.(3)
    
    Incorporated by reference to the Registrants Quarterly
    Report on Form
    10-Q filed
    with the Securities and Exchange Commission on August 13,
    2004.(4)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    October 21, 2004.(5)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    November 8, 2004.(6)
    
    Incorporated by reference to the Registrants Quarterly
    Report on Form
    10-Q filed
    with the Securities and Exchange Commission on November 15,
    2004.(7)
    
    Incorporated by reference to the Registrants Registration
    Statement on
    Form S-8
    filed with the Securities and Exchange Commission on
    November 17, 2004.(8)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    December 29, 2004.(9)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    January 20, 2005.(10)
    
    Incorporated by reference to the Registrants Quarterly
    Report on Form
    10-Q filed
    with the Securities and Exchange Commission on November 8,
    2005.(11)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    March 20, 2006.(12)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    March 31, 2006.(13)
    
    Incorporated by reference to the Registrants Registration
    Statement on
    Form S-4/A
    filed with the Securities and Exchange Commission on
    March 31, 2006.(14)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    April 20, 2006.(15)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on May 1,
    2006.(16)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on May 9,
    2006.(17)
    
    Incorporated by reference to the Registrants Quarterly
    Report on Form
    10-Q filed
    with the Securities and Exchange Commission on May 10, 2006. 69




---



##### Table of Contents



(18)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    July 26, 2006.(19)
    
    Incorporated by reference to the Registrants Quarterly
    Report on Form
    10-Q filed
    with the Securities and Exchange Commission on August 8,
    2006.(20)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    August 31, 2006.(21)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    October 6, 2006.(22)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    October 16, 2006.(23)
    
    Incorporated by reference to the Registrants Quarterly
    Report on Form
    10-Q filed
    with the Securities and Exchange Commission on November 9,
    2006.(24)
    
    Incorporated by reference to the Registrants Current
    Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    January 4, 2007.&
    
    Indicates that the exhibit is an English translation of a
    foreign language document.@
    
    Indicates that the exhibit is an English summary of a foreign
    language document.#
    
    Indicates management contract or compensatory plan.%
    
    The Registrant has been granted confidential treatment with
    respect to certain portions of this exhibit (indicated by
    asterisks), which 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 separately filed with the Securities and Exchange
    Commission.*
    
    These certifications are being furnished solely to accompany
    this annual report pursuant to 18 U.S.C. Section 1350,
    and are not being filed for purposes of Section 18 of the
    Securities Exchange Act of 1934 and are not to be incorporated
    by reference into any filing of the Registrant, whether made
    before or after the date hereof, regardless of any general
    incorporation language in such filing. 70




---



##### Table of Contents



SIGNATURES      By:
    /s/  CHRISTIAN
    ITIN   President and Chief Executive Officer
 (Principal Executive Officer)
  By:
    /s/  CHRISTOPHER
    P. SCHNITTKER   Senior Vice President and Chief Financial Officer
 (Principal Financial and Accounting Officer)
    POWER OF
    ATTORNEY
  attorney-in-fact, Form 10-K,
    Name

Title

Date/s/  CHRISTIAN
    ITINChristian
    Itin

President, Chief Executive Officer
    and Director(Principal Executive Officer)

March 15, 2007/s/  CHRISTOPHER
    P.
    SCHNITTKERChristopher
    P. Schnittker

Senior Vice President and
    Chief Financial Officer(Principal Financial and Accounting Officer)

