##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period fromto
 Commission File No. 0-50772
 INHIBITEX, INC.
  Delaware
    
    74-2708737(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)9005 Westside ParkwayAlpharetta, Georgia
    
    30009(Address of principal executive
    
    (Zip Code)offices)
 (678) 746-1100
 Not Applicable
 þ o
 Rule 12b-2
 Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company þ
 o þ




---



##### 



TABLE OF CONTENTS
 PAGEPART I  FINANCIAL INFORMATIONItem 1. Financial StatementsBalance Sheets as of June 30, 2008 and December 31, 2007
    
    
    3Statements of Operations for the Three and Six Months Ended June 30, 2008 and 2007
    
    
    4Statements of Cash Flows for the Six Months Ended June 30, 2008 and 2007
    
    
    5Notes to Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 4T. Controls and Procedures
    
    
    19PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    20Item 1A. Risk Factors
    
    
    20Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22Item 4. Submission of Matters to a Vote of Security Holders
    
    
    22Item 6. Exhibits
    
    
    23Signatures
    
    
    24Exhibit IndexExhibit 31.1Exhibit 32.1
   2




---



##### Table of Contents



PART I
FINANCIAL INFORMATION
 INHIBITEX, INC.
 
 CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    December 31,2008
    
    
    2007(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    13,532,642
    
    
    $
    14,178,143Short-term investments
    
    
    27,965,920
    
    
    
    36,088,309Prepaid expenses and other current assets
    
    
    840,071
    
    
    
    1,058,426Accounts receivable
    
    
    187,332
    
    
    
    44,988Total current assets
    
    
    42,525,965
    
    
    
    51,369,866Property and equipment, net
    
    
    2,523,618
    
    
    
    2,564,345Long-term investments
    
    
    400,480
    
    
    
    Total assets
    
    $
    45,450,063
    
    
    $
    53,934,211LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,005,956
    
    
    $
    1,160,351Accrued expenses
    
    
    3,405,457
    
    
    
    6,605,253Current portion of notes payable
    
    
    312,500
    
    
    
    312,500Current portion of capital lease obligations
    
    
    388,112
    
    
    
    698,151Current portion of deferred revenue
    
    
    941,667
    
    
    
    441,667Other current liabilities
    
    
    154,824
    
    
    
    154,824Total current liabilities
    
    
    6,208,516
    
    
    
    9,372,746Long-term liabilities:Notes payable, net of current portion
    
    
    546,875
    
    
    
    703,125Capital lease obligations, net of current portion
    
    
    
    
    
    
    68,710Deferred revenue, net of current portion
    
    
    312,500
    
    
    
    387,500Other liabilities, net of current portion
    
    
    1,149,944
    
    
    
    1,202,328Total long-term liabilities
    
    
    2,009,319
    
    
    
    2,361,663Total liabilities
    
    
    8,217,835
    
    
    
    11,734,409Stockholders equity:Preferred stock, $.001 par value; 5,000,000
shares authorized at June 30, 2008 and
December 31, 2007; none issued and outstanding
    
    
    
    
    
    
    Common stock, $.001 par value; 75,000,000 shares
authorized at June 30, 2008 and December 31,
2007; 43,048,212 and 42,785,318 shares issued
and outstanding at June 30, 2008 and
December 31, 2007, respectively
    
    
    43,048
    
    
    
    42,785Warrants
    
    
    15,551,492
    
    
    
    15,551,492Accumulated other comprehensive income
    
    
    6,352
    
    
    
    106,480Additional paid-in capital
    
    
    241,422,983
    
    
    
    240,634,018Accumulated deficit
    
    
    (219,791,647
    )
    
    
    (214,134,973
    )Total stockholders equity
    
    
    37,232,228
    
    
    
    42,199,802Total liabilities and stockholders equity
    
    $
    45,450,063
    
    
    $
    53,934,211
   3




---



##### Table of Contents



INHIBITEX, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue:License fees and milestones
    
    $
    412,500
    
    
    $
    412,500
    
    
    $
    825,000
    
    
    $
    825,000Collaborative research and
development
    
    
    375,000
    
    
    
    250,000
    
    
    
    750,000
    
    
    
    500,000Grants and other revenue
    
    
    
    
    
    
    22,500
    
    
    
    
    
    
    
