##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 0-27264
 VIA Pharmaceuticals, Inc.
 (Exact name of registrant as specified in its charter)
 DELAWARE
(State or other jurisdiction of 
incorporation or organization)
    
    33-0687976
(I.R.S. Employer
Identification No.)
 750 Battery Street, Suite 330
San Francisco, CA 94111
(Address of principal executive offices)
 (415) 283-2200
(Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company þ o þ




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##### 



Page No.PART I.  FINANCIAL INFORMATIONItem 1. Condensed Financial StatementsUnaudited Condensed Balance Sheets as of March 31, 2009 and December 31, 2008
    
    
    1Unaudited Condensed Statements of Operations for the Three Month Periods Ended March 31,
2009 and 2008, and for the Period from June 14, 2004 (date of inception) to March 31,
2009
    
    
    2Unaudited Condensed Statements of Cash Flows for the Three Month Periods Ended March 31,
2009 and 2008, and for the Period from June 14, 2004 (date of inception) to March 31,
2009
    
    
    3Notes to the Unaudited Condensed Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 4T. Controls and Procedures
    
    
    33PART II.  OTHER INFORMATION
    
    
    34Item 1A. Risk Factors
    
    
    34Item 6. Exhibits
    
    
    37SIGNATURE
    
    
    39EXHIBITSEX-31.1EX-31.2EX-32.1EX-32.2
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##### Table of Contents



PART I.  FINANCIAL INFORMATION
 
 Item 1. Condensed Financial Statements
 
 VIA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
 UNAUDITED CONDENSED BALANCE SHEETS
 March 31,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    2,360,432
    
    
    $
    4,064,545Prepaid expenses and other current assets
    
    
    201,153
    
    
    
    604,080Total current assets
    
    
    2,561,585
    
    
    
    4,668,625Property and equipment-net
    
    
    259,635
    
    
    
    291,804Other non-current assets
    
    
    40,374
    
    
    
    40,374Total
    
    $
    2,861,594
    
    
    $
    5,000,803LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    479,434
    
    
    $
    753,824Accrued expenses and other liabilities
    
    
    2,617,424
    
    
    
    2,652,458Interest payable  affiliate
    
    
    16,439
    
    
    
    Notes payable  affiliate  net of discount of $803,265
    
    
    1,196,735
    
    
    
    Total current liabilities
    
    
    4,310,032
    
    
    
    3,406,282Deferred rent
    
    
    33,533
    
    
    
    30,637Total liabilities
    
    
    4,343,565
    
    
    
    3,436,919Commitments and contingenciesStockholders equity (deficit):Common stock, $0.001 par value-200,000,000 shares
authorized at March 31, 2009 and December 31, 2008;
20,648,476 and 20,592,718 shares issued and outstanding
at March 31, 2009 and December 31, 2008, respectively
    
    
    20,648
    
    
    
    20,593Preferred stock Series A, $0.001 par value-5,000,000
shares authorized at March 31, 2009 and December 31, 2008; 0 shares issued and outstanding at March 31, 2009
and December 31, 2008
    
    
    
    
    
    
    Convertible preferred stock Series C, $0.001 par
value-17,000 shares authorized at March 31, 2009 and
December 31, 2008; 2,000 shares issued and outstanding
at March 31, 2009 and December 31, 2008; liquidation
preference of $2,000,000
    
    
    2
    
    
    
    2Additional paid-in capital
    
    
    63,425,758
    
    
    
    62,169,530Deficit accumulated in the development stage
    
    
    (64,928,379
    )
    
    
    (60,626,241
    )Total stockholders equity (deficit)
    
    
    (1,481,971
    )
    
    
    1,563,884Total
    
    $
    2,861,594
    
    
    $
    5,000,803
  1




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##### Table of Contents



VIA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
 UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
 Period FromJune 14, 2004(Date ofThree Months Ended
    
    
    Inception) toMarch 31,
    
    
    March 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009Revenue
    
    $
    
    
    
    $
    
    
    
    $
    Operating expenses:Research and development
    
    
    2,134,756
    
    
    
    3,318,162
    
    
    
    36,985,719General and administration
    
    
    2,064,020
    
    
    
    2,664,957
    
    
    
    23,911,753Merger transaction costs
    
    
    
    
    
    
    
    
    
    
    3,824,090Total operating expenses
    
    
    4,198,776
    
    
    
    5,983,119
    
    
    
    64,721,562Operating loss
    
    
    (4,198,776
    )
    
    
    (5,983,119
    )
    
    
    (64,721,562
    )Other income (expense):Interest income
    
    
    
    
    
    
    102,754
    
    
    
    914,628Interest expense
    
    
    (113,217
    )
    
    
    (120
    )
    
    
    (1,118,310
    )Other income (expense)-net
    
    
    9,855
    
    
    
    (28,739
    )
    
    
    (3,135
    )Total other income (expense)
    
    
    (103,362
    )
    
    
    73,895
    
    
    
    (206,817
    )Net Loss
    
    $
    (4,302,138
    )
    
