##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 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)
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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##### 



Page No.PART I.  FINANCIAL INFORMATION
    
    
    1Item 1. Condensed Financial Statements
    
    
    1Unaudited Condensed Balance Sheets as of June 30, 2008 and December 31, 2007
    
    
    1Unaudited Condensed Statements of Operations for the Three and Six Month Periods Ended
June 30, 2008 and 2007, and for the Period from June 14, 2004 (date of inception) to June
30, 2008
    
    
    2Unaudited Condensed Statements of Cash Flows for the Six Month Periods Ended June 30,
2008 and 2007, and for the Period from June 14, 2004 (date of inception) to June 30, 2008
    
    
    3Notes to the Unaudited Condensed Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 4T. Controls and Procedures
    
    
    31PART II.  OTHER INFORMATION
    
    
    32Item 1. Legal Proceedings
    
    
    32Item 1A. Risk Factors
    
    
    32Item 4. Submission of Matters to a Vote of Security Holders
    
    
    32Item 6. Exhibits
    
    
    33SIGNAURE
    
    
    34EXHIBITSEXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
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PART I.  FINANCIAL INFORMATION
 
 Item 1. Condensed Financial Statements
 VIA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
 
 UNAUDITED CONDENSED BALANCE SHEETS
 JUNE 30,
    
    
    DECEMBER 31,2008
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    12,516,066
    
    
    $
    23,098,764Prepaid expenses and other current assets
    
    
    799,089
    
    
    
    953,347Total current assets
    
    
    13,315,155
    
    
    
    24,052,111Property and equipment-net
    
    
    368,219
    
    
    
    335,429Other non-current assets
    
    
    77,830
    
    
    
    97,401Total
    
    $
    13,761,204
    
    
    $
    24,484,941LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    348,220
    
    
    $
    748,719Accrued expenses and other liabilities
    
    
    3,151,122
    
    
    
    3,178,453Capital lease obligation-current portion
    
    
    533
    
    
    
    2,051Total current liabilities
    
    
    3,499,875
    
    
    
    3,929,223Deferred rent
    
    
    5,742
    
    
    
    3,980Total liabilities
    
    
    3,505,617
    
    
    
    3,933,203Commitments and contingenciesShareholders equity:Common stock, $0.001 par value-200,000,000 shares authorized at June 30, 2008 and
December 31, 2007; 19,707,257 shares issued and outstanding at June 30,
2008 and December 31, 2007
    
    
    19,707
    
    
    
    19,707Preferred stock Series A, $0.001 par value-5,000,000 shares authorized at June 30,
2008 and December 31, 2007; 0 shares issued and outstanding at June 30,
2008 and December 31, 2007
    
    
    
    
    
    
    Convertible preferred stock Series C, $0.001 par value-17,000 shares authorized at
June 30, 2008 and December 31, 2007; 2,000 shares issued and outstanding
at June 30, 2008 and December 31, 2007; liquidation preference of $2,000,000
    
    
    2
    
    
    
    2Additional paid-in capital
    
    
    61,656,669
    
    
    
    60,876,834Treasury stock- 0 and 2,014 shares at June 30, 2008 and December 31, 2007, respectively
    
    
    
    
    
    
    (10,276
    )Accumulated other comprehensive income
    
    
    10,869
    
    
    
    16,884Deficit accumulated in the development stage
    
    
    (51,431,660
    )
    
    
    (40,351,413
    )Total shareholders equity
    
    
    10,255,587
    
    
    
    20,551,738Total
    
    $
    13,761,204
    
    
    $
    24,484,941
  1




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VIA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
 
 UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
 PERIOD FROMJUNE 14, 2004(DATE OFTHREE MONTHS ENDED
    
    
    SIX MONTHS ENDED
    
    
    INCEPTION) TOJUNE 30,
    
    
    JUNE 30,
    
    
    JUNE 30,
    
    
    JUNE 30,
    
    
    JUNE 30,2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008Revenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating costs and expenses:Research and development
    
    
    3,120,027
    
    
    
    1,871,665
    
    
    
    6,438,189
    
    
    
    5,061,327
    
    
    
    29,485,099General and administration
    
    
    2,106,815
    
    
    
    1,969,229
    
    
    
    4,771,772
    
    
    
    3,460,708
    
    
    
    17,962,339Merger transaction costs
    
    
    
    
    
    
    2,231,507
    
    
    
    
    
    
    
    3,824,090
    
    
    
    3,824,090Total operating costs and expenses
    
    
    5,226,842
    
    
    
    6,072,401
    
    
    
    11,209,961
    
    
    
    12,346,125
    
    
    
    51,271,528Operating loss
    
    
    (5,226,842
    )
    
    
    (6,072,401
    )
    
    
    (11,209,961
    )
    
    
    (12,346,125
    )
    
    
    (51,271,528
    )Other income (expense):Interest income
    
    
    50,438
    
    
    
    64,298
    
    
    
    153,192
    
    
    
