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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
 
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 0-23280
 NEUROBIOLOGICAL TECHNOLOGIES, INC.
  Delaware
    
    94-3049219(State of incorporation)
    
    (I.R.S. Employer Identification No.)2000 Powell Street, Suite 800, Emeryville, California
    
    94608(Address of principal executive office)
    
    (Zip Code)
 (510) 595-6000
  Title of Each Class
    
    Name of Each Exchange on Which RegisteredCommon Stock, $0.001 par value
    
    The NASDAQ Stock Market LLCPreferred Share Purchase Rights
    
    (NASDAQ Capital Market)
  
 o þ
 o þ
 þ o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
   Documents incorporated by reference:




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##### 



Part IItem 1 Business
    
    
    1Item 1A Risk Factors
    
    
    15Item 1B Unresolved Staff Comments
    
    
    23Item 2 Properties
    
    
    23Item 3 Legal Proceedings
    
    
    23Item 4 Submission of Matters to a Vote of Security Holders
    
    
    23Part IIItem 5 Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
    
    
    24Item 6 Selected Financial Data
    
    
    24Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    26Item 7A Quantitative and Qualitative Disclosures about Market Risk
    
    
    34Item 8 Financial Statements and Supplementary Data
    
    
    34Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    51Item 9A(T) Controls and Procedures
    
    
    51Item 9B Other Information
    
    
    52Part IIIItem 10 Directors, Executive Officers and Corporate Governance
    
    
    52Item 11 Executive Compensation
    
    
    52Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    52Item 13 Certain Relationships and Related Transactions, and Director Independence
    
    
    52Item 14 Principal Accounting Fees and Services
    
    
    52Part IVItem 15 Exhibits, Financial Statement Schedules
    
    
    53Exhibit 4.1Exhibit 10.1Exhibit 10.32Exhibit 21.1Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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PART I
 
 ITEM 1. BUSINESS
 This report contains forward-looking statements. These forward-looking statements are based on
our current expectations about our business and industry. In some cases, these statements may be
identified by terminology such as anticipates, believes, continue, estimates, expects,
may, plans, potential, predicts, should, will, or the negative of such terms and other
comparable terminology. These statements involve known and unknown risks and uncertainties that may
cause our results, levels of activity, performance or achievements to be materially different from
those expressed or implied by the forward-looking statements. Factors that may cause or contribute
to such differences include, among others, those discussed in this report under Item 1A.Risk
Factors. Except as may be required by law, we do not intend to update any forward-looking
statement to reflect events after the date of this report.
 Overview
 ®
    Consequences of Stroke and Current Medical Care
 Stroke Background
   1




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Investigative Drug Treatments
  Neuroprotectants.
 Reperfusion Agents.
  
    
    Risk of Bleeding Fibrinolytic drugs dissolve blood clots, including
those formed naturally as a protective response to vessel injury,
which can result in bleeding. The risk of intracranial hemorrhaging
increases as the dosage increases. Patients who are already taking
other medications to prevent formation of clots, such as
anticoagulants or antiplatelets, may not be good candidates for the
use of fibrinolytic drugs due to the increased difficulty of
controlling bleeding. In the study that led to FDA approval of rt-PA,
the incidence of SICH in rt-PA patients was 6.4%, compared to 0.6% in
the placebo group. As a result, rt-PA is subject to strict limitations
on when, how long and in what dosages it may be administered.
    
    Time Window for Administration Due to its decreasing efficacy the
later it is administered, rt-PA is approved for administration to
acute ischemic stroke patients when started within three hours of
stroke onset. This three-hour window is considered to be a limiting
factor in treating acute ischemic stroke with rt-PA, and is one of the
reasons a small percentage of U.S. acute ischemic stroke patients
receive rt-PA.
 Our Product Candidate for Stroke  Viprinex
 Mechanism of Action
  
    
    Anticoagulation By removing fibrinogen, a key requirement of clot
formation, Viprinex impairs further growth of the clot. The reduction
of fibrinogen levels also reduces the likelihood of further clot
formation, including reocclusion, or reclotting, after use of
fibrinolytic drugs, a concern in stroke patients treated with rt-PA.
  2




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
    
    Decreased blood viscosity By removing fibrinogen, an abundant protein
in human plasma, Viprinex decreases the protein content of blood
plasma and reduces blood viscosity. The reduction in blood viscosity
generally improves blood flow. We believe this should enhance blood
flow to the affected areas of the brain even before a clot has been
broken up.
    
    Clot break-up The proteins formed by Viprinexs break-up of
fibrinogen appear to indirectly stimulate the conversion of
plasminogen to plasmin, which dissolves clots by removing the fibrin
within the clot.
  Market Opportunity
   Viprinex History
    Previous Clinical Trials Conducted by Knoll
  Number of PatientsStudy
    
    Phase
    
    
    Viprinex
    
    
    Placebo
    
    
    TotalSingle Institution
    
    
    Not Applicable
    
    
    
    10
    
    
    
    10
    
    
    
    20Single Institution
    
    
    Not Applicable
    
    
    
    15
    
    
    
    15
    
    
    
    30A-20
    
    
    2
    
    
    
    64
    
    
    
    68
    
    
    
    132STAT (North America)
    
    
    3
    
    
    
    248
    
    
    
    252
    
    
    
    500ESTAT (Europe)
    
    
    3
    
    
    
    604
    
    
    
    618
    
    
    
    1,222TOTAL
    
    
    
    
    
    
    941
    
    
    
    963
    
    
    
    1,904
  3




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A-20 Phase 2 Clinical Trial Conducted by Knoll
    
  STAT: Phase 3 North American Clinical Trial Conducted by Knoll
   4




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ESTAT: Phase 3 European Clinical Trial Conducted by Knoll
   
 Retrospective Analysis: ESTAT
   5




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Retrospective Analysis: Pooled Analysis; Time-to-Treat
  
 Retrospective Analysis: Key Lessons from Viprinex-treated Patients in the Knoll Clinical Trials
   
    
    Efficacy the initial rapid lowering of fibrinogen levels, or
defibrinogenation rate, appeared to have resulted in better functional
success outcomes than slower initial rates of defibrinogenation.
    
    Safety SICH occurred more frequently in patients with prolonged low fibrinogen levels.
  6




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Efficacy
  
  
  
  7




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Safety (Symptomatic Intracranial Hemorrhage)
  
  Conclusion & Summary of Knoll Trials
   8




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ASP 1 and ASP 2 Phase 3 Clinical trials
    Trial Design and Statistical Considerations
    
  
    
    If the treatment effect observed in the group receiving Viprinex falls within a
specified range as compared to the placebo group, the DSMB will recommend continuing
the trials to their conclusion (with continued periodic DSMB safety reviews, but no
additional interim efficacy reviews).
    
    If the treatment effect observed in the group receiving Viprinex is not greater
than a specified minimum threshold, as compared to placebo (which would indicate
that the trials are unlikely to show benefit for Viprinex if the trials are
continued), the DSMB will recommend halting the trials for futility.
    
    If the treatment effect observed in the group receiving Viprinex is substantially
greater than the placebo group, the DSMB has authority to recommend halting the
trials for superiority. This recommendation would indicate that the DSMB does not
feel it is ethical to continue to dose patients on placebo because of the benefits
observed in the Viprinex group. In order for the DSMB to stop the trial for
superiority, efficacy of the drug would need to be greatly superior to placebo, and
as a result it is relatively uncommon for clinical studies to be halted for
superiority at an interim analysis.
  9




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Dosing
  Primary and Secondary Endpoints
   Pretreatment
    
    Prestroke
    
    
    Day 90 mRS ScoreNIHSS Score
    
    mRS Score
    
    
    Responder
    
    
    Non-Responder515
    
    
    01
    
    
    
    01
    
    
    
    263 16
    
    
    01
    
    
    
    02
    
    
    
    36Any
    
    
    3 2
    
    
    
    02
    
    
    
    36
  Memantine
    XERECEPT
   10




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15-20%
  Alzheimers Disease
  Fibroblast growth factor
  Competition
  ® 1 2
  ®
  11




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Business Strategy
  
    
    Successfully completing the clinical development of Viprinex.We have
designed our current clinical trials to establish that Viprinex has a
better efficacy and safety profile than the only treatment currently
available for acute ischemic stroke, rt-PA. These trials are designed
to show that Viprinex can be safe and effective in treating patients
with acute ischemic stroke when initiated within six hours of stroke
onset. If these trials are successful and we receive approval, the six
hour treatment window would make Viprinex available to a greater
proportion of the people who suffer acute ischemic strokes than rt-PA,
which currently is approved for use within three hours of stroke
onset.
    
    Seeking a partner to commercialize Viprinex, but maintaining
significant interest in commercial success, if the drug is approved.
We intend to partner with a major pharmaceutical company, or with
several strong regional pharmaceutical companies, to commercialize
Viprinex for ischemic stroke. We also intend to retain a significant
continuing interest in the success of the product, such as through
retained co-promotion rights or significantly high royalty rates. By
retaining these rights, we expect to be able to secure a greater share
of potential revenues from the commercialization of Viprinex.
    
