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UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
  FORM 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file
    no. 0-19591
  IDM PHARMA, INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware(State or other jurisdiction
    of
    incorporation or organization)

33-0245076(I.R.S. Employer
    Identification No.)   9 Parker, Suite 100, Irvine, CA 92618
 (Address of Principal executive
    offices)
  Registrants telephone number, including area code:
 (949) 470-4751
  Securities registered pursuant to Section 12(b) of the
    Act:
 Common Stock, $0.01 par value
 (Title of class)
   (Name of Each Exchange on
    Which Registered)
  Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
 o þ
 þ o
 Regulation S-K Form 10-K Form 10-K. o
   Large accelerated
    filer o

Accelerated
    filer o

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    Company þ   Rule 12b-2 o þ
    DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.
    *
    
    Excludes 5,200,979 shares of
    Common Stock held by directors and officers and stockholders
    whose ownership exceeds 10% of the Common Stock outstanding on
    June 29, 2007. Exclusion of shares held by any person
    should not be construed to indicate that such person possesses
    the power, direct or indirect, to direct or cause the direction
    of the management or policies of the registrant, or that such
    person is controlled by or under common control with the
    registrant.




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PART I
  Item 1.
    Business  Forward
    Looking Statements
    ® ® ® ® ® ® ®
    Overview
    ® to-be-marketed
     2




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L-MTP-PE
      L-MTP-PE.
    ®
 3




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10-year
        
    for our products that are designed to destroy residual cancer
    cells, we have rights to both non-cellular immunotherapies that
    stimulate the immune system non-specifically such as L-MTP-PE,
    and cellular immunotherapies that use activated macrophages,
    such as BEXIDEM,
    for our Dendritophage products that are designed to prevent
    tumor recurrence, we have rights to specific immunotherapies
    using dendritic cell vaccines, a type of therapeutic cancer
    vaccine, and
    for our synthetic vaccines, we have rights to specific
    combinations of peptides and analogs of peptides called epitopes.       4




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Industry
    and Scientific Background
  Overview
          Osteosarcoma
  60-65%
  Melanoma
    Lung
    cancer
   5




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The
    Immune System and Our Therapeutic Approaches
  lymphocyte-based
          
    one or several antigens against which an immune reaction will be
    triggered,
    a delivery vehicle which will deliver the antigen to the
    appropriate immune system cells at the correct time, and
    an immune system stimulant which will enhance the elicited
    immune reaction.     6




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®
    Advantages
    of Our Approaches
    
    Multiple and Complementary Product
    Categories.  We use different innovative
    approaches to fight cancer. We use both ex-vivo and in-vivo
    activation of immune cells to stimulate and enhance the
    bodys natural defenses. We have product candidates
    designed to destroy residual cancer cells, such as our
    macrophage activators and our MAK-based products, and product
    candidates designed to prevent tumor recurrence, such as our
    synthetic-peptides-based or Dendritophage-based cancer
    treatments.
    Unique Macrophage-Based Approach.  To our
    knowledge, we are the only company that is developing products
    based on activation of macrophages. This includes our L-MTP-PE.
    Benefits of Ex-Vivo Engineering of
    Dendritophages.  Our Dendritophages are produced
    outside the body and therefore in isolation from the potential
    negative effects of cancer on dendritic cell function. As a
    result, we believe that they should continue to function after
    injection into a cancer patient to trigger a broad immune
    response. 7




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
    Potential Product Synergies.  Our immune system
    stimulants, such as L-MTP-PE, have independent therapeutic
    activity as well as the potential to enhance the activity of
    some of our Cell Drugs. If successful, these products could be
    used alone and in combination, increasing their potential value.
    Low Toxicity and Well-Tolerated.  Unlike
    chemotherapy and other conventional cancer treatments, our
    multiple approaches to immunotherapy have been shown in clinical
    trials to have low toxicity and to be well-tolerated.
    Potential to Treat a Wide Variety of
    Cancers.  Because our MAK cells are not tumor
    specific and because our Dendritophages can be loaded with a
    variety of antigens or synthetic peptides, we are able to
    develop new product opportunities for the treatment of a variety
    of cancers.
    Use of Epitopes in Vaccine Development.  By
    selectively modifying epitopes included in our synthetic
    vaccines, we believe we can enhance the desired immune response,
    and by using multiple epitopes from multiple tumor-associated
    antigens, increase the likelihood that the vaccine will continue
    to elicit an effective immune response.  Product
    Development Programs
   8




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PrimaryProduct Candidate

Description

Indication(s)

Status*

Marketing RightsProduct Candidates to Destroy Residual Cancer CellsL-MTP-PE/MEPACT

Liposomal muramyl-tripeptide phosphatidylethanol- amine

Osteosarcoma

NDA filed in U.S.; MAA filed in EU

IDM Pharma, Medison Pharma (Israel) and Genesis Pharma (South
    East Europe)BEXIDEM

MAK

Bladder cancer

Phase 2

IDM PharmaProduct Candidates to Stimulate an Immune Response and
    Prevent Tumor RecurrenceUVIDEM

Dendritophage + melanoma tumor cell lysates

Melanoma

Phase 2

IDM PharmaIDM-2101

Multiple tumor-associated CTL epitopes

Non-Small Cell Lung cancer

Phase 2

IDM PharmaCOLLIDEM

Dendritophages + tumor associated antigen peptides

Colorectal cancer

Phase 1/2

IDM Pharma     *
    
    Human clinical trials are usually conducted in three sequential
    phases that may overlap. In Phase 1, the drug is typically
    introduced into healthy human subjects to determine the initial
    safety profile, identify side effects and evaluate dosage
    tolerance, distribution and metabolism. In Phase 2, the drug is
    studied in a limited patient population with the target disease
    to determine preliminary efficacy and optimal dosages and to
    expand the safety profile. In certain cases, regulatory
    authorities may permit Phase 1 and Phase 2 to be combined into a
    single Phase 1/2 trial by accepting a Phase 2 protocol in which
    the first few patients are more specifically tested for safety
    and tolerance. This is particularly true in instances where it
    may be inappropriate to conduct Phase 1 studies in normal
    volunteers, such as is the case with our cellular products. In
    Phase 3, large-scale comparative trials are conducted in
    patients with the target disease to provide sufficient data for
    the proof of efficacy and safety required for product approval
    by regulatory agencies. Regulatory authorities may permit Phase
    2 and Phase 3 trials to be combined into a single Phase 2/3
    trial by accepting a protocol that typically includes a planned
    interim analysis after an initial group of patients (Phase
    2) is treated to help guide a decision about continuation
    or modification for the Phase 3 portion. Preclinical studies
    involve laboratory evaluation of product characteristics and
    laboratory and/or animal studies to assess the potential
    efficacy and safety of the product, as well as development of
    manufacturing processes for clinical production.  Our
    Clinical Stage Products
  Our
    Product Candidates to Destroy Residual Cancer
    Cells
  L-MTP-PE for Treatment of
    Osteosarcoma. 60-65% 5-year
 9




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2mg/m 2 2 L-MTP-PE. follow-up L-MTP-PE
  L-MTP-PE
       10




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BEXIDEM for Treatment of Superficial Bladder
    Cancer.
   11




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Products
    to Prevent Tumor Recurrence
  UVIDEM for Treatment of Melanoma.
  15-25%
  2/3 melanoma
     12




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IDM-2101 for Non-Small Cell Lung Cancer.
          COLLIDEM for Treatment of Colorectal
    Cancer.
  ,
    Product
    Manufacturing
     13




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and/or
             14




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Marketing
    and Sales
    Collaboration
    Agreements and Licenses
    Collaboration
    with sanofi-aventis
  10-year
    in vitro
     15




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16




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and/or
  Collaboration
    with Medarex
    country-by-country product-by-product
    License
    Agreement with Novartis
   17




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country-by-country product-by-product
  Collaboration
    with Biotecnol
  E-coli, E-coli
        and/or
    Other
    Agreements and Licenses
   18




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back-up
    ® ®
  Government
    Research Funding
      30-days
  Acquisition
    of Certain Assets from Jenner Biotherapies
   19




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Intellectual
    Property
  Patents
    and/or
  L-MTP-PE 10-year
       20




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Trademarks
        Government
    Regulation
        Regulation
    of Clinical Trials
   21




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30-day
  Regulation
    of Marketing Approval
      
    whether the drug is safe and effective in its proposed use(s),
    and whether the benefits of the drug outweigh the risks
    whether the drugs proposed labeling (package insert) is
    appropriate, and what it should contain; and
    whether the methods used in manufacturing the drug and the
    controls used to maintain the drugs quality are adequate
    to preserve the drugs identity, strength, quality, and
    purity.    Orphan
    Drugs
     22




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Environmental
    and Health and Safety Laws and Regulations
    Competition
  indication-by-indication
  and/or
 23




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Financial
    Information About Geographic Areas
  Long-lived
    Assets
    Risks
    Associated with Foreign Operations
    Employees
    Convention Collective de
    lIndustrie Pharmaceutique
    Available
    Information
  Form 10-K, Form 10-Q, Form 8-K,
 24