March 15, 2007/s/  DAVID
    F. HALEDavid
    F. Hale

DirectorChairman of the Board of Directors

March 15, 2007/s/  JERRY
    C. BENJAMINJerry
    C. Benjamin

Director

March 15, 2007/s/  JOHN
    E. BERRIMANJohn
    E. Berriman

Director

March 15, 2007 71




---



##### Table of Contents



Name

Title

Date/s/  MICHAEL
    G. CARTERMichael
    G. Carter

Director

March 15, 2007/s/  PETER
    JOHANNPeter
    Johann

Director

March 15, 2007/s/  BARCLAY
    A. PHILLIPSBarclay
    A. Phillips

Director

March 15, 2007/s/  PHILLIP
    M.
    SCHNEIDERPhillip
    M. Schneider

Director

March 15, 2007/s/  OTELLO
    STAMPACCHIAOtello
    Stampacchia

Director

March 15, 2007  72




---



##### Table of Contents



MICROMET,
    INC.
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  PageReport of
    Independent Registered Public Accounting Firm


F-2Consolidated
    Balance Sheets as of December 31, 2006 and 2005


F-3Consolidated
    Statements of Operations for the years ended December 31,
    2006, 2005 and 2004


F-4Consolidated
    Statements of Stockholders Equity (Deficit) for the years
    ended December 31, 2006, 2005 and 2004


F-5Consolidated
    Statements of Cash Flows for the years ended December 31,
    2006, 2005 and 2004


F-6Notes to
    Consolidated Financial Statements


F-7  F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                   F-2




---



##### Table of Contents



MICROMET,
    INC.
  CONSOLIDATED
    BALANCE SHEETS
  December 31,


December 31,2006


2005(In thousands, except par value)ASSETSCurrent assets:Cash and cash equivalents

$
24,301


$
11,414Accounts receivable


2,319



2,170Prepaid expenses and other current
    assets


2,048



1,043Total current assets


28,668



14,627Property and equipment, net


3,357



3,513Loans to related parties






213Loans to employees


78



70Goodwill


6,917



Patents, net


8,850



9,705Deposits and other assets


243



113Restricted cash


3,059



636Total assets

$
51,172


$
28,877LIABILITIES AND
    STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Accounts payable

$
1,680


$
1,287Accrued expenses


10,153



6,534Other liabilities


366



1,927Short-term note


1,320



2,852Current portion of long-term debt
    obligations


599



3,638Current portion of convertible
    notes payable






2,761Current portion of deferred revenue


2,972



6,035Total current liabilities


17,090



25,034Convertible notes payable, net of
    current portion






11,844Deferred revenue, net of current
    portion


195



52Other non-current liabilities


1,961



949Long-term debt obligations, net of
    current portion


7,408



5,531CommitmentsStockholders equity
    (deficit):Preferred stock, $0.00004 par
    value; 10,000 shares authorized; no shares issued and
    outstanding






Common stock, $0.00004 par
    value; 150,000 shares authorized; 31,419 and
    17,915 shares issued and outstanding at December 31,
    2006 and 2005, respectively


1



1Additional paid-in capital


163,482



67,181Stock subscription from conversion






23,108Stock subscription receivable


(27
)


(242
)Accumulated other comprehensive
    income


5,869



6,234Accumulated deficit


(144,807
)


(110,815
)Total stockholders equity
    (deficit)


24,518



(14,533
)Total liabilities and
    stockholders equity (deficit)

$
51,172


$
28,877    F-3




---



##### Table of Contents



MICROMET,
    INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Years Ended December 31,2006


2005


2004(In thousands, except per share amounts)RevenuesCollaboration agreements

$
25,449


$
23,130


$
14,530License fees


1,959



2,482



2,103Other


175



111



108Total revenues


27,583



25,723



16,741Operating expensesResearch and development


28,252



28,579



33,084In-process research and development


20,890







General and administrative


12,012



6,861



5,589Total operating expenses


61,154



35,440



38,673Loss from operations


(33,571
)


(9,717
)


(21,932
)Other income (expenses)Interest expense


(1,725
)


(5,176
)


(2,944
)Interest income


743



335



264Other income (expense)


561



288



(456
)Net loss


(33,992
)


(14,270
)


(25,068
)Beneficial conversion charge on
    issuance of preferred shares






(4,780
)


