U.S.
SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549








FORM
10-K








ý  ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF
1934


For
the fiscal year ended December 31, 2008


OR


 ̈ TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF
1934


Commission file number
000-53404








BIO-PATH HOLDINGS,
INC.


(Exact
name of registrant as specified in its charter)


Utah
            
            87-0652870(State
      or other jurisdiction of  incorporation)
            
            (I.R.S.
      employer identification No.)





3293 Harrison Boulevard,
Suite 230, Ogden, UT 84403


(Address
of principal executive offices)





Issuer’s telephone no.,
including area code: (801) 399-5500





Securities
registered pursuant to Section 12(b) of the Exchange Act: None


Securities
registered pursuant to Section 12(g) of the Exchange Act: Common Stock $0.001
par value





-Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes  ̈  No ý


-Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.  Yes  ̈  No ý


-Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes ý  No  ̈





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.  ý





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.





Large
      accelerated filer  ̈
            Accelerated
      filer   ̈Non-accelerated
      filer  ̈ (Do
      not check if a smaller reporting company)
            Smaller
      reporting company  ý




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).  Yes  ̈  Noý





The
Issuer’s revenues for the fiscal year ended December 31, 2008 were
$-0-.





As of
March 24, 2009, there were 41,923,602 shares of the Issuer’s common stock issued
and outstanding of which 22,581,026 were held by
non-affiliates.   The aggregate market value of the common stock
held by non-affiliates of the registrant based upon the last sales price of the
common stock reported on the OTCBB on March 24, 2009 was approximately
$3,838,774.





DOCUMENTS
INCORPORATED BY REFERENCE:  NONE





TABLE OF
CONTENTS





Page





PART
      I
            1Item
      1. Description of Business
            2Item
      1A. Risk Factors
            14Item
      2. Properties
            27Item
      3. Legal Proceedings
            27Item
      4. Submission of Matters to a Vote of Security Holders
            27PART
      II
            27Item
      5. Market for the Registrant’s Common Stock and Related Security Holder
      Matters
            27Item
      6. Selected Consolidated Financial Data
            29Item
      7. Management’s Discussion and Analysis of Financial Condition and Results
      of Operation
            29Item
      7A. Quantitative and Qualitative Disclosures About Market
      Risk.
            36Item
      8. Financial Statements and Supplementary Data
            36Item
      9. Changes and Disagreements with Accountants on Accounting and Financial
      Disclosure
            36Item
      9A. Controls and Procedures
            37Item
      9B. Other Information
            38PART
      III
            38Item
      10. Directors, Executive Officers and Corporate Governance
            38Item
      11. Executive Compensation
            41Item
      12. Security Ownership of Certain Beneficial Owners and
      Management
            43Item
      13. Certain Relationships and Related Party Transactions
            45Item
      14. Principal Accountant Fees and Services
            45Item
      15. Exhibits
            46





PART I





Unless the context requires otherwise,
references in this report to “we,” “our,” “us,” “Company” and “Bio-Path” refer
to Bio-Path Holdings, Inc. and its subsidiaries.  Our wholly-owned
subsidiary, Bio-Path, Inc., is sometime hereafter referred to as “Bio-Path
Subsidiary”.





Note
Regarding Forward-Looking Statements





This annual report on Form 10-K
contains forward-looking statements that have been made pursuant to the
provisions of the Private Securities Litigation Reform Act of
1995.  Such forward-looking statements are based on current
expectations, estimates and projections about our industry, management’s beliefs
and certain assumptions made by our management, and may include, but are not
limited to, statements regarding to:





·
            the
      potential benefits and commercial potential of our potential
      products,


·
            level
      of future sales, if any,


·
            collections,
      costs, expenses and capital requirements, cash
  outflows,


·
            the
      safety and efficacy of our product
candidates,


·
            estimates
      of the potential markets and estimated trial
  dates,


·
            sales
      and marketing plans,


·
            any
      changes in the current or anticipated market demand or medical need of our
      potential products,


·
            our
      clinical trials, commencement dates for new clinical trials, clinical
      trial results, evaluation of our clinical trial results by regulatory
      agencies in other countries,


·
            need
      for additional research and
testing,


·
            the
      uncertainties involved in the drug development process and
      manufacturing,


·
            our
      future research and development
activities,


·
            assessment
      of competitors and potential
competitors,


·
            potential
      costs resulting from product liability or other third-party
      claims,


·
            the
      sufficiency of our existing capital resources and projected cash needs,
      and


·
            assessment
      of impact of recent accounting
pronouncements.





Words
such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,”
“estimates,” variations of such words and similar expressions are intended to
identify such forward-looking statements, although not all forward-looking
statements contain these identifying words.  These statements are not
guarantees of future performance and are subject to certain risks,
uncertainties, and assumptions that are difficult to predict; therefore, actual
results may differ materially from those expressed or forecasted in any such
forward-looking statements.  Such risks and uncertainties include, but
are not limited to, those discussed later in this report under the section
entitled “Risk Factors.”  Unless required by law, we undertake no
obligation to update publicly any forward-looking statements, whether because of
new information, future events or otherwise.  However, readers should
carefully review the risk factors set forth in other reports or documents we
file from time to time with the Securities and Exchange Commission.








ITEM 1.  DESCRIPTION OF BUSINESS





Bio-Path Holdings, Inc. through
Bio-Path, Inc., our wholly-owned subsidiary (“Bio-Path Subsidiary”) is engaged
in the business of financing and facilitating the development of novel cancer
therapeutics.  Our initial plan has been to acquire licenses for drug
technologies from The University of Texas M. D. Anderson Cancer Center (“M. D.
Anderson”), to fund clinical and other trials for such technologies and to
commercialize such technologies. We have two exclusive licenses (“License
Agreements”) from M. D. Anderson for three lead products and nucleic acid
delivery technology. These licenses specifically provide drug delivery platform
technology with composition of matter intellectual property that enables
systemic delivery of antisense, small interfering RNA (“siRNA”) and small
molecules for treatment of cancer.





Our business plan is to act efficiently
as an intermediary in the process of translating newly discovered drug
technologies into authentic therapeutic drugs products.  Our strategy
is to selectively license potential drug candidates for certain cancers, and,
primarily utilizing the comprehensive drug development capabilities of M. D.
Anderson, to advance these candidates into initial human efficacy trials (Phase
IIA), and out-license each successful potential drug to a pharmaceutical
company.





Plan
of Operation





Our plan of operation over the next 36
months is focused on achievement of milestones with the intent to demonstrate
clinical proof-of concept of our drug delivery technology and lead drug
products. Furthermore, we will attempt to validate our business model by
in-licensing additional products to broaden the drug product
pipeline.





We anticipate that over the next 36
months, we will need to raise approximately $11,500,000 to completely implement
our business plan.  Since its inception, Bio-Path Subsidiary completed
several financings raising net proceeds of $3,131,460. Our short term plan is to
achieve three key milestones:





(1)  conduct a Phase I
clinical trial of our lead drug BP-100-1.01, which if successful, will validate
our liposomal delivery technology for nucleic acid drug products including
siRNA;





(2)  perform necessary
pre-clinical studies in our lead liposomal siRNA drug candidate, BP-100-2.01 to
enable the filing of an Investigational New Drug (“IND”) for a Phase I clinical
trial; and





(3)  out-license
(non-exclusively) our delivery technology for either antisense or siRNA to a
pharmaceutical partner to speed development applications of our
technology.





In June 2008, we entered into a Project
Plan Agreement with Althea Technologies, Inc. (“Althea”) relating to supply of
drug product for our first Phase I clinical trials of our BP-100-1.01
drug.  In September 2008 we executed a definitive agreement with
Althea.





BP-100-1.01





BP-100-1.01 is our lead lipid delivery
RNAi drug, which will be clinically tested for validation in Acute Myeloid
Leukemia (AML), Myelodysplastic Syndrome (MDS) and Chronic Myelogenous Leukemia
(CML).  If this outcome is favorable, we expect there will be
opportunities to negotiate non-exclusive license applications involving upfront
cash payments with pharmaceutical companies developing antisense drugs that need
systemic delivery technology.





2


The IND
for BP-100-1.01 was submitted to the FDA in February of 2008 and included all
in vitro testing,
animal studies and manufacturing and chemistry control studies
completed.  The FDA requested some changes be made to the application
submission.  The Company is currently working on the requested
changes.  The final package submission to the FDA must include the
manufacturing and chemistry control test data from an engineering test batch
that will use the same manufacturing procedures to be used to manufacture the
drug product to be used on human patients in the Phase I clinical
trial.  The clinical batch of drug product is currently scheduled to
be manufactured in mid May, 2009 and the Company expects to have the final data
submitted to the FDA by the end of April, 2009.  Based on this
timetable, the Company anticipates having the IND approved and commencement of
patient enrollment for the Phase I clinical trial to start the end of May
2009.  The primary objective of the Phase I clinical trial, as in any
Phase I clinical trial, is the safety of the drug for treatment of human
patients.  An additional key objective of the trial is to assess that
the effectiveness of the delivery technology.





The Phase I clinical trial of
BP-100-1.01 is budgeted for $1,675,000.  A significant portion of this
budget is for acquisition of the drug material to be tested, a majority of which
has been paid by the Company.  Commencement of the Phase I clinical
trial depends on the Federal Drug Administration (“FDA”) approving the IND for
BP-100-1.01.





We have entered into a supply agreement
with Althea Technologies, Inc. for the manufacture of BP-100-1.01 for our
upcoming Phase I Clinical Trial.  Althea is a contract manufacturer
who will formulate and lyophilize our BP-100-1.01 product requirements according
to current Good Manufacturing Practices (cGMP).  The contract includes
payments by Bio-Path of approximately $700,000 for process development and
manufacture of cGMP product suitable for use in human patients in the Company’s
Phase I clinical trial.  Bio-Path has the right to terminate the
agreement at any time, subject to payment of a termination fee to
Althea.  The termination fee is not material.





BP-100-2.01





BP-100-2.01 is our lead siRNA drug,
which will be clinically tested for validation as a novel, targeted ovarian
cancer therapeutic agent.  The Company prepared a review package of
the testing material for this drug product and reviewed the information with the
FDA.  Based on this review and feedback, performing the remaining
pre-clinical development work for BP-100-2.01 expected to be required for an IND
is budgeted for $225,000. The additional pre-clinical work is expected to
include two toxicity studies in mice and primates.





Definitions





The following definitions are intended
to assist you in understanding certain matters discussed in this Business
Section:





Antisenseisa
medication containing part of the non-coding strand of messenger RNA (mRNA), a
key molecule involved in the translation of DNA into protein. Antisense drugs
hybridize with and inactivate mRNA. This stops a particular gene from producing
the protein for which it holds the recipe. Antisense drugs have been developed
or are "in the pipeline" to treat eye disease in AIDS, lung cancer, diabetes and
diseases such as arthritis and asthma with a major inflammatory
component





3


Acute Myeloid
Leukemiais a cancer of the myeloid line of white blood cells,
characterized by the rapid proliferation of abnormal cells which accumulate in
the bone marrow and interfere with the production of normal blood cells. AML is
the most common acute leukemia affecting adults, and its incidence increases
with age. Although AML is a relatively rare disease, accounting for
approximately 1.2% of cancer deaths in the United States, its incidence is
expected to increase as the population ages. The symptoms of AML are caused by
replacement of normal bone marrow with leukemic cells, resulting in a drop in
red blood cells, platelets, and normal white blood cells. These symptoms include
fatigue, shortness of breath, easy bruising and bleeding, and increased risk of
infection. Although several risk factors for AML have been identified, the
specific cause of AML remains unclear. As an acute leukemia, AML progresses
rapidly and is typically fatal within weeks or months if left untreated. Acute
myeloid leukemia is a potentially curable disease; but only a minority of
patients is cured with current therapy.





Chronic
Myelogenous Leukemiaisa form of leukemia
characterized by the increased and unregulated growth of predominantly myeloid
cells in the bone marrow and the accumulation of these cells in the blood. CML
is a clonal bone marrow stem cell disorder in which proliferation of mature
granulocytes (neutrophils, eosinophils, and basophils) and their precursors is
the main finding. It is a type of myeloproliferative disease associated with a
characteristic chromosomal translocation called the Philadelphia
chromosome.





Liposomal
Delivery TechnologyLiposomes are used for drug delivery
due to their unique properties. A liposome encapsulates a region on aqueous
solution inside a hydrophobic membrane; dissolved hydrophilic solutes cannot
readily pass through the lipids. Hydrophobic chemicals can be dissolved into the
membrane, thereby incorporating the materials, and in this way liposome can
carry both hydrophobic molecules and hydrophilic molecules. To deliver the
molecules to sites of action, the lipid bilayer can fuse with other bilayers
such as the cell membrane, thus delivering the liposome contents. By making
liposomes in a solution of DNA or drugs (which would normally be unable to
diffuse through the membrane) they can be (indiscriminately) delivered past the
lipid bilayer.





Myelodysplastic
Syndromes are a diverse collection of hematological conditions united by
ineffective production (or dysplasia) of myeloid blood cells and risk of
transformation to acute myelogenous leukemia (AML).[1] Anemia
requiring chronic blood transfusion is frequently present. Myelodysplastic
syndromes are bone marrow stem cell disorders resulting in disorderly and
ineffective hematopoiesis (blood production) manifested by irreversible
quantitative and qualitative defects in hematopoietic (blood-forming) cells. In
a majority of cases, the course of disease is chronic with gradually worsening
cytopenias due to progressive bone marrow failure.





Nucleic Acid Drug
Products.  Nucleic acid base sequence of proteins plays a
crucial role in the expression of gene. The gene is responsible for the
synthesis of proteins and these proteins, which are synthesized, are responsible
for the biological process including diseases. If the nucleic acid sequence is
altered, it could be possible to block or transfer the message for protein
synthesis, thereby preventing the particular protein, which is responsible for
the disease. These nucleic acids act as drugs by different mechanisms, they may
bind with the synthesized proteins, and they can hybridize to a messenger RNA
leading to translation arrest or may induce degradation to target RNA. In this
way the nucleic acids can act as drugs for inhibiting gene expression or protein
synthesis.




siRNA.  Small
interfering RNA (siRNA), sometimes known as short interfering RNA or silencing
RNA, is a class of 20-25 nucleotide-long double-stranded RNA molecules that
play a variety of roles in biology. Most notably, siRNA is involved in the RNA
interference (RNAi) pathway, where it interferes with the expression of a
specific gene.  A therapeutic siRNA drug is designed to block the
cell’s ability to produce a disease causing protein, effectively controlling the
disease.




4


Projected
Financing Needs





We anticipate that will need to raise
an additional $11,500,000 in the next 36 months to complete our $15 million fund
raising objectives, which will enable us to conduct additional clinical trials
in other Bio-Path drug candidates and extend operations through 36
months.





The Phase I clinical trial of
BP-100-2.01 is expected to cost $2,000,000.  Commencement of the Phase
I clinical trial depends on the FDA approving the IND for
BP-100-2.01.  Success in the Phase I clinical trial will be based on
the demonstration that the delivery technology for siRNA has the same delivery
characteristics seen in our pre-clinical studies of the drug in
animals.  If the Phase I clinical trial in BP-100-1.01 is successful,
we will follow with a Phase IIa trial in BP-100-1.01.  Successful
Phase I and IIA trials of BP-100-1.01 will demonstrate clinical proof-of-concept
that BP-100-1.01 is a viable therapeutic drug product for treatment of AML, MDS
and CML.  The Phase IIA clinical trial in BP-100-1.01 is expected to
cost approximately $1,600,000.





The additional capital raised will also
allow Bio-Path to conduct a Phase I clinical trial of BP-100-1.02, which is an
anti-tumor drug that treats a broad range of cancer tumors.  This
trial is budgeted to cost $2,500,000 and is higher than the Phase I clinical
trial for BP-100-1.01 due to expected higher hospital, patient monitoring and
drug costs.  Similar to the case with BP-100-1.01, commencement of the
Phase I clinical trial of BP-100-1.02 requires that the FDA approve the IND
application for BP-100-1.02.





We have currently budgeted
approximately $3,000,000 out of the total $11,500,000 in net proceeds to be
raised for additional drug development opportunities.  The balance of
the funding is planned to fund patent expenses, licensing fees, pre-clinical
costs to M. D. Anderson’s Pharmaceutical Development Center, consulting fees and
management and administration.





We have generated approximately one
full year of financial information and have not previously demonstrated that we
will be able to expand our business through an increased investment in our
technology and trials. We cannot guarantee that plans as described in this
report will be successful. Our business is subject to risks inherent in growing
an enterprise, including limited capital resources and possible rejection of our
new products and/or sales methods. If financing is not available on satisfactory
terms, we may be unable to continue expanding our operations. Equity financing
will result in a dilution to existing shareholders.





There can be no assurance of the
following:





1)           That
the actual costs of a particular trial will come within our budgeted
amount.


2)           That
any trials will be successful or will result in drug commercialization
opportunities.


3)           That
we will be able to raise the sufficient funds to allow us to operate for three
years or to complete our trials.





Background
Information about M. D.  Anderson





We anticipate that our initial drug
development efforts will be pursuant to two exclusive License Agreements with M.
D. Anderson. M. D. Anderson’s stated mission is to “make cancer history”
(www.mdanderson.org).  Achieving
that goal begins with integrated programs in cancer treatment, clinical trials,
educational programs and cancer prevention.  M. D. Anderson is one of
the largest and most widely recognized cancer centers in the world: U.S. News
& World Report’s “America’s Best Hospitals” survey has ranked M. D. Anderson
as one of 2 best hospitals for 16 consecutive years. M. D. Anderson will treat
more than 100,000 patients this year, of which approximately 11,000 will
participate in therapeutic clinical research exploring novel treatments the
largest such program in the nation. M. D.


5


Anderson
employs more than 15,000 people including more than 1,000 M. D.
and  Ph.D clinicians and researchers, and is routinely conducting more
than 700 clinical trials at any one time.





Each year, researchers at M. D.
Anderson and around the globe publish numerous discoveries that have the potential to become or enable
new cancer drugs. The pharmaceutical and biotechnology industries have more than
four hundred cancer drugs in various stages of clinical trials. Yet the number
of actual new drugs
that are approved to treat this dreaded disease is quite small and its growth
rate is flat or decreasing. A successful new drug in this market is a “big deal”
and substantially impacts those companies who have attained it: Genentech’s
Avastin, Novartis’ Gleevec, OSI’s Tarceva and Millennium’s Velcade are examples
of such.





Over the past several years M. D.
Anderson has augmented its clinical and research prominence through the
establishment of the Pharmaceutical Development Center (“PDC”).  The
PDC was formed for the sole purpose of helping researchers at M.
D.  Anderson prepare their newly discovered compounds for clinical
trials.  It has a full-time staff of professionals and the capability
to complete all of the studies required to characterize a compound for the
filing of an Investigational New Drug Application (“IND”) with the FDA, which is
required to initiate clinical trials.  These studies include
pharmacokinetics (”pK”), tissue distribution, metabolism studies and toxicology
studies.





We anticipate being able to use the PDC
as a source for some of the pre-clinical work needed in the future, potentially
at a lower cost than what it would cost to use a for-profit contract research
organization.





Relationship
with M. D. Anderson





Bio-Path was founded to focus on
bringing the capital and expertise needed to translate drug candidates developed
at M. D. Anderson (and potentially other research institutions) into real
treatment therapies for cancer patients.  To carry out this mission,
Bio-Path plans to negotiate several agreements with M. D. Anderson that
will:





·
            give
      Bio-Path ongoing access to M. D. Anderson’s Pharmaceutical Development
      Center for drug development;


·
            provide
      rapid communication to Bio-Path of new drug candidate disclosures in
      the     Technology Transfer
    Office;


·
            standardize
      clinical trial programs sponsored by Bio-Path;
  and


·
            standardize
      sponsored research under a master agreement addressing intellectual
      property sharing.





Bio-Path’s Chief Executive Officer is
experienced working with M. D.Anderson and its personnel.  Bio-Path
believes that if Bio-Path obtains adequate financing, Bio-Path will be
positioned to translate current and future M. D. Anderson technology into real
treatments for cancer patients.  This in turn is expected to provide a
steady flow of cancer drug candidates for out-licensing to pharmaceutical
partners.





Licenses





Bio-Path Subsidiary has negotiated and
signed two licenses with M. D. Anderson for late stage preclinical molecules,
and intends to use our relationship with M. D. Anderson to develop these
compounds through Phase IIa clinical trials, the point at which we will have
demonstrated proof-of-concept of the efficacy and safety for our product
candidates in cancer patients.  At such time, we may seek a
development and marketing partner in the pharmaceutical or biotech
industry.  In certain cases, we may choose to complete development and
market the product ourselves.


6


Our basic guide to a decision to obtain
a license for a potential drug candidate is as follows:





·
            Likelihood of efficacy:
      Are the in vitro
      pre-clinical studies on mechanism of action and the in vivo animal models
      robust enough to provide a compelling case that the
      “molecule/compound/technology” has a high probability of working in
      humans?


·
            Does it fit with the Company’s
      expertise: Does Bio-Path possess the technical and clinical assets
      to significantly reduce the scientific and clinical risk to a point where
      a pharmaceutical company partner would likely want to license this
      candidate within 36-40 months from the date of Bio-Path acquiring a
      license?


·
            Affordability and potential for
      partnering: Can the clinical trial endpoints be designed in a
      manner that is unambiguous, persuasive, and can be professionally
      conducted in a manner consistent with that expected by the pharmaceutical
      industry at a cost of less than $5-$7 million dollars without “cutting
      corners”?


·
            Intellectual property and
      competitive sustainability:  Is the intellectual property
      and competitive analysis sufficient to meet Big Pharma criteria assuming
      successful early clinical human
results?





Out-Licenses
and Other Sources of Revenue





We intend to develop a steady series of
drug candidates through Phase IIa clinical trials and then to engage in a series
of out-licensing transactions to the pharmaceutical and biotechnology
companies.  These companies would then conduct later-stage clinical
development, regulatory approval and eventual marketing of the
drug.  We expect that such out-license transactions would include
upfront license fees, milestone/success payments and royalties.  We
intend to maximize the quality and frequency of these transactions, while
minimizing the time and cost to achieve meaningful candidates for
out-licensing.