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Item 1A.
    Risk
    Factors  We wish to caution readers that the following important
    factors, among others, in some cases have affected our results
    and in the future could cause our actual results and needs to
    vary materially from forward-looking statements made from time
    to time by us on the basis of managements then-current
    expectations. The business in which we are engaged is in a
    rapidly changing and competitive market and involves a high
    degree of risk, and accuracy with respect to forward-looking
    projections is difficult.
  Our lead
    product candidate, L-MTP-PE, may never obtain regulatory
    approval.
      and/or
     25




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Even if
    we receive regulatory approval for L-MTP-PE, we may not be able
    to commercialize it immediately or market it
    successfully.
      10-year
 26




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Even if
    we obtain regulatory approval for our products, we may be
    required to perform additional clinical trials or change the
    labeling of our products if we or others identify side effects
    after our products are on the market, which could harm sales of
    the affected products.
    
    regulatory approval may be withdrawn;
    reformulation of our products, additional clinical trials,
    changes in labeling of our products or changes to or
    re-certifications of our manufacturing facilities may be
    required;
    sales of the affected products may drop significantly;
    our reputation in the marketplace may suffer; and
    lawsuits, including costly and lengthy class action suits, may
    be brought against us.    Our
    substantial additional capital requirements and potentially
    limited access to financing may harm our ability to develop
    products and fund our operations, and if we do not obtain
    additional funding we may be required to sell our assets or our
    company, or dissolve and liquidate all of our assets.
    
    whether we are able to secure additional financing on favorable
    terms, or at all;
    the costs associated with, and the success of, obtaining
    marketing approval and, as applicable, pricing approval, for
    L-MTP-PE for the treatment of osteosarcoma in the United States,
    Europe and other jurisdictions and the timing of any such
    approval;
    the success or failure of the product launch and
    commercialization of L-MTP-PE;
    the costs associated with the launch and the commercialization
    of L-MTP-PE in the United States, Europe and other jurisdictions
    upon obtaining marketing approval;
    the costs associated with our clinical trials for our product
    candidates, including our lung cancer vaccine candidate;
    progress with other preclinical testing and clinical trials in
    the future;
    our ability to establish and maintain collaboration and license
    agreements and any government contracts and grants;
    the actual revenue we receive under our license agreements;
    the time and costs involved in obtaining regulatory approvals
    for our products; 27




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
    the costs involved in filing, prosecuting, enforcing and
    defending patent claims and any other proprietary rights;
    competing technological and market developments; and
    the magnitude of our immunotherapeutic product discovery and
    development programs.  and/or
  L-MTP-PE.
    The
    process of developing immunotherapeutic products requires
    significant research and development, preclinical testing and
    clinical trials, all of which are extremely expensive and
    time-consuming and may not result in a commercial
    product.
    
    the results of preclinical studies may be inconclusive, or they
    may not be indicative of results that will be obtained in human
    clinical trials;
    after reviewing test results, we may abandon projects that we
    might previously have believed to be promising;
    after reviewing test results, our collaborators may abandon
    projects that we might believe are still promising and we would
    either have to bear the operating expenses and capital
    requirements of continued development of our therapeutic cancer
    vaccines or abandon the projects outright or put them on hold as
    we have done with 28




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our UVIDEM development program following sanofi-aventis
    termination of its participation in the program;  
    we, our collaborators or government regulators may suspend or
    terminate clinical trials if the participating subjects or
    patients are being exposed to unacceptable health risks;
    clinical trials may be delayed as a result of difficulties in
    identifying and enrolling patients who meet trial eligibility
    criteria;
    safety and efficacy results attained in early human clinical
    trials may not be indicative of results that are obtained in
    later clinical trials; and
    our product candidates may not have the desired effects or may
    have undesirable side effects that preclude regulatory approval
    or limit their commercial use, if approved.    Our
    revenues and operating results are likely to
    fluctuate.
      Black-Scholes-Merton
  Our
    history of operating losses and our expectation of continuing
    losses may hurt our ability to reach profitability or continue
    operations.
   29




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If we
    lose our key management personnel or are unable to attract and
    retain qualified personnel, it could delay or hurt our research
    and product development efforts.
    Unexpected
    or undesirable side effects or other characteristics of our
    products and technology may delay or otherwise hurt the
    development of our drug candidates, or may expose us to
    significant liability that could cause us to incur significant
    costs.
      Adverse
    publicity regarding the safety or side effects of the technology
    approach or products of others could negatively impact us and
    cause the price of our common stock to decline.
   30




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Our
    treatment approach may not prove effective.
    
    the targeted antigens are not sufficiently different from those
    normal cells to cause an immune reaction;
    the tumor cells do not express the targeted antigen or other
    target structures at all or in sufficient quantities to be
    recognized by immune system cells, such as T cells or
    macrophages;
    the immune response stimulated by the immunotherapeutic agent is
    not strong enough to destroy all of the cancer cells; or
    cancer cells may, through various mechanisms, escape an immune
    response.    If we
    cannot enter into and maintain strategic collaborations on
    acceptable terms in the future, we may not be able to develop
    products in markets where it would be too costly or complex to
    do so on our own.
    If our
    collaboration or license arrangements are unsuccessful, our
    revenues and product development may be limited.
    
    collaborations and licensee arrangements may be terminated, in
    which case we will experience increased operating expenses and
    capital requirements if we elect to pursue further development
    of the product candidate;
    collaborators and licensees may delay clinical trials and
    prolong clinical development, under-fund a clinical trial
    program, stop a clinical trial or abandon a product candidate;
    expected revenue might not be generated because milestones may
    not be achieved and product candidates may not be developed;
    collaborators and licensees could independently develop, or
    develop with third parties, products that could compete with our
    future products;
    the terms of our contracts with current or future collaborators
    and licensees may not be favorable to us in the future; 31




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
    a collaborator or licensee with marketing and distribution
    rights to one or more of our products may not commit enough
    resources to the marketing and distribution of our products,
    limiting our potential revenues from the commercialization of a
    product; and
    disputes may arise delaying or terminating the research,
    development or commercialization of our product candidates, or
    result in significant and costly litigation or arbitration.  We may
    not be able to license technology necessary to develop
    products.
    Our
    supplies of certain materials necessary to our business may be
    limited and key raw materials of desired quantity and quality
    may be difficult to obtain.
      and/or
      If we
    and/or our collaborators cannot cost-effectively manufacture our
    immunotherapeutic product candidates in commercial quantities or
    for clinical trials in compliance with regulatory requirements,
    we and/or our collaborators may not be able to successfully
    commercialize the products.
   32




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L-MTP-PE
  
    non-compliance by these third parties with regulatory and
    quality control standards;
    breach by these third parties of their agreements with
    us; and
    termination or non-renewal of these agreements for reasons
    beyond our control.      We are
    subject to extensive and uncertain government regulation and we
    may not be able to obtain necessary regulatory
    approvals.
    
    fines and penalties;
    injunctions;
    seizure of products;
    total or partial suspension of product marketing;
    failure of a regulatory agency to grant marketing authorization;
    withdrawal of marketing approvals; and
    criminal prosecution. 33




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post-marketing
    We may
    not be able to commercialize products under development by us if
    those products infringe claims in existing patents or patents
    that have not yet issued, and this would materially harm our
    ability to operate.
  and/or
  Our
    failure to obtain issued patents and, consequently, to protect
    our proprietary technology, could hurt our competitive
    position.
    
    the pending patent applications we have filed or to which we
    have exclusive rights may not result in issued patents or may
    take longer than we expect to result in issued patents;
    the allowed claims of any patents that issue may not provide
    meaningful protection;
    we may be unable to develop additional proprietary technologies
    that are patentable;
    the patents licensed or issued to us may not provide a
    competitive advantage;
    other companies may challenge patents licensed or issued to us; 34




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
    disputes may arise regarding inventions and corresponding
    ownership rights in inventions and know-how resulting from the
    joint creation or use of our intellectual property and our
    respective licensors or collaborators; and
    other companies may design around the technologies patented by
    us.  If we are
    unable to compete effectively in the highly competitive
    biotechnology industry, our business will fail.
          Litigation
    regarding intellectual property rights owned or used by us may
    be costly and time-consuming.
       35




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
    assert against others or defend ourselves against claims of
    infringement;
    enforce patents owned by, or licensed to us from another party;
    protect our trade secrets or know-how; or
    determine the enforceability, scope and validity of our
    proprietary rights or those of others.  If we are
    unable to protect our trade secrets, we may be unable to protect
    from competitors our interests in proprietary know-how that is
    not patentable or for which we have elected not to seek patent
    protection.
    Successful
    commercialization of our future products will depend on our
    ability to gain acceptance by the medical community.
    
    the extent to which our therapeutic product candidates are
    demonstrated to be safe and effective in clinical trials;
    convenience and ease of administration;
    the success of sales, marketing and public relations efforts;
    the availability of alternative treatments;
    competitive pricing;
    the reimbursement policies of governments and other third
    parties; and
    garnering support from well respected external advocates.    We may
    experience difficulties managing our growth, which could
    adversely affect our results of operations.
   36




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
    train, manage, motivate and retain our employee base
    accurately forecast demand for, and revenues from, our product
    candidates, particularly L-MTP-PE; and
    expand existing operational, financial and management
    information systems to support our development and planned
    commercialization activities and the multiple locations of our
    offices.    Our use
    of hazardous materials could expose us to significant
    costs.
    clean-up
  Our
    financial results may be adversely affected by fluctuations in
    foreign currency exchange rates.
    The
    volatility of the price of our common stock may adversely affect
    stockholders.
    