    113,383
    
    
    
    878,164Interest expense
    
    
    (94
    )
    
    
    (4,453
    )
    
    
    (214
    )
    
    
    (59,744
    )
    
    
    (999,278
    )Other (expense) income
    
    
    5,475
    
    
    
    (2,478
    )
    
    
    (23,264
    )
    
    
    (8,336
    )
    
    
    (39,018
    )Total other income (expense)
    
    
    55,819
    
    
    
    57,367
    
    
    
    129,714
    
    
    
    45,303
    
    
    
    (160,132
    )Net Loss
    
    $
    (5,171,023
    )
    
    $
    (6,015,034
    )
    
    $
    (11,080,247
    )
    
    $
    (12,300,822
    )
    
    $
    (51,431,660
    )Loss per share of common stockbasic and diluted
    
    $
    (0.27
    )
    
    $
    (1.99
    )
    
    $
    (0.57
    )
    
    $
    (7.03
    )Weighted average shares outstandingbasic and diluted
    
    
    19,588,094
    
    
    
    3,017,186
    
    
    
    19,581,217
    
    
    
    1,749,728
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VIA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
 
 UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
 PERIOD FROMJUNE 14, 2004(DATE OFSIX MONTHS ENDED
    
    
    INCEPTION) TOJUNE 30,
    
    
    JUNE 30,
    
    
    JUNE 30,2008
    
    
    2007
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (11,080,247
    )
    
    $
    (12,300,822
    )
    
    $
    (51,431,660
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    80,736
    
    
    
    46,374
    
    
    
    268,330Change in unrealized gain on foreign currency hedge
    
    
    (6,015
    )
    
    
    6,018
    
    
    
    10,869Stock compensation expense
    
    
    790,112
    
    
    
    530,005
    
    
    
    2,180,961Deferred rent
    
    
    1,761
    
    
    
    
    
    
    
    5,741Changes in assets and liabilities:Prepaid expenses and other assets
    
    
    173,180
    
    
    
    (565,396
    )
    
    
    (880,252
    )Accounts payable
    
    
    (400,500
    )
    
    
    382,359
    
    
    
    348,218Accrued expenses and other liabilities
    
    
    (33,254
    )
    
    
    1,140,602
    
    
    
    3,245,200Accrued merger transaction costs
    
    
    
    
    
    
    3,865,185
    
    
    
    Interest payable
    
    
    
    
    
    
    55,111
    
    
    
    992,722Net cash used in operating activities
    
    
    (10,474,227
    )
    
    
    (6,840,564
    )
    
    
    (45,259,871
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (106,953
    )
    
    
    (145,251
    )
    
    
    (614,320
    )Cash provided in the Merger
    
    
    
    
    
    
    11,147,160
    
    
    
    11,147,160Capitalized merger transaction costs
    
    
    
    
    
    
    (350,069
    )
    
    
    (350,069
    )Net cash provided by (used in) investing activities
    
    
    (106,953
    )
    
    
    10,651,840
    
    
    
    10,182,771Cash flows from financing activities:Proceeds from convertible promissory notes
    
    
    
    
    
    
    5,000,000
    
    
    
    24,425,000Capital lease payments
    
    
    (1,518
    )
    
    
    (1,295
    )
    
    
    (11,440
    )Issuance of common stock
    
    
    
    
    
    
    
    
    
    
    23,141,360Exercise of stock options for the issuance of common stock
    
    
    
    
    
    
    42,323
    
    
    
    44,046Repurchase and retirement of common stock
    
    
    
    
    
    
    (4,239
    )
    
    
    (5,800
    )Net cash provided by (used in) financing activities
    
    
    (1,518
    )
    
    
    5,036,789
    
    
    
    47,593,166Increase (decrease) in cash and cash equivalents
    
    
    (10,582,698
    )
    
    
    8,848,065
    
    
    
    12,516,066Cash and cash equivalents-beginning of period
    
    
    23,098,764
    
    
    
    3,337,360
    
    
    
    Cash and cash equivalents-end of period
    
    $
    12,516,066
    
    
    $
    12,185,425
    
    
    $
    12,516,066Supplemental disclosure of noncash activities:Interest on convertible debt converted to notes payable
    
    $
    
    
    
    $
    334,222
    
    
    $
    992,722Conversion of notes to preferred stock Series A
    
    $
    
    
    
    $
    13,334,222
    
    
    $
    25,517,722Accrued compensation converted to notes payable
    
    $
    
    
    
    $
    
    
    
    $
    100,000Equipment acquired under capital lease
    
    $
    
    
    
    $
    
    
    
    $
    11,973Stock issuance for license acquisition
    
    $
    
    
    
    $
    
    
    
    $
    1,000Retirement of treasury stock
    
    $
    10,276
    
    
    $
    
    
    
    $
    10,276Supplemental disclosure of cash flow information:Interest paid
    
    $
    215
    
    
    $
    181
    
    
    $
    2,042Taxes paid
    
    $
    3,470
    
    
    $
    
    
    
