##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
   o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   INHIBITEX, INC.
  Delaware
    
    74-2708737(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 9005 Westside Parkway
Alpharetta, Georgia 30004
 (678) 746-1100
 Not Applicable
 þ o
 o þ




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TABLE OF CONTENTS
 PAGEPART I  FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Balance Sheets as of June 30, 2005 and December 31, 2004
    
    
    3Condensed Statements of Operations for the Three and Six Months Ended June 30, 2005 and 2004 and for the Period from Inception (May 13, 1994) through June 30, 2005
    
    
    4Condensed Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004 and for the Period from Inception (May 13, 1994) through June 30, 2005
    
    
    5Notes to Condensed Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    22Item 4. Controls and Procedures
    
    
    22PART II  OTHER INFORMATIONItem 4. Submission of matters to a vote
    
    
    23Item 6. Exhibits
    
    
    23Signatures
    
    
    24Exhibit IndexEX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEO AND CFO
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PART I FINANCIAL INFORMATION 
 Item 1. Financial Statements PART I
FINANCIAL INFORMATION
 
 CONDENSED BALANCE SHEETS INHIBITEX, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEETS
(unaudited)
 June 30,
    
    
    December 31,2005
    
    
    2004ASSETSCurrent assets:Cash and cash equivalents
    
    $
    26,275,755
    
    
    $
    71,580,823Short-term investments
    
    
    39,650,942
    
    
    
    15,623,887Prepaid expenses and other current assets
    
    
    1,848,910
    
    
    
    1,082,359Accounts receivable
    
    
    192,178
    
    
    
    322,019Total current assets
    
    
    67,967,785
    
    
    
    88,609,088Property and equipment, net
    
    
    7,649,820
    
    
    
    2,629,987Total assets
    
    $
    75,617,605
    
    
    $
    91,239,075LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,132,137
    
    
    $
    3,077,636Accrued expenses
    
    
    5,330,195
    
    
    
    3,587,093Current portion of notes payable
    
    
    1,480,670
    
    
    
    877,239Current portion of capital lease obligations
    
    
    570,739
    
    
    
    315,043Current portion of deferred revenue
    
    
    191,667
    
    
    
    191,667Other current liabilities
    
    
    1,192,359
    
    
    
    1,000,000Total current liabilities
    
    
    9,897,767
    
    
    
    9,048,678Long-term liabilities:Notes payable, net of current portion
    
    
    1,622,087
    
    
    
    486,112Capital lease obligations, net of current portion
    
    
    1,065,696
    
    
    
    321,190Deferred revenue, net of current portion
    
    
    762,498
    
    
    
    837,498Other liabilities, net of current portion
    
    
    1,323,437
    
    
    
    Total long-term liabilities
    
    
    4,773,718
    
    
    
    1,644,800Total liabilities
    
    
    14,671,485
    
    
    
    10,693,478Stockholders equity:Preferred stock, $.001 par value; 5,000,000
shares authorized at June 30, 2005 and December
31, 2004; none issued and outstanding
    
    
    
    
    
    
    Common stock, $.001 par value; 75,000,000 shares
authorized at June 30, 2005 and December 31,
2004; 25,203,583 and 25,133,327 shares issued
and outstanding at June 30, 2005 and December
31, 2004, respectively
    
    
    25,204
    
    
    
    25,133Common stock warrants
    
    
    11,555,968
    
    
    
    11,555,968Additional paid-in capital
    
    
    173,353,502
    
    
    
    173,188,745Deferred stock compensation
    
    
    (1,020,723
    )
    
    
    (1,269,099
    )Deficit accumulated during the development stage
    
    
    (122,967,831
    )
    
    
    (102,955,150
    )Total stockholders equity
    
    
    60,946,120
    
    
    
    80,545,597Total liabilities and stockholders equity
    
    $
    75,617,605
    
    
    $
    91,239,075
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CONDENSED STATEMENTS OF OPERATIONS INHIBITEX, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
 Period fromInceptionThree Months Ended
    
    
    Six Months Ended
    
    
    (May 13, 1994)June 30,
    
    
    June 30,
    
    
    Through2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    June 30, 2005Revenue:License fees and milestones
    