    The development and regulatory status of our product candidates,
    particularly L-MTP-PE;
    whether we are able to secure additional financing on favorable
    terms, if at all;
    announcements of technological innovations or new commercial
    immunotherapeutic products by us or others; 37




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
    governmental regulation that affects the biotechnology and
    pharmaceutical industries in general or us in particular;
    developments in patent or other proprietary rights by us;
    receipt of funding by us under collaboration and license
    agreements and government grants;
    developments in, or termination of, our relationships with our
    collaborators and licensees;
    public concern as to the clinical results
    and/or the
    safety of drugs developed by us or others; and
    announcements related to the sale of our common stock or other
    securities.    Our
    principal stockholders, executive officers and directors own a
    significant percentage of shares of our common stock and, as a
    result, the trading price for shares of our common stock may be
    depressed. These stockholders may make decisions that may be
    adverse to your interests.
      Future
    sales of shares of our common stock may cause the market price
    of your shares to decline.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    3-year
 38




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Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders    PART II
  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities    High


Low2008First Quarter (through March 17)

$
3.81


$
0.592007Fourth Quarter

$
1.64


$
0.79Third Quarter

$
2.90


$
1.48Second Quarter

$
9.27


$
2.59First Quarter

$
3.30


$
2.382006Fourth Quarter

$
3.80


$
2.60Third Quarter

$
3.51


$
2.25Second Quarter

$
6.40


$
2.98First Quarter

$
6.25


$
2.77     Form 10-K.
  Stock
    Price Performance Graph(1)
   39




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COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN
    (PERFORMANCE CHART)
  
    (1)
    
    The material in this section is not soliciting
    material, is not deemed filed with the SEC,
    and is not to be incorporated by reference into any filing of
    the Company under the Securities Act of 1933, as amended, or the
    Exchange Act.  Item 6.
    Selected
    Financial Data  Form 10-K.
  Years Ended December 31,2007


2006


2005


2004


2003(In millions, except for net loss per share)Statement of Operations Data:Operating revenues

$
14.6


$
11.3


$
8.5


$
5.8


$
6.1Net loss


(18.3
)


(23.5
)


(39.2
)


(31.7
)


(18.4
)Net loss per share  basic and diluted


(0.87
)


(1.75
)


(3.84
)


(4.35
)


(2.56
)   As of December 31,2007


2006


2005


2004


2003(In millions)Balance Sheet Data:Working capital

$
21.0


$
4.5


$
22.4


$
37.2


$
40.9Total assets


40.1



24.4



42.9



55.3



65.8Long-term obligations


1.7



1.0



0.8



0.4



0.3Stockholders equity


26.0



10.2



28.7



42.5



55.1  40




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Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Except for the historical information contained herein, the
    following discussion contains forward-looking statements that
    involve risks and uncertainties. When used herein, the words
    believe, anticipate, expect,
    estimate and similar expressions are intended to
    identify such forward-looking statements. There can be no
    assurance that these statements will prove to be correct. Our
    actual results could differ materially from those discussed
    here. Factors that could cause or contribute to such differences
    include, but are not limited to, those discussed in this annual
    report. We undertake no obligation to update any of the
    forward-looking statements contained herein to reflect any
    future events or developments.
  Overview
             41




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L-MTP-PE.
  sanofi-aventis
   42




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and/or
    and/or
   43




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Basis of
    Consolidated Financial Statements Presentation
  Series S-1
      Immuno-Designed
 44




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Critical
    Accounting Policies and Estimates
    Revenue
    recognition
  Revenue Recognition, 00-21 Revenue Arrangements with Multiple Deliverables.
          Research
    and development expenses and related tax credit
     45




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Patents,
    trademarks and licenses
    and/or
  Impairment
    of long-lived assets
  Accounting for the
    Impairment or Disposal of Long-Lived Assets, IDM-2101,
   46




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Goodwill
  Goodwill and Other
    Intangible Assets,
  Cost
    Associated with Exit or Disposal
      Accounting for Costs Associated with Exit or Disposal
    Activities Employers
    Accounting for Postemployment Benefits
 47




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Stock
    based compensation
  Share-Based Payments. Accounting
    for Stock Issued to Employees Share-Based
    Payment.
    Warrants
  EITF 00-19, Accounting for Derivative Financial Instruments Indexed To,
    and Potentially Settled In, a Companys Own Stock, EITF 00-19
   49




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Income
    Taxes
        Business
    Combination and Name Change
          Epimmune common stock

$
21,301Epimmune preferred stock, as-converted to common


2,589Estimated fair value of options assumed


2,586Estimated IDM Pharma S.A. direct transaction costs


3,298Total purchase price

$
29,774    50




---



##### Table of Contents



Estimated UsefulAmount


Life (Years)Purchase price allocation:Net tangible assets (net of liabilities)

$
1,607



Licensing and milestone agreements


1,600



5 yearsIn-process research and development (IPR&D)


13,300



Goodwill


13,267



Total purchase price

$
29,774   Accounting for Research and
    Development Costs, Applicability of FASB Statement No. 2 to Business
    Combinations Accounted for by the Purchase Method, an
    Interpretation of SFAS No. 2
  EP HIV-1090
  Goodwill and Other
    Intangible Assets,
  Sale of
    Infectious Disease Related Assets
    ® ®
 51




---



##### Table of Contents



Results
    of Operations for the Years Ended December 31, 2007 and
    2006
  Revenues.
      Research and Development Expenses and Impairment of
    Patents and Licenses.
       52




---



##### Table of Contents



Selling and Marketing Expenses.
  General and Administrative
    Expenses.
  Restructuring Expenses.
  Interest Income.
  Interest Expense.
  Foreign Exchange Gain or Loss.
  Income Tax Expense or Benefit.
    Net Loss.
  Results
    of Operations for the Years Ended December 31, 2006 and
    2005
  Revenues.
   53




---



##### Table of Contents



Research and Development Expenses and Impairment of
    Patents and Licenses.
        Selling and Marketing Expenses.
  General and Administrative
    Expenses.
  Acquired in Process Research and
    Development.
  Interest Income, Net.
 54




---



##### Table of Contents



Foreign Exchange Gain or Loss.
  Income Tax Benefit.
      Net Loss.
  Liquidity
    and Capital Resources
         55




---



##### Table of Contents



and/or
   56




---



##### Table of Contents



Payments Due by PeriodLess Than


Years


Years


More ThanTotal


1 Year


2-3


4-5


5 Years(In thousands of $)Contractual ObligationsLong-Term Debt


530



177







353



Operating Lease Obligations


2,433



774



911



377



371Fixed Mandatory Payments under Collaboration, Licensing and
    Consulting Agreements


25



15



1



9



Total


2,988



966



912



739



371   and/or
   57




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##### Table of Contents



Off-Balance
    Sheet Arrangements
    
    any obligations under a guarantee contract;
    a retained or contingent interest in assets transferred to an
    unconsolidated entity or similar arrangement that serves as
    credit, liquidity or market risk support for such assets;
    any obligation under a derivative instrument that is both
    indexed to our stock and classified in shareholders
    equity, or not reflected, in our statement of financial
    position; or
    any obligation, including a contingent obligation, arising out
    of a variable interest, in an unconsolidated entity that is held
    by, and material to, us, where such entity provides financing,
    liquidity, market risk or credit risk support to us, or engages
    in leasing, hedging or research and development services with us.  Trends
      L-MTP-PE L-MTP-PE,
       58




---



##### Table of Contents



Recently
    Issued Accounting Standards
  Accounting
    Standards Adopted
  Accounting for
    Uncertainty in Income Taxes, an interpretation of
    SFAS No. 109, Accounting for Income Taxes
    (FIN 48),
  No. 00-19-2, Accounting for Registration Payment Arrangements, Accounting for Contingencies.
 59




---



##### Table of Contents



FSP 00-19-2
  Accounting for Certain Hybrid Financial FASB Statements No. 133 and 140.
  New
    Accounting Standards Not Yet Adopted
  Fair Value Measurements
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities.
  EITF 07-3, Accounting for Non-refundable Advance Payments for Goods or
    Services to Be Used in Future Research and Development
    Activities EITF 07-3
  Non
    controlling Interests in Consolidated Financial Statem - An Amendment of ARB No. 51
  Business Combinations
  No. 07-1, Accounting for Collaborative Arrangements (EITF 07-1). EITF 07-1
 60




---



##### Table of Contents



EITF 07-1 EITF 07-1 EITF 07-1
    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risks        Item 8.
    Consolidated
    Financial Statements and Supplementary Data  Form 10-K.
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Conclusion
    Regarding the Effectiveness of Disclosure Controls and
    Procedures
  Rule 13a-15(e)
 61




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##### Table of Contents



Managements
    Report on Internal Control Over Financial Reporting
  Rule 13a-15(f). Internal
    Control  Integrated Framework Internal Control  Integrated Framework
  Changes
    in Internal Control Over Financial Reporting
    Report of
    Independent Registered Public Accounting Firm
    PART III
  Item 10.
    Directors,
    Executive Officers of the Registrant and Corporate
    Governance    Item 11.
    Executive
    Compensation    Compensation
    Committee Interlocks and Insider Participation
    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   62




