##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 0-27264
 
 VIA Pharmaceuticals, Inc.
 (Exact name of registrant as specified in its charter)
 
 DELAWARE
    
    33-0687976(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 750 Battery Street, Suite 330
San Francisco, CA 94111
(Address of principal executive offices)
 (415) 283-2200
(Registrants telephone number, including area code)
 
 Yes þ No o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 Yes o No þ




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##### 



Page No.PART I.  FINANCIAL INFORMATIONItem 1. Condensed Financial StatementsUnaudited Condensed Balance Sheets as of September 30, 2010 and December 31, 2009
    
    
    1Unaudited Condensed Statements of Operations for the Three and Nine Month Periods Ended September 30, 2010 and 2009, and for the Period from June 14, 2004 (date of inception) to September 30, 2010
    
    
    2Unaudited Condensed Statements of Cash Flows for the Nine Month Periods Ended September 30, 2010 and 2009, and for the Period from June 14, 2004 (date of inception) to September 30, 2010
    
    
    3Notes to the Unaudited Condensed Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    30Item 4T. Controls and Procedures
    
    
    47PART II.  OTHER INFORMATION
    
    
    48Item 1A. Risk Factors
    
    
    48Item 5. Other Information
    
    
    48Item 6. Exhibits
    
    
    49SIGNATURE
    
    
    51Exhibit 4.7Exhibit 4.8Exhibit 4.11Exhibit 10.2Exhibit 10.3Exhibit 10.4Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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##### Table of Contents



PART I.  FINANCIAL INFORMATION
 
 Item 1. Condensed Financial Statements
 VIA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
 
 UNAUDITED CONDENSED BALANCE SHEETS
 September 30,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    277,924
    
    
    $
    2,189,742Prepaid expenses and other current assets
    
    
    147,792
    
    
    
    155,361Total current assets
    
    
    425,716
    
    
    
    2,345,103Property and equipment-net
    
    
    31,802
    
    
    
    170,617Other non-current assets
    
    
    32,289
    
    
    
    40,374Total
    
    $
    489,807
    
    
    $
    2,556,094LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Accounts payable
    
    $
    964,030
    
    
    $
    705,887Accrued expenses and other liabilities
    
    
    1,300,891
    
    
    
    2,226,720Accrued restructuring costs
    
    
    122,650
    
    
    
    Interest payable  affiliate
    
    
    2,207,466
    
    
    
    789,041Notes payable  affiliate  net of discount of
$491,565 at September 30, 2010 and $4,374 at
December 31, 2009
    
    
    12,508,435
    
    
    
    9,995,626Total current liabilities
    
    
    17,103,472
    
    
    
    13,717,274Accrued expenses and other liabilities  long-term
    
    
    52,763
    
    
    
    Accrued restructuring costs  net of current portion
    
    
    11,207
    
    
    
    Deferred rent
    
    
    10,323
    
    
    
    37,450Total liabilities
    
    
    17,177,765
    
    
    
    13,754,724Commitments and contingenciesStockholders equity (deficit):Common stock, $0.001 par value-200,000,000 shares
authorized at September 30, 2010 and December 31,
2009, respectively; 20,558,446 and
20,646,374 shares issued and outstanding at
September 30, 2010 and December 31, 2009,
respectively
    
    
    20,559
    
    
    
    20,646Preferred stock Series A, $0.001 par
value-5,000,000 shares authorized at September 30,
2010 and December 31, 2009, respectively; 0 shares
issued and outstanding at September 30, 2010 and
December 31, 2009, respectively
    
    
    
    
    
    
    Convertible preferred stock Series C, $0.001 par
value-17,000 shares authorized at September 30,
2010 and December 31, 2009, respectively;
2,000 shares issued and outstanding at September
30, 2010 and December 31, 2009, respectively;
liquidation preference of $2,000,000
    
    
    2
    
    
    
    2Additional paid-in capital
    
    
    72,026,760
    
    
    
    70,385,287Deficit accumulated in the development stage
    
    
    (88,735,279
    )
    
    
    (81,604,565
    )Total stockholders equity (deficit)
    
    
    (16,687,958
    )
    
    
    (11,198,630
    )Total
    
    $
    489,807
    
    
    $
    2,556,094
   1




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##### Table of Contents



VIA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
 
 UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
 Period FromJune 14, 2004(Date ofThree Months Ended
    
    
    Nine Months Ended
    
    
    Inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Revenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating costs and expenses:Research and development
    
    
    449,908
    
    
    
    1,306,309
    
    
    
    1,818,599
    
    
    
    4,949,118
    
    
    
    42,724,777General and administration
    
    
    757,996
    
    
    
    1,697,476
    
    
    
    3,209,947
    
    
    
    5,491,380
    
    
    
    32,256,000Merger transaction costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,824,090Restructuring costs
    
    
    
    
    
    
    
    
    
    
    106,959
    
    
    
    
    
    
    
    106,959Total operating costs and expenses
    
    
    1,207,904
    
    
    
    3,003,785
    
    
    
    5,135,505
    
    
    
    10,440,498
    
    
    
    78,911,826Operating loss
    
    
    (1,207,904
    )
    
    
    (3,003,785
    )
    
    
    (5,135,505
    )
    
    
    (10,440,498
    )
    
    
    (78,911,826
    )Other income (expense):Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    914,628Interest expense
    
    
    (901,028
    )
    
    
    (5,033,598
    )
    
    
    (1,979,460
    )
    
    
    (6,299,768
    )
    
    
    (10,717,943
    )Other income (expense)-net
    
    
    (9,391
    )
    
    
    (663
    )
    
    
    (15,749
    )
    
    
    8,893
    
    
    
    (20,138
    )Total other income (expense)
    
    
    (910,419
    )
    
    
    (5,034,261
    )
    
    
    (1,995,209
    )
    
    
    (6,290,875
    )
    
    
    (9,823,453
    )Net Loss
    
    $
    (2,118,323
    )
    
    $
    (8,038,046
    )
    
    $
    (7,130,714
    )
    
    $
    (16,731,373
    )
    
    $
    (88,735,279
    )Loss per share of common
stockbasic and diluted
    
    $
    (0.10
    )
    
    $
    (0.40
    )
    
    $
    (0.35
    )
    
    $
    (0.84
    )Weighted average shares
outstandingbasic and diluted
    
    
    20,452,332
    
    
    
    20,014,457
    
    
    
    20,358,351
    
    
    
    19,875,482
   2




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VIA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
 
 UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
 Period fromJune 14, 2004(Date ofNine Months Ended
    
    
    Inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010Cash flows from operating activities:Net loss
    
    $
    (7,130,714
    )
    
    $
    (16,731,373
    )
    
    $
    (88,735,279
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    66,437
    
    
    
    103,653
    
    
    
    596,310Amortization of discount on notes payable  affiliate
    
    
    561,035
    
    
    
    5,888,810
    
    
    
    7,505,384Excess facility lease costs
    
    
    133,222
    
    
    
    
    
    
    
    133,222Lease abandonment costs
    
    
    173,712
    
    
    
    
    
    
    
    173,712Disposal of property and equipment
    
    
    72,378
    
    
    
    450
    
    
    
    76,991Stock compensation expense
    
    
    592,631
    
    
    
    980,560
    
    
    
    4,550,213Deferred rent
    
    
    (27,127
    )
    
    
    5,961
    
    
    
    10,323Changes in assets and liabilities:Prepaid expenses and other assets
    
    
    15,654
    
    
    
    327,108
    
    
    
