UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K/A


(Amendment
No. 1)


(Mark
One)


[X]          Annual
Report Pursuant To Section 13 Or 15(D) Of The Securities Exchange Act Of
1934


For the fiscal year ended December 31,
2008





OR


[  ]          Transition
Report Pursuant To Section 13 Or 15(D) Of The Securities Exchange Act Of
1934


For the transition period from
_______________ to _______________





Commission
File Number: 0-23317





ORE
PHARMACEUTICALS INC.


(Exact
name of registrant as specified in its charter)





Delaware
                  06-1411336(State
      of Other Jurisdiction of Incorporation or Organization)
                  (I.R.S.
      Employer Identification
No.)





610
Professional Drive, Suite 101


Gaithersburg,
Maryland 20879


(Address
of Principal Executive Offices)





Registrant’s
phone number, including area code: (240) 361-4400


Securities
registered pursuant to Section 12(b) of the Act: None


Securities
registered pursuant to Section 12(g) of the Act:


COMMON
STOCK, $.01 PAR VALUE


(Title
of Class)





Indicate
by check mark if the Registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act: YES  ̈  NO x





Indicate
by check mark if the Registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act: YES  ̈  NO x





Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days:  YES x  NO  ̈





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of the Registrant’s knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K:  x





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


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




Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act):  YES  ̈ NO x





The
aggregate market value of the voting stock (which consists solely of shares of
Common Stock) held by non-affiliates of the Registrant as of June 30, 2008 was
approximately $6,983,000, based on the closing price on that date of Common
Stock on The NASDAQ Stock Market.*





The number
of shares outstanding of the Registrant’s Common Stock, $.01 par value, was
5,483,519 as of April 16, 2009.





*
            Excludes
      211,216 shares of Common Stock held by Directors and executive officers
      and stockholders whose beneficial ownership exceeds 10% of the shares
      outstanding on June 30, 2008. Exclusion of shares held by any person
      should not be construed to indicate that such person possesses the power,
      direct or indirect, to direct or cause the direction of the management or
      policies of the Registrant, or that such person is controlled by or under
      common control with the Registrant.





Documents
Incorporated by Reference


None.










Explanatory
Note





This
Amendment No. 1 on Form 10-K/A (“Amendment No. 1”) is being filed by Ore
Pharmaceuticals Inc. to amend our Annual Report on Form 10-K for the fiscal year
ended December 31, 2008 filed with the Securities and Exchange Commission
(“SEC”) on March 17, 2009 (“Initial Report”). We are amending the Initial Report
to include information originally intended to be incorporated by reference from
our Definitive Proxy Statement for our next annual meeting of stockholders
pursuant to Regulation 14A of the Securities Act of 1934, as amended, that we
intended to file with the SEC no later than 120 days following our fiscal year
end.





Since we
will not be filing our Definitive Proxy Statement by the end of 120 days
following our fiscal year end as originally intended, we are hereby filing this
Amendment No. 1 to provide the information we originally intended to incorporate
by reference in our Initial Report. Such information is the information required
by Items 10 to 14 of Part III of the Annual Report on Form 10-K and the officer
certification associated with the same. Pursuant to Rule 12b-15 under the
Securities Exchange Act of 1934, as amended, Part III of the Initial Report is
hereby deleted in its entirety and replaced with the following Part III as set
forth below, and Part IV is amended to add the exhibits set forth in such
exhibit list to be filed herewith. This Amendment No. 1 does not change our
previously reported financial statements and other financial disclosures
contained in our Initial Report.





Except for
the addition of the Part III information and the filing of the related
certifications, no other changes have been made to the Initial Report. This
Amendment No. 1 does not reflect events occurring after the date of the Initial
Report or modify or update those disclosures affected by subsequent
events.





As used in
this Amendment No. 1, unless the context otherwise requires, references to “Ore
Pharmaceuticals,” “Ore Pharmaceuticals Inc.,” the “Company,” “we,” “us,” and
“our” refer to Ore Pharmaceuticals Inc.









2





PART
III





Part III
of our Initial Report is hereby deleted in its entirety and replaced with the
following Part III as set forth below.





Please
note that all our share amounts, including options to purchase our shares and
restricted stock awards, reflect the one-for-five reverse stock split approved
by our stockholders on May 23, 2008.





ITEM
      10.
            DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE





Directors
and Executive Officers





The
following table sets forth, as of April 16, 2009, information regarding the
names and ages of all our Directors and Executive Officers.





Directors
      and Executive Officers
                              Age
                              Director
                                Since
                              Expiration
                                of
      Term
                              Positions
      and Offices HeldJ.
      Stark Thompson, Ph.D
                              67
                              2002
                              2011
                              Chairman
      of the Board of DirectorsMark
      J. Gabrielson
                              53
                              2007
                              2010
                              Director,
      President, Chief Executive Officer, Principal Financial Officer and
      TreasurerMichael
      J. Brennan, M.D., Ph.D (1)
                              51
                              1995
                              2010
                              DirectorMark
      D. Gessler
                              47
                              2000
                              2011
                              DirectorG.
      Anthony Gorry, Ph.D.
                              68
                              1997
                              2009
                              DirectorDavid
      L. Urdal, Ph.D.
                              59
                              2007
                              2010
                              DirectorStephen
      Donahue, M.D.
                              45
                              NA
                              NA
                              Senior
      Vice President, Clinical
Development


_____________________________


(1)
            Dr.
      Brennan resigned as a Director effective April 27,
  2009.





Set forth
below is biographical information for the Directors and Executive
Officers.





J. Stark Thompson, Ph.D. has
been non-executive Chairman of the Board of the Company since November 2004 and
has served as a Director since February 2002. From 1988 until his retirement in
November 2000, Dr. Thompson served as the President, Chief Executive Officer and
as a Director of Life Technologies, Inc., a developer, manufacturer and supplier
of products and services for life science research. Dr. Thompson is a Director
of Luminex Corporation, where he serves on the Auditing and Nominating
Committees. Dr. Thompson has a Ph.D. in Physiological Chemistry from
Ohio State University.





Mark J. Gabrielson was
appointed President and Chief Executive Officer of the Company on March 1, 2009.
Mr. Gabrielson has served as a Director of the Company since April 2007. From
January 2008 until February 2009, Mr. Gabrielson was a founder and Managing
General Partner of p-Value Capital LLC, a specialty financial services firm
focused on assembling and financing portfoilios of clinical stage pharmaceutical
and biopharmaceutical products. Mr. Gabrielson also is a co-founder and Director
of Pulmatrix Inc., a privately held company that is developing inhalant
technologies to help control respiratory infectious disease. From March 2003
until January 2008, Mr. Gabrielson served as the Chief Executive Officer of
Pulmatrix Inc. From 1999 until December 2003, Mr. Gabrielson was a founder and
Managing Member of Fordyce & Gabrielson LLC, a venture capital firm where he
led a series of investments in early stage technology-intensive companies,
including Pulmatrix. From 1990 to 1999, Mr. Gabrielson was a General
Partner of Prince Ventures LP, a private venture capital firm specializing in
healthcare investing. Mr. Gabrielson holds an A.B. degree from
Princeton University.