    $
    39,449
  3




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




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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation Accounting and Reporting by Development Stage Enterprises
   Use of Estimates
 Significant Risks and Uncertainties
  Cash and Cash Equivalents
 Property and Equipment
 5




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Long-Lived Assets
 Acquired Intellectual Property Rights
 Research and Development Expenses Accounting for Research and Development
Costs.
  Income Taxes Accounting for
Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109
 Earnings (Loss) Per Share of Common Stock
 6




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Three months ended
    
    
    Six months endedJune 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008
    
    
    June 30, 2007Net loss
    
    $
    (5,171,023
    )
    
    $
    (6,015,034
    )
    
    $
    (11,080,247
    )
    
    $
    (12,300,822
    )Basic and diluted net loss per share:Weighted-average shares of common stock outstanding
    
    
    19,707,257
    
    
    
    3,266,131
    
    
    
    19,707,257
    
    
    
    3,266,131Less: Weighted-average shares of common stock subject to repurchase
    
    
    (119,163
    )
    
    
    (248,945
    )
    
    
    (126,040
    )
    
    
    (1,516,403
    )Weighted-average shares used in computing basic net loss per share
    
    
    19,588,094
    
    
    
    3,017,186
    
    
    
    19,581,217
    
    
    
    1,749,728Dilutive effect of common share equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted-average shares used in computing diluted net loss per share
    
    
    19,588,094
    
    
    
    3,017,186
    
    
    
    19,581,217
    
    
    
    1,749,728Basic and diluted net loss per share
    
    $
    (0.27
    )
    
    $
    (1.99
    )
    
    $
    (0.57
    )
    
    $
    (7.03
    )
  Three and six months endedJune 30, 2008
    
    June 30, 2007Common stock equivalents (in shares):Shares of common stock subject to outstanding options
    
    
    2,826,976
    
    
    
    776,306Shares of common stock subject to outstanding warrants
    
    
    231,454
    
    
    
    Total shares of common stock equivalents
    
    
    3,058,430
    
    
    
    776,306
  Comprehensive Income (Loss)
 Three months
    
    
    Three months
    
    
    Six months
    
    
    Six monthsended
    
    
    ended
    
    
    ended
    
    
    endedJune 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008
    
    
    June 30, 2007Net loss
    
    $
    (5,171,023
    )
    
    $
    (6,015,034
    )
    
    $
    (11,080,247
    )
    
    $
    (12,300,822
    )Change in unrealized gain (loss) on foreign currency cash flow hedges
    
    
    (5,534
    )
    
    
    3,981
    
    
    
    (6,015
    )
    
    
    6,018Total comprehensive loss$
    (5,176,557
    )
    
    $
    (6,011,053
    )
    
    $
    (11,086,262
    )
    
    $
    (12,294,804
    )
 Derivative Instruments Accounting for Derivative
Instruments and Hedging Activities.
 7




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New Accounting Pronouncements Disclosures about
Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133
 Share-based Payment  Certain Assumptions Used in Valuation Methods  Expected Term Share-Based Payment
 Business
Combinations Non-controlling Interest In Consolidated Financial
Statements an amendment of Accounting Research Bulletin No. 51.
 3. MERGER WITH CORAUTUS
  8




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Cash
    
    $
    11,147,160Accrued expenses
    
    
    (286,408
    )Merger transaction costs expensed
    
    
    3,824,090Total purchase price
    
    $
    14,684,842
  4. STOCK-BASED COMPENSATION
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees.
    9




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Three months ended
    
    Six months endedJune 30, 2008
    
    June 30, 2007
    
    June 30, 2008
    
    June 30, 2007Expected life from grant date
    
    
    6.08
    
    
    
    5.00-6.08
    
    
    
    2.50-6.08
    
    
    
    5.00-6.08Expected volatility
    
    
    81
    %
    
    
    74
    %
    
    
    79%-81
    %
    
    
    68%-74
    %Risk free interest rate
    
    
    3.49
    %
    
    
    5.03
    %
    
    
    2.48-3.49
    %
    
    
    5.03
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  Period fromJune 14, 2004Three months ended
    
    
    Six months ended
    
    
    (date of inception) toJune 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008Research and development expense
    
    $
    134,206
    
    
    $
    91,051
    
    
    $
    248,239
    
    
    $
    182,255
    
    
    $
    747,449General and administrative expense
    
    
    242,934
    
    
    
    191,133
    
    
    
    541,873
    
    
    
    347,750
    
    
    
    1,426,134Total
    
    $
    377,140
    
    
    $
    282,184
    
    
    $
    790,112
    
    
    $
    530,005
    
    
    $
    2,173,583
  5. RESEARCH AND DEVELOPMENT
   10




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Period fromJune 14, 2004Three months ended
    
    
    Six months ended
    
    
    (date of inception) toJune 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008Externally generated R&D expense
    