In addition to this source of revenue
and value, we may forward integrate one or more of our own drug candidates. For
example, there are certain cancers that are primarily treated only in a
comprehensive cancer center; of which there are approximately forty in the US
and perhaps two hundred throughout the world.  Hence, “marketing and
distribution” becomes a realistic possibility for select
products.  These candidates may be eligible for Orphan Drug Status
which provides additional incentives in terms of market exclusivities and
non-dilutive grant funding for clinical trials.





Finally, there are technologies for
which we anticipate acquiring licenses whose application goes well beyond cancer
treatment. The ability to provide a unique and greatly needed solution to the
delivery of small molecules, DNA and siRNA and their efficient uptake by
targeted physiological tissues is a very important technological asset that may
be commercialized in other areas of medicine.





License
Agreement





We have
entered into two Patent and Technology License Agreements (the “Licenses”) with
M. D. Anderson relating to its technology. A summary of certain material terms
of each of the Licenses is as follows:


7





Licensor:
            The
      Board of Regents of the University of Texas System on behalf of The
      University of Texas M.D. Anderson Cancer CenterLicensee:
            Bio-Path,
      Inc.License:
            A
      royalty bearing, exclusive license to manufacture, use and sell the
      Licensed ProductsTerritory:
            WorldwideRetained
      Rights:
            Certain
      research and academic rights are retained by LicensorLicense
      Fees:
            Documentation
      Fee - $40,000 for the first license and $60,000 for the second license;
      annual maintenance fee - $25,000 for years 1, 2 & 3 increasing to
      $100,000 in the eighth year.  After the first sale, increasing
      to $125,000Royalties:
            Three
      percent of net salesMilestone
      Payments:
            One-time
      payments range from $150,000 to $2,000,000.  Total up to
      $8,150,000Securities
      Issuance:
            1,883,333
      shares of Bio-Path for first License and 1,255,556 shares for
      secondLicenseExpense:
            Bio-Path
      will reimburse M. D. Anderson for expensesTerm:
            Full
      term of patents





To
maintain its rights to the licensed technology, we must meet certain development
and funding milestones.





Description
of Technologies





The License Agreements relate to the
following technologies:




1)
            a
      lead siRNA drug product2)
            two
      single nucleic acid (antisense) drug
products


3)
            delivery
      technology platform for nucleic
acids





Business
Strategy





In order to capitalize on the growing
need for new drug candidates by the pharmaceutical industry, and recognizing the
value of clinical data, we have developed our commercialization strategy based
on the following concepts:





Develop
in-licensed compounds to proof-of-concept in patients through Phase
IIA.


8





·
            Manage
      trials as if they were being done by Big Pharma: seamless transition;
      quality systems; documentation; and disciplined program management
      recognized by Big Pharma diligence teams; trials conducted, monitored and
      data collected consistent with applicable FDA regulations to maximize
      Bio-Path’s credibility and value to minimize time to gain registration by
      Partner.





·
            Leverage
      M. D. Anderson’s pre-clinical and clinical development capabilities,
      including using the PDC for pre-clinical studies as well as clinical
      pharmacokinetics and pharmacodynamics and the institution’s world-renowned
      clinics, particularly for early clinical trials.  This should
      allow us to develop our drug candidates with experienced professional
      staff at a reduced cost compared to using external contract
      laboratories.  This should also allow us to operate in an
      essentially virtual fashion, thereby avoiding the expense of setting up
      and operating laboratory facilities, without losing control over timing or
      quality or IP contamination.





·
            Use
      our Scientific Advisory Board to supplement our Management Team to
      critically monitor existing programs and evaluate new technologies and/or
      compounds discovered or developed at M. D. Anderson, or elsewhere, for
      in-licensing.





·
            Hire
      a small team of employees or consultants: business development, regulatory
      management, and project management.





·
            Outsource
      manufacturing and regulatory capabilities. Bio-Path will not need to
      invest its resources in building functions where it does not add
      substantial value or differentiation. Instead, it will leverage an
      executive team with expertise in the selection and management of high
      quality contract manufacturing and regulatory
  firms.





Manufacturing





We have no manufacturing
capabilities and intend to outsource our manufacturing function.  The
most likely outcome of the out-license of a Bio-Path drug to a pharmaceutical
partner will be that the pharmaceutical partner will be responsible for
manufacturing drug product requirements.  However, in the event
Bio-Path is required to supply a drug product to a distributor or pharmaceutical
partner for commercial sale, Bio-Path will need to develop, contract for, or
otherwise arrange for the necessary manufacturing capabilities. There are a
limited number of manufacturers that operate under the FDA’s current good
manufacturing practices (cGMP) regulations capable of manufacturing our future
products.  In September 2008, we executed a Supply Agreement with
Althea Technologies, Inc., a cGMP manufacturer of pharmaceutical products, for
the supply of drug product needed for Bio-Path’s upcoming clinical
trials.





Intellectual
Property





Patents, trademarks, trade secrets,
technology, know-how and other proprietary rights are important to our
business.  Our success will depend in part on our ability to develop
and maintain proprietary aspects of our technology. To this end, we intend to
have an intellectual property program directed at developing proprietary rights
in technology that we believe will be important to our success.





We will actively seek patent protection
in the U.S. and, as appropriate, abroad and closely monitor patent activities
related to our business.


9


In addition to patents, we will rely on
trade secrets and proprietary know-how, which we seek to protect, in part,
through confidentiality and proprietary information agreements.





Employees





We currently employ two (2) full time
employees.  We also have contractual relationships with 4 additional
professionals who perform medical officer, regulatory and drug development
duties.  We expect to hire additional employees once additional
funding has been secured that will enable additional clinical programs to be
undertaken.





Scientific
Advisory Board





Our
Scientific Advisory Board consists of the following scientists and
oncologists:





Gabriel Lopez-Berestein,
M.D. – Chairman
of the Scientific Advisory Board and founder of Bio-Path;  Professor
of Medicine and Internist, Director, Cancer Therapeutics Discovery Program,
Chief, Section of Immunobiology and Drug Carriers at M. D. Anderson Cancer
Center.





Anil Sood, M.D.
--  Member of the Scientific Advisory Board and co-founder of
Bio-Path; Professor, Department of Gynecologic Oncology & Professor,
Department of Cancer Biology M. D. Anderson Cancer Center; Director, Ovarian
Cancer Research & Director, Blanton-Davis Ovarian Cancer Research Program;
Faculty Scholar Award, M. D. Anderson Cancer Center.





Ana M. Tari, Ph.D., M.S. –
Member of the Scientific Advisory Board and co-founder of Bio-Path; Assistant
Professor, Department of Experimental Therapeutics, M.D. Anderson Cancer
Center.





Additional
scientists and clinicians will join the Scientific Advisory Board once
additional funding has been secured to expend Bio-Path’s
operations.





Competition





We are
engaged in fields characterized by extensive research efforts, rapid
technological progress and intense competition. There are many public and
private companies, including pharmaceutical companies, chemical companies and
biotechnology companies, engaged in developing products for the same human
therapeutic applications that we are targeting. Currently, substantially all of
our competitors have substantially greater financial, technical and human
resources than Bio-Path and are more experienced in the development of new drugs
than Bio-Path. In order for us to compete successfully, we may need to
demonstrate improved safety, efficacy, ease of manufacturing and market
acceptance of our products over the products of our competitors.





We will
face competition based on the safety and efficacy of our drug candidates, the
timing and scope of regulatory approvals, the availability and cost of supply,
marketing and sales capabilities, reimbursement coverage, price, patent position
and other factors. Our competitors may develop or commercialize more effective,
safer or more affordable products than we are able to develop or commercialize
or obtain more effective patent protection. As a result, our competitors may
commercialize products more rapidly or effectively than we may be able to, which
would adversely affect our competitive position, the likelihood that our drug
candidates, if approved, will achieve initial market acceptance and our ability
to generate meaningful revenues from those drugs. Even if our drug candidates
are approved and achieve initial market acceptance, competitive products may
render such drugs obsolete or noncompetitive.


10


If any
such drug is rendered obsolete, we may not be able to recover the expenses of
developing and commercializing that drug. With respect to all of our drugs and
drug candidates, Bio-Path is aware of existing treatments and numerous drug
candidates in development by our competitors.





Government
Regulation





Regulation by governmental authorities
in the United States and foreign countries is a significant factor in the
development, manufacturing, and expected marketing of our future drug product
candidates and in its ongoing research and development activities. The nature
and extent to which such regulations will apply to Bio-Path will vary depending
on the nature of any drug product candidates developed. We anticipate that all
of our drug product candidates will require regulatory approval by governmental
agencies prior to commercialization.





In particular, human therapeutic
products are subject to rigorous pre-clinical and clinical testing and other
approval procedures of the FDA and similar regulatory authorities in other
countries. Various federal statutes and regulations also govern or influence
testing, manufacturing, safety, labeling, storage, and record-keeping related to
such products and their marketing. The process of obtaining these approvals and
the subsequent compliance with the appropriate federal statutes and regulations
requires substantial time and financial resources. Any failure by us or our
collaborators to obtain, or any delay in obtaining, regulatory approval could
adversely affect the marketing of any drug product candidates developed by us,
our ability to receive product revenues, and our liquidity and capital
resources.





The steps ordinarily required before a
new drug may be marketed in the United States, which are similar to steps
required in most other countries, include:





·
            pre-clinical
      laboratory tests, pre-clinical studies in animals, formulation studies and
      the submission to the FDA of an investigational new drug
      application;


·
            adequate
      and well-controlled clinical trials to establish the safety and efficacy
      of the drug;


·
            the
      submission of a new drug application or biologic license application to
      the FDA; and


·
            FDA
      review and approval of the new drug application or biologics license
      application.





Bio-path’s
business model relies on it entering into out-license agreements with
pharmaceutical licensee partners who will be responsible for post-Phase IIA
clinical testing and working with the FDA on necessary regulatory submissions
resulting in approval of new drug applications for
commercialization.





Non-clinical tests include laboratory
evaluation of drug product candidate chemistry, formulation and toxicity, as
well as animal studies. The results of pre-clinical testing are submitted to the
FDA as part of an investigational new drug application. A 30-day waiting period
after the filing of each investigational new drug application is required prior
to commencement of clinical testing in humans. At any time during the 30-day
period or at any time thereafter, the FDA may halt proposed or ongoing clinical
trials until the FDA authorizes trials under specified terms. The
investigational new drug application process may be extremely costly and
substantially delay the development of our drug product candidates. Moreover,
positive results of non-clinical tests will not necessarily indicate positive
results in subsequent clinical trials in humans. The FDA may require additional
animal testing after an initial investigational new drug application is approved
and prior to Phase III trials.








11


Clinical
trials to support new drug applications are typically conducted in three
sequential phases, although the phases may overlap. During Phase I, clinical
trials are conducted with a small number of subjects to assess metabolism,
pharmacokinetics, and pharmacological actions and safety, including side effects
associated with increasing doses. Phase II usually involves studies in a limited
patient population to assess the efficacy of the drug in specific, targeted
indications; assess dosage tolerance and optimal dosage; and identify possible
adverse effects and safety risks.





If a compound is found to be
potentially effective and to have an acceptable safety profile in Phase II
evaluations, Phase III trials are undertaken to further demonstrate clinical
efficacy and to further test for safety within an expanded patient population at
geographically dispersed clinical trial sites.





After successful completion of the
required clinical trials, a new drug application is generally submitted. The FDA
may request additional information before accepting the new drug application for
filing, in which case the new drug application must be resubmitted with the
additional information. Once the submission has been accepted for filing, the
FDA reviews the new drug application and responds to the applicant. The FDA’s
request for additional information or clarification often significantly extends
the review process. The FDA may refer the new drug application to an appropriate
advisory committee for review, evaluation, and recommendation as to whether the
new drug application should be approved, although the FDA is not bound by the
recommendation of an advisory committee.





If the FDA evaluations of the
application and the manufacturing facilities are favorable, the FDA may issue an
approval letter or an “approvable” letter. An approvable letter will usually
contain a number of conditions that must be met in order to secure final
approval of the new drug application and authorization of commercial marketing
of the drug for certain indications. The FDA may also refuse to approve the new
drug application or issue a “not approvable” letter outlining the deficiencies
in the submission and often requiring additional testing or
information.





Sales outside the United States of any
drug product candidates Bio-Path develops will also be subject to foreign
regulatory requirements governing human clinical trials and marketing for drugs.
The requirements vary widely from country to country, but typically the
registration and approval process takes several years and requires significant
resources.





To date, we have not submitted a
marketing application for any product candidate to the FDA or any foreign
regulatory agency, and none of our proposed product candidates have been
approved for commercialization in any country.  We have no experience
in designing, conducting and managing the clinical testing necessary to obtain
such regulatory approval. In addition to our internal resources and our
Scientific Advisory Board, Bio-Path will depend on regulatory consultants for
assistance in designing preclinical studies and clinical trials and drafting
documents for submission to the FDA. If we are not able to obtain regulatory
consultants on commercially reasonable terms, we may not be able to conduct or
complete clinical trials or commercialize our future product
candidates.  We intend to establish relationships with multiple
regulatory consultants for our future clinical trials, although there is no
guarantee that the consultants will be available for future clinical trials on
terms acceptable to us.





Under the
FDA Modernization Act of 1997, the FDA may grant “Fast Track” designation to
facilitate the development of a drug intended for the treatment of a serious or
life-threatening condition if the drug demonstrates, among other things, the
potential to address an unmet medical need. The benefits of Fast Track
designation include scheduled meetings with the FDA to receive input on
development plans, the option of submitting an NDA in sections (rather than
submitting all components simultaneously), and the option of requesting
evaluation of trials using surrogate endpoints. Fast Track designation does not
necessarily lead to a priority review or accelerated approval of a drug
candidate by the FDA.


12


Timing
to Approval





We
estimate that it generally takes 10 to 15 years, or possibly longer, to
discover, develop and bring to market a new pharmaceutical product in the United
States as outlined below:





Phase:
            
            Objective:
            
            Estimated Duration:Discovery
            
            Lead
      identification and target validation
            
            2
      to 4 yearsPreclinical
            
            Initial
      toxicology for preliminary identification of risks for humans; gather
      early pharmacokinetic data
            
            1
      to 2 yearsPhase
      I
            
            Evaluate
      safety in humans; study how the drug candidate works, metabolizes and
      interacts with other drugs
            
            1
      to 2 yearsPhase
      II
            
            Establish
      effectiveness of the drug candidate and its optimal dosage; continue
      safety evaluation
            
            2
      to 4 yearsPhase
      III
            
            Confirm
      efficacy, dosage regime and safety profile of the drug candidate; submit
      NDA
            
            2
      to 4 yearsFDA
      approval
            
            Approval
      by the FDA to sell and market the drug for the approved
      indication
            
            6
      months to 2 years




A drug
candidate may fail at any point during this process. Animal and other
non-clinical studies typically are conducted during each phase of human clinical
trials.





However,
our business model is primarily focused on the pre-clinical to Phase IIA
interval.  This greatly reduces the timeframe for the Company from
in-license of a new, pre-clinical stage drug candidate to be developed to
out-licensing to a pharmaceutical partner.  A successful Phase IIA
drug typically is afforded significant value by investors in the public stock
markets.




Post-approval
Studies


Even
after FDA approval has been obtained, further studies, including post-approval
trials, may be required to provide additional data on safety and will be
required to gain approval for the sale of a product as a treatment for clinical
indications other than those for which the product initially was approved. Also,
the FDA will require post-approval reporting to monitor the side effects of the
drug. Results of post-approval programs may limit or expand the indications for
which the drug product may be marketed. Further, if there are any requests for
modifications to the initial FDA approval for the drug, including changes in
indication, manufacturing process, labeling or manufacturing facilities, a
supplemental NDA may be required to be submitted to the FDA or we may elect to
seek changes and submit a supplemental NDA to obtain approval.




Other
Regulations


Pursuant
to the Drug Price Competition and Patent Term Restoration Act of 1984, under
certain conditions a sponsor may be granted marketing exclusivity for a period
of five years following FDA approval. During this period, third parties would
not be permitted to obtain FDA approval for a similar or identical drug through
an Abbreviated NDA, which is the application form typically used by
manufacturers seeking approval of a generic drug. The statute also allows a
patent owner to extend the term of the patent for a period equal to one-half the
period of time elapsed between the submission of an IND and the filing of the
corresponding NDA plus the period of time between the filing of the NDA and FDA
approval. We intend to seek the benefits of this statute, but there can be no
assurance that Bio-Path will be able to obtain any such benefits.





13


Whether
or not FDA approval has been obtained, approval of a drug product by regulatory
authorities in foreign countries must be obtained prior to the commencement of
commercial sales of the product in such countries. Historically, the
requirements governing the conduct of clinical trials and product approvals, and
the time required for approval, have varied widely from country to
country.





The FDA
may grant orphan drug designation to drugs intended to treat a “rare disease or
condition” that affects fewer than 200,000 individuals in the United States.
Orphan drug designation must be requested before submitting an application for
marketing authorization. Orphan drug designation does not convey any advantage
in, or shorten the duration of, the regulatory review and approval process. If a
product that has an orphan drug designation subsequently receives the first FDA
approval for the indication for which it has such designation, the product is
entitled to orphan exclusivity, which means the FDA may not approve any other
application to market the same drug for the same indication for a period of
seven years; except in limited circumstances, such as a showing of clinical
superiority to the product with orphan exclusivity. Also, competitors may
receive approval of different drugs or biologics for the indications for which
the orphan product has exclusivity.  As a result of our License
Agreements with M. D. Anderson, we have the rights to drug
BP-100-1.01.  This drug has been granted orphan drug status by the
FDA.





Pharmaceutical
companies are also subject to various federal and state laws pertaining to
health care “fraud and abuse,” including anti-kickback laws and false claims
laws. Anti-kickback laws make it illegal for any entity or person to solicit,
offer, receive, or pay any remuneration in exchange for, or to induce, the
referral of business, including the purchase or prescription of a particular
drug. False claims laws prohibit anyone from knowingly and willingly presenting,
or causing to be presented, for payment to third party payors, including
Medicare and Medicaid, claims for reimbursed drugs or services that are false or
fraudulent, claims for items or services not provided as claimed, or claims for
medically unnecessary items or services.





In
addition to the statutes and regulations described above, Bio-Path is also
subject to regulation under the Occupational Safety and Health Act, the
Environmental Protection Act, the Toxic Substances Control Act, the Resource
Conservation and Recovery Act and other federal, state, local and foreign
regulations, now or hereafter in effect.





We
currently do not have any significant facilities.  We lease two small
offices in Ogden, Utah and Houston, Texas. The offices will be expanded as
additional employees join Bio-Path.  Due to the anticipated use of the
PDC for pre-clinical development of our sponsored drug candidates, Bio-Path does
not foresee at this time the need to lease laboratory space.





ITEM 1A.  RISK FACTORS





Bio-Path is a
development stage company with no revenue.  We are a holding
company.  Our operations are conducted by our subsidiary Bio-Path
Subsidiary which is a development stage company that was formed on May 10,
2007.  Bio-Path Subsidiary has generated no revenues from its
contemplated principal business activity.  We currently have no
products available for sale, no product revenues, and may not succeed in
developing or commercializing any drug products that will generate product or
licensing revenues.  We do not expect to have any products on the
market for several years.  In addition, development of any of our
product candidates will require a process of pre-clinical and clinical testing,
and submission to and approval by the U.S. Food and Drug Administration (“FDA”)
or other regulatory agencies, during which our products could
fail.  Whether profitability is achieved may depend on success in
developing, manufacturing and marketing our product candidates or in finding
suitable partners to commercialize these candidates.








14


No
revenues in the foreseeable future.Bio-Path Subsidiary has
never generated revenues and does not expect any revenues to be generated in the
foreseeable future.  The drug development process is a lengthy process
and no revenues from product sales will be generated for several years, if
ever.





Need for
additional capital. Our business plan calls for us to raise approximately
$15,000,000 from the sale of our securities.  Bio-Path Subsidiary has
raised approximately $3,573,150.  We anticipate we currently have
sufficient capital to fund our operations for the next nine (9)
months.  We will be required to raise substantial additional financing
at various intervals for development programs, including significant
requirements for clinical trials, for operating expenses including intellectual
property protection and enforcement, for pursuit of regulatory approvals and for
establishing or contracting out manufacturing, marketing and sales
functions.  We intend to seek additional funding from product-based
collaborations, federal grants, technology licensing, and public or private
financings, but there is no assurance that such additional funding will be
available on terms acceptable to us, or at all. Accordingly, we may not be able
to secure the significant funding which is required to maintain and continue
development programs at their current levels or at levels that may be required
in the future.  We may be forced to accept funds on terms or pricing
that is highly dilutive or otherwise onerous to other equity holders. If we
cannot secure adequate financing, we may be required to delay, scale back or
eliminate one or more of our development programs or to enter into license or
other arrangements with third parties to commercialize products or technologies
that we would otherwise seek to further develop ourselves.





Reliance on
collaboration agreements.   Our business strategy depends
upon our ability to enter into collaborative relationships for the development
and commercialization of products based on licensed compounds. We will face
significant competition in seeking necessary and appropriate collaborators.
Moreover, these arrangements are complex to negotiate and time-consuming to
document.  We may not be successful in our efforts to establish or
maintain our existing collaborative relationships, if any, or other alternative
arrangements on commercially reasonable terms. We have not entered into any
collaborative agreements and there can be no assurance that we will ever enter
into such agreements.  If we are unable to enter into collaborative
agreements, our business model must change and we will be required to raise even
greater capital to fund the costs of services that we anticipate having provided
by collaborators.  This will make an investment in the Company an even
greater risk to investors.