Net loss attributable to common
    stockholders

$
(33,992
)

$
(19,050
)

$
(25,068
)Basic and diluted net loss per
    common share

$
(1.29
)

$
(3.70
)

$
(16.64
)Weighted average shares used to
    compute basic and diluted net loss per share


26,366



5,147



1,506    F-4




---



##### Table of Contents



MICROMET,
    INC.
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
  Stock








AccumulatedAdditional


Subscription


Stock





Other


TotalCommon Stock


Paid-in


from


Subscription


Accumulated


Comprehensive


StockholdersShares


Amount


Capital


Conversion


Receivables


Deficit


Income


Equity (Deficit)(In thousands)Balance at January 1,
    2004


1,506


$



$
57,563


$



$
(259
)

$
(66,697
)

$
4,145


$
(5,248
)Payments received for stock
    subscription receivable


















15











15Stock-based compensation expense










2



















2Net loss






















(25,068
)






(25,068
)Foreign currency translation
    adjustment


























(2,886
)


(2,886
)Realized gain (loss) on short-term
    investments


























(44
)


(44
)Total comprehensive loss






























(27,998
)Balance at December 31,
    2004


1,506







57,565







(244
)


(91,765
)


1,215



(33,229
)Payments received for stock
    subscription receivable


















2











2Issuance of shares in connection
    with private placement investor agreement for cash, including
    beneficial conversion recorded at $4,780


16,409



1



9,616











(4,780
)






4,837Subscription of 88 shares in
    connection with conversion of convertible promisorry note














11,029















11,029Subscription of 80 shares in
    connection with conversion of convertible notes














12,079















12,079Net loss






















(14,270
)






(14,270
)Foreign currency translation
    adjustment


























5,057



5,057Unrealized loss on short-term
    investments


























(38
)


(38
)Total comprehensive loss






























(9,251
)Balance at December 31,
    2005


17,915



1



67,181



23,108



(242
)


(110,815
)


6,234



(14,533
)Payments received for stock
    subscription receivable


















215











215Issuance of shares in connection
    with conversion of convertible promissory note


88







11,029



(11,029
)














Issuance of shares in connection
    with conversion of convertible notes


98







14,843



(12,079
)














2,764Investor capital contribution per
    investor agreement










4,796



















4,796Issuance of shares in connection
    with conversion of convertible notes


1,661







10,700



















10,700Issuance of shares in connection
    with merger with CancerVax Corporation


9,381







41,740



















41,740Issuance of shares in connection
    with private placement, net of offering costs of $714


2,222







7,286



















7,286Exercise of stock options


18







84



















84Issuance of shares in connection
    with employee severance payment from merger with CancerVax


22







145



















145Issuance of shares in connection
    with compensation for board of director services


14







72



















72Stock based compensation expense










5,606



















5,606Net loss






















(33,992
)






(33,992
)Foreign currency translation
    adjustment


























(403
)


(403
)Realized gain on short-term
    investments


























38



38Total comprehensive loss






























(34,357
)Balance at December 31,
    2006


31,419


$
1


$
163,482


$



$
(27
)

$
(144,807
)

$
5,869


$
24,518    F-5




---



##### Table of Contents



MICROMET,
    INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years Ended December 31,2006


2005


2004(In thousands)Cash flows from operating
    activities:Net loss

$
(33,992
)

$
(14,270
)

$
(25,068
)Adjustments to reconcile net loss
    to net cash used in operating activities:Depreciation and amortization


3,068



3,181



3,479Amortization of debt discounts










254In-process research and development


20,890







Provision for losses on lease
    commitments and impairment of related leasehold improvements










1,440Non-cash interest on convertible
    notes payable






2,908



694Non-cash interest on long-term debt
    obligations


517



597



512Net gain on debt restructuring


(842
)






Net gains on sale of short-term
    investments










(44
)Stock-based compensation expense


5,678







2Net loss (gain) on disposal of
    property and equipment


15



(4
)