    $
    1,890,096
    
    
    $
    1,167,033
    
    
    $
    4,109,573
    
    
    $
    3,802,197
    
    
    $
    21,265,066Internally generated R&D expense
    
    
    1,229,931
    
    
    
    704,632
    
    
    
    2,328,616
    
    
    
    1,259,130
    
    
    
    8,220,033Total
    
    $
    3,120,027
    
    
    $
    1,871,665
    
    
    $
    6,438,189
    
    
    $
    5,061,327
    
    
    $
    29,485,099
  Period fromJune 14, 2004Three months ended
    
    
    Six months ended
    
    
    (date of inception) toJune 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008Externally generated R&D expense:In-licensing expenses
    
    $
    6,250
    
    
    $
    
    
    
    $
    12,500
    
    
    $
    1,635,000
    
    
    $
    4,857,500Clinical Research Organization expenses
    
    
    658,641
    
    
    
    458,396
    
    
    
    1,515,814
    
    
    
    873,893
    
    
    
    5,214,489Investigator expenses
    
    
    506,716
    
    
    
    218,774
    
    
    
    1,105,833
    
    
    
    301,384
    
    
    
    2,224,621Consulting expenses
    
    
    392,868
    
    
    
    266,465
    
    
    
    705,467
    
    
    
    505,439
    
    
    
    4,764,558Other
    
    
    325,621
    
    
    
    223,398
    
    
    
    769,959
    
    
    
    486,481
    
    
    
    4,203,898Total
    
    $
    1,890,096
    
    
    $
    1,167,033
    
    
    $
    4,109,573
    
    
    $
    3,802,197
    
    
    $
    21,265,066
  Period fromJune 14, 2004Three months ended
    
    
    Six months ended
    
    
    (date of inception) toJune 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008Internally generated R&D expense:Payroll and payroll related expenses
    
    $
    821,233
    
    
    $
    504,473
    
    
    $
    1,591,113
    
    
    $
    848,683
    
    
    $
    5,633,332Stock-based compensation
    
    
    134,206
    
    
    
    91,051
    
    
    
    248,239
    
    
    
    182,255
    
    
    
    747,449Travel and entertainment expenses
    
    
    99,698
    
    
    
    30,734
    
    
    
    208,583
    
    
    
    80,165
    
    
    
    873,337Other
    
    
    174,794
    
    
    
    78,374
    
    
    
    280,681
    
    
    
    148,027
    
    
    
    965,915Total
    
    $
    1,229,931
    
    
    $
    704,632
    
    
    $
    2,328,616
    
    
    $
    1,259,130
    
    
    $
    8,220,033
 6. PROPERTY AND EQUIPMENT
  June 30,
    
    
    December 31,2008
    
    
    2007Property and equipment at cost:Computer equipment and software
    
    $
    299,278
    
    
    $
    291,149Furniture and fixtures
    
    
    108,869
    
    
    
    102,547Lab equipment
    
    
    46,946
    
    
    
    46,946Office equipment
    
    
    36,693
    
    
    
    35,409Leasehold Improvements
    
    
    128,456
    
    
    
    31,315Capital lease equipment
    
    
    11,973
    
    
    
    11,973Total property and equipment at cost
    
    
    632,215
    
    
    
    519,339Less: accumulated depreciation
    
    
    (263,996
    )
    
    
    (183,910
    )Total
    
    $
    368,219
    
    
    $
    335,429
 11




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Period fromJune 14, 2004Three months ended
    
    
    Six months ended
    
    
    (date of inception) toJune 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008Research and development expense
    
    $
    10,895
    
    
    $
    7,963
    
    
    $
    20,761
    
    
    $
    14,876
    
    
    $
    71,635General and administrative expense
    
    
    30,963
    
    
    
    18,399
    
    
    
    60,524
    
    
    
    31,173
    
    
    
    193,560Total
    
    $
    41,858
    
    
    $
    26,362
    
    
    $
    81,285
    
    
    $
    46,049
    
    
    $
    265,195
 7. FINANCING ARRANGEMENTS
   Debtors Accounting for a Modification or Exchange of Debt
Instruments
 8. EQUITY
  Common Stock
 (in shares)
    
    June 30, 2008
    
    December 31, 20072007 Incentive Award Plan-outstanding and available to grant
    
    
    3,767,515
    
    
    
    3,267,515Common stock warrants
    
    
    231,454
    
    
    
    106,520Total
    
    
    3,998,969
    
    
    
    3,374,035
 Preferred Stock
 12




---



##### Table of Contents



2007 Incentive Award Plan
  WeightedAverageNumber of
    
    
    ExerciseShares
    
    
    Price2007 Incentive Award Plan Options Outstanding  January 1, 2008
    
    
    2,642,110
    
    
    $
    7.02Granted
    
    
    282,000
    
    
    $
    2.82Exercised
    
    
    
    
    
    
    Canceled
    
    
    (97,134
    )
    