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##### Table of Contents



PART IV
  Item 15.
    Exhibits
    and Financial Statement Schedules  (a) Financial
    Statements
  (1) Index to Consolidated Financial Statements
  page F-1 Form 10-K.
  PageReport of Independent Registered Public Accounting Firm

F-2Consolidated Balance Sheets as of December 31, 2007 and 2006

F-3Consolidated Statements of Operations for each of the three
    years ended December 31, 2007

F-4Consolidated Statements of Cash Flows for each of the three
    years ended December 31, 2007

F-5Consolidated Statements of Stockholders Equity for each of
    the three years ended December 31, 2007

F-6Notes to Consolidated Financial Statements

F-7   (2) Consolidated Financial Statement Schedules
    (3) Listing of Exhibits
  ExhibitNumber

Document Description3
.1

Amended and Restated Certificate of Incorporation filed with the
    Secretary of State of Delaware on December 2, 1991.(1)3
.2

Certificate of Designation of Series A Junior Participating
    Preferred Stock filed with the Secretary of State of Delaware on
    April 2, 1993.(2)3
.3

Certificate of Amendment of Amended and Restated Certificate of
    Incorporation filed with the Secretary of State of Delaware on
    July 5, 1995.(3)3
.4

Certificate of Increase of Series A Junior Participating
    Preferred Stock filed with the Secretary of State of Delaware on
    July 5, 1995.(3)3
.5

Certificate of Amendment of Amended and Restated Certificate of
    Incorporation filed with the Secretary of State of Delaware on
    July 2, 1998.(4)3
.6

Certificate of Increase of Series A Junior Participating
    Preferred Stock filed with the Secretary of State of Delaware on
    July 2, 1998.(4)3
.7

Certificate of Amendment of Amended and Restated Certificate of
    Incorporation filed with the Secretary of State of Delaware on
    November 12, 1998.(5)3
.8

Certificate of Designations of the Series S and
    Series S-1
    Preferred Stock filed with the Secretary of State of Delaware on
    June 29, 1999.(6)3
.9

Certificate of Amendment of Amended and Restated Certificate of
    Incorporation filed with the Secretary of State of Delaware on
    July 1, 1999.(7)3
.10

Certificate of Amendment of Amended and Restated Certificate of
    Incorporation filed with the Secretary of State of Delaware on
    September 23, 1999.(8)3
.11

Certificate of Decrease of Series A Junior Participating
    Preferred Stock filed with the Secretary of State of Delaware on
    September 23, 1999.(8)3
.12

Certificate of Amendment of Amended and Restated Certificate of
    Incorporation filed with the Secretary of State of Delaware on
    June 17, 2004.(9)3
.13

Certificate of Amendment of Amended and Restated Certificate of
    Incorporation filed with the Secretary of State of Delaware on
    August 15, 2005.(10) 63




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##### Table of Contents



ExhibitNumber

Document Description3
.14

Certificate of Ownership and Merger, filed with the Secretary of
    State of Delaware on August 15, 2005.(10)3
.15

Amended and Restated Bylaws of the Company.(24)4
.1

Reference is made to Exhibits 3.1 through 3.15.4
.2

Specimen certificate of the Common Stock.4
.3

Unit Purchase Agreement, dated February 20, 2007, by and
    among the Registrant and the purchasers listed on Exhibit A
    thereto.(23)4
.4

Form of Warrant.(23)4
.5

Form of Securities Purchase Agreement.(26)4
.6

Form of Warrant.(26)10
.1

Form of Indemnification Agreement entered into between the
    Company and its directors and officers.(29)(*)10
.2

1989 Stock Plan, as amended (the 1989 Plan).(4)(*)10
.3

Forms of Incentive Stock Option Agreement under the 1989
    Plan.(1)(*)10
.4

Form of Nonstatutory Stock Option Agreement under the 1989
    Plan.(1)(*)10
.5

2001 Employee Stock Purchase Plan.(11)(*)10
.6

Non-exclusive License Agreement dated October 28, 2002
    between the Company and Valentis Inc.(12)(A)10
.7

Share Exchange Agreement dated March 15, 2005 among the
    Company and certain shareholders of IDM S.A.(13)10
.8

Amendment No. 1 (to the Share Exchange Agreement) dated
    March 15, 2005 among the Company and certain shareholders
    of IDM S.A.(13)10
.9

Voting Agreement dated March 15, 2005 among the Company,
    Hélène Ploix, as the Shareholder Representative, and
    certain stockholders of the Company.(13)10
.10

Amended and Restated Preferred Exchange Agreement dated
    April 12, 2005.(14)10
.11

Amendment No. 2 (to the Share Exchange Agreement) dated
    April 21, 2005 among the Company and certain shareholders
    of IDM S.A.(15)10
.12

Amendment No. 3 (to the Share Exchange Agreement) dated
    May 31, 2005 among the Company and certain shareholders of
    IDM S.A.(16)10
.13

Amendment No. 4 (to the Share Exchange Agreement) dated
    June 30, 2005 among the Company and certain shareholders of
    IDM S.A.(17)10
.14

Amendment No. 5 (to the Share Exchange Agreement) dated
    August 16, 2005 among the Company and certain shareholders
    of IDM S.A.(10)10
.15

Employment Agreement with Jean-Loup Romet-Lemonne, M.D.
    dated April 21, 2005.(10)(*)10
.16

Form of Option Liquidity Agreement between the Company and
    certain shareholders of IDM S.A.(18)10
.17

Form of Put/Call Agreement between the Company and certain
    shareholders of IDM S.A.(18)10
.18

2000 Stock Plan, as amended, and French Annex to the 2000 Stock
    Plan.(18)(*)10
.19

Form of Stock Option Agreement under the 2000 Plan.(19)(*)10
.20

Form of Deferred Issuance Restricted Stock Bonus Agreement under
    the 2000 Plan.(19)(*)10
.21

Form of French Participants Deferred Issuance Restricted Stock
    Bonus Agreement under the 2000 Plan.(20)(*)10
.22

Form of French Annex Stock Option Agreement under the 2000
    Plan.(20)(*)10
.23

Amendment No. 1 to the French Annex to the 2000 stock
    plan(21)(*)10
.24

Asset Purchase Agreement between the Company and Pharmexa Inc.
    dated November 23, 2005.(21)(B)10
.25

Amendment No. 1 to the Asset Purchase Agreement between the
    Company and Pharmexa Inc. dated December 30, 2005.(21)(B)10
.26

License Agreement for EIS(R) between the Company and Pharmexa
    Inc. dated December 30, 2005.(21)(B) 64




---



##### Table of Contents



ExhibitNumber

Document Description10
.27

License Agreement for PADRE(R) between the Company and Pharmexa
    Inc. dated December 30, 2005.(21)(B)10
.28

Services Agreement between the Company and Pharmexa Inc. dated
    December 30, 2005.(21)(B)10
.29

License Agreement between CIBA-GEIGY Ltd (now Novartis) and
    TherAtid Inc. dated April 4, 1996 (assigned to IDM S.A.
    January 30, 2003).(21)(B)10
.30

Memorandum of Agreement between IDM S.A. and sanofi-aventis
    dated July 20, 2001.(21)(B)10
.31

IL-13 Agreement between IDM S.A. and sanofi-aventis dated
    November 30, 2001.(21)(B)10
.32

Development, Collaboration and Supply Agreement between IDM S.A.
    and Medarex Inc. dated May 24, 2002. (21)(B)10
.33

IL-13 Development and Manufacturing Agreement between IDM S.A.
    and Biotecnol S.A. dated November 4, 2003.(21)(B)10
.34

Amendment No. 1 to IL-13 Development and Manufacturing
    Agreement between IDM S.A. and Biotecnol S.A. dated May 18,
    2004. (21)(B)10
.35

License and Distribution Agreement between IDM S.A. and
    Cambridge Laboratories dated May 10, 2005. (21)(B)10
.36

Amended and Restated IL-13 License Agreement between IDM S.A.
    and sanofi-aventis dated August 12, 2005.(21)(B)10
.37

Amended and Restated Directors Deferred Compensation Plan,
    effective as of January 1, 2005.(21)(*)10
.38

Consulting Agreement with Sylvie Grégoire, Pharm.D., dated
    August 10, 2006.(22)10
.39

Employment Agreement with Hérve Duchesne de Lamotte, dated
    March 15, 1998, as amended (25)(*)10
.40

Employment Agreement with Bonnie Mills, Ph.D., dated as of
    June 6, 2005. (25)(*)10
.41

Consulting Agreement with John P. McKearn, Ph.D., dated as
    of May 1, 2007.(25)10
.42

Employment Agreement with Robert J. De Vaere, dated as of
    May 2, 2007. (25)(*)10
.43

Employment Agreement with Timothy P. Walbert, dated May 25,
    2007. (27)(*)10
.44

Amendment to Employment Agreement with Jean Loup Romet-Lemmone,
    dated July 16, 2007.(27)(*)10
.45

Employment Agreement with Jeffrey W. Sherman, dated
    August 27, 2007. (28)(*)10
.46