Michael J. Brennan, M.D.,
Ph.D. has served as a Director since December 1995. Dr. Brennan served
previously as the Company’s Chief Executive Officer from 1995 until 2000 and as
Chairman of the Board from 1995 until 2001. Most recently, Dr. Brennan served as
the Company’s Director of Strategic Initiatives from 2000 until December 2008.
Since January 2006, Dr. Brennan has been Managing Director of Pearl Street
Venture Funds, a venture capital firm. From December 2003 until December 2005,
Dr. Brennan was a Managing Director of Coastview Capital, a venture capital firm
focused exclusively on life science investments. From September 2000 until April
2003, Dr. Brennan was a General Partner of Oxford Biosciences Partners, a
venture capital firm specializing in the financing of early stage healthcare
companies. Dr. Brennan received a Ph.D. in neurobiology and an M.D. from the
University of Witwatersrand, Johannesburg, South Africa.





3




Mark D. Gessler has served as
a Director since 2000. From June 2000 until March 2007, Mr. Gessler served as
Chief Executive Officer of the Company, and from January 1999 until March 2007,
as President of the Company. From April 2001 to November 2004, Mr. Gessler
served as the Company’s Chairman of the Board of Directors. Since it was founded
in 1996, Mr. Gessler has been the Managing Director of SAGE Partners LLC, a
private investment firm. Mr. Gessler holds an MBA from the University of
Tennessee.





G. Anthony Gorry, Ph.D. has
served as a Director since January 1997. Since prior to March 2001, Dr. Gorry
has been the Friedkin Professor of Management and Professor of Computer Science
at Rice University, where he also serves as the Director of the Center for
Technology in Teaching and Learning. Dr. Gorry directs a training grant on
computational biology funded by the National Library of Medicine. He is also
Adjunct Professor of Neuroscience at Baylor College of Medicine. Dr. Gorry holds
a B.Eng. from Yale University, an M.S. in chemical engineering from the
University of California, Berkeley and a Ph.D. in computer science from the
Massachusetts Institute of Technology.





David L. Urdal, Ph.D. has
served as a Director since April 2007. Dr. Urdal has served as Senior Vice
President and Chief Scientific Officer of Dendreon Corporation since June 2004
and, in January 2006, assumed oversight of the company’s manufacturing
operations. Prior to June 2004, he served as Vice Chairman of Dendreon’s Board
of Directors and Chief Scientific Officer and in various other capacities,
including President, since joining in July 1995.  Dr. Urdal also
serves as a director of VLST Corporation, a privately held biopharmaceutical
development company. Dr. Urdal received a B.S. and M.S. in Public Health and a
Ph.D. in Biochemical Oncology from the University of Washington.





Stephen Donahue, M.D. has
served as the Senior Vice President of Clinical Development for the Company
since July 2007. His background includes all phases of clinical drug development
and regulatory affairs. Prior to joining the Company, from 2004 to 2007, Dr.
Donahue was Vice President, Clinical Research and Regulatory Affairs at Predix
Pharmaceuticals, which merged with Epix Pharmaceuticals. At Predix, he headed
clinical development in therapeutic areas of neurology, psychiatry, pulmonary
and metabolism. Dr. Donahue previously was Medical Director, Clinical Research,
Atherosclerosis and Metabolism for Merck & Co., Inc. and held positions with
Bristol-Myers Squibb in the departments of Clinical Design/Evaluation and
Clinical Pharmacology. Dr. Donahue has worked on a number of approved drugs,
including pravastatin, metformin and ezetimibe/simvastatin. Dr. Donahue holds an
A.B. from Brown University, an M.D. from Georgetown University and was an NIH
Fellow in Clinical Pharmacology at Georgetown. He has achieved board
certifications in both Internal Medicine and Clinical Pharmacology.





Section
16(A) Beneficial Ownership Reporting Compliance





Section
16(a) of the Exchange Act requires the Company’s Directors and executive
officers, and persons who own more than ten percent of a registered class of the
Company’s equity securities, to file with the SEC initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of Ore Pharmaceuticals Inc. Officers, Directors and greater than ten percent
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.





To the
Company’s knowledge, in 2008, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all reports required by Section 16(a) with respect to the
Company’s officers, directors and beneficial owners of greater than ten percent
of the Company’s stock were filed timely.





Code
of Ethics





The Board
of Directors has adopted a code of ethics, applicable to all Directors and to
all employees of the Company and its subsidiaries, including the Company’s chief
executive officer, chief financial officer, principal accounting officer and
controller, and any other senior financial officers. The code of ethics is
available on the Company’s website at www.orepharma.com. If
there are any future amendments to, or waivers from, the provisions of the code
of ethics applicable to the chief executive officer, chief financial officer,
principal accounting officer and controller or any senior financial officer, or
to any other persons with respect to whom disclosure of such an amendment or
waiver is required by applicable rules and regulations, the disclosure
obligations with respect to any such amendment or waiver will be made, to the
extent permitted, by posting such information on the Company’s website at www.orepharma.com.





4




Audit
Committee





The Audit
Committee is currently composed of three non-employee Directors, each of whom is
independent under the NASDAQ rules. During 2008, the Audit Committee consisted
of Mark J. Gabrielson (Chairman and member, until his appointment as Chief
Executive Officer on March 1, 2009), J. Stark Thompson (ex officio until
February 21, 2008, when he was appointed as a voting member, and a voting member
until March 12, 2009, when he was appointed Chairman), G. Anthony Gorry (from
March 21, 2008) and Lloyd I. Miller, III, a former Director, (until his
resignation on March 14, 2008). On March 12, 2009, David L. Urdal was appointed
to the Audit Committee. The Board of Directors has determined that Dr. Thompson
is an “audit committee financial expert,” as defined under the rules of the SEC.
The Audit Committee is governed by a written charter approved by the Board of
Directors, a copy of which is available on the Company’s website at www.orepharma.com.




ITEM
      11.
            EXECUTIVE
      COMPENSATION


Summary
Compensation Table





The
following table summarizes the compensation of the Named Executive Officers for
the fiscal years ended December 31, 2008 and 2007. The “Named Executive
Officers” are the Company’s then Chief Executive Officer, the two other most
highly compensated executive officers who were serving as executive officers at
the end of 2008 based on their total compensation in the table below and one
additional individual that was not an executive officer of the Company as of
December 31, 2008, but for whom disclosure is required because he was an
executive officer during most of 2008 and, other than the then Chief Executive
Officer, was one of the two most highly compensated individuals at the Company
in 2008. The compensation shown in the table below does not include compensation
received by Mr. Dimmler in his capacity as a non-employee Director in 2007 when
he was not serving as an executive officer.





