UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549


FORM
10-Q





(Mark
One)





[X]           Quarterly
Report Pursuant To Section 13 Or 15(d) Of The


Securities Exchange Act Of
1934


For the quarterly period ended March
31, 2008





OR





[   ]           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: 0-23317


ORE
PHARMACEUTICALS INC.







Delaware
              06-1411336(State or other
      jurisdiction of
              (I.R.S.
      Employerincorporation or
      organization)
              Identification
      No.)


610
Professional Drive, Suite 101


Gaithersburg,
Maryland 20879


(Address
of principal executive offices)


(240)
361-4400


(Registrant’s
phone number, including area code)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days:YES xNOo





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








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





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





The number
of shares outstanding of the Registrant’s Common Stock, $.01 par value, was
27,515,461 as of April 30, 2008.















ORE
PHARMACEUTICALS INC.








TABLE
OF CONTENTS




PART
      I
              
              FINANCIAL
      INFORMATIONItem
      1.
              
              Financial Statements
              3Consolidated Condensed Balance Sheets at March 31, 2008
      and December 31, 2007
              3Consolidated Condensed Statements of Operations for the
      Three Months Ended March 31, 2008 and 2007
              4Consolidated Condensed Statements of Cash Flows for the
      Three Months Ended March 31, 2008 and 2007
              5Notes to Consolidated Condensed Financial
      Statements
              6Item
      2.
              
              Management’s Discussion and Analysis of Results of
      Operations and Financial Condition
              10Item
      3.
              
              Quantitative and Qualitative Disclosure about Market
      Risk
              14Item
      4.
              
              Controls and Procedures
              14PART
      II
              
              OTHER
      INFORMATIONItem 1.
              
              Legal Proceedings
              15Item 1A.
              
              Risk Factors
              15Item 2.
              
              Unregistered Sales of Equity Securities and Use of
      Proceeds
              15Item 3.
              
              Defaults Upon Senior Securities
              15Item 4.
              
              Submission of Matters to a Vote of Security
      Holders
              15Item 5.
              
              Other Information
              15Item 6.
              
              Exhibits
              15Signatures
              
              16







PART
      I
            
            FINANCIAL
INFORMATION




Item
      1.
              
              Financial
      Statements


ORE PHARMACEUTICALS INC.





CONSOLIDATED
CONDENSED BALANCE SHEETS


(in
thousands, except share data)




March
      31,
              
              
              December
      31,2008
              
              
              2007(Unaudited)ASSETSCurrent
      assets:Cash
      and cash equivalents
              
              $
              20,767
              
              
              $
              26,323Marketable
      securities available-for-sale
              
              
              2,975
              
              
              
              6,477Accounts
      receivable
              
              
              8
              
              
              
              1,953Prepaid
      expenses
              
              
              1,086
              
              
              
              910Other
      current assets
              
              
              215
              
              
              
              1,185Total
      current assets
              
              
              25,051
              
              
              
              36,848Property
      and equipment, net
              
              
              1,960
              
              
              
              2,101Long-term
      investments
              
              
              2,964
              
              
              
              2,964Goodwill
              
              
              554
              
              
              
              554Other
      intangibles, net
              
              
              903
              
              
              
              836Other
      assets
              
              
              2,805
              
              
              
              2,676Total
      assets
              
              $
              34,237
              
              
              $
              45,979LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable
              
              $
              1,519
              
              
              $
              1,120Accrued
      compensation and employee benefits
              
              
              1,328
              
              
              
              2,516Other
      accrued expenses
              
              
              2,446
              
              
              
              2,912Current
      portion of long-term debt
              
              
              502
              
              
              
              501Deferred
      revenue
              
              
              750
              
              
              
              1,500Total
      current liabilities
              
              
              6,545
              
              
              
              8,549Long-term
      debt, net of current portion
              
              
              27
              
              
              
              27Deferred
      rent
              
              
              20
              
              
              
              32Total
      liabilities
              
              
              6,592
              
              
              
              8,608Commitments
      and contingencies
              
              
              -
              
              
              
              -Stockholders'
      equity:Preferred
      stock, $.01 par value; 10,000,000 shares authorized; and no shares issued
      andoutstanding
      as of March 31, 2008 and December 31, 2007
              
              
              -
              
              
              
              -Common
      stock, $.01 par value; 60,000,000 shares authorized;  27,515,461
      and 32,242,588 sharesissued
      and outstanding as of March 31, 2008 and December 31, 2007,
      respectively
              
              
              275
              
              
              
              322Additional
      paid-in-capital
              
              
              384,678
              
              
              
              387,463Accumulated
      other comprehensive loss
              
              
              -
              
              
              
              (46
              )Accumulated
      deficit
              
              
              (357,308
              )
              
              
              (350,368
              )Total
      stockholders' equity
              
              
              27,645
              
              
              
              37,371Total
      liabilities and stockholders' equity
              
              $
              34,237
              
              
              $
              45,979




See accompanying
notes.




3.




ORE PHARMACEUTICALS INC.





CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS


(in
thousands, except per share data)


(Unaudited)




Three
      Months EndedMarch
      31,2008
              
              
              2007Revenue:Drug
      repositioning and development services
              
              $
              750
              
              
              $
              -Expenses:Research
      and development
              
              
              2,842
              
              
              
              2,378Selling,
      general and administrative
              
              
              5,164
              
              
              
              3,271Total
      expenses
              
              
              8,006
              
              
              
              5,649Loss
      from operations
              
              
              (7,256
              )
              
              
              (5,649
              )Interest
      (income), net
              
              
              (316
              )
              
              
              (615
              )Loss
      from continuing operations
              
              
              (6,940
              )
              
              
              (5,034
              )Loss
      from discontinued operations
              
              
              -
              
              
              
              (5,072
              )Net
      loss
              
              $
              (6,940
              )
              
              $
              (10,106
              )Basic
      and diluted net loss per share:Loss
      from continuing operations
              
              $
              (0.22
              )
              
              $
              (0.16
              )Loss
      from discontinued operations
              
              
              -
              
              
              
              (0.16
              )Net
      loss
              
              $
              (0.22
              )
              
              $
              (0.32
              )Shares
      used in computing basic and dilutednet
      loss per share
              
              
              31,031
              
              
              
              31,837




See
accompanying notes.