(4
)Changes in operating assets and
    liabilities:Accounts receivable


506



12,703



(10,794
)Prepaid expenses and other current
    assets


(617
)


597



381Accounts payable, accrued expenses
    and other liabilities


(7,154
)


(1,425
)


4,574Deferred revenue


(3,423
)


(5,465
)


8,656Net cash used in operating
    activities


(15,354
)


(1,178
)


(15,918
)Cash flows from investing
    activities:Proceeds from disposals of property
    and equipment


135



4



4Proceeds for loans to related
    parties


226







Purchases of property and equipment


(618
)


(65
)


(97
)Restricted cash used as collateral


(70
)


(118
)


Cash acquired in connection with
    merger, net of costs paid


37,401







Net cash provided by (used in)
    investing activities


37,074



(179
)


(93
)Cash flow from financing
    activities:Proceeds from issuance of
    convertible notes










12,439Proceeds from issuance of preferred
    shares






4,837



Proceeds from capital contributions
    from stockholders


4,796







Proceeds from issuance of common
    stock, net


7,286







Proceeds from exercise of stock
    options


84







Proceeds from stock subscription
    receivable


215



2



15Principal payments on short-term
    note


(1,290
)






Principal payments on long-term
    debt obligations


(21,129
)


(2,814
)


(2,962
)Principal payments on capital lease
    obligations


(66
)


(62
)


(41
)Net cash (used in) provided by
    financing activities


(10,104
)


1,963



9,451Effect of exchange rate changes on
    cash and cash equivalents


1,271



(1,941
)


953Net increase (decrease) in cash and
    cash equivalents


12,887



(1,335
)


(5,607
)Cash and cash equivalents at
    beginning of period


11,414



12,749



18,356Cash and cash equivalents at end of
    period

$
24,301


$
11,414


$
12,749Supplemental disclosure of cash
    flow information:Cash paid for interest

$
2,302


$
1,476


$
1,432Supplemental disclosure of
    noncash investing and financing activities:Issuance of warrant in connection
    with committed equity financing facility

$
472


$



$
Issuance of warrant in connection
    with common stock issuance

$
1,446


$



$
Conversion of 2004 convertible
    notes payable

$
2,764


$



$
Conversion of convertible notes
    payable

$
10,700


$



$
Subscription of 88 common
    shares

$



$
11,029


$
Subscription of 80 common
    shares

$



$
12,079


$
Acquisitions of equipment purshased
    through capital leases

$
64


$
139


$
    F-6




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Note 1.
    Business
    Overview  ®
  Note 2.
    Basis of
    Presentation           F-7




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    1-for-3
    Note 3.
    Summary
    of Significant Accounting Policies  Foreign
    Currency Translation
      Cash
    and Cash Equivalents
    Restricted
    Cash
   F-8




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Accounts
    Receivable
    Derivative
    Financial Instruments
  Accounting for Derivative Instruments and Hedging Activities
  Property
    and Equipment
    Purchase
    Price Allocation for Business Combinations
    Goodwill
  Goodwill and Other Intangible Assets
 F-9




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Patents
    Impairment
    of Long-Lived and Identifiable Intangible Assets
  Accounting for the Impairment or Disposal of Long-Lived
    Assets
  Revenue
    Recognition
          No. 00-21, Revenue Arrangements with Multiple Deliverables. No. 00-21
 F-10




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Research
    and Development
    Total
    Comprehensive Loss
    Year Ended December 31,2006


2005


2004Realized and unrealized gains
    (losses) on investments, net

$
38


$
(38
)

$
(44
)Foreign currency translation
    adjustments


(403
)


5,057



(2,886
)Net decrease in accumulated other
    comprehensive loss

$
(365
)