Name
      and Principal Position
                        Year
                        Salary
                          ($)
                        Bonus
                          (1)($)
                        Stock
                          Awards
                          ($)
                        Option
                          Awards
                          ($)
                        Non-Equity
                          Incentive
      Plan
                          Compensation
                          (2)($)
                        All
      Other
                          Compensation
                          (3)($)
                        Total
                          ($)Charles
      L. Dimmler, III
                          President
      and Chief Executive Officer (4)
                        2008
                          2007
                        425,000
                          331,826
                        
                          
                        (28,080)
                          130,829
                        41,268
                          29,312
                        59,500
                          59,942
                        28,859
                          23,826(5)
                        526,547
                          575,735Philip
      L. Rohrer, Jr.
                          Chief
      Financial Officer (6)
                        2008
                          2007
                        275,000
                          275,000
                        137,500
                          137,500
                        
                          
                        11,760
                          44,307
                        
                          
                        10,058
                          9,011
                        434,318
                          465,818F.
      Dudley Staples, Jr.
                          Senior
      Vice President, Secretary and General Counsel (7)
                        2008
                          2007
                        265,000(8)
                          258,558
                        
                          
                        (22,912)
                          52,487
                        13,873
                          12,478
                        27,300
                          35,100
                        9,996
                          7,168
                        293,257
                          365,791Larry
      Tiffany
                          Senior
      Vice President (9)
                        2008
                          2007
                        252,882(10)
                          300,000
                        75,000
                          
                        
                          
                        
                          
                        
                          200,000
                        9,920
                          7,909
                        337,802
                          507,909


_____________________________




5




(1)
            Amounts
      paid as retention incentives to the executives under the terms of the
      executives’ respective employment
arrangements.


(2)
            Except
      for the payment to Mr. Tiffany in 2007, which was pursuant to an
      individual compensation arrangement, amounts earned in 2008 and paid in
      2009 under the Company’s 2008 Performance Year Incentive Compensation Plan
      and earned in 2007 and paid in 2008 under the Company’s 2007 Performance
      Year Incentive Compensation Plan. Amounts earned in 2006 and paid in 2007
      under the Company’s 2006 Performance Year Incentive Compensation Plan are
      not included and are as follows: Mr. Rohrer ($63,113) and Mr. Staples
      ($34,425). Mr. Dimmler was not an employee of the Company in 2006. Mr.
      Tiffany’s non-equity incentive compensation earned in 2006 was paid to him
      in 2006.


(3)
            Comprises
      the perquisites provided to Named Executive Officers in the following
      chart, which are in addition to Company benefits available to all
      employees including health, dental, vision and long-term care insurance,
      long-term and short-term disability benefits, life insurance and
      reimbursement for certain wellness related expenses. Although the
      Company’s matching contribution under the 401(k) plan is available to all
      participating employees, the chart also includes the specific matching
      contribution provided to each of the Named Executive Officers. See the
      chart below detailing specifics in the category of “All Other
      Compensation.”


(4)
            Mr.
      Dimmler served as President and Chief Executive Officer from March 2007
      until his termination without cause in March 2009. The negative amount
      under “Stock Awards” represents the reversal of previously recognized
      expense related to restricted stock awards that were forfeited because the
      vesting conditions were not met within the required
  period.


(5)
            Does
      not include Director’s compensation of $22,169 earned prior to Mr.
      Dimmler’s appointment to President and Chief Executive Officer in
      2007.


(6)
            Mr.
      Rohrer served as Chief Financial Officer from 1999 until his termination
      without cause in March 2009.


(7)
            Mr.
      Staples served as Senior Vice President, Secretary and General Counsel
      from May 2002 until his termination without cause in January 2009. The
      negative amount under “Stock Awards” represents the reversal of previously
      recognized expense related to a restricted stock award that was forfeited
      because the vesting conditions were not met within the required
      period.


(8)
            Includes
      a $5,000 payment for a portion Mr. Staples’ accrued, but unused
      paid-time-off (“PTO”).


(9)
            Mr.
      Tiffany served as Senior Vice President, Genomics until the sale of the
      assets of the Genomics Division was completed on December 13, 2007.
      Subsequently, he became Interim Head, Commercial Operations for the
      Company and President and Chief Executive Officer of DioGenix, a
      subsidiary of the Company, until his resignation on September 12,
      2008.


(10)
            Includes
      a $41,518 payment for Mr. Tiffany’s accrued, but unused PTO upon his
      resignation from the Company in September
2008.





The
following chart details the “All Other Compensation” category of the Summary
Compensation Table above.





Name
                Year
                Financial
      Counsel &
                  Tax
      Prep.(1)
                  ($)
                Enhanced
      Life
                  Insurance(2)
                  ($)
                Enhanced
                  Disability(3)
                  ($)
                401(k)
                  Matching(4)
                  ($)
                Additional
                  Payments
                  ($)
                Total
                  ($)Charles
      L. Dimmler, III
                2008
                  2007
                
                  
                470
                  277
                342
                  531
                9,200
                  6,266
                18,847(5)
                  16,752(5)
                28,859
                  23,826Philip
      L. Rohrer, Jr.
                2008
                  2007
                
                  1,250
                516
                  339
                342
                  672
                9,200
                  6,750
                
                  
                10,058
                  9,011F.
      Dudley Staples, Jr.
                2008
                  2007
                
                  63
                454
                  271
                342
                  610
                9,200
                  6,224
                
                  
                9,996
                  7,168Larry
      Tiffany
                2008
                  2007
                
                  3,250
                464
                  373
                256
                  536
                9,200
                  3,750
                
                  
                9,920
                  7,909





(1)
            The
      amount above reflects the actual amount paid by the Company during 2007
      for the Named Executive Officer’s personal tax preparation and financial
      counsel expenses. The maximum amount made available to each Named
      Executive Officer was $5,000. This benefit was discontinued beginning in
      2008.


(2)
            Additional
      premium paid to increase the Named Executive Officer’s life insurance
      coverage.


(3)
            Additional
      premium paid to increase the limit on benefits under the Named Executive
      Officer’s short and long-term disability
  coverage.


(4)
            The
      401(k) matching contribution of 4% and 3% in 2008 and 2007, respectively,
      of cash compensation contributed to the plan is available to all
      employees.


(5)
            The
      amount reflects personal travel and living expenses reimbursed by the
      Company due to the location of Mr. Dimmler’s
  residence.




6




Employment
Agreements





In 2008,
the Company had employment agreements with each of its NEOs. The agreements also
included a separate Proprietary Information and Inventions Agreement (the
“Proprietary Information Agreement”) in which the employees agreed to
protect the Company’s intellectual property and to disclose and assign to
the Company ownership of any inventions made by the employees during
employment that relate to the Company’s business.