    (205,081
    )Accounts payable
    
    
    258,143
    
    
    
    (423,439
    )
    
    
    960,541Accrued expenses and other liabilities
    
    
    (1,046,778
    )
    
    
    (22,056
    )
    
    
    1,279,943Accrued restructuring costs
    
    
    635
    
    
    
    
    
    
    
    635Interest payable  affiliate
    
    
    1,418,425
    
    
    
    410,959
    
    
    
    3,200,188Net cash used in operating activities
    
    
    (4,912,347
    )
    
    
    (9,459,367
    )
    
    
    (70,452,898
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    
    
    
    
    (16,155
    )
    
    
    (664,175
    )Sale of property and equipment
    
    
    
    
    
    
    532
    
    
    
    532Cash provided in the Merger
    
    
    
    
    
    
    
    
    
    
    11,147,160Capitalized merger transaction costs
    
    
    
    
    
    
    
    
    
    
    (350,069
    )Net cash provided by (used in) investing activities
    
    
    
    
    
    
    (15,623
    )
    
    
    10,133,448Cash flows from financing activities:Proceeds from convertible promissory notes  affiliate
    
    
    
    
    
    
    
    
    
    
    24,425,000Proceeds from notes payable  affiliate
    
    
    3,000,000
    
    
    
    10,000,000
    
    
    
    13,000,000Capital lease payments
    
    
    
    
    
    
    
    
    
    
    (11,973
    )Issuance of common stock
    
    
    
    
    
    
    
    
    
    
    23,141,360Exercise of stock options for the issuance of common stock
    
    
    1,292
    
    
    
    1,933
    
    
    
    49,550Repurchase and retirement of common stock
    
    
    (763
    )
    
    
    
    
    
    
    (6,563
    )Net cash provided by financing activities
    
    
    3,000,529
    
    
    
    10,001,933
    
    
    
    60,597,374Increase (decrease) in cash and cash equivalents
    
    
    (1,911,818
    )
    
    
    526,943
    
    
    
    277,924Cash and cash equivalents-beginning of period
    
    
    2,189,742
    
    
    
    4,064,545
    
    
    
    Cash and cash equivalents-end of period
    
    $
    277,924
    
    
    $
    4,591,488
    
    
    $
    277,924Supplemental disclosure of noncash activities:Issuance of warrant and related discount on notes payable  affiliate
    
    $
    1,048,226
    
    
    $
    6,948,723
    
    
    $
    7,996,949Interest on convertible debt converted to notes payable  affiliate
    
    $
    
    
    
    $
    
    
    
    $
    992,722Conversion of notes to preferred stock Series A  affiliate
    
    $
    
    
    
    $
    
    
    
    $
    25,517,722Accrued compensation converted to notes payable
    
    $
    
    
    
    $
    
    
    
    $
    100,000Stock issuance for license acquisition
    
    $
    
    
    
    $
    
    
    
    $
    1,000Supplemental disclosure of cash flow information:Interest paid
    
    $
    
    
    
    $
    
    
    
    $
    7,856Taxes paid
    
    $
    770
    
    
    $
    116
    
    
    $
    37,385
   3




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




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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation 
   5




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Use of Estimates 
 Cash and Cash Equivalents 
 Property and Equipment 
 Long-Lived Assets 
 Incentive Award Accruals 
 Research and Development Expenses 
   6




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Fair Value of Financial and Derivative Instruments 
 
    
    Level 1  Quoted prices in active markets for identical assets or liabilities.
 
    
    Level 2  Inputs other than quoted prices included in Level 1, such as quoted prices for
similar assets and liabilities in active markets; quoted prices for identical or similar
assets and liabilities in markets that are not active; or other inputs that are observable
or can be corroborated by observable market data.
 
    
    Level 3  Unobservable inputs that are supported by little or no market activity and that
are significant to the fair value of the assets or liabilities. This includes certain
pricing models, discounted cash flow methodologies and similar techniques that use
significant unobservable inputs.
  
    
    Derivative financial instruments indexed to and potentially settled in a companys own
stock;
 
    
    Accounting for derivative instruments and hedging activities; and
 
    
    Accounting for convertible debt and debt issued with stock purchase warrants.
   
    
    Derivative financial instruments indexed to and potentially settled in a companys own
stock;
 
    
    Accounting for derivative instruments and hedging activities; and
 
    
    Accounting for convertible debt and debt issued with stock purchase warrants.
   7




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Changes in Level 3 Recurring Fair Value Measurements 
 As ofSeptember 30,2010Fair value  December 31, 2009
    
    $
    6,948,723Warrants (1)
    
    
    1,048,226Change in unrealized gains related to financial instruments at September 30, 2010 (2)
    
    
    Fair value  September 30, 2010
    
    $
    7,996,949Total unrealized gains (losses) (2)
    
    $
    
 
 (1)
    
    The Warrants are included in additional paid in capital in the Stockholders Equity section
of the Balance Sheet.(2)
    
    The Warrants are not revalued at the reporting dates and do not result in gains and losses. Income Taxes 
 Segment Reporting 
 Earnings (Loss) Per Share of Common Stock 
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net loss
    
    $
    (2,118,323
    )
    
    $
    (8,038,046
    )
    
    $
    (7,130,714
    )
    
    $
    (16,731,373
    )Basic and diluted net loss per share:Weighted-average shares of common stock outstanding
    
    
    20,558,446
    
    
    
    20,646,374
    
    
    
    20,580,460
    
    
    
    20,630,382Less: Weighted-average shares of common stock
subject to repurchase
    
    
    (106,114
    )
    
    
    (631,917
    )
    
    
    (222,109
    )
    
    
    (754,900
    )Weighted-average shares used in computing basic
net loss per share
    
    
    20,452,332
    
    
    
    20,014,457
    
    
    
    20,358,351
    
    
    
    19,875,482Dilutive effect of common share equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted-average shares used in computing diluted
net loss per share
    
    
    20,452,332
    
    
    
    20,014,457
    
    
    
    20,358,351
    
    
    
    19,875,482Basic and diluted net loss per share
    
    $
    (0.10
    )
    
    $
    (0.40
    )
    
    $
    (0.35
    )
    
    $
    (0.84
    )
  8




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As ofSeptember 30,
    
    
    September 30,2010
    
    
    2009Common stock equivalents (in shares):Shares of common stock subject to outstanding options
    
    
    1,847,872
    
    
    
    2,740,733Shares of common stock subject to outstanding warrants
    
    
    101,050,407
    
    
    
    83,503,348Shares of common stock subject to conversion from series C preferred stock
    
    
    13,986,013
    
    
    
    Total shares of common stock equivalents
    
    
    116,884,292
    
    
    
    86,244,081
  Comprehensive Income (Loss) 
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net loss
    
    $
    (2,118,323
    )
    
    $
    (8,038,046
    )
    
    $
    (7,130,714
    )
    
    $
    (16,731,373
    )Changes in unrealized gain (loss)
on foreign currency cash flow
hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Basic and diluted net loss per share
    
    $
    (2,118,323
    )
    
    $
    (8,038,046
    )
    
    $
    (7,130,714
    )
    
    $
    (16,731,373
    )
 Derivative Instruments 
  New Accounting Pronouncements 
  9




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3. STOCK-BASED COMPENSATION
       10




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Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    September 30,
    
    
    September 30,
    
    September 30,2010
    
    2009
    
    
    2010
    
    2009Expected life from grant date
    
    6.16-7.21
    
    
    
    
    