4.




ORE PHARMACEUTICALS INC.





CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS


(in
thousands)


(Unaudited)




Three
      Months EndedMarch
      31,2008
              
              
              2007Cash
      flows from operating activities:Loss
      from continuing operations
              
              $
              (6,940
              )
              
              $
              (5,034
              )Adjustments
      to reconcile loss from continuing operations to net cash
    flowsfrom
      continuing operating activities:Depreciation
      and amortization
              
              
              296
              
              
              
              270Non-cash
      stock-based compensation expense
              
              
              159
              
              
              
              163Other
      non-cash items
              
              
              343
              
              
              
              -Changes
      in continuing operating assets and liabilities:Accounts
      receivable
              
              
              1,946
              
              
              
              2,384Prepaids
      and other assets
              
              
              (151
              )
              
              
              102Accounts
      payable
              
              
              399
              
              
              
              (1,367
              )Accrued
      expenses and deferred rent
              
              
              (1,666
              )
              
              
              253Accrued
      restructuring
              
              
              -
              
              
              
              (599
              )Deferred
      revenue
              
              
              (750
              )
              
              
              -Net
      cash flows from continuing operating activities
              
              
              (6,364
              )
              
              
              (3,828
              )Loss
      from discontinued operations
              
              
              -
              
              
              
              (5,072
              )Adjustments
      to reconcile net loss from discontinued operations to net cash
      flowsfrom
      discontinued operating activities:Depreciation
      and amortization and other non-cash items
              
              
              -
              
              
              
              2,236Changes
      in discontinued operating assets and liabilities
              
              
              -
              
              
              
              1,677Net
      cash flows from discontinued operating activities
              
              
              -
              
              
              
              (1,159
              )Net
      cash flows from operating activities
              
              
              (6,364
              )
              
              
              (4,987
              )Cash
      flows from investing activities:Purchases
      of property and equipment
              
              
              (97
              )
              
              
              (119
              )Purchases
      of licenses and patent costs
              
              
              (152
              )
              
              
              (106
              )Proceeds
      from sale of marketable securities available-for-sale
              
              
              6,522
              
              
              
              14,638Purchase
      of marketable securities available-for-sale
              
              
              (2,975
              )
              
              
              (5,888
              )Net
      proceeds received from sale of Genomics Assets
              
              
              501
              
              
              
              -Net
      proceeds received from sale of Preclinical Division
              
              
              272
              
              
              
              -Payment
      related to sale of Preclinical Divison
              
              
              -
              
              
              
              (1,174
              )Net
      investing activities of discontinued operations
              
              
              -
              
              
              
              (647
              )Net
      cash flows from investing activities
              
              
              4,071
              
              
              
              6,704Cash
      flows from financing activities:Purchase
      of common stock
              
              
              (3,263
              )
              
              
              -Repayments
      of an equipment loan
              
              
              -
              
              
              
              (12
              )Net
      cash flows from financing activities
              
              
              (3,263
              )
              
              
              (12
              )Net
      increase (decrease) in cash and cash equivalents
              
              
              (5,556
              )
              
              
              1,705Cash
      and cash equivalents, beginning of period
              
              
              26,323
              
              
              
              25,700Cash
      and cash equivalents, end of period
              
              $
              20,767
              
              
              $
              27,405Supplemental
      disclosure:Interest
      paid
              
              $
              1
              
              
              $
              2




See
accompanying notes.




5.




ORE PHARMACEUTICALS INC.





Notes
to Consolidated Condensed Financial Statements


March
31, 2008


(in
thousands, except share and per share data)


(Unaudited)





Note
1 — Organization and summary of significant accounting policies





Description
of Business





Ore
Pharmaceuticals Inc., including its wholly owned subsidiary, DioGenix Inc. (its
molecular diagnostics business), (collectively, the “Company”), is a commercial
drug development company focused on discovery and development of new indications
for drugs and drug candidates.  The Company’s indication seeking
program provides an efficient and cost-effective approach for systematically
uncovering a compound’s biological activity and identifying potential new
indications of therapeutic effects.  The Company has used its
indication seeking program in efforts to build its own proprietary pipeline and
to contribute to the pipeline success of its drug repositioning
partners.  The Company currently expects to file with the U.S. Food
and Drug Administration an Investigational New Drug Application (“IND”) for
GL1001, the Company’s lead preclinical, small molecule drug candidate, during
the summer of 2008.  The Company continues to explore strategic
alternatives for its molecular diagnostics business.





In
December 2007, the Company sold the assets of its Genomics Division (“Genomics
Assets”) (see Note 3).





Basis
of Presentation





The
accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with United States Generally Accepted Accounting
Principles (“GAAP”) for interim financial information and the instructions to
Form 10-Q and Article 10 of Regulation S-X.  The consolidated
condensed balance sheet as of March 31, 2008, consolidated condensed statements
of operations for the three months ended March 31, 2008 and 2007 and the
consolidated condensed statements of cash flows for the three months ended March
31, 2008 and 2007 are unaudited, but include all adjustments (consisting of
normal recurring adjustments) that the Company considers necessary for a fair
presentation of the financial position, operating results and cash flows,
respectively, for the periods presented.  Although the Company
believes that the disclosures in these financial statements are adequate to make
the information presented not misleading, certain information and footnote
information normally included in financial statements prepared in accordance
with GAAP have been condensed or omitted pursuant to the rules and regulations
of the United States Securities and Exchange Commission (“SEC”).  All
material intercompany accounts and transactions have been eliminated in
consolidation.





As a
result of the Company’s sale of its Genomics Assets and in accordance with
Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for
the Impairment or Disposal of Long-Lived Assets”, the Company has classified the
results of operations of the Genomics Division (not including the business
associated with its molecular diagnostics business) as a discontinued operation
(see Note 3).





Results
for any interim period are not necessarily indicative of results for any future
interim period or for the entire year.  The accompanying unaudited
consolidated condensed financial statements should be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company’s Annual Report on Form 10-K for the year ended December 31,
2007.