    $
    2.412007 Incentive Award Plan Options Outstanding  June 30, 2008
    
    
    2,826,976
    
    
    $
    6.76
  13




---



##### Table of Contents



Options Outstanding
    
    Options Vested or Expected to Vest
    
    Options ExercisableAverage
    
    Weighted
    
    Number
    
    Average
    
    Weighted
    
    
    
    
    
    WeightedNumber of
    
    Remaining
    
    Average
    
    Exercisable or
    
    Remaining
    
    Average
    
    
    
    
    
    AverageRange of Exercise
    
    Options
    
    Contractual
    
    Exercise
    
    Expected to
    
    Contractual
    
    Exercise
    
    Number
    
    ExercisePrices
    
    Outstanding
    
    Life (Years)
    
    Price
    
    Vest
    
    Life (Years)
    
    Price
    
    Exercisable
    
    Price$0.03
    
    
    260,232
    
    
    
    6.94
    
    
    $
    0.03
    
    
    
    259,760
    
    
    
    6.94
    
    
    $
    0.03
    
    
    
    250,783
    
    
    $
    0.03$0.14
    
    
    102,307
    
    
    
    8.30
    
    
    $
    0.14
    
    
    
    101,403
    
    
    
    8.30
    
    
    $
    0.14
    
    
    
    84,232
    
    
    $
    0.14$2.19
    
    
    35,000
    
    
    
    9.97
    
    
    $
    2.19
    
    
    
    33,250
    
    
    
    9.97
    
    
    $
    2.19
    
    
    
    
    
    
    $
    2.19$2.38
    
    
    1,414,017
    
    
    
    9.47
    
    
    $
    2.38
    
    
    
    1,355,777
    
    
    
    9.47
    
    
    $
    2.38
    
    
    
    249,228
    
    
    $
    2.38$2.90
    
    
    235,000
    
    
    
    9.55
    
    
    $
    2.90
    
    
    
    223,250
    
    
    
    9.55
    
    
    $
    2.90
    
    
    
    
    
    
    $
    2.90$3.10
    
    
    12,000
    
    
    
    9.73
    
    
    $
    3.10
    
    
    
    11,400
    
    
    
    9.73
    
    
    $
    3.10
    
    
    
    
    
    
    $
    3.10$3.48
    
    
    396,373
    
    
    
    9.09
    
    
    $
    3.48
    
    
    
    380,871
    
    
    
    9.09
    
    
    $
    3.48
    
    
    
    86,332
    
    
    $
    3.48$5.10
    
    
    22,300
    
    
    
    8.93
    
    
    $
    5.10
    
    
    
    22,300
    
    
    
    8.93
    
    
    $
    5.10
    
    
    
    22,300
    
    
    $
    5.10$5.25
    
    
    47
    
    
    
    0.50
    
    
    $
    5.25
    
    
    
    47
    
    
    
    0.50
    
    
    $
    5.25
    
    
    
    47
    
    
    $
    5.25$5.55
    
    
    37,172
    
    
    
    8.93
    
    
    $
    5.55
    
    
    
    37,172
    
    
    
    8.93
    
    
    $
    5.55
    
    
    
    37,172
    
    
    $
    5.55$11.25-1023.75
    
    
    312,528
    
    
    
    6.40
    
    
    $
    42.36
    
    
    
    312,528
    
    
    
    6.40
    
    
    $
    42.36
    
    
    
    312,528
    
    
    $
    42.362,826,976
    
    
    
    8.80
    
    
    $
    6.76
    
    
    
    2,737,758
    
    
    
    8.80
    
    
    $
    6.90
    
    
    
    1,042,622
    
    
    $
    13.88
  Warrants
     9. RELATED PARTIES
  14




---



##### Table of Contents



10. COMMITMENTS
 Operating Leases
  AmountJuly through December 2008
    
    $
    212,6562009
    
    
    429,4172010
    
    
    437,5972011
    
    
    445,7772012
    
    
    362,4682013
    
    
    139,742Total minimum lease payments
    
    $
    2,027,657
  Capital Leases
   15




---



##### Table of Contents



Amount2008
    
    $
    5442009
    
    
    Total minimum lease payments
    
    
    544Less amount representing interest
    
    
    (11
    )Present value of net minimum lease payments
    
    
    533Capital lease obligation  long-term
    
    
    Capital lease obligation  short-term
    
    $
    533
 11. INCOME TAXES
     12. EMPLOYEE BENEFIT PLANS
  13. SUBSEQUENT EVENT
  16




---



##### 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, 2007 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.
 Background
  Overview
 Description of Business and Background
     17




---



##### Table of Contents




    
    terminate or delay clinical trials or studies of VIA-2291;
    
    terminate or delay the pre-clinical development of one or more of its other pre-clinical
candidates;
    
    curtail its licensing activities that are designed to identify molecular targets and
small molecules for treating cardiovascular disease;
    
    relinquish rights to product candidates, development programs, or discovery development
programs that it may otherwise seek to develop or commercialize on its own; and
    
    delay, reduce the scope of, or eliminate one or more of its research and development
programs, or ultimately cease operations.
 Revenue
  Research and Development Expenses
  18