    6.16-7.21
    
    
    6.08Expected volatility
    
    114%-118%
    
    
    
    %
    
    114%-118%
    
    
    105
    %Risk free interest rate
    
    1.64%-1.95%
    
    
    
    %
    
    1.64%-1.95%
    
    
    2.89
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    
  Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Research and development expense
    
    $
    43,453
    
    
    $
    19,115
    
    
    $
    122,250
    
    
    $
    228,110
    
    
    $
    1,201,676General and administrative expense
    
    
    110,034
    
    
    
    232,121
    
    
    
    436,035
    
    
    
    705,206
    
    
    
    3,240,897Total
    
    $
    153,487
    
    
    $
    251,236
    
    
    $
    558,285
    
    
    $
    933,316
    
    
    $
    4,442,573
   Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Research and development expense
    
    $
    3,588
    
    
    $
    3,934
    
    
    $
    10,695
    
    
    $
    11,754
    
    
    $
    27,063General and administrative expense
    
    
    6,314
    
    
    
    12,024
    
    
    
    23,651
    
    
    
    35,490
    
    
    
    73,199Total
    
    $
    9,902
    
    
    $
    15,958
    
    
    $
    34,346
    
    
    $
    47,244
    
    
    $
    100,262
  4. RESEARCH AND DEVELOPMENT
   11




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Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Externally generated R&D expense
    
    $
    85,729
    
    
    $
    732,162
    
    
    $
    474,366
    
    
    $
    2,985,635
    
    
    $
    29,179,557Internally generated R&D expense
    
    
    364,179
    
    
    
    574,147
    
    
    
    1,344,233
    
    
    
    1,963,483
    
    
    
    13,545,220Total
    
    $
    449,908
    
    
    $
    1,306,309
    
    
    $
    1,818,599
    
    
    $
    4,949,118
    
    
    $
    42,724,777
  Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010In-licensing expenses
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    400,000
    
    
    $
    5,270,000CRO and investigator expenses
    
    
    1,204
    
    
    
    221,030
    
    
    
    19,868
    
    
    
    909,296
    
    
    
    10,769,207Consulting expenses
    
    
    43,718
    
    
    
    211,893
    
    
    
    166,439
    
    
    
    916,097
    
    
    
    6,585,108Other
    
    
    40,807
    
    
    
    299,239
    
    
    
    288,059
    
    
    
    760,242
    
    
    
    6,555,242Total
    
    $
    85,729
    
    
    $
    732,162
    
    
    $
    474,366
    
    
    $
    2,985,635
    
    
    $
    29,179,557
  Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Payroll and payroll related expenses
    
    $
    235,542
    
    
    $
    459,266
    
    
    $
    804,362
    
    
    $
    1,380,281
    
    
    $
    9,311,521Stock-based compensation
    
    
    47,041
    
    
    
    23,050
    
    
    
    132,945
    
    
    
    239,864
    
    
    
    1,228,739Travel and entertainment expenses
    
    
    11,724
    
    
    
    29,799
    
    
    
    55,005
    
    
    
    134,815
    
    
    
    1,210,624Other
    
    
    69,872
    
    
    
    62,032
    
    
    
    351,921
    
    
    
    208,523
    
    
    
    1,794,336Total
    
    $
    364,179
    
    
    $
    574,147
    
    
    $
    1,344,233
    
    
    $
    1,963,483
    
    
    $
    13,545,220
 5. PROPERTY AND EQUIPMENT
  As ofSeptember 30,
    
    
    December 31,2010
    
    
    2009Property and equipment at cost:Computer equipment and software
    
    $
    281,822
    
    
    $
    308,467Furniture and fixtures
    
    
    113,363
    
    
    
    113,363Office equipment
    
    
    21,048
    
    
    
    38,282Leasehold Improvements
    
    
    24,794
    
    
    
    129,740Total property and equipment at cost
    
    
    441,027
    
    
    
    589,852Less: accumulated depreciation
    
    
    (409,225
    )
    
    
    (419,235
    )Total
    
    $
    31,802
    
    
    $
    170,617
  12




---



##### Table of Contents



Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Research and development expense
    
    $
    2,729
    
    
    $
    5,865
    
    
    $
    10,923
    
    
    $
    17,730
    
    
    $
    142,851General and administrative expense
    
    
    11,347
    
    
    
    28,293
    
    
    
    55,514
    
    
    
    85,923
    
    
    
    427,459Total
    
    $
    14,076
    
    
    $
    34,158
    
    
    $
    66,437
    
    
    $
    103,653
    
    
    $
    570,310
 6. NOTES PAYABLE AFFILIATES
  September 30,
    
    
    December 31,2010
    
    
    2009Issued March 12, 2009  18%  due April 1, 2010 (Loan Agreement)
    
    $
    10,000,000
    
    
    $
    10,000,000Less: Unamortized discount
    
    
    
    
    
    
    (4,374
    )Balance
    
    $
    10,000,000
    
    
    $
    9,995,626Issued March 26, 2010  15%  due December 31, 2010 (2010 Loan Agreement)
    
    
    3,000,000
    
    
    
    Less: Unamortized discount
    
    
    (491,565
    )
    
    
    Balance
    
    $
    2,508,435
    
    
    $
    Total
    
    $
    12,508,435
    
    
    $
    9,995,626
 Notes Payable Issued March 12, 2009   due April 1, 2010 (Loan Agreement)
     13




---



##### Table of Contents



.
  Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,March 12, 2009 Borrowing
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Interest expense
    
    $
    90,740
    
    
    $
    75,616
    
    
    $
    254,466
    
    
    $
    166,849
    
    
    $
    496,932Discount amortization
    
    
    
    
    
    
    354,211
    
    
    
    36
    
    
    
    891,334
    
    
    
    900,044Total
    
    $
    90,740
    
    
    $
    429,827
    
    
    $
    254,502
    
    
    $
    1,058,183
    
    
    $
    1,396,976
  March 12, 2009Expected life from grant date  in years
    
    
    5.0Expected volatility
    
    
    116.79
    %Risk free interest rate
    
    
    2.10
    %Dividend yield
    
    
    
   Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,May 19, 2009 Borrowing
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Interest expense
    
    $
    90,740
    
    
    $
    75,617
    
    
    $
    254,466
    
    
    $
    110,959
    
    
    $
    441,041Discount amortization
    
    
    
    
    
    
    950,913
    
    
    
    96
    
    
    
    1,509,509
    
    
    
    1,532,892Total
    
    $
    90,740
    
    
    $
    1,026,530
    
    
    $
    254,562
    
    
    $
    1,620,468
    
    
    $
    1,973,933
  14




---



##### Table of Contents



May 19, 2009Expected life from grant date  in years
    
    
    4.81Expected volatility
    
    
    108.63
    %Risk free interest rate
    
    
    2.05
    %Dividend yield
    
    
    
   Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,June 29, 2009 Borrowing
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Interest expense
    
    $
    90,740
    
    
    $
    75,616
    
    
    $
    254,466
    
    
    $
    77,260
    
    
    $
    407,343Discount amortization
    
    
    
    
    
    
    1,545,694
    
    
    
    157
    
    
    
    1,587,926
    
    
    
    1,625,935Total
    
    $
    90,740
    
    
    $
    1,621,310
    
    
    $
    254,623
    
    
    $
    1,665,186
    
    
    $
    2,033,278
  June 29, 2009Expected life from grant date  in years
    
    
    4.7Expected volatility
    
    
    112.03
    %Risk free interest rate
    
    
    2.40
    %Dividend yield
    
    
    