    $
    (5,909,224
    )
    
    $
    (64,928,379
    )Loss per share of common stock-basic and diluted
    
    $
    (0.22
    )
    
    $
    (0.30
    )Weighted average shares outstanding-basic and diluted
    
    
    19,717,184
    
    
    
    19,532,057
  2




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##### Table of Contents



VIA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
 UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
 Period FromJune 14, 2004(Date ofThree Months Ended
    
    
    Inception) toMarch 31,
    
    
    March 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (4,302,138
    )
    
    $
    (5,909,224
    )
    
    $
    (64,928,379
    )Adjustments to reconcile net loss to net cash used in operating
activities:Depreciation and amortization
    
    
    34,925
    
    
    
    39,752
    
    
    
    428,438Amortization of discount on notes payable  affiliate
    
    
    96,779
    
    
    
    
    
    
    
    96,779Loss on disposal of property and equipment
    
    
    
    
    
    
    
    
    
    
    4,163Change in unrealized gain on foreign currency hedge
    
    
    
    
    
    
    (481
    )
    
    
    Stock compensation expense
    
    
    354,567
    
    
    
    412,972
    
    
    
    3,046,994Deferred rent
    
    
    2,896
    
    
    
    (1,194
    )
    
    
    33,533Changes in assets and liabilities:Prepaid expenses and other assets
    
    
    402,927
    
    
    
    (66,106
    )
    
    
    (266,527
    )Accounts payable
    
    
    (274,391
    )
    
    
    52,012
    
    
    
    475,944Accrued expenses and other liabilities
    
    
    (35,034
    )
    
    
    260,169
    
    
    
    2,717,425Interest payable  affiliate
    
    
    16,439
    
    
    
    
    
    
    
    1,009,161Net cash used in operating activities
    
    
    (3,703,030
    )
    
    
    (5,212,100
    )
    
    
    (57,382,469
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (2,756
    )
    
    
    (5,110
    )
    
    
    (650,776
    )Cash provided in the Merger
    
    
    
    
    
    
    
    
    
    
    11,147,160Capitalized merger transaction costs
    
    
    
    
    
    
    
    
    
    
    (350,069
    )Net cash provided by (used in) investing activities
    
    
    (2,756
    )
    
    
    (5,110
    )
    
    
    10,146,315Cash flows from financing activities:Proceeds from convertible promissory notes  affiliate
    
    
    
    
    
    
    
    
    
    
    24,425,000Proceeds from notes payable  affiliate
    
    
    2,000,000
    
    
    
    
    
    
    
    2,000,000Capital lease payments
    
    
    
    
    
    
    (744
    )
    
    
    (11,973
    )Issuance of common stock
    
    
    
    
    
    
    
    
    
    
    23,141,360Exercise of stock options for the issuance of common stock
    
    
    1,673
    
    
    
    
    
    
    
    47,999Repurchase and retirement of common stock
    
    
    
    
    
    
    
    
    
    
    (5,800
    )Net cash provided by (used in) financing activities
    
    
    2,001,673
    
    
    
    (744
    )
    
    
    49,596,586Increase (decrease) in cash and cash equivalents
    
    
    (1,704,113
    )
    
    
    (5,217,954
    )
    
    
    2,360,432Cash and cash equivalents-beginning of period
    
    
    4,064,545
    
    
    
    23,098,764
    
    
    
    Cash and cash equivalents-end of period
    
    $
    2,360,432
    
    
    $
    17,880,810
    
    
    $
    2,360,432Supplemental disclosure of noncash activities:Issuance of warrant and related discount on notes payable 
affiliate
    
    $
    900,044
    
    
    $
    
    
    
    $
    900,044Interest on convertible debt converted to notes payable  affiliate
    
    $
    
    
    
    $
    
    
    
    $
    992,722Conversion of notes to preferred stock Series A
    
    $
    
    
    
    $
    
    
    
    $
    25,517,722Accrued compensation converted to notes payable
    
    $
    
    
    
    $
    
    
    
    $
    100,000Stock issuance for license acquisition
    
    $
    
    
    
    $
    
    
    
    $
    1,000Supplemental disclosure of cash flow information:Interest paid
    
    $
    
    
    
    $
    72
    
    
    $
    7,856Taxes paid
    
    $
    1,716
    
    
    $
    3,470
    
    
    $
    41,165
  3




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##### Table of Contents



VIA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
 NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
 1. ORGANIZATION
 Overview 
   Going Concern 
 4




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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation Accounting and Reporting by
Development Stage Enterprises
   Use of Estimates 
 Cash and Cash Equivalents 
 Property and Equipment 
 Long-Lived Assets 
 Research and Development Expenses  Accounting for Research and Development
Costs.
 5




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Fair Value of Financial and Derivative Instruments  Fair Value Measurement
 
    
    Level 1  Quoted prices in active markets for identical assets or liabilities.
    
    Level 2  Inputs other than quoted prices included in Level 1, such as quoted prices for
similar assets and liabilities in active markets; quoted prices for identical or similar
assets and liabilities in markets that are not active; or other inputs that are observable
or can be corroborated by observable market data.
    