    $
    37,500
    
    
    $
    37,500
    
    
    $
    75,000
    
    
    $
    75,000
    
    
    $
    1,087,500Collaborative research and
development
    
    
    125,000
    
    
    
    125,000
    
    
    
    250,000
    
    
    
    250,000
    
    
    
    2,749,455Grants and other revenue
    
    
    6,020
    
    
    
    
    
    
    
    120,651
    
    
    
    
    
    
    
    420,651Total revenue
    
    
    168,520
    
    
    
    162,500
    
    
    
    445,651
    
    
    
    325,000
    
    
    
    4,257,606Operating expense:Research and development
    
    
    8,781,635
    
    
    
    6,061,771
    
    
    
    17,911,248
    
    
    
    10,099,756
    
    
    
    92,950,412General and administrative
    
    
    1,818,912
    
    
    
    818,937
    
    
    
    3,227,327
    
    
    
    1,661,448
    
    
    
    19,529,905Amortization of deferred
stock compensation
    
    
    124,188
    
    
    
    118,193
    
    
    
    248,376
    
    
    
    224,913
    
    
    
    897,900Total operating expense
    
    
    10,724,735
    
    
    
    6,998,901
    
    
    
    21,386,951
    
    
    
    11,986,117
    
    
    
    113,378,217Loss from operations
    
    
    (10,556,215
    )
    
    
    (6,836,401
    )
    
    
    (20,941,300
    )
    
    
    (11,661,117
    )
    
    
    (109,120,611
    )Other income, net
    
    
    
    
    
    
    14,050
    
    
    
    
    
    
    
    14,050
    
    
    
    703,042Interest income (expense), net
    
    
    486,222
    
    
    
    10,255
    
    
    
    928,619
    
    
    
    13,403
    
    
    
    1,831,801Net loss
    
    
    (10,069,993
    )
    
    
    (6,812,096
    )
    
    
    (20,012,681
    )
    
    
    (11,633,664
    )
    
    
    (106,585,768
    )Dividends and accretion to
redemption value of redeemable
preferred stock
    
    
    
    
    
    
    (1,221,822
    )
    
    
    
    
    
    
    (2,823,160
    )
    
    
    (16,382,063
    )Net loss attributable to
common stockholders
    
    $
    (10,069,993
    )
    
    $
    (8,033,918
    )
    
    $
    (20,012,681
    )
    
    $
    (14,456,824
    )
    
    $
    (122,967,831
    )Basic and diluted net loss
attributable to common
stockholders per
share
    
    $
    (0.40
    )
    
    $
    (1.72
    )
    
    $
    (0.80
    )
    
    $
    (5.49
    )Weighted average shares used
to compute basic and diluted
net loss attributable to
common stockholders per share
    
    
    25,198,094
    
    
    
    4,669,950
    
    
    
    25,172,976
    
    
    
    2,633,918
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CONDENSED STATEMENTS OF CASH FLOWS INHIBITEX, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
 Period fromInception(May 13, 1994)Six Months Ended
    
    
    ThroughJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005Cash flows from operating activities:Net loss
    
    $
    (20,012,681
    )
    
    $
    (11,633,664
    )
    
    $
    (106,585,768
    )Adjustments
to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    543,244
    
    
    
    397,532
    
    
    
    4,008,298Amortization of deferred stock compensation
    
    
    248,376
    
    
    
    224,913
    
    
    
    897,900Loss on sale of equipment
    
    
    1,222
    
    
    
    
    
    
    
    49,356Amortization of investment premium or discount
    
    
    35,416
    
    
    
    77,962
    
    
    
    236,077Forgiveness of receivables from stockholders
    
    
    
    
    
    
    
    
    
    
    28,695Amortization of warrants and discount on debt
    
    
    
    
    
    
    53,685
    
    
    
    176,477Stock issued for interest
    
    
    
    
    
    
    2,310
    
    
    
    126,886Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    99,500Changes in operating assets and liabilities:Prepaid expenses and other assets
    
    
    (766,551
    )
    
    
    (574,101
    )
    
    
    (1,848,910
    )Accounts receivable
    
    
    129,841
    
    
    
    289,498
    
    
    
    (192,178
    )Accounts payable and other liabilities
    
    
    (429,703
    )
    
    
    (187,645
    )
    