   15




---



##### Table of Contents



Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,August 14, 2009 Borrowing
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Interest expense
    
    $
    90,740
    
    
    $
    39,452
    
    
    $
    254,466
    
    
    $
    39,452
    
    
    $
    369,534Discount amortization
    
    
    
    
    
    
    1,293,316
    
    
    
    329
    
    
    
    1,293,316
    
    
    
    1,373,041Total
    
    $
    90,740
    
    
    $
    1,332,768
    
    
    $
    254,795
    
    
    $
    1,332,768
    
    
    $
    1,742,575
  August 14, 2009Expected life from grant date  in years
    
    
    4.58Expected volatility
    
    
    115.22
    %Risk free interest rate
    
    
    2.32
    %Dividend yield
    
    
    
 .
  Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,September 11, 2009 Borrowing
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Interest expense
    
    $
    90,739
    
    
    $
    16,439
    
    
    $
    254,465
    
    
    $
    16,439
    
    
    $
    346,520Discount amortization
    
    
    
    
    
    
    606,724
    
    
    
    3,756
    
    
    
    606,724
    
    
    
    1,516,811Total
    
    $
    90,739
    
    
    $
    623,163
    
    
    $
    258,221
    
    
    $
    623,163
    
    
    $
    1,863,331
  September 11, 2009Expected life from grant date  in years
    
    
    4.50Expected volatility
    
    
    115.41
    %Risk free interest rate
    
    
    2.07
    %Dividend yield
    
    
    
  16




---



##### Table of Contents



Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Interest expense
    
    $
    453,699
    
    
    $
    282,740
    
    
    $
    1,272,329
    
    
    $
    410,959
    
    
    $
    2,061,370Discount amortization
    
    
    
    
    
    
    4,750,858
    
    
    
    4,374
    
    
    
    5,888,809
    
    
    
    6,948,723Total
    
    $
    453,699
    
    
    $
    5,033,598
    
    
    $
    1,276,703
    
    
    $
    6,299,768
    
    
    $
    9,010,093
  Notes Payable Issued March 26, 2010  15%  due December 31, 2010 (2010 Loan Agreement)
      17




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##### Table of Contents



Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,March 29, 2010 Borrowing
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Interest expense
    
    $
    47,260
    
    
    $
    
    
    
    $
    95,548
    
    
    $
    
    
    
    $
    95,548Discount amortization
    
    
    174,201
    
    
    
    
    
    
    
    352,189
    
    
    
    
    
    
    
    352,189Total
    
    $
    221,461
    
    
    $
    
    
    
    $
    447,737
    
    
    $
    
    
    
    $
    447,737
  March 29, 2010Expected life from grant date  in years
    
    
    4.99Expected volatility
    
    
    119.82
    %Risk free interest rate
    
    
    2.60
    %Dividend yield
    
    
    
   Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,May 26, 2010 Borrowing
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Interest expense
    
    $
    3,781
    
    
    $
    
    
    
    $
    5,260
    
    
    $
    
    
    
    $
    5,260Discount amortization
    
    
    17,484
    
    
    
    
    
    
    
    24,326
    
    
    
    
    
    
    
    24,326Total
    
    $
    21,265
    
    
    $
    
    
    
    $
    29,586
    
    
    $
    
    
    
    $
    29,586
  May 26, 2010Expected life from grant date  in years
    
    
    4.83Expected volatility
    
    
    119.48
    %Risk free interest rate
    
    
    1.99
    %Dividend yield
    
    
    
   18




---



##### Table of Contents



Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,June 4, 2010 Borrowing
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Interest expense
    
    $
    7,562
    
    
    $
    
    
    
    $
    9,781
    
    
    $
    
    
    
    $
    9,781Discount amortization
    
    
    29,322
    
    
    
    
    
    
    
    37,927
    
    
    
    
    
    
    
    37,927Total
    
    $
    36,884
    
    
    $
    
    
    
    $
    47,708
    
    
    $
    
    
    
    $
    47,708
  June 4, 2010Expected life from grant date  in years
    
    
    4.81Expected volatility
    
    
    119.88
    %Risk free interest rate
    
    
    1.90
    %Dividend yield
    
    
    
   Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,June 29, 2010 Borrowing
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Interest expense
    
    $
    11,342
    
    
    $
    
    
    
    $
    11,589
    
    
    $
    
    
    
    $
    11,589Discount amortization
    
    
    46,217
    
    
    
    
    
    
    
    47,221
    
    
    
    
    
    
    
    47,221Total
    
    $
    57,559
    
    
    $
    
    
    
    $
    58,810
    
    
    $
    
    
    
    $
    58,810
  June 29, 2010Expected life from grant date  in years
    
    
    4.74Expected volatility
    
    
    120.12
    %Risk free interest rate
    
    
    1.68
    %Dividend yield
    
    
    
  19




---



##### Table of Contents



Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,July 15, 2010 Borrowing
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Interest expense
    
    $
    3,206
    
    
    $
    
    
    
    $
    3,206
    
    
    $
    
    
    
    $
    3,206Discount amortization
    
    
    10,570
    
    
    
    
    
    
    
    10,570
    
    
    
    
    
    
    
    10,570Total
    
    $
    13,776
    
    
    $
    
    
    
    $
    13,776
    
    
    $
    
    
    
    $
    13,776
  July 15, 2010Expected life from grant date  in years
    
    
    4.70Expected volatility
    
    
    120.71
    %Risk free interest rate
    
    
    1.64
    %Dividend yield
    
    
    
   Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,July 27, 2010 Borrowing
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Interest expense
    
    $
    20,342
    
    
    $
    
    
    
    $
    20,342
    
    
    $
    
    
    
    $
    20,342Discount amortization
    
    
    81,026
    
    
    
    
    
    
    
    81,026
    
    
    
    
    
    
    
    81,026Total
    
    $
    101,368
    
    
    $
    
    
    
    $
    101,368
    
    
    $
    
    
    
    $
    101,368
  20




---



##### Table of Contents



July 27, 2010Expected life from grant date  in years
    
    
    4.66Expected volatility
    
    
    120.64
    %Risk free interest rate
    
    
    1.69
    %Dividend yield
    
    
    
   Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,September 28, 2010 Borrowing
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Interest expense
    
    $
    370
    
    
    $
    
    
    
    $
    370
    
    
    $
    
    
    
    $
    370Discount amortization
    
    
    3,402
    
    
    
    
    
    
    
    3,402
    
    
    
    
    
    
    
    3,402Total
    
    $
    3,772
    
    
    $
    
    
    
    $
    3,772
    
    
    $
    
    
    
    $
    3,772
  September 28, 2010Expected life from grant date  in years
    
    
    4.49Expected volatility
    
    
    123.90
    %Risk free interest rate
    
    
    1.09
    %Dividend yield
    
    
    
  Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Interest expense
    
    $
    93,863
    
    
    $
    
    
    
    $
    146,096
    
    
    $
    
    
    
    $
    146,096Discount amortization
    
    
    362,222
    
    
    
    
    
    
    
    556,661
    
    
    
    
    
    
    
    556,661Total
    
    $
    456,085
    
    
    $
    
    
    
    $
    702,757
    
    
    $
    
    
    
    $
    702,757
   21




---



##### Table of Contents



Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Interest expense
    
    $
    547,562
    
    
    $
    282,740
    
    
    $
    1,418,425
    
    
    $
    410,959
    
    
    $
    2,207,466Discount amortization
    
    
    362,222
    
    
    