    Level 3  Unobservable inputs that are supported by little or no market activity and
that are significant to the fair value of the assets or liabilities. This includes certain
pricing models, discounted cash flow methodologies and similar techniques that use
significant unobservable inputs.
 Accounting
for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Companys Own Stock Accounting for Derivative Instruments and Hedging Activities Determining Whether an Instrument (or Embedded Feature) Is
Indexed to an Entitys Own Stock Accounting for Convertible Debt and Debt Issued with
Stock Purchase Warrants
 Changes in Level 3 Recurring Fair Value
Measurements 
 6




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As ofMarch 31, 2009Fair value  December 31, 2008
    
    $
    Warrant (1)
    
    
    900,044Change in unrealized gains related to financial instruments at March 31, 2009 (2)
    
    
    Fair value  March 31, 2009
    
    $
    900,044Total unrealized gains (losses) (2)
    
    $
    
 
 (1)
    
    The Warrant is included in additional paid in capital in the Stockholders Equity section
of the Balance Sheet.(2)
    
    The Warrant is not revalued at the reporting date and does not result in gains and losses. Income Taxes  Accounting for
Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109
 Segment Reporting  Disclosures About Segments of an Enterprise and Related
Information"
 Earnings (Loss) Per Share of Common Stock 
  Three Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2008Net loss
    
    $
    (4,302,138
    )
    
    $
    (5,909,224
    )Basic and diluted net loss per share:Weighted-average shares of common stock outstanding
    
    
    20,597,567
    
    
    
    19,707,257Less: Weighted-average shares of common stock subject to repurchase
    
    
    (880,383
    )
    
    
    (175,200
    )Weighted-average shares used in computing basic net loss per share
    
    
    19,717,184
    
    
    
    19,532,057Dilutive effect of common share equivalents
    
    
    
    
    
    
    Weighted-average shares used in computing diluted net loss per share
    
    
    19,717,184
    
    
    
    19,532,057Basic and diluted net loss per share
    
    $
    (0.22
    )
    
    $
    (0.30
    )
 7




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##### Table of Contents



Years EndedMarch 31,
    
    March 31,2009
    
    2008Common stock equivalents (in shares):Shares of common stock subject to outstanding options
    
    
    2,740,744
    
    
    
    2,888,992Shares of common stock subject to outstanding warrants
    
    
    83,539,559
    
    
    
    231,520Shares of common stock subject to conversion from series C preferred stock
    
    
    
    
    
    
    Total shares of common stock equivalents
    
    
    86,280,303
    
    
    
    3,120,512
  Comprehensive Income (Loss) 
  Three Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2008Net loss
    
    $
    (4,302,138
    )
    
    $
    (5,909,224
    )Change in unrealized gain (loss) on foreign currency cash flow hedges
    
    
    
    
    
    
    (481
    )Total comprehensive loss
    
    $
    (4,302,138
    )
    
    $
    (5,909,705
    )
 Derivative Instruments 
   8




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New Accounting Pronouncements  Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entitys Own Stock
 Disclosures about Derivative Instruments and
Hedging Activities, an amendment of FASB Statement No. 133
 Accounting for Collaborative Agreements
 Business Combinations Non-controlling Interest In Consolidated Financial Statements an
amendment of Accounting Research Bulletin No. 51
 Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future
Research and Development Activities
 Interim
Disclosures about Fair Value of Financial Instruments Disclosures about Fair Value of Financial Instruments Interim Financial Reporting,
 Determining Fair Value When
the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly
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3. STOCK-BASED COMPENSATION
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees.
      Three Months EndedMarch 31, 2009
    
    March 31, 2008Expected life from grant date
    
    
    6.08
    
    
    
    2.5-6.08Expected volatility
    
    
    97
    %
    
    
    79
    %Risk free interest rate
    
    
    1.67
    %
    
    
    2.48
    %Dividend yield
    
    
    
    
    
    
    
 10




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##### Table of Contents



Period fromJune 14, 2004Three Months Ended
    
    
    (Date of Inception) toMarch 31,
    
    
    March 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009Research and development expense
    
    $
    97,217
    
    
    $
    114,034
    
    
    $
    916,417General and administrative expense
    
    
    241,835
    
    
    
    298,938
    
    
    
    2,105,157Total
    
    $
    339,052
    
    
    $
    412,972
    
    
    $
    3,021,574
   Period fromJune 14, 2004Three Months Ended
    
    
    (Date of Inception) toMarch 31,
    
    
    March 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009Research and development expense
    
    $
    3,894
    
    
    $
    
    
    
    $
    4,528General and administrative expense
    
    
    11,621
    
    
    
    
    
    
    
    13,514Total
    
    $
    15,515
    
    
    $
    
    
    
    $
    18,042
  4. RESEARCH AND DEVELOPMENT
   Period fromJune 14, 2004Three Months Ended
    
    
    (date of inception) toMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2009Externally generated research and development expense
    