Use
of Estimates





The
preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period.  Actual results could differ from those
estimates.





Comprehensive
Loss





The
Company accounts for comprehensive loss as prescribed by SFAS No. 130,
“Reporting Comprehensive Income”.  Comprehensive income (loss) is the
total net income (loss) plus all changes in equity during the period except
those changes resulting from investment by and distribution to
owners.  Total comprehensive loss was $6,894 and $10,086 for the three
months ended March 31, 2008 and 2007, respectively.





New
Accounting Pronouncements





In
September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS
No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements.  SFAS 157 is effective for fiscal years
beginning after November 15, 2007.  In February 2008, the FASB decided
to issue a final Staff Position to allow a one-year deferral of adoption of SFAS
157 for non-financial assets and liabilities that are recognized or disclosed at
fair value in the financial statements on a nonrecurring basis.  The
FASB also decided to amend SFAS 157 to exclude FASB Statement No. 13 and its
related interpretive accounting pronouncements that address leasing
transactions.  The Company adopted SFAS 157 for financial assets and
liabilities on January 1, 2008 and the adoption had no impact on the Company’s
financial position or results of operations.




6.




SFAS
No. 157 discusses valuation techniques, such as the market approach
(comparable market prices), the income approach (present value of future income
or cash flow) and the cost approach (cost to replace the service capacity of an
asset or replacement cost).  The statement utilizes a fair value
hierarchy that prioritizes the inputs to valuation techniques used to measure
fair value into three broad levels.  The following is a brief
description of those three levels:


·
            Level
      1:  Observable inputs such as quoted prices (unadjusted) in
      active markets for identical assets or
  liabilities.


·
            Level
      2:  Inputs other than quoted prices that are observable for the
      asset or liability, either directly or indirectly.  These
      include quoted prices for similar assets or liabilities in active markets
      and quoted prices for identical or similar assets or liabilities in
      markets that are not active.


·
            Level
      3:  Unobservable inputs that reflect the reporting entity’s own
      assumptions.




The
Company’s financial assets subject to fair value measurements and the necessary
disclosures are as follows:




Fair
      Value
              
              
              Fair
      Value Measurements at March 31, 2008as
      of
              
              
              Using
      Fair Value HierarchyMarch
      31, 2008
              
              
              Level
      1
              
              
              Level
      2
              
              
              Level
      3Cash
      and cash equivalents
              
              $
              20,767
              
              
              $
              17,328
              
              
              $
              3,439
              
              
              $
              -Marketable
      securities available-for-sale
              
              
              2,975
              
              
              
              -
              
              
              
              2,975
              
              
              
              -Total
              
              $
              23,742
              
              
              $
              17,328
              
              
              $
              6,414
              
              
              $
              -




Level 2
financial assets include the Company’s investments in commercial paper and a
corporate bond at March 31, 2008.  The Company’s privately held equity
investments are accounted for under the cost method of accounting and are tested
for impairment at any point at which the Company has an indication that an
impairment may exist.





In
December 2007, the FASB issued SFAS No. 141 Revised, “Business Combinations”
(“SFAS 141R”).  SFAS 141R revises SFAS 141, “Business
Combinations”.  SFAS 141R requires an acquirer to determine the fair
value of the consideration exchanged as of the acquisition date (i.e., the date
the acquirer obtains control).  Presently, an acquisition is valued as
of the date the parties agree upon the terms of the transaction.  SFAS
141R also modifies, among other things, the accounting for direct costs
associated with an acquisition, contingencies acquired and contingent
consideration.  The Company will adopt SFAS 141R for business
combinations for which the acquisition date occurs after January 1,
2009.





Note
2 — Stock-based compensation





At March
31, 2008, the Company has the following stock-based compensation plans: 1997
Equity Incentive Plan (the “Stock Plan”) and 1997 Non-Employee Directors’ Stock
Option Plan (the “Directors’ Plan”).





For the
three months ended March 31, 2008 and 2007, the Company recorded stock-based
compensation expense of $159 and $234, respectively.





Stock
Option Awards





The
Company determined the fair value of each option grant on the date of grant
using the Black-Scholes option pricing model for the indicated periods, with the
following assumptions:




Three
      Months EndedMarch
      31,2008
              
              
              2007Expected
      volatility
              
              
              61%
              
              
              
              58%Risk-free
      interest rate
              
              
              3.04%
              
              
              
              4.47%Expected
      lives
              
              3
      years
              
              
              3
      yearsDividend
      rate
              
              
              0%
              
              
              
              0%




7.





The
following is a summary of option activity for the three months ended March 31,
2008:




Per
      ShareWeighted-
              
              
              AggregateNumber
      of
              
              
              Average
              
              
              IntrinsicShares
              
              
              Exercise
      Price
              
              
              ValueOutstanding
      at January 1, 2008
              
              
              4,524,287
              
              
              $
              5.72Options
      granted
              
              
              5,000
              
              
              $
              0.87Options
      exercised
              
              
              -
              
              
              $
              -Options
      cancelled
              
              
              (744,240
              )
              
              $
              6.36Outstanding
      at March 31, 2008
              
              
              3,785,047
              
              
              $
              5.59
              
              
              $
              -Exercisable
      at March 31, 2008
              
              
              3,027,090
              
              
              $
              6.52
              
              
              $
              -


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





Restricted
Stock Awards





During
2007, the Committee approved grants for shares of restricted stock under the
Stock Plan subject to certain performance- or time-based vesting conditions
which, if not met, would result in forfeiture of the shares and the reversal of
any previously recognized related stock-based compensation expense.





The
following is a summary of restricted stock awards activity for the three months
ended March 31, 2008:




Per
      ShareWeighted-AverageNumber
      of
              
              
              Grant-DateShares
              
              
              Fair
      ValueOutstanding
      at January 1, 2008
              
              
              307,621
              
              
              $
              1.31Restricted
      stock granted
              
              
              -
              
              
              $
              -Restricted
      stock vested
              
              
              (50,000
              )
              
              $
              1.37Restricted
      stock forfeited
              
              
              (125,000
              )
              
              $
              1.04Outstanding
      at March 31, 2008
              
              
              132,621
              
              
              $
              1.53




Performance-based
nonvested restricted stock awards are recognized as compensation expense over
the expected vesting period based on the fair value at the date of grant and the
number of shares ultimately expected to vest.  As of March 31, 2008,
the remaining 132,621 outstanding shares of restricted stock will only vest if
certain performance milestones are achieved.  At March 31, 2008, the
Company believes that the achievement of the performance milestones is
probable.