Each
agreement typically provided for payment of salary and specified annual bonus or
incentive cash compensation. Except in the case of Mr. Tiffany, in the event of
termination by the Company without “cause” (as defined), the executive officer
would receive certain payments as described below under “Potential Payments upon
Termination or Change in Control – Termination by Company Without ‘Cause’.” The
agreement of Mr. Staples required that, for a stated period after termination of
employment, he not solicit the business of any client or customer of the
Company, except on behalf of the Company, and not solicit employees of the
Company to leave the Company. More recent agreements, including ones signed by
Messrs. Dimmler, Rohrer, and Tiffany include restrictions, subject to the terms
and conditions of their respective agreements, on solicitation and an express
covenant against competing with the Company or assisting anyone else to do so
for a stated period following termination of employment.





The
Company entered into an employment agreement with Mr. Dimmler, the former Chief
Executive Officer, effective as of March 21, 2007, the date of his appointment.
For 2008, the agreement provided for a salary of $425,000, benefits available to
other senior executives and a potential incentive compensation payment equal to
40% of his salary under the Company’s 2008 Incentive Compensation Plan if
100% of targets were achieved. In connection with his employment by the
Company, Mr. Dimmler was granted the following equity awards under the Company’s
1997 Equity Incentive Plan (“Plan”):





·
            An
      option to purchase 24,000 shares of Common Stock, exercisable at $6.85 per
      share, the fair market value on the date of grant, vesting in four equal
      increments of 6,000 shares each, beginning on July 9, 2007 (the date of
      grant) and on each of the next three anniversaries of the date of grant,
      and of which, 12,000 shares vested and 12,000 shares forfeited as of March
      31, 2009;


·
            10,000
      shares of restricted stock that vested on March 21,
  2008;


·
            5,000
      shares of restricted stock, vesting upon achievement of a performance
      target related to development of a Company compound on or before March 31,
      2008, which target was not achieved and the grant
    lapsed;


·
            6,000
      shares of restricted stock, vesting upon achievement of a performance
      target related to development of a repositioned compound by a third-party
      drug repositioning partner on or before March 31, 2008, which target was
      not achieved and the grant lapsed;
and


·
            5,000
      shares of restricted stock, vesting upon completion of a significant
      transaction with respect to the Genomics Division prior to December 31,
      2008, which target was achieved.





In 2008,
Mr. Dimmler received an option to purchase 47,040 shares of Common Stock,
exercisable at $2.20 per share, the fair market value on the date of grant,
vesting in two equal increments on December 31, 2008 and December 31,
2009.  The unvested portion of his option was forfeited upon his
termination without cause as of March 31, 2009.





Mr.
Dimmler’s options had a 10-year term from the date of grant and all of the
equity grants continue to be subject to the other terms and conditions of the
Plan and the standard forms of stock option and restricted stock grant
agreements thereunder. The stock options are incentive stock options under
Section 422 of the Internal Revenue Code of 1986, as amended, (the “Code”) to
the maximum extent permitted by the law and the Plan.





The
Company also agreed to reimburse Mr. Dimmler for transition costs of commuting
from his principal residence and staying at the Company’s locations and other
reasonable and necessary business expenses. In connection with his termination
without cause (as defined in the agreement) as of March 31, 2009, Mr. Dimmler
received certain payments described below under “Potential Payments upon Termination
or Change in Control –Termination by Company Without
‘Cause’.”





7




Upon expiration of Mr. Tiffany’s employment terms in January 2007,
the Company entered into an employment agreement with Mr. Tiffany pursuant to
which the Company agreed to pay Mr. Tiffany, effective as of February 1, 2007, a
salary at an annual rate of $300,000 and incentive compensation of $200,000 when
the Genomics Division was sold. Under the terms of his agreement, Mr.
Tiffany was not eligible for benefits under the Company’s Executive Severance
Plan discussed below under “Potential Payments upon Termination
or Change in Control –Change in Control Payments.” In 2008, the Company
amended Mr. Tiffany’s employment agreement such that he would receive a
potential incentive compensation payment equal to $75,000 under the Company’s
2008 Incentive Compensation Plan if 100% of targets were achieved, and
guaranteed retention payments of $37,500 for each full calendar quarter of 2008
during which Mr. Tiffany remained employed. Mr. Tiffany forfeited his incentive
compensation payment when he resigned from the Company in September 2008 and
received retention payments equal to $75,000. In 2008, Mr. Tiffany received an
option to purchase 5,880 shares of Common Stock, exercisable at $2.20 per share,
the fair market value on the date of grant, vesting in two equal increments on
December 31, 2008 and December 31, 2009, and which was forfeited upon his
resignation in September 2008.





Mr. Rohrer
served as the Company’s Chief Financial Officer until he was terminated without
cause effective March 31, 2009. Mr. Rohrer’s agreements during 2007, 2008 and
2009 provided for an annual salary of $275,000. His 2009 agreement was for a
term ending December 31, 2009. Mr. Rohrer was entitled to a guaranteed bonus of
$137,500 in 2007 and 2008. In 2009, his agreement provided for potential
retention payments of up to $275,000 in the event he remained at the Company
through September 2009, subject to acceleration in the event he was terminated
earlier. In connection with his termination without cause as of March 31, 2009,
Mr. Rohrer received certain payments described below under “Potential Payments upon Termination
or Change in Control –Termination by Company Without ‘Cause’.” In 2007,
Mr. Rohrer was granted an option for 10,940 shares of Common Stock, exercisable
at $9.55 per share, the fair market value on the date of grant, that vested in
monthly installments over ten months, intended to retain his services at least
through the vesting periods. In 2008, Mr. Rohrer received an option to purchase
23,520 shares of Common Stock, exercisable at $2.20 per share, the fair market
value on the date of grant, vesting in two equal increments on December 31, 2008
and December 31, 2009.  The unvested portion of his option was
forfeited upon his termination without cause as of March 31, 2009.