    28,500Total revenue
    
    
    787,500
    
    
    
    685,000
    
    
    
    1,575,000
    
    
    
    1,353,500Operating expense:Research and development
    
    
    2,108,102
    
    
    
    1,678,463
    
    
    
    5,514,149
    
    
    
    3,245,037General and administrative
    
    
    1,222,339
    
    
    
    1,961,906
    
    
    
    2,563,907
    
    
    
    3,268,064Total operating expense
    
    
    3,330,441
    
    
    
    3,640,369
    
    
    
    8,078,056
    
    
    
    6,513,101Loss from operations
    
    
    (2,542,941
    )
    
    
    (2,955,369
    )
    
    
    (6,503,056
    )
    
    
    (5,159,601
    )Other (loss) income, net
    
    
    3,054
    
    
    
    (1,013
    )
    
    
    14,480
    
    
    
    1,944,579Interest income, net
    
    
    331,012
    
    
    
    632,066
    
    
    
    831,902
    
    
    
    1,352,905Net loss
    
    $
    (2,208,875
    )
    
    $
    (2,324,316
    )
    
    
    (5,656,674
    )
    
    
    (1,862,117
    )Basic and diluted net loss per share
    
    $
    (0.05
    )
    
    $
    (0.08
    )
    
    $
    (0.13
    )
    
    $
    (0.06
    )Weighted average shares used to
compute basic and diluted net loss
per share
    
    
    42,909,471
    
    
    
    30,812,510
    
    
    
    42,850,270
    
    
    
    30,659,861
   4




---



##### Table of Contents



INHIBITEX, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited)
 Six Months EndedJune 30,2008
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (5,656,674
    )
    
    $
    (1,862,117
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation and amortization
    
    
    480,486
    
    
    
    532,041Share-based compensation
    
    
    855,653
    
    
    
    887,110(Gain) loss on sale of equipment
    
    
    (17,689
    )
    
    
    1,538Amortization of investment premium or discount
    
    
    (445,121
    )
    
    
    (735,542
    )Changes in operating assets and liabilities:Prepaid expenses and other assets
    
    
    218,355
    
    
    
    346,613Accounts receivable
    
    
    (142,344
    )
    
    
    (1,753,803
    )Accounts payable and other liabilities
    
    
    (135,309
    )
    
    
    (191,211
    )Accrued expenses
    
    
    (3,176,505
    )
    
    
    (1,502,818
    )Deferred revenue
    
    
    425,000
    
    
    
    1,175,001Net cash used in operating activities
    
    
    (7,594,148
    )
    
    
    (3,103,188
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (445,550
    )
    
    
    Proceeds from sale of property and equipment
    
    
    23,480
    
    
    
    Purchases of investments
    
    
    (25,033,175
    )
    
    
    (40,258,149
    )Proceeds from maturities and sales of investments
    
    
    33,100,077
    
    
    
    40,200,000Cash paid in connection with previous acquisition
    
    
    (94,761
    )
    
    
    (1,547,522
    )Net cash provided by (used in) investing activities
    
    
    7,550,071
    
    
    
    (1,605,671
    )Cash flows from financing activities:Payments on promissory notes and capital leases
    
    
    (534,999
    )
    
    
    (846,922
    )Proceeds from the issuance of common stock
    
    
    11,452
    
    
    
    16,852Repurchase of common stock
    
    
    (77,877
    )
    
    
    Net cash used in financing activities
    
    
    (601,424
    )
    
    
    (830,070
    )Decrease in cash and cash equivalents
    
    
    (645,501
    )
    
    
    (5,538,929
    )Cash and cash equivalents at beginning of period
    
    
    14,178,143
    
    
    
    19,681,861Cash and cash equivalents at end of period
    
    $
    13,532,642
    
    
    $
    14,142,932Supplemental cash flow information:Interest paid
    
    $
    30,715
    
    
    $
    83,520
   5




---



##### Table of Contents



INHIBITEX, INC.
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. Operations
  ® taphylococcus aureus
 
 2. Summary of Significant Accounting Policies
  Recent Accounting Pronouncements. Fair Value Measurements The
Fair Value Option for Financial Assets and Financial Liabilities"
  6