Employment Agreement with Timothy C. Melkus, dated
    December 3, 2007.(*)14
.1

Code of Business Conduct and Ethics dated December 9, 2003,
    as amended.(29)21
.1

Subsidiaries of IDM Pharma, Inc.(21)23
.1

Consent of Independent Registered Public Accounting Firm.25
.1

Power of Attorney. Reference is made to the signature page of
    this report.31
.1

Certification of Principal Executive Officer pursuant to
    Section 302 of the Public Company Accounting Reform and
    Investor Protection Act of 2002 (18 U.S.C. § 1350, as
    adopted).31
.2

Certification of Principal Financial Officer pursuant to
    Section 302 of the Public Company Accounting Reform and
    Investor Protection Act of 2002 (18 U.S.C. § 1350, as
    adopted).32
.1

Certification pursuant to Section 906 of the Public Company
    Accounting Reform and Investor Protection Act of 2002
    (18 U.S.C. § 1350, as adopted).     *
    
    Executive Compensation Plans and Arrangements(1)
    
    Incorporated by reference to the Companys
    Form S-1
    Registration Statement and Amendments thereto filed with
    Securities and Exchange Commission (the SEC) (File
    No.
    33-43356).(2)
    
    Incorporated by reference to the Companys
    Form 8-K,
    filed with the SEC on March 22, 1993.(3)
    
    Incorporated by reference to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 1994, filed with the
    SEC on March 31, 1995.(4)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q
    for the quarterly period ended June 30, 1998, filed with
    the SEC on August 14, 1998.(5)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q
    for the quarterly period ended September 30, 1998, filed
    with the SEC on November 16, 1998. 65




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##### Table of Contents



(6)
    
    Incorporated by reference to the Companys
    Form 8-K,
    filed with the SEC on July 16, 1999.(7)
    
    Incorporated by reference to the Companys Definitive Proxy
    Statement, filed with the SEC on Form DEF 14A on
    July 28, 1999.(8)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q
    for the quarterly period ended September 30, 1999, filed
    with the SEC on November 15, 1999.(9)
    
    Incorporated by reference to the Companys Registration
    Statement on
    Form S-8,
    filed with the SEC on July 2, 2004.(10)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K,
    filed with the SEC on August 17, 2005.(11)
    
    Incorporated by reference to the Companys Registration
    Statement on
    Form S-8,
    filed with the SEC on June 27, 2001 (File
    No. 333-63950).(12)
    
    Incorporated by reference to Amendment No. 1 to the
    Companys Registration Statement on
    Form S-1/A,
    filed on November 6, 2002.(13)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K,
    filed on March 18, 2005.(14)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K,
    filed on April 18, 2005.(15)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K,
    filed on April 22, 2005.(16)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K,
    filed on June 2, 2005.(17)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K,
    filed on July 7, 2005.(18)
    
    Incorporated by reference to the Companys Definitive Proxy
    Statement on Form DEFM14A, filed with the SEC on
    June 30, 2005.(19)
    
    Incorporated by reference to the Companys Registration
    Statement on
    Form S-8,
    filed with the SEC on September 8, 2005 (File
    No. 333-128178).(20)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q,
    for the quarterly period ended September 30, 2005, filed on
    November 14, 2005.(21)
    
    Incorporated by reference to the Companys Annual Report on
    Form 10-K,
    for the fiscal year ended December 31, 2005, filed on
    March 31, 2006.(22)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q
    for the quarterly period ended September 30, 2006, filed
    with the SEC on November 14, 2006.(23)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K,
    filed on February 21, 2007.(24)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K,
    filed on March 27, 2007.(25)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q
    for the quarterly period ended March 31, 2007, filed on
    May 15, 2007.(26)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K,
    filed with the SEC on June 21, 2007.(27)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q
    for the quarterly period ended June 30, 2007, filed with
    the SEC on August 10, 2007.(28)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q
    for the quarterly period ended September 30, 2007, filed
    with the SEC on November 11, 2007.(29)
    
    Incorporated by reference to the Companys Annual Report on
    Form 10-K,
    for the fiscal year ended December 31, 2006, filed on
    April 2, 2007.(A)
    
    Portions of this exhibit have been granted confidential
    treatment pursuant to an order granted by the Securities and
    Exchange Commission on November 5, 2002.(B)
    
    Portions of this exhibit have been granted confidential
    treatment pursuant to an order granted by the Securities and
    Exchange Commission on September 12, 2006. 66




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##### Table of Contents



SIGNATURES
    Pharma, Inc.
  By
    /s/Timothy
    P. Walbert   President and Chief Executive Officer
  Form 10-K,
    Signature

Title

Date/s/Timothy
    P. WalbertTimothy
    P. Walbert

President and Chief Executive Officer (Principal Executive
    Officer)

March 21, 2008/s/Robert
    J. De
    VaereRobert
    J. De Vaere

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

March 21, 2008/s/Robert
    BeckRobert
    Beck, M.D.

Director

March 21, 2008/s/Jean
    DeleageJean
    Deleage, Ph.D.

Director

March 21, 2008/s/Sylvie
    GrégoireSylvie
    Grégoire, Pharm. D

Director

March 21, 2008/s/Michael
    G. GreyMichael
    G. Grey

Director

March 21, 2008/s/John
    P. MckearnJohn
    P. McKearn, Ph.D.

Director

March 21, 2008Edward
    E. Penhoet, Ph.D.

Director  67




---



##### 



IDM
    PHARMA INC.
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
   
 PageReport of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets as of
    December 31, 2007 and 2006


F-3Consolidated Statements of Operations for the
    Years Ended December 31, 2007, 2006 and 2005


F-4Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2007, 2006 and 2005


F-5Consolidated Statements of Stockholders
    Equity for the Years Ended December 31, 2007, 2006 and
    2005


F-6Notes to Consolidated Financial Statements


F-7EXHIBIT 4.2EXHIBIT 10.46EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1   F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                 F-2




---



##### Table of Contents



IDM
    PHARMA, INC.
  CONDENSED
    CONSOLIDATED BALANCE SHEETS
  December 31,


December 31,2007


2006ASSETSCurrent assets:Cash and cash equivalents

$
28,382,000


$
10,181,000Related party accounts receivable


3,201,000



3,353,000Accounts receivable


86,000



39,000Research and development tax credit, current portion


834,000



201,000Prepaid expenses and other current assets


665,000



1,380,000Total current assets


33,168,000



15,154,000Property and equipment, net


513,000



1,711,000Patents, trademarks and other licenses, net


2,734,000



3,323,000Goodwill


2,812,000



2,812,000Research and development tax credit, less current portion


749,000



1,300,000Other long-term assets


83,000



82,000$
40,059,000


$
24,382,000LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued liabilities

$
5,202,000


$
4,935,000Accrued payroll and related expenses


2,041,000



1,251,000Deferred revenues, current portion


390,000



769,000Common stock warrants


450,000



Other current liabilities


4,079,000



3,681,000Total current liabilities


12,162,000



10,636,000Long-term debt, less current portion


365,000



505,000Deferred revenues, less current portion


146,000



2,593,000Other non-current liabilities


1,363,000



452,000Total liabilities


14,036,000



14,186,000Stockholders equity:Preferred stock, $0.01 par value, 10,000,000 shares
    authorized and no shares issued and outstanding at
    December 31, 2007 and December 31, 2006






Common stock, $0.01 par value, 55,000,000 shares
    authorized at December 31, 2007 and December 31, 2006
    and 25,148,380 and 13,401,071 shares issued and outstanding
    at December 31, 2007 and December 31, 2006,
    respectively


251,000



134,000Additional paid-in capital


205,105,000



171,892,000Accumulated other comprehensive income


18,742,000



16,701,000Accumulated deficit


(198,075,000
)


(178,531,000
)Total stockholders equity


26,023,000



10,196,000$
40,059,000


$
24,382,000    F-3




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##### Table of Contents



IDM
    PHARMA, INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Years Ended December 31,2007


2006


2005Revenues:Related party revenue

$
14,246,000


$
11,147,000


$
6,794,000Research grants and contract revenue


55,000



96,000



1,621,000License fees, milestones and other revenues


329,000



43,000



124,000Total revenues


14,630,000



11,286,000



8,539,000Costs and expenses:Research and development


21,828,000



22,329,000



24,021,000Impairment of patents and licenses


511,000



592,000



2,555,000Selling and marketing


1,024,000



605,000



1,270,000General and administrative


11,535,000



9,402,000



7,437,000Restructuring


1,092,000







Acquired in process research and development










13,300,000Total costs and expenses


35,990,000



32,928,000



48,583,000Loss from operations


(21,360,000
)


(21,642,000
)


(40,044,000
)Interest income


1,118,000



503,000



580,000Interest expense related to warrants


3,878,000







Other expenses, net










(4,000
)Foreign exchange loss


(1,680,000
)


(2,559,000
)


(162,000
)Loss before income tax


(18,044,000
)


(23,698,000
)


(39,630,000
)Income tax (expense) benefit


(306,000
)


243,000



421,000Net loss

$
(18,350,000
)

$
(23,455,000
)

$
(39,209,000
)Weighted average number of shares outstanding


21,075,738



13,366,002



10,208,937Basic and diluted loss per share

$
(0.87
)

$
(1.75
)

$
(3.84
)Comprehensive loss:Net loss

$
(18,350,000
)