8




Outstanding
Equity Awards at December 31, 2008





Option
      Awards
                                                              Stock
      AwardsName
                                                              Number
      of
                                                                Securities
                                                                Underlying
      Unexercised
                                                                Options
      (#) Exercisable
                                                              Number
      of
                                                                Securities
                                                                Underlying
                                                                Unexercised
                                                                Options
      (#) Unexercisable
                                                              Equity
                                                                Incentive
      Plan Awards:
                                                                Number
      of
                                                                Securities
                                                                Underlying
                                                                Unexercised
                                                                Unearned
                                                                Options
      (#)
                                                              Option
                                                                Exercise
                                                                Price
      ($)
                                                              Option
                                                                Expiration
                                                                Date
                                                              Number
                                                                of
      Shares
                                                                or
      Units
                                                                of
      Stock
                                                                That
                                                                Have
                                                                Not
                                                                Vested
                                                                (#)
                                                              Market
      Value
                                                                of
      Shares or
                                                                Units
      of Stock
                                                                That
      Have
                                                                Not
      Vested
                                                                ($)
                                                              Equity
                                                                Incentive
                                                                Plan
                                                                Awards:
                                                                Number
      of
                                                                Unearned
                                                                Shares,
                                                                Units
      or
                                                                Other
                                                                Rights
                                                                ThatHave
                                                                Not
                                                                Vested
      (#)
                                                              Equity
                                                                Incentive
                                                                Plan
                                                                Awards:
                                                                Market
      or
                                                                Payout
                                                                Value
      of
                                                                Unearned
                                                                Shares,
                                                                Units
      or
                                                                Other
                                                                Rights
                                                                That
      Have
                                                                Not
      Vested
                                                                ($)Charles
      L. Dimmler, III (1)
                                                              4,000*
                                                                3,000*
                                                                3,000*
                                                                3,000*
                                                                3,000*
                                                                3,000*
                                                                3,000*
                                                                3,000*
                                                                12,000
                                                                23,520
                                                              
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                              
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                12,000
                                                                23,520
                                                              314.375
                                                                177.815
                                                                129.700
                                                                64.450
                                                                40.000
                                                                19.350
                                                                17.050
                                                                12.200
                                                                6.850
                                                                2.200
                                                              2/1/2010
                                                                6/7/2010
                                                                6/6/2011
                                                                6/5/2012
                                                                6/4/2013
                                                                6/2/2014
                                                                6/1/2015
                                                                5/31/2016
                                                                7/8/2017
                                                                4/23/2018
                                                              
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                              
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                              
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                              
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                Philip
      L. Rohrer, Jr. (2)
                                                              24,900
                                                                8,000
                                                                3,200
                                                                8,000
                                                                25,000
                                                                7,500
                                                                10,940
                                                                11,760
                                                              
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                              
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                11,760
                                                              27.190
                                                                36.050
                                                                36.050
                                                                36.050
                                                                27.100
                                                                19.350
                                                                9.550
                                                                2.200
                                                              10/18/2009
                                                                2/1/2010
                                                                2/22/2011
                                                                9/24/2011
                                                                7/23/2013
                                                                6/2/2014
                                                                2/21/2017
                                                                4/23/2018
                                                              
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                              
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                              
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                              
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                F.
      Dudley Staples, Jr. (3)
                                                              13,000
                                                                5,000
                                                                1,111
                                                                1,111
                                                                1,111
                                                                1,111
                                                                11,760
                                                              
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                              
                                                                
                                                                2,222
                                                                2,222
                                                                2,222
                                                                2,222
                                                                11,760
                                                              44.050
                                                                19.350
                                                                9.550
                                                                11.250
                                                                13.750
                                                                16.250
                                                                2.200
                                                              7/31/2012
                                                                6/2/2014
                                                                2/21/2017
                                                                2/21/2017
                                                                2/21/2017
                                                                2/21/2017
                                                                4/23/2018
                                                              
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                              
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                              
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                              
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                Larry
      Tiffany (4)
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              





__________________________




*
            Options
      awarded for service as a non-employee Director.(1)
            The
      employment of Mr. Dimmler was terminated without cause in March 2009 and
      his options will expire on June 30, 2009 (35,520), February 1, 2010
      (4,000) and March 31, 2010 (21,000). Unvested options were forfeited upon
      his termination.


(2)
            The
      employment of Mr. Rohrer was terminated without cause in March 2009 and
      his options will expire on June 30, 2009. Unvested options were forfeited
      upon his termination.


(3)
            The
      employment of Mr. Staples was terminated without cause in January 2009;
      his unvested options were forfeited upon his termination and his vested
      options expired on April 15, 2009.(4)
            Options
      for 5,880 shares were granted to Larry Tiffany in 2008 and were
      subsequently forfeited upon his resignation in September
  2008.





9





Potential Payments upon Termination or Change in
Control





The
Company had employment agreements with its NEOs that contained provisions
benefiting each party to the agreement; such agreements typically included
severance benefits, which are reflected below.





Termination by Company
Without “Cause”





In the
event of a termination without “cause,” other than in connection with a “change
of control,” the Company agreed to provide Messrs. Dimmler and Staples a
severance payment equal to twelve (12) months of the executive’s current base
salary, reimbursement of certain premiums for post-termination health insurance
for the executive and any then-insured dependents, for up to 12 months, and
third party outplacement assistance through a program and provider selected by
the Company for a period of up to six months and not costing more than
$20,000.





In the
event of Mr. Rohrer’s termination without “cause,” other than in connection with
a “change of control,” the Company agreed to cause acceleration of up to
$275,000 in aggregate retention incentive payments (in lieu of severance
benefits), reimbursement of certain premiums for post-termination health
insurance for the executive and any then-insured dependents, for up to 12
months, and third party outplacement assistance through a program and provider
selected by the Company for a period of up to six months and not costing more
than $20,000.





The
Company is obligated to give an executive thirty (30) days prior written notice
of termination without cause, or one additional month’s pay in lieu of such
notice. To obtain these severance benefits, an executive is required to sign a
release of certain claims.





In
connection with their respective terminations without cause, the Company paid
amounts due to Messrs. Dimmler, Staples and Rohrer in accordance with these
agreements in 2009.





Change in Control
Payments





The
Company has an Executive Severance Plan, which is referred to as the “COC Plan,”
which covers certain employees and which has been terminated as to future hires.
The COC Plan applies to a termination of employment of an executive by the
Company within three months before or thirteen months after a “change of
control” of the Company. Benefits under the COC Plan are available if the
executive:





·
            is
      terminated without cause (as defined in the COC Plan);
  or


·
            resigns
      due to a constructive termination (as defined in the COC
      Plan).





Each of
the NEOs, except for Mr. Tiffany in accordance with the terms of his employment
agreement, was eligible for benefits under the COC Plan during his employment in
2008 and for a period following his termination in 2009. Under the terms of this
plan, an eligible executive whose employment was terminated by the Company
without cause within three months before or thirteen months after a change
of  control would be entitled to the following benefits:





·
            a
      payment equal to twelve (12) months of the executive’s current base salary
      plus the annual full target bonus award that the executive was eligible to
      receive as of the date of
termination;


·
            payment
      of the premiums for post-termination health insurance for the executive
      and his then-insured dependents for 12 months;
  and


·
            outplacement
      assistance.





In
addition, if the executive remains employed by the Company on the date of a
“change of control” or was terminated without cause or as a result of
constructive termination within three months prior to the “change of control,”
all stock options held by the executive as of the date of the “change of
control” become fully vested.





10




Director
Compensation





The table
below summarizes the compensation paid by the Company to Directors for the
fiscal year ended December 31, 2008.




Name
                Fees
      Earned or Paid
                  in
      Cash
                  ($)
                Option
                  Awards
      (1)
                  ($)
                All
      Other
                  Compensation
                  ($)
                Total
                  ($)Michael
      J. Brennan, M.D., Ph.D.
                