$
5,019


$
(2,930
)   Stock-Based
    Compensation
  Adoption
    of Statement of Financial Accounting Standards
    No. 123(R):
    Transition Election Related to Accounting for Tax
    Effects of Share-Based Payment Awards
    Stock-Based
    Compensation under FAS 123 for Periods Prior to
    2006:
  Accounting for Stock-Based Compensation
 F-11




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock-Based
    Compensation for Issuances to Non-Employees:
  No. 96-18, Accounting for Equity Instruments That Are Issued to Other
    Than Employees for Acquiring or in Conjunction with Selling
    Goods or Services
  Income
    Taxes
  Accounting for Income Taxes
  Net
    Loss Per Share
  Earnings Per Share.
  Reclassifications
    Recent
    Accounting Standards and Pronouncements
  Accounting for Uncertain Tax Positions Accounting for Income Taxes
  Considering the Effects of Prior Year Misstatements when
    Quantifying Misstatements in Current Year Financial
    Statements.
  Fair Value Measurements.
 F-12




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 4.
    Merger
    with CancerVax        Fair value of CancerVax common
    stock

$
41,030Estimated fair value of CancerVax
    stock options and stock warrants assumed


710Estimated transaction costs
    incurred by Micromet


2,257Total purchase price

$
43,997    F-13




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Cash and cash equivalents

$
39,645Receivables under collaborations


447Restricted cash


2,280Other assets


569Accounts payable


(2,639
)Accrued expenses


(5,764
)Current portion of long-term debt
    obligations


(16,816
)Long-term liabilities


(1,532
)Net book value of acquired assets
    and liabilities


16,190In-process research and development


20,890Goodwill


6,917Total purchase price

$
43,997     sub-licensed sub-licensing
  Pro
    Forma Results of Operations
   F-14




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2006


2005Revenues

$
28,305


$
66,331Net loss

$
(45,399
)

$
(55,907
)Beneficial conversion charge on
    issuance of preferred shares






(4,780
)Net loss attributable to common
    stockholders

$
(45,399
)

$
(60,687
)Basic and diluted net loss per
    common share

$
(1.53
)

$
(4.23
)     Note 5.
    Property
    and Equipment    Estimated


December 31,Useful Life


2006


2005Laboratory equipment


5 years


$
6,359


$
5,314Computer equipment and software


3 years



1,716



1,369Furniture


10 years



701



951Leasehold improvements


10 years



3,187



2,85611,963



10,490Less: accumulated depreciation and
    amortization






(8,606
)


(6,977
)Property and equipment, net





$
3,357


$
3,513     Note 6.
    Patents    December 31,2006


2005Patents

$
19,667


$
17,643Less: accumulated amortization


(10,817
)


(7,938
)Patents, net

$
8,850


$
9,705    F-15




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     2007

$
1,9662008


1,9662009


1,9662010


1,9662011


986$
8,850   Note 7.
    Accrued
    Expenses    December 31,2006


2005Accrued employee benefits

$
1,527


$
1,877Accrued taxes


1,677



1,317Accrued research and development
    expenses


2,501



1,696Accrued severance obligations


1,029



Accrued license agreement fees


1,700



Accrued facility lease exit
    liability, assumed in merger


481



Other accrued liabilities and
    expenses


1,238



1,644$
10,153


$
6,534   Note 8.
    Income
    Taxes       F-16




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     December 31,2006


2005Deferred tax assets:Net operating loss
    carryforwards  Germany

$
55,267


$
44,898Net operating loss
    carryforwards  United States and California


27,809



Receivables






2,577Prepaid expenses and other current
    assets


156



Patents, net


3,116



1,221Property and equipment, net


6,581



Stock-based compensation


1,833



Accrued expenses and other
    liabilities


889



Other non-current liabilities


194



94Other


66



(68
)Deferred tax liabilities:Deferred revenue


(6,500
)


89,411



48,722Less: valuation allowance


(89,411
)


(48,722
)Net deferred tax assets

$



$
         Note 9.
    Deferred
    Revenue   F-17




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 10.
    Convertible
    Notes Payable    December 31,2006