    
    3,647,933Accrued expenses
    
    
    1,743,102
    
    
    
    (206,097
    )
    
    
    5,330,195Deferred revenue
    
    
    (75,000
    )
    
    
    (75,000
    )
    
    
    954,165Net cash used in operating activities
    
    
    (18,582,734
    )
    
    
    (11,630,607
    )
    
    
    (93,071,374
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (4,308,739
    )
    
    
    (203,816
    )
    
    
    (8,494,075
    )Purchases of short-term investments
    
    
    (83,265,972
    )
    
    
    (17,117,359
    )
    
    
    (130,710,204
    )Proceeds from maturities of short-term investments
    
    
    59,182,073
    
    
    
    5,600,000
    
    
    
    90,789,253Net cash used in investing activities
    
    
    (28,392,638
    )
    
    
    (11,721,175
    )
    
    
    (48,415,026
    )Cash flows from financing activities:Proceeds from promissory notes and related warrants
    
    
    2,177,642
    
    
    
    
    
    
    
    5,191,134Payments on promissory notes and capital leases
    
    
    (693,594
    )
    
    
    (618,917
    )
    
    
    (3,665,341
    )Proceeds from bridge loan and related warrants
    
    
    
    
    
    
    
    
    
    
    2,220,000Net proceeds from the issuance of preferred stock and warrants
    
    
    
    
    
    
    1,517,997
    
    
    
    81,788,868Proceeds from the issuance of common stock, net of issuance costs
    
    
    186,256
    
    
    
    30,785,766
    
    
    
    82,227,494Net cash provided by financing activities
    
    
    1,670,304
    
    
    
    31,684,846
    
    
    
    167,762,155(Decrease) increase  in cash and cash equivalents
    
    
    (45,305,068
    )
    
    
    8,333,064
    
    
    
    26,275,755Cash and cash equivalents at beginning of period
    
    
    71,580,823
    
    
    
    26,649,150
    
    
    
    Cash and cash equivalents at end of period
    
    $
    26,275,755
    
    
    $
    34,982,214
    
    
    $
    26,275,755Supplemental cash flow information:Interest paid
    
    $
    83,023
    
    
    $
    108,106
    
    
    $
    864,364Supplemental non-cash investing and financing activities:Fixed assets capitalized using promissory notes and capital leases
    
    
    1,255,560
    
    
    
    240,764
    
    
    
    3,213,339Conversion of bridge loans and interest payable into Series C
Preferred Stock
    
    
    
    
    
    
    
    
    
    
    2,124,576Preferred stock dividends and accretion of preferred stock to
redemption value
    
    
    
    
    
    
    2,823,160
    
    
    
    16,382,063Unrealized loss on short-term investments
    
    
    21,428
    
    
    
    5,653
    
    
    
    35,514
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INHIBITEX, INC.
(A Development Stage Company)
 
 NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 1. Operations
  Staphylococcus aureus (S. aureus)
 2. Summary of Significant Accounting Policies
 Basis of Presentation
 Use of Estimates.
 Cash, Cash Equivalents and Short-Term Investments. Accounting for Certain Investments in Debt and Equity Securities
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Property and Equipment, Net.
 Asset
    
    Estimated LifeComputer software and equipment
    
    3 yearsFurniture and fixtures
    
    7 yearsLaboratory equipment
    
    5 yearsLeasehold improvements
    
    Lesser of estimated useful life or life of lease
 Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use.
 Revenue Recognition. Revenue Recognition in Financial Statements Revenue Recognition Revenue Arrangements with Multiple Deliverables
 Accrued Expenses.
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Prepaid Expenses and Other Current Assets.
 Stock-based Compensation. Accounting for Stock Issued to Employees Accounting for Certain Transactions Involving Stock
Compensation, an Interpretation of APB No. 25, and Related Interpretations Accounting for Stock-Based Compensation Accounting for Equity Instruments that are
Issued to Other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services. Accounting for
Stock-Based Compensation  Transition and Disclosure Interim Financial Reporting
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Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net loss attributable to common
stockholders  as reported
    
    $
    (10,069,993
    )
    
    $
    (8,033,918
    )
    
    $
    (20,012,681
    )
    
    $
    (14,456,824
    )Add: Amortization of deferred stock
compensation included in
net loss  as reported
    