---



##### Table of Contents



Business Combinations
 Non-controlling Interests in Consolidated Financial
Statements-an amendment of ARB No. 51
 Disclosures about Derivative Instruments and Hedging
Activities,
 The Hierarchy of Generally Accepted Accounting Principles, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles
 3. Net Loss Per Share
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net loss available for common stockholders
    
    $
    (2,208,875
    )
    
    $
    (2,324,316
    )
    
    $
    (5,656,674
    )
    
    $
    (1,862,117
    )Weighted average common shares outstanding used
to
compute basic earnings per share
    
    
    42,909,471
    
    
    
    30,812,510
    
    
    
    42,850,270
    
    
    
    30,659,861Dilutive effect of:Stock options and restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Shares used to compute diluted earnings per share
    
    
    42,909,471
    
    
    
    30,812,510
    
    
    
    42,850,270
    
    
    
    30,659,861Basic net loss per share
    
    $
    (0.05
    )
    
    $
    (0.08
    )
    
    $
    (0.13
    )
    
    $
    (0.06
    )Diluted loss per share
    
    $
    (0.05
    )
    
    $
    (0.08
    )
    
    $
    (0.13
    )
    
    $
    (0.06
    )Number of antidilutive stock options and
restricted stock excluded from computation
    
    
    5,398,310
    
    
    
    2,716,166
    
    
    
    5,398,310
    
    
    
    2,716,166Number of antidilutive warrants excluded from
computation
    
    
    8,535,097
    
    
    
    2,608,035
    
    
    
    8,535,097
    
    
    
    2,608,035
  7




---



##### Table of Contents



4. Acquisition
    Fair value of Inhibitex common stock
issued
    
    $
    18,924,279Estimated fair value of FermaVir stock options and
stock warrants assumed
    
    
    9,212,033Estimated transaction and exit
costs
    
    
    1,930,352Cash advance consideration as note
receivable
    
    
    1,500,000Total purchase
price
    
    $
    31,566,664
 Goodwill and Other Intangible Assets
  Cash and cash
equivalents
    
    $
    68,953Prepaid expenses and other current
assets
    
    
    23,009Property and equipment,
net
    
    
    3,600Other
assets
    
    
    43,890Accounts
payable
    
    
    (870,754
    )Accrued
expenses
    
    
    (271,743
    )Net fair value of acquired assets and
liabilities
    
    
    (1,003,045
    )In-process research and
development
    
    
    32,569,709Total purchase
price
    
    $
    31,566,664
  8




---



##### Table of Contents



Pro Forma Results of Operations
  (Unaudited)
    
    
    (Unaudited)Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues
    
    $
    787,500
    
    
    $
    685,000
    
    
    $
    1,575,000
    
    
    $
    1,353,500Operating
expenses
    
    $
    3,330,441
    
    
    $
    4,614,542
    
    
    $
    8,078,056
    
    
    $
    10,068,005Net loss
    
    $
    (2,208,875
    )
    
    $
    (9,368,625
    )
    
    $
    (5,656,674
    )
    
    $
    (13,132,375
    )Basic and diluted net loss
per common share
    
    $
    (0.05
    )
    
    $
    (0.22
    )
    
    $
    (0.13
    )
    
    $
    (0.31
    )
 5. Share-Based Award Plans
   9




---



##### Table of Contents



Stock Options
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Weighted average risk-free interest rate
    
    
    3.03
    %
    
    
    
    
    
    
    2.65
    %
    
    
    4.83
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expected weighted average volatility
    
    
    .68
    
    
    
    
    
    
    
    .68
    
    
    
    .76Expected weighted average life of options (years)
    
    
    4.0
    
    
    
    
    
    
    
    4.0
    
    
    
    4.0Weighted average fair value of options granted
    
    $
    0.34
    
    
    
    
    
    
    $
    0.45
    
    
    $
    0.91
  Weighted-Average
    
    
    AggregateWeighted Average
    
    
    Remaining
    
    
    IntrinsicNumber of
    
    
    Exercise Price
    
    
    Contractual
    
    
    ValueStock Options
    
    
    Per Option
    
    
    Term
    
    
    ($000)Balance at
December 31,
2007
    
    4,958,131
    
    
    $
    2.35Granted
    
    
    103,500
    
    
    $
    0.85Exercised
    
    
    (6,303
    )
    