If we do enter into collaborative
agreements, of which there can be no assurance, the success of collaboration
arrangements will depend heavily on the efforts and activities of our
collaborators. Our collaborators will have significant discretion in determining
the efforts and resources that they will apply to these collaborations. The
risks that we face in connection with these collaborations include, but are not
limited to, the following:





·
            disputes
      may arise in the future with respect to the ownership of rights to
      technology developed with
collaborators;


·
            disagreements
      with collaborators could delay or terminate the research, development or
      commercialization of products, or result in litigation or
      arbitration;


·
            we
      may have difficulty enforcing the contracts if one of our collaborators
      fails to perform;


·
            our
      collaborators may terminate their collaborations with us, which could make
      it difficult for us to attract new collaborators or adversely affect the
      perception of us in the business or financial
  communities;


·
            collaborators
      will have considerable discretion in electing whether to pursue the
      development of any additional drugs and may pursue technologies or
      products either on their own or in collaboration with our competitors that
      are similar to or competitive with our technologies or products that are
      the subject of the collaboration with the
  Company; and


15





·
            our
      collaborators may change the focus of their development and
      commercialization efforts. Pharmaceutical and biotechnology companies
      historically have re-evaluated their priorities following mergers and
      consolidations, which have been common in recent years in these
      industries. The ability of our products to reach their potential could be
      limited if our collaborators decrease or fail to increase spending
      relating to such products.





Given these risks, it is possible that
any collaborative arrangements into which we enter may not be successful. The
failure of any of our collaborative relationships could delay drug development
or impair commercialization of our products.





Reliance on third
parties for manufacturing.  We have no
manufacturing experience and no commercial scale manufacturing capabilities and
we do not expect to manufacture any products in the foreseeable future. In order
to continue to develop products, apply for regulatory approvals and ultimately
commercialize products, we will need to develop, contract for, or otherwise
arrange for the necessary manufacturing capabilities.  However,
“out-license” pharmaceutical partners will likely be responsible for
manufacturing of those drug requirements.





We intend to rely upon third parties to
produce material for preclinical and clinical testing purposes.  We
expect that our out-license pharmaceutical partners, to the extent we have such
partners, will produce materials that may be required for the commercial
production of our products.





We have entered into a Supply Agreement
with Althea Technologies, Inc. for the manufacture of our drug requirements for
our drug BP-100-1.01.  Althea is a manufacturer that operates under
the FDA’s current good manufacturing practices (“cGMP”) regulations and is
capable of manufacturing our products in the foreseeable future.  If
our pharmaceutical company partners are unable to arrange for third party
manufacturing of our products on a timely basis, Althea could potentially
manufacture their requirements.





Reliance on third party manufacturers
will entail risks to which we would not be subject if we manufactured our own
products, including, but not limited to:





·
            reliance
      on the third party for regulatory compliance and quality
      assurance;


·
            the
      possibility of breach of the manufacturing agreement by the third party
      because of factors beyond our
control;


·
            the
      possibility of termination or nonrenewal of the agreement by the third
      party, based on its own business priorities, at a time that is costly or
      inconvenient for Bio-Path;


·
            the
      potential that third party manufacturers will develop know-how owned by
      such third party in connection with the production of our products that is
      necessary for the manufacture of our
  products; and


·
            reliance
      upon third party manufacturers to assist us in preventing inadvertent
      disclosure or theft of Bio-Path’s proprietary
  knowledge.





16


Reliance on key
members of scientific and management staff.  Our success
depends on the availability and contributions of members of our current and
future scientific team and our current and future senior management teams and
other key personnel that we currently have or which we may develop in the
future. The loss of services of any of these persons could delay or reduce our
product development and commercialization efforts. Furthermore, recruiting and
retaining qualified scientific personnel to perform future research and
development work will be critical to our success. The loss of members of our
management team, key clinical advisors or scientific personnel, or our inability
to attract or retain other qualified personnel or advisors, could significantly
weaken our management, harm our ability to compete effectively and harm our
business.





Need for
intellectual property protection.  As described through this
Memorandum, Bio-Path Subsidiary has entered into two license agreements with M.
D. Anderson.  The patents underlying the licensed intellectual
property and positions, and those of other biopharmaceutical companies, are
generally uncertain and involve complex legal, scientific and factual
questions.





Our ability to develop and
commercialize drugs depends in significant part on our ability to:





·
            obtain
      and/or develop broad, protectable intellectual
  property;


·
            obtain
      additional licenses to the proprietary rights of others on commercially
      reasonable terms;


·
            operate
      without infringing upon the proprietary rights of
  others;


·
            prevent
      others from infringing on our proprietary
  rights; and


·
            protect
      trade secrets.





We do not know whether any of those
patent applications which we may have licensed will result in the issuance of
any patents. Patents that we may acquire and those that might be issued in the
future, may be challenged, invalidated or circumvented, and the rights granted
thereunder may not provide us with proprietary protection or competitive
advantages against competitors with similar technology. Furthermore, our
competitors may independently develop similar technologies or duplicate any
technology we develop. Because of the extensive time required for development,
testing and regulatory review of a potential product, it is possible that,
before any of our products can be commercialized, any related patent may expire
or remain in force for only a short period following commercialization, thus
reducing any advantage of the patent.





Because patent applications in the
United States and many foreign jurisdictions are typically not published until
at least 12 months after filing, or in some cases not at all, and because
publications of discoveries in the scientific literature often lag behind actual
discoveries, neither Bio-Path nor our licensors can be certain that either
Bio-Path or our licensors were the first to make the inventions claimed in
issued patents or pending patent applications, or that Bio-Path was the first to
file for protection of the inventions set forth in these patent
applications.





Reliance on third
party patents.  We may not have rights under some patents or
patent applications related to products we may develop in the future. Third
parties may own or control these patents and patent applications in the United
States and abroad. Therefore, in some cases, to develop, manufacture, sell or
import some of our future products, Bio-Path or our collaborators may choose to
seek, or be required to seek, licenses under third party patents issued in the
United States and abroad or under patents that might be issued from United
States and foreign patent applications. In instances in which Bio-Path must
obtain a license for third party patents, it will be required to pay license
fees or royalties or both to the licensor. If licenses are not available to us
on acceptable terms, we or our collaborators may not be able to develop,
manufacture, sell or import these products.


17


Exposure to
patent litigation.  There has been substantial litigation and
other proceedings regarding patent and other intellectual property rights in the
pharmaceutical and biotechnology industry. We may become a party to various
types of patent litigation or other proceedings regarding intellectual property
rights from time to time even under circumstances where we are not using and do
not intend to use any of the intellectual property involved in the
proceedings.





The cost of any patent litigation or
other proceeding, even if resolved in our favor, could be substantial. Some of
our competitors may be able to sustain the cost of such litigation or
proceedings more effectively than we will be able to because our competitors may
have substantially greater financial resources. If any patent litigation or
other proceeding is resolved against us, we or our collaborators may be enjoined
from developing, manufacturing, selling or importing our drugs without a license
from the other party and we may be held liable for significant damages. We may
not be able to obtain any required license(s) on commercially acceptable terms
or at all.





Uncertainties resulting from the
initiation and continuation of patent litigation or other proceedings could have
a material adverse effect on our ability to compete in the marketplace. Patent
litigation and other proceedings may also absorb significant management
time.





Competition.  The
pharmaceutical and biotechnology industry is highly competitive and
characterized by rapid and significant technological change. We will face
intense competition from organizations such as pharmaceutical and biotechnology
companies, as well as academic and research institutions and government
agencies. Some of these organizations are pursuing products based on
technologies similar to our future technologies. Other of these organizations
have developed and are marketing products, or are pursuing other technological
approaches designed to produce products that are competitive with our future
product candidates in the therapeutic effect these competitive products have on
diseases targeted by our product candidates. Our competitors may discover,
develop or commercialize products or other novel technologies that are more
effective, safer or less costly than any that we may develop.  Our
competitors may also obtain FDA or other regulatory approval for their products
more rapidly than we may obtain approval for our products.





Many of our competitors are
substantially larger than we are and have greater capital resources, research
and development staffs and facilities than we have. In addition, many of our
competitors are more experienced in drug discovery, development and
commercialization, obtaining regulatory approvals and drug manufacturing and
marketing.





We anticipate that the competition with
our products and technologies will be based on a number of factors including
product efficacy, safety, availability and price. The timing of market
introduction of our future products and competitive products will also affect
competition among products. We expect the relative speed with which we can
develop products, complete the initial Phase I and IIA clinical trials,
establish a strategic partner and supply appropriate quantities of the products
for late stage trials to be important competitive factors. Our competitive
position will also depend upon our ability to attract and retain qualified
personnel, to obtain patent protection or otherwise develop proprietary products
or processes and to secure sufficient capital resources for the period between
technological conception and commercial sales or out-license to a pharmaceutical
partner.





Market
reception.  The commercial success of any of our future
products for which we may obtain marketing approval from the FDA or other
regulatory authorities will depend upon their acceptance by the medical
community and third party payors as clinically useful, cost-effective and safe.
Many of the products that we will develop will be based upon technologies or
therapeutic approaches that are relatively new and unproven. As a result, it may
be more difficult for us to achieve regulatory approval or market acceptance of
our products. Our efforts to educate the medical community on these potentially
unique approaches may require greater resources than would be typically required
for products based on conventional technologies or therapeutic approaches. The
safety, efficacy, convenience and cost-effectiveness of our future products as
compared to competitive products will also affect market
acceptance.





18




Changes in
Bio-Path relationships with M. D.  Anderson.  Our
license agreements with M. D. Anderson provide M. D. Anderson the right to
terminate the agreements upon written notice to us if we do not meet all of our
requirements under the license agreements which require us to file an
Investigational New Drug Application with the FDA or have a commercial sale of a
licensed product within an agreed upon period of time.  If either of
the licenses or any other agreements we enter into with M. D. Anderson is
terminated for any reason, our business will be adversely and perhaps materially
adversely affected, and our business may fail. In addition, our relationship
with M. D. Anderson is not exclusive to us.  It is possible that M. D.
Anderson could enter into an exclusive relationship with one of our future
competitors.  If this were to occur it could adversely affect our
competitive position and depending on the terms of any such agreement, could
make it difficult for us to succeed.





No sales,
marketing and distribution capabilities. We currently have no sales,
marketing or distribution capabilities and do not intend to develop such
capabilities in the foreseeable future. If we are unable to establish sales,
marketing or distribution capabilities either by developing our own sales,
marketing and distribution organization or by entering into agreements with
others, we may be unable to successfully sell any products that we are able to
begin to commercialize. If we, and our strategic partners, are unable to
effectively sell our products, our ability to generate revenues will be harmed.
We may not be able to hire, in a timely manner, the qualified sales and
marketing personnel for our needs, if at all. In addition, we may not be able to
enter into any marketing or distribution agreements on acceptable terms, if at
all. If we cannot establish sales, marketing and distribution capabilities as we
intend, either by developing our own capabilities or entering into agreements
with third parties, sales of future products, if any, will be
harmed.





Exposure to
product liability claims or recall.Our business will
expose us to potential product liability risks inherent in the clinical testing
and manufacturing and marketing of pharmaceutical products, and we may not be
able to avoid significant product liability exposure. A product liability claim
or recall could be detrimental to our business. In addition, we do not currently
have any product liability or clinical trial insurance, and we may not be able
to obtain or maintain such insurance on acceptable terms, or we may not be able
to obtain any insurance to provide adequate coverage against potential
liabilities. Our inability to obtain sufficient insurance coverage at an
acceptable cost or otherwise to protect against potential product liability
claims could prevent or limit the commercialization of any products that we
develop.





Rapid technology
change and obsolescence. New products and
technological developments in the healthcare field may adversely affect our
ability to complete the necessary regulatory requirements and introduce the
proposed products in the market. The healthcare field, which is the market for
our products, is characterized by rapid technological change, new and improved
product introductions, changes in regulatory requirements, and evolving industry
standards. Our future success will depend to a substantial extent on our ability
to identify new market trends on a timely basis and develop, introduce and
support proposed products on a successful and timely basis. If we fail to
develop and deploy our proposed products on a successful and timely basis, we
may not be competitive.





Risks
Relating to Governmental Approvals





Extensive
regulatory requirements.  The testing, manufacturing, labeling,
advertising, promotion, exporting and marketing of our products are subject to
extensive regulation by governmental authorities in Europe, the United States
and elsewhere throughout the world.


19


To date,
we have not submitted a marketing application for any product candidate to the
FDA or any foreign regulatory agency, and none of our product candidates have
been approved for commercialization in any country.  Prior to
commercialization, each product candidate would be subject to an extensive and
lengthy governmental regulatory approval process in the United States and in
other countries.  We may not be able to obtain regulatory approval for
any product candidate we develop or, even if approval is obtained, the labeling
for such products may place restrictions on their use that could materially
impact the marketability and profitability of the product subject to such
restrictions. Any regulatory approval of a product may also contain requirements
for costly post-marketing testing and surveillance to monitor the safety or
efficacy of the product. Any product for which we or our pharmaceutical company
out-license partner obtain marketing approval, along with the facilities at
which the product is manufactured, any post-approval clinical data and any
advertising and promotional activities for the product will be subject to
continual review and periodic inspections by the FDA and other regulatory
agencies.





We have no experience in designing,
conducting and managing the clinical testing necessary to obtain such regulatory
approval. Satisfaction of these regulatory requirements, which includes
satisfying the FDA and foreign regulatory authorities that the product is both
safe and effective for its intended therapeutic uses, typically takes several
years depending upon the type, complexity and novelty of the product and
requires the expenditure of substantial resources.  In addition to our
internal resources, we will depend on regulatory consultants and our proposed
Scientific Advisory Board for assistance in designing our preclinical studies
and clinical trials and drafting documents for submission to the FDA. If we are
not able to obtain regulatory consultants on commercially reasonable terms, we
may not be able to conduct or complete clinical trials or commercialize our
product candidates.  We intend to establish relationships with
multiple regulatory consultants for our existing clinical trials, although there
is no guarantee that the consultants will be available for future clinical
trials on terms acceptable to us.





In addition, submission of an
application for marketing approval to the relevant regulatory agency following
completion of clinical trials may not result in the regulatory agency approving
the application if applicable regulatory criteria are not satisfied, and may
result in the regulatory agency requiring additional testing or
information.





Both before and after approval is
obtained, violations of regulatory requirements may result in:





·
            the
      regulatory agency’s delay in approving, or refusal to approve, an
      application for approval of a
product;


·
            restrictions
      on such products or the manufacturing of such
  products;


·
            withdrawal
      of the products from the market;


·
            warning
      letters;


·
            voluntary
      or mandatory recall;


·
            fines;


·
            suspension
      or withdrawal of regulatory
approvals;


·
            product
      seizure;


·
            refusal
      to permit the import or export of our
products;


·
            injunctions
      or the imposition of civil
penalties; and


·
            criminal
      penalties.





Clinical
trials.  In order to obtain regulatory approvals for the
commercial sale of our products, we will be required to complete extensive
clinical trials in humans to demonstrate the safety and efficacy of our drug
candidates.  We may not be able to obtain authority from the FDA or
other equivalent foreign regulatory agencies to complete these trials or
commence and complete any other clinical trials.


20


The
results from preclinical testing of a drug candidate that is under development
may not be predictive of results that will be obtained in human clinical trials.
In addition, the results of early human clinical trials may not be predictive of
results that will be obtained in larger scale, advanced stage clinical trials. A
failure of one or more of our clinical trials can occur at any stage of testing.
Further, there is to date no data on the long-term clinical safety of our lead
compounds under conditions of prolonged use in humans, nor on any long-term
consequences subsequent to human use. We may experience numerous unforeseen
events during, or as a result of, preclinical testing and the clinical trial
process that could delay or prevent its ability to receive regulatory approval
or commercialize our products, including:





·
            regulators
      or institutional review boards may not authorize us to commence a clinical
      trial or conduct a clinical trial at a prospective trial
    site;


·
            our
      preclinical tests or clinical trials may produce negative or inconclusive
      results, and we may decide, or regulators may require us, to conduct
      additional preclinical testing or clinical trials or we may abandon
      projects that we expect may not be
promising;


·
            we
      might have to suspend or terminate our clinical trials if the
      participating patients are being exposed to unacceptable health
      risks;


·
            regulators
      or institutional review boards may require that we hold, suspend or
      terminate clinical research for various reasons, including noncompliance
      with regulatory requirements;


·
            the
      cost of our clinical trials may be greater than we currently
      anticipate;


·
            the
      timing of our clinical trials may be longer than we currently
      anticipate; and


·
            the
      effects of our products may not be the desired effects or may include
      undesirable side effects or the products may have other unexpected
      characteristics.





The rate of completion of clinical
trials is dependent in part upon the rate of enrollment of patients. Patient
accrual is a function of many factors, including:





·
            the
      size of the patient population;


·
            the
      proximity of patients to clinical
sites;


·
            the
      eligibility criteria for the study;


·
            the
      nature of the study;


·
            the
      existence of competitive clinical
  trials; and


·
            the
      availability of alternative
treatments.





We may not be able to successfully
complete any clinical trial of a potential product within any specified time
period.  In some cases, we may not be able to complete the trial at
all.  Moreover, clinical trials may not show our potential products to
be both safe and efficacious. Thus, the FDA and other regulatory authorities may
not approve any of our potential products for any indication.





Our clinical development costs will
increase if we experience delays in our clinical trials. We do not know whether
planned clinical trials will begin as planned, will need to be restructured or
will be completed on schedule, if at all. Significant clinical trial delays
could also allow our competitors to bring products to market before we do and
impair our ability to commercialize our products.





Pricing and
reimbursement. If our future strategic partners succeed in bringing our
product candidates to the market, they may not be considered cost-effective, and
coverage and adequate payments may not be available or may not be sufficient to
allow us to sell our products on a competitive basis. In both the United States
and elsewhere, sales of medical products and therapeutics are dependent, in
part, on the availability of reimbursement from third party payors, such as
health maintenance organizations and other private insurance plans, and
governmental programs such as Medicare.


21


Third
party payors are increasingly challenging the prices charged for pharmaceutical
products and medical devices. Our business will be affected by the efforts of
government and third party payors to contain or reduce the cost of health care
through various means. In the United States, there have been and will continue
to be a number of federal and state proposals to implement government controls
on pricing. Similar government pricing controls exist in varying degrees in
other countries. In addition, the emphasis on managed care in the United States
has increased, and will continue to increase the pressure on the pricing of
pharmaceutical products and medical devices. We cannot predict whether any
legislative or regulatory proposals will be adopted or the effect these
proposals or managed care efforts may have on our business.





Regulatory
and legal uncertainties could result in significant costs or otherwise harm the
business of the Company.





In order
to manufacture and sell our products, we must comply with extensive
international and domestic regulations. In order to sell its products in the
United States, approval from the FDA is required. The FDA approval process is
expensive and time-consuming. We cannot predict whether our products will be
approved by the FDA. Even if they are approved, we cannot predict the time frame
for approval.  Foreign regulatory requirements differ from
jurisdiction to jurisdiction and may, in some cases, be more stringent or
difficult to obtain than FDA approval. As with the FDA, we cannot predict if or
when we may obtain these regulatory approvals. If we cannot demonstrate that our
products can be used safely and successfully in a broad segment of the patient
population on a long-term basis, our products would likely be denied approval by
the FDA and the regulatory agencies of foreign governments.





Our
Product candidates are based on new technology and, consequently, are inherently
risky.  Concerns about the safety and efficacy of our products could
limit its future success.





We are
subject to the risks of failure inherent in the development of product
candidates based on new technologies. These risks include the possibility that
the products we create will not be effective, that our product candidates will
be unsafe or otherwise fail to receive the necessary regulatory approvals or
that our product candidates will be hard to manufacture on a large scale or will
be uneconomical to market.





Many
pharmaceutical products cause multiple potential complications and side effects,
not all of which can be predicted with accuracy and many of which may vary from
patient to patient. Long term follow-up data may reveal additional complications
associated with our products.  The responses of potential physicians
and others to information about complications could materially affect the market
acceptance of our future products, which in turn would materially harm our
business.





Unsuccessful
or delayed regulatory approvals required to exploit the commercial potential of
our future products could increase our future development costs or impair our
future sales.





No
Bio-Path technologies have been approved by the FDA for sale in the United
States or in foreign countries. To exploit the commercial potential of our
technologies, we are conducting and planning to conduct additional pre-clinical
studies and clinical trials. This process is expensive and can require a
significant amount of time. Failure can occur at any stage of testing, even if
the results are favorable. Failure to adequately demonstrate safety and efficacy
in clinical trials would prevent regulatory approval and restrict our ability to
commercialize our technologies. Any such failure may severely harm our business.
In addition, any approvals obtained may not cover all of the clinical
indications for which approval is sought, or may contain significant limitations
in the form of narrow indications, warnings, precautions or contraindications
with respect to conditions of use, or in the form of onerous risk management
plans, restrictions on distribution, or post-approval study
requirements.




22


State
pharmaceutical marketing compliance and reporting requirements may expose us to
regulatory and legal action by state governments or other government
authorities.




In recent
years, several states, including California, Vermont, Maine, Minnesota, New
Mexico and West Virginia have enacted legislation requiring pharmaceutical
companies to establish marketing compliance programs and file periodic reports
on sales, marketing, pricing and other activities. Similar legislation is being
considered in other states. Many of these requirements are new and uncertain,
and available guidance is limited. Unless we are in full compliance with these
laws, we could face enforcement actions and fines and other penalties and could
receive adverse publicity, all of which could harm our business.




We
may be subject to new federal and state legislation to submit information on our
open and completed clinical trials to public registries and
databases.




In 1997,
a public registry of open clinical trials involving drugs intended to treat
serious or life-threatening diseases or conditions was established under the
Food and Drug Administration Modernization Act, or the FDMA, in order to promote
public awareness of and access to these clinical trials. Under the FDMA,
pharmaceutical manufacturers and other trial sponsors are required to post the
general purpose of these trials, as well as the eligibility criteria, location
and contact information of the trials. Since the establishment of this registry,
there has been significant public debate focused on broadening the types of
trials included in this or other registries, as well as providing for public
access to clinical trial results. A voluntary coalition of medical journal
editors has adopted a resolution to publish results only from those trials that
have been registered with a no-cost, publicly accessible database, such as
www.clinicaltrials.gov. Federal legislation was introduced in the fall of 2004
to expand www.clinicaltrials.gov and to require the inclusion of study results
in this registry. The Pharmaceutical Research and Manufacturers of America has
also issued voluntary principles for its members to make results from certain
clinical studies publicly available and has established a website for this
purpose. Other groups have adopted or are considering similar proposals for
clinical trial registration and the posting of clinical trial results. Failure
to comply with any clinical trial posting requirements could expose us to
negative publicity, fines and other penalties, all of which could materially
harm our business.