$
(23,455,000
)

$
(39,209,000
)Other comprehensive gain (loss)


2,041,000



3,545,000



(3,920,000
)$
(16,309,000
)

$
(19,910,000
)

$
(43,129,000
)    F-4




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##### Table of Contents



IDM
    PHARMA, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years Ended December 31,2007


2006


2005Operating activitiesNet loss

$
(18,350,000
)

$
(23,455,000
)

$
(39,209,000
)Adjustments to reconcile net loss to net cash used in operating
    activities:Stock-based compensation expense


1,777,000



1,313,000



859,000Change in fair value of common stock warrants


(3,878,000
)






Depreciation and amortization


1,120,000



1,329,000



1,812,000Impairment of patents and licenses


478,000



587,000



2,557,000Acquired in process research and development










13,300,000Impairment of property and equipment


912,000







Foreign exchange loss


1,894,000



2,525,000



Change in operating assets and liabilities:Related party accounts receivable (sanofi-aventis)


478,000



(497,000
)


(826,000
)Accounts receivable


70,000



869,000



Prepaid expenses and other current assets


794,000



1,193,000



(340,000
)Research and development tax credit receivable


73,000



256,000



85,000Other long-term assets


7,000



25,000



330,000Accounts payable and accrued liabilities


(305,000
)


(405,000
)


(1,489,000
)Accrued payroll and related expenses


658,000



(1,622,000
)


67,000Deferred revenues


(2,990,000
)


(578,000
)


(403,000
)Other liabilities


(575,000
)


969,000



1,624,000Net cash used in operating activities


(17,837,000
)


(17,491,000
)


(21,633,000
)Investing activitiesProceeds from asset sale










12,090,000Purchase of property and equipment


(249,000
)


(216,000
)


(514,000
)Patents, trademarks and other licenses


(159,000
)


(210,000
)


(499,000
)Net cash paid for acquisition










(1,015,000
)Net cash (used in) provided by investing activities


(408,000
)


(426,000
)


10,062,000Financing activitiesProceeds from loans










225,000Net proceeds from issuance of common stock


36,007,000



49,000



2,000Net cash provided by financing activities


36,007,000



49,000



227,000Effect of exchange rate on cash and cash equivalents


439,000



1,347,000



(3,731,000
)Increase (decrease) in cash and cash equivalents


18,201,000



(16,521,000
)


(15,075,000
)Cash and cash equivalents at beginning of year


10,181,000



26,702,000



41,777,000Cash and cash equivalents at end of period

$
28,382,000


$
10,181,000


$
26,702,000Supplemental disclosure of cash flow informationInterest paid

$



$



$
3,000Supplemental disclosure of non-cash investing and financing
    activitiesIssuance of shares in exchange for patents and licenses

$



$



$
2,030,000Issuance of shares in connection with Epimmune acquisition

$



$



$
26,476,000Adoption of FIN 48:Reduction of retained earnings

$
(1,194,000
)

$



$
Increase in tax liability

$
1,194,000


$



$
    F-5




---



##### Table of Contents






IDM
    PHARMA, INC.
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY
 For the
    three years ended December 31, 2007
  Additional





Accumulated Other





TotalCommon Stock


Paid-In


Deferred


Comprehensive


Accumulated


StockholdersShares


Amount


Capital


Compensation


Income


Deficit


EquityBalance at December 31, 2004


8,378,130



84,000



141,242,000



(43,000
)


17,085,000



(115,867,000
)


42,501,000Issuance of common stock in connection with exercise of warrants


2,237,862



22,000



2,008,000















2,030,000Issuance of common stock in connection with Epimmune acquisition


2,569,817



26,000



26,450,000















26,476,000Issuance of common stock in connection with employee stock
    purchase plan


2,344







5,000















5,000Issuance of common stock in connection with stock bonus grants


30,900







104,000















104,000Issuance of deferred issuance restricted stock awards










1,059,000



(1,059,000
)










Issuance of consultant stock option










22,000















22,000Deferred compensation related to employee stock options










(2,000
)


2,000











Amortization of deferred compensation














732,000











732,000Decrease in estimated issuance costs










3,000















3,000Net loss






















(39,209,000
)


(39,209,000
)Translation adjustment


















(3,920,000
)






(3,920,000
)Balance at December 31, 2005


13,219,053



132,000



170,891,000



(368,000
)


13,165,000



(155,076,000
)


28,744,000Stock options exercised


16,011







49,000















49,000Issuance of restricted stocks


139,456



2,000



222,000















224,000Stock based compensation expense










1,089,000















1,089,000Deferred compensation adjustment related to FAS 123(R)
    adoption










(359,000
)


368,000



(9,000
)






Issuance of common stock in connection with IDM S.A. PEA shares


26,551























Net loss






















(23,455,000
)


(23,455,000
)Translation adjustment


















3,545,000







3,545,000Balance at December 31, 2006


13,401,071



134,000



171,892,000







16,701,000



(178,531,000
)


10,196,000Cumulative effect of the adoption of FIN 48






















(1,194,000
)


(1,194,000
)Issuance of common stock in connection with private placement,
    net of issuance costs of $0.2 million


4,566,995



46,000



11,653,000















11,699,000Issuance of common stock in connection with registered direct
    offering, net of issuance costs of $1.4 million


7,142,855



71,000



19,769,000















19,840,000Stock options exercised


4,130







14,000















14,000Issuance of restricted stock


45,671























Issuance of common stock in connection with IDM S.A. PEA shares


7,758























Shares cancelled


(20,100
)






















Stock based compensation expense










1,777,000















1,777,000Net loss






















(18,350,000
)


(18,350,000
)Translation adjustment


















2,041,000







2,041,000Balance at December 31, 2007


25,148,380



251,000



205,105,000







18,742,000



(198,075,000
)


26,023,000
    F-6




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Nature of
    Business    ® tm
      ®
  2.
    Organization
    and Basis of Presentation  Immuno-Designed
  Series S-1
 F-7




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   2.
    Organization
    and Basis of Presentation  (Continued)        3.
    Recent
    Operating Results and Liquidity  and/or
         F-8




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   3.
    Recent
    Operating Results and
    Liquidity  (Continued)    4.
    Summary
    of Significant Accounting Policies  Use of
    Estimates
    Foreign
    Currency Translation
       F-9




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   4.
    Summary
    of Significant Accounting
    Policies  (Continued)      Cash
    and Cash Equivalents
    Major
    customer and concentration of credit risk
        Revenue
    recognition
  Revenue Recognition, 00-21 Revenue Arrangements with Multiple Deliverables.
   F-10




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   4.
    Summary
    of Significant Accounting
    Policies  (Continued)    sanofi-aventis
      Research
    and development expenses and related tax credit
        Patents,
    trademarks and licenses
   F-11




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   4.
    Summary
    of Significant Accounting
    Policies  (Continued)  straight-line Accounting for the
    Impairment or Disposal of Long-Lived Assets
  and/or
  Impairment
    of long lived assets
  Accounting for the
    Impairment or Disposal of Long-Lived Assets,
     F-12




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   4.
    Summary
    of Significant Accounting
    Policies  (Continued)    Fair
    value of financial instruments
    Property
    and equipment  net
    Laboratory Equipment:


5 yearsComputer Equipment:


3 yearsFurniture:


5 yearsOffice Equipment:


8 yearsLeasehold improvements:


Shorter of useful life or lease term     Income
    taxes
    Accounting for Uncertainty in Income Taxes, an Interpretation
    of SFAS No. 109, Accounting for Income Taxes
  Segment
    information
   F-13




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   4.
    Summary
    of Significant Accounting
    Policies  (Continued)  Goodwill
  Goodwill and Other
    Intangible Assets
  Earnings
    per share
  Earnings per Share.
  2007


2006


2005Options Outstanding


1,840,595



1,891,840



1,143,806Restricted Stock Awards


232,141



42,141



188,739Warrants Outstanding


3,377,412



211,882



325,056Reserved Pursuant to Option Liquidity Agreement


372,868



380,815



403,984Reserved Pursuant to Put/Call Agreements


0



52,049



78,600Total


5,823,016



2,578,727



2,140,185   Stock-Based
    Compensation
  Share-Based
  Comprehensive
    Income
  Reporting Comprehensive Income
 F-14




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   4.
    Summary
    of Significant Accounting
    Policies  (Continued)    5.
    Business
    Combination and Name Change        Epimmune common stock

$
21,301,000Epimmune preferred stock, as-converted to common


2,589,000Estimated fair value of options and warrants assumed


2,586,000Estimated IDM Pharma S.A. direct transaction costs


3,298,000Total purchase price

$
29,774,000         Estimated UsefulAmount


Life (Years)Purchase price allocation:Net tangible assets (net of liabilities)

$
1,607,000



Licensing and milestone agreements


1,600,000



5 yearsIn-process research and development (IPR&D)


13,300,000



Goodwill


13,267,000



Total purchase price

$
29,774,000    F-15




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   5.
    Business
    Combination and Name
    Change  (Continued)  Accounting for Research
    and Development Costs, Applicability of FASB Statement No. 2 to Business
    Combinations Accounted for by the Purchase Method,
  EP HIV-1090
  Goodwill and Other
    Intangible Assets,
  6.
    Sale of
    Infectious Disease Related Assets    ®
 F-16