                
                50,000 (2)
                50,000Frank
      L. Douglas, M.D., Ph.D. (3)
                17,000
                (6,497)
                
                10,503Mark
      J. Gabrielson
                77,000
                8,670
                
                85,670Mark
      D. Gessler
                62,500
                1,375
                
                63,875G.
      Anthony Gorry, Ph.D.
                71,500
                5,530
                
                77,030Lloyd
      I. Miller, III (4)
                44,750
                865
                90,000
                135,615J.
      Stark Thompson, Ph.D.
                93,500
                7,374
                
                100,874David
      L. Urdal, Ph.D.
                76,500
                8,670
                
                85,170


_________________________


(1)
            Reflects
      the dollar amount recognized for financial statement reporting purposes
      for the fiscal year ended December 31, 2008 in accordance with FAS 123(R),
      and thus includes amounts from awards granted in and prior to 2008. As of
      December 31, 2008, each Director listed has the following number of
      options outstanding granted under the 1997 Non-Employee Directors’ Stock
      Option Plan: Brennan: none; Douglas: none; Gabrielson: 9,000; Gessler:
      3,000; Gorry: 30,000; Miller: none; Thompson: 40,000; and Urdal: 9,000. In
      addition, each of Brennan, Gessler and Gorry had the following number of
      options outstanding granted under the 1997 Equity Incentive Plan: Brennan:
      19,200; Gessler: 96,200; and Gorry:
8,500.


(2)
            Compensation
      received pursuant to Brennan’s employment agreement with the Company that
      expired on December 31, 2008. Brennan served as the Director of Strategic
      Initiatives and received a salary of $50,000 per year for such services.
      Brennan was eligible to receive benefits under the Company’s Executive
      Severance Plan in the event he was terminated in connection with a “change
      of control.” He was entitled to receive $25,000 upon termination if he was
      terminated other than for “cause” or if he terminated the agreement for
      good reason as defined in the agreement, but such payments were not due
      upon expiration of his agreement. Brennan agreed to certain non-compete
      and non-solicitation provisions during the term of the agreement and for a
      period of one year thereafter. Brennan was not separately compensated for
      his services as a Director. Beginning in January 2009 until his
      resignation on April 27, 2009, Brennan was paid for his services as a
      Director in the same manner as other non-employee Directors since he was
      no longer an employee.


(3)
            Douglas
      completed his term as a Director on May 23, 2008 and did not stand for
      reelection. The negative amount under “Option Awards” represents the
      reversal of previously recognized expense related to options that were
      cancelled prior to the vesting conditions being
  met.


(4)
            Miller
      resigned as a Director on March 14, 2008 and surrendered his options.
      Includes $35,500 in unpaid Director fees for the balance of his term and
      $90,000 paid to him to reimburse his legal fees and expenses in connection
      with his resignation.





Cash
Compensation





Each
non-employee Director other than the Chairman of the Board receives an annual
retainer of $25,000 and the non-executive Chairman receives an annual retainer
of $50,000. Each non-employee Director (including the Chairman of the Board)
also receives a fee of $1,500 per Board meeting attended, whether in person or
by telephone, and (except for the Chairman unless otherwise determined) $1,000
per committee meeting not held in conjunction with a full Board meeting, whether
in person or by telephone. The chairman of each of the Audit and Compensation
Committees receives an additional $10,000 per year for serving as a chairman of
these committees and the chairman of the Corporate Governance and Nominating
Committee receives an additional $5,000 per year. The members of the Board of
Directors are also eligible for reimbursement for their expenses incurred in
connection with Board meeting attendance.





The
Compensation Committee presently is reviewing the Directors’ cash and equity
compensation arrangements with the assistance of its outside compensation
consultant and may recommend changes to these arrangements.




11




Equity
Compensation





Each
non-employee Director receives automatic nonstatutory stock option grants under
the 1997 Non-Employee Directors’ Stock Option Plan (the “Directors’ Plan”).
Options are granted at fair market value. Vesting of any installment of options
requires that the optionee has, during the entire period prior to such vesting
installment date, continuously served as a non-employee Director or employee of
or consultant to the Company or any affiliate of the Company. Options have a 10
year term, unless terminated due to termination of the grantee’s service as a
Director or employee of or consultant to the Company or any affiliate of the
Company. Upon termination of service, the optionee has the lesser of the balance
of the option term or 12 months to exercise vested options (or 18 months if
termination is due to the death of the grantee).





Initial grant: Upon election,
each new Director receives a grant of an option for six thousand (6,000) shares
that vests in 4 equal annual installments on the anniversary of the date of
grant and with the first installment vesting on the first anniversary of the
date of grant. Upon appointment of a non-employee Director as the Chairman of
the Board, the non-employee Chairman is automatically granted, on the date of
such election or appointment, an option to purchase ten thousand (10,000) shares
of the common stock of the Company less, in the discretion of the Board, any
unvested shares under any previous stock option received effective upon election
or appointment as a non-employee Director under the preceding
sentence.




Annual grant: Immediately
following each annual meeting of stockholders, each person who is then a
non-employee Director and who has continuously served as a non-employee Director
for the six (6)-month period prior to the date of such annual meeting of
stockholders is automatically granted an option to purchase three thousand
(3,000) shares of common stock of the Company that vests on the first
anniversary of the date of grant. In the case of a non-employee Chairman,
instead of the annual grant provided in the preceding sentence, immediately
following each annual meeting of stockholders, the non-employee Chairman shall
automatically be granted (regardless of whether the non-employee Chairman has
served as a non-employee Director for the six (6) month period prior to the date
of such annual meeting of stockholders) an option to purchase four thousand
(4,000) shares of common stock of the Company.











12





ITEM
      12.
              SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS.


Security
Ownership of Certain Beneficial Owners and Management





The
following table sets forth certain information regarding the ownership of the
Company’s Common Stock as of April 16, 2009 by: (i) each Director and nominee
for Director; (ii) each of the Named Executive Officers (as such term is defined
above under the caption “Executive Compensation ─ Summary Compensation Table”);
(iii) all of the Company’s current executive officers and Directors as a group;
and (iv) all those known by Ore Pharmaceuticals to be beneficial owners of more
than five percent of the Company’s Common Stock.