    $
    0.68Forfeited or
expired
    
    
    (199,965
    )
    
    $
    1.88Balance at June 30,
2008
    
    
    4,855,363
    
    
    $
    2.34
    
    
    
    6.50
    
    
    $
    19
  Restricted Stock
  Weighted-AverageGrant Date FairShares
    
    
    ValueBalance at December 31, 2007
    
    
    902,959
    
    
    $
    1.83Granted
    
    
    
    
    
    
    Released
    
    
    (360,012
    )
    
    $
    1.89Forfeited
    
    
    
    
    
    
    Balance at June 30, 2008
    
    
    542,947
    
    
    $
    1.79
   10




---



##### Table of Contents



6. Contingency
    7. Comprehensive Loss
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net loss
    
    $
    (2,208,875
    )
    
    $
    (2,324,316
    )
    
    $
    (5,656,674
    )
    
    $
    (1,862,117
    )Change in net unrealized (losses) gains on
investments
    
    $
    (149,836
    )
    
    $
    9,139
    
    
    $
    (100,128
    )
    
    $
    7,534Comprehensive loss
    
    $
    (2,358,711
    )
    
    $
    (2,315,177
    )
    
    $
    (5,756,802
    )
    
    $
    (1,854,583
    )
 8. Fair Value Measurements
 Fair Value Measurements"
 Level 1
    
    Quoted prices in active markets for identical assets or
liabilities. Our Level 1 assets and liabilities include
investments in marketable securities and cash equivalents.Level 2
    
    Observable inputs other than Level 1 prices, such as quoted prices
for similar assets or liabilities; quoted prices in markets that
are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full
term of the assets or liabilities.Level 3
    
    Unobservable inputs that are supported by little or no market
activity and that are significant to the fair value of the assets
or liabilities.
  11




---



##### Table of Contents



Quoted prices inactive markets for
    
    
    Significant other
    
    
    Significantidentical assets
    
    
    observable inputs
    
    
    unobservable inputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Cash equivalents (1)
    
    $
    12,808,558
    
    
    $
    12,808,558
    
    
    $
    
    
    
    $
    Short and long-term investments available-for-sale (2)
    
    
    28,366,400
    
    
    
    28,366,400
    
    
    
    
    
    
    
    Total
    
    $
    41,174,958
    
    
    $
    41,174,958
    
    
    $
    
    
    
    $
    
 (1)
    
    Cash equivalents consist primarily of money market funds,
corporate notes and commercial paper securities with
original maturity dates of three months or less, for which
we determine fair value through quoted market prices.(2)
    
    Investments available-for-sale consists of corporate notes,
asset-backed securities, and government agency notes, for
which we determine fair value through quoted market prices.  12




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANICAL 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:
 
    
    The expected timing of completing a Phase I trial evaluating multiple ascending doses of FV-100 in
healthy volunteers in the fourth quarter of 2008;
    
    the expected timing of initiating a Phase II trial of FV-100 in shingles patients around year end 2008;
    
    our plans and the length of time it may take to select lead candidates for our HCV polymerase
inhibitor program and HIV integrase inhibitor program ;
    
    our intent to pursue licenses, co-development, collaborations or other transactions to support the
further development of Aurexis;
    
    our plans to support our existing collaborations;
    
    the number of months that our current cash, cash equivalents, short-term and long-term investments
will allow us to operate;
    
    our future financing requirements, the factors that may influence the timing and amount of these
requirements, and how we expect to fund them;
    
    potential future revenue from collaborative research agreements, partnerships, license agreements or
materials transfer agreements;
    
    our plans to present data at certain scientific meetings in the future;
    