As of
March 31, 2008, $465 of total unrecognized compensation cost related to stock
option and restricted stock awards is expected to be recognized over a
weighted-average period of 1.7 years.  This estimate does not include
the impact of other possible stock-based awards that may be made during future
periods.





Note
3 — Discontinued Operations





In
December 2007, the Company completed the sale of its Genomics Assets to Ocimum
Biosolutions Ltd. (“Ocimum”) for a sales price of $10,000, of which $7,000 was
received at closing less transaction costs of $1,890 and the balance of the
sales price is payable pursuant to a $3,000 non-interest bearing promissory note
due 18 months from the date of closing.  The note has been recorded in
other assets, net of a discount of $262 as of March 31, 2008 due to imputed
interest.  In connection with the sale of its Genomics Assets, the
Company agreed to indemnify Ocimum in the event of a breach of its
representations and warranties to, and agreements with,
Ocimum.  Ocimum also assumed certain liabilities relating to the
Genomics Assets and the lease obligations of the Company’s former Genomics
laboratory and office facility, subject to the Company’s agreement to reimburse
Ocimum for 50% of the lease obligations for 2008.  In March 2008, the
Company relocated its corporate headquarters from the Ocimum space and as a
result recorded $470 of accelerated lease expense upon abandonment of such
space.In the
event of Ocimum’s default under the lease, which expires in February 2011, the
Company could be liable for amounts due under the lease totaling $2,602 at March
31, 2008 (not including the Company’s remaining lease obligations in
2008).  At March 31, 2008, Ocimum had on deposit in escrow $728 to
partially secure both Ocimum’s performance under the lease and payment of the
$3,000 promissory note.  The Company retained full rights in
perpetuity to use the databases of its former Genomics business, existing as of
closing, for its commercial drug development business.  The Company
also retained certain assets associated with its molecular diagnostic business
and continues to explore strategic alternatives for these assets.





8.




Due to the Company’s sale of its
Genomics Assets, the results of the former Genomics Division have been
classified as a discontinued operation. Summarized operating results for the
discontinued operation included in the Company’s Consolidated Condensed
Statements of Operations for the three months ended March 31, 2007 are as
follows:





Three
      Months EndedMarch
      31,2007Revenue
      from discontinued operations
              
              $
              3,269Loss
      from discontinued operations
              
              $
              (5,072
              )


Note
4 — Share purchase





On March
14, 2008, the Company entered into an agreement with a then member of its Board
of Directors to purchase 4,602,127 shares owned directly or indirectly by that
Director for $3,263 (the “Share Purchase”).  In addition, the Company
agreed to reimburse the director $90 for certain fees and expenses and to pay
$36 in Board fees through the remainder of the director’s term, which were
recorded as Selling, General and Administrative expenses.  In
connection with the Share Purchase, the director resigned from the Company’s
Board of Directors and surrendered stock options for 30,000 shares of the
Company’s common stock.  Of the purchase price of $3,263, the Company
allocated $272 to the price paid in excess of the fair value of the shares,
which was also recorded as a Selling, General and Administrative
expense.  The remaining $2,991 was recorded as a reduction to common
stock, based on the par value, and to additional paid-in capital.  The
shares purchased were cancelled and returned to the status of authorized and
unissued shares.





Note
5 — Segment information





Subsequent
to the sale of the Genomics Assets (see Note 3), the Company manages its
business as two operating segments: Commercial Drug Development and molecular
diagnostics; however, because these operating segments meet the aggregation
criteria of SFAS 131 “Disclosures about Segments of an Enterprise and Related
Information”, the Company has aggregated its operating segments into one
reporting segment.  For the three months ended March 31, 2008, one
customer accounted for the Company’s total revenue.




9.




Item
2.                      Management’s
Discussion and Analysis of Results of Operations and Financial
Condition





This
Quarterly Report on Form 10-Q (“Form 10-Q”) contains forward-looking statements
regarding future events and the future results of Ore Pharmaceuticals Inc. (“Ore
Pharmaceuticals”) that are based on current expectations, estimates, forecasts
and projections about the industries in which Ore Pharmaceuticals operates and
the beliefs and assumptions of the management of Ore Pharmaceuticals. Words such
as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,”
“believes,” “seeks,” “estimates,” variations of such words, and similar
expressions are intended to identify such forward-looking statements. These
forward-looking statements are only predictions and are subject to risks,
uncertainties and assumptions. Therefore, actual results may differ materially
and adversely from those expressed in any forward-looking statements. Factors
that might cause or contribute to such differences include those discussed in
the Company’s Annual Report on Form 10-K for the year ended December 31, 2007
under the section entitled “Risk Factors” and in our subsequent filings with the
Securities and Exchange Commission. Ore Pharmaceuticals undertakes no obligation
to revise or update publicly any forward-looking statements to reflect any
change in management’s expectations with regard thereto or any change in events,
conditions, or circumstances on which any such statements are
based.





Unless the
context otherwise requires, references in this Form 10-Q to “Ore
Pharmaceuticals,” “DioGenix,” the “Company,” “we,” “us,” and “our” refer to Ore
Pharmaceuticals Inc. and its wholly owned subsidiary, DioGenix Inc.





Overview





Ore
Pharmaceuticals is a commercial drug development company focused on supplying
the demand for development-stage drug compounds to the pharmaceutical industry
to enrich drug development pipelines.  Our indication seeking program
provides an efficient and cost-effective approach for systematically uncovering
a compound’s biological activity and identifying potential new indications of
therapeutic effects.  This program is helping us to build our own
development pipeline and to enable pharmaceutical companies to return compounds
to their development pipelines.  Our goal is to provide to
pharmaceutical companies drug compounds that have already been successfully
tested for safety in Phase I clinical trials and for which we have identified
new therapeutic uses.  These compounds may then be reinstated or
introduced into pharmaceutical company development pipelines at Phase Ib or IIa
of human clinical trial testing or returned to our pipeline for further
development.