    Continuing to in-license and acquire new product candidates.We seek
to in-license and acquire promising drug candidates that target major
medical needs and that can be rapidly commercialized, if our financial
resources are sufficient. For example, we do not intend to in-license
any new products or potential products until our clinical trials are
funded to completion. Thereafter, we intend to continue to use the
expertise of our experienced team in advancing drug candidates through
human clinical trials and the regulatory approval process. Our focus
is likely to be on acquiring and developing later-stage CNS drugs, but
we may also acquire earlier-stage drug candidates in this area, if we
believe our expertise could advance their development and they would
complement our existing products.
 Manufacturing and Supply
      12




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Patents
   
    
    patents involve complex legal and factual issues that have been the subject of much litigation;
    
    no consistent policy has emerged from the United States Patent and
Trademark Office regarding the breadth of claims allowed or the degree
of protection afforded under biotechnology patents; and
    
    others may independently develop similar products, duplicate potential
products, or design around the claims of potentially patented
products.
   Government Regulation
   
  
    
    In Phase 1, a company conducts clinical trials with a small number of
subjects to determine a drugs early safety profile, dosage tolerance
and its pharmacokinetic pattern.
    
    In Phase 2, a company conducts clinical trials with a limited number
of patients afflicted with a specific disease in order to determine
preliminary effectiveness, optimal dosages and further evidence of
safety.
    
    In Phase 3, a company conducts large-scale, well-controlled,
multi-center trials with patients afflicted with a target disease in
order to provide enough data to demonstrate effectiveness and safety
prior to commercialization.
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Reimbursement
   Employees
  Available Information and Website Address
 www.ntii.com www.sec.gov
 
 ITEM 1A. RISK FACTORS
 This Annual Report on Form 10-K includes forward-looking statements about our business and
results of operations that are subject to risks and uncertainties. Factors that could cause or
contribute to such differences include those discussed below. In addition to the risk factors
discussed below, we are also subject to additional risks and uncertainties not presently known to
us or that we currently deem immaterial. If any of these known or unknown risks or uncertainties
actually occurs, our business could be harmed substantially.
 Risks Related to Our Current Clinical Trials for Viprinex
 Viprinex has failed in one of two Phase 3 clinical trials conducted by Knoll for the treatment of
acute ischemic stroke, and it may not prove to be safe and effective in our current Phase 3 trials.
Because Viprinex is our only product candidate, the failure of the
interim analysis or any negative or inconclusive results in the ongoing
trials would significantly harm our prospects and depress our stock price.
 
   15




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If our clinical trials for Viprinex are delayed because of patient enrollment or other problems, we
would incur additional costs and experience delays in the potential receipt of revenues .
 1 2
 The approval of Viprinex by the FDA or other regulatory authorities is uncertain and regulatory
authorities may not approve it even if it meets the safety and efficacy endpoints in our clinical
trials.
   We rely on third parties to conduct our clinical trials for Viprinex, and their failure to perform
their obligations in a timely or competent manner may prevent or delay development and
commercialization of our lead drug candidate.
    16




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We do not have our own manufacturing facilities and are dependent on contract manufacturers and
suppliers for the development and production of Viprinex.
   Risks Related to Our Financial Condition
 We have a history of losses, we expect to generate losses in the near future, and we may never
achieve or maintain profitability.
  We will need to raise additional capital to reach profitability and to complete the clinical trial
work that is likely to be necessary to apply for approval of Viprinex. If we succeed in raising
additional capital through a debt or equity financing transaction, it may adversely affect our
stock price. If we are unable to raise additional capital, we may be forced to curtail operations.
   
    
    the time and cost involved in completing the clinical trials and obtaining regulatory approval for Viprinex;
    
    the amount of royalties received from Merz for future sales of memantine;
    
    the payments received pursuant to our agreements with Celtic;
    
    the progress of our clinical development program;
    
    the cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights;
    
    the acquisition or licensing of new drug candidates;
    
    competing technological and market developments;
    
    our ability to establish partnerships to commercialize Viprinex and any future product candidates;
    
    future commercialization activities and arrangements; and
    
    the cost of our research collaborations with the Buck Institute for Age Research.
  17




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The auction rate securities we hold in our portfolio are currently not actively trading, and we may
have to sell all or some of these securities at a loss to fund our operations .
  Risks Related to Our Business
 The approval of any future product candidate by the FDA or other regulatory authorities is
uncertain and will involve the commitment of substantial time and resources.
  
    
    their determination that a product candidate is not safe or effective;
    
    their determination that the manufacturing processes or facilities do not meet specified requirements; or
    
    changes to their approval policies, guidelines or new regulations that affect us in an unfavorable manner.
  Even if Viprinex is approved for commercialization, it may not be successfully commercialized or
generate meaningful product revenues for us.
   18




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If Viprinex does not attain adequate market acceptance by health care professionals and patients,
our business prospects and results of operations will suffer.
  
    
    perception of physicians and other members of the health care
community of its safety and efficacy relative to that of competing
products;
    
    cost-effectiveness;
    
    patient and physician satisfaction with the product;
    
    ability to successfully manufacture commercially and on a timely basis;
    
    cost and availability of raw materials;
    
    reimbursement policies of governments and third-party payors;
    
    unfavorable publicity concerning Viprinex or similar drugs;
    
    the introduction, availability and acceptance of competing products,
including those of any future partners;
    
    adverse event information relating to the product;
    
    product labeling or product inserts required by the FDA or regulatory authorities in other countries;
    
    regulatory developments related to the manufacture or continued use of the product; and
    
    extent and effectiveness of sales and marketing and distribution support for the product.
  If government and third party payors fail to provide coverage and adequate payment rates for
Viprinex, if approved, our revenues and prospects for profitability will suffer.
  Even if we are granted approval for our product candidates, we may not be able to maintain that
approval, which would reduce our revenues.
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The royalty rate we receive for memantine product sales will decrease.
  We only have very limited control over the development and commercialization of XERECEPT, which we
have sold to Celtic, and as a result, we may not realize a significant portion of the potential
value of this product candidate.
  We face intense competition from other companies.
   If we do not continue to attract and retain key employees, our product development efforts and our
operations will be impaired.
  Clinical trials or marketing of any of our potential products may expose us to liability claims
from the use of such products, which our insurance may not cover.
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Our success will depend, in large part, on our ability to obtain or license patents, protect trade
secrets and operate without infringing upon the proprietary rights of others.
  
    
    patents involve complex legal and factual issues that have recently been the subject of much litigation;
    
    no consistent policy has emerged from the United States Patent and
Trademark Office regarding the breadth of claims allowed or the degree
of protection afforded under biotechnology patents; and
    
    others may independently develop similar products, duplicate any of
our potential products, or design around the claims of any of our
potential patented products.
   We have previously concluded that we have material weaknesses in our internal controls over
accounting for certain complex transactions and other items, and we have restated financial
statements from prior periods as a result of material weaknesses in our internal controls over
accounting for highly complex issues and transactions.
   Risks Related to Our Common Stock
 The market price of our common stock has been, and is likely to continue to be, highly volatile.
  
    
    announcements of the results of our clinical trials of Viprinex;
    
    announcements of our plans regarding clinical trials of Viprinex;
    
    announcements of the results of clinical trials of competitors or Celtic;
    
    other evidence of the safety or efficacy of our products, or those of
Celtic, Merz or its marketing partners, or our competitors (such as
rt-PA for stroke);
    
    announcements of technological innovations or new therapeutic products by us or our competitors;
  21




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
    
    developments in patent or other proprietary rights of us or our competitors, including litigation;
    
    our need for additional capital or fluctuations in our operating results;
    
    government regulation and health care legislation; and
    
    market conditions for life science companies stocks in general;
 We may not continue to meet the listing standards of the NASDAQ Capital Market, which could result
in our delisting and negatively impact the price of our common stock and our ability to access the
capital markets.
  Our certificate of incorporation, our bylaws, Delaware law and our stockholder rights plan contain
provisions that could discourage another company from acquiring us and may prevent attempts by our
stockholders to replace or remove our current board and/or management.
  
    
    authorizing the issuance of blank check preferred stock without any
need for action by stockholders; and
    
    providing for dilutive issuance of preferred stock, commonly referred
to as a poison pill, which can generally be triggered after a person
or a group acquires 15% or more of our common stock.
  There may be issuances of shares of preferred stock in the future.
   22




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FORWARD-LOOKING STATEMENTS
  
    
    our ability to complete clinical trials for Viprinex;
    
    the timing and results of the interim analysis for the clinical trials for Viprinex;
    
    the timing and outcome of the final analysis for the current clinical trials of Viprinex;
    
    the completion, announcement and success of any other clinical trials
that we commence and the progress of those trials;
    
    our receipt of regulatory approvals;
    
    our ability to maintain and establish intellectual property rights in our product candidates;
    
    whether any product candidate we commercialize is safer or more
effective than other marketed products, treatments or therapies;
    
    our development activities, including development of Viprinex, and projected expenditures;
    
    our ability to have manufactured sufficient supplies of active
pharmaceutical ingredient and drug product for clinical testing and
commercialization;
    
    our ability to obtain licenses to any necessary third-party intellectual property;
    
    our ability to retain and hire necessary employees and appropriately staff our development programs;
    
    our cash requirements; and
    
    our financial performance.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   23