    4,750,858
    
    
    
    561,035
    
    
    
    5,888,809
    
    
    
    7,505,384Total
    
    $
    909,784
    
    
    $
    5,033,598
    
    
    $
    1,979,460
    
    
    $
    6,299,768
    
    
    $
    9,712,850
  7. EQUITY
  Common Stock 
  September 30,
    
    
    December 31,2010
    
    
    20092007 Incentive Award Plan  outstanding and available to grant
    
    
    3,916,326
    
    
    
    3,328,398Shares of common stock subject to outstanding warrants
    
    
    101,050,407
    
    
    
    83,403,348Shares of common stock subject to conversion from series C preferred stock
    
    
    13,986,013
    
    
    
    Total shares of common stock equivalents
    
    
    118,952,746
    
    
    
    86,731,746
  Preferred Stock 
   22




---



##### Table of Contents



2002 Stock Option Plans 
 2004 Stock Option Plans 
 2007 Incentive Award Plan 
  WeightedAverageOption Shares
    
    
    ExerciseStock Option Awards
    
    Outstanding
    
    
    Price2007 Incentive Award Plan Options Outstanding  December 31, 2009
    
    
    2,740,686
    
    
    $
    6.90Granted
    
    
    
    
    
    
    Exercised
    
    
    (43,057
    )
    
    $
    0.03Canceled
    
    
    (849,757
    )
    
    $
    2.222007 Incentive Award Plan Options Outstanding  September 30, 2010
    
    
    1,847,872
    
    
    $
    9.07
  23




---



##### Table of Contents



Options Outstanding
    
    
    Options Vested or Expected to Vest
    
    
    Options ExercisableAverage
    
    
    Weighted
    
    
    Number
    
    
    Average
    
    
    Weighted
    
    
    
    
    
    
    WeightedRange of
    
    Number of
    
    
    Remaining
    
    
    Average
    
    
    Exercisable or
    
    
    Remaining
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    Options
    
    
    Contractual
    
    
    Exercise
    
    
    Expected to
    
    
    Contractual
    
    
    Exercise
    
    
    Number
    
    
    ExercisePrices
    
    Outstanding
    
    
    Life (Years)
    
    
    Price
    
    
    Vest
    
    
    Life (Years)
    
    
    Price
    
    
    Exercisable
    
    
    Price$0.03
    
    
    124,897
    
    
    
    4.66
    
    
    $
    0.03
    
    
    
    124,897
    
    
    
    4.66
    
    
    $
    0.03
    
    
    
    124,897
    
    
    $
    0.03$0.14
    
    
    70,992
    
    
    
    6.03
    
    
    $
    0.14
    
    
    
    70,981
    
    
    
    6.03
    
    
    $
    0.14
    
    
    
    70,759
    
    
    $
    0.14$0.15
    
    
    40,000
    
    
    
    8.21
    
    
    $
    0.15
    
    
    
    40,000
    
    
    
    8.21
    
    
    $
    0.15
    
    
    
    40,000
    
    
    $
    0.15$2.38
    
    
    810,000
    
    
    
    7.21
    
    
    $
    2.38
    
    
    
    798,820
    
    
    
    7.21
    
    
    $
    2.38
    
    
    
    575,624
    
    
    $
    2.38$2.90
    
    
    235,000
    
    
    
    7.29
    
    
    $
    2.90
    
    
    
    231,263
    
    
    
    7.29
    
    
    $
    2.90
    
    
    
    156,666
    
    
    $
    2.90$3.48
    
    
    219,400
    
    
    
    6.84
    
    
    $
    3.48
    
    
    
    217,002
    
    
    
    6.84
    
    
    $
    3.48
    
    
    
    169,119
    
    
    $
    3.48$5.10
    
    
    16,725
    
    
    
    6.68
    
    
    $
    5.10
    
    
    
    16,725
    
    
    
    6.68
    
    
    $
    5.10
    
    
    
    16,725
    
    
    $
    5.10$5.55
    
    
    18,586
    
    
    
    6.68
    
    
    $
    5.55
    
    
    
    18,586
    
    
    
    6.68
    
    
    $
    5.55
    
    
    
    18,586
    
    
    $
    5.55$11.25$1023.75
    
    
    312,272
    
    
    
    4.15
    
    
    $
    42.36
    
    
    
    312,272
    
    
    
    4.15
    
    
    $
    42.36
    
    
    
    312,272
    
    
    $
    42.361,847,872
    
    
    
    6.46
    
    
    $
    9.07
    
    
    
    1,830,546
    
    
    
    6.46
    
    
    $
    9.13
    
    
    
    1,484,648
    
    
    $
    10.64
   Restricted Stock 
  WeightedAverageGrant DateRestricted Stock Awards
    
    Shares
    
    
    Fair ValueUnvested at December 31, 2009
    
    
    423,875
    
    
    $
    0.15Granted
    
    
    
    
    
    
    Vested
    
    
    (233,653
    )
    
    $
    0.15Forfeited
    
    
    (125,534
    )
    
    $
    0.15Unvested at September 30, 2010
    
    
    64,688
    
    
    $
    0.15
  24




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##### Table of Contents



Warrants  Affiliates 
    Warrants  Other 
     25




---



##### Table of Contents



8. RELATED PARTIES
      26




---



##### Table of Contents



9. COMMITMENTS
 Operating Leases 
  Period fromJune 14, 2004Three months ended
    
    
    Nine months ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Research and development expense
    
    $
    26,967
    
    
    $
    30,496
    
    
    $
    240,797
    
    
    $
    91,489
    
    
    $
    758,521General and administrative expense
    
    
    51,552
    
    
    
    77,724
    
    
    
    173,491
    
    
    
    234,846
    
    
    
    1,090,851Total
    
    $
    78,519
    
    
    $
    108,220
    
    
    $
    414,288
    
    
    $
    326,335
    
    
    $
    1,849,372
  AmountOctober through December 2010
    
    $
    110,2512011
    
    
    445,7772012
    
    
    362,4682013
    
    
    139,742Total minimum lease payments
    
    $
    1,058,238
   27




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##### Table of Contents



10. INCOME TAXES
    11. EMPLOYEE BENEFIT PLANS
  12. RESTRUCTURING COSTS
  13. LEASE ABANDONMENT COSTS
   28




---



##### Table of Contents



14. SUBSEQUENT EVENTS
 Bridge Note
  2010 Loan Amendment
    Qualifying Therapeutic Discovery Project
   29




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion and analysis of the Companys financial condition and results of
operations should be read in conjunction with the Companys financial statements and related notes
appearing elsewhere in this Quarterly Report on Form 10-Q . In addition to historical information,
this discussion and analysis contains forward-looking statements that involve risks, uncertainties
and assumptions. The Companys actual results may differ materially from those anticipated in these
forward-looking statements as a result of risks and uncertainties that exist in our operations,
development efforts and business environment, including but not limited to those set forth under
the Section entitled Risk Factors in our Annual Report on Form 10-K for the year ended December
31, 2009 and elsewhere in this Quarterly Report on Form 10-Q and in other documents we file with
the Securities and Exchange Commission. All forward-looking statements included in this report are
based on information available to us as of the date hereof, and, unless required by law, we assume
no obligation to update any such forward-looking statement.
 Management Overview
    Treatment with 5-Lipoxygenase Inhibitor VIA-2291 (Atreleuton) in Patients with Recent Acute
Coronary Syndrome Circ
Cardiovasc Imaging . 2010;3:298-307
    30