    $
    1,435,875
    
    
    $
    2,219,801
    
    
    $
    26,501,851Internally generated research and development expense
    
    
    698,881
    
    
    
    1,098,361
    
    
    
    10,483,868Total
    
    $
    2,134,756
    
    
    $
    3,318,162
    
    
    $
    36,985,719
 11




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Period fromJune 14, 2004Three Months Ended
    
    
    (date of inception) toMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2009In-licensing expenses
    
    $
    400,000
    
    
    $
    6,250
    
    
    $
    5,270,000CRO and investigator expenses
    
    
    530,754
    
    
    
    1,456,290
    
    
    
    10,189,978Consulting expenses
    
    
    269,129
    
    
    
    312,598
    
    
    
    5,567,667Other
    
    
    235,992
    
    
    
    444,663
    
    
    
    5,474,206Total
    
    $
    1,435,875
    
    
    $
    2,219,801
    
    
    $
    26,501,851
  Period fromJune 14, 2004Three Months Ended
    
    
    (date of inception) toMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2009Personnel and related expenses
    
    $
    482,576
    
    
    $
    769,880
    
    
    $
    7,296,530Stock-based compensation expense
    
    
    101,111
    
    
    
    114,034
    
    
    
    920,944Travel and entertainment expense
    
    
    38,785
    
    
    
    108,885
    
    
    
    1,024,155Other
    
    
    76,409
    
    
    
    105,562
    
    
    
    1,242,239Total
    
    $
    698,881
    
    
    $
    1,098,361
    
    
    $
    10,483,868
 5. PROPERTY AND EQUIPMENT
  March 31,
    
    
    December 31,2009
    
    
    2008Property and equipment at cost:Computer equipment and software
    
    $
    323,973
    
    
    $
    321,217Furniture and fixtures
    
    
    108,869
    
    
    
    108,869Office equipment
    
    
    38,282
    
    
    
    38,282Leasehold improvements
    
    
    129,740
    
    
    
    129,740Total property and equipment at cost
    
    
    600,864
    
    
    
    598,108Less: accumulated depreciation
    
    
    (341,229
    )
    
    
    (306,304
    )Total
    
    $
    259,635
    
    
    $
    291,804
  6. FINANCING ARRANGEMENTS
   12




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.
  March 12, 2009Expected life from grant date  in years
    
    
    5.0Expected volatility
    
    
    116.79
    %Risk free interest rate
    
    
    2.10
    %Dividend yield
    
    
    
 7. EQUITY
  13




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Common Stock 
 March 31,
    
    December 31,(In shares)
    
    2009
    
    20082007 Incentive Award Plan  outstanding and available to grant
    
    
    3,326,296
    
    
    
    2,882,054Shares of common stock subject to outstanding warrants
    
    
    83,539,559
    
    
    
    207,479Shares of common stock subject to conversion from series C preferred stock
    
    
    
    
    
    
    Total shares of common stock equivalents
    
    
    86,865,855
    
    
    
    3,089,533
  Preferred Stock 
  2002 Stock Option Plans 
 2004 Stock Option Plans 
 14




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2007 Incentive Award Plan 
 Restricted Stock 
  WeightedAverageGrant DateRestricted Stock Awards
    
    Shares
    
    
    Fair ValueUnvested at December 31, 2008
    
    
    852,750
    
    
    $
    0.15Granted
    
    
    
    
    
    
    Vested
    
    
    (106,591
    )
    
    $
    0.15Forfeited
    
    
    
    
    
    
    Unvested at March 31, 2009
    
    
    746,159
    
    
    $
    0.15
 15




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##### Table of Contents



WeightedAverageOption Shares
    
    
    ExerciseOutstanding
    
    
    Price2007 Incentive Award Plan Options Outstanding  December 31, 2008
    
    
    2,807,927
    
    
    $
    6.77Granted
    
    
    
    
    
    $
    Exercised
    
    
    (55,758
    )
    
    $
    0.03Canceled
    
    
    (11,425
    )
    
    $
    4.662007 Incentive Award Plan Options Outstanding  March 31, 2009
    
    
    2,740,744
    
    
    $
    6.91
   Options Outstanding
    
    Options Vested or Expected to Vest
    
    Options ExercisableAverage
    
    Weighted
    
    Number
    
    Average
    
    Weighted
    
    
    
    
    
    WeightedNumber of
    
    Remaining
    
    Average
    
    Exercisable or
    
    Remaining
    
    Average
    
    
    
    
    
    AverageOptions
    
    Contractual
    
    Exercise
    
    Expected to
    
    Contractual
    
    Exercise
    
    Number
    
    ExerciseRange of Exercise Prices
    
    Outstanding
    
    Life (Years)
    
    Price
    
    Vest
    
    Life (Years)
    
    Price
    
    Exercisable
    
    Price$0.03
    
    
    183,565
    
    
    
    6.16
    
    
    $
    0.03
    
    
    
    183,503
    
    
    
    6.16
    
    
    $
    0.03
    
    
    