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PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
  Fiscal Year 2008
    
    High
    
    
    LowFourth Quarter
    
    $
    2.73
    
    
    $
    1.15Third Quarter
    
    $
    3.15
    
    
    $
    2.00Second Quarter
    
    $
    5.19
    
    
    $
    2.06First Quarter
    
    $
    12.60
    
    
    $
    3.46
 Fiscal Year 2007
    
    High
    
    
    LowFourth Quarter
    
    $
    15.68
    
    
    $
    9.94Third Quarter
    
    $
    19.95
    
    
    $
    14.42Second Quarter
    
    $
    22.54
    
    
    $
    13.93First Quarter
    
    $
    22.40
    
    
    $
    15.47
  
 ITEM 6. SELECTED FINANCIAL DATA
  Fiscal Year Ended June 30,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(in thousands, except per share data)Statement of Operations Data:Total revenues
    
    $
    14,760
    
    
    $
    17,673
    
    
    $
    12,339
    
    
    $
    3,100
    
    
    $
    2,786Expenses:Research and development
    
    
    24,581
    
    
    
    26,737
    
    
    
    22,808
    
    
    
    10,749
    
    
    
    2,098Acquired in-process research and development
    
    
    
    
    
    
    
    
    
    
    11,501
    
    
    
    12,650
    
    
    
    General and administrative
    
    
    6,876
    
    
    
    6,537
    
    
    
    5,968
    
    
    
    4,927
    
    
    
    3,101Total expenses
    
    
    31,457
    
    
    
    33,274
    
    
    
    40,277
    
    
    
    28,326
    
    
    
    5,199Operating loss
    
    
    (16,697
    )
    
    
    (15,601
    )
    
    
    (27,938
    )
    
    
    (25,226
    )
    
    
    (2,413
    )Interest income
    
    
    1,254
    
    
    
    493
    
    
    
    399
    
    
    
    249
    
    
    
    128Interest expense
    
    
    (2,479
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other income
    
    
    1,600
    
    
    
    980
    
    
    
    
    
    
    
    
    
    
    
    477Loss before income taxes
    
    
    (16,322
    )
    
    
    (14,128
    )
    
    
    (27,539
    )
    
    
    (24,977
    )
    
    
    (1,808
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    (300
    )
    
    
    
    
    
    
    Net loss
    
    $
    (16,322
    )
    
    $
    (14,128
    )
    
    $
    (27,839
    )
    
    $
    (24,977
    )
    
    $
    (1,808
    )Basic and diluted net loss per share
    
    $
    (0.84
    )
    
    $
    (3.26
    )
    
    $
    (6.84
    )
    
    $
    (6.59
    )
    
    $
    (0.61
    )Shares used in basic and diluted net loss per
share calculation
    
    
    19,437
    
    
    
    4,338
    
    
    
    4,070
    
    
    
    3,790
    
    
    
    2,954
  24




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As of June 30,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(in thousands)Balance Sheet Data:Cash, cash equivalents and
short-term investments
    
    $
    29,980
    
    
    $
    8,957
    
    
    $
    15,248
    
    
    $
    8,506
    
    
    $
    20,734Working capital
    
    
    21,817
    
    
    
    (3,973
    )
    
    
    12,055
    
    
    
    5,290
    
    
    
    20,446Total assets
    
    
    43,187
    
    
    
    10,921
    
    
    
    22,499
    
    
    
    9,815
    
    
    
    21,384Total current liabilities
    
    
    9,042
    
    
    
    14,222
    
    
    
    9,609
    
    
    
    3,816
    
    
    
    661Accumulated deficit
    
    
    (125,591
    )
    
    
    (109,269
    )
    
    
    (95,141
    )
    
    
    (67,302
    )
    
    
    (42,325
    )Stockholders equity (deficit)
    
    
    20,286
    
    
    
    (22,093
    )
    
    
    (11,402
    )
    
    
    5,999
    
    
    
    20,723
  Quarterly Periods in the Fiscal Year Ended June 30, 2008September 30
    
    
    December 31
    
    
    March 31
    
    
    June 30
    
    
    Total(in thousands, except per share data)(quarterly amounts are unaudited)Quarterly Results of
Operations:Total revenues
    
    $
    3,900
    
    
    $
    3,663
    
    
    $
    3,684
    
    
    $
    3,513
    
    
    $
    14,760Research and
development expenses
    
    
    (5,460
    )
    
    
    (7,416
    )
    
    
    (5,945
    )
    
    
    (5,760
    )
    
    
    (24,581
    )General and
administrative
expenses
    
    
    (1,659
    )
    
    
    (1,912
    )
    
    
    (1,757
    )
    
    
    (1,548
    )
    
    
    (6,876
    )Interest income
    
    
    28
    
    
    
    452
    
    
    
    540
    
    
    
    234
    
    
    
    1,254Other income (expense)
    
    
    2,269
    
    
    
    (1,670
    )
    
    
    (1,585
    )
    
    
    107
    
    
    
    (879
    )Net loss
    
    $
    (922
    )
    
    $
    (6,883
    )
    
    $
    (5,063
    )
    
    $
    (3,454
    )
    
    $
    (16,322
    )Basic and diluted net
loss per share
    
    $
    (0.19
    )
    
    $
    (0.36
    )
    
    $
    (0.19
    )
    
    $
    (0.13
    )
    
    $
    (0.84
    )Shares used in basic
and diluted net loss
per share calculation
    
    
    4,772
    
    
    
    19,313
    
    
    
    26,913
    
    
    
    26,913
    
    
    
    19,437
 Quarterly Periods in the Fiscal Year Ended June 30, 2007September 30
    
    
    December 31
    
    
    March 31
    
    
    June 30
    
    
    Total(in thousands, except per share data)(quarterly amounts are unaudited)Quarterly Results
of Operations:Total revenues
    
    $
    4,781
    
    
    $
    4,020
    
    
    $
    4,878
    
    
    $
    3,994
    
    
    $
    17,673Research and
development
expenses
    
    
    (5,858
    )
    
    
    (5,681
    )
    
    
    (7,690
    )
    
    
    (7,508
    )
    
    
    (26,737
    )General and
administrative
expenses
    
    
    (1,494
    )
    
    
    (1,565
    )
    
    
    (1,686
    )
    
    
    (1,792
    )
    
    
    (6,537
    )Interest income
    
    
    153
    
    
    
    116
    
    
    
    84
    
    
    
    140
    
    
    
    493Other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    980
    
    
    
    980Net loss
    
    $
    (2,418
    )
    
    $
    (3,110
    )
    
    $
    (4,414
    )
    
    $
    (4,186
    )
    
    $
    (14,128
    )Basic and diluted
net loss per share
    
    $
    (0.57
    )
    
    $
    (0.74
    )
    
    $
    (1.04
    )
    
    $
    (0.91
    )
    
    $
    (3.26
    )Shares used in
basic and diluted
net loss per share
calculation
    
    
    4,222
    
    
    
    4,222
    
    
    
    4,237
    
    
    
    4,669
    
    
    
    4,338
  25




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 OVERVIEW
 ®
  Financing activity
  Viprinex, our Phase 3 investigational drug for acute ischemic stroke
  XERECEPT®, a Phase 3 investigational drug for which we have rights to receive milestone and
royalty/profit-sharing payments
  Amendment to Merz Agreement
   26




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##### Table of Contents



Critical Accounting Policies
  Revenue recognition
    Research and development expenses
  Estimates Involved in Determining Fair Value of Investments
   27




---



##### Table of Contents



Equity Financing Warrants
 Accounting for Derivative Financial Instruments Indexed to, and
Potentially Settled in, a Companys Own Stock
 Stock-based compensation
  Recent Accounting Pronouncements
 Fair Value Measurements Effective Date of FASB Statement No. 157,
 Accounting for
Nonrefundable Advance Payments for Goods or Services to Be Used in Future Research and Development
Activities,
 Accounting for Collaborative Arrangements Related to the Development and Commercialization of
Intellectual Property
  28




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##### Table of Contents



RESULTS OF OPERATIONS
 Revenues
  Increase/(Decrease)Fiscal Year Ended June 30,
    
    
    From Prior Year2008
    
    
    2007
    
    
    2006
    
    
    2008/2007
    
    
    2007/2006Royalty
    
    $
    8,253
    
    
    $
    6,853
    
    
    $
    5,063
    
    
    $
    1,400
    
    
    $
    1,790XERECEPT sale
    
    
    5,500
    
    
    
    5,500
    
    
    
    3,209
    
    
    
    
    
    
    
    2,291Collaboration services
    
    
    1,007
    
    
    
    5,320
    
    
    
    4,067
    
    
    
    (4,313
    )
    
    
    1,253Technology sale and
collaboration
services
    
    
    6,507
    
    
    
    10,820
    
    
    
    7,276
    
    
    