---



##### Table of Contents



Background
  VIA-2291
     31




---



##### Table of Contents



Treatment with 5-Lipoxygenase
Inhibitor VIA-2291 (Atreleuton) in Patients with Recent Acute Coronary Syndrome Circ Cardiovasc Imaging . 2010;3:298-307
  Roche Licensed Assets
    32




---



##### Table of Contents



Going Concern
       33




---



##### Table of Contents




    
    terminate or delay clinical trials or studies of VIA-2291;
 
    
    terminate or delay the preclinical development of one or more of its other preclinical
candidates;
 
    
    curtail its licensing activities that are designed to identify molecular targets and
small molecules for treating cardiovascular disease;
 
    
    relinquish rights to product candidates, development programs, or discovery development
programs that it may otherwise seek to develop or commercialize on its own; and
 
    
    delay, reduce the scope of, or eliminate one or more of its research and development
programs, or ultimately cease operations.
  34




---



##### Table of Contents



Revenue
  Research and Development Expenses
   
    
    compensation of personnel associated with research and development activities, including
consultants, investigators, and contract research organizations (CROs);
 
    
    in-licensing fees;
 
    
    laboratory supplies and materials;
 
    
    costs associated with the manufacture of product candidates for preclinical testing and
clinical studies;
 
    
    preclinical costs, including toxicology and carcinogenicity studies;
 
    
    fees paid to professional service providers for independent monitoring and analysis of
the Companys clinical trials;
 
    
    depreciation and equipment; and
 
    
    allocated costs of facilities and infrastructure.
  35




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##### Table of Contents



Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Externally generated R&D expense
    
    $
    85,729
    
    
    $
    732,162
    
    
    $
    474,366
    
    
    $
    2,985,635
    
    
    $
    29,179,557Internally generated R&D expense
    
    
    364,179
    
    
    
    574,147
    
    
    
    1,344,233
    
    
    
    1,963,483
    
    
    
    13,545,220Total
    
    $
    449,908
    
    
    $
    1,306,309
    
    
    $
    1,818,599
    
    
    $
    4,949,118
    
    
    $
    42,724,777
  Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010In-licensing expenses
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    400,000
    
    
    $
    5,270,000CRO and investigator expenses
    
    
    1,204
    
    
    
    221,030
    
    
    
    19,868
    
    
    
    909,296
    
    
    
    10,769,207Consulting expenses
    
    
    43,718
    
    
    
    211,893
    
    
    
    166,439
    
    
    
    916,097
    
    
    
    6,585,108Other
    
    
    40,807
    
    
    
    299,239
    
    
    
    288,059
    
    
    
    760,242
    
    
    
    6,555,242Total
    
    $
    85,729
    
    
    $
    732,162
    
    
    $
    474,366
    
    
    $
    2,985,635
    
    
    $
    29,179,557
  Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Payroll and payroll related expenses
    
    $
    235,542
    
    
    $
    459,266
    
    
    $
    804,362
    
    
    $
    1,380,281
    
    
    $
    9,311,521Stock-based compensation
    
    
    47,041
    
    
    
    23,050
    
    
    
    132,945
    
    
    
    239,864
    
    
    
    1,228,739Travel and entertainment expenses
    
    
    11,724
    
    
    
    29,799
    
    
    
    55,005
    
    
    
    134,815
    
    
    
    1,210,624Other
    
    
    69,872
    
    
    
    62,032
    
    
    
    351,921
    
    
    
    208,523
    
    
    
    1,794,336Total
    
    $
    364,179
    
    
    $
    574,147
    
    
    $
    1,344,233
    
    
    $
    1,963,483
    
    
    $
    13,545,220
    36




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##### Table of Contents



General and Administrative
  Interest Income, Interest Expense and Other Expenses
  Results of Operations
 Comparison of the three months ended September 30, 2010 and 2009
  For the Three Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeRevenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    Research and development expense
    
    
    449,908
    
    
    
    1,306,309
    
    
    
    (856,401
    )
    
    
    (66
    )%General and administrative expense
    
    
    757,996
    
    
    
    1,697,476
    
    
    
    (939,480
    )
    
    
    (55
    )%Interest expense
    
    
    901,028
    
    
    
    5,033,598
    
    
    
    (4,132,570
    )
    
    
    (82
    )%Other expense
    
    
    9,391
    
    
    
    663
    
    
    
    8,728
    
    
    
    1,316
    %
 Revenue.
 Research and Development Expense.
  37




---



##### Table of Contents



General and Administrative Expense.
 Interest Expense.
 Other Expense.
 Income Tax Expense.
 Comparison of the Nine months ended September 30, 2010 and 2009
  For the Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeRevenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    Research and development expense
    
    
    1,818,599
    
    
    
    4,949,118
    
    
    
    (3,130,519
    )
    
    
    (63
    )%General and administrative expense
    
    
    3,209,947
    
    
    
    5,491,380
    
    
    
    (2,281,433
    )
    
    
    (42
    )%Restructuring costs
    
    
    106,959
    
    
    
    
    
    
    
    106,959
    
    
    
    Interest expense
    
    
    1,979,460
    
    
    
    6,299,768
    
    
    
    (4,320,308
    )
    
    
    (69
    )%Other income/(expense)
    
    
    (15,749
    )
    
    
    8,893
    
    
    
    (24,642
    )
    
    
    (277
    )%
  38




---



##### Table of Contents



Revenue.
 Research and Development Expense.
 General and Administrative Expense.
 Restructuring Costs.
 Interest Expense.
  39




---



##### Table of Contents



Other Income/(Expense).
 Income Tax Expense.
 Liquidity and Capital Resources
       40




---



##### Table of Contents



41




---



##### Table of Contents



Contractual Obligation and Commitments
  Payments Due by PeriodLess Than
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsOperating lease obligations (1)
    
    $
    1,058,238
    
    
    $
    443,732
    
    
    $
    614,506
    
    
    $
    
    
    
    $
    Notes and related interest payable  affiliate (2)
    
    
    15,207,466
    
    
    
    15,207,466
    
    
    
    
    
    
    
    
    
    
    
    Uncertain tax positions (3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Licensing agreements (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    16,265,704
    
    
    $
    15,651,198
    
    
    $
    614,506
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Operating lease obligations reflect contractual commitments for the
Companys office facilities for its headquarters in San Francisco,
California and its clinical operations location in Princeton, New
Jersey. The San Francisco headquarters lease has been extended through
May 31, 2013 and has been expanded to a total of 8,180 square feet.
The lease amendment resulted in an increase of approximately $1.5
million in future rent. The lease amendment to the Princeton, New
Jersey facility extends the lease through April 2, 2012 and has been
expanded to a total of 4,979 square feet. The lease amendment resulted
in an increase of approximately $330,000 in future rent. As more
fully described in Note 13 to the unaudited condensed financial
statements, on June 1, 2010, the Company abandoned its office space
leased in Princeton, New Jersey.(2)
    