2005MedImmune convertible promissory
    note, due June 6, 2010, including accrued interest

$



$
11,8442004 convertible promissory notes,
    including accrued interest of $572,000 at December 31, 2005






2,761Total convertible notes payable






14,605Less: current portion






(2,761
)Convertible notes payable, net of
    current portion

$



$
11,844   MedImmune
    Convertible Promissory Note
        2004
    Convertible Promissory Notes
    Enzon
    Convertible Promissory Note
     F-18




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Note 11.
    Other
    Non-Current Liabilities    December 31,2006


2005Restructuring provision, net of
    current portion (see Note 21)

$
417


$
423GEK subsidy, net of current portion


227



249Asset retirement obligation


271



205Facility lease exit liability,
    assumed in merger with CancerVax, net of current portion


989



Capital lease obligations, net of
    current portion (see Note 13)


57



68Option bonds due to related parties






4$
1,961


$
949   GEK
    Subsidy
    Asset
    Retirement Obligation
   F-19




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2006


2005Beginning balance January 1,

$
205


$
199Accretion expense


40



34Currency translation adjustment


26



(28
)Ending balance December 31,

$
271


$
205   Option
    Bonds Due from Related Parties
    Note 12.
    Long-Term
    Debt    December 31,


December 31,2006


2005TBG borrowings due
    December 31, 2006; interest payable semi-annually at 6%

$



$
1,593TBG borrowings due
    December 31, 2008; interest payable semi-annually at rates
    ranging from 6% to 7%


2,015



2,700Bayern Kapital borrowings due
    December 31, 2006; interest payable quarterly at 6.75%


586



1,761TBFB borrowings due
    December 31, 2008; interest payable quarterly at 6%


3,386



2,831MedImmune borrowings due
    June 6, 2010; interest payable monthly at 4.5%


2,020



GEDO borrowings due
    December 31, 2006; interest payable monthly at 7.5%






175ETV borrowings due 36 months
    after draw-down; interest payable monthly at rates ranging from
    11.55% to 12.81%






109Total long-term debt obligations


8,007



9,169Less: current portion


(599
)


(3,638
)Long-term debt obligations, net of
    current portion

$
7,408


$
5,531  F-20




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007

$
5992008


5,3882009


2010


2,020Total

$
8,007   Silent
    Partnership Agreements
      Amendments
    to the Silent Partnership Agreements
     F-21




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      
 Amendment
    to MedImmune Note
    Grundstücksentwicklungs-
    und Verwaltungsgesellschaft mbH & Co KG
    Silicon
    Valley Bank Loan and Security Agreement
    Note 13.
    Commitments
    and Contingencies  Leases
       F-22




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Capital
    Lease Obligations
      Capital


OperatingLeases


Leases2007

$
76


$
4,4782008


52



4,5202009


7



4,5262010






4,5922011






4,661Thereafter






2,349Total minimum lease payments


135


$
25,126Less: amount representing imputed
    interest


5Present value of minimum lease
    payments


130Less: current portion


73Capital lease obligation, less
    current portion

$
57     License
    and Research and Development Agreements
       F-23




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     2007

$
1,8552008


1552009


552010


552011


55Thereafter


275Total minimum payments

$
2,450   Other
    Taxes
    Note 14.
    Stockholders
    Equity (Deficit)  Committed
    Equity Financing Facility
    Form S-3
  Private
    Placements of Common Stock
   F-24




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Conversion
    of MedImmune Convertible Notes
    Conversion
    of Enzon Convertible Note
    Conversion
    of 2004 Convertible Notes
    Additional
    Issuances of Warrants to Purchase Common Stock
     F-25




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Stock
    Subscription Receivable
    Note 15.
    Stock
    Option and Employee Stock Purchase Plans  2000
    and 2002 Stock Option Plans
    2000
    and 2003 Stock Option Plans Assumed from CancerVax in
    Merger
    2006
    Stock Option Plan
   F-26