Beneficial
      Ownership (1)Name
      and Address
                Number
      of
                  Shares
                  Beneficially
                  Owned
                Shares
      Issuable
                  Pursuant
      to Options
                  Exercisable
      Within 60
                  Days
      of April 16, 2009
                Total
                  Shares
                Percentage
                  OwnershipRenaissance
      Technologies LLC (2)
                413,580
                
                413,580
                7.5Michael
      J. Brennan, M.D., Ph.D. (3)
                79,154
                19,200
                98,354
                1.8Charles
      L. Dimmler, III (3,4)
                51,570
                60,520
                112,090
                2.0Mark
      J. Gabrielson
                2,000
                43,500
                45,500
                *Mark
      D. Gessler (3)
                54,528
                99,200
                153,728
                2.8G.
      Anthony Gorry, Ph.D. (3)
                6,400
                38,500
                44,900
                *Philip
      L. Rohrer, Jr. (5)
                2,370
                99,300
                101,670
                1.8F.
      Dudley Staples, Jr. (5)
                3,697
                
                3,697
                *J.
      Stark Thompson, Ph.D.
                3,400
                40,000
                43,400
                *David
      L. Urdal, Ph.D.
                5,000
                6,000
                11,000
                *All
      Directors and Executive Officers as a Group (7 persons)
(6)
                164,482
                267,743
                432,225
                7.5


_____________________________


*
Represents beneficial ownership of less than 1%.


(1)
            This
      table is based upon information supplied by officers, Directors and
      principal stockholders and Schedules 13D and 13G filed with the SEC.
      Beneficial ownership is determined in accordance with the rules of the SEC
      and generally includes voting or investment power with respect to
      securities. Except as indicated by footnote, and subject to community
      property laws where applicable, the persons named in the table above have
      sole voting and investment power with respect to all shares of Common
      Stock shown as beneficially owned by them. The percentage of beneficial
      ownership disclosed in this table is based on 5,483,519 shares of Common
      Stock outstanding as of April 16,
2009.


(2)
            Based
      on a Schedule 13G/A filed with the SEC on February 13, 2009, Renaissance
      Technologies LLC has sole voting power and sole dispositive power with
      respect to all of the shares. Its address is 800 Third Avenue, New York,
      New York 10022.


(3)
            Includes:
      as to Dr. Brennan, 15,000 shares held of record by the Brennan Family
      Limited Partnership; as to Mr. Dimmler, 1,000 shares held of record by
      Newcastle Harbor, LLC and 71 shares held by his wife; as to Mr. Gessler,
      5,000 shares held of record by the Gessler Family Limited Partnership;
      and, as to Dr. Gorry, 4,400 shares held of record by an individual
      retirement account for his benefit.


(4)
            Options
      for Mr. Dimmler will forfeit on June 30, 2009 (35,520), February 1, 2010
      (4,000) and March 31, 2010 (21,000) due to his termination of employment
      without cause.


(5)
            Options
      for Mr. Rohrer will forfeit on June 30, 2009 due to his terminations of
      employment without cause.


(6)
            Includes
      only Directors and executive officers as of April 16, 2009 and does not
      include Messrs. Dimmler, Rohrer, and Staples as they were no longer
      employed by and/or serving as a Director of the Company as of April 16,
      2009; also includes Dr. Donahue, including 10,000 unvested shares of
      restricted stock.




13




Equity
Compensation Plan Information





We
maintain the 1997 Equity Incentive Plan and the 1997 Non-Employee Directors’
Stock Option Plan pursuant to which we may grant equity awards to eligible
persons. The following table gives information about equity awards under both
plans as of December 31, 2008.




Plan
      Category
                (a)
                  Number
      of Securities
                  to
      be Issued upon
                  Exercise
      of
                  Outstanding
      Options,
                  Warrants
      and Rights
                (b)
                  Weighted-Average
                  Exercise
      Price of
                  Outstanding Options,
                  Warrants and
      Rights
                  ($)
                (c)
                  Number
      of Securities
                  Remaining Available
      for Future
                  Issuance Under
      Equity
                  Compensation Plans
                  (Excluding
      Securities Reflected
                  in
      Column (a))Equity
      compensation plans approved by stockholders
                683,847
                24.10
                830,245Equity
      compensation plans not approved by stockholders
                
                
                




ITEM
      13.
                CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
 Transactions
with Related Persons





The
Company has entered into indemnity agreements with certain officers and
Directors which provide, among other things, that the Company will indemnify
such officer or Director, under the circumstances and to the extent provided for
therein, for expenses (including attorney fees), witness fees, damages,
judgments, fines and settlements he may be required to pay in actions or
proceedings to which he is or may be made a party by reason of his position as a
Director, officer or other agent of the Company, and otherwise to the full
extent permitted under Delaware law and the Company’s Amended and Restated
Bylaws.





On March
14, 2008, concurrently with the resignation of Lloyd I. Miller, III as a
Director of the Company, the Company entered into a Stock Purchase Agreement by
and among Mr. Miller, Millfam II L.P., a Georgia limited partnership (together
with Miller, the “Stockholders”), and the Company, pursuant to which the Company
agreed to purchase an aggregate of 920,426 shares of the Company’s common stock
from the Stockholders. Mr. Miller is the sole manager of the sole general
partner of the Millfam II L.P. The purchase price for the shares was $3.545 per
share, representing a trailing 30-day weighted average of closing prices for the
30 days preceding March 5, 2008, for an aggregate of $3,262,908. The stock
purchase represented 14.3% of the Company’s common stock outstanding prior to
the purchase and Mr. Miller’s entire beneficial ownership interest in the
Company. Following completion of the purchase, the Company had 5,514,092
outstanding shares of common stock. The Company used cash on hand to fund the
purchase. In connection with the stock purchase, the Company reimbursed Mr.
Miller for $90,000 in legal fees and expenses and $35,500 in unpaid Director
fees for the balance of his term.





The
Company entered into an employment agreement with Mr. Gabrielson, the new Chief
Executive Officer, effective as of March 1, 2009. The agreement provides
for a base annual salary of $200,000, with the potential to increase the salary
by $100,000 based upon the Company consummating a financing of at least ten
million ($10,000,000) of net working capital, plus $10,000 for each additional
million ($1,000,000) of net working capital up to a maximum of $400,000 per
annum. Mr. Gabrielson is entitled to benefits available to other senior
executives. In connection with his employment by the Company, Mr. Gabrielson was
granted 500,000 shares of Common Stock, exercisable at $0.40 per share, the fair
market value on the date of grant under the Plan, vesting as
follows:




·
            300,000
      option shares in equal monthly increments over the two years after
      grant;


·
            200,000
      option shares upon a financing of at least $10 million of net working
      capital; and


·
            all
      option shares will vest upon a qualified “change of
    control.”





Mr.
Gabrielson’s options have a 10-year term from the date of grant and the equity
grant is subject to the other terms and conditions of the Plan and the standard
form of stock option agreement thereunder. The stock option is an incentive
stock option under Section 422 of the Code to the maximum extent permitted by
the law and the Plan.





14




The
Company also agreed to provide Mr. Gabrielson with a special incentive cash
bonus if, in the next two years, the Company consummates directly or, in some
instances, indirectly a financing of at least $10 million.  Such bonus
shall be paid in cash immediately following the Company’s or its related
entity’s receipt of the net working capital proceeds of such financing and shall
be in an amount equal to one half of one percent (0.5%) of the net working
capital proceeds received.