    182,016
    
    
    $
    0.03$0.14
    
    
    90,505
    
    
    
    7.57
    
    
    $
    0.14
    
    
    
    90,180
    
    
    
    7.57
    
    
    $
    0.14
    
    
    
    82,388
    
    
    $
    0.14$0.15
    
    
    50,000
    
    
    
    9.72
    
    
    $
    0.15
    
    
    
    50,000
    
    
    
    9.72
    
    
    $
    0.15
    
    
    
    50,000
    
    
    $
    0.15$1.70
    
    
    750
    
    
    
    9.36
    
    
    $
    1.70
    
    
    
    720
    
    
    
    9.36
    
    
    $
    1.70
    
    
    
    
    
    
    $
    1.70$2.19
    
    
    35,000
    
    
    
    9.22
    
    
    $
    2.19
    
    
    
    33,600
    
    
    
    9.22
    
    
    $
    2.19
    
    
    
    
    
    
    $
    2.19$2.38
    
    
    1,389,194
    
    
    
    8.72
    
    
    $
    2.38
    
    
    
    1,353,209
    
    
    
    8.72
    
    
    $
    2.38
    
    
    
    489,569
    
    
    $
    2.38$2.90
    
    
    235,000
    
    
    
    8.79
    
    
    $
    2.90
    
    
    
    228,342
    
    
    
    8.79
    
    
    $
    2.90
    
    
    
    68,541
    
    
    $
    2.90$3.10
    
    
    12,000
    
    
    
    8.98
    
    
    $
    3.10
    
    
    
    11,641
    
    
    
    8.98
    
    
    $
    3.10
    
    
    
    3,020
    
    
    $
    3.10$3.48
    
    
    391,430
    
    
    
    8.34
    
    
    $
    3.48
    
    
    
    381,974
    
    
    
    8.34
    
    
    $
    3.48
    
    
    
    155,032
    
    
    $
    3.48$5.10
    
    
    22,300
    
    
    
    8.18
    
    
    $
    5.10
    
    
    
    22,300
    
    
    
    8.18
    
    
    $
    5.10
    
    
    
    22,300
    
    
    $
    5.10$5.55
    
    
    18,586
    
    
    
    8.18
    
    
    $
    5.55
    
    
    
    18,586
    
    
    
    8.18
    
    
    $
    5.55
    
    
    
    18,586
    
    
    $
    5.55$11.25-1023.75
    
    
    312,414
    
    
    
    5.65
    
    
    $
    42.36
    
    
    
    312,414
    
    
    
    5.65
    
    
    $
    42.36
    
    
    
    312,414
    
    
    $
    42.362,740,744
    
    
    
    8.13
    
    
    $
    6.91
    
    
    
    2,686,469
    
    
    
    8.13
    
    
    $
    7.00
    
    
    
    1,383,866
    
    
    $
    11.12
  Warrants  additional paid-in capital 
  16




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Warrants 
    8. RELATED PARTIES
   17




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9. COMMITMENTS
 Operating Leases
  AmountApril through December 2009
    
    $
    323,2562010
    
    
    437,5972011
    
    
    445,7772012
    
    
    362,4682013
    
    
    139,742Total minimum lease payments
    
    $
    1,708,840
  10. INCOME TAXES
   18




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11. EMPLOYEE BENEFIT PLANS
  19




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion and analysis of the Companys financial condition and results of
operations should be read in conjunction with the Companys financial statements and related notes
appearing elsewhere in this Quarterly Report on Form 10-Q . In addition to historical information,
this discussion and analysis contains forward-looking statements that involve risks, uncertainties
and assumptions. The Companys actual results may differ materially from those anticipated in these
forward-looking statements as a result of risks and uncertainties that exist in our operations,
development efforts and business environment, including but not limited to those set forth under
the Section entitled Risk Factors in our Annual Report on Form 10-K for the year ended December
31, 2008 and elsewhere in this Quarterly Report on Form 10-Q and in other documents we file with
the Securities and Exchange Commission. All forward-looking statements included in this report are
based on information available to us as of the date hereof, and, unless required by law, we assume
no obligation to update any such forward-looking statement.
 Overview
 Background
  Recent Developments
  Description of Business
  20




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
    
    terminate or delay clinical trials or studies of VIA-2291;
    
    terminate or delay the preclinical development of one or more of its other preclinical
candidates;
    
    curtail its licensing activities that are designed to identify molecular targets and
small molecules for treating cardiovascular disease;
    
    relinquish rights to product candidates, development programs, or discovery development
programs that it may otherwise seek to develop or commercialize on its own; and
    
    delay, reduce the scope of, or eliminate one or more of its research and development
programs, or ultimately cease operations.
  Revenue
  23




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Research and Development Expenses
   
    
    compensation of personnel associated with research and development activities, including
consultants, investigators, and contract research organizations (CROs);
    
    in-licensing fees;
    
    laboratory supplies and materials;
    
    costs associated with the manufacture of product candidates for preclinical testing and
clinical studies;
    
    preclinical costs, including toxicology and carcinogenicity studies;
    
    fees paid to professional service providers for independent monitoring and analysis of
the Companys clinical trials;
    
    depreciation and equipment; and
    
    allocated costs of facilities and infrastructure.
  Period fromJune 14, 2004Three Months Ended
    