    
    124,188
    
    
    
    118,193
    
    
    
    248,376
    
    
    
    224,913Deduct: Stock compensation expense
determined under fair value method
    
    
    (523,695
    )
    
    
    (269,552
    )
    
    
    (1,003,806
    )
    
    
    (483,901
    )Net loss attributable to common
stockholders  pro forma
    
    $
    (10,469,500
    )
    
    $
    (8,185,277
    )
    
    $
    (20,768,111
    )
    
    $
    (14,715,812
    )Net loss attributable to common
stockholders per share (basic and
diluted):As reported
    
    $
    (0.40
    )
    
    $
    (1.72
    )
    
    $
    (0.80
    )
    
    $
    (5.49
    )Pro forma
    
    $
    (0.42
    )
    
    $
    (1.75
    )
    
    $
    (0.83
    )
    
    $
    (5.59
    )
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Risk-free interest rate
    
    
    3.86
    %
    
    
    3.62
    %
    
    
    3.74
    %
    
    
    3.23
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Volatility factors
    
    
    .50
    
    
    
    .43
    
    
    
    .50
    
    
    
    .43Expected life of options (years)
    
    
    4.0
    
    
    
    4.0
    
    
    
    4.0
    
    
    
    4.0Weighted average fair value of
options granted
    
    $
    3.48
    
    
    $
    2.13
    
    
    $
    3.81
    
    
    $
    2.06
  Fair Value of Financial Instruments.
 Concentrations of Credit Risk and Limited Suppliers.
  Research and Development Expense.
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Income Taxes. Accounting for Income Taxes
 Comprehensive Loss. Comprehensive Income,
 Lease Accounting.
 Recent Accounting Pronouncements. Share-Based Payment Statement of Cash Flows
   3. Net Loss Per Share
 Earnings Per Share
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Three Months Ended June 30,
    
    
    Six Months Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004HistoricalNumerator:Net loss attributable to common
stockholders
    
    $
    (10,069,993
    )
    
    $
    (8,033,918
    )
    
    $
    (20,012,681
    )
    
    $
    (14,456,824
    )Denominator:Weighted average common shares
outstanding
    
    
    25,198,094
    
    
    
    4,669,950
    
    
    
    25,172,976
    
    
    
    2,633,918Basic and diluted net loss per
share attributable to common
stockholders
    
    $
    (0.40
    )
    
    $
    (1.72
    )
    
    $
    (0.80
    )
    
    $
    (5.49
    )
  June 30,2005
    
    
    2004Common stock options
    
    
    2,260,377
    
    
    
    1,268,101Warrants
    
    
    3,800,143
    
    
    
    1,829,118Total
    
    
    6,060,520
    
    
    
    3,097,219
 4.
Notes Payable
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 This Quarterly Report on Form 10-Q contains forward-looking statements. These forward-looking
statements involve known and unknown risks, uncertainties and other factors that may cause actual
results, performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking statements. In some cases,
you can identify forward-looking statements by terms such as may, will, should, could,
would, expect, plan, intend, anticipate, believe, estimate, project, predict,
forecast, potential, likely or possible, as well as the negative of such expressions, and
similar expressions intended to identify forward-looking statements. These forward-looking
statements include, without limitation, statements relating to:
 
    
    potential future revenue from collaborative research or materials transfer agreements;
    
    our ability to successfully commercialize our product candidates and generate product-related revenue in the future;
    
    the potential volatility of our quarterly and annual operating results;
    
    the anticipated length of time to fully enroll and generate data from our Phase III Veronate trial;
    
    the anticipated timing of the Data Safety Monitoring Board (DSMB) for reviewing the Phase III Veronate
trial;
    
    our intention to proceed to a larger well-powered follow-on clinical trial of Aurexis in patients with S. aureus
bloodstream infections and the timing, design and size of such clinical trial;
    
    our plans to establish a specialized hospital-based sales force and commercialize our product candidates, particularly
Veronate, in the United States;
    
    expected increases in our research and development expenses, general and administrative expenses and operating losses in
the future;
    
    our expected future amortization of deferred stock compensation;
    
    our planned adoption of SFAS No. 123(R) and the potential impact that the adoption of SFAS No. 123(R) may have on our
future results of operations and reported cash flows;
    