    (4,313
    )
    
    
    3,544$
    14,760
    
    
    $
    17,673
    
    
    $
    12,339
    
    
    $
    (2,913
    )
    
    $
    5,334
    Research and Development Expenses
  Increase/(Decrease)Fiscal Year Ended June 30,
    
    
    From Prior Year2008
    
    
    2007
    
    
    2006
    
    
    2008/2007
    
    
    2007/2006Viprinex for stroke
    
    $
    22,071
    
    
    $
    21,208
    
    
    $
    15,962
    
    
    $
    863
    
    
    $
    5,246XERECEPT
    
    
    1,061
    
    
    
    5,529
    
    
    
    6,846
    
    
    
    (4,468
    )
    
    
    (1,317
    )Preclinical
programs for
Alzheimers and
Huntingtons
diseases
    
    
    1,449
    
    
    
    
    
    
    
    
    
    
    
    1,449
    
    
    
    $
    24,581
    
    
    $
    26,737
    
    
    $
    22,808
    
    
    $
    (2,156
    )
    
    $
    3,929
  29




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##### Table of Contents



Acquired In-Process Research and Development Expenses
   30




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##### Table of Contents



General and Administrative Expenses
  Increase FromFiscal Year Ended June 30,
    
    
    Prior Year2008
    
    
    2007
    
    
    2006
    
    
    2008/2007
    
    
    2007/2006$
    6,876
    
    
    $
    6,537
    
    
    $
    5,968
    
    
    $
    339
    
    
    $
    569
    Interest Expense
  Impairment Charge for Decrease in Fair Value of Investments
  Interest Income
  Non-cash Gain on Decrease in Fair Value of Warrants
   31




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
  June 30,
    
    
    June 30,2008
    
    
    2007Cash, cash equivalents and short-term investments
    
    $
    29,980
    
    
    $
    8,957Cash, cash equivalents, short-term and long-term investments
    
    $
    41,830
    
    
    $
    8,957Working capital (excluding deferred revenue and the warrant liability)
    
    $
    27,357
    
    
    $
    4,945
     
    
    the time and cost involved in completing the clinical trials and obtaining regulatory
approval for Viprinex;
    
    the value we are able to receive upon our disposition of the auction rate securities
we hold as long-term investments;
    
    the royalties received from Merz for future sales of memantine;
    
    the receipt of milestone, royalty and profit-sharing payments pursuant to our
agreements with Celtic;
    
    the progress of our clinical development programs;
    
    the cost of filing, prosecuting, defending, and enforcing patent claims and other
intellectual property rights;
    
    the acquisition or licensing of new drug candidates;
    
    competing technological and market developments;
    
    our ability to establish collaborative relationships;
    
    the development of commercialization activities and arrangements; and
    
    the cost of our research collaborations with the Buck Institute for Age Research.
  32




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##### Table of Contents



Contractual Obligations
  Payments due by periodLess than 1
    
    
    
    
    
    
    Over 3Total
    
    
    year
    
    
    1-3 years
    
    
    yearsOperating lease obligations
    
    $
    770
    
    
    $
    373
    
    
    $
    397
    
    
    $
    Manufacturing commitment (1)
    
    
    4,410
    
    
    
    4,410
    
    
    
    
    
    
    
    Total
    
    $
    5,180
    
    
    $
    4,783
    
    
    $
    397
    
    
    $
    
 (1)
    
    Under our agreement for supply of the active pharmaceutical ingredient in
Viprinex with Nordmark, we have agreed to make a termination payment of up to
2,800,000 in the event we cancel the agreement prior to the commercialization
of Viprinex. Although we presently have no intention to cancel the agreement, the
cancellation payment is a potential contractual obligation and is therefore
included in the table. In the event that the current clinical trials are stopped
for futility, we believe we would cancel the agreement as soon as we determine
that further development of Viprinex is unlikely. Our obligation in Euros has been
translated at a June 30, 2008 exchange rate of approximately $1.575 per Euro.   Active ingredient production/purification and operation of a snake farm.
  Finished Product Manufacturing.
  Clinical Research Organizations for assistance overseeing the clinical trials.
  Medical Facilities conducting the clinical trials.
  Data Management.
  License agreement for Viprinex.
  Employees.
  Buck Institute for Age Research.
  33




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm
    
    35Audited Financial StatementsConsolidated Balance Sheets
    
    36Consolidated Statements of Operations
    
    37Consolidated Statements of Stockholders Equity (Deficit)
    
    38Consolidated Statements of Cash Flows
    
    39Notes to Consolidated Financial Statements
    
    40
   34




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Report of Independent Registered Public Accounting Firm
 
    Accounting for Uncertainty in
Income Taxes an Interpretation of FAS 109
 
  35




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##### Table of Contents



NEUROBIOLOGICAL TECHNOLOGIES, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except per share amounts)
 June 30,2008
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    27,941
    
    
    $
    5,538Short-term investments
    
    
    2,039
    
    
    
    3,419Accounts receivable
    
    
    599
    
    
    
    430Prepaid expenses and other current assets
    
    
    280
    
    
    
    862Total current assets
    
    
    30,859
    
    
    
    10,249Deposits
    
    
    85
    
    
    
    85Long-term investments
    
    
    11,850
    
    
    
    Property and equipment, net
    
    
    393
    
    
    
    587$
    43,187
    
    
    $
    10,921LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Accounts payable
    
    $
    588
    
    
    $
    1,623Accrued clinical trial expenses
    
    
    1,075
    
    
    
    1,579Accrued professional expenses
    
    
    252
    
    
    
    344Accrued manufacturing and related expenses
    
    
    581
    
    
    
    825Other accrued liabilities
    
    
    1,006
    
    
    
    933Deferred revenue, current portion
    
    
    5,500
    
    
    
    5,500Warrant liability
    
    
    40
    
    
    
    3,418Total current liabilities
    
    
    9,042
    
    
    
    14,222Deferred revenue, net of current portion
    
    
    13,292
    
    
    
    18,792Long term clinical trial expenses and other liabilities
    
    
    567
    
    
    
    Total liabilities
    
    
    22,901
    
    
    
    33,014Commitments and contingenciesStockholders equity (deficit):Preferred stock, $0.001 par value, 5,000 shares
authorized; 3,000 authorized shares designated as
Series A convertible preferred stock, 2,332 shares
issued, 494 shares outstanding at June 30, 2008 and
2007, with aggregate liquidation preference of $247
    
    
    247
    
    
    
    247Common stock, $0.001 par value, 50,000 shares
authorized, 26,924 and 4,691 shares issued and
outstanding at June 30, 2008 and 2007, respectively
    
    
    27
    
    
    
    5Additional paid-in capital
    
    
    145,113
    
    
    
    86,930Accumulated deficit
    
    
    (125,591
    )
    
    
    (109,269
    )Accumulated other comprehensive income (loss)
    
    
    490
    
    
    
    (6
    )Total stockholders equity (deficit)
    
    
    20,286
    
    
    
    (22,093
    )$
    43,187
    
    
    $
    10,921
 See accompanying notes.
  36




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##### Table of Contents



NEUROBIOLOGICAL TECHNOLOGIES, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share amounts)
 Fiscal Year Ended June 30,2008
    
    
    2007
    
    
    2006REVENUES:Royalty
    
    $
    8,253
    
    
    $
    6,853
    
    
    $
    5,063Technology sale and collaboration services
    
    
    6,507
    
    
    
    10,820
    
    
    
    7,276Total revenues
    
    
    14,760
    
    
    
    17,673
    
    
    
    12,339EXPENSES:Research and development
    
    
    24,581
    
    
    
    26,737
    
    
    
    22,808Acquired in-process research and development
    
    
    
    
    
    
    
    
    
    
    11,501General and administrative
    
    
    6,876
    
    
    
    6,537
    
    
    
    5,968Total expenses
    
    
    31,457
    
    
    
    33,274
    
    
    
    40,277Operating loss
    
    
    (16,697
    )
    
    
    (15,601
    )
    
    
    (27,938
    )Interest expense, including non-cash amortization of $2,336
discount on notes
    
    
    (2,479
    )
    
    
    
    
    
    
    Impairment charge for decrease in fair value of investments
    
    
    (1,778
    )
    
    
    
    
    
    
    Interest income
    
    
    1,254
    
    
    
    493
    
    
    
    399Non-cash gain on decrease in fair value of warrants
    
    
    3,378
    
    
    
    980
    
    
    
    Loss before income taxes
    
    
    (16,322
    )
    
    
    (14,128
    )
    
    
    (27,539
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    (300
    )Net loss
    
    $
    (16,322
    )
    
    $
    (14,128
    )
    
    $
    (27,839
    )Basic and diluted net loss per share
    
    $
    (0.84
    )
    
    $
    (3.26
    )
    
    $
    (6.84
    )Shares used in basic and diluted net loss per share calculation
    
    
    19,437
    
    
    
    4,338
    
    
    
    4,070
 See accompanying notes.
  37




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##### Table of Contents



NEUROBIOLOGICAL TECHNOLOGIES, INC.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
 (in thousands, except per share amounts)
 Convertible
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated
    