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   6.
    Sale of
    Infectious Disease Related
    Assets  (Continued)    AmountPrepaids and other current assets

$
214,000Fixed assets


778,000Intangible assets


1,627,000Goodwill


10,455,000Accrued liabilities


(146,000
)Total carrying value

$
12,928,000       Year EndedDecember 31,2005Revenues

$
7,134Net loss

$
(39,483
)Net loss per common share  basic and diluted

$
(3.87
)   7.
    Research
    and Development and Other Agreements  Novartis
    -Jenner
   F-17




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   7.
    Research
    and Development and Other
    Agreements  (Continued)  country-by-country product-by-product
      Agreement
    with sanofi-aventis (Related Party)
  10-year
   F-18




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   7.
    Research
    and Development and Other
    Agreements  (Continued)      2007


2006


2005Amortization of upfront fee

$
1,007,000


$
221,000


$
220,000Amortization of phase 1 milestone payment


1,190,000



262,000



259,000Amortization of initial R&D expenses from 1999 to 2001


957,000



210,000



208,000Reimbursement of current R&D expenses


11,092,000



10,454,000



6,107,000Total revenues

$
14,246,000


$
11,147,000


$
6,794,000         Medarex
    (Related Party)
     F-19




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   7.
    Research
    and Development and Other
    Agreements  (Continued)  EITF 96-18, Accounting For Equity Instruments That Are Issued to Other
    Than Employees For Acquiring, or in conjunction with Selling,
    Goods or Services,
      Cambridge
    Laboratories
       F-20




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    Balance
    Sheet Information  Cash
    and Cash equivalents
    As of December 31,2007


2006Money market mutual funds

$
27,827,000


$
609,000Cash, including certificates of deposit


555,000



9,572,000Total cash and cash equivalents

$
28,382,000


$
10,181,000   Prepaids
    and Other Current Assets
    As of December 31,2007


2006Prepaid expenses

$
312,000


$
1,117,000Value added tax receivable


165,000



121,000Prepaid services agreement






97,000Other current assets


188,000



45,000$
665,000


$
1,380,000   Property
    and Equipment  Net
    As of December 31,2007


2006Laboratory equipment

$
2,547,000


$
2,713,000Computer equipment


1,531,000



1,787,000Furniture and other equipment


351,000



706,000Leasehold improvements


1,908,000



2,195,000Total property and equipment


6,337,000



7,401,000Less accumulated depreciation and amortization


(5,824,000
)


(5,690,000
)Property and equipment  net

$
513,000


$
1,711,000    F-21




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   8.
    Balance
    Sheet Information  (Continued)  Intangible
    Assets  Net
  assets-net
  As of December 31, 2007


As of December 31, 2006Accumulated








AccumulatedAmortization








Amortizationand








andOriginal Cost


Impairment


Net


Original Cost


Impairment


NetPatents

$
1,208,000


$
(924,000
)

$
284,000


$
1,215,000


$
(593,000
)

$
622,000Trade marks


47,000



(47,000
)






170,000



(100,000
)


70,000Novartis-Jenner and other licenses


4,619,000



(2,169,000
)


2,450,000



4,174,000



(1,543,000
)


2,631,000Sanofi-aventis licenses(1)


2,030,000



(2,030,000
)






2,030,000



(2,030,000
)


Medarex licenses(2)


20,960,000



(20,960,000
)






18,943,000



(18,943,000
)


Total

$
28,864,000


$
(26,130,000
)

$
2,734,000


$
26,532,000


$
(23,209,000
)

$
3,323,000     (1)
    
    On August 12, 2005, sanofi-aventis exercised warrants that
    were granted in connection with the 1999 Agreement in exchange
    for a new license agreement for the Companys use of IL-13
    in Phase 3 clinical trials and for the commercialization of the
    Companys products using IL-13. The fair value of the
    shares issued to sanofi-aventis was estimated at approximately
    $2,030,000. The fair value allocated to the license was
    reflected in intangible assets and immediately impaired in full
    since the acquired license has no alternative future use.(2)
    
    In 2000, the Company acquired licenses from Medarex, which were
    capitalized for an amount of $12,379,000. In 2004, the Company
    recorded an impairment charge of $6,776,000 relating to the
    remaining carrying value of the Medarex licenses. This
    impairment charge was related to IDM Pharmas decision not
    to further pursue any of the development programs in connection
    with the MDX-210 antibody, an antibody used in the
    Companys OSIDEM-2 product candidate.    2007


2006


2005AmortizationPatents

$
105,000


$
186,000


$
166,000Licenses


433,000



383,000



509,000Trademarks


8,000



14,000



47,000$
546,000


$
583,000


$
722,000ImpairmentPatents

$
423,000


$
414,000


$
264,000Licenses






144,000



2,071,000Trademarks


77,000



34,000



220,000$
500,000


$
592,000


$
2,555,000    F-22




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   8.
    Balance
    Sheet Information  (Continued)    2008

$
495,0002009


495,0002010


495,0002011


495,0002012


495,000Thereafter


259,000$
2,734,000   Other
    Currents Liabilities
    As of December 312007


2006Value added tax payable

$
524,000


$
875,000Accrued tax liabilities


2,285,000



1,680,000Severance costs


472,000



864,000Contract termination costs






90,000French social tax accrual


67,000



Up-front payment received from Cambridge laboratories


365,000



Interest-free loan from governmental agencies 
    Current portion


177,000



European grant


189,000



172,000$
4,079,000


$
3,681,000   Other
    Non-current Liabilities
    As of December 31,2007


2006Pension obligation

$
169,000


$
122,000Upfront payment received from Cambridge Laboratories






330,000Accrued tax liabilities


1, 194,000



$
1,363,000


$
452,000  F-23




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   8.
    Balance
    Sheet Information  (Continued)  Long-term
    Debt
    As of December 31,2007


2006Interest-free loan from governmental agencies  Long
    term portion

$
353,000


$
479,000Long-term equipment lease


12,000



26,000Long term portion

$
365,000


$
505,000       9.
    Share-Based
    Compensation  Overview
  Accounting for Stock Issued to
    Employees Accounting for
    Stock-Based Compensation.
  Share-Based Payment
   F-24




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   9.
    Share-Based
    Compensation  (Continued)      Description
    of Share-Based Compensation Plans
    1998 IDM Stock Option Plan
  2000 IDM Stock Option Plan
    1989 Stock Plan
 F-25




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   9.
    Share-Based
    Compensation  (Continued)    1997 Stock Plan
  2000 Stock Plan
       F-26




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   9.
    Share-Based
    Compensation  (Continued)  Stock
    Option Activities
    WeightedAverageExerciseShares


PriceBalance at December 31, 2004


623,434


$
25.30Granted


981,384


$
8.14Cancelled


(57,028
)

$
22.46Balance at December 31, 2005


1,547,790


$
14.53Granted


905,500


$
2.95Exercised


(16,011
)

$
3.06Cancelled


(164,624
)

$
11.66Balance at December 31, 2006


2,272,655


$
9.84Granted


827,200


$
4.89Exercised


(4,130
)

$
3.32Cancelled


(882,262
)

$
6.67Balance at December 31, 2007


2,213,463


$
9.66   Employee Stock Purchase Plan
   F-27




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   9.
    Share-Based
    Compensation  (Continued)    2007


2006


2005Employee Stock Options:Research and development

$
290,000


$
163,000


$
General and administrative


1,175,000



332,000



27,000Sales and marketing


20,000



3,000



1,485,000



498,000



27,000Employee Restricted Stock:Research and development

$
22,000


$



$
General and administrative


213,000



224,000



809,000235,000



224,000



809,000Consultant Options and Stock Awards (general and administrative)

$
57,000


$
591,000


$
23,000Total stock-based compensation expense

$
1,177,000


$
1,313,000


$
859,000     Determining Fair Value
  Expected Term
  Expected Volatility
  Risk-Free Interest Rate
 F-28




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   9.
    Share-Based
    Compensation  (Continued)    Dividends
  Forfeitures
      2007

2006

2005(Post-CombinationPeriod)Average expected term (years)

5.50  6.06

5.50  7.00

6.00Expected volatility (range)

88%  93%

84%  95%

115%Risk-free interest rate

3.45%  4.92%

4.57%  5.03%

5.00Expected dividend yield

0%

0%

0%   Stock
    Option Activity and Share-Based Compensation Expense
    Weighted


Weighted AverageAverage


Remaining


AggregateExercise


Contractual Term


IntrinsicShares


Price


(years)


ValueOptions outstanding, December 31, 2006


2,272,655


$
9.84Granted


827,200


$
4.89Exercised


(4,130
)

$
3.32Cancelled, forfeited or expired


(882,262
)

$
6.67Options outstanding, December 31, 2007


2,213,463


$
9.66



7.29


$
Options exercisable, December 31, 2007


1,297,257


$
13.43



6.32


$
    F-29




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   9.
    Share-Based
    Compensation  (Continued)    Weighted