    our plan to increase borrowings under our existing credit
facilities;
    
    our future financing requirements and how we plan to fund them;
    
    the number of months that our current cash, cash equivalents, short-term investments and our borrowing capacity under
existing arrangements will allow us to operate; and
    
    anticipated financial results, including revenues, operating expenses and ending cash, cash equivalents and short-term
investments for our fiscal year ending on December 31, 2005.
 These statements reflect our current views with respect to future events and are based on
assumptions and subject to risks and uncertainties including, without limitation: that the
preceding preclinical and clinical results related to our antibody-based products, including
Veronate and Aurexis, are not reflective of future results; Wyeth terminating our license and
collaborative research agreement; the cost and rate at which investigators can recruit patients
into our clinical trials; our ongoing or future clinical trials not demonstrating the appropriate
safety and efficacy of our product candidates; our ability to successfully develop current and
future product candidates either independently or in collaboration with business partners; our
ability to secure and our use of third-party contract clinical research and data management
 -12-




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organizations, raw material suppliers and manufacturers, who may not fulfill their contractual
obligations or otherwise perform satisfactorily in the future; manufacturing and maintaining
sufficient quantities of clinical trial material on hand to complete our clinical trials on a
timely basis; the length of time to perform final evaluation of data from our Phase II Aurexis
clinical trail; our failure to obtain DSMB or regulatory approval to commence or continue our
clinical trials or to market our product candidates; our ability to protect and maintain our
proprietary intellectual property rights from unauthorized use by others; our collaborators do not
fulfill their obligations under our agreements with them in the future; the condition of the
financial equity and debt markets and our ability to raise sufficient funding in such markets; our
ability to manage our current cash reserves as planned; changes in related governmental laws and
regulations; changes in general economic business or competitive conditions; and other statements
contained elsewhere in this Quarterly Report on Form 10-Q and risk factors described in or referred
to in greater detail in the Risk Factors section of our annual report on Form 10-K filed with
the Securities and Exchange Commission on March 28, 2005 and in risk factors described in or
referred to in greater detail in the Risk Factors section of the Companys prospectus, which
forms part of its Registration Statement on Form S-3 , which, as amended, was declared effective by
the Securities and Exchange Commission on July 7, 2005.
 There may be events in the future that we are unable to predict accurately, or over which we have
no control. You should read this Form 10-Q and the documents that we reference herein that have
been filed or incorporated by reference as exhibits completely and with the understanding that our
actual future results may be materially different from what we expect. Our business and financial
condition, results of operations, and prospects may change. We may not update these forward-looking
statements, even though our situation may change in the future, unless we have obligations under
the federal securities laws to update and disclose material developments related to previously
disclosed information. We qualify all of the information presented in this Form 10-Q , and
particularly our forward-looking statements, by these cautionary statements.
 Inhibitex ® , MSCRAMM ® , Veronate ® , and Aurexis ® are
registered trademarks of Inhibitex, Inc. MSCRAMM is an acronym for Microbial Surface Components
Recognizing Adhesive Matrix Molecules
 The following discussion should be read in conjunction with the condensed financial statements and
the notes thereto included in Item 1 of this Quarterly Report on Form 10-Q .
 Overview
 Staphylococcus aureus, S. aureus, S. aureus
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Recent Developments
  S. aureus
 S. aureus
 S. aureus S.
aureus
  Critical Accounting Policies and Estimates
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Use of Estimates.
 Revenue Recognition. Revenue Recognition in
Financial Statements, Revenue Recognition, Revenue Arrangements with Multiple Deliverables.
 Accrued Expenses.
 Stock-Based Compensation. Accounting for Stock Issued to Employees, Accounting for
Stock-Based Compensation.
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Financial Operations Overview
 Revenue.
 Research and Development Expense.
  
    
    the scope, rate of progress and cost of our clinical trials and other research and development programs;
 
    
    future clinical trial results;
 
    
    the terms and timing of any collaborative, licensing and other arrangements that we may establish;
 
    
    the cost and timing of regulatory approvals;
 
    
    the cost of establishing and maintaining clinical and commercial supplies of our product candidates;
 
    
    the effect of competing technological and market developments; and
 
    
    the availability of funding to continue clinical trials.
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General and Administrative Expense.
 Deferred Stock Compensation
 Interest and Other Income (Expense), net.
 Results of Operations
 Three Months Ended June 30, 2005 and 2004
 Revenue.
 Research and Development Expense. ,
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Three Months Ended June30,2005
    
    
    2004(in thousands)Clinical and manufacturing-related expense
    
    $
    5,526
    
    
    $
    3,151Personnel-related salaries and expenses
    
    
    1,777
    
    
    
    1,335License fees, legal, and other expense
    
    
    877
    
    
    
    1,186Depreciation and facility-related expense.
    