    
    (date of inception) toMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2009Externally generated research and development expense
    
    $
    1,435,875
    
    
    $
    2,219,801
    
    
    $
    26,501,851Internally generated research and development expense
    
    
    698,881
    
    
    
    1,098,361
    
    
    
    10,483,868Total
    
    $
    2,134,756
    
    
    $
    3,318,162
    
    
    $
    36,985,719
  Period fromJune 14, 2004Three Months Ended
    
    
    (date of inception) toMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2009In-licensing expenses
    
    $
    400,000
    
    
    $
    6,250
    
    
    $
    5,270,000CRO and investigator expenses
    
    
    530,754
    
    
    
    1,456,290
    
    
    
    10,189,978Consulting expenses
    
    
    269,129
    
    
    
    312,598
    
    
    
    5,567,667Other
    
    
    235,992
    
    
    
    444,663
    
    
    
    5,474,206Total
    
    $
    1,435,875
    
    
    $
    2,219,801
    
    
    $
    26,501,851
 24




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Period fromJune 14, 2004Three Months Ended
    
    
    (date of inception) toMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2009Personnel and related expenses
    
    $
    482,576
    
    
    $
    769,880
    
    
    $
    7,296,530Stock-based compensation expense
    
    
    101,111
    
    
    
    114,034
    
    
    
    920,944Travel and entertainment expense
    
    
    38,785
    
    
    
    108,885
    
    
    
    1,024,155Other
    
    
    76,409
    
    
    
    105,562
    
    
    
    1,242,239Total
    
    $
    698,881
    
    
    $
    1,098,361
    
    
    $
    10,483,868
    General and Administrative
  25




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Interest Income, Interest Expense and Other Expenses
  Results of Operations
 Comparison of the three months ended March 31, 2009 and 2008
  Three Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeRevenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    Research and development expense
    
    
    2,134,756
    
    
    
    3,318,162
    
    
    
    (1,183,406
    )
    
    
    (36
    )%General and administrative expense
    
    
    2,064,020
    
    
    
    2,664,957
    
    
    
    (600,937
    )
    
    
    (23
    )%Interest income
    
    
    
    
    
    
    102,754
    
    
    
    (102,754
    )
    
    
    Interest expense
    
    
    113,217
    
    
    
    120
    
    
    
    113,097
    
    
    
    Other income/(expense)
    
    
    9,855
    
    
    
    (28,739
    )
    
    
    38,594
    
    
    
    134
    %
 Revenue .
 Research and Development Expense.
 General and Administrative Expense.
 26




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Interest Income.
 Interest Expense.
 Other Income/(Expense).
 Income Tax Expense .
 Liquidity and Capital Resources
     27




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28




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Contractual Obligation and Commitments
  Payments Due by PeriodLess Than
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsOperating lease obligations (1)
    
    
    1,708,840
    
    
    
    431,462
    
    
    
    887,465
    
    
    
    389,913
    
    
    
    Notes payable  affiliate (2)
    
    
    2,000,000
    
    
    
    2,000,000
    
    
    
    
    
    
    
    
    
    
    
    Uncertain tax positions (3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,708,840
    
    
    $
    2,431,462
    
    
    $
    887,465
    
    
    $
    389,913
    
    
    $
    
 
 (1)
    
    Operating lease obligations reflect contractual commitments for the
Companys office facilities for its headquarters in San Francisco,
California and its clinical operations location in Princeton, New
Jersey. In January 2008, the Company expanded and extended both leases
to ensure adequate facilities for current activities. The San
Francisco headquarters lease has been extended through May 31, 2013
and has been expanded to a total of 8,180 square feet. The lease
amendment resulted in an increase of approximately $1.5 million in
future rent. The lease amendment to the Princeton, New Jersey facility
extends the lease through April 2, 2012 and has been expanded to a
total of 4,979 square feet. The lease amendment resulted in an
increase of approximately $330,000 in future rent.(2)
    
    As more fully described in Note 6 to the Unaudited Condensed Financial
Statements, in March 2009, the Company entered into a Note and Warrant
Purchase Agreement (the Loan Agreement) with its principal
stockholder and one of its affiliates (the Lenders) whereby the
Lenders agreed to lend to the Company in the aggregate up to $10.0
million, pursuant to the terms of promissory notes (collectively, the
Notes) delivered under the Loan Agreement (the Loan Transaction).
On March 12, 2009, the Company borrowed an initial amount of $2.0
million. Subject to the Lenders approval, the Company may borrow in
the aggregate up to an additional $8.0 million at subsequent closings
pursuant to the terms of the Loan Agreement and Notes. The Notes are
secured by a first priority lien on all of the assets of the Company.
Amounts borrowed under the Notes accrue interest at the rate of 15%
per annum, which increases to 18% per annum following an event of
default. Unless earlier paid in accordance with the terms of the
Notes, all unpaid principal and accrued interest shall become fully
due and payable on the earlier to occur of (i) September 14, 2009,
(ii) the closing of a debt, equity or combined debt/equity financing
resulting in gross proceeds or available credit to the Company of not
less than $20.0 million (a Financing), and (iii) the closing of a
transaction in which the Company sells, conveys, licenses or otherwise
disposes of a majority of its assets or is acquired by way of a
merger, consolidation, reorganization or other transaction or series
of transactions pursuant to which stockholders of the Company prior to
such acquisition own less than 50% of the voting interests in the
surviving or resulting entity.(3)
    