WeightedAverage








AverageRemaining


Weighted





Exercise PriceOptions


Life in


Average


Options


of OptionsRange of Exercise Prices

Outstanding


Years


Exercise Price


Exercisable


Exercisable$1.00 to $4.99


1,070,878



8.95


$
2.86



441,928


$
3.00$5.00 to $9.99


560,656



7.59



7.01



279,897



6.49$10.00 to $19.99


188,187



2.40



14.47



183,474



14.45$20.00 to $29.99


168,945



4.80



27.00



167,161



26.98$30.00 and above


224,797



4.57



31.65



224,797



31.65Total


2,213,463



7.29


$
9.66



1,297,257


$
13.43       Performance-Based
    Stock Options
  EITF 96-18, Accounting for Equity Instruments That Are Issued to Other
    Than Employees for Acquiring, or in Conjunction with Selling,
    Goods or Services.
  Restricted
    Stock Awards
   F-30




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   9.
    Share-Based
    Compensation  (Continued)      WeightedAverageGrant-DateShares


Fair ValueNon-vested at December 31, 2006


27,755


$
6.22Granted


190,000



3.50Vested


(43,638
)


7.40Forfeited






Non-vested at December 31, 2007


174,117


$
2.96     Comparable
    Disclosures
      10.
    Shareholders
    Equity    Preferred
    Stock
   F-31




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   10.
    Shareholders
    Equity  (Continued)  Common
    Stock
    Accounting for Certain Financial
    Instruments with Characteristics of Both Liabilities and Equity,
  Stock
    Warrants
        Sale
    of Common Stock and Warrants
  pre-existing
 F-32




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##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   10.
    Shareholders
    Equity  (Continued)    Form S-3
  Form S-3 No. 333-143058),
      EITF 00-19, Accounting for Derivative Financial Instruments Indexed To,
    and Potentially Settled In, a Companys Own Stock, EITF 00-19
 F-33




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   10.
    Shareholders
    Equity  (Continued)    Directors
    Deferred Compensation Plan
      Shares
    Reserved for Future Issuance
    Options granted and outstanding


2,213,463Options authorized for future grants


577,513Employee stock purchase plan for future purchases


69,948Common stock warrants


3,377,412Restricted stock awards


232,1416,470,477   11.
    Income
    Tax Provision (Benefit)  Accounting for
    Uncertainty in Income Taxes, an interpretation of
    SFAS No. 109, Accounting for Income Taxes
    (FIN 48)
 F-34




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   11.
    Income
    Tax Provision (Benefit)  (Continued)      As of December 31,2005


2006


2007Foreign

$
(16,692,000
)

$
(13,580,000
)

$
(9,830,000
)United States


(22,938,000
)


(10,118,000
)


(8,214,000
)Total

$
(39,630,000
)

$
(23,698,000
)

$
(18,044,000
)     Years Ended December 31,2005


2006


2007Current:Federal

$
120,000


$



$
425,000State


5,000







Foreign


(546,000
)


(243,000
)


(119,000
)Income tax expense (benefit)

$
(421,000
)

$
(243,000
)

$
306,000       Years Ended December 31,2005


2006


2007Amounts computed at statutory federal rate

$
(13,474,000
)

$
(8,057,000
)

$
(6,136,000
)State taxes net of federal benefit


(1,337,000
)


(530,000
)


(672,000
)Nondeductible expenses and other


372,000



493,000



(231,000
)Foreign refundable credits


(546,000
)


(303,000
)


(119,000
)Foreign tax rate differential


(1,169,000
)


91,000



Change in valuation allowance


5,946,000



4,607,000



2,174,000Asset basis differences


9,663,000







Alternative minimum tax


124,000







Expiration of US net operating losses and tax credits






3,456,000



Losses not benefited










4,865,000Unrecognized tax losses under FIN 48










425,000$
(421,000
)

$
(243,000
)

$
306,000  F-35




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   11.
    Income
    Tax Provision (Benefit)  (Continued)    As of December 312006


2007Deferred tax liabilities:Patents expensed for tax

$
(68,000
)

$
(87,000
)Fixed assets


(84,000
)


(73,000
)Total deferred tax liabilities


(152,000
)


(160,000
)Deferred tax assets:Capitalized research expenses


1,203,000



261,000Reserves and accruals


1,944,000



4,004,000FAS 123R expense


37,000



529,000US net operating loss carryforwards


60,006,000



Foreign net operating loss carryforwards


57,186,000



63,263,000Research and development credits


9,264,000



Other, net


223,000



1,758,000Total deferred tax assets


129,863,000



69,815,000Valuation allowance for deferred tax assets


(129,711,000
)


(69,655,000
)Net deferred tax assets

$



$
     7, ,
     F-36




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   11.
    Income
    Tax Provision (Benefit)  (Continued)      The following table summarizes the activity related to the
    Companys unrecognized tax benefits:   Balance at January 1, 2007

$
779,000Increases related to prior year tax positions


Increases related to current year tax positions


237,000Decreases due to settlements


Other


Balance at December 31, 2007

$
1,016,000      F-37




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   11.
    Income
    Tax Provision (Benefit)  (Continued)    12.
    Benefit
    Plans and 401(k) Plan        13.
    Commitments  Operating
    lease commitments
        OperatingYear

Leases2008

$
774,0002009


711,0002010


200,0002011


189,0002012


188,000Thereafter


371,000Total

$
2,433,000     Obligations
    under collaboration, licensing and contract research
    organization agreements
   F-38




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   13.
    Commitments  (Continued)    Commitment
    with Biotecnol
    Commitment
    with Accovion
  2 3
    14.
    Restructuring
    and Severance Related Charges   F-39




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##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   14.
    Restructuring
    and Severance Related
    Charges  (Continued)      Accounting for Costs Associated with Exit or
    Disposal Activities Employers Accounting for Postemployment Benefits
         F-40




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##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   14.
    Restructuring
    and Severance Related
    Charges  (Continued)          15.
    Related
    Party Transactions      16.
    Recent
    Accounting Pronouncements  Accounting for Certain
    Hybrid Financial FASB
    Statements No. 133 and 140.
 F-41




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##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   16.
    Recent
    Accounting Pronouncements  (Continued)  Fair Value Measurements
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities.
  No. 07-3, Accounting for Nonrefundable Advance Payments for Goods or
    Services to be Used in Future Research and Development
    Activities (EITF 07-3), EITF 07-3 EITF 07-3
  Non controlling Interests
    in Consolidated Financial Statements  An Amendment of
    ARB No. 51
  Business
    Combinations
  No. 07-1, Accounting for Collaborative Arrangements (EITF 07-1). EITF 07-1 EITF 07-1 EITF 07-1
 F-42




---



##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   16.
    Recent
    Accounting Pronouncements  (Continued)  EITF 07-1
    17.
    Unaudited
    quarterly financial information  Accounting for Uncertainty in Income Taxes, an
    Interpretation of SFAS No. 109, Accounting for Income
    Taxes
    1stQuarter


1st Quarter


2nd Quarter


2nd Quarter


3rd Quarter


3rd QuarterAs Filed


As Amended


As Filed


As Amended


As Filed


As Amended


4th QuarterYear Ended December 31, 2007(a)Revenues

$
2.8


$
2.8


$
3.1


$
3.1


$
3.1


$
3.1


$
5.6Loss from operations


(5.5
)


(5.5
)


(6.2
)


(6.2
)


(6.0
)


(6.0
)


(3.6
)Income tax (expense) benefit


0.1











(0.1
)






(0.1
)


(0.1
)Net loss


(5.9
)


(6.0
)


(5.7
)


(5.8
)


(3.8
)


(3.9
)


(2.7
)Basic and diluted net loss per share(b)


(0.38
)


(0.39
)


(0.31
)


(0.32
)


(0.15
)


(0.15
)


(0.11
)Balance Sheet Amounts:(a)Other non-current liabilities

$
0.5


$
1.7


$
0.5


$
1.7


$
0.5


$
1.7


$
1.4Total liabilities


16.2



17.5



19.1



20.5



17.0



18.5



14.0Accumulated deficit


184.4



185.7



190.1



191.5



193.9



195.4



198.1Total stockholders equity


16.1



14.8



31.7



30.3



29.4



27.9



26.0Total liabilities and stockholders equity


32.2



32.2



50.8



50.8



46.4



46.4



40.0   1st Quarter


2nd Quarter


3rd Quarter


4th QuarterYear Ended December 31, 2006Revenues

$
2.3


$
3.0


$
3.0


$
3.0Loss from operations


(6.2
)


(6.0
)


(4.2
)


(5.2
)Net loss


(6.6
)


(7.0
)


(3.9
)


(5.9
)Basic and diluted net loss per share


(0.50
)


(0.52
)


(0.29
)


(0.44
)  F-43




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##### Table of Contents



IDM
    PHARMA INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   17.
    Unaudited
    quarterly financial
    information  (Continued)    (a)
    
    The operating results and balance sheet amounts for the quarters
    ended March 31, June 30 and September 30, 2007 have
    been adjusted to properly reflect the adoption of FIN 48.
    The adjustment was to increase the tax provision for
    unrecognized tax benefits (including related interest and
    penalties) in the amount of $0.1 million for each of the
    quarters, and to record a liability for unrecognized tax
    benefits (including interests and penalties) of
    $1.3 million, $1.4 million and $1.5 million at
    the end of each respective quarters.(b)
    
    The sum of the four quarters will not agree to the annual total
    due to rounding within the quarter. F-44