    
    602
    
    
    
    390Total research and development expense
    
    $
    8,782
    
    
    $
    6,062
 General and Administrative Expense.
 Amortization of Deferred Stock Compensation.
 Interest and Other Income (Expense), net .
 -18-




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Dividends and Accretion to Redemption Value of Redeemable Preferred Stock.
 Six Months Ended June 30, 2005 and 2004
 Revenue.
 Research and Development Expense. , S. aureu
  Six Months Ended June 30,2005
    
    
    2004(in thousands)Clinical and manufacturing-related expense
    
    $
    11,864
    
    
    $
    4,582Personnel-related salaries and expenses
    
    
    3,305
    
    
    
    2,622License fees, legal, and other expense
    
    
    1,612
    
    
    
    2,149Depreciation and facility-related expense.
    
    
    1,130
    
    
    
    747Total research and development expense
    
    $
    17,911
    
    
    $
    10,100
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##### Table of Contents



General and Administrative Expense.
 Amortization of Deferred Stock Compensation.
 Interest and Other Income (Expense), net .
 Dividends and Accretion to Redemption Value of Redeemable Preferred Stock.
 Liquidity and Capital Resources
 Sources of Liquidity
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##### Table of Contents



Cash Flows
     Funding Requirements
   -21-




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##### Table of Contents



2005 Financial Guidance
   ̈
    
    Total revenue from existing agreements of approximately $800,000 to $1.0 million; ̈
    
    total operating expenses of approximately $45 to $47 million; and ̈
    
    cash, cash equivalents and short-term investments in the amount of approximately $39 to
$41 million at December 31, 2005.
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
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##### Table of Contents



Changes in Internal Control over Financial Reporting
  
 PART II
 OTHER INFORMATION
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE
  Approved the proposal to elect the director nominees named below:William D. Johnston
    
    For
    
    
    21,423,330
    
    
    Withheld
    
    
    246,570Russell M. Medford
    
    For
    
    19,356,111
    
    Withheld
    
    2,313,790A. Keith Willard
    
    For
    
    21,422,630
    
    Withheld
    
    247,270Approved the proposal to amend our 2004 Stock Incentive Plan:For
    
    
    19,110,115
    
    
    Against
    
    
    1,109,312
    
    
    Abstain
    
    
    9,037Approved the ratification of Ernst &Young LLP, as independent registered public accounting firm for
the fiscal year ending December 31, 2005.For
    
    
    21,660,736
    
    
    Against
    
    
    6,050
    
    
    Abstain
    
    
    3,072
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##### Table of Contents



ITEM 6. EXHIBITS
  Exhibit No.
    
    Description31.1
    
    Section 302 Certification of the Chief Executive Officer Required by Rule 13a-14(a) or
Rule 15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 200231.2
    
    Section 302 Certification of the Chief Financial Officer Required by Rule 13a-14(a) or
Rule 15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 200232.1
    
    Section 906 Certifications of
the Chief Executive Officer and the Chief Financial Officer
 
 SIGNATURES
  Date: August 15, 2005
    INHIBITEX, INC/s/ Russell H. PlumbRussell H. PlumbVice President, Finance and Administration,
Chief Financial Officer -24-




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description31.1
    
    Section 302 Certification of the Chief Executive Officer
Required by Rule 13a-14(a) or Rule 15d-14(a) of the
Securities Exchange Act of 1934, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Section 302 Certification of the Chief Financial Officer
Required by Rule 13a-14(a) or Rule 15d-14(a) of the
Securities Exchange Act of 1934, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Section 906 Certifications of the Chief Executive Officer
and the Chief Financial Officer
 -25-