We will
develop our own pipeline of drug compounds by identifying and analyzing
promising unpartnered compounds in the public domain and by acquiring rights to
develop partnered compounds for which we identify new therapeutic uses when our
partners choose not to reinstate compounds into their own pipeline.





In 2006,
we acquired certain rights to develop our first proprietary compound from
Millennium Pharmaceuticals, Inc. (“Millennium”).  We have identified
potential new therapeutic uses for this preclinical, small molecule drug
candidate (GL1001) to treat gastrointestinal inflammation and other related
diseases and conditions; GL1001 has shown indications of efficacy at relevant
doses in in vivo
testing for inflammatory bowel disease (IBD).  We are conducting
additional validation and development testing and intend to initiate clinical
testing in 2008 while actively seeking to out-license or partner the further
clinical development and commercialization of GL1001.  We currently
expect to file with the U.S. Food and Drug Administration an Investigational New
Drug Application (“IND”) for GL1001 during the summer of 2008.





Our
objective is to produce income by:


·
            Monetizing
      compounds from our own development pipeline through out-licensing or
      various forms of collaboration; and


·
            Earning
      milestones and royalties from our pharmaceutical company partners who
      reinstate their compounds back into their own development pipelines for
      therapeutic uses we have
identified.





We have
partnership agreements with pharmaceutical companies to find new therapeutic
uses for compounds they have assessed as safe in human clinical trials, but
which they have discontinued development.  We currently have drug
repositioning and development partnerships with eightpharmaceutical partners:
Pfizer, Inc., F. Hoffmann-La Roche Ltd, Eli Lilly and Co., NV Organon, Abbott
Laboratories, H. Lundbeck, Merck-Serono and Solvay.  Under these
agreements, our partners provide us with compounds that we analyze using our
indication seeking program to identify new therapeutic uses.  Our drug
repositioning and development agreements vary somewhat as to specific terms, but
generally, we are entitled to receive success-based payments when certain
milestones are achieved.  If all milestones are achieved for a
compound, the totals could range from $60-100+ million per
compound.  If a compound is returned by our partners to commercial
development, we are entitled to receive royalty payments, as a percentage of
sales, that range from single- to low double-digits and are generally tiered
according to sales volume.  In most cases, if our partner decides not
to take the compound back into development, we have an option to obtain
development rights for a pre-negotiated amount and our partner would receive
success-based milestone payments and royalties on sales.





Our
agreement with Organon involves co-ownership and co-development of repositioned
compounds, and it therefore differs substantially from our other
agreements.





We apply
our indication seeking program to both our partnered and unpartnered compounds
at our expense.  This program consists of genomics databases and
bioinformatics software developed by Ore Pharmaceuticals over the past ten
years, and proprietary biological screening technologies acquired from
Millennium in 2004 that have undergone subsequent further
development.  To date, we have initiated evaluation of more than 125
compounds.  We have been able to propose alternative indications for
approximately one third of the compounds for which the full evaluations have
been completed.  Some of the compounds for which we have found new
indications have or will progress to in vivo validation and/or
efficacy studies to evaluate and support their suitability for re-entering
clinical trials for the proposed new indications.  Typically, we pay
for the validation studies, subject in most cases to reimbursement from our
partners for costs in excess of an agreed amount.  After completion of
the initial validation study, a partner may wish to conduct additional studies
to learn more about the efficacy of the compound for the new indication before
deciding whether to reinstate the compound into its development
pipeline.  Generally, our partners would conduct these in vivo efficacy studies at
their own expense.  We expect that some portion of the partnered
compounds will have successful outcomes in the in vivo tests and will be
selected by our partners to re-enter clinical trials, although we do not expect
to derive revenue from reinstatement of compounds into our pharmaceutical
partners’ pipelines until after 2008.





10.




Our
pharmaceutical partners choose not to develop some of the compounds for which we
identify new uses for a variety of reasons, that may include: (i) insufficient
effectiveness in treating the disease or condition for which they were designed;
(ii) safety and toxicity issues; (iii) patient variability in responding to a
compound; (iv) the new use may be in a therapeutic area in which the partner is
not involved; (v) the compound may compete with another product that the partner
has in development; (vi) competing products may already be on the market and
have established market acceptance; (vii) the intellectual property and/or
regulatory protection for the new therapeutic use may not be adequate and (viii)
insufficient potential economic return for the company developing the
compound.  In most cases, we have the option to acquire development
rights to candidates rejected by our pharmaceutical partners for consideration,
consisting of an initial development fee and future development milestones and
royalties on sales.





Our
transformation into a commercial drug development company continued with the
sale of our Genomics Assets in December 2007.  We continue to consider
other strategic opportunities and paths to enhance shareholder value, including
but not limited to additional sources of funding and new strategic relationships
with pharmaceutical companies and other third parties.





In
December 2007, we completed the sale of the assets of our Genomics Division (the
“Genomics Assets”) to Ocimum Biosolutions Ltd. (“Ocimum”) for a sales price of
$10.0 million, of which $7.0 million was received at closing and the balance is
payable pursuant to a $3.0 million non-interest bearing promissory note due 18
months from the date of closing.  We agreed to indemnify Ocimum in the
event of a breach of our representations and warranties to, and agreements with,
Ocimum.  Ocimum also assumed certain liabilities relating to the
Genomics Assets and the lease obligations of our former Genomics laboratory and
office facility, subject to our agreement to reimburse Ocimum for 50% of the
lease obligations for 2008.  In the event of Ocimum’s default under
the lease, which expires in February 2011, we could be liable for the amounts
due under the lease that could total $2.6 million at March 31, 2008 (not
including our remaining lease obligations in 2008).  At March 31,
2008, Ocimum had on deposit in escrow $0.7 million to partially secure both
Ocimum’s performance under the lease and payment of the $3.0 million promissory
note.  We have retained full rights in perpetuity to use the databases
of our former Genomics business, existing as of closing, for our Commercial Drug
Development business.  We also retained certain assets associated with
our molecular diagnostics business and continue to explore strategic
alternatives for these assets.