    The Company adopted FIN 48 on the first day of its 2007 fiscal year.
The amount of unrecognized tax benefits at December 31, 2008 was
$274,000. This amount has been excluded from the contractual
obligations table because a reasonably reliable estimate of the timing
of future tax settlements cannot be determined. Off-Balance Sheet Arrangements
  Critical Accounting Policies
  29




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Research and Development Accruals
    30




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Stock-based Compensation
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees.
      Three Months EndedMarch 31, 2009
    
    March 31, 2008Expected life from grant date
    
    
    6.08
    
    
    
    2.5-6.08Expected volatility
    
    
    97
    %
    
    
    79
    %Risk free interest rate
    
    
    1.67
    %
    
    
    2.48
    %Dividend yield
    
    
    
    
    
    
    
 31




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Period fromJune 14, 2004Three Months Ended
    
    
    (Date of Inception) toMarch 31,
    
    
    March 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009Research and development expense
    
    $
    97,217
    
    
    $
    114,034
    
    
    $
    916,417General and administrative expense
    
    
    241,835
    
    
    
    298,938
    
    
    
    2,105,157Total
    
    $
    339,052
    
    
    $
    412,972
    
    
    $
    3,021,574
   Period fromJune 14, 2004Three Months Ended
    
    
    (Date of Inception) toMarch 31,
    
    
    March 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009Research and development expense
    
    $
    3,894
    
    
    $
    
    
    
    $
    4,528General and administrative expense
    
    
    11,621
    
    
    
    
    
    
    
    13,514Total
    
    $
    15,515
    
    
    $
    
    
    
    $
    18,042
  Forward-looking statements
  
    
    the Companys ability to borrow additional amounts under the loan from the Lenders, which
is subject to the discretion of the Lenders;
    
    the Companys ability to obtain necessary financing in the near term, including amounts
necessary to repay the loan from the Lenders by the September 14, 2009 maturity date (or
earlier if certain repayment acceleration provisions are triggered);
    
    the Companys ability to control its operating expenses;
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
    
    the Companys ability to comply with covenants included in the loan from the Lenders;
    
    the Companys ability to maintain the listing of its common stock on NASDAQ;
    
    the Companys ability to timely recruit and enroll patients for the FDG-PET clinical
trial, as well as any future clinical trial;
    
    the Companys failure to obtain sufficient data from enrolled patients that can be used
to evaluate VIA-2291, thereby impairing the validity or statistical significance of its
clinical trials;
    
    the Companys ability to successfully complete its clinical trials of VIA-2291 on
expected timetables and the outcomes of such clinical trials;
    
    complexities in designing and implementing current cardiovascular clinical trials using
histological examinations, measurement of biomarkers, medical imaging, and atherosclerotic
plaque bioassays;
    
    the results of the Companys clinical trials, including without limitation, with respect
to the safety and efficacy of VIA-2291;
    
    if the results of the ACS and CEA studies, upon further review, are revised, interpreted
differently by regulatory authorities or negated by later stage clinical trials;
    
    the Companys ability to obtain necessary FDA approvals, including to initiate future
clinical trials of VIA-2291 (such as a Phase IIb trial or a Phase III registration trial);
    
    the Companys ability to successfully commercialize VIA-2291;
    
    the Companys ability to obtain and protect its intellectual property related to its
product candidates;
    
    the Companys potential for future growth and the development of its product pipeline,
including the THR Beta Agonist candidate and the other compounds licensed from Roche;
    
    the Companys ability to form and maintain collaborative relationships to develop and
commercialize our product candidates;
    
    general economic and business conditions; and
    
    the other risks described under the heading Risk Factors in the Companys Annual Report
on Form 10-K for the year ended December 31, 2008, as supplemented by the risks described
under Risk Factors in Part II, Item IA of this Quarterly Report on Form 10-Q.
  
 Item 4T. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  33




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Changes in Internal Control Over Financial Reporting
  
 PART II.  OTHER INFORMATION
 
 Item 1A. Risk Factors
  Risks Related to the Companys Business
 The Company is at an early stage of development. The Company has never generated and may never
generate revenues from commercial sales of its products and the Company may not have products to
market for several years, if ever.
    34




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Risk Related to the Securities Market and Ownership of the Companys Common Stock
 We may be unable to maintain our listing on the NASDAQ Capital Market. Failure to maintain our
listing could adversely affect our business, and the liquidity of our common stock would be
seriously limited.
    35




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The Companys stock price could decline significantly based on the results and timing of its
clinical trials.
  36




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Item 6. Exhibits
 Exhibit No.
    