    As more fully described in Note 6 in the notes to the unaudited
condensed financial statements, in March 2009, the Company entered
into the Loan Agreement with the Lenders whereby the Lenders agreed to
lend to the Company in the aggregate up to $10.0 million, pursuant to
the terms of the Notes delivered under the Loan Agreement. On March
12, 2009, the Company borrowed an initial amount of $2.0 million.
During the three months ended September 30, 2009, the Company borrowed
$2.0 million on May 19, 2009, and another $2.0 million on June 29,
2009. During the three months ended September 30, 2009, the Company
borrowed $2.0 million on August 14, 2009, and a final $2.0 million on
September 11, 2009. The Notes are secured by a first priority lien on
all of the assets of the Company, including the Companys intellectual
property. Amounts borrowed under the Notes accrue interest at the rate
of 15% per annum, which increases to 18% per annum following an event
of default. As of September 30, 2010, the Company accrued $1,607,671
in interest payable  affiliate for unpaid interest expenses. Unless
earlier paid in accordance with the terms of the Notes, all unpaid
principal and accrued interest shall become fully due and payable on
the earlier to occur of (i) April 1, 2010, (ii) the closing of a debt,
equity or combined debt/equity financing resulting in gross proceeds
or available credit to the Company of not less than $20,000,000, and
(iii) the closing of a transaction in which the Company sells,
conveys, licenses or otherwise disposes of a majority of its assets or
is acquired by way of a merger, consolidation, reorganization or other
transaction or series of transactions pursuant to which stockholders
of the Company prior to such acquisition own less than 50% of the
voting interests in the surviving or resulting entity. While the
Lenders have not declared an event of default, the Company failed to
repay the debt and all related interest to the Lenders due on April 1,
2010. As a result, the Company is now accruing interest at the higher
18% per annum beginning April 1, 2010.  42




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##### Table of Contents



Also as more fully described in Note 6 in the notes to the unaudited
condensed financial statements, in March 2010, the Company entered
into an additional Note and Warrant Purchase Agreement (the 2010 Loan
Agreement) with the Lenders whereby the Lenders agreed to lend to the
Company in the aggregate up to $3,000,000, pursuant to the terms of
promissory notes (collectively, the 2010 Notes) delivered under the
2010 Loan Agreement. On March 29, 2010, the Company borrowed an
initial amount of $1,250,000. During the three months ended June 30,
2010, the Company borrowed $100,000 on May 26, 2010, $200,000 on June
4, 2010, and another $300,000 on June 29, 2010. During the three
months ended September 30, 2010, the Company borrowed $100,000 on July
15, 2010, $750,000 on July 27, 2010 and a final $300,000 on September
28, 2010. The 2010 Notes are secured by a lien on all of the assets
of the Company. Amounts borrowed under the 2010 Notes accrue interest
at the rate of 15% per annum, which increases to 18% per annum
following an event of default. As of September 30, 2010, the Company
accrued $52,233 in interest payable  affiliate for unpaid interest
expenses. Unless earlier paid in accordance with the terms of the 2010
Notes, all unpaid principal and accrued interest shall become fully
due and payable on the earlier to occur of (i) December 31, 2010, (ii)
the closing of a debt, equity or combined debt/equity financing
resulting in gross proceeds or available credit to the Company of not
less than $20,000,000, and (iii) the closing of a transaction in which
the Company sells, conveys, licenses or otherwise disposes of a
majority of its assets or is acquired by way of a merger,
consolidation, reorganization or other transaction or series of
transactions pursuant to which stockholders of the Company prior to
such acquisition own less than 50% of the voting interests in the
surviving or resulting entity.(3)
    
    The Company adopted new accounting guidance for the accounting for
uncertainty in income tax positions on the first day of its 2007
fiscal year. The amount of unrecognized tax benefits at December 31,
2009 was $584,710. This amount has been excluded from the contractual
obligations table because a reasonably reliable estimate of the timing
of future tax settlements cannot be determined.(4)
    
    Under certain licensing agreements, Roche may receive up to $22.4
million in milestone payments, the majority of which would be tied to
the achievement of product development and regulatory milestones. In
addition, once products containing the compounds are approved for
marketing, Roche will receive single-digit royalties based on net
sales, subject to certain reductions. Off-Balance Sheet Arrangements
  Critical Accounting Policies
     43




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##### Table of Contents



Research and Development Accruals
    Incentive Award Accruals
  Stock-based Compensation
   44




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    September 30,
    
    
    September 30,
    
    September 30,2010
    
    2009
    
    
    2010
    
    2009Expected life from grant date
    
    6.16-7.21
    
    
    
    
    
    6.16-7.21
    
    
    6.08Expected volatility
    
    114%-118%
    
    
    
    %
    
    114%-118%
    
    
    105
    %Risk free interest rate
    
    1.64%-1.95%
    
    
    
    %
    
    1.64%-1.95%
    
    
    2.89
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    
  Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Research and development expense
    
    $
    43,453
    
    
    $
    19,115
    
    
    $
    122,250
    
    
    $
    228,110
    
    
    $
    1,201,676General and administrative expense
    
    
    110,034
    
    
    
    232,121
    
    
    
    436,035
    
    
    
    705,206
    
    
    
    3,240,897Total
    
    $
    153,487
    
    
    $
    251,236
    
    
    $
    558,285
    
    
    $
    933,316
    
    
    $
    4,442,573
   45




---



##### Table of Contents



Period fromJune 14, 2004Three Months Ended
    
    
    Nine Months Ended
    
    
    (date of inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Research and development expense
    
    $
    3,588
    
    
    $
    3,934
    
    
    $
    10,695
    
    
    $
    11,754
    
    
    $
    27,063General and administrative expense
    
    
    6,314
    
    
    
    12,024
    
    
    
    23,651
    
    
    
    35,490
    
    
    
    73,199Total
    
    $
    9,902
    
    
    $
    15,958
    
    
    $
    34,346
    
    
    $
    47,244
    
    
    $
    100,262
  Forward-looking statements
  
    
    the Companys ability to find a market maker to apply and be cleared by the Financial
Industry Regulatory Authority to quote the Companys common stock on the OTC Bulletin Board;
 
    
    ability and willingness of active market makers in our Companys common stock to trade
the Companys common stock on the Pink Sheets under a piggyback qualification;
 
    
    the Companys ability to obtain necessary financing in the near term, including amounts
necessary to repay the 2009 loan from Bay City Capital following the April 1, 2010 maturity
date and the 2010 loan, as amended, from Bay City Capital by the December 31, 2010 maturity date (or
earlier if certain repayment acceleration provisions are triggered);
 
    
    the Companys ability to control its operating expenses;
 
    
    the Companys ability to comply with covenants included in the loans with Bay City
Capital;
 
    
    the Companys ability to operate its business following the restructuring, as described
in Note 12 in the notes to the unaudited condensed financial statements;
 
    
    the Companys ability to comply with its reporting obligations under the rules and
regulations promulgated by the Securities and Exchange Commission following the
restructuring;
 
    
    the Companys ability to timely recruit and enroll patients in any future clinical
trials;
 
    
    the Companys failure to obtain sufficient data from enrolled patients that can be used
to evaluate VIA-2291, thereby impairing the validity or statistical significance of its
clinical trials;
  46




---



##### Table of Contents




    
    the Companys ability to successfully complete its clinical trials of VIA-2291 on
expected timetables and the outcomes of such clinical trials;
 
    
    complexities in designing and implementing cardiometabolic clinical trials using
surrogate endpoints in Phase 1 and Phase 2 clinical trials which may differ from the
ultimate endpoints required for registration of a candidate drug;
 
    
    the results of any future clinical trials of the Company;
 
    
    if the results of the ACS and CEA studies, upon further review and analysis, are revised,
interpreted differently by regulatory authorities or negated by later stage clinical trials;
 
    
    the Companys ability to obtain necessary FDA approvals;
 
    
    the Companys ability to successfully commercialize VIA-2291;
 
    
    the Companys ability to identify potential clinical candidates from the family of DGAT1
compounds licensed and move them into preclinical development;
 
    
    the Companys ability to obtain and protect its intellectual property related to its
product candidates;
 
    
    the Companys potential for future growth and the development of its product pipeline,
including the THR beta agonist candidate and the other compounds licensed from Roche;
 
    
    the Companys ability to obtain strategic opportunities to partner and collaborate with
large biotechnology or pharmaceutical companies to further develop VIA-2291;
 
    
    the Companys ability to form and maintain collaborative relationships to develop and
commercialize our product candidates;
 
    
    general economic and business conditions; and
 
    
    the other risks described under the heading Risk Factors in the Companys Annual Report
on Form 10-K for the fiscal year ended December 31, 2009, as supplemented by the risks
described under Risk Factors in Part II, Item 1A in the Companys Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2010 and June 30, 2010.
  