We
face uncertainty related to pricing and reimbursement and health care
reform.




In both
domestic and foreign markets, sales of our future products will depend in part
on the availability of reimbursement from third-party payors such as government
health administration authorities, private health insurers, health maintenance
organizations and other health care-related organizations. Reimbursement by such
payors is presently undergoing reform and there is significant uncertainty at
this time as to how this will affect sales of certain pharmaceutical
products.




Medicare,
Medicaid and other governmental healthcare programs govern drug coverage and
reimbursement levels in the United States. Federal law requires all
pharmaceutical manufacturers to rebate a percentage of their revenue arising
from Medicaid-reimbursed drug sales to individual states. Generic drug
manufacturers’ agreements with federal and state governments provide that the
manufacturer will remit to each state Medicaid agency, on a quarterly basis, 11%
of the average manufacturer price for generic products marketed and sold under
abbreviated new drug applications covered by the state’s Medicaid program. For
proprietary products, which are marketed and sold under new drug applications,
manufacturers are required to rebate the greater of (a) 15.1% of the
average manufacturer price or (b) the difference between the average
manufacturer price and the lowest manufacturer price for products sold during a
specified period.




23


Both the
federal and state governments in the United States and foreign governments
continue to propose and pass new legislation, rules and regulations designed to
contain or reduce the cost of health care. Existing regulations that affect the
price of pharmaceutical and other medical products may also change before any
products are approved for marketing. Cost control initiatives could decrease the
price that we receive for any product developed in the future. In addition,
third-party payors are increasingly challenging the price and cost-effectiveness
of medical products and services and litigation has been filed against a number
of pharmaceutical companies in relation to these issues. Additionally, some
uncertainty may exist as to the reimbursement status of newly approved
injectable pharmaceutical products. Our products, if any, may not be considered
cost effective or adequate third-party reimbursement may not be available to
enable us to maintain price levels sufficient to realize an adequate return on
our investment.





Other
companies may claim that we infringe their intellectual property or proprietary
rights, which could cause us to incur significant expenses or prevent us from
selling products.




Our
success will depend in part on our ability to operate without infringing the
patents and proprietary rights of third parties. The manufacture, use and sale
of new products have been subject to substantial patent rights litigation in the
pharmaceutical industry. These lawsuits generally relate to the validity and
infringement of patents or proprietary rights of third parties. Infringement
litigation is prevalent with respect to generic versions of products for which
the patent covering the brand name product is expiring, particularly since many
companies which market generic products focus their development efforts on
products with expiring patents. Other pharmaceutical companies, biotechnology
companies, universities and research institutions may have filed patent
applications or may have been granted patents that cover aspects of our products
or its licensors’ products, product candidates or other
technologies.




Future or
existing patents issued to third parties may contain patent claims that conflict
with our future products. We expect to be subject to infringement claims from
time to time in the ordinary course of business, and third parties could assert
infringement claims against us in the future with respect to products that we
may develop or license. Litigation or interference proceedings could force us
to:




·
            stop
      or delay selling, manufacturing or using products that incorporate or are
      made using the challenged intellectual
property;


·
            pay
      damages; or


·
            enter
      into licensing or royalty agreements that may not be available on
      acceptable terms, if at all.







Any
litigation or interference proceedings, regardless of their outcome, would
likely delay the regulatory approval process, be costly and require significant
time and attention of key management and technical personnel.





Any
inability to protect intellectual property rights in the United States and
foreign countries could limit our ability to manufacture or sell
products.





We will
rely on trade secrets, unpatented proprietary know-how, continuing technological
innovation and, in some cases, patent protection to preserve a competitive
position. Our patents and licensed patent rights may be challenged, invalidated,
infringed or circumvented, and the rights granted in those patents may not
provide proprietary protection or competitive advantages to us. We and our
licensors may not be able to develop patentable products. Even if patent claims
are allowed, the claims may not issue, or in the event of issuance, may not be
sufficient to protect the technology owned by or licensed to us. Third party
patents could reduce the coverage of the patent’s license, or that may be
licensed to or owned by us.


24


If
patents containing competitive or conflicting claims are issued to third
parties, we may be prevented from commercializing the products covered by such
patents, or may be required to obtain or develop alternate technology. In
addition, other parties may duplicate, design around or independently develop
similar or alternative technologies.




We may
not be able to prevent third parties from infringing or using our intellectual
property, and the parties from whom we may license intellectual property may not
be able to prevent third parties from infringing or using the licensed
intellectual property. We generally will attempt to control and limit access to,
and the distribution of, our product documentation and other proprietary
information. Despite efforts to protect this proprietary information, however,
unauthorized parties may obtain and use information that we may regard as
proprietary. Other parties may independently develop similar know-how or may
even obtain access to these technologies.




The laws
of some foreign countries do not protect proprietary information to the same
extent as the laws of the United States, and many companies have encountered
significant problems and costs in protecting their proprietary information in
these foreign countries.




The U.S.
Patent and Trademark Office and the courts have not established a consistent
policy regarding the breadth of claims allowed in pharmaceutical patents. The
allowance of broader claims may increase the incidence and cost of patent
interference proceedings and the risk of infringement litigation. On the other
hand, the allowance of narrower claims may limit the value of our proprietary
rights.





We
may be required to defend lawsuits or pay damages for product liability
claims.




Product
liability is a major risk in testing and marketing biotechnology and
pharmaceutical products. We may face substantial product liability exposure in
human clinical trials and for products that sell after regulatory approval.
Product liability claims, regardless of their merits, could exceed policy
limits, divert management’s attention, and adversely affect our reputation and
the demand for our products.





Other
Corporate Risks




Our articles of
incorporation grant our board of directors the power to designate and issue
additional shares of common and/or preferred stock.





Our authorized capital consists of
200,000,000 shares of common stock and 10,000,000 shares of preferred
stock.  Our preferred stock may be designated into series pursuant to
authority granted by our articles of incorporation, and on approval from our
board of directors. The board of directors, without any action by our
shareholders,  may designate and issue shares in such classes or
series as the board of directors deems appropriate and establish the rights,
preferences and privileges of such shares, including dividends, liquidation and
voting rights. The rights of holders of other classes or series of stock that
may be issued could be superior to the rights of holders of our common shares.
The designation and issuance of shares of capital stock having preferential
rights could adversely affect other rights appurtenant to shares of our common
stock. Furthermore, any issuances of additional stock (common or preferred) will
dilute the percentage of ownership interest of then-current holders of our
capital stock and may dilute the book value per share of our common
stock.





We do not intend
to pay dividends on our common stock for the foreseeable
future.





We do not anticipate that we will
have any revenues for the foreseeable future and accordingly, we do not
anticipate that we will pay any dividends for the foreseeable future.
Accordingly, any return on an investment in our Company will be realized, if at
all, only when you sell shares of our common stock.


25


Our common stock
trades only in an illiquid trading market.




Trading of our common stock is conducted on the “OTC Bulletin Board”. This could
have an adverse effect on the liquidity of our common stock, not only in terms
of the number of shares that can be bought and sold at a given price, but also
through delays in the timing of transactions and reduction in security analysts’
and the media’s coverage of Bio-Path and our common stock. This may result in
lower prices for our common stock than might otherwise be obtained and could
also result in a larger spread between the bid and asked prices for our common
stock.





If
the trading price of our common stock continues to fluctuate in a wide range,
our stockholders will suffer considerable uncertainty with respect to an
investment in our common stock.





The trading price of our commons tock
has been volatile and may continue to be volatile in the
future.  Factors such as announcements of fluctuations in our or our
competitors’ operating results or clinical or scientific results, fluctuations
in the trading prices or business prospects of our competitors and
collaborators, changes in our prospects, and market conditions for
biopharmaceutical stocks in general could have a significant impact on the
future trading prices of our common stock and our convertible senior
notes.  In particular, the trading price of the common stock of many
biopharmaceutical companies, including ours, has experienced extreme price and
volume fluctuations, which have at times been unrelated to the operating
performance of the companies whose stocks were affected.  This is due
to several factors, including general market conditions, the announcement of the
results of our clinical trials or product development and the results of our
efforts to obtain regulators approval of our products.  In particular,
between February 15, 2008 and December 31, 2008, the closing sales price of our
common stock fluctuated from a low of $0.50 per share to a high of $6.00 per
share.  While we cannot predict our future performance, if our stock
price continues to fluctuate in a wide range, an investment in our common stock
may result in considerable uncertainty for an investor.





Penny
stock.   Our common stock is considered to be a “penny
stock” if it meets one or more of the definitions in Rules 15g-2 through 15g-6
promulgated under Section 15(g) of the Securities Exchange Act of 1934, as
amended. These include, but are not limited to the following: (i) the stock
trades at a price less than $5.00 per share; (ii) it is NOT traded on a
“recognized” national exchange; (iii) it is NOT quoted on the NASDAQ Stock
Market, or even if so, has a price less than $5.00 per share; or (iv) is issued
by a company with net tangible assets less than $2.0 million, if in business
more than a continuous three years, or with average revenues of less than $6.0
million for the past three years. The principal result or effect of being
designated a “penny stock” is that securities broker-dealers cannot recommend
the stock but must trade in it on an unsolicited basis.





Additionally, Section 15(g) of the
Securities Exchange Act of 1934, as amended, and Rule 15g-2 promulgated there
under by the SEC require broker-dealers dealing in penny stocks to provide
potential investors with a document disclosing the risks of penny stocks and to
obtain a manually signed and dated written receipt of the document before
effecting any transaction in a penny stock for the investor’s
account.





Potential investors in our common stock
are urged to obtain and read such disclosure carefully before purchasing any
Units that are deemed to be “penny stock.” Moreover, Rule 15g-9 requires
broker-dealers in penny stocks to approve the account of any investor for
transactions in such stocks before selling any penny stock to that investor.
This procedure requires the broker-dealer to (i) obtain from the investor
information concerning his or her financial situation, investment experience and
investment objectives; (ii) reasonably determine, based on that information,
that transactions in penny stocks are suitable for the investor and that the
investor has sufficient knowledge and experience as to be reasonably capable of
evaluating the risks of penny stock transactions;


26


(iii)
provide the investor with a written statement setting forth the basis on which
the broker-dealer made the determination in (ii) above; and (iv) receive a
signed and dated copy of such statement from the investor, confirming that it
accurately reflects the investor’s financial situation, investment experience
and investment objectives. Compliance with these requirements may make it more
difficult for holders of our common stock to resell their Units to third parties
or to otherwise dispose of them in the market or otherwise.





Limitation on
director liability. As permitted by Utah law, our Articles of
Incorporation limit the liability of directors to the Company or its
stockholders for monetary damages for breach of a director’s fiduciary duty
except for liability in certain instances. As a result of such Articles of
Incorporation and Utah law, our stockholders may have limited rights to recover
against directors for breach of fiduciary duty.





ITEM 2.  PROPERTIES





We currently do not have any
significant facilities.  We lease two small offices in Ogden, Utah and
Houston, Texas. The offices will be expanded as additional employees join
Bio-Path.  Due to the anticipated use of the PDC for pre-clinical
development of our sponsored drug candidates, Bio-Path does not foresee at this
time the need to lease laboratory space.





ITEM 3. LEGAL PROCEEDINGS





We are not a party to any legal
proceedings





ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS





No
matters were submitted to our shareholders for a vote during the last quarter of
the year ended December 31, 2008.





PART II





ITEM 5. MARKET FOR THE REGISTRANT’S COMMON STOCK AND
RELATED SECURITY HOLDER MATTERS





Our
common stock is quoted on the OTCBB  under the symbol
“BPTH”.  There has only been limited trading in our common
stock.   The prices reported below reflect inter-dealer prices
and are without adjustments for retail markups, markdowns or commissions, and
may not necessarily represent actual transactions.





High
      Bid
            
            Low
      BidFiscal
      Year Ended December 31, 2007First
      Fiscal Quarter
            
            $  .90
            
            $  .61Second
      Fiscal Quarter
            
            $  .90
            
            $  .35Third
      Fiscal Quarter
            
            $  .50
            
            $  .35Fourth
      Fiscal Quarter
            
            $  .87
            
            $  .50Fiscal
      Year Ended December 31, 2008First
      Fiscal Quarter
            
            $  .90
            
            $  .52Second
      Fiscal Quarter
            
            $5.00
            
            $  .90


27





High
      Bid
            
            Low
      BidThird
      Fiscal Quarter
            
            $2.60
            
            $1.50Fourth
      Fiscal Quarter
            
            $1.65
            
            $1.40Fiscal
      Year Ended December 31, 2009First
      Fiscal Quarter
            
            $  .90
            
            $  .11(Through
      March 30, 2007)





Shares
Issued in Unregistered Transactions





During the fiscal year ended December
31, 2008 we issued 458,994 shares of our common stock in unregistered
transactions.  A total of 38,023,578 shares were issued in the merger
wherein we acquired Bio-Path Subsidiary.  All of the shares of common
stock issued were issued in non registered transactions in reliance on Section
4(2) of the Securities Act of 1933, as amended (the “Securities Act”). The
shares of common stock issued were as follows:





Placement
      Agent
            78,970Strategic
      Consultants
            80,000Firm
      for Services Finding Merger Partner
            200,000Investor
      Relations Firm
            100,000Share
      Rounding Per NASDAQ Rules
            24Total
            458,994





Holders





As of
March 24, 2009 there were 41,923,602 shares of common stock outstanding and
approximately 232 stockholders of record.





Dividends





We have
not paid any cash dividends since our inception and do not anticipate or
contemplate paying dividends in the foreseeable future.





Purchases
of Equity Securities by the Small Business Issuer and Affiliated
Purchasers





None





Equity
Compensation Plan Information





Plan Category
            Number
      of Shares of common stock to be issued upon exercise of outstanding options
            Weighted-average
      exercise price of outstanding options
            Weighted-average
      term to expiration of options outstanding
            Number
      of shares of common stock remaining available for future issuance under
      equity compensation
    plansEquity
      compensation plans approved by stockholders (1)
            3,850,620
            $1.21
            9.2
      yrs.
            3,149,380Equity
      compensation plans not approved by stockholders
            ---
            ---
            ---
            ---


28


(1)           Reflects
number of shares of common stock to be issued upon exercise of outstanding
options and warrants under all of our equity compensation plans, including our
2007 Stock Incentive Plan.  No shares of common stock are available
for future issuance under any of our equity compensation plans, except the 2007
Stock Incentive Plan. The outstanding options and restricted shares are not
transferable for consideration and do not have dividend equivalent rights
attached.  Remaining average term to expiration of options outstanding
is as of March 24, 2009.





Limitation
on Directors’ Liability, Charter Provisions and Other Matters





Utah law authorizes corporations to
limit or eliminate the personal liability of directors to corporations and their
stockholders for monetary damages for breach of directors’ fiduciary duty of
care.  The duty of care requires that, when acting on behalf of the
corporation, directors must exercise an informed business judgment based on all
material information reasonably available to them.  Absent the
limitations authorized by Utah law, directors are accountable to corporations
and their stockholders for monetary damages for conduct constituting gross
negligence in the exercise of their duty of care.  Utah law enables
corporations to limit available relief to equitable remedies such as injunction
or rescission.  Our Articles of Incorporation limits the liability of
our directors to us or to our stockholders (in their capacity as directors but
not in their capacity as officers) to the fullest extent permitted by Utah
law.





The
inclusion of this provision in our Articles of Incorporation may have the effect
of reducing the likelihood of derivative litigation against directors and may
discourage or deter stockholders or management from bringing a lawsuit against
directors for breach of their duty of care, even though such an action, if
successful, might otherwise have benefited the Company and its
stockholders.





Our
Bylaws provide indemnification to our officers and directors and certain other
persons with respect to certain matters.  Insofar as indemnification
for liabilities arising under the 1933 Act may be permitted to our directors and
officers, we have been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the 1933 Act and is, therefore, unenforceable.





Transfer
Agent and Registrar





Our transfer agent is Fidelity Transfer
Company, 8915 S. 700 E., Suite 102, Sandy, Utah 84070; telephone (801)
562-1300.





ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA





Not required by smaller reporting
companies.





ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION





In addition to historical information,
this report contains forward-looking statements that involve risks and
uncertainties, which may cause our actual results to differ materially from
plans and results discussed in forward-looking statements.  We
encourage you to review the risks and uncertainties, discussed in the section
entitled Item 1A “Risk Factors,” and the “Note Regarding Forward-Looking
Statements,” included in the beginning of this Form 10-K.  The risks
and uncertainties can cause actual results to differ significantly from those
forecasted in forward-looking statements or implied in historical results and
trends.


29


The following discussion should be read
in conjunction with our consolidated financial statements and related notes
appearing elsewhere in this form 10-K





Overview





We were formed under the name of Ogden
Golf Co. Corporation.  We terminated our retail golf store operations
in December 2006.  On February 14, 2008, we acquired Bio-Path, Inc.
(“Bio-Path Subsidiary”) in  a reverse merger
transaction.  In connection with the Merger, we changed our name to
Bio-Path Holdings, Inc., we acquired Bio-Path Subsidiary as a wholly owned
subsidiary and we appointed new officers and directors.  In connection
with the Merger, we also increased our authorized capital stock and adopted a
Stock Incentive Plan.  The Merger and related matters are further
described in a Form 8-K filed with the Securities and Exchange Commission on
February 19, 2008. Subsequent to the Merger, we changed our fiscal year end from
June 30th to
December 31st.





Bio-Path
Subsidiary was formed to finance and facilitate the development of novel cancer
therapeutics.  Our initial plan was to acquire licenses for drug
technologies from The University of Texas M. D. Anderson Cancer Center (“M. D.
Anderson”), to fund clinical and other trials for such technologies and to
commercialize such technologies. Bio-Path has negotiated and executed two
exclusive licenses (“License Agreements”) for three lead products and nucleic
acid delivery technology. These licenses specifically provide drug delivery
platform technology with composition of matter intellectual property that
enables systemic delivery of antisense, small interfering RNA (“siRNA”) and
small molecules for treatment of cancer.  Bio-Path’s business plan is
to act efficiently as an intermediary in the process of translating newly
discovered drug technologies into authentic therapeutic drugs
candidates.  Its strategy is to selectively license potential drug
candidates for certain cancers, and, primarily utilizing the comprehensive drug
development capabilities of M. D. Anderson, to advance these candidates into
initial human efficacy trials (Phase IIa), and out-license each successful
potential drug to a pharmaceutical company.





Plan
of Operation





See Item 1 of this Form
10-K.





Results
of Operations for Year Ended December 31, 2008.





Except
as discussed below, a discussion of our past financial results is not pertinent
to the business plan of the Company on a going forward basis, due to the change
in our business which occurred upon consummation of the Merger on February
14,  2008.





Results
of Operations for the twelve months ended December 31, 2008 and period from
inception (May 10, 2007) to December 31, 2007.





We have
no operating revenues since our inception.  Our operating expenses for
the twelve months ended December 31, 2008 were $2,893,828 and consisted of
general and administrative expenses of $587,163, stock issued for services of
$300,000, cost of stock options and warrants of $1,501,239 and amortization
expense of $171,954 for our technology licenses.  We expended $333,472
on research and development costs during the year ended December 31,
2008.





Our
operating expenses for the period of inception (May 10, 2007) to December 31,
2007 were $307,006 and consisted of general and administrative expenses of
$271,280, and amortization expense of $27,551 for our technology
licenses.  We expended $8,175 on research and development costs during
the year ended December 31, 2007.


30


We had
interest income of $ 41,061 for the twelve months ended December 31, 2008
compared to interest income of $25,609 for the period of inception (May 10,
2007) to December 31, 2007. Our interest income was derived from cash and cash
equivalents net of bank fees.





Our net
loss was $2,852,767 for the twelve months ended December 31, 2008 compared to a
net loss of  $281,397 for the period of inception (May 10, 2007) to
December 31, 2007.  Net loss per share, both basic and diluted was
$.07 for the twelve months ended December 31, 2008 and $0.01 for the period of
inception (May 10, 2007) to December 31, 2007.





Liquidity
and Capital Resources as of December 31, 2008





At December 31, 2008, we had cash of
$1,507,071 compared to $1,219,358 at December 31, 2007.  We currently
have no lines of credit or other arranged access to debt financing.





Net cash used in operations during the
year ended December 31, 2008 was $930,600 compared to $251,107 from inception to
December 31, 2007.  Inasmuch as we have not yet generated revenues,
our entire expenses of operations are funded by our cash assets.





In the year ended December 31, 2008, we
paid $150,000 for the cash portion of the purchase price of the licenses we
acquired from M.D. Anderson.





Currently all of our cash is, and has
been, generated from financing activities.   Cash provided by
financing activities was $1,368,313 compared to $1,670,465 from inception to
December 31, 2007.  Since inception we have net cash from financing
activities of $3,038,779. As discussed in our Plan of Operation above, we
believe that our available cash will be sufficient to fund our liquidity and
capital expenditure requirements through the fiscal year ending December 31,
2009.  However, we believe that we will need to raise approximately an
additional $11,500,000 in net proceeds to completely implement our business
plan.  We do need to raise additional capital during 2009, in order to
fund our operations in 2010.  There can be no assurance that we will
be able to raise cash when it is needed to fund our operations.





Liquidity
and Capital Resources as of December 31, 2007





At December 31, 2007, we had cash of
$1,219,358.  Cash used in operations since inception to December 31,
2007 totaled $251,107. Since inception, we have net cash from financing
activities of $1,670,465. As discussed in our Plan of Operation above, we
believe that our available cash will be sufficient to fund our liquidity and
capital expenditure requirements through the current fiscal year ending December
31, 2008. However, we believe that we will need to raise approximately
$15,000,000 in gross proceeds to completely implement our business
plan.