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock
    Option Plan Activity:
  2000
    and 2002 Stock Option Plans
    Number of


Weighted AverageOptions


Exercise PriceOutstanding at January 1, 2004


3,119


$1.87Granted


25


$8.42 - 67.32Expired


(111
)

$1.50Outstanding at December 31,
    2004


3,033


$8.42 - 67.32Expired


(4
)

$8.42 - 67.32Outstanding at December 31,
    2005


3,029


$8.42 - 67.32Expired


(3,029
)

$8.42 - 67.32Outstanding at December 31,
    2006





     2003
    and 2006 Stock Option Plans
    Number of


Weighted AverageOptions


Exercise PriceOutstanding at January 1, 2006






Granted


2,812


$
3.16Exercised


(18
)

$
4.40Assumed in merger


1,384


$
13.13Expired


(592
)

$
16.13Outstanding at December 31,
    2006


3,586


$
4.38    F-27




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Options Outstanding


Options ExercisableWeightedAverage


Weighted





WeightedRemaining


Average





AverageNumber


Contractual


Exercise


Number


ExerciseRange of Exercise Prices

Outstanding


Life


Price


Exercisable


Price(Thousands)


(Years)





(Thousands)$ 1.66 - $ 1.66


1,730



9.07


$
1.66



1,172


$
1.66$ 2.60 - $ 2.62


470



9.81


$
2.61






$
$ 3.23 - $ 3.70


357



7.90


$
3.56



107


$
3.23$ 3.88 - $ 6.63


527



7.03


$
5.63



253


$
4.90$ 8.46 - $ 9.90


374



5.48


$
9.16



349


$
9.20$19.80 - $28.95


54



7.75


$
24.10



49


$
24.38$31.95 - $38.61


74



7.19


$
35.70



72


$
35.78$ 1.66 - $38.61


3,586



8.32


$
4.38



2,002


$
5.26   Stock-Based
    Compensation:
      Year EndedDecember 31, 2006Research and development

$
2,573General and administrative


2,033Employee stock-based compensation
    expense

$
4,606     Year EndedDecember 31,2006Expected volatility 2006 and 2003
    Plans

78.2% to 80.0%Risk-free interest rate 2006 and
    2003 Plans

4.6% to 5.0%Dividend yield 2006 and 2003 Plans

0%Expected term 2006 Plan

5.2 yearsExpected term 2003 Plan

5.8 to 6.1 years   at-the-money
 F-28




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Share-Based Payment.
            Year EndedDecember 31,2006Expected volatility

79.0% to 80.0%Risk-free interest rate

4.8% to 5.0%Dividend yield

0%Expected term

Contractual term   Employee
    Stock Purchase Plan
   F-29




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 16.
    Related
    Parties  Loans
    to Related Parties
    Compensation
    Arrangement with David F. Hale
    Note 17.
    Financial
    Risk Management Objectives and Policies    Foreign
    Currency Risk
    Credit
    and Liquidity Risk
       F-30




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     December 31,2006


2005Abbott Laboratories






57
%MedImmune, Inc.


52
%


38
%Viventia Barbados, Inc.


28
%


     December 31,2006


2005


2004Merck Serono


66
%


52
%


MedImmune, Inc.


19
%


22
%


41
%Enzon, Inc.






16
%


20
%Cell Therapeutics, Inc.