---



##### Table of Contents




    
    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 pre-clinical testing and
clinical studies;
    
    Pre-clinical costs, including toxicology and carcinogenicity studies;
    
    Fees paid to professional service providers for independent monitoring and analysis of
the Companys clinical trials;
    
    Depreciation and equipment; and
    
    Allocated costs of facilities and infrastructure.
  Period fromJune 14, 2004Three months ended
    
    
    Six months ended
    
    
    (date of inception) toJune 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008Externally generated R&D expense
    
    $
    1,890,096
    
    
    $
    1,167,033
    
    
    $
    4,109,573
    
    
    $
    3,802,197
    
    
    $
    21,265,066Internally generated R&D expense
    
    
    1,229,931
    
    
    
    704,632
    
    
    
    2,328,616
    
    
    
    1,259,130
    
    
    
    8,220,033Total
    
    $
    3,120,027
    
    
    $
    1,871,665
    
    
    $
    6,438,189
    
    
    $
    5,061,327
    
    
    $
    29,485,099
  Period fromJune 14, 2004Three months ended
    
    
    Six months ended
    
    
    (date of inception) toJune 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008Externally generated R&D expense:In-licensing expenses
    
    $
    6,250
    
    
    $
    
    
    
    $
    12,500
    
    
    $
    1,635,000
    
    
    $
    4,857,500Clinical Research Organization expenses
    
    
    658,641
    
    
    
    458,396
    
    
    
    1,515,814
    
    
    
    873,893
    
    
    
    5,214,489Investigator expenses
    
    
    506,716
    
    
    
    218,774
    
    
    
    1,105,833
    
    
    
    301,384
    
    
    
    2,224,621Consulting expenses
    
    
    392,868
    
    
    
    266,465
    
    
    
    705,467
    
    
    
    505,439
    
    
    
    4,764,558Other
    
    
    325,621
    
    
    
    223,398
    
    
    
    769,959
    
    
    
    486,481
    
    
    
    4,203,898Total
    
    $
    1,890,096
    
    
    $
    1,167,033
    
    
    $
    4,109,573
    
    
    $
    3,802,197
    
    
    $
    21,265,066
 19




---



##### Table of Contents



Period fromJune 14, 2004Three months ended
    
    
    Six months ended
    
    
    (date of inception) toJune 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008Internally generated R&D expense:Payroll and payroll related expenses
    
    $
    821,233
    
    
    $
    504,473
    
    
    $
    1,591,113
    
    
    $
    848,683
    
    
    $
    5,633,332Stock-based compensation
    
    
    134,206
    
    
    
    91,051
    
    
    
    248,239
    
    
    
    182,255
    
    
    
    747,449Travel and entertainment expenses
    
    
    99,698
    
    
    
    30,734
    
    
    
    208,583
    
    
    
    80,165
    
    
    
    873,337Other
    
    
    174,794
    
    
    
    78,374
    
    
    
    280,681
    
    
    
    148,027
    
    
    
    965,915Total
    
    $
    1,229,931
    
    
    $
    704,632
    
    
    $
    2,328,616
    
    
    $
    1,259,130
    
    
    $
    8,220,033
     20




---



##### Table of Contents



General and Administrative
   21




---



##### Table of Contents



Interest Income, Interest Expense and Other Expenses
  Results of Operations
 Comparison of the three months ended June 30, 2008 and 2007
  Three Months EndedJune 30, 2008
    
    
    June 30, 2007
    
    
    $ Change
    
    
    % ChangeRevenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    Research and development expense
    
    
    3,120,027
    
    
    
    1,871,665
    
    
    
    1,248,362
    
    
    
    67
    %General and administrative expense
    
    
    2,106,815
    
    
    
    1,969,229
    
    
    
    137,586
    
    
    
    7
    %Merger transaction costs
    
    
    
    
    
    
    2,231,507
    
    
    
    (2,231,507
    )
    
    
    (100
    )%Interest income
    
    
    50,438
    
    
    
    64,298
    
    
    
    (13,860
    )
    
    
    (22
    )%Interest expense
    
    
    94
    
    
    
    4,453
    
    
    
    (4,359
    )
    
    
    (98
    )%Other income/(expense)
    
    
    5,475
    
    
    
    (2,478
    )
    
    
    7,953
    
    
    
    321
    %
 Revenue
 Research and Development Expense.
 General and Administrative Expense.
 22




---



##### Table of Contents



Merger Transaction Costs.
 Interest Income.
 Interest Expense.
 Other
Income/(Expense).
 Income Tax Expense
 Comparison of the six months ended June 30, 2008 and 2007
  Six Months EndedJune 30, 2008
    
    
    June 30, 2007
    
    
    $ Change
    
    
    % ChangeRevenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    Research and development expense
    
    
    6,438,189
    
    
    
    5,061,327
    
    
    
    1,376,862
    
    
    