Other
Events





In April
of 2008 we granted stock options for services to be performed  over
the next three years, to purchase in the aggregate 1,615,000 shares of our
common stock.  Terms of the stock option grants require, among other
things, that the individual continues to provide services over the vesting
period of the option, which is four or five years from the date that each option
granted to the individual becomes effective.  The exercise price of
the options is $0.90 a share.  In April of 2008 we awarded warrants
for services to purchase in the aggregate 85,620 shares of our common
stock.  The exercise price is $0.90 a share.  In April of
2008, we issued 200,000 shares of our common stock to a firm in connection with
introducing Bio-Path, Inc. to its merger partner Ogden Golf. In October, 2008 we
granted a total of 2,500,000 employee stock options to our two corporate
officers, Peter Nielsen and Douglas Morris.


31


As of
March 24, 2009, a total of 1,458,332 of these options are now vested, and the
remaining 1,041,668 vest over a three year period from October 2008 based on
one-thirty six per month for services rendered as employees.  The
exercise price is $1.40 per share.





Off-Balance
Sheet Arrangements





We do not have any off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that is material to investors.





Contractual
Obligations and Commitments





Bio-Path has recently entered into
two Patent and Technology License Agreements (the “Licenses”) with M. D.
Anderson relating to its technology.  (See” Business of
Bio-Path”)





In September 2008, Bio-Path entered
into a Supply Agreement with Althea Technologies, Inc. for the supply of drug
product for the Company’s upcoming clinical trial of the drug BP-100-1.01 in
human patients.





Inflation





The Company does not believe that
inflation will negatively impact its business plans.





Critical
Accounting Policies





The preparation of financial statements
in conformity with generally accepted accounting principles (“GAAP”) in the
United States has required the management of the Company to make assumptions,
estimates and judgments that affect the amounts reported in the financial
statements, including the notes thereto, and related disclosures of commitments
and contingencies, if any. The Company considers its critical accounting
policies to be those that require the more significant judgments and estimates
in the preparation of financial statements, including the
following:





Concentration of
Credit Risk --Financial instruments that potentially subject the Company
to a significant concentration of credit risk consist of cash.  The
Company maintains its cash balances with one major commercial bank, JPMorgan
Chase Bank.  The balances are insured by the Federal Deposit Insurance
Corporation up to $250,000.  As a result, $1,257,071 of the Company’s
cash balances is not covered by the FDIC.





Intangible
Assets/Impairment of Long-Lived Assets -- As of December 31, 2008, Other
Assets totals $2,504,662 for the Company’s two technology licenses, comprised of
$2,704,167 in value acquiring the Company’s technology licenses and its
intellectual property, less accumulated amortization of $199,505.  The
technology value consists of $350,000 in cash paid or accrued to be paid to MD
Anderson, plus 3,138,889 shares of common stock granted to M.D. Anderson valued
at $2,354,167.  This value is being amortized over a fifteen year (15
year) period from November 7, 2007, the date that the technology licenses became
effective.  As of December 31, 2008 accrued payments to be made to M.
D. Anderson totaled $125,000, and such payments are expected to be made in 2009.
The Company accounts for the impairment and disposition of its long-lived assets
in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets.  In
accordance with SFAS No. 144, long-lived assets are reviewed for events of
changes in circumstances which indicate that their carrying value may not be
recoverable.  The Company estimates that approximately $175,000 will
be amortized per year for each future year for the current value of the
technology licenses acquired until approximately 2022.


32


Research and
Development Costs --Costs and expenses that can be clearly identified as
research and development are charged to expense as incurred in accordance with
SFAS No. 2, “Accounting for Research and Development Costs.”  For the
year 2008, the Company had $333,472 of costs classified as research and
development expense.  Of this amount, approximately $225,000 is
comprised of raw materials and costs for the Company’s raw material suppliers
and contract drug manufacturer to perform unplanned additional engineering test
runs of the Company’s lead drug product in advance of manufacturing a current
Good Manufacturing Practice (cGMP) clinical batch of this drug for use in an
upcoming Phase I Clinical Trial.




Stock-Based
Compensation --The Company has accounted for stock-based compensation
under the provisions of Statement of Financial Accounting Standards No. 123(R),
“Share-Based Payment.”  This statement requires us to record an
expense associated with the fair value of stock-based
compensation.  We currently use the Black-Scholes option valuation
model to calculate stock based compensation at the date of
grant.  Option pricing models require the input of highly subjective
assumptions, including the expected price volatility.  Changes in
these assumptions can materially affect the fair value
estimate.





Stock Option
Grants- In April of 2008 the Company made stock option grants for
services over the next three years to purchase in the aggregate 1,615,000 shares
of the Company’s common stock.  Terms of the stock option grants
require, among other things, that the individual continues to provide services
over the vesting period of the option, which is four or five years from the date
that each option granted to the individual becomes effective.  The
exercise price of the options is $0.90 a share.  None of these stock
options grants were for current management and officers of the
Company.  The Company determined the fair value of the stock options
granted using the Black Scholes model and expenses this value monthly based upon
the service period schedule for each stock option award.  For purposes
of determining fair value, the Company used an average annual volatility of
seventy two percent (72%), which was calculated based upon an average of
volatility of similar biotechnology stocks.  The risk free rate of
interest used in the model was taken from a table of the market rate of interest
for U. S. Government Securities for the date of the stock option awards and
interpolated as necessary to match the appropriate effective term for the
award.   The total value of stock options granted was determined
using this methodology to be $761,590, which will be expensed over the next six
years based on the service period.





In
October of 2008 the Company made stock option grants to management and officers
to purchase in the aggregate 2,500,000 shares of the Company’s common
stock.  Terms of the stock option grants require that the individuals
continue employment with the Company over the vesting period of the option,
fifty percent (50%) of which vested upon the date of the grant of the stock
options and fifty percent (50%) of which will vest over 3 years from the date
that the options were granted.  The exercise price of the options is
$1.40 a share.  The Company determined the fair value of the stock
options granted using the Black Scholes model and expenses this value monthly
based upon the service period for each stock option award.  For
purposes of determining fair value, the Company used an average annual
volatility of eighty four percent (84%), which was calculated based upon taking
a weighted average of the volatility of the Company’s common stock and the
volatility of similar biotechnology stocks.  The risk free rate of
interest used in the model was taken from a table of the market rate of interest
for U. S. Government Securities for the date of the stock option awards and
interpolated as necessary to match the appropriate effective term for the
award.





The total
value of stock options granted to management and officers was determined using
this methodology to be $2,485,000, half of which was expensed at the date of
grant and the balance will be expensed over the next three years based on the
stock optionvesting
schedule.





In
December of 2008 the Company made stock option grants for services over the next
three years to purchase in the aggregate 100,000 shares of the Company’s common
stock.  Terms of the stock option grants require, among other things,
that the individual continues to provide services over the vesting period of the
option, which is three or four years from the date that each option granted to
the individual becomes effective.  The exercise price of the options
is $0.30 a share.  None of these stock options grants were for current
management and officers of the Company.  The Company determined the
fair value of the stock options granted using the Black Scholes model and
expenses this value monthly based upon the vesting schedule for each stock
option award.  For purposes of determining fair value, the Company
used an average annual volatility of eighty four percent (84%), which was
calculated based upon taking a weighted average of the volatility of the
Company’s common stock and the volatility of similar biotechnology
stocks.


33


The risk
free rate of interest used in the model was taken from a table of the market
rate of interest for U. S. Government Securities for the date of the stock
option awards and interpolated as necessary to match the appropriate effective
term for the award.   The total value of stock options granted
was determined using this methodology to be $21,450, which will be expensed over
the next four years based on the stock option vesting schedule.





Total
stock option expense for the year 2008 being reported on totaled
$1,465,189.





Warrant
Grants - In April of 2008 the Company awarded warrants for services to
purchase in the aggregate 85,620 shares of the Company’s common stock.The
exercise price is $0.90 a share.  The warrants were one hundred
percent (100%) vested upon issuance and were expensed upfront as warrants for
services.  The fair value of the warrants expensed was determined
using the same methodology as described above for stock options.  The
total value of the warrants granted was determined using this methodology to be
$36,050, the total amount of which was expensed in the second quarter
2008.





Net Loss Per
Share –In accordance with SFAS No. 128, Earnings Per Share, and SEC
Staff Accounting Bulletin (“SAB”) No. 98, basic net loss per common share is
computed by dividing net loss for the period by the weighted average number of
common shares outstanding during the period.  Under SFAS No. 128,
diluted net income (loss) per share is computed by dividing the net income
(loss) for the period by the weighted average number of common and common
equivalent shares, such as stock options and warrants, outstanding during the
period.





Comprehensive
Income --Comprehensive income (loss) is defined as all changes in a
company’s net assets, except changes resulting from transactions with
shareholders.  At  December 31,  2008, the Company
has no reportable differences between net loss and comprehensive
loss.





Use of Estimates
--The preparation of consolidated financial statements in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in
the Company’s consolidated financial statements and accompanying notes. On an
ongoing basis, the Company evaluates its estimates and judgments, which are
based on historical and anticipated results and trends and on various other
assumptions that the Company believes to be reasonable under the circumstances.
By their nature, estimates are subject to an inherent degree of uncertainty and,
as such, actual results may differ from the Company’s estimates.





Recent
Accounting Pronouncements:





In September 2006, the FASB issued SFAS
No. 157 “Fair Value Measurements.”  SFAS 157 defines fair value,
establishes a framework for measuring fair value, and expends disclosures about
fair value measurements.  SFAS 157 applies under other accounting
pronouncements that require or permit fair value measurements and does not
require any new fair value measurements.  The provisions of SFAS 157
were originally to be effective beginning January 1,
2008.  Subsequently, the FASB provided for a one-year deferral of the
provisions of SFAS 157 for non-financial assets and liabilities that are
recognized or disclosed at fair value in consolidated financial statements on a
non-recurring basis.  We are currently evaluating the input of
adopting the provisions of SFAS 157 for non-financial assets and liabilities
that are recognized or disclosed on a non-recurring basis.





34


In February 2007, the FASB
issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities — Including an amendment of FASB Statement
No. 115, which is effective for fiscal years beginning after
November 15, 2007. The statement permits entities to choose to measure many
financial instruments and certain other items at fair value. The Company has not
elected to account for any of its assets or liabilities using the fair value
option under SFAS No. 159 and accordingly, the adoption of SFAS
No. 159 did not have a material impact on the Company's financial position
or results of operations.





In July
2007, the Emerging Issues Task Force (EITF) issued EITF 07-3, "Accounting
for Nonrefundable Advance Payments for Goods or Services to be Used in Future
Research and Development Activities" (EITF 07-3). EITF 07-3 clarifies
the accounting for non-refundable advance payments for goods or services that
will be used or rendered for research and development activities. EITF 07-3
states that such payments should be capitalized and recognized as an expense as
the goods are delivered or the related services are performed. If an entity does
not expect the goods to be delivered or the services rendered, the capitalized
advance payment should be charged to expense. EITF 07-3 is effective for
fiscal years beginning after December 15, 2007. We adopted EITF 07-3
on January 1, 2008. The adoption of EITF 07-3 did not have a material
effect on our financial position or the results of our operations.





In
December 2007, the FASB completed the second phase of its business combination
project and issued the following two accounting standards:  (i)
Statement No. 141(R), "Business Combinations;" and (ii) Statement
No. 160, "Noncontrolling Interests in Consolidated Financial
Statements" — an amendment of ARB No. 51.   These statements
dramatically change the way companies account for business combinations and
noncontrolling interests. Compared with their predecessors, Statements 141(R)
and 160 will require:





·
            More
      assets acquired and liabilities assumed to be measured at fair value as of
      the acquisition date;


·
            Liabilities
      related to contingent consideration to be remeasured at fair value in each
      subsequent reporting period;


·
            An
      acquirer in preacquisition periods to expense all acquisition related
      costs; and


·
            Noncontrolling
      interests in subsidiaries initially to be measured at fair value and
      classified as a separate component of
equity.





Statements
141(R) and 160 should both be applied prospectively for fiscal years beginning
on or after December 15, 2008. However, Statement 160 requires entities to
apply the presentation and disclosure requirements retrospectively to
comparative financial statements if presented. Both standards prohibit early
adoption. We are currently assessing the impact these new standards will have on
our consolidated financial statements.





In
December 2007, the FASB ratified a consensus opinion reached by the EITF on EITF
Issue 07-1, "Accounting for Collaborative Arrangements" (EITF 07-1). The
guidance in EITF 07-1 defines collaborative arrangements and establishes
presentation and disclosure requirements for transactions within a collaborative
arrangement (both with third parties and between participants in the
arrangement). The consensus in EITF 07-1 is effective for fiscal years, and
interim periods within those fiscal years, beginning after December 15,
2008. The consensus requires retrospective application to all collaborative
arrangements existing as of the effective date, unless retrospective application
is impracticable. The impracticability evaluation and exception should be
performed on an arrangement-by-arrangement basis. We are evaluating the impact
EITF 07-1 will have on our financial statements. We currently do not
believe that the adoption of EITF 07-1 will have a significant effect on
our financial statements.





35


In
December 2007, the SEC staff issued Staff Accounting Bulletin (SAB) 110,
“Share-Based Payment” (SAB 110) which amends SAB 107, “Share-Based Payment,” to
permit public companies, under certain circumstances, to use the simplified
method in SAB 107 for employee option grants after December 31,
2007.  Use of the simplified method after December 2007 is permitted
only for companies whose historical data about their employees’ exercise
behavior does not provide a reasonable basis for estimating the expected term of
the options.  We are currently evaluating the potential impact that
the adoption of FSP 142-3 may have on our consolidated financial
statements.  We currently use the simplified method to estimate the
expected term for employee option grants, as adequate historical experience is
not available to provide a reasonable estimate.  SAB 110 is effective
for employee options granted after December 31, 2007.  We adopted SAB
110 on January 1, 2008 and will continue to apply the simplified method until
enough historical experience is readily available to provide a reasonable
estimate of the expected term for employee option grants.





In April
2008, the FASB issued FASB Staff Position No. 142-3, Determination of the
Useful Life of Intangible Assets ("FSP 142-3"). FSP 142-3 amends the factors
that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible
Assets ("SFAS 142"). The objective of this FSP is to improve the
consistency between the useful life of a recognized intangible asset under
SFAS 142 and the period of expected cash flows used to measure the fair
value of the asset under SFAS 141R. This FSP is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years.





In
November 2008, the FASB issued EITF Issue No. 08-7, "Accounting for Defensive Intangible
Assets," or EITF 08-7. EITF 08-7 seeks to clarify how to
account for defensive intangible assets, or those intangible assets acquired in
a business combination that an entity does not intend to actively use but does
intend to prevent others from using, subsequent to initial measurement.
EITF 08-7 is effective for all intangible assets acquired during the first
fiscal year beginning on or after December 15, 2008. Early adoption is not
permitted. The impact of the adoption of EITF 08-7 will be dependent upon
the type and structure of any transactions that the Company may make in the
future.





ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK.





Information not required for smaller
reporting companies.





ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMETARY
DATA





The consolidated financial statements
and supplementary data of the Company required  in
this  item are set forth beginning on page F-1. In the calendar year
2008, our fiscal year end was changed from June 30th to
December 31st.





ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE





On February 14, 2008, Bio-Path
Holdings, Inc. (fka Ogden Golf Co. Corporation) acquired Bio-Path, Inc in a
merger transaction.  Such transaction is further described in a Form
8-K filed on February 19, 2008.  Subsequent to the merger transaction,
the Board of Directors of Bio-Path Holdings, Inc. (the “Registrant”) determined
that it was in the best interests of the Registrant to appoint the accounting
firm of Bio-Path, Inc., as the independent registered public accounting firm of
the Registrant in place of the Registrant’s previous accounting
firm.


36


(a)            Effective
March 3, 2008, Spector & Wong, LLP   (“Spector & Wong”)
was notified that it was no longer the independent registered public accounting
firm of the Registrant. The   reports of Spector & Wong on
the financial statements of the Registrant as of and for the years ended June
30, 2007 and 2006 did not contain an adverse opinion or a disclaimer of opinion,
nor were they qualified or modified as to uncertainty, audit scope or accounting
principles, except for the addition of an explanatory paragraph expressing
substantial doubt about the Registrants ability to continue as a going
concern.





During the years ended June 30, 2007
and 2006 and through March 3, 2008, there were no disagreements with Spector
& Wong on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure which disagreements, if not
resolved to the satisfaction of Spector & Wong, would have caused Spector
& Wong to make a reference to the subject matter of the disagreement in its
reports on the Registrant’s financial statements for such
periods.  There were no reportable events (as defined in Regulation
S-B Item 304(a)(1)(iv)) during the years ended June 30, 2007 and 2006 or the
subsequent interim period through March 3, 2008.





The Registrant requested that Spector
& Wong furnish it with a letter addressed to the Securities and Exchange
Commission stating whether or not it agrees with the above
statements.  A copy of such letter, dated March 6, 2008 was filed as
an exhibit to the Form 8-K which was filed to report on the change of
independent registered public accounting firm.





(b)            On
February 21, 2008, upon the authorization and approval of the full Board of
Directors acting as the audit committee of the Registrant, the Registrant
appointed the accounting firm of Mantyla McReynolds, LLC (“Mantyla”) as the
Company’s independent registered public accounting firm.  No
consultations occurred between the Registrant and Mantyla during the years ended
June 30, 2007 and 2006 and through February 21, 2008 regarding either
(i) the application of accounting principles to a specific completed or
contemplated transaction, the type of audit opinion that might be rendered on
the Registrant’s financial statements, or other information provided that was an
important factor considered by the Registrant in reaching a decision as to an
accounting, auditing or financial reporting issue, or (ii) any matter that
was the subject of disagreement or a reportable event requiring disclosure under
Item 304(a)(1)(iv) of Regulation S-B.





ITEM 9A. CONTROLS AND PROCEDURES





(a)           Evaluation of disclosure
controls and procedures. Under the supervision and with the
participation of our management, including our principal executive officer/
principal financial officer, we conducted an evaluation of the effectiveness of
the design and operations of our disclosure controls and procedures, as defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
of December 31, 2008. Based on this evaluation, our Chief Executive
Officer/Chief Financial Officer concluded that our disclosure controls and
procedures are effective to ensure that information required to be disclosed in
the reports submitted under the Securities and Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in
Securities and Exchange Commission (“SEC”) rules and forms, including to ensure
that information required to be disclosed by the Company is accumulated and
communicated to management, including the principal executive officer/principal
financial officer, as appropriate to allow timely decisions regarding required
disclosure.




(b)           Evaluation
of disclosure controls and procedures. We are responsible for establishing
and maintaining adequate internal control over financial reporting (as defined
in Rule 13a-15(f) under the Exchange Act). Our internal control over
financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes of accounting principles generally
accepted in the United States.


37


Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance of achieving their control
objectives.




Our Chief
Executive Officer and Chief Financial Officer evaluated the effectiveness of our
internal control over financial reporting as of December 31, 2008. In making
this assessment, we used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control-Integrated
Framework. Based on this evaluation, our Chief Executive Office/ Chief Financial
Officer concluded that, as of December 31, 2008, our internal control over
financial reporting was effective.





This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
 Management’s report was not subject to attestation by our registered
public accounting firm pursuant to temporary rules of the SEC that permit us to
provide only management’s report in this annual report.




(c)           Changes in internal controls
over financial reporting.  The Company’s Chief Executive
Officer/ Chief Financial Officer has determined that there have been no changes
in the Company’s internal control over financial reporting during the period
covered by this report identified in connection with the evaluation described in
the above paragraph that have materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financial
reporting.





ITEM 9B. OTHER INFORMATION





None.





PART III





ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS, AND CORPORATE
GOVERNANCE.





Identification
of Directors and Executive Officers





The
current directors and officers of Bio-Path Holdings, Inc. who will serve until
the next annual meeting of shareholders or until their successors are elected or
appointed and qualified, are set forth below:





Name
            Age
            Position - CommitteePeter
      Nielsen
            59
            Chief
      Executive Officer/President/Chief Financial Officer/Treasurer/ Chairman of
      the Board and DirectorDouglas
      P. Morris
            53
            Vice
      President of Corporate Development/ Secretary/DirectorDr.
      Thomas Garrison
            51
            DirectorDr.
      Gillian Ivers-Read
            55
            Director








38


Background
Information





Peter Nielsen,
CEOis a co-founder of Bio-Path, serving as its Chief Executive Officer,
President and Chief Financial Officer/Treasurer and Chairman of the Board of
Directors. Mr. Nielsen has developed a close working relationship over the last
five years with key individuals at M. D. Anderson and suppliers. Mr. Nielsen has
a broad management background in senior management, leading turnarounds of
several large companies.  He also has experience in finance, product
development, cost and investment analysis, manufacturing and
planning.  He has also worked with several other biotech companies
developing and executing on strategies for growth and is currently a Director of
Synthecon, Inc., a manufacturer of 3D bioreactors.  Prior to joining
Bio-Path, Mr. Nielsen served as Chief Financial Officer of Omni Energy Services
Corp., a NASDAQ traded energy Services Company.  Mr. Nielsen was a
Lieutenant in the U.S. Naval Nuclear Power program where he was Director of the
Physics Dept. and was employed at Ford Motor Company in product
development.  He holds engineering and M.B.A. finance degrees from the
University of California-Berkeley.





Douglas P.
Morris is a co-founder of Bio-Path serving as its Vice President of
Corporate Development, Secretary and a Director. Since 1993, Mr. Morris has been
an officer and director of Celtic Investment, Inc., a financial services
company. Celtic Investment owns Celtic Bank, an FDIC insured industrial loan
company chartered under the laws of the State of Utah. Since 1990, Mr. Morris
owns and operates Hyacinth Resources, LLC (“Hyacinth”).  Hyacinth is a
privately held business consulting firm. Hyacinth consults with privately held
and publicly held corporations relating to management, merger and acquisitions,
debt and equity financing, capital market access, and market support for
publicly traded securities. Hyacinth also holds investments purchased by Mr.
Morris.  Mr. Morris has recently formed Sycamore Ventures, LLC, a
privately-held consulting firm.  Mr. Morris has a BA from Brigham
Young University and a Masters in Public Administration from the University of
Southern California.