The
results from the former Genomics Division have been classified as a discontinued
operation in the accompanying financial statements.





On March
14, 2008, we entered into an agreement with a then member of our Board of
Directors to purchase 4,602,127 shares owned directly or indirectly by that
Director for $3.3 million (the “Share Purchase”).  In addition, we
agreed to reimburse the director $0.1 million for certain fees and expenses and
to pay less than $0.1 million in Board fees through the remainder of the
director’s term, which were recorded as Selling, General and Administrative
expenses.  In connection with the Share Purchase, the director
resigned from the Company’s Board of Directors and surrendered stock options for
30,000 shares of our common stock.





We
received notice from NASDAQ that our stock would be subject to delisting if it
did not regain compliance by having the closing bid price of our common stock
equal or exceed $1.00 per share for a minimum of 10 consecutive trading
days.  As a proposed remedy, we have asked the stockholders of the
Company to approve a one-for-five reverse stock split of our common stock at the
next annual meeting of stockholders scheduled to be held on May 23,
2008.





We have
incurred net losses in each year since our inception, including losses of $34.7
million in 2007, $54.7 million in 2006 and $48.3 million in 2005.  At
March 31, 2008, we had an accumulated deficit of $357.3 million.  Our
losses have resulted principally from costs incurred from our disposed
businesses and the development of our Commercial Drug Development
business.  We expect to incur additional losses in the
future.





Results
of Continuing Operations





With the
completion of the sale of our Genomics Assets in December 2007, the Genomics
Division has been classified as a “Discontinued Operation” for historical
financial statement purposes.  Our remaining continuing operations
consist of our Commercial Drug Development business and, to a much lesser
extent, our molecular diagnostics business.  In addition, certain
expenses previously allocated to the operations that were discontinued that we
have subsequently determined would not be eliminated as a result of the sale,
have been re-allocated to our Commercial Drug Development business for all
periods presented.  Expenses for our molecular diagnostic business are
also included in our operating expenses from continuing operations; however,
these expenses are not considered material to Ore Pharmaceuticals.





11.




Three
Months Ended March 31, 2008 and 2007





Revenue.  Revenue
from continuing operations was $0.8 million for the three months ended March 31,
2008 and $0.0 million for the same period in 2007.  The 2008 revenue
resulted from a licensing agreement with H. Lundbeck for certain technology
rights unrelated to our core Commercial Drug Development business.  We
expect to derive future revenue primarily from the out-licensing of our drug
candidate, GL1001, and other compounds we may add to our pipeline and the
achievement of milestones and royalties under our drug repositioning and
development agreements.





Research and Development
Expense. Research and development expenses, which consist primarily of
costs associated with the evaluation of customer-supplied drug candidates and,
to a lesser degree, further development of our proprietary drug candidate,
GL1001, increased to $2.8 million for the three months ended March 31, 2008 from
$2.4 million for the same period in 2007.  Amounts for 2008 include
$0.3 million in third-party costs for further development of our preclinical
compound, GL1001.  For 2008, we expect research and development
expenses to increase modestly, primarily as a result of further development of
GL1001.





Selling, General and Administrative
Expense. Selling, general and administrative expenses from continuing
operations, which consist primarily of sales, marketing, accounting, legal,
human resources and other general corporate expenses, increased to $5.2 million
for the three months ended March 31, 2008 from $3.3 million for the same period
in 2007.  The increase is largely due to $0.8 million in increased
legal and advisory fees associated with the Share Purchase, strategic planning
and our proposed reverse split of the Company’s shares, $0.5 million in
accelerated lease costs resulting from the Company’s relocation of its corporate
headquarters and $0.4 million of expense related to the Share
Purchase.  This increase was partially offset by $0.7 million in
additional severance expense incurred in 2007 when compared to 2008 and $0.4
million in fees received in 2007 for providing transition services to the buyer
of our Preclinical business.  For 2008, we expect a modest increase in
selling, general and administrative expenses.





Net Interest Income. Net
interest income decreased to $0.3 million for the three months ended March 31,
2008 from $0.6 million for the same period in 2007, due to the decline in the
balance of our cash and cash equivalents and marketable securities
available-for-sale and a decrease in our rates of return on
investments.





Liquidity
and Capital Resources





From
inception through March 31, 2008, we have financed our operations and
acquisitions through the issuance and sale of equity securities and payments
from customers.  As of March 31, 2008, we had approximately $23.7
million in cash, cash equivalents and marketable securities available-for-sale,
compared to $32.8 million as of December 31, 2007.





Net cash
from operating activities from continuing operations decreased to a negative
$6.4 million for the three months ended March 31, 2008 from a negative $3.8
million for the same period in 2007, primarily due to our increased loss from
continuing operations for the three months ended March 31, 2008.





Our cash
burn for the first quarter of 2008 totaled $9.1 million, which reflected a
reduction of marketable securities available-for-sale of $3.5
million.  Our cash usage included $3.3 million for the Share Purchase,
$1.7 million for employee compensation expenses, including bonus, retention and
severance payments, and $0.8 million for expenses incurred in connection with
the sale of our Genomics Assets in late 2007.  The remaining cash
usage of $3.3 million reflected the favorable impact of the collection of $1.9
million of accounts receivable that we retained in connection with the sale of
our Genomics Assets.





We expect
our cash burn for the second quarter of 2008 to be somewhat greater than that
for the first quarter of 2008, excluding amounts paid for the Share
Purchase.  We also expect our cash usage for the first half of 2008 to
be higher than that for the second half of 2008, due in significant part to the
aforementioned Share Purchase and higher bonus, retention and severance payments
in the first half.  The Company’s cash usage estimates for the second
half reflect the achievement of our revenue objectives for 2008, including the
possible out-licensing of GL1001 in 2008.  However, we may not achieve
our revenue objectives for 2008.