7
%






19
%     Fair
    Value of Financial Instruments
         F-31




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     December 31, 2006


December 31, 2005Carrying


Fair


Carrying


FairAmount


Value


Amount


ValueCuris, Inc. promissory note

$
1,320


$
1,154


$
2,852


$
914MedImmune, Inc. promissory note
    payable due June 6, 2010


2,020



1,545



11,844



8,834Shareholder convertible notes due
    December 31, 2006










2,761



103TBG (silent partner) borrowings
    due December 31, 2006










1,593



1,505Bayern Kapital (silent partner)
    borrowings due December 31, 2006


586



585



1,761



1,693TBG (silent partner) borrowings
    due December 31, 2008


2,015



2,168



2,700



2,336TBFB (silent partner) borrowings
    due December 31, 2008


3,386



3,629



2,831



2,428$
9,327


$
9,081


$
26,342


$
17,813   Note 18.
    License
    Agreements and Collaborations    Agreements
    Relevant for the Generation of Antibodies and for the BiTE
    Platform in General
  Purchase
    Agreement with Curis
    License
    Agreement with Enzon
   F-32




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       License
    Agreement with Cambridge Antibody Technology Limited and
    Enzon
        Licensing
    of Single-Chain Antibody Patents
  Exclusive
    IP Marketing Agreement with Enzon
      License
    Agreements with Various Parties pursuant to the Exclusive IP
    Marketing Agreement
   F-33




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Agreements
    Relevant for Adecatumumab
  License
    Agreement with Cambridge Antibody Technology Limited
    License,
    Development, Manufacturing and Supply Agreement with CIMAB and
    YM BioSciences
    Note 19.
    Research
    and Development Agreements    Merck
    Serono
   F-34




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   and/or and/or
        Enzon
       F-35




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    MedImmune
    MT103
    Collaboration and License Agreement
      BiTE
    Research Collaboration Agreement
      Rentschler
    Biotechnologie
      Boehringer
    Ingelheim
     F-36




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Other
    Licensing and Research and Development Agreements
  and/or
  Note 20.
    Legal
    Proceedings  Cell
    Therapeutics/Novuspharma
      Curis
    Patent
    Opposition in Europe
   F-37




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Other
    Matters
    Note 21.
    Restructuring    Accounting for Costs Associated with Exit or Disposal
    Activities
  2006


2005Beginning balance January 1,

$
599


$
1,146Amounts paid


(269
)


(562
)Accretion expense


86



147Currency translation adjustment


56



(132
)Ending balance December 31,

$
472


$
599   Note 22.
    Segment
    Disclosures    Revenues:
    2006


2005


2004United States

$
5,762


$
11,416


$
14,475Switzerland


20,271



13,520



1,407All others


1,550



787



859$
27,583


$
25,723


$
16,741  F-38




---



##### Table of Contents



MICROMET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Long-lived
    Assets:
    Note 23.
    Subsequent
    Events    Note 24.
    Quarterly
    Financial Data (unaudited)    Year Ended December 31, 2006First


Second


Third


FourthQuarter


Quarter


Quarter


QuarterTotal
    revenues(1)

$
4,123


$
5,017


$
4,636


$
13,807Total operating
    expenses(2)


5,736



34,386



10,152



10,880Net income (loss)


(2,166
)


(29,455
)


(5,766
)


3,395Basic net income (loss) per common
    share


(0.12
)


(1.18
)


(0.19
)


0.11Diluted net income (loss) per
    common share


(0.12
)


(1.18
)


(0.19
)


0.11   Year Ended December 31, 2005First


Second


Third


FourthQuarter


Quarter


Quarter


QuarterTotal revenues

$
5,791


$
5,727


$
5,526


$
8,679Total operating expenses


8,912



8,263



8,819



9,446Net loss attributable to common
    stockholders


(4,241
)


(3,620
)


(4,464
)


(6,725
)Basic and diluted net loss per
    common share


(2.82
)


(2.40
)


(2.96
)


(0.42
)     (1)
    
    Included in revenues in the
    4th quarter
    of 2006 is the receipt of a Merck Serono milestone payment of
    $10.0 million under our collaboration agreement.(2)
    
    Included in total operating expenses in the
    2nd quarter
    of 2006 is a write-off of in-process research and development of
    $20.9 million, which was recorded as an expense immediately
    upon completion of the merger. F-39