Dr. Thomas
Garrison is a practicing medical doctor with over twenty years experience
in the clinical medical field with extensive administration
responsibilities.  He isresidency trained and
board certified in emergency medicine. He has extensive experience in
high-acuity, high-volume emergency departments with large trauma referral
bases.  He continues to be Chief or Chair person over hospital
Emergency Departments and has co-authored several textbooks on emergency
medicine.  In addition to his professional medical career, he has been
involved in a number of successful entrepreneurial pursuits.  He is
currently involved inAdvanced Laser Clinics,
Inc., serving as Corporate Medical Director for this growing national
company.  He is responsible for medical oversight, written policies,
regulatory input, equipment selection, pharmaceuticals, training and other
medically relevant issues.  He received his Doctor of Medicine, Uniformed Services
University of the Health Sciences, Bethesda, Maryland in 1982, and his Bachelor
of Science; Chemistry Major, Engineering Minorfrom the University of
Utah in 1978.





Dr. Gillian
Ivers-Read.Dr.Ivers-Read is and has been
since April 2002, Executive Vice President, Development Operations of Pharmion
Corp., a publicly held biotech company.  From 1996 to 2001, Dr.
Ivers-Read held various regulatory positions with Hoechst Marion Roussel and its
successor Aventis Pharmaceuticals, Inc., where she most recently held the
position of Vice President, Global Regulatory Affairs. From 1994 to 1996, Dr.
Ivers-Read was Vice President, Development and Regulatory Affairs for Argus
Pharmaceuticals and from 1984 to 1994 she served as a regulatory affairs
director for Marion Merrell Dow.





Committees
of the Board of Directors





We currently have a compensation
committee of the Board of Directors consisting of Dr. Gillian Ivers-Read and
Douglas P. Morris.  We anticipate as our Board of Directors increases
in size, we will appoint an audit committee and a nominating and corporate
governance committee.




39


Key
Consultants





Dai-Shan
Wong.  Mr. Wong was appointed as Bio-Path’s Director of
Regulatory Affairs and Quality Control in July 2008.  Mr. Wong was
Director of Regulatory Affairs with Applied Logic Associates and is a certified
regulatory consultant with over 20 years of diversified regulatory and clinical
oversight of U. S. Food and Drug Administration (FDA) regulated medical
products.  He has extensive experience in Quality System Regulations
implementation and in performing quality audits.  In addition, Mr.
Wong has held project and general management positions.  Dai-Shan Wong
has a B.S. in Biology from Oklahoma Baptist University and has done graduate
work in biochemistry at the University of Texas Medical Branch, Galveston,
Texas.  Mr. Wong is a Certified Regulatory Affairs Professional
(RAC).





Thomas
A. Walker, Ph.D.   Dr. Walker was
appointed as Bio-Path’s Chemistry, Manufacturing and Controls CMC Development
Specialist.  Dr. Walker also has more than twenty years of broad
analytical chemistry experience in the pharmaceutical industry.  He
was involved significantly with the start up and qualification of Quality
Control laboratories and a Quality Assurance department for GEL Analytics, a
pharmaceutical drug supplier.  He also has provided oversight in
setting up and qualifying current Good Manufacturing Practice (cGMP) analytical
and Good Laboratory Practices (GLP) analytical and bioanalytical
laboratories.  His experience in drug development includes preparation
of regulatory filings for pharmaceutical drug products and experience managing
preformulation, analytical methods development/validation and drug delivery
departments.  Dr. Walker has authored numerous articles and a book
chapter covering various topics in analytical chemistry.  Thomas
Walker has a Ph.D. in Analytical Chemistry from The University of Iowa and a
B.S. in Chemistry from Oral Roberts University.





Alan MacKenzie,
Ph.D.  Dr. MacKenzie is a leading lyophilization expert with a
particular emphasis on developing lyophilization processes for solvents based
products.  Dr. MacKenzie has been a Professor at the University of
Washington.





Ana Tari,
Ph.D.  Dr. Tari is an Assistant Professor at the M. D. Anderson
Cancer Center.  Dr. Tari was the lead researcher who has developed
Bio-Path’s lead cancer drug BP-100-1.01.





Other
Involvement in Certain Legal Proceedings





There have been no events under any
bankruptcy act, no criminal proceedings and any judgments or injunctions
material to the evaluation of the ability and integrity of any director or
executive officer during the last five years.





Code
of Ethics





We have adopted a Code of Ethics, or
our Code of Ethics, that applies to directors, officers and employees and
complies with the requirements of Item 406 of Regulation S-K and the listing
standards of the NASDAQ Global Market.  Our Code of Ethics is located
on our website (www.biopathholdings.com).  Any amendments or waivers
to our Code of Ethics will be promptly disclosed on our website and as required
by applicable laws, rules and regulations of the Securities and Exchange
Commissions.





Communications
with Board Members





We have
not adopted a formal process by which stockholders may communicate with the
Board of Directors.





40


Compliance
with Section 16(a)





No disclosure required





ITEM 11. EXECUTIVE COMPENSATION





Compensation
Discussion and Analysis





The
compensation committee (a) annually reviews and determines salaries,
bonuses and other forms of compensation paid to our executive officers and
management; (b) selects recipients of awards of incentive stock options and
non-qualified stock options and establishes the number of shares and other terms
applicable to such awards; and (c) construes the provisions of and
generally administers the 2007 Stock Incentive Plan (the “2007 Plan”). We do not
currently have a Compensation Committee Charter.





The
compensation committee of our board of directors has overall responsibility for
the compensation program for our executive officers. Our compensation committee
consists of an independent director and a non-independent director.  The
compensation committee is responsible for establishing policies and otherwise
discharging the responsibilities of the board with respect to the compensation
of our executive officers, senior management, and other employees. In evaluating
executive officer pay, the compensation committee may retain the services of an
independent compensation consultant or research firm and consider
recommendations from the chief executive officer and persons serving in
supervisory positions over a particular officer or executive officer with
respect to goals and compensation of the other executive officers. The
compensation committee assesses the information it receives in accordance with
its business judgment. The compensation committee also periodically is
responsible for administering all of our incentive and equity-based
plans.





All
decisions with respect to executive compensation are first approved by the
compensation committee and then submitted, together with the compensation
committee’s recommendation, to the members of the board for final
approval.





Elements
of compensation for our executives generally include:





base
salary (typically subject to upward adjustment annually based on individual
performance);





stock
option awards;





health,
disability and life insurance.





Our
primary objective with respect to executive compensation is to design a reward
system that will align executives’ compensation with Bio-Path’s overall business
strategies and attract and retain highly qualified executives.  The
principle elements of executive compensation are salary, bonus and will, during
fiscal 2008, include stock option grants. We intend to stay competitive in
the marketplace with our peers.  In considering the elements of
compensation, Bio-Path considers its current cash position in determining
whether to adjust salaries, bonuses and stock option grants. The following table
sets forth summary information about the compensation paid to our
officers.




41


Summary
Compensation Table





Name
              Year
              Salary
      ($)
              Bonus
      ($)
              Stock
      Option ($)
              Total
      ($)Peter
      Nielsen, CEO, President
              2007
              $133,333
              $20,000
              -0-
              $153,333Chairman
              2008
              $250,000
              -0-
              -0-
              $250,000Douglas
      P. Morris, VP Corporate Development/Drector
              2007
              $  80,000
              -0-
              -0-
              $  80,000Corporate
      Development Director
              2008
              $120,000
              -0-
              -0-
              $120,000


Stock
Option Grants and Exercises During the Fiscal Year Ended December 21,
2008





The
following table sets forth information concerning stock option grants made
during the fiscal year ended December 31, 2008, to our executive officers named
in the “Summary Compensation Table” above. The fair value information in the far
right column is for illustration purposes only and is not intended to predict
the future price of our Common Stock. The actual future value of the stock
options will depend on the market value of the Common Stock.





GRANTS
OF PLAN-BASED AWARDS





All
      OtherOptionsAwards:
            
            ExerciseNumber
      of
            
            or
      Base
            
            Grant
      DateSecurities
            
            Price
      of
            
            Fair
      ValueUnderlying
            
            Option
            
            of
      OptionGrant
            
            Options
      (#)
            
            Awards
            
            AwardsName
            
            Date
            
            (1)
            
            ($/Sh)
            
            ($/Sh)Peter
      Nielsen
            
            10/7/08
            
            1,500,000
            
            $1.40
            
            $
      .99Douglas
      Morris
            
            10/7/08
            
            1,000,000
            
            $1.40
            
            $
      .99





(1)           This
column shows the exercise price for the stock options granted, which was the
closing price of our Common Stock on October 7, 2008, the date of
grant.





For the fiscal year ended December 31,
2007 neither of the persons listed in the Summary Compensation Table were
granted options or other rights to purchase shares of our common stock. In
October 2008 we granted our Chief Executive Officer, Peter Nielsen, an option to
purchase 1,500,000 shares of our common stock at a price of $1.40 per
share.  In October 2008 we also granted our Vice President of
Corporate Development, Douglas P. Morris, an option to purchase 1,000,000 shares
of our common stock at a price of $1.40 per share.  Each of the
options provides that one-half of the option shares are immediately vested and
the remaining one-half of the option shares vest in 36 equal monthly increments.
The options are exercisable for a term of ten years from the date of
grant.





The
following table sets forth certain information with respect to outstanding stock
option and warrant awards of the named executive officers for the fiscal year
ended December 31, 2008.





42


OUTSTANDING
EQUITY AWARDS AT DECEMBER 31, 2008





Option/Warrant
      AwardsName
            Number
      of Securities Underlying Unexercised Options/Warrants Exercisable
      (#)(1)
            Number
      of Securities Underlying Unexercised Options/Warrants Unexercisable
      (#)(1)
            Equity
      Incentive Plan Awards: Number of Securities Underlying Unexercised
      Unearned
              Options
      (#)
            Option/
              Warrant
      Exercise
              Price
      ($)
            Option/
              Warrant
      Expiration Date (2)Peter
      Nielsen
            1,500,000
            0
            -
            $1.40
            7/24/20080
            -Douglas
      P. Morris
            1,000,000
            0
            -
            $1.40
            2/2/20140
            -





(1)
            Except
      as indicated, the options granted vest and become exercisable in monthly
      installments over a two year period, commencing on the date of
      grant.





(2)
            The
      amount represents the shares of Common Stock issuable upon exercise of the
      vested warrants.




Option/Warrant
Exercises





No officer or director exercised any
option during the fiscal year ended December 31, 2008





Employment
Agreements





Bio-Path subsidiary has entered into
employment agreements with its Chief Executive Officer, Peter Nielsen and its
Vice President of Corporate Development, Douglas P. Morris, dated May 1,
2007.  The employment agreement for Mr. Nielsen provides for a base
salary of $250,000.  The employment agreement for Mr. Morris provides
for a base salary of $120,000.





Director
Compensation





Currently,
outside directors received cash compensation of $500 for each Board meeting
attended and $250 for each telephonic Board meeting that they participate
in.  Outside directors also receive annual stock options to purchase
25,000 shares of the Company’s common stock for each 12 month period they serve
as a director.





ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT





Security
Ownership of Certain Beneficial Owners





The
following table sets forth information regarding Shares of our common stock
beneficially owned as of March 24, 2009 by: (1) each of our officers and
directors; (ii) all officers and directors as a group; and (iii) each person
known by us to beneficially own five percent or more of the outstanding Units of
its common stock.


43





Shareholder
            Shares Owned
            PercentagePeter
      Nielsen (1)  (2)
            5,956,100
            14.21%Douglas
      P. Morris (1)
      (3)
            2,157,588
            5.15%Dr.
      Tom Garrison (1)
            1,761,324
            4.20%Dr.
      Gillian Ivers-Read (1)
      (4)
            -0-
            -0-%M.
      D.  Anderson
            6,930,025
            16.51%Tom
      Fry
            5,533,334
            13.20%All
      officers anddirectors
      as a group (5)
            9,875,012
            23.55%Total
            41,923,602
            100.00%





(1)           These
are the officers and directors of Bio-Path.





(2)           Includes
5,164,434 shares owned of record and 791,666 shares issuable upon the exercise
of options that are currently exercisable or will be exercisable within 60 days.
In addition to the vested options of Mr. Nielsen, additional options vest
monthly over the next 36 months. If such option were to fully vest, he would
have the right to purchase a total of 1,500,000 shares at $1.40 per
share.





(3)           Includes
1,629,811 shares owned of record and 527,777 shares issuable upon the exercise
of options that are currently exercisable or will be exercisable within 60 days.
In addition to the vested options of Mr. Morris, additional options vest monthly
over the next 36 months. If such option were to fully vest, he would have the
right to purchase a total of 1,000,000 shares at $1.40 per share.





(4)           Dr.
Ivers-Read owns options which are not currently vested.  These
options, if fully vested would, entitled her to purchase 450,000 shares of
common stock at a price of $0.90 per share.  These options vest over a
period of three years.





(5)           Includes
8,555,569 shares of record and 1,319,443 shares issuable upon the exercise of
currently vested options.





Stock
Options





In April of 2008 the Company made stock
option grants for services over the next three years to purchase in the
aggregate 1,615,000 shares of the Company’s common stock.  Terms of
the stock option grants require, among other things, that the individual
continues to provide services over the vesting period of the option, which is
four or five years from the date that each option granted to the individual
becomes effective.  The exercise price of the options is $0.90 a
share.  The Company determined the fair value of the stock options
granted using the Black Scholes model and expenses this value monthly based upon
the vesting schedule for each stock option award.  For purposes of
determining fair value, the Company used an average annual volatility of seventy
two percent (72%), which was calculated based upon an average of volatility of
similar biotechnology stocks.  The risk free rate of interest used in
the model was taken from a table of the market rate of interest for U. S.
Government Securities for the date of the stock option awards and interpolated
as necessary to match the appropriate effective term for the
award.   The total value of stock options granted through
December 31, 2008 was determined using this methodology  is $761,590,
which will be expensed over the next six years based on the stock option vesting
schedule. The expense for the three months ended June 30, 2008 was
$42,216.


44


In August 2008, Ulrich Mueller resigned
as a Director of the Company and withdrew from his consulting agreement as an
advisor to the Company.  As a result, the Company cancelled stock
options granted to Dr. Mueller to purchase 450,000 shares of common
stock.




In
October 2008 we granted our Chief Executive Officer, Peter Nielsen, an option to
purchase 1,500,000 shares of our common stock at a price of $1.40 per
share.  In October 2008 we also granted our Vice President of
Corporate Development, Douglas P. Morris, an option to purchase 1,000,000 shares
of our common stock at a price of $1.40 per share.  Each of the
options provides that one-half of the option shares are immediately vested and
the remaining one-half of the option shares vest in 36 equal monthly increments.
The options are exercisable for a term of ten years from the date of
grant.  The fair market value of these options has not been determined
as of the date of this Memorandum.





Warrants





We have a
total of 85,620 outstanding warrants that are fully vested and which were
expensed in the second quarter of 2008.





Equity
Compensation Plan Information





We have no Equity Compensation Plans
except for our Stock Incentive Plan.





ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS





Prior to
the merger, Bio-Path, Inc. issued shares of its common stock to Peter Nielsen,
Douglas P. Morris and Dr. Thomas Garrison at a price of $.001 per share. These
individuals are officers and/or directors of the Company.  These
shares were converted into a total of 8,555,569 shares of our common stock in
the merger transaction





As part of the license agreements with
M. D. Anderson, Bio-Path Subsidiary issued M. D.  Anderson 3,138,889
shares of our common stock.  In addition, M. D. Anderson researchers
purchased shares of our subsidiary’s common stock at par
value.   These shares issued to M. D.  Anderson and
such researchers were converted into a total of 8,858,873 shares of our common
stock in the merger.





We granted director Gillian Ivers-Read
options to purchase 450,000 shares of our common stock at a price of $0.90 per
share.  These options vest over a period of four years.





We recently granted to Peter Nielsen
and Douglas P. Morris options to purchase a total of 2,500,000 shares of our
common stock at a price of $1.40 per share. These individuals are officers and
directors of the Company.





ITEM 14. Principal Accounting Fees and
Services





Our entire Board currently serves as
our audit committee. The Audit Committee has adopted policies and procedures to
oversee the external audit process including engagement letters, estimated fees
and solely pre-approving all permitted non-audit work performed by Mantyla
McReynolds, PC. The Committee has pre-approved all fees for work
performed.




45


The Audit Committee has considered
whether the services provided by Mantyla McReynolds as disclosed below in the
captions “Audit-Related Fee”, “Tax Fees” and “All Other Fees” and has concluded
that such services are compatible with the independence of Mantyla McReynolds as
the Company’s principal accountants.




For the fiscal years 2008 and 2007, the
Audit Committee pre-approved all services described below  in the captions
“Audit Fees”, “Audit-Related Fees”, “Tax Fees” and “All Other Fees”. For fiscal
year 2008 and 2007, no hours expended on Mantyla McReynolds’ engagement to audit
the Company’s financial statements were attributed to work performed by persons
other than full-time, permanent employees of Mantyla McReynolds.





The aggregate fees billed for
professional services by Mantyla McReynolds in fiscal year 2008 and
2007:





Type
      of Fees
            
            2008
            
            2007Audit
      Fees
            
            $49,940
            
            $3,327Audit-Related
      Fees
            
            -
            
            -Tax
      Fees
            
            887
            
            -All
      Other Fees
            
            -
            
            -Total
            
            $50,827
            
            $3,327










ITEM
15.                    EXHIBITS





A.
            Exhibits




Exhibit
                Number
              Exhibit2.1
              Agreement
      and Plan of Merger and Reorganization dated September 27, 2007, by and
      among Ogden Golf Co. Corporation, a Utah corporation (the registrant),
      Biopath Acquisition Corp., a Utah corporation and wholly owned subsidiary
      of the registrant, and Bio-Path, Inc., a Utah corporation (incorporated by
      reference to exhibit 2.1 to the registrant’s current report on Form 8-K
      filed on September 27, 2007).3.1
              Restated
      Articles of Incorporation (incorporated by reference to exhibit 3.2 to the
      registrant’s current report on Form 8-A filed on September 10,
      2008).3.2
              Bylaws
      (incorporated
      by reference to exhibit 3.2 to the registrant’s current report on Form 8-A
      filed on September 10, 2008)3.3
              Articles
      of Merger relating to the merger of Biopath Acquisition Corp. with and
      into Bio-Path, Inc. (incorporated by reference to exhibit 3.2 to the
      registrant’s current report on Form 8-K filed on February 19,
      2008).4.1
              Specimen
      Stock certificate (incorporated
      by reference to exhibit 3.2 to the registrant’s current report on Form 8-A
      filed on September 10, 2008)
  46


10.1
              Employment
      Agreement – Peter Nielsen (incorporated by reference to exhibit 3.2 to the
      registrant’s current report on Form 8-K filed on February 19,
      2008).10.2
              Employment
      Agreement – Douglas P. Morris (incorporated by reference to exhibit 3.2 to
      the registrant’s current report on Form 8-K filed on February 19,
      2008).10.3
              Drug
      Product Development and Clinical Supply Agreement (incorporated by
      reference to exhibit 10.1 to the registrant’s current report on Form 8-K
      filed on October 16, 2008).10.4
              Amended
      2007 Stock Incentive Plan (incorporated by reference to exhibit 4.1 to the
      registrant’s registration on Form S-8 filed on December 10,
      2008).14.1
              Code
      of Ethics21.1
              Subsidiaries
      of Bio-Path Holdings, Inc.23.1
              Consent
      of Independent Registered Public Accounting Firm31
              Certificate
      of Chief Executive Officer/Chief Financial Officer pursuant to Exchange
      Act Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 Sarbanes
      Oxley Act of 2002.32
              Certificate
      of Chief Executive Officer/ Chief Financial Officer pursuant to Section 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes
      Oxley Act of
2002.


47


SIGNATURES





In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.





BIO-PATH
HOLDINGS, INC.





Dated:
      April 2, 2009
            By:           /s/Peter
      NielsenPresidentChief
      Executive OfficerChief
      Accounting Officer/Principal Financial
Officer





In
accordance with the Securities Exchange Act, this report has been signed below
by the following persons on behalf of the Company and in the capacities and on
the dates indicated.





Date
            Title
            SignatureApril
      2, 2009
            Chief
      Executive
              Officer/Principal
      Financial Officer/President/ Director
            /s/Director
            Peter  NielsenApril
      2, 2009
            Secretary
      and
            /s/Director
            Douglas
      P. MorrisApril
      2, 2009
            Director
            /s/Dr.
      Thomas GarrisonApril
      2, 2009
            Director
            /s/Dr.
      Gillian Ivers-Read











48


Index to Financial
Statements





Bio-Path
      Holdings, Inc. Financial Statements
            PageReport
      of Independent Registered Public Accounting Firm
            F-2Consolidated
      Balance Sheet
            F-3Consolidated
      Statement of Operations
            F-4Consolidated
      Statement of Cash Flows
            F-5Consolidated
      Statement of Shareholders' Equity
            F-6Notes
      to Financial Statements
            F-7


F-1


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








The Board
of Directors and Shareholders


Bio-Path
Holdings, Inc.





We have
audited the accompanying consolidated balance sheets of Bio-Path Holdings,
Inc. [a development stage company] as of December 31, 2008 and 2007, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the period ended December 31, 2008 and the period from inception to
December 31, 2007 and 2008. These financial statements are the responsibility of
the Company's management.  Our responsibility is to express an opinion
on these financial statements based on our audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  The Company has
determined that it is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting.  Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting.  Accordingly, we
express no such opinion.  An audit also includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis for
our opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Bio-Path Holdings, Inc., as of
December 31, 2008 and 2007, and the results of their operations and their cash
flows for the period ended December 31, 2008 and the period from inception to
December 31, 2007 and 2008 in conformity with accounting principles generally
accepted in the United States of America.








Mantyla
McReynolds, LLC


Salt Lake
City, Utah


March 31,
2009





F-2


BIO-PATH
HOLDINGS, INC.