    and anticipated future and increased losses from operations.
 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: 3M Company or
Wyeth not terminating our license and collaborative research agreements; maintaining sufficient
resources, including executive management and key employees; our ability to successfully develop
current and future product candidates either in collaboration with a partner or independently;
our ability to obtain timely regulatory approval to advance our product candidates; the results
of ongoing lead optimization activities and future preclinical studies supporting the selection
of lead candidates for our HCV and/or HIV programs; our ongoing or future preclinical studies or
clinical trials demonstrating the appropriate safety and efficacy of our product candidates;
our ability to secure and our use of third-party contract clinical and preclinical research and
data management organizations; manufacturers fulfilling their contractual obligations or
otherwise perform satisfactorily in the future; manufacturing and maintaining sufficient
quantities of preclinical and clinical trial material on hand to complete our preclinical
studies or clinical trials on a timely basis; our ability enroll patients in clinical trials in
a timely manner; failure to obtain regulatory approval to commence or continue our clinical
trials or to market our product candidates for safety or other reasons; our ability to obtain,
protect and maintain our intellectual property rights for our product candidates from
unauthorized use by others; our collaborators fulfilling their obligations under our agreements
with them in the future; our ability to attract suitable organizations to collaborate on the
development and commercialization of our product candidates; the condition of the financial
equity and debt markets and our ability to raise sufficient funding in such markets; our ability
to manage our expenses, revenues and cash reserves as planned; 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 Form 10-K for December 31, 2007 and in the Risk Factors section of
Form 10-Q for March 31, 2008. 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 and 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, 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.
  13




---



##### Table of Contents



Inhibitex ® , MSCRAMM ® 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 financial statements and the notes
thereto included in Item 1 of this Quarterly Report on Form 10-Q .
 Overview
  ® taphylococcus aureus
    Recent Developments
 Phase I FV-100 Clinical Trial  50
 Settlement of Litigation with Nabi Pharmaceuticals
  14




---



##### Table of Contents



NASDAQ Listing Transfer -
 Critical Accounting Policies
   
    
    Revenue Recognition
    
    Accrued Expenses
    
    Share-based Compensation
  Fair
Value Measurements The Fair Value Option for Financial Assets and Financial
Liabilities" Business Combinations" Non-controlling Interests in Consolidated Financial Statements-an amendment of ARB
No. 51" Disclosures about Derivative Instruments and Hedging Activities" The Hierarchy of Generally Accepted Accounting Principles .
 Results of Operations
 Three Months Ended June 30, 2008 and 2007
 Summary.
  15




---



##### Table of Contents



Revenue.
 Research and Development Expense.
  June 30,2008
    
    
    2007(In millions)Clinical, preclinical and
manufacturing-related
expenses
    
    $
    (0.3
    )
    
    $
    Salaries, benefits and
share-based compensation
expense
    
    
    1.1
    
    
    
    0.8License fees, patent-related
legal fees and other
expenses
    
    
    0.7
    
    
    
    0.4Depreciation and facility related
expenses
    
    
    0.6
    
    
    
    0.5Total research and development
expense
    
    $
    2.1
    
    
    $
    1.7
 General and Administrative Expense.
   June 30,2008
    
    
    2007(In millions)Professional and legal
fees
    
    $
    0.3
    
    
    $
    0.4Salaries, benefits and share-based
compensation expense
    
    
    0.5
    
    
    
    1.1Other expenses
    
    
    0.3
    
    
    
    0.4Depreciation and facility-related
expenses
    
    
    0.1
    
    
    
    0.1Total general and administrative
expense
    
    $
    1.2
    
    
    $
    2.0
  16




---



##### Table of Contents



Six Months Ended June 30, 2008 and 2007
 Summary.
 Revenue.
 Research and Development Expense.
  June 30,2008
    
    
    2007(In millions)Clinical, preclinical and
manufacturing-related expenses
    
    $
    0.9
    
    
    $
    Salaries, benefits and share-based
compensation expense
    
    
    2.2
    
    
    
    1.6License fees, patent-related legal fees and
other expenses
    
    
    1.3
    
    
    
    0.6Depreciation and facility related
expenses
    
    
    1.1
    
    
    
    1.0Total research and development
expense
    
    $
    5.5
    
    
    $
    3.2
 General and Administrative Expense.
   17




---



##### Table of Contents



June 30,2008
    
    
    2007(In millions)Professional and legal
fees
    
    $
    0.6
    
    
    $
    0.5Salaries, benefits and share-based
compensation expense
    
    
    1.2
    
    
    
    1.8Other expenses
    
    
    0.6
    
    
    
    0.7Depreciation and facility-related
expenses
    
    
    0.2
    
    
    
    0.3Total general and administrative
expense
    
    $
    2.6
    
    
    $
    3.3
 Other Income (Loss), net .
 Liquidity and Capital Resources
        
    
    any changes in our strategy in the future;
    
    our development plans of our product candidates;
    
    the terms and timing of any collaborative, licensing and other arrangements that we may establish;
    
    the timing and costs and the variability thereof, associated with conducting preclinical studies;
  18