    
    TotalSeries A
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    StockholdersPreferred Stock
    
    
    Common Stock
    
    
    Paid-In
    
    
    Accumulated
    
    
    Comprehensive
    
    
    EquityShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Income (Loss)
    
    
    (Deficit)Balances at June 30, 2005
    
    
    504
    
    
    $
    252
    
    
    
    3,868
    
    
    $
    4
    
    
    
    73,048
    
    
    $
    (67,302
    )
    
    $
    (3
    )
    
    $
    5,999Issuance of common stock upon exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    70
    
    
    
    
    
    
    
    
    
    
    
    70Issuance of common stock under employee
stock purchase plan
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    36
    
    
    
    
    
    
    
    
    
    
    
    36Issuance of common stock at $28.00 per share
in connection with acquisition
    
    
    
    
    
    
    
    
    
    
    340
    
    
    
    
    
    
    
    9,500
    
    
    
    
    
    
    
    
    
    
    
    9,500Conversion of preferred stock to common stock
    
    
    (10
    )
    
    
    (5
    )
    
    
    1
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    848
    
    
    
    
    
    
    
    
    
    
    
    848Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,839
    )
    
    
    
    
    
    
    (27,839
    )Unrealized loss on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16
    )
    
    
    (16
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,855
    )Balances at June 30, 2006
    
    
    494
    
    
    
    247
    
    
    
    4,223
    
    
    
    4
    
    
    
    83,507
    
    
    
    (95,141
    )
    
    
    (19
    )
    
    
    (11,402
    )Issuance of common stock upon exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    37
    
    
    
    
    
    
    
    473
    
    
    
    
    
    
    
    
    
    
    
    473Common stock received as consideration for
exercise of stock options
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    (150
    )
    
    
    
    
    
    
    
    
    
    
    (150
    )Issuance of common stock under employee
stock purchase plan
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    47
    
    
    
    
    
    
    
    
    
    
    
    47Issuance of common stock and warrants at
$16.10 per share of common stock, net of
issuance costs
    
    
    
    
    
    
    
    
    
    
    435
    
    
    
    1
    
    
    
    6,493
    
    
    
    
    
    
    
    
    
    
    
    6,494Reclassification of fair value of warrants
issued to warrant liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,398
    )
    
    
    
    
    
    
    
    
    
    
    (4,398
    )Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    958
    
    
    
    
    
    
    
    
    
    
    
    958Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,128
    )
    
    
    
    
    
    
    (14,128
    )Unrealized gain on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    13Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,115
    )Balances at June 30, 2007
    
    
    494
    
    
    
    247
    
    
    
    4,691
    
    
    
    5
    
    
    
    86,930
    
    
    
    (109,269
    )
    
    
    (6
    )
    
    
    (22,093
    )Issuance of common stock under employee
stock purchase plan
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    42
    
    
    
    
    
    
    
    
    
    
    
    42Issuance of common stock at deemed price of
$5.95 per share in bridge financing
transaction, net of issuance costs
    
    
    
    
    
    
    
    
    
    
    393
    
    
    
    
    
    
    
    2,326
    
    
    
    
    
    
    
    
    
    
    
    2,326Issuance of common stock at $2.75 per share
in public offering, net of issuance costs
    
    
    
    
    
    
    
    
    
    
    21,818
    
    
    
    22
    
    
    
    54,809
    
    
    
    
    
    
    
    
    
    
    
    54,831Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,006
    
    
    
    
    
    
    
    
    
    
    
    1,006Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,322
    )
    
    
    
    
    
    
    (16,322
    )Unrealized gain on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    496
    
    
    
    496Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,826
    )Balances at June 30, 2008
    
    
    494
    
    
    $
    247
    
    
    
    26,924
    
    
    $
    27
    
    
    $
    145,113
    
    
    $
    (125,591
    )
    
    $
    490
    
    
    $
    20,286
 See accompanying notes.
  38




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##### Table of Contents



NEUROBIOLOGICAL TECHNOLOGIES, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands, except per share amounts)
 Fiscal Year Ended June 30,2008
    
    
    2007
    
    
    2006OPERATING ACTIVITIESNet loss
    
    $
    (16,322
    )
    
    $
    (14,128
    )
    
    $
    (27,839
    )Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:Depreciation and amortization
    
    
    205
    
    
    
    230
    
    
    
    194Stock-based compensation expense
    
    
    1,006
    
    
    
    958
    
    
    
    848Acquired in-process research and development
    
    
    
    
    
    
    
    
    
    
    11,500Impairment charge for decrease in value of investments
    
    
    1,778
    
    
    
    
    
    
    
    Amortization of note discount
    
    
    2,336
    
    
    
    
    
    
    
    Non-cash gain on decrease in fair value of warrants
    
    
    (3,378
    )
    
    
    (980
    )
    
    
    Changes in assets and liabilities:Accounts receivable
    
    
    (169
    )
    
    
    1,140
    
    
    
    (1,570
    )Notes receivable
    
    
    
    
    
    
    4,000
    
    
    
    (4,000
    )Prepaid expenses and other current assets
    
    
    582
    
    
    
    (45
    )
    
    
    (271
    )Deposits
    
    
    
    
    
    
    
    
    
    
    30Accounts payable and accrued expenses
    
    
    (1,235
    )
    
    
    1,195
    
    
    
    293Deferred revenue
    
    
    (5,500
    )
    
    
    (5,500
    )
    
    
    29,792Net cash provided by (used in) operating activities
    
    
    (20,697
    )
    
    
    (13,130
    )
    
    
    8,977INVESTING ACTIVITIESAcquisition of Empire Pharmaceuticals, Inc.
    
    
    
    
    
    
    
    
    
    
    (2,000
    )Purchase of investments
    
    
    (22,918
    )
    
    
    (52,038
    )
    
    
    (91,201
    )Sales and maturities of investments
    
    
    11,166
    
    
    
    54,172
    
    
    
    93,375Purchases of property and equipment
    
    
    (11
    )
    
    
    (66
    )
    
    
    (349
    )Net cash provided by (used in) investing activities
    
    
    (11,763
    )
    
    
    2,068
    
    
    
    (175
    )FINANCING ACTIVITIESIssuance of common stock and warrants, net of issuance costs
    
    
    54,831
    
    
    
    6,493
    
    
    
    Proceeds from stock options and employee stock purchase
    
    
    42
    
    
    
    370
    
    
    
    106Issuance of common stock and notes in bridge financing
transaction, net of issuance costs
    
    
    5,990
    
    
    
    
    
    
    
    Repayment of notes issued in bridge financing transaction
    
    
    (6,000
    )
    
    
    
    
    
    
    Net cash provided by financing activities
    
    
    54,863
    
    
    
    6,863
    
    
    
    106Increase (decrease) in cash and cash equivalents
    
    
    22,403
    
    
    
    (4,199
    )
    
    
    8,908Cash and cash equivalents at beginning of period
    
    
    5,538
    
    
    
    9,737
    
    
    
    829Cash and cash equivalents at end of period
    
    $
    27,941
    
    
    $
    5,538
    
    
    $
    9,737SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest expense
    
    $
    143
    
    
    $
    
    
    
    $
    Cash paid for income taxes
    
    $
    
    
    
    $
    275
    
    
    $
    130SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS:Issuance of common stock in connection with acquisition
    
    $
    
    
    
    $
    
    
    
    $
    9,500Conversion of preferred stock to common stock
    
    $
    
    
    
    $
    
    
    
    $
    5
 See accompanying notes.
  39




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##### Table of Contents



NEUROBIOLOGICAL TECHNOLOGIES, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (tabular amounts in thousands, except per share amounts, percentages and years)
 Note 1. Description of Business and Summary of Significant Accounting Policies
 Business Description and Basis of Presentation
 ®
  Reverse Stock Split
  Use of Estimates
  Revenue Recognition
    Cash Equivalents and Investments
   40




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##### Table of Contents



Concentration of Credit and Other Risks and Uncertainties
   Fair Value of Financial Instruments
  Property and Equipment
  Impairment of Long-Lived Assets
  Warrants Issued in Connection with Equity Financings
  Research and Development Expenses
   41




---



##### Table of Contents



Acquired in-process research and development expenses
  Stock-Based Compensation
  Comprehensive loss
  Operating Leases
  Net Loss per Share
  Income Taxes
  Accounting for Uncertainty in Income Taxes  an Interpretation of FASB
Statement No. 109
 Recent Accounting Pronouncements
 Fair
Value Measurements Effective Date of FASB Statement No. 157,
  42




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##### Table of Contents



Accounting for
Nonrefundable Advance Payments for Goods or Services to Be Used in Future Research and Development
Activities
 Accounting for
Collaborative Arrangements Related to the Development and Commercialization of Intellectual
Property
 Reclassifications
  Note 2. Investments
  As of June 30,2008
    
    
    2007Market
    
    
    
    
    
    
    MarketCost
    
    
    Value
    
    
    Cost
    
    
    ValueType of security and termU.S government and agency obligationsMaturing in one to five years
    
    $
    
    
    