The
Company entered into an employment agreement with Dr. Donahue, Senior Vice
President of Clinical Development, effective as of July 23, 2007. The
agreement provided for a base annual salary of $295,000, and a potential
incentive compensation payment equal to 40% of salary (prorated for the period
of employment in 2007) under the Company’s 2007 and 2008 Incentive Compensation
Plans if 100% of targets are achieved. In connection with his employment by
the Company, Dr. Donahue was granted the following equity awards under the
Plan:




·
            An
      option to purchase 20,000 shares of Common Stock, exercisable at $6.85 per
      share, the fair market value on the date of grant, vesting in 48 equal
      monthly increments, beginning on July 31,
2007;


·
            8,000
      shares of restricted stock, vesting upon achievement of performance
      targets related to development of the Company’s compounds on or before
      July 29, 2009, which target has been partially achieved as to 4,000
      shares; and


·
            6,000
      shares of restricted stock, vesting upon achievement of a performance
      target related to development of two repositioned compound by third-party
      drug repositioning partners on or before July 29,
  2009.





In 2008,
Dr. Donahue received an option to purchase 23,520 shares of Common Stock,
exercisable at $2.20 per share, the fair market value on the date of grant,
vesting in two equal increments on December 31, 2008 and December 31,
2009.  In 2009, Dr. Donahue received an option to purchase 50,000
shares of Common Stock, exercisable at $0.35 per share, the fair market value on
the date of grant, 25% of which vests on the first anniversary of the date of
grant and the remaining 75% vesting in twenty-four (24) equal monthly increments
beginning on the first anniversary of the date of grant and continuing for the
next two years.





Dr.
Donahue’s options have a 10-year term from the date of grant and all of the
equity grants continue to be subject to the other terms and conditions of the
Plan and the standard forms of stock option and restricted stock grant
agreements thereunder. The stock options are incentive stock options under
Section 422 of the Code to the maximum extent permitted by the law and the
Plan.





The
Company has a policy to have all such transactions with related persons be
approved by its Board of Directors.  Pursuant to this policy, the
Board of Directors has approved the above transactions.





Director
Independence





The Board
of Directors has determined that as of the date of this report on Form 10-K/A, a
majority of its members are independent Directors under the NASDAQ Global
Market’s (“NASDAQ”) rules for Director independence. The independent Directors
are Drs. Gorry, Thompson and Urdal. Dr. Thompson serves as non-executive
Chairman of the Board.





All of the
standing committees of the Board of Directors are comprised entirely of
independent Directors. The chairpersons of the Company’s standing committees are
appointed by the Board of Directors. Below is a chart showing the structure and
current membership of the standing committees of the Board of
Directors.





Member
                Audit
      Committee
                Compensation
                  Committee
                Corporate
      Governance
                  and
      Nominating
                  CommitteeG.
      Anthony Gorry, Ph.D.
                X
                X
                CJ.
      Stark Thompson, Ph.D.
                C
                **
                **David
      L. Urdal, Ph.D.
                X
                C
                X


X = Member; C = Chairperson; ** =
Ex-officio, non-voting participant




15




ITEM
      14.
                PRINCIPAL
      ACCOUNTING FEES AND
SERVICES





Fees
of Independent Registered Accounting Firm





The
following is a summary of the fees billed to the Company by Ernst & Young
LLP for professional services rendered for the fiscal years ended December 31,
2008 and 2007:





Fee
      Category
                2008
      Fees($)
                2007
      Fees($)Audit
      Fees
                183,000
                402,500Audit-Related
      Fees
                18,700
      (1)
                53,500 (2)Tax
      Fees
                63,100
                70,500All
      Other Fees
                
                Total
      Fees
                264,800
                526,500


_____________________________


(1)
            Fees
      for work related to exploring specific strategic alternatives including
      the sale of the Company’s DioGenix
subsidiary.


(2)
            Fees
      for work related to the sale of the Company’s Genomics
    Assets.





Audit
Fees. These
consist of fees billed for (i) professional services rendered for the audit of
the Company’s annual consolidated financial statements included in the Annual
Report on Form 10-K; (ii) review of the interim consolidated financial
statements included in the Quarterly Reports on Form 10-Q for the respective
fiscal years, irrespective of the period in which the related services are
rendered or billed; and (iii) services provided by Ernst & Young LLP in
connection with regulatory filings, including accounting and financial work
related to the proper application of financial accounting and/or reporting
standards.





Audit-Related
Fees. These
consist of fees billed for assurance and related services that are reasonably
related to the performance of the audit or review of the Company’s consolidated
financial statements and are not reported under the caption “Audit Fees.” These services
may include consultations related to internal control and compliance procedures,
due diligence related to mergers and acquisitions and consultations concerning
financial accounting and reporting standards.





Tax Fees.
These consist of fees billed for professional services for tax return
preparation, tax compliance, tax advice and tax planning.





All Other
Fees. These
consist of fees billed for services not captured in the other categories listed
above.





Policy
on Audit Committee Pre-Approval of Audit Services and Permissible Non-Audit
Services of Independent Registered Public Accounting Firm





The Audit
Committee’s policy is to pre-approve, generally or specifically, all audit and
permissible audit-related and non-audit services performed by the Company’s
independent registered public accounting firm. Prior to engagement of the firm
for the next year’s audit, the firm provides to the Audit Committee for approval
the scope of the proposed audit and proposed related fees for services expected
to be rendered during that year within each of applicable categories of
services. The independent registered public accounting firm and management
throughout the year report periodically to the Audit Committee as to the actual
services received and fees incurred by category of service. The Audit
Committee’s prior approval is to be obtained for the scope or cost of
pre-approved services to be increased and for additional permissible non-audit
services to be obtained.





In
determining whether to pre-approve any given services, the Audit Committee
considers whether such services are consistent with the continued independence
of the independent registered public accounting firm under the SEC’s rules,
whether the firm is best positioned to provide the most effective and efficient
service and whether the performance of the service by the firm might enhance the
Company’s ability to manage or control risk or improve audit
quality.





16




The Audit
Committee has delegated to its Chairman authority between meetings to
pre-approve permitted services to be provided by the independent registered
public accounting firm. The Audit Committee Chairman must report any such
authorizations to the Audit Committee at the next scheduled
meeting.






ITEM
      15.
                  EXHIBITS,
      FINANCIAL STATEMENT
SCHEDULES
 Part IV of
our Initial Report is hereby amended solely to add the following exhibits
required to be filed in connection with this Amendment No. 1.





(a)3.
Index to Exhibits




ExhibitNumber
                                      
                                      Description of Document31
                                      
                                      Certifications
      pursuant to Rule 13a-14(a) and
15d-14(a).










17





SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on the 30th day of
April, 2009.




ORE
      PHARMACEUTICALS INC.By:/s/
      MARK J. GABRIELSONMark
      J. GabrielsonPresident
      and Chief Executive
Officer








18