 Item 4T. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
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Changes in Internal Control Over Financial Reporting
    
 PART II.  OTHER INFORMATION
 
 Item 1A. Risk Factors
  
 Item 5. Other Information
 2010 Loan Amendment
      48




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##### Table of Contents



Item 6. Exhibits
 ExhibitNumber
    
    Description3.1
    
    
    Restated Certificate of Incorporation (filed as Exhibit 3.1 to the Form 10-K filed on March 22, 2005
and incorporated herein by reference)3.2
    
    
    Certificate of Amendment to the Restated Certificate of Incorporation (filed as Exhibit 3.1 to the
Form 10-KSB filed on March 30, 2000 and incorporated herein by reference)3.3
    
    
    Certificate of Amendment to the Restated Certificate of Incorporation (filed as Exhibit 3.3 to the
Form 10-K filed on March 28, 2003 and incorporated herein by reference)3.4
    
    
    Certificate of Amendment to the Restated Certificate of Incorporation (filed as Exhibit 3.4 to the
Form 10-K filed on March 28, 2003 and incorporated herein by reference)3.5
    
    
    Certificate of Amendment to the Restated Certificate of Incorporation (filed as Exhibit 3.5 to the
Form 10-K filed on March 28, 2003 and incorporated herein by reference)3.6
    
    
    Amended and Restated Certificate of Designation of Preferences and Rights of Series C Preferred Stock
(filed as Annex H to the Form S-4/A filed on December 19, 2002 and incorporated herein by reference)3.7
    
    
    Certificate of Amendment to the Restated Certificate of Incorporation (Increase in Authorized Shares)
(filed as Exhibit 3.7 to the Form 10-Q filed on August 14, 2007 and incorporated herein by reference)3.8
    
    
    Certificate of Amendment to the Restated Certificate of Incorporation (Reverse Stock Split) (filed as
Exhibit 3.8 to the Form 10-Q filed on August 14, 2007 and incorporated herein by reference)3.9
    
    
    Certificate of Amendment to the Restated Certificate of Incorporation (Name Change) (filed as Exhibit
3.9 to the Form 10-Q filed on August 14, 2007 and incorporated herein by reference)
  49




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##### Table of Contents



ExhibitNumber
    
    Description3.10
    
    
    Fourth Amended and Restated Bylaws (filed as Exhibit 3.1 to the Form 8-K filed on April 17, 2008 and
incorporated herein by reference)4.1
    
    
    Warrant issued to Trout Partners LLC, dated July 31, 2007 (filed as Exhibit 99.1 to the Form 8-K filed
on August 6, 2007 and incorporated herein by reference)4.2
    
    
    Warrant issued to Redington, Inc., dated March 1, 2008 (filed as Exhibit 4.2 to the Form 10-K filed on
March 28, 2008 and incorporated herein by reference)4.3
    
    
    Warrant to Purchase Common Stock of VIA Pharmaceuticals, Inc. issued to Bay City Capital Fund IV Fund,
L.P., dated March 12, 2009 (filed as Exhibit 4.1 to the Form 8-K filed on March 12, 2009 and
incorporated herein by reference)4.4
    
    
    Warrant to Purchase Common Stock of VIA Pharmaceuticals, Inc. issued to Bay City Capital Fund IV
Co-Investment Fund, L.P., dated March 12, 2009 (filed as Exhibit 4.2 to the Form 8-K filed on March
12, 2009 and incorporated herein by reference)4.5
    
    
    Warrant to Purchase Common Stock of VIA Pharmaceuticals, Inc. issued to Bay City Capital Fund IV Fund,
L.P., dated March 26, 2010 (filed as Exhibit 4.5 to the Form 10-K filed on March 31, 2010 and
incorporated herein by reference)4.6
    
    
    Warrant to Purchase Common Stock of VIA Pharmaceuticals, Inc. issued to Bay City Capital Fund IV
Co-Investment Fund, L.P., dated March 26, 2010 (filed as Exhibit 4.6 to the Form 10-K filed on March
31, 2010 and incorporated herein by reference)4.7
    *
    
    Warrant to Purchase Common Stock of VIA Pharmaceuticals, Inc. issued to Bay City Capital Fund
IV Fund, L.P., dated November 15, 20104.8
    *
    
    Warrant to Purchase Common Stock of VIA Pharmaceuticals, Inc. issued to Bay City Capital Fund
IV Co-Investment Fund, L.P., dated November 15, 20104.9
    
    
    Second Amended and Restated Registration Rights Agreement, dated as of March 12, 2009, by and among
VIA Pharmaceuticals, Inc. and the parties named therein (filed as Exhibit 4.3 to the Form 8-K filed on
March 12, 2009 and incorporated herein by reference)4.10
    
    
    Amendment No. 1 to the Second Amended and Restated Registration Rights Agreement, dated as of March
26, 2010, by and among VIA Pharmaceuticals, Inc. and the parties named therein (filed as Exhibit 4.8
to the Form 10-K filed on March 31, 2010 and incorporated herein by reference)4.11
    *
    
    Amendment No. 2 to the Second Amended and Restated Registration Rights Agreement, dated as of
November 15, 2010, by and among VIA Pharmaceuticals, Inc. and the parties named therein10.1
    
    
    Promissory Note, dated as of October 29, 2010, by VIA Pharmaceuticals, Inc. and Bay City Capital Fund
IV, L.P. (filed as Exhibit 10.1 to the Form 8-K filed on November 4, 2010 and incorporated herein by
reference)10.2
    *
    
    Omnibus Amendment, dated as of November 15, 2010 by and among VIA Pharmaceuticals, Inc., Bay
City Capital Fund IV, L.P., Bay City Capital Fund IV Co-Investment Fund, L.P., and Bay City
Capital LLC10.3
    *
    
    Amended and Restated Promissory Note, dated as of November 15, 2010, by VIA Pharmaceuticals,
Inc. and payable to Bay City Capital Fund IV, L.P.10.4
    *
    
    Amended and Restated Promissory Note, dated as of November 15, 2010, by VIA Pharmaceuticals,
Inc. and payable to Bay City Capital Fund IV Co-Investment Fund, L.P.31.1
    *
    
    Principal Executive Officers Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    *
    
    Principal Financial Officers Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    *
    
    Certification Pursuant to 18 U.S.C. § 1350 (Section 906 of Sarbanes-Oxley Act of 2002).32.2
    *
    
    Certification Pursuant to 18 U.S.C. § 1350 (Section 906 of Sarbanes-Oxley Act of 2002).
 
 *
    
    Filed herewith  50




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VIA PHARMACEUTICALS, INC.By:
    /s/ Karen S. WrightKaren S. WrightVice President, Controller

Duly Authorized Officer and 
Principal Financial
Officer  51