---



##### Table of Contents




    
    the cost of manufacturing preclinical and clinical trial materials for our product candidates;
    
    the timing and costs and the variability thereof, associated with conducting clinical trials, the
rate of enrollment in such clinical trials and the results of these clinical trials;
    
    the cost and the time it takes to obtain the regulatory approvals required to advance the
development of our programs or product candidates;
    
    the number of product candidates we may advance into clinical development;
    
    future payments we may receive or make under existing or future license or collaboration
agreements if any and assuming existing agreements continue;
    
    whether we obtain additional preclinical or clinical-stage product candidates or programs through
future in-licensing or acquisition;
    
    the cost to maintain a corporate infrastructure to support being a publicly-traded company; and
    
    the cost of filing, prosecuting, and enforcing patent and other intellectual property claims.
   
 ITEM 4T. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
   19




---



##### Table of Contents



PART II
OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
    
 ITEM 1A. RISK FACTORS
 You should carefully consider the following discussion of risks, together with the other
information contained in this Form 10-Q . The occurrence of any of the following risks could
materially harm our business, our financial condition, and our ability to raise additional capital
in the future or ever become profitable. In that event, the market price of our common stock could
decline and you could lose part or all of your investment. The Risk Factors included in the
Companys Annual Report on Form 10-K for the year ended December 31, 2007 and the Companys
Quarterly Report on Form 10-Q for the period ended March 31, 2008 have not materially changed,
except as set forth below.
 Risks Relating to our Development of our Product Candidates
 All of our product candidates are still in the early stages of development and remain subject to
numerous preclinical studies, clinical testing and regulatory approval. If we are unable to
successfully develop our product candidates, our business will be materially harmed.
  
 
    
    offer therapeutic or other benefits over existing, comparable drugs;
    
    be proven safe and effective in clinical trials;
    
    have the desired effects or may include undesirable effects or the
drug candidates may have other unexpected characteristics;
  20




---



##### Table of Contents




    
    meet applicable regulatory standards;
    
    be capable of being produced in commercial quantities at acceptable costs; or
    
    be successfully commercialized by us or by our partners.
   Risks Related to Owning Our Common Stock
 We currently do not meet the standards for continued listing on The NASDAQ Capital Market, and we
cannot provide any assurance that we will meet these standards in the future. If we are delisted
from this exchange, the value of your investment may substantially decrease.
   21




---



##### Table of Contents



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Issuer Purchases of Equity Securities
  Maximum NumberTotal Number
    
    
    (or ApproximateOf Shares
    
    
    Dollar Value) ofTotal
    
    
    
    
    
    
    Purchased as
    
    
    Shares That MayNumber of
    
    
    Average
    
    
    Part of Publicly
    
    
    Yet Be PurchasedShares
    
    
    Price Paid
    
    
    Announced Plans
    
    
    under the PlansPurchased
    
    
    per Share
    
    
    or Programs
    
    
    Or ProgramsApril 1 through April 30
    
    
    114,231
    
    
    $
    0.68
    
    
    
    N/A
    
    
    
    N/AMay 1 through May 31
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/AJune 1 through June 30
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    114,231
    
    
    $
    0.68
    
    
    
    N/A
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   M. James Barrett, Ph.D.
    
    For
    
    
    22,298,751
    
    
    Withheld
    
    
    1,009,929Russell M. Medford,
M.D., Ph.D.
    
    For
    
    
    22,651,119
    
    
    Withheld
    
    
    657,561A. Keith Willard
    
    For
    
    
    22,643,889
    
    
    Withheld
    
    
    664,791
   22




---



##### Table of Contents



ITEM 6. EXHIBITS
  Exhibit No.
    
    Description31.1
    
    
    Section 302 Certification of the Chief Executive Officer and 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
  23




---



##### Table of Contents



SIGNATURES
  INHIBITEX, INCDate: August 12, 2008
    /s/ Russell H. PlumbRussell H. PlumbPresident, Chief Executive Officer,
Chief Financial Officer and Chief Accounting Officer  24




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description31.1
    
    
    Section 302 Certification of the Chief Executive Officer and Chief Financial Officer as
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