Specific
future financial commitments from continuing operations as of March 31, 2008 are
set forth in the following table:





WithinTotal
              
              
              9
      Months
              
              
              2009
      & 2010
              
              
              2011
      & 2012
              
              
              Beyond
      2012Long-term
      debt
              
              $
              531
              
              
              $
              504
              
              
              $
              27
              
              
              $
              -
              
              
              $
              -Operating
      leases
              
              
              7,122
              
              
              
              1,141
              
              
              
              2,484
              
              
              
              2,573
              
              
              
              924Total
              
              $
              7,653
              
              
              $
              1,645
              
              
              $
              2,511
              
              
              $
              2,573
              
              
              $
              924




Assuming
we realize our objectives as to revenue and cash receipts, as to which there can
be no assurance, we believe that existing cash, cash equivalents and marketable
securities available-for-sale, payment in June 2009 of the $3.0 million
promissory note from Ocimum and potential payments from the out-licensing of our
compounds will be sufficient to support our operations for at least the next two
years. We expect long-term support of our operations to come from additional
out-licensing payments (including up-front payments, milestones and royalties)
and milestones and royalties from our drug repositioning
partnerships.  These estimates are forward-looking statements that
involve risks and uncertainties.  Our actual future capital
requirements and the adequacy of our available funds will depend on many
factors, including those discussed under “Risks Factors” in our Form 10-K for
the year ended December 31, 2007.





12.




Critical
Accounting Policies





Our
consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States, which require management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period.  Actual results
could differ from these estimates.  The following discussion
highlights what we believe to be the critical accounting policies and judgments
made in the preparation of these consolidated financial statements.





Revenue
Recognition





Revenue is
recognized in accordance with the SEC’s Staff Accounting Bulletin No. 104,
“Revenue Recognition” (“SAB 104”).  SAB 104 requires that four basic
criteria be met before revenue can be recognized: 1) persuasive evidence of an
arrangement exists; 2) delivery has occurred or services rendered; 3) the fee is
fixed and determinable; and 4) collectability is reasonably
assured.  As to 1), our business practices require that our services
be performed pursuant to contracts with our customers.  As to 2), we
recognize revenue when services are rendered to our
customers.  Determination of 3) and 4) are based on management’s
judgments regarding the fixed nature of our arrangements taking into account
termination provisions and the collectability of fees under our
arrangements.  Should changes in conditions cause management to
determine these criteria are not met for certain future arrangements, revenue
recognized for any reporting period would be adjusted and could be adversely
affected.





In
accordance with Emerging Issues Task Force Issue No. 00-21, “Revenue
Arrangements with Multiple Deliverables”, revenue recognized for any
multiple-element contract is allocated to each element of the arrangement based
on the relative fair value of the element.  The determination of fair
value of each element is based on our analysis of objective evidence from
comparable internal or third-parties’ sales of the individual
element.  If we are unable to determine evidence of fair value for an
undelivered element of the arrangement, revenue for the arrangement is deferred
and recognized using the revenue recognition method appropriate to the
predominant undelivered element.





We expect
to enter into contractual arrangements with multiple deliverables.  If
we are unable to determine objectively and reliably the fair value of individual
undelivered elements, we recognize all revenue using the revenue recognition
method appropriate to the predominant undelivered element.  We also
defer the direct and incremental expenses associated with the delivery of
services for which revenue has been deferred and recognize these expenses as we
recognize the related revenue.  The timing of revenue recognition
associated with agreements we enter into in future periods may also be dependent
on our ability to objectively and reliably determine the fair value of
deliverables included in those agreements.





Goodwill
and Intangible Assets Impairment





Under
Statement of Financial Accounting Standards No. 142, “Goodwill and Other
Intangible Assets”, we are required to perform an annual impairment test of our
goodwill and periodic reviews of our other intangible assets.  In
addition, we are required to test for impairment at any point we have an
indication that impairment may exist.  We have elected to perform our
annual impairment test of goodwill as of October 1.  As part of our
annual testing of goodwill, we determined that no impairment existed in the
carrying value of goodwill.  This assessment was based on estimates of
fair value we obtained as a result of exploring our strategic alternatives for
our molecular diagnostics business.





Our
assessment of fair value is dependent on subjective estimates we make of
inherently uncertain future net cash flows as a result of exploring our
strategic alternatives for our molecular diagnostics
business.  Accordingly, our estimates of future net cash flows may
change as market conditions and circumstances dictate.  Future
impairment tests of goodwill and other intangibles may result in additional
impairment charges based on these changing estimates.





Equity
Investments





We hold an
equity investment in one company (Xceed Molecular, formerly MetriGenix) with a
remaining book value of $3.0 million as of March 31, 2008.  We record
an investment impairment charge when indicators of impairment exist and it is
believed that an investment has experienced a decline in value that is
other-than-temporary.  Future adverse changes in market conditions or
poor operating results of the underlying investee could result in our inability
to recover the carrying value of this investment that may not be reflected in
such an investment’s current carrying value, thereby possibly requiring an
impairment charge in the future.





13.




Stock-Based
Compensation





Statement
of Financial Accounting Standards (“SFAS”) No. 123 (revised 2004), “Share-Based
Payment” requires us to expense the fair value of stock-based compensation
awards of our various stock-based compensation programs over the requisite
service period of the award.  We estimate the fair value of our
stock-based compensation using fair value pricing models which require the use
of significant assumptions for expected volatility of our common stock, life of
stock options and forfeiture rates.  Future adverse changes in such
assumptions could result in us recording increased stock-based compensation
expenses for stock-based compensation awards granted/issued in the
future.





Recently
Issued Accounting Pronouncements





In
September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS
No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements.  SFAS 157 is effective for fiscal years
beginning after November 15, 2007.  In February 2008, the FASB decided
to issue a final Staff Position to allow a one-year deferral of adoption of SFAS
157 for non-financial assets and liabilities that are recognized or disclosed at
fair value in the financial statements on a nonrecurring basis.  The
FASB also decided to amend SFAS 157 to exclude FASB Statement No. 13 and its
related interpretive accounting pronouncements that address leasing
transactions.  We adopted SFAS 157 for financial assets and
liabilities on January 1, 2008 and the adoption had no impact on our financial
position or results of operations.