    27
    %General and administrative expense
    
    
    4,771,772
    
    
    
    3,460,708
    
    
    
    1,311,064
    
    
    
    38
    %Merger transaction costs
    
    
    
    
    
    
    3,824,090
    
    
    
    (3,824,090
    )
    
    
    (100
    )%Interest income
    
    
    153,192
    
    
    
    113,383
    
    
    
    39,809
    
    
    
    35
    %Interest expense
    
    
    214
    
    
    
    59,744
    
    
    
    (59,530
    )
    
    
    (100
    )%Other expense
    
    
    23,264
    
    
    
    8,336
    
    
    
    14,928
    
    
    
    179
    %
 23




---



##### Table of Contents



Revenue
 Research and Development Expense.
 General and Administrative Expense.
  Merger Transaction Costs.
 Interest Income.
 24




---



##### Table of Contents



Interest Expense.
 Other
Expense.
 Income Tax Expense
 Liquidity and Capital Resources
      25




---



##### Table of Contents



Contractual Obligation and Commitments
  Payments Due by PeriodLess Than
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsLong-term capital lease obligations(1)
    
    $
    544
    
    
    $
    544
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating lease obligations(2)
    
    
    2,027,657
    
    
    
    425,660
    
    
    
    875,194
    
    
    
    726,803
    
    
    
    Stanford license(3)
    
    
    845,000
    
    
    
    25,000
    
    
    
    70,000
    
    
    
    100,000
    
    
    
    650,000Uncertain tax positions(4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,873,201
    
    
    $
    451,204
    
    
    $
    945,194
    
    
    $
    826,803
    
    
    $
    650,000
 
 (1)
    
    Long-term capital lease of a copier.(2)
    
    Operating lease obligations reflect contractual commitments for the Companys office
facilities for its headquarters in San Francisco, California and its clinical operations
location in Princeton, New Jersey. In January 2008, the Company expanded and extended both
leases to ensure adequate facilities for current activities. The San Francisco headquarter
lease has been extended through May 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
March 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.(3)
    
    Agreement with the Board of Trustees of the Leland Stanford Junior University granting the
Company exclusive worldwide rights to any and all patents derived from an invention describing
approaches to identify novel candidate genes implicated in the development of atherosclerosis,
which represent likely targets for future novel diagnostic and therapeutic strategies in
atherosclerosis. The Company, in addition to the $26,000 license fees, net of related
accumulated amortization included in other long-term assets in the balance sheet, has long
term fixed and determinable commitments to remit to Stanford license maintenance fees in the
amount of $25,000 in 2008 and 2009 respectively, $35,000 in 2010 and 2011 respectively, and
$50,000 in 2012 and beyond. The license maintenance fees can be applied to future royalties
the Company will pay to Stanford. The Company has 26




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##### Table of Contents



agreed to make certain royalty payments to Stanford related to the issuance and sublicense of the
Stanford license and payments corresponding to the achievement of certain development and
regulatory milestones. The royalty rate varies from 1% to 6% of net sales depending on the type
of product sold and whether the Company holds an exclusive right to the Stanford license at the
time of sale. The Company is also required, under the agreement, to make milestone payments to
Stanford for each of the Companys licensed products that use the Stanford patent as the product
reaches various development and regulatory milestones. The Stanford license becomes non-exclusive
after October 17, 2011 and terminates upon the expiration of the last licensed patent. As of June
30, 2008, we are unable to determine or predict the timing and amount of any potential royalty or
milestone payments.(4)
    
    The Company adopted FIN No. 48 on the first day of its 2007 fiscal year. The amount of
unrecognized tax benefits at June 30, 2008 was approximately $678,000. This amount has been
excluded from the contractual obligations table because a reasonably reliable estimate of the
timing of future tax settlements cannot be determined. Off-Balance Sheet Arrangements
  27




---



##### Table of Contents



Critical Accounting Policies
     Research and Development Accruals
    28




---



##### Table of Contents



Stock-based Compensation
 Share-Based Payment, Accounting for Stock-Based
Compensation Accounting for Stock
Issued to Employees.
  Certain Assumptions Used in Valuation Methods  Expected Term
  Period fromJune 14, 2004Three months ended
    
    
    Six months ended
    
    
    (date of inception) toJune 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008Research and development expense
    
    $
    134,206
    
    
    $
    91,051
    
    
    $
    248,239
    
    
    $
    182,255
    
    
    $
    747,449General and administrative expense
    
    
    242,934
    
    
    
    191,133
    
    
    
    541,873
    
    
    
    347,750
    
    
    