(A
Development Stage Company)





CONSOLIDATED BALANCE SHEET


December
31, 2008 and 2007





December
      31,2008
                
                
                2007ASSETSCurrent
      assetsCash
                
                $
                1,507,071
                
                
                $
                1,219,358Restricted
      cash
                
                
                -
                
                
                
                208,144Drug
      product for testing
                
                
                292,800
                
                
                
                -Other
      current assets
                
                
                82,772
                
                
                
                27,434Total
      current assets
                
                
                1,882,643
                
                
                
                1,454,936Other
      assetsTechnology
      licenses
                
                
                2,704,167
                
                
                
                2,554,167Less
      Accumulated Amortization
                
                
                (199,505
                )
                
                
                (27,551
                )2,504,662
                
                
                
                2,526,616TOTAL
      ASSETS
                
                $
                4,387,305
                
                
                $
                3,981,552LIABILITIES
      & SHAREHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
                
                
                185,843
                
                
                
                21,998Escrow
      cash payable
                
                
                -
                
                
                
                208,144Accrued
      expense
                
                
                16,442
                
                
                
                8,175Accrued
      license payments
                
                
                125,000
                
                
                
                -Total
      current liabilities
                
                
                327,285
                
                
                
                238,317Long
      term debt
                
                
                -
                
                
                
                -TOTAL
      LIABILITIES
                
                
                327,285
                
                
                
                238,317Shareholders'
      EquityPreferred
      Stock, $.001 par value
                
                
                -
                
                
                
                -10,000,000
      shares authorized, no shares issued and outstandingCommon
      Stock, $.001 par value, 200,000,000 shares authorized
                
                
                41,923
                
                
                
                15,48441,923,602
      and 15,484,050 shares issued and outstandingas
      of 12/31/08 and 12/31/07, respectivelyAdditional
      paid in capital
                
                
                7,152,261
                
                
                
                4,009,148Accumulated
      deficit during development stage
                
                
                (3,134,164
                )
                
                
                (281,397
                )Total
      shareholders' equity
                
                
                4,060,020
                
                
                
                3,743,235TOTAL
      LIABILITIES & SHAREHOLDERS' EQUITY
                
                $
                4,387,305
                
                
                $
                3,981,552





SEE
ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS


F-3


BIO-PATH
HOLDINGS, INC.


(A
Development Stage Company)





CONSOLIDATED STATEMENT OF OPERATIONS


FOR
THE YEAR ENDED DECEMBER 31, 2008 AND FOR THE PERIOD


FROM
INCEPTION (MAY 10, 2007) THROUGH DECEMBER 31, 2008 AND 2007





From
      inception
                
                
                From
      inception05/10/07
      to
                
                
                05/10/07
      to2008
                
                
                12/31/07
                
                
                12/31/08Revenue
                
                $
                -
                
                
                $
                -
                
                
                $
                -Operating
      expenseResearch
      and development
                
                
                333,472
                
                
                
                8,175
                
                
                
                341,647General
      & administrative
                
                
                587,163
                
                
                
                271,280
                
                
                
                858,443Stock
      issued for services
                
                
                300,000
                
                
                
                -
                
                
                
                300,000Stock
      options & warrants
                
                
                1,501,239
                
                
                
                -
                
                
                
                1,501,239Amortization
                
                
                171,954
                
                
                
                27,551
                
                
                
                199,505Total
      operating expense
                
                
                2,893,828
                
                
                
                307,006
                
                
                
                3,200,834Net
      operating loss
                
                $
                (2,893,828
                )
                
                $
                (307,006
                )
                
                $
                (3,200,834
                )Other
      incomeInterest
      income
                
                
                41,061
                
                
                
                25,609
                
                
                
                66,670Total
      Other Income
                
                
                41,061
                
                
                
                25,609
                
                
                
                66,670Net
      Loss
                
                $
                (2,852,767
                )
                
                $
                (281,397
                )
                
                $
                (3,134,164
                )Loss per
      shareNet
      loss per share, basic and diluted
                
                $
                (0.07
                )
                
                $
                (0.01
                )
                
                $
                (0.09
                )Basic
      and diluted weighted average numberof
      common shares outstanding
                
                
                41,162,099
                
                
                
                26,514,573
                
                
                
                34,355,984





SEE
ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS


F-4


BIO-PATH
HOLDINGS, INC.


(A
Development Stage Company)





CONSOLIDATED STATEMENT OF CASH FLOWS


FOR
THE YEAR ENDED DECEMBER 31, 2008 AND THE PERIODS


FROM
INCEPTION (MAY 10, 2007) THROUGH DECEMBER 31, 2008 AND 2007





From
      inception
                
                
                From
      inception05/10/2007
      to
                
                
                05/10/2007
      to2008
                
                
                12/31/2007
                
                
                12/31/2008CASH
      FLOW FROM OPERATING ACTIVITIESNet
      loss
                
                $
                (2,852,767
                )
                
                $
                (281,397
                )
                
                $
                (3,134,164
                )Adjustments
      to reconcile net loss  to net cash used in operating
      activitiesAmortization
                
                
                171,954
                
                
                
                27,551
                
                
                
                199,505Common
      stock issued for services
                
                
                300,000
                
                
                
                -
                
                
                
                300,000Stock
      options and warrants
                
                
                1,501,239
                
                
                
                -
                
                
                
                1,501,239(Increase)
      decrease in assetsRestricted
      escrow cash
                
                
                208,144
                
                
                
                (208,144
                )Drug
      product for testing
                
                
                (292,800
                )
                
                
                -
                
                
                
                (292,800
                )Other
      current assets
                
                
                (55,338
                )
                
                
                (27,434
                )
                
                
                (82,772
                )Increase
      (decrease) in liabilitiesAccounts
      payable and accrued expenses
                
                
                297,112
                
                
                
                30,173
                
                
                
                327,285Escrow
      cash payable
                
                
                (208,144
                )
                
                
                208,144Net
      cash used in operating activities
                
                
                (930,600
                )
                
                
                (251,107
                )
                
                
                (1,181,707
                )CASH
      FLOW FROM INVESTING ACTIVITIESPurchase
      of exclusive license
                
                
                (150,000
                )
                
                
                (200,000
                )
                
                
                (350,000
                )Net
      cash used in investing activities
                
                
                (150,000
                )
                
                
                (200,000
                )
                
                
                (350,000
                )CASH
      FLOW FROM FINANCING ACTIVITIESProceeds
      from convertible notes
                
                
                
                
                
                
                435,000
                
                
                
                435,000Cash
      repayment of convertible notes
                
                
                .
                
                
                
                (15,000
                )
                
                
                (15,000
                )Net
      proceeds from sale of common stock
                
                
                1,368,313
                
                
                
                1,250,465
                
                
                
                2,618,778Net
      cash from financing activities
                
                
                1,368,313
                
                
                
                1,670,465
                
                
                
                3,038,778NET
      INCREASE IN CASH
                
                
                287,713
                
                
                
                1,219,358
                
                
                
                1,507,071Cash,
      beginning of period
                
                
                1,219,358
                
                
                
                -
                
                
                
                -Cash,
      end of period
                
                $
                1,507,071
                
                
                $
                1,219,358
                
                
                $
                1,507,071SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONCash
      paid forInterest
                
                $
                -
                
                
                $
                -
                
                
                $
                -Income
      taxes
                
                $
                -
                
                
                $
                -
                
                
                $
                -Non-cash
      financing activitiesCommon
      stock issued upon conversion of convertible notes
                
                
                
                
                
                $
                420,000
                
                
                $
                420,000Common
      stock issued to Placement Agent
                
                $
                78,970
                
                
                $
                199,375
                
                
                $
                278,345Common
      stock issued to M.D. Anderson for technology license
                
                
                
                
                
                $
                2,354,167
                
                
                $
                2,354,167





SEE
ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS


F-5


BIO-PATH
HOLDINGS, INC.


(A
Development Stage Company)





CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY


FOR
THE YEAR ENDED DECEMBER 31, 2008 AND THE PERIOD


FROM
INCEPTION (MAY 2007) THROUGH DECEMBER 31, 2008





AdditionalCommon
      Stock
              
              
              Paid
      in
              
              
              AccumulatedDate
              Description
              
              Shares
              
              
              Amount
              
              
              Capital
              
              
              Deficit
              
              
              TotalMay-07
              Common
      stock issued for cash
              
              
              6,480,994
              
              
              $
              6,481
              
              
              $
              -
              
              
              $
              -
              
              
              $
              6,481Jun-07
              Common
      stock issued for cash
              
              
              25,000
              
              
              
              25
              
              
              
              
              
              
              
              
              
              
              
              252nd
      Quarter fund raising expense
              
              
              
              
              
              
              
              
              
              
              (26,773
              )
              
              
              
              
              
              
              (26,773
              )Net
      loss 2nd Quarter 2007
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (56,210
              )
              
              
              (56,210
              )Balances
      at June 30, 2007
              
              
              6,505,994
              
              
              
              6,506
              
              
              
              (26,773
              )
              
              
              (56,210
              )
              
              
              (76,477
              )Aug-07
              Common
      stock issued for cash in seed round
              
              
              3,975,000
              
              
              
              3,975
              
              
              
              989,775
              
              
              
              
              
              
              
              993,750Aug-07
              Common
      stock issued for cash in second round
              
              
              1,333,334
              
              
              
              1,333
              
              
              
              998,667
              
              
              
              
              
              
              
              1,000,000Aug-07
              Common
      stock issued to Placement Agent for services
              
              
              530,833
              
              
              
              531
              
              
              
              198,844
              
              
              
              
              
              
              
              199,3753rd
      Quarter fund raising expense
              
              
              
              
              
              
              
              
              
              
              (441,887
              )
              
              
              
              
              
              
              (441,887
              )Net
      loss 3rd Quarter 2007
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (81,986
              )
              
              
              (81,986
              )Balances
      at September 30, 2007
              
              
              12,345,161
              
              
              
              12,345
              
              
              
              1,718,626
              
              
              
              (138,196
              )
              
              
              1,592,775Nov-07
              Common
      stock issued MD Anderson for License
              
              
              3,138,889
              
              
              
              3,139
              
              
              
              2,351,028
              
              
              
              
              
              
              
              2,354,1674th
      Quarter fund raising expense
              
              
              
              
              
              
              
              
              
              
              (60,506
              )
              
              
              
              
              
              
              (60,506
              )Net
      loss 4th Quarter 2007
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (143,201
              )
              
              
              (143,201
              )Balances
      at December 31, 2007
              
              
              15,484,050
              
              
              $
              15,484
              
              
              $
              4,009,148
              
              
              $
              (281,397
              )
              
              $
              3,743,235Feb-08
              Common
      stock issued for cash in 3rd round
              
              
              1,579,400
              
              
              
              1,579
              
              
              
              1,577,821
              
              
              
              
              
              
              
              1,579,400Feb-08
              Common
      stock issued to Placement Agent
              
              
              78,970
              
              
              
              79
              
              
              
              78,891
              
              
              
              
              
              
              
              78,970Feb-08
              Common
      stock issued for services
              
              
              80,000
              
              
              
              80
              
              
              
              79,920
              
              
              
              
              
              
              
              80,000Feb-08
              Merger
      with 2.20779528 : 1 exchange ratio
              
              
              20,801,158
              
              
              
              20,801
              
              
              
              (20,801
              )
              
              
              
              
              
              
              -Feb-08
              Add
      merger partner Odgen Golf shareholders
              
              
              3,600,000
              
              
              
              3,600
              
              
              
              (3,600
              )
              
              
              
              
              
              
              -1st
      Quarter fund raising expense
              
              
              
              
              
              
              
              
              
              
              (251,902
              )
              
              
              
              
              
              
              (251,902
              )Net
      loss 1st Quarter 2008
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (226,206
              )
              
              
              (226,206
              )Balances
      at March 31, 2008
              
              
              41,623,578
              
              
              $
              41,623
              
              
              $
              5,469,477
              
              
              $
              (507,603
              )
              
              $
              5,003,497Apr-08
              Common
      stock issued to PCS, Inc. in connection
              
              
              200,000
              
              
              
              200
              
              
              
              179,800
              
              
              
              
              
              
              
              180,000with
      mergerApr-08
              Stock
      option awards
              
              
              
              
              
              
              
              
              
              
              42,216
              
              
              
              
              
              
              
              42,216Apr-08
              Warrants
      issued for services
              
              
              
              
              
              
              
              
              
              
              36,050
              
              
              
              
              
              
              
              36,050Apr-08
              Share
      rounding
              
              
              24
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              -2nd
      Quarter fund raising expense
              
              
              
              
              
              
              
              
              
              
              (6,243
              )
              
              
              
              
              
              
              (6,243
              )Net
      loss 2nd Quarter 2008
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (496,256
              )
              
              
              (496,256
              )Balances
      at June 30, 2008
              
              
              41,823,602
              
              
              $
              41,823
              
              
              $
              5,721,300
              
              
              $
              (1,003,859
              )
              
              $
              4,759,264Stock
      option vesting
              
              
              
              
              
              
              
              
              
              
              30,770
              
              
              
              
              
              
              
              30,7703rd
      Quarter fund raising expense
              
              
              
              
              
              
              
              
              
              
              (12,886
              )
              
              
              
              
              
              
              (12,886
              )Net
      loss 3rd Quarter 2008
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (239,049
              )
              
              
              (239,049
              )Balances
      at September 30, 2008
              
              
              41,823,602
              
              
              $
              41,823
              
              
              $
              5,739,184
              
              
              $
              (1,242,908
              )
              
              $
              4,538,099Dec-08
              Common
      stock issued for services
              
              
              100,000
              
              
              
              100
              
              
              
              39,900
              
              
              
              
              
              
              
              40,000Dec-08
              Stock
      option vesting
              
              
              
              
              
              
              
              
              
              
              1,392,202
              
              
              
              
              
              
              
              1,392,2024th
      Quarter fund raising expense
              
              
              
              
              
              
              
              
              
              
              (19,025
              )
              
              
              
              
              
              
              (19,025
              )Net
      loss 4th Quarter 2008
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,891,256
              )
              
              
              (1,891,256
              )Balances
      at December 31, 2008
              
              
              41,923,602
              
              
              $
              41,923
              
              
              $
              7,152,261
              
              
              $
              (3,134,164
              )
              
              $
              4,060,020





SEE
ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS


F-6


Bio-Path
Holdings, Inc.


(A
Development Stage Company)





Notes to Financial Statements


December
31, 2008







1.  Organization
and Business


Bio-Path
Holdings, Inc. (“Bio-Path” or the “Company”) is a development stage company
founded with technology from The University of Texas, M. D. Anderson Cancer
Center (“M. D. Anderson”) dedicated to developing novel cancer drugs under an
exclusive license arrangement.  The Company has drug delivery platform
technology with composition of matter intellectual property that enables
systemic delivery of antisense, small interfering RNA (“siRNA”) and small
molecules for treatment of cancer.  In addition to its existing
technology under license, the Company has a blanket disclosure agreement with M.
D. Anderson, which in addition to a close working relationship with key members
of the University’s staff, is expected to provide Bio-Path with a strong
pipeline of promising drug candidates on a continuing basis.  Bio-Path
expects the program with MD Anderson, with additional funding, to enable the
Company to broaden its technology to include cancer drugs other than antisense
and siRNA.





Bio-Path
believes that its core technology, if successful, will enable it to be at the
center of emerging genetic and molecular target-based therapeutics that require
systemic delivery of DNA and RNA-like material.  In total, the Company
expects that with additional funding it will be able to have up to six (6) drug
candidates under license at various stages of development.  The
Company’s two lead drug candidates potentially treat a large segment of cancer
patients.  The Company’s primary lead drug candidate, which is
expected to enter a Phase I clinical trial in the second quarter 2009, will
treat patients in the trial with chronic myelogenous leukemia, acute myeloid
leukemia, acute lymphoblastic leukemia and myelodysplastic
syndrome.  There is also pre-clinical evidence that this drug can be
used to treat late-stage breast cancer patients and other forms of
cancer.  A second lead drug candidate is expected to be tested
initially in patients with follicular lymphoma, and if successful, could
potentially be used in treating up to forty percent (40%) of cancer
tumors.  These two drug candidates will be ready to commence clinical
trials after receiving investigational new drug (“IND”) status from the
FDA.  The Company has filed an IND application for its lead drug
candidate and expects to be granted an IND for this drug product in the second
quarter of 2009.





The
Company was founded in May of 2007 as Bio-Path, Inc., a Utah
corporation.  In February of 2008, Bio-Path, Inc. completed a reverse
merger with Ogden Golf Co. Corporation, a public company traded over the counter
that had no current operations at the time of the reverse merger.  The
name of Ogden Golf was changed to Bio-Path Holdings, Inc. and the directors and
officers of Bio-Path, Inc. became the directors and officers of Bio-Path
Holdings, Inc.  Bio-Path became a publicly traded company (symbol
BPTH) as a result of this merger.





The
Company’s operations to date have been limited to organizing and staffing the
Company, acquiring, developing and securing its technology and undertaking
product development for a limited number of product candidates. As the Company
has not begun its planned principal operations of commercializing a product
candidate, the accompanying financial statements have been prepared in
accordance with principles established for development stage
enterprises.





F-7




2. Summary
of Significant Accounting Policies


Principles
of Consolidation





The
consolidated financial statements include the accounts of Bio-Path Holdings,
Inc., and its wholly-owned subsidiary Bio-Path, Inc.  All intercompany
accounts and transactions have been eliminated in consolidation.





Cash
and Cash Equivalents





The
Company considers all highly liquid investments with a maturity of three months
or less when purchased to be cash equivalents.





Concentration of
Credit Risk --Financial instruments that potentially subject the Company
to a significant concentration of credit risk consist of cash.  The
Company maintains its cash balances with one major commercial bank, JPMorgan
Chase Bank.  The balances are insured by the Federal Deposit Insurance
Corporation up to $250,000.  As a result, $1,257,071 of the Company’s
cash balances is not covered by the FDIC.





Intangible
Assets/Impairment of Long-Lived Assets --As of December 31, 2008, Other
Assets totals $2,504,662 for the Company’s two technology licenses, comprised of
$2,704,167 in value acquiring the Company’s technology licenses and its
intellectual property, less accumulated amortization of $199,505.  The
technology value consists of $350,000 in cash paid or accrued to be paid to MD
Anderson, plus 3,138,889 shares of common stock granted to MD Anderson valued at
$2,354,167.  This value is being amortized over a fifteen year (15
year) period from November 7, 2007, the date that the technology licenses became
effective.  As of December 31, 2008 accrued payments to be made to M.
D. Anderson totaled $125,000, and such payments are expected to be made in 2009.
The Company accounts for the impairment and disposition of its long-lived assets
in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144,
Accounting for the Impairment
or Disposal of Long-Lived Assets.  In accordance with SFAS No.
144, long-lived assets are reviewed for events of changes in circumstances which
indicate that their carrying value may not be recoverable.  The
Company estimates that approximately $175,000 will be amortized per year for
each future year for the current value of the technology licenses acquired until
approximately 2022.





Research and
Development Costs --Costs and expenses that can be clearly identified as
research and development are charged to expense as incurred in accordance with
SFAS No. 2, “Accounting for Research and Development Costs.”  For the
year 2008, the Company had $333,472 of costs classified as research and
development expense.  Of this amount, approximately $225,000 is
comprised of raw materials and costs for the Company’s raw material suppliers
and contract drug manufacturer to perform unplanned additional engineering test
runs of the Company’s lead drug product in advance of manufacturing a current
Good Manufacturing Practice (cGMP) clinical batch of this drug for use in an
upcoming Phase I Clinical Trial.





Stock-Based
Compensation --The Company has accounted for stock-based compensation
under the provisions of Statement of Financial Accounting Standards No. 123(R),
“Share-Based Payment.”  This statement requires us to record an
expense associated with the fair value of stock-based
compensation.  We currently use the Black-Scholes option valuation
model to calculate stock based compensation at the date of
grant.  Option pricing models require the input of highly subjective
assumptions, including the expected price volatility.  Changes in
these assumptions can materially affect the fair value estimate.





F-8


Net Loss Per
Share –In accordance with SFAS No. 128, Earnings Per Share, and SEC
Staff Accounting Bulletin (“SAB”) No. 98, basic net loss per common share is
computed by dividing net loss for the period by the weighted average number of
common shares outstanding during the period.  Although there were
warrants and stock options outstanding during 2008, under SFAS No. 128, no
potential common shares shall be included in the computation of any diluted
per-share amount when a loss from continuing operations
exists.  Consequently, diluted net loss per share is not presented in
the financial statements for the year 2008. The calculation of Basic and Diluted
earnings per share for 2008 did not include 1,250,000 shares and 85,620 shares
issuable pursuant to the exercise of vested common stock and vested warrants,
respectively, as of December 31, 2008 as the effect would be
anti-dilutive.





Comprehensive
Income --Comprehensive income (loss) is defined as all changes in a
company’s net assets, except changes resulting from transactions with
shareholders.  At December 31, 2008, the Company has no reportable
differences between net loss and comprehensive loss.





Use of Estimates
--The preparation of consolidated financial statements in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in
the Company’s consolidated financial statements and accompanying notes. On an
ongoing basis, the Company evaluates its estimates and judgments, which are
based on historical and anticipated results and trends and on various other
assumptions that the Company believes to be reasonable under the circumstances.
By their nature, estimates are subject to an inherent degree of uncertainty and,
as such, actual results may differ from the Company’s estimates.





Income Taxes --The Company accounts for income taxes under FASB Statement No. 109,
Accounting for Income Taxes. Deferred income tax assets and liabilities are
determined based upon differences between the financial reporting and tax bases
of assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to
reverse.





New Accounting
Pronouncements -- In September 2006, the FASB issued SFAS No. 157 “Fair
Value Measurements.”  SFAS 157 defines fair value, establishes a
framework for measuring fair value, and expends disclosures about fair value
measurements.  SFAS 157 applies under other accounting pronouncements
that require or permit fair value measurements and does not require any new fair
value measurements.  The provisions of SFAS 157 were originally to be
effective beginning January 1, 2008.  Subsequently, the FASB provided
for a one-year deferral of the provisions of SFAS 157 for non-financial assets
and liabilities that are recognized or disclosed at fair value in consolidated
financial statements on a non-recurring basis.  We are currently
evaluating the input of adopting the provisions of SFAS 157 for non-financial
assets and liabilities that are recognized or disclosed on a non-recurring
basis.