    $
    
    
    
    $
    112
    
    
    $
    110Auction rate securities (ARS)Maturing in 22 to 37 years
    
    
    11,372
    *
    
    
    11,850
    
    
    
    3,183
    
    
    
    3,183Corporate debt obligationsMaturing within one year
    
    
    2,027
    
    
    
    2,039
    
    
    
    15
    
    
    
    15Maturing in one to five years
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    20Mortgage and asset-backed securitiesMaturing in over five years
    
    
    
    
    
    
    
    
    
    
    95
    
    
    
    91Total investments
    
    $
    13,399
    
    
    $
    13,889
    
    
    $
    3,425
    
    
    $
    3,419ClassificationShort-term
    
    
    
    
    
    $
    2,039
    
    
    
    
    
    
    $
    3,419Long-term
    
    
    
    
    
    
    11,850
    
    
    
    
    
    
    
    Total investments
    
    
    
    
    
    $
    13,889
    
    
    
    
    
    
    $
    3,419
 *
    
    Cost represents purchase price less impairment charge of $1,768,000 on securities still
held at June 30, 2008.  43




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##### Table of Contents



Note 3. Property and Equipment. Net
  2008
    
    
    2007Manufacturing equipment
    
    $
    501
    
    
    $
    501Furniture, fixtures and leasehold improvements
    
    
    300
    
    
    
    300Machinery and equipment
    
    
    289
    
    
    
    2781,090
    
    
    
    1,079Less accumulated depreciation and amortization
    
    
    (697
    )
    
    
    (492
    )$
    393
    
    
    $
    587
 Note 4. Warrant Liability
 Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Companys Own Stock
 June 30,2008
    
    
    2007Volatility of common stock
    
    
    0.70
    
    
    
    0.79Term of warrants (in years)
    
    
    3.75
    
    
    
    4.75Risk-free interest rate
    
    
    3.0
    %
    
    
    4.9
    %Dividend rate
    
    
    
    
    
    
    
 Note 5. Commitments and Contingencies
  Fiscal year ending June 30:2009
    
    $
    3732010
    
    
    2922011
    
    
    105$
    770
  44




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##### Table of Contents



Note 6. Stockholders Equity (Deficit)
 Series A Convertible Preferred Stock
  Stockholder Rights Plan
   45




---



##### Table of Contents



Common Stock Transactions
    Securities Convertible into Common Stock
  Stock option and purchase plans
    
    
    3,876Warrants
    
    
    544Series A Convertible Preferred Stock
    
    
    714,491
  Expiration Date
    
    Exercise Price
    
    
    Number of SharesAugust 2009
    
    $
    47.11
    
    
    
    83April 2012
    
    $
    16.80
    
    
    
    461544
 Note 7. Stock-based compensation
     46




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##### Table of Contents



4 year vesting
    
    
    4 year vesting
    
    
    3 year vesting
    
    
    1 year vesting7 year term
    
    
    10 year term
    
    
    7 year term
    
    
    10 year termJune 30, 2008:Expected volatility
    
    
    0.75
    
    
    
    0.90
    
    
    
    0.80
    
    
    
    0.82Expected term (in years)
    
    
    4.75
    
    
    
    6.25
    
    
    
    4.50
    
    
    
    5.75Risk-free interest rate
    
    
    3.4
    %
    
    
    2.9
    %
    
    
    4.7
    %
    
    
    3.5
    %June 30, 2007:Expected volatility
    
    
    0.79  0.93
    
    
    
    1.08
    
    
    
    0.80
    
    
    
    0.89  0.90Expected term (in years)
    
    
    4.75
    
    
    
    6.25
    
    
    
    4.50
    
    
    
    5.50Risk-free interest rate
    
    
    4.6%  4.7
    %
    
    
    4.7
    %
    
    
    4.7
    %
    
    
    4.6%  4.7
    %June 30, 2006:Expected volatility
    
    
    
    
    
    
    1.10  1.27
    
    
    
    
    
    
    
    1.27Expected term (in years)
    
    
    
    
    
    
    6.25
    
    
    
    
    
    
    
    5.5Risk-free interest rate
    
    
    
    
    
    
    4.4  4.8
    %
    
    
    
    
    
    
    4.4
    %
  Fiscal Year Ended June 30,2008
    
    
    2007
    
    
    2006Research and development
    
    $
    283
    
    
    $
    346
    
    
    $
    340General and administrative
    
    
    723
    
    
    
    612
    
    
    
    508$
    1,006
    
    
    $
    958
    
    
    $
    848
   47




---



##### Table of Contents



Options OutstandingWeightedOptions Available
    
    
    
    
    
    
    Averagefor Future Grant
    
    
    Number of Shares
    
    
    Exercise PriceBalance at June 30, 2005
    
    
    49
    
    
    
    320
    
    
    $
    20.86Options granted
    
    
    (67
    )
    
    
    67
    
    
    $
    26.39Options canceled and expired
    
    
    6
    
    
    
    (7
    )
    
    $
    26.55Options exercised
    
    
    
    
    
    
    (11
    )
    
    $
    6.02Options authorized
    
    
    214
    
    
    
    
    
    
    
    Balance at June 30, 2006
    
    
    202
    
    
    
    369
    
    
    $
    22.26Options granted
    
    
    (105
    )
    
    
    105
    
    
    $
    17.57Options canceled and expired
    
    
    10
    
    
    
    (11
    )
    
    $
    22.35Options exercised
    
    
    
    
    
    
    (37
    )
    
    $
    12.67Balance at June 30, 2007
    
    
    107
    
    
    
    426
    
    
    $
    21.84Options granted
    
    
    (1,417
    )
    
    
    1,417
    
    
    $
    2.36Option granted outside of plan
    
    
    
    
    
    
    150
    
    
    $
    2.47Options canceled and expired
    
    
    36
    
    
    
    (84
    )
    
    $
    18.39Options exercised
    
    
    
    
    
    
    
    
    
    
    Options authorized
    
    
    3,200
    
    
    
    
    
    
    
    Balance at June 30, 2008
    
    
    1,926
    
    
    
    1,909
    
    
    $
    6.04
  Options Outstanding
    
    
    Options ExercisableWeightedAverageRemaining
    
    
    Weighted
    
    
    
    
    
    
    WeightedRange of
    
    
    
    
    
    
    Contractual
    
    
    Average
    
    
    
    
    
    
    AverageExercise Prices
    
    
    Shares
    
    
    Term in Years
    
    
    Exercise Price
    
    
    Shares
    
    
    Exercise Price$
    1.35
    
    
    
    243
    
    
    
    7.0
    
    
    $
    1.35
    
    
    
    
    
    
    $
    2.08
    
    
    
    500
    
    
    
    6.9
    
    
    
    2.08
    
    
    
    
    
    
    
    2.47  2.55
    
    
    
    251
    
    
    
    9.4
    
    
    
    2.48
    
    
    
    10
    
    
    
    2.553.00
    
    
    
    572
    
    
    
    8.3
    
    
    
    3.00
    
    
    
    136
    
    
    
    3.004.38  19.25
    
    
    
    156
    
    
    
    3.8
    
    
    
    12.43
    
    
    
    126
    
    
    
    11.1820.09  49.44
    
    
    
    187
    
    
    
    5.4
    
    
    
    31.52
    
    
    
    170
    
    
    
    32.11$
    1.35  49.44
    
    
    
    1,909
    
    
    
    7.2
    
    
    $
    6.04
    
    
    
    442
    
    
    $
    16.50
  Note 8. Collaboration Agreements
   48




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##### Table of Contents



Note 9. Income Taxes
   June 30,2008
    
    
    2007
    
    
    2006Deferred tax assets:Net operating losses
    
    $
    15,834
    
    
    $
    12,418
    
    
    $
    5,845Deferred revenue
    
    
    7,443
    
    
    
    9,622
    
    
    
    11,797Research credits
    
    
    18
    
    
    
    1,298
    
    
    
    898Other
    
    
    1,386
    
    
    
    546
    
    
    
    400Total deferred tax assets
    
    
    24,681
    
    
    
    23,884
    
    
    
    18,940Valuation allowance
    
    
    (24,681
    )
    
    
    (23,884
    )
    
    
    (18,940
    )Net deferred tax assets
    
    $
    
    
    
    $
    
    
    
    $
    
  49




---



##### Table of Contents



Fiscal Year endedJune 30,2008
    
    
    2007
    
    
    2006Tax expense (benefit) at federal statutory rate
    
    
    (35.0
    )%
    
    
    (35.0
    )%
    
    
    (35.0
    )%Effect of:State tax expense (benefit), net
    
    
    (5.3
    )%
    
    
    (4.1
    )%
    
    
    1.1Share-based compensation expenses
    
    
    1.9
    %
    
    
    1.7
    %
    
    
    1.1In-process research and development expense
    
    
    
    
    
    
    
    
    
    
    14.6
    %Warrant gain
    
    
    (7.2
    )%
    
    
    (2.4
    )%
    
    
    Losses not benefited
    
    
    45.6
    %
    
    
    39.8
    %
    
    
    19.3
    %Total provision for income taxes
    
    
    
    %
    
    
    
    %
    
    
    1.1
    %
  Balance at July 1, 2007
    
    $
    660Increase (decrease) for current period tax positions
    
    
    Balance at June 30, 2008
    
    $
    660
  Note 10. 401(k) Savings Plan
   50




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A(T). CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   Managements Report on Internal Control over Financial Reporting
 Internal Controls  Integrated Framework Internal Control Over Financial Reporting  Guidance for Smaller Public Companies
   Internal Controls  Integrated Framework
   51




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##### Table of Contents



ITEM 9B. OTHER INFORMATION
  
 PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  
 ITEM 11. EXECUTIVE COMPENSATION
  
 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 ACCOUNTING FEES AND SERVICES
   52




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 (a)
    
    Financial Statements and Schedules:
  (b)
    
    Exhibits:
  Exhibit
    
    
    
    Incorporated by ReferenceNo.
    