    Description3.1
    
    Restated Certificate of Incorporation (filed as Exhibit 3.1 to the Form 10-K filed on March 22, 2005
and incorporated herein by reference)3.2
    
    Certificate of Amendment to the Restated Certificate of Incorporation (filed as Exhibit 3.1 to the
Form 10-KSB filed on March 30, 2000 and incorporated herein by reference)3.3
    
    Certificate of Amendment to the Restated Certificate of Incorporation (filed as Exhibit 3.3 to the
Form 10-K filed on March 28, 2003 and incorporated herein by reference)3.4
    
    Certificate of Amendment to the Restated Certificate of Incorporation (filed as Exhibit 3.4 to the
Form 10-K filed on March 28, 2003 and incorporated herein by reference)3.5
    
    Certificate of Amendment to the Restated Certificate of Incorporation (filed as Exhibit 3.5 to the
Form 10-K filed on March 28, 2003 and incorporated herein by reference)3.6
    
    Amended and Restated Certificate of Designation of Preferences and Rights of Series C Preferred Stock
(filed as Annex H to the Form S-4/A filed on December 19, 2002 and incorporated herein by reference)3.7
    
    Certificate of Amendment to the Restated Certificate of Incorporation (Increase in Authorized Shares)
(filed as Exhibit 3.7 to the Form 10-Q filed on August 14, 2007 and incorporated herein by reference)3.8
    
    Certificate of Amendment to the Restated Certificate of Incorporation (Reverse Stock Split) (filed as
Exhibit 3.8 to the Form 10-Q filed on August 14, 2007 and incorporated herein by reference)3.9
    
    Certificate of Amendment to the Restated Certificate of Incorporation (Name Change) (filed as Exhibit
3.9 to the Form 10-Q filed on August 14, 2007 and incorporated herein by reference)3.10
    
    Fourth Amended and Restated Bylaws of VIA Pharmaceuticals, Inc. (filed as Exhibit 3.1 to the Form 8-K
filed on April 17, 2008 and incorporated herein by reference)4.1
    
    Warrant to Purchase Common Stock of VIA Pharmaceuticals, Inc. issued to Bay City Capital Fund IV,
L.P., dated March 12, 2009 (filed as Exhibit 4.1 to the Form 8-K filed on March 12, 2009 and
incorporated herein by reference)4.2
    
    Warrant to Purchase Common Stock of VIA Pharmaceuticals, Inc. issued to Bay City Capital Fund IV
Co-Investment Fund, L.P., dated March 12, 2009 (filed as Exhibit 4.2 to the Form 8-K filed on March
12, 2009 and incorporated herein by reference)4.3
    
    Second Amended and Restated Registration Rights Agreement, dated as of March 12, 2009, by and among
VIA Pharmaceuticals, Inc. and the parties named therein (filed as Exhibit 4.3 to the Form 8-K filed
on March 12, 2009 and incorporated herein by reference)10.1
    
    Note and Warrant Purchase Agreement, dated as of March 12, 2009, by and among VIA Pharmaceuticals,
Inc., Bay City Capital Fund IV, L.P. and Bay City Capital Fund IV Co-Investment Fund, L.P. (filed as
Exhibit 10.1 to the Form 8-K filed on March 12, 2009 and incorporated herein by reference)10.2
    
    Promissory Note, dated as of March 12, 2009, by VIA Pharmaceuticals, Inc. and payable to Bay City
Capital Fund IV, L.P (filed as Exhibit 10.2 to the Form 8-K filed on March 12, 2009 and incorporated
herein by reference)10.3
    
    Promissory Note, dated as of March 12, 2009, by VIA Pharmaceuticals, Inc. and payable to Bay City
Capital Fund IV
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Exhibit No.
    
    DescriptionCo-Investment Fund, L.P. (filed as Exhibit 10.3 to the Form 8-K filed on March 12,
2009 and incorporated herein by reference)10.4
    
    Consulting Agreement by and between VIA Pharmaceuticals, Inc. and Adeoye Olukotun, M.D., dated
January 29, 2009 (filed as Exhibit 10.1 to the Form 8-K filed on February 3, 2009 and incorporated
herein by reference)31.1*
    
    Principal Executive Officers Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2*
    
    Principal Financial Officers Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1*
    
    Certification Pursuant to 18 U.S.C. § 1350 (Section 906 of Sarbanes-Oxley Act of 2002)32.2*
    
    Certification Pursuant to 18 U.S.C. § 1350 (Section 906 of Sarbanes-Oxley Act of 2002)
 
 *
    
    Filed herewith 38




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VIA PHARMACEUTICALS, INC.By:
    /s/ James G. StewartJames G. StewartSenior Vice President, Chief Financial Officer
Duly Authorized Officer and Principal Financial Officer 39