In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations.” 
SFAS No. 141(R) changes the accounting for and reporting of business combination
transactions in the following way:  Recognition with certain exceptions, of
100% of the fair values of assets acquired, liabilities assumed, and non
controlling interests of acquired businesses; measurement of all acquirer shares
issued in consideration for a business combination at fair value on the
acquisition date; recognition of contingent consideration arrangements at their
acquisition date fair values, with subsequent changes in fair value generally
reflected in earnings; recognition of pre-acquisition gain and loss
contingencies at their acquisition date fair value; capitalization of in-process
research and development (IPR&D) assets acquired at acquisition date fair
value; recognition of acquisition-related transaction costs as expense when
incurred; recognition of acquisition-related restructuring cost accruals in
acquisition accounting only if the criteria in Statement No. 146 are met as of
the acquisition date; and recognition of changes in the acquirer’s income tax
valuation allowance resulting from the business combination separately from the
business combination as adjustments to income tax
expense.


F-9


SFAS No.
141(R) is effective for the first annual reporting period beginning on or after
December 15, 2008 with earlier adoption prohibited.  The adoption of
SFAS No. 141(R) will affect valuation of business acquisitions made in 2009 and
forward.





In
December 2007, the FASB issued SFAS No. 160 "Non-controlling Interest in
Consolidated Financial Statements – an Amendment of ARB 51" (SFAS
160).  SFAS 160 clarifies that a non-controlling interest in a
subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements.  It also
requires consolidated net income to be reported at amounts that include the
amounts attributable to both the parent and the non-controlling interest, and
requires disclosure, on the face of the consolidated statement of income, of the
amounts of consolidated net income attributable to the parent and to the
noncontrolling interest.  SAFS 160 is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008.  Earlier adoption is prohibited.  We do not anticipate
a material impact upon adoption.





In
December 2007, the FASB ratified a consensus opinion reached by the EITF on EITF
Issue 07-1, "Accounting for Collaborative Arrangements" (EITF 07-1). The
guidance in EITF 07-1 defines collaborative arrangements and establishes
presentation and disclosure requirements for transactions within a collaborative
arrangement (both with third parties and between participants in the
arrangement). The consensus in EITF 07-1 is effective for fiscal years, and
interim periods within those fiscal years, beginning after December 15,
2008. The consensus requires retrospective application to all collaborative
arrangements existing as of the effective date, unless retrospective application
is impracticable. The impracticability evaluation and exception should be
performed on an arrangement-by-arrangement basis. We are evaluating the impact
EITF 07-1 will have on our financial statements. We currently do not
believe that the adoption of EITF 07-1 will have a significant effect on
our financial statements.





In
December 2007, the SEC staff issued Staff Accounting Bulletin (SAB) 110,
"Share-Based Payment" (SAB 110) which amends SAB 107, "Share-Based
Payment", to permit public companies, under certain circumstances, to use the
simplified method in SAB 107 for employee option grants after
December 31, 2007. Use of the simplified method after December 2007 is
permitted only for companies whose historical data about their employees'
exercise behavior does not provide a reasonable basis for estimating the
expected term of the options. We currently use the simplified method to estimate
the expected term for employee option grants, as adequate historical experience
is not available to provide a reasonable estimate. SAB 110 is effective for
employee options granted after December 31, 2007. We adopted SAB 110
on January 1, 2008 and will continue to apply the simplified method until
enough historical experience is readily available to provide a reasonable
estimate of the expected term for employee option grants.





In
March 2008, the FSAB issued FASS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities.”  SFAS 161 is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity's financial position, financial performance, and cash
flows.  SFAS 161 is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008, with early
application encouraged.  We do not anticipate a material impact upon
adoption.





In April
2008, the FASB issued FASB Staff Position No. 142-3, Determination of the
Useful Life of Intangible Assets ("FSP 142-3"). FSP 142-3 amends the factors
that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible
Assets ("SFAS 142"). The objective of this FSP is to improve the
consistency between the useful life of a recognized intangible asset under
SFAS 142 and the period of expected cash flows used to measure the fair
value of the asset under SFAS 141R.


F-10


This FSP
is effective for financial statements issued for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years. We are
currently evaluating the potential impact that the adoption of FSP 142-3 may
have on our consolidated financial statements.





In
November 2008, the FASB issued EITF Issue No. 08-7, "Accounting for Defensive Intangible
Assets," or EITF 08-7. EITF 08-7 seeks to clarify how to
account for defensive intangible assets, or those intangible assets acquired in
a business combination that an entity does not intend to actively use but does
intend to prevent others from using, subsequent to initial measurement.
EITF 08-7 is effective for all intangible assets acquired during the first
fiscal year beginning on or after December 15, 2008. Early adoption is not
permitted. The impact of the adoption of EITF 08-7 will be dependent upon
the type and structure of any transactions that the Company may make in the
future.





3.           Restricted
Cash





As of
December 31, 2007, Current Assets included $208,144 of restricted
cash.  This represented funds deposited in an escrow account pursuant
to an ongoing placement memorandum for the sale of the Company’s common
stock.  Since the conditions of the offering required that a minimum
of $500,000 of common stock be sold to enable closing of the round and release
of the funds to the Company, the $208,144 was classified as a Current Liability
on the December 31, 2007 Balance Sheet.  Subsequently, in February of
2008 these funds were released to the Company when the private placement sales
of common stock exceeded the $500,000 minimum.





4.           Drug
Product for Testing





The
Company has paid installments to its contract drug manufacturing supplier
totaling $292,800 during the third quarter and fourth quarters of 2008 pursuant
to a Project Plan and Supply Agreement (see Note 10. below) for the manufacture
and delivery of the Company’s lead drug product for testing in a Phase I
clinical trial.  This amount is carried on the Balance Sheet as of
December 31, 2008 at cost as Drug Product for Testing and will be expensed as
the drug product is used during the Phase I clinical trial.





5.           Accounts
Payable





As of
December 31, 2008, Current Liabilities included accounts payable of
$185,843.  Of this amount, $154,000 represents account balances owed
to the Company’s contract drug manufacturing supplier.  The Company
subsequently paid off these balances during the first quarter of
2009.





6.           Convertible
Debt





The
Company issued $435,000 in notes convertible into common stock at a rate of $.25
per common share.  As of December 31, 2007, $15,000 of the convertible
notes had been repaid in cash and $420,000 of the convertible notes had been
converted into 1,680,000 shares of Bio-Path common stock and was included in the
seed round completed in August of 2007.  No interest was recorded
because interest was nominal prior to conversion.  No beneficial
conversion feature existed as of the debt issuance date since the conversion
rate was greater than or equal to the fair value of the common stock on the
issuance date.





F-11


7.           Accrued
License Payments





Accrued
license payments totaling $125,000 were included in Current Liabilities as of
December 31, 2008.  These amounts represent patent expenses for the
licensed technology expected to be invoiced from M. D. Anderson and maintenance
fees needed to keep the licenses underlying patents in current good standing
with the institution.  It is expected that the accrued license
payments will be made to M. D. Anderson in 2009.






8. Stockholders’
Equity


Issuance of
Common Stock – In May and June of 2007, the Company issued 6,505,994
shares of common stock for $6,506 in cash to founders of the
Company.  In August of 2007, the Company issued 3,975,000 shares of
common stock for $993,750 in cash to investors in the Company pursuant to a
private placement memorandum.  In August of 2007 the Company issued an
additional 1,333,334 shares of common stock for $1,000,000 in cash to investors
in the Company pursuant to a second round of financing.  The Company
issued 530,833 in common stock to the Placement Agent as commission for the
shares of common stock sold to investors.  In November of 2007, the
Company issued 3,138,889 shares in common stock to MD Anderson as partial
consideration for its two technology licenses from MD Anderson.





In
February of 2008, the Company completed a reverse merger with Ogden Golf Co.
Corporation and issued 38,023,578 shares of common stock of the public company
Bio-Path Holdings (formerly Ogden Golf Co. Corporation) in exchange for
pre-merger common stock of Bio-Path, Inc.  In addition, shareholders
of Ogden Golf Co. Corporation retained 3,600,000 shares of common stock of
Bio-Path Holdings.  In February of 2008 Bio-Path issued 80,000 shares
of common stock to strategic consultants pursuant to executed agreements and the
fair value was expensed upfront as common stock for services.  In
April of 2008, the Company issued 200,000 shares of common stock to a firm in
connection with introducing Bio-Path, Inc. to its merger partner Ogden Golf Co.
Corporation.  The fair value of this stock issuance was expensed
upfront as common stock for services valued at $200,000.  In April of
2008, the Company recorded an additional 24 shares for rounding in accordance
with FINRA rules.  In December of 2008, the Company issued 100,000
shares of common stock to an investor relations firm for
services.  The fair value of this stock issuance was expensed upfront
as common stock for services valued at $100,000.  As of December 31,
2008 there were 41,923,602 shares of common stock issued and
outstanding.  There are no preferred shares outstanding as of December
31, 2008.





9.           Stock-Based
Compensation Plans





The Plan -
In 2007, the Company adopted the 2007 Stock Incentive Plan, as amended (the
“Plan”).  The Plan provides for the grant of Incentive Stock Options,
Nonqualified Stock Options, Restricted Stock Awards, Restricted Stock Unit
Awards, Performance Awards and other stock-based awards, or any combination of
the foregoing to our key employees, non-employee directors and
consultants.  The total number of Shares reserved and available for
grant and issuance pursuant to this Plan is 7,000,000 Shares, subject to
the automatic annual Share increase as defined in the Plan.  Under the
Plan, the exercise price is determined by the compensation committee of the
Board of Directors, and for options intended to qualify as qualified incentive
stock options, may not be less than the fair market value as determined by the
closing stock price at the date of the grant.  Each option and award
shall vest and expire as determined by the compensation
committee.  Options expire no later than ten years from the date of
grant.  All grants provide for accelerated vesting if there is a
change of control, as defined in the Plan.





F-12


Stock
option and warrant awards granted were estimated to have a weighted average fair
value per share of $0.86 for the year 2008.  There were no stock
options or warrants granted prior to 2008.  The fair value calculation
is based on stock options and warrants granted during the period using the
Black-Scholes option-pricing model on the date of grant.  In addition,
for all stock options and warrants granted, exercise price was determined based
on the fair market value as determined by the closing stock price at the date of
the grant.  For the year ended December 31, 2008 the following
weighted average assumptions were used in determining fair value:





2008Risk-free
      interest rate
            3.10%Dividend
      yield
            -%Expected
      volatility
            80%Expected
      term in months
            76





The
Company determines the expected term of its stock option and warrant awards
based on the numerical average of the length of the vesting period and the term
of the exercise period.  Expected volatility is determined by
weighting the volatility of the Company’s historical stock price with the
volatility of a group of peer group stock over the expected term of the grant,
which method compensates for the limited trading history of the Company’s share
price.  The risk-free interest rate for the expected term of each
option and warrant granted is based on the U.S. Treasury yield curve in effect
at the time of grant.





Option
activity under the Plan for the year ended December 31, 2008, was as
follows:





WeightedWeighted-
            
            AverageAverage
            
            Remaining
            
            AggregateExercise
            
            Contractual
            
            IntrinsicOptions
            
            Price
            
            Term
            
            Value(In
      years)Year
      Ended December 31, 2008Outstanding
      at December 31, 2007
            -
            
            -
            
            -
            
            -Granted
            3,765,000
            
            $1.22Exercised
            -
            
            -Forfeited/expired
            -
            
            -Outstanding
      at December 31, 2008
            3,765,000
            
            $1.22
            
            9.6
            
            $    25,000Vested
      and expected to vest December 31, 2008
            1,250,000
            
            $1.40
            
            9.8
            
            -Exercisable
      at December 31, 2008
            -
            
            -
            
            -
            
            -





The
aggregate intrinsic value in the table above represents the total pretax
intrinsic value (the difference between the Company’s closing stock price on the
last trading day of 2008 and the exercise price, multiplied by the number of
in-the-money options) that would have been received by the option holders had
all option holders exercised their options on December 31, 2008.  This
amount changes based on the fair market value of the Company’s
stock.





F-13


A summary
of options outstanding and exercisable as of December 31, 2008:





Options
      Outstanding
            
            Options
      ExercisableWeightedAverage
            
            Weighted
            
            
            
            WeightedRange
      of Exercise
            Number
            
            Remaining
            
            Average
            
            Number
            
            AveragePrices
            Outstanding
            
            Contractual
      Life
            
            Exercise
      Price
            
            Exercisable
            
            Exercise
      Price(Years)$0.30
            100,000
            
            8.7
            
            $0.30
            
            -
            
            -$0.90
            1,165,000
            
            9.3
            
            $0.90
            
            -
            
            -$1.40
            2,500,000
            
            9.8
            
            $1.40
            
            1,250,000
            
            $        1.403,765,000
            
            9.6
            
            $1.22
            
            1,250,000
            
            $        1.40





Warrant
activity under the Plan for the year ended December 31, 2008, was as
follows:





WeightedWeighted-
            
            AverageAverage
            
            Remaining
            
            AggregateExercise
            
            Contractual
            
            IntrinsicOptions
            
            Price
            
            Term
            
            Value(In
      years)Year
      Ended December 31, 2008Outstanding
      at December 31, 2007
            -
            
            -
            
            -
            
            -Granted
            85,620
            
            $0.90Exercised
            -
            
            -Forfeited/expired
            -
            
            -Outstanding
      at December 31, 2008
            85,620
            
            $0.90
            
            4.9
            
            $              -Vested
      and expected to vest December 31, 2008
            85,620
            
            $0.90
            
            4.9
            
            $              -Exercisable
      at December 31, 2008
            -
            
            -
            
            -
            
            -





A summary
of warrants outstanding and exercisable as of December 31, 2008:





Options
      Outstanding
            
            Options
      ExercisableWeightedAverage
            
            Weighted
            
            
            
            WeightedRange
      of Exercise
            Number
            
            Remaining
            
            Average
            
            Number
            
            AveragePrices
            Outstanding
            
            Contractual
      Life
            
            Exercise
      Price
            
            Exercisable
            
            Exercise
      Price(Years)$0.90
            85,620
            
            4.9
            
            $0.90
            
            85,620
            
            $        0.9085,620
            
            4.9
            
            $0.90
            
            85,620
            
            $ 
              .90





F-14


Stock Option
Grants -In April of 2008 the Company made stock option grants for
services over the next three years to purchase in the aggregate 1,615,000 shares
of the Company’s common stock.  Terms of the stock option grants
require, among other things, that the individual continues to provide services
over the vesting period of the option, which is four or five years from the date
that each option granted to the individual becomes effective.  The
exercise price of the options is $0.90 a share.  None of these stock
options grants were for current management and officers of the
Company.  The Company determined the fair value of the stock options
granted using the Black Scholes model and expenses this value monthly based upon
the vesting schedule for each stock option award.  For purposes of
determining fair value, the Company used an average annual volatility of seventy
two percent (72%), which was calculated based upon an average of volatility of
similar biotechnology stocks.  The risk free rate of interest used in
the model was taken from a table of the market rate of interest for U. S.
Government Securities for the date of the stock option awards and interpolated
as necessary to match the appropriate effective term for the
award.   The total value of stock options granted was determined
using this methodology to be $761,590, which will be expensed over the next six
years based on the stock option service period.





In
October of 2008 the Company made stock option grants to management and officers
to purchase in the aggregate 2,500,000 shares of the Company’s common
stock.  Terms of the stock option grants require that the individuals
continue employment with the Company over the vesting period of the option,
fifty percent (50%) of which vested upon the date of the grant of the stock
options and fifty percent (50%) of which will vest over 3 years from the date
that the options were granted.  The exercise price of the options is
$1.40 a share.  The Company determined the fair value of the stock
options granted using the Black Scholes model and expenses this value monthly
based upon the vesting schedule for each stock option award.  For
purposes of determining fair value, the Company used an average annual
volatility of eighty four percent (84%), which was calculated based upon taking
a weighted average of the volatility of the Company’s common stock and the
volatility of similar biotechnology stocks.  The risk free rate of
interest used in the model was taken from a table of the market rate of interest
for U. S. Government Securities for the date of the stock option awards and
interpolated as necessary to match the appropriate effective term for the
award.   The total value of stock options granted to management
and officers was determined using this methodology to be $2,485,000, half of
which was expensed at the date of grant and the balance will be expensed over
the next three years based on the stock option service period.





In
December of 2008 the Company made stock option grants for services over the next
three years to purchase in the aggregate 100,000 shares of the Company’s common
stock.  Terms of the stock option grants require, among other things,
that the individual continues to provide services over the vesting period of the
option, which is three or four years from the date that each option granted to
the individual becomes effective.  The exercise price of the options
is $0.30 a share.  None of these stock options grants were for current
management and officers of the Company.  The Company determined the
fair value of the stock options granted using the Black Scholes model and
expenses this value monthly based upon the vesting schedule for each stock
option award.  For purposes of determining fair value, the Company
used an average annual volatility of eighty four percent (84%), which was
calculated based upon taking a weighted average of the volatility of the
Company’s common stock and the volatility of similar biotechnology
stocks.  The risk free rate of interest used in the model was taken
from a table of the market rate of interest for U. S. Government Securities for
the date of the stock option awards and interpolated as necessary to match the
appropriate effective term for the award.   The total value of
stock options granted was determined using this methodology to be $21,450, which
will be expensed over the next four years based on the stock option vesting
schedule.





Total
stock option expense for the year 2008 being reported on totaled
$1,465,189.





F-15


Warrant Grants -In April of 2008 the Company awarded warrants for services to purchase in
the aggregate 85,620 shares of the Company’s common stock.  The
exercise price is $0.90 a share.  The warrants were one hundred
percent (100%) vested upon issuance and were expensed upfront as warrants for
services.  The fair value of the warrants expensed was determined
using the same methodology as described above for stock options.  The
total value of the warrants granted was determined using this methodology to be
$36,050, the total amount of which was expensed in the second quarter
2008.





10.
            Commitments
      and Contingencies





Technology
License -The Company has executed an exclusive license from MD Anderson
to develop drug delivery technology for antisense and siRNA drug
products.  This license requires, among other things, the Company to
reimburse MD Anderson for ongoing patent expense.  The Company
estimates these expenses will total approximately $275,000.  The
Company estimates that it will be required to pay patent expenses at the minimum
rate of $25,000 per quarter.





Drug Supplier
Project Plan - In June of 2008, Bio-Path entered into a Project Plan
agreement with a contract drug manufacturing suppler for delivery of drug
product to support commencement of the Company’s Phase I clinical trial of its
first cancer drug product.  The Company currently expects to start
this trial by the end of the second quarter 2009.  In 2008, the
Company paid $292,800 to this manufacturer under this agreement that is carried
at cost as Drug Product for Testing on the balance sheet (see Note 4.) and
recorded an additional $154,000 in R&D expense for unplanned additional
manufacturing development.  The Company expects to pay an additional
$577,200 to this supplier when it delivers clinical grade drug product for
testing in the Company’s clinical trial.





Placement Agent
Agreement –In the fourth quarter of 2008, the Company entered into a
Placement Agent Agreement to raise additional capital.  Under the
terms of this Agreement, the Company is required to pay cash and stock
commission to the Placement Agent for funds raised.  This Agreement
will be in effect into the second quarter of 2009.





11.
            Income
      Taxes




At
December 31, 2008, the Company has a net operating loss carryforward for Federal
income tax purposes of $1,629,057 which expires in varying amounts during the
tax years 2027 and 2028.  The Company recorded an increase in the
valuation allowance of $509,274 for the year ended December 31,
2008.






The
components of the Company’s deferred tax asset are as follows:




December
      31,2008
            
            2007Net
      Operating Loss (NOL) Carryover
            $    553,879
            
            $       97,373Share
      Based Expense
            52,767
            
            -Total
      Deferred Tax Asset
            606,646
            
            97,373Less:
      Valuation Allowance
            (606,646)
            
            (97,373)Net
      Deferred Tax Asset
            $               -
            
            $                -





Reconciliation
between income taxes at the statutory tax rate (34%) and the actual income tax
provision for continuing operations follows:


F-16





December
      31,2008
            
            2007Loss
      Before Income Taxes
            $
      (2,852,767)
            
            $   (281,397)Tax
      Benefit @ Statutory Tax Rate
            969,941
            
            98,487Effects
      of:Exclusion
      of ISO Expense
            (457,654)(Increase)/Decrease
      in Valuation Allowance
            (509,274)
            
            (97,373)Other
            (3,013)
            
            (1,114)Provision
      (Benefit) for Income Taxes
            $                -
            
            $              -





The
Company adopted the provisions of Financial Accounting Standards, or FASB
Interpretation No. 48


“Accounting
for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109,”
or FIN 48, on June 1, 2007. As of December 31, 2008 and 2007, the Company has no
unrecognized income tax benefits. The Company is in process of completing an
analysis of its tax credit carryforwards. Any uncertain tax positions identified
in the course of this analysis will not impact its financial statements due to
the full valuation allowance.  A reconciliation of our unrecognized
tax benefits for the years ending December 31, 2008 and 2007 is presented in the
table below:





December
      31,2008
            
            2007Beginning
      balance
            $           0.0
            
            $          0.0Additions
      based on tax positions related to current year
            0.0
            
            0.0Reductions
      for tax positions of prior years
            0.0
            
            0.0Reductions
      due to expiration of statute of limitations
            0.0
            
            0.0Settlements
      with taxing authorities
            0.0
            
            0.0Ending
      Balance
            $           0.0
            
            $          0.0





The
Company’s policy for classifying interest and penalties associated with
unrecognized income tax benefits is to include such items as tax expense. No
interest or penalties have been recorded during the years ended December 31,
2008, and 2007.





The tax
years from 2007 and forward remain open to examination by federal and Texas
authorities due to net operating loss and credit carryforwards. The Company is
currently not under examination by the Internal Revenue Service or any other
taxing authorities.





12.           Subsequent
Events





In July
of 2008, Bio-Path initiated discussions with M. D. Anderson for commencement of
a Phase I clinical trial for its first cancer drug product.  The
Company has negotiated an agreement with M. D. Anderson for the conduct of this
clinical trial, but is waiting on approval of revisions to the protocol for the
clinical trial that have been submitted to M. D. Anderson’s Institutional Review
Board for approval.  The expected cost of M. D. Anderson’s services to
conduct this trial is now expected to be approximately $240,000. The Company
expects the revised protocol to be approved by the end of the first quarter or
early second quarter 2009.








F-17