    Description
    
    Form
    
    Date of Filing
    
    Filed Herewith3.1
    
    
    Amended and Restated Certificate of Incorporation.
    
    S-3
    
    2/25/20053(i).1
    
    
    Certificate of Amendment to Amended and Restated
Certificate of Incorporation.
    
    10-Q
    
    2/10/20063.2
    
    
    Amended and Restated Bylaws of Neurobiological
Technologies, Inc.
    
    8-K
    
    6/20/20073.3
    
    
    Certificate of Designation, Preferences and
Rights of Series RP Preferred Stock of
Registrant.
    
    8-A
    
    5/20/20054.1
    
    
    Form of Common Stock Certificate.
    
    
    
    
    
    x4.2
    
    
    Form of Warrant to Purchase Common Stock, issued
March 1, 2004 to investors in a private placement
transaction.
    
    8-K
    
    3/4/20044.3
    
    
    Form of Rights Certificate for RP Preferred Stock.
    
    8-A
    
    5/20/20054.4
    
    
    Form of Common Stock Warrant issued to certain
institutional investors as a component of the
units in a private placement transaction on April
4, 2007.
    
    8-K
    
    4/2/200710.1
    
    
    Form of Indemnity Agreement between the Company
and its directors and officers. *
    
    
    
    
    
    x10.2
    
    
    Rights Agreement, dated May 19, 2005, by and
between American Stock Transfer & Trust Co., as
Rights Agent, and the Company.
    
    8-A
    
    5/20/200510.3
    
    
    Amendment No. 1 to Rights Agreement
    
    8-A
    
    11/5/200710.4
    
    
    1993 Stock Plan. *
    
    14A
    
    10/9/200110.5
    
    
    Amended and Restated 2003 Equity Incentive Plan. *
    
    14A
    
    4/3/200810.6
    
    
    2003 Employee Stock Purchase Plan. *
    
    14A
    
    10/9/200310.7
    
    
    Office Lease Agreement, dated April 22, 2005, by
and between CA-Emeryville Properties Limited
Partnership and the Company.
    
    10-Q
    
    5/10/200510.8
    
    
    Commercial Sublease, dated May 18, 2005, between
the Company and Refac.
    
    10-K
    
    9/28/200510.9
    
    
    License Agreement, dated as of March 29, 2002, by
and between Abbott Laboratories and Empire
Pharmaceuticals, Inc. +
    
    10-K
    
    9/28/200510.10
    
    
    First Amendment to License Agreement, dated as of
October 22, 2003, by and between Abbott
Laboratories and Empire Pharmaceuticals, Inc. +
    
    10-K
    
    9/28/200510.11
    
    
    Cooperation and Supply Agreement, dated March 1,
2005, by and between the Company and Nordmark
Arzneimittel GmbH & Co. KG. +
    
    10-Q
    
    5/10/200510.12
    
    
    Agreement on the Establishment of a Snake Farm
and Purification Unit, dated January 18, 2006, by
and between the Company and Nordmark Arzneimittel
GmbH & Co. KG.
    
    10-K
    
    11/6/2006
  53




---



##### Table of Contents



Exhibit
    
    
    
    Incorporated by ReferenceNo.
    
    Description
    
    Form
    
    Date of Filing
    
    Filed Herewith10.13
    
    
    Amendment to the Agreement on the Establishment
of a Snake Farm and Purification Unit, dated
March 6, 2006, by and between the Company and
Nordmark Arzneimittel GmbH & Co. KG.
    
    10-K
    
    11/6/200610.14
    
    
    Drug Product Development and Clinical Supply
Agreement, dated as of April 1, 2005, by and
between the Company and Baxter Pharmaceutical
Solutions LLC. +
    
    10-K
    
    9/28/200510.15
    
    
    Project Contract, dated May 1, 2004, by and
between the Company and ICON Clinical Research,
L.P.
    
    10-K
    
    9/28/200510.16
    
    
    Project Contract, dated January 1, 2005, by and
between the Company and ICON Clinical Research,
L.P.
    
    10-K
    
    9/28/200510.17
    
    
    Master Clinical Services Agreement, dated January
16, 2007, by and between the Company and ICON
Clinical Research Limited.
    
    10-K
    
    9/13/200710.18
    
    
    Master Clinical Development Agreement, dated as
of July 25, 2005, by and between the Company and
SCIREX Corporation.
    
    10-K
    
    9/28/200510.19
    
    
    Amendment to Agreement by and between the Company
and SCIREX Corporation, dated April 26, 2006.
    
    10-K
    
    11/6/200610.20
    
    
    Agreement between the Company and Childrens
Medical Center Corp., effective as of April 16,
1998. +
    
    10-KSB
    
    9/29/199810.21
    
    
    License and Cooperation Agreement among the
Company, Merz + Co. GmbH & Co. and Childrens
Medical Center Corp., effective as of April 16,
1998. +
    
    10-Q
    
    2/8/200710.22
    
    
    Amendment to License and Cooperation Agreement
among the Company, Merz + Co. GmbH & Co. and
Childrens Medical Center Corp., dated as of
February 20, 2008. +
    
    10-Q
    
    5/12/200810.23
    
    
    Asset Purchase Agreement, dated September 19,
2005, by and between the Company, Neutron ROW
Ltd. and Neutron Ltd.
    
    10-Q
    
    11/9/200510.24
    
    
    Collaboration and Services Agreement, dated
November 28, 2005, by and between Neutron Ltd.
and the Company.
    
    8-K
    
    12/1/200510.25
    
    
    Collaboration and License Agreement, entered into
as of November 29, 2007, by and between Buck
Institute for Age Research and the Company for
the fibroblast growth factor-2. +
    
    10-Q
    
    5/12/200810.26
    
    
    Collaboration and License Agreement, entered into
as of February 29, 2008, by and between Buck
Institute for Age Research and the Company for
the Netrin-1 protein. +
    
    10-Q
    
    5/12/200810.27
    
    
    Securities Purchase Agreement between the Company
and certain institutional investors, dated March
30, 2007.
    
    8-K
    
    4/2/200710.28
    
    
    Securities Purchase Agreement, dated as of
September 12, 2007, by and among the Company and
the purchasers listed therein.
    
    8-K
    
    9/12/200710.29
    
    
    Security Agreement, dated as of September 12,
2007, by and between the Company and U.S. Bank
National Association, as Trustee under the
Indenture.
    
    8-K
    
    9/12/200710.30
    
    
    Consulting Agreement between the Company and Lisa
U. Carr, M.D., Ph.D., dated July 1, 2007. *
    
    8-K
    
    7/6/200710.31
    
    
    Employment Offer Letter, dated March 18, 2008, by
and between the Company and Matthew M. Loar. *
    
    8-K
    
    4/3/200810.32
    
    
    Fiscal 2009 executive officer base salaries and
fiscal 2008 bonus amounts. *
    
    
    
    
    
    x21.1
    
    
    Subsidiary of the Company.
    
    
    
    
    
    x23.1
    
    
    Consent of Odenberg, Ullakko, Muranishi & Co.
LLP, Independent Registered Public Accounting
Firm.
    
    
    
    
    
    x
  54




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##### Table of Contents



Exhibit
    
    
    
    Incorporated by ReferenceNo.
    
    Description
    
    Form
    
    Date of Filing
    
    Filed Herewith24.1
    
    
    Powers of Attorney. (Contained on Signature Page)
    
    
    
    
    
    x31.1
    
    
    Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
    
    
    
    
    
    x31.2
    
    
    Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
    
    
    
    
    
    x32.1
    
    
    Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
    
    
    
    
    
    x32.2
    
    
    Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
    
    
    
    
    
    x
 +
    
    Confidential treatment has been granted with respect to portions of
this exhibit pursuant to an application requesting confidential
treatment under Rule 24b-2 of the Securities Exchange Act of 1934. A
complete copy of this exhibit, including the redacted terms, has been
separately filed with the Securities and Exchange Commission.*
    
    This exhibit is a management contract or compensatory plan or arrangement.  55




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##### Table of Contents



SIGNATURES
  Neurobiological Technologies, Inc.By:
    
    /s/ Paul E. FreimanDated: September 16, 2008
    
    
    
    Paul E. FreimanPresident and Chief Executive Officer
 POWERS OF ATTORNEY AND SIGNATURES
   Signature
    
    Title
    
    Date/s/ Paul E. Freiman

Paul E. Freiman
    
    Director, President and Chief
Executive Officer 
(Principal Executive Officer)
    
    September 16, 2008/s/ Matthew M. Loar

Matthew M. Loar
    
    Vice President and Chief Financial
Officer(Principal
Financial Officer and
Principal Accounting Officer)
    
    September 16, 2008/s/ Abraham E. Cohen

Abraham E. Cohen
    
    Chairman of the Board
    
    September 16, 2008/s/ Theodore L. Eliot, Jr.