    1,426,134Total
    
    $
    377,140
    
    
    $
    282,184
    
    
    $
    790,112
    
    
    $
    530,005
    
    
    $
    2,173,583
 29




---



##### Table of Contents



Forward-looking statements
  
    
    the Companys ability to obtain necessary financing;
    
    the Companys ability to control its operating expenses;
    
    the Companys ability to recruit and enroll patients for the FDG-PET clinical trial;
    
    the Companys failure to obtain sufficient data from enrolled patients that can be used
to evaluate VIA-2291, thereby impairing the validity or statistical significance of its
clinical trials;
    
    the Companys ability to successfully complete its clinical trials of VIA-2291 on
expected timetables and the outcomes of such clinical trials;
    
    complexities in designing and implementing cardiovascular clinical trials using
histological examinations, measurement of biomarkers, medical imaging, and atherosclerotic
plaque bioassays;
    
    the results of the Companys clinical trials, including without limitation, with respect
to the safety and efficacy of VIA-2291;
    
    the outcome of any legal proceedings;
    
    the Companys ability to obtain necessary FDA approvals;
    
    the Companys ability to successfully commercialize VIA-2291;
    
    the Companys ability to obtain and protect its intellectual property related to its
product candidates;
    
    the Companys potential for future growth and the development of its product pipeline;
    
    the Companys ability to form and maintain collaborative relationships to develop and
commercialize our product candidates;
    
    general economic and business conditions; and
    
    the other risks described under the heading Risk Factors in the Companys Annual Report
on Form 10-K for the year ended December 31, 2007.
  30




---



##### Table of Contents



Item 4T. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  31




---



##### Table of Contents



PART II.  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 4. Submission of Matters to a Vote of Security Holders
   Nominee
    
    For
    
    Against
    
    WithheldLawrence K. Cohen
    
    
    16,288,547
    
    
    
    0
    
    
    
    20,473Douglass B. Given
    
    
    16,288,559
    
    
    
    0
    
    
    
    20,461Richard L. Anderson
    
    
    16,288,560
    
    
    
    0
    
    
    
    20,460Mark N.K. Bagnall
    
    
    16,288,559
    
    
    
    0
    
    
    
    20,461Fred B. Craves
    
    
    16,288,559
    
    
    
    0
    
    
    
    20,461David T. Howard
    
    
    16,288,061
    
    
    
    0
    
    
    
    20,959John R. Larson
    
    
    16,288,560
    
    
    
    0
    
    
    
    20,460
  For
    
    Against
    
    Abstain16,288,975
    
    
    5,398
    
    
    
    14,647
 32




---



##### Table of Contents



Item 6. Exhibits
 Exhibit No.
    
    Description3.1
    
    Restated Certificate of Incorporation (filed as Exhibit 3.1 to the Form 10-K filed on
March 22, 2005 and incorporated herein by reference)3.2
    
    Certificate of Amendment to the Restated Certificate of Incorporation (filed as
Exhibit 3.1 to the Form 10-KSB filed on March 30, 2000 and incorporated herein by
reference)3.3
    
    Certificate of Amendment to the Restated Certificate of Incorporation (filed as
Exhibit 3.3 to the Form 10-K filed on March 28, 2003 and incorporated herein by
reference)3.4
    
    Certificate of Amendment to the Restated Certificate of Incorporation (filed as
Exhibit 3.4 to the Form 10-K filed on March 28, 2003 and incorporated herein by
reference)3.5
    
    Certificate of Amendment to the Restated Certificate of Incorporation (filed as
Exhibit 3.5 to the Form 10-K filed on March 28, 2003 and incorporated herein by
reference)3.6
    
    Amended and Restated Certificate of Designation of Preferences and Rights of Series C
Preferred Stock (filed as Annex H to the Form S-4/A filed on December 19, 2002 and
incorporated herein by reference)3.7
    
    Certificate of Amendment to the Restated Certificate of Incorporation (Increase in
Authorized Shares) (filed as Exhibit 3.7 to the Form 10-Q filed on August 14, 2007 and
incorporated herein by reference)3.8
    
    Certificate of Amendment to the Restated Certificate of Incorporation (Reverse Stock
Split) (filed as Exhibit 3.8 to the Form 10-Q filed on August 14, 2007 and incorporated
herein by reference)3.9
    
    Certificate of Amendment to the Restated Certificate of Incorporation (Name Change)
(filed as Exhibit 3.9 to the Form 10-Q filed on August 14, 2007 and incorporated herein
by reference)3.10
    
    Fourth Amended and Restated Bylaws of VIA Pharmaceuticals, Inc. (filed as Exhibit 3.1 to
the Form 8-K filed on April 17, 2008 and incorporated herein by reference)31.1*
    
    Principal Executive Officers Certifications Pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2*
    
    Principal Financial Officers Certifications Pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1*
    
    Certification Pursuant to 18 U.S.C. § 1350 (Section 906 of Sarbanes-Oxley Act of 2002)32.2*
    
    Certification Pursuant to 18 U.S.C. § 1350 (Section 906 of Sarbanes-Oxley Act of 2002)
 
 *
    
    Filed herewith 33




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##### Table of Contents



VIA PHARMACEUTICALS, INC.By:
    /s/ James G. StewartJames G. StewartSenior Vice President, Chief Financial Officer
Duly Authorized Officer and Principal Financial
Officer 34