In
December 2007, the FASB issued SFAS No. 141 Revised, “Business Combinations”
(“SFAS 141R”).  SFAS 141R revises SFAS 141, “Business
Combinations”.  SFAS 141R requires an acquirer to determine the fair
value of the consideration exchanged as of the acquisition date (i.e., the date
the acquirer obtains control).  Presently, an acquisition is valued as
of the date the parties agree upon the terms of the transaction.  SFAS
141R also modifies, among other things, the accounting for direct costs
associated with an acquisition, contingencies acquired and contingent
consideration.  We will adopt SFAS 141R for business combinations for
which the acquisition date occurs after January 1, 2009.





Item
3.                   Quantitative
and Qualitative Disclosure about Market Risk





We have
exposure to financial market risks, including changes in interest rates and the
underlying credit of the U.S. Government and its agencies and corporate debt
issuers.  At March 31, 2008, we had cash and cash equivalents of
approximately $20.8 million and marketable securities available-for-sale of an
additional $3.0 million.  We invest our excess cash primarily in money
market funds, obligations of the U.S. Government and its agencies and marketable
debt securities of companies with strong credit ratings.  These
instruments have maturities of twenty-four months or less when
purchased.  We do not utilize derivative financial instruments,
derivative commodity instruments or other market risk sensitive instruments,
positions or transactions in any material fashion.  Accordingly, we
believe that, while the instruments we hold are subject to changes in the
financial standing of the issuer of such securities, we are not subject to any
material risks arising from changes in foreign currency exchange rates,
commodity prices, equity prices or other market changes that affect market risk
sensitive instruments.  Based on our cash and cash equivalents and
marketable securities available-for-sale balances at March 31, 2008, a
hypothetical 100 basis point adverse movement in interest rates would have
resulted in an increase in the loss from continuing operations of approximately
$0.1 million for the three months ended March 31, 2008.  Actual
changes in rates may differ from the hypothetical assumptions used in computing
this exposure.





Item
4.                   Controls
and Procedures





Evaluation
of Disclosure Controls and Procedures





As of
March 31, 2008, under the supervision and with the participation of our
management, including the Chief Executive Officer (“CEO”) and Chief Financial
Officer (“CFO”), an evaluation was performed of the effectiveness of the design
and operation of our “disclosure controls and procedures” (“Disclosure
Controls”).  These are controls and procedures designed to reasonably
assure that information required to be disclosed in our reports filed under the
Exchange Act, such as this Form 10-Q, is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the United
States Securities and Exchange Commission (“SEC”).  Disclosure
Controls are also designed to reasonably assure that such information is
accumulated and communicated to our management, including the CEO and CFO as
appropriate, to allow timely decisions regarding required
disclosure.  Based on that evaluation, our CEO and CFO have concluded
that, as of March 31, 2008, our disclosure controls and procedures were
effective to provide reasonable assurance that information required to be
disclosed in our Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified by the SEC, and that material
information relating to us is made known to management, including the CEO and
CFO, particularly during the period when our periodic reports are being
prepared.





Our
management, including the CEO and CFO, does not expect that our Disclosure
Controls or our internal control over financial reporting will prevent or detect
all errors and all instances of fraud.  A control system, no matter
how well designed and operated, can provide only reasonable, not absolute,
assurance that the control system’s objectives will be met.  The
design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs.  Further, because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that
misstatements due to error or fraud will not occur or that all control issues
and instances of fraud, if any, within the Company have been
detected.  These inherent limitations include the realities that
judgments in decision-making can be faulty and that breakdowns can occur because
of simple error or mistake.  Controls can also be circumvented by the
individual acts of some persons, by collusion of two or more people, or by
management override of the controls.  The design of any system of
controls is based, in part, on certain assumptions about the likelihood of
future events and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future
conditions.  Projections of any evaluation of the effectiveness of
controls to future periods are subject to risks.  Over time, controls
may become inadequate because of changes in conditions or deterioration in the
degree of compliance with policies or procedures.





14.




Changes
in Internal Control Over Financial Reporting





There were
no changes in our internal controls over financial reporting during the first
quarter of 2008 that materially affected or are reasonably likely to materially
affect our internal controls over financial reporting.





PART
II                                OTHER
INFORMATION





Item
1.                      Legal
Proceedings





We are not
currently a party to any material legal proceedings.





Item
1A.                  
Risk Factors





None.





Item
2.                   Unregistered
Sales of Equity Securities and Use of Proceeds





(c)
Purchases of Equity Securities by the Issuer and Affiliated
Purchasers:




Total
      Number
              
              Maximum
      Numberof
      Shares
              
              (or
      ApproximateTotal
              
              
              
              Purchased
      as
              
              Dollar
      Value) ofNumber
      of
              
              Average
              
              Part
      of Publicly
              
              Shares
      that May YetShares
              
              Price
      Paid
              
              Announced
      Plans
              
              Be
      Purchased UnderPeriod
              
              Purchased
              
              per
      Share
              
              or
      Programs
              
              the
      Plans or ProgramsMarch
      2008
              
              4,602,127
              
              $                0.709
              
              4,602,127
              
              None


On March
14, 2008, the Company purchased 4,602,127 shares owned by a then Director of the
Company for $3.3 million.  The purchase was previously reported in a
Current Report on Form 8-K.





Item
3.                    Defaults
Upon Senior Securities





None.





Item
4.                  Submission
of Matters to a Vote of Security Holders





None.





Item
5.                     Other
Information





None.





Item
6.                    Exhibits




10.86a
            First
      Amendment to Lease dated February 28, 2008, between Registrant and
      Thirty-Eight Sidney Street Limited Partnership.31
            Certifications
      pursuant to Rule 13a-14(a)/15d-14(a).32
            Certifications
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002.




15.




SIGNATURES








Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.







ORE
PHARMACEUTICALS INC.






Date:
              
              May 8,
      2008
              By:
              /s/
      Philip L. Rohrer,
      Jr.Philip L. Rohrer,
      Jr.Chief Financial
      Officer(Principal
      Financial and Accounting Officer)