Theodore L. Eliot, Jr.
    
    Director
    
    September 16, 2008/s/ William A. Fletcher

William A. Fletcher
    
    Director
    
    September 16, 2008/s/ F. Van Kasper

F. Van Kasper
    
    Director
    
    September 16, 2008/s/ Abraham D. Sofaer

Abraham D. Sofaer
    
    Director
    
    September 16, 2008/s/John B. Stuppin

John B. Stuppin
    
    Director
    
    September 16, 2008
  56




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##### Table of Contents



EXHIBIT INDEX
 Exhibit
    
    
    
    Incorporated by ReferenceNo.
    
    Description
    
    Form
    
    Date of Filing
    
    Filed Herewith3.1
    
    
    Amended and Restated Certificate of Incorporation.
    
    S-3
    
    2/25/20053(i).1
    
    
    Certificate of Amendment to Amended and Restated
Certificate of Incorporation.
    
    10-Q
    
    2/10/20063.2
    
    
    Amended and Restated Bylaws of Neurobiological
Technologies, Inc.
    
    8-K
    
    6/20/20073.3
    
    
    Certificate of Designation, Preferences and
Rights of Series RP Preferred Stock of
Registrant.
    
    8-A
    
    5/20/20054.1
    
    
    Form of Common Stock Certificate.
    
    
    
    
    
    x4.2
    
    
    Form of Warrant to Purchase Common Stock, issued
March 1, 2004 to investors in a private placement
transaction.
    
    8-K
    
    3/4/20044.3
    
    
    Form of Rights Certificate for RP Preferred Stock.
    
    8-A
    
    5/20/20054.4
    
    
    Form of Common Stock Warrant issued to certain
institutional investors as a component of the
units in a private placement transaction on April
4, 2007.
    
    8-K
    
    4/2/200710.1
    
    
    Form of Indemnity Agreement between the Company
and its directors and officers. *
    
    
    
    
    
    x10.2
    
    
    Rights Agreement, dated May 19, 2005, by and
between American Stock Transfer & Trust Co., as
Rights Agent, and the Company.
    
    8-A
    
    5/20/200510.3
    
    
    Amendment No. 1 to Rights Agreement
    
    8-A
    
    11/5/200710.4
    
    
    1993 Stock Plan. *
    
    14A
    
    10/9/200110.5
    
    
    Amended and Restated 2003 Equity Incentive Plan. *
    
    14A
    
    4/3/200810.6
    
    
    2003 Employee Stock Purchase Plan. *
    
    14A
    
    10/9/200310.7
    
    
    Office Lease Agreement, dated April 22, 2005, by
and between CA-Emeryville Properties Limited
Partnership and the Company.
    
    10-Q
    
    5/10/200510.8
    
    
    Commercial Sublease, dated May 18, 2005, between
the Company and Refac.
    
    10-K
    
    9/28/200510.9
    
    
    License Agreement, dated as of March 29, 2002, by
and between Abbott Laboratories and Empire
Pharmaceuticals, Inc. +
    
    10-K
    
    9/28/200510.10
    
    
    First Amendment to License Agreement, dated as of
October 22, 2003, by and between Abbott
Laboratories and Empire Pharmaceuticals, Inc. +
    
    10-K
    
    9/28/200510.11
    
    
    Cooperation and Supply Agreement, dated March 1,
2005, by and between the Company and Nordmark
Arzneimittel GmbH & Co. KG. +
    
    10-Q
    
    5/10/200510.12
    
    
    Agreement on the Establishment of a Snake Farm
and Purification Unit, dated January 18, 2006, by
and between the Company and Nordmark Arzneimittel
GmbH & Co. KG.
    
    10-K
    
    11/6/200610.13
    
    
    Amendment to the Agreement on the Establishment
of a Snake Farm and Purification Unit, dated
March 6, 2006, by and between the Company and
Nordmark Arzneimittel GmbH & Co. KG.
    
    10-K
    
    11/6/200610.14
    
    
    Drug Product Development and Clinical Supply
Agreement, dated as of April 1, 2005, by and
between the Company and Baxter Pharmaceutical
Solutions LLC. +
    
    10-K
    
    9/28/200510.15
    
    
    Project Contract, dated May 1, 2004, by and
between the Company and ICON Clinical Research,
L.P.
    
    10-K
    
    9/28/200510.16
    
    
    Project Contract, dated January 1, 2005, by and
between the Company and ICON Clinical Research,
L.P.
    
    10-K
    
    9/28/2005
  57




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##### Table of Contents



Exhibit
    
    
    
    Incorporated by ReferenceNo.
    
    Description
    
    Form
    
    Date of Filing
    
    Filed Herewith10.17
    
    
    Master Clinical Services Agreement, dated January
16, 2007, by and between the Company and ICON
Clinical Research Limited.
    
    10-K
    
    9/13/200710.18
    
    
    Master Clinical Development Agreement, dated as
of July 25, 2005, by and between the Company and
SCIREX Corporation.
    
    10-K
    
    9/28/200510.19
    
    
    Amendment to Agreement by and between the Company
and SCIREX Corporation, dated April 26, 2006.
    
    10-K
    
    11/6/200610.20
    
    
    Agreement between the Company and Childrens
Medical Center Corp., effective as of April 16,
1998. +
    
    10-KSB
    
    9/29/199810.21
    
    
    License and Cooperation Agreement among the
Company, Merz + Co. GmbH & Co. and Childrens
Medical Center Corp., effective as of April 16,
1998. +
    
    10-Q
    
    2/8/200710.22
    
    
    Amendment to License and Cooperation Agreement
among the Company, Merz + Co. GmbH & Co. and
Childrens Medical Center Corp., dated as of
February 20, 2008. +
    
    10-Q
    
    5/12/200810.23
    
    
    Asset Purchase Agreement, dated September 19,
2005, by and between the Company, Neutron ROW
Ltd. and Neutron Ltd.
    
    10-Q
    
    11/9/200510.24
    
    
    Collaboration and Services Agreement, dated
November 28, 2005, by and between Neutron Ltd.
and the Company.
    
    8-K
    
    12/1/200510.25
    
    
    Collaboration and License Agreement, entered into
as of November 29, 2007, by and between Buck
Institute for Age Research and the Company for
the fibroblast growth factor-2. +
    
    10-Q
    
    5/12/200810.26
    
    
    Collaboration and License Agreement, entered into
as of February 29, 2008, by and between Buck
Institute for Age Research and the Company for
the Netrin-1 protein. +
    
    10-Q
    
    5/12/200810.27
    
    
    Securities Purchase Agreement between the Company
and certain institutional investors, dated March
30, 2007.
    
    8-K
    
    4/2/200710.28
    
    
    Securities Purchase Agreement, dated as of
September 12, 2007, by and among the Company and
the purchasers listed therein.
    
    8-K
    
    9/12/200710.29
    
    
    Security Agreement, dated as of September 12,
2007, by and between the Company and U.S. Bank
National Association, as Trustee under the
Indenture.
    
    8-K
    
    9/12/200710.30
    
    
    Consulting Agreement between the Company and Lisa
U. Carr, M.D., Ph.D., dated July 1, 2007. *
    
    8-K
    
    7/6/200710.31
    
    
    Employment Offer Letter, dated March 18, 2008, by
and between the Company and Matthew M. Loar. *
    
    8-K
    
    4/3/200810.32
    
    
    Fiscal 2009 executive officer base salaries and
fiscal 2008 bonus amounts. *
    
    
    
    
    
    x21.1
    
    
    Subsidiary of the Company.
    
    
    
    
    
    x23.1
    
    
    Consent of Odenberg, Ullakko, Muranishi & Co.
LLP, Independent Registered Public Accounting
Firm.
    
    
    
    
    
    x24.1
    
    
    Powers of Attorney. (Contained on Signature Page)
    
    
    
    
    
    x31.1
    
    
    Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
    
    
    
    
    
    x31.2
    
    
    Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
    
    
    
    
    
    x32.1
    
    
    Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
    
    
    
    
    
    x32.2
    
    
    Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
    
    
    
    
    
    x
 +
    
    Confidential treatment has been granted with respect to portions of
this exhibit pursuant to an application requesting confidential
treatment under Rule 24b-2 of the Securities Exchange Act of 1934. A
complete copy of this exhibit, including the redacted terms, has been
separately filed with the Securities and Exchange Commission.*
    
    This exhibit is a management contract or compensatory plan or arrangement.  58