UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
  
 Form
10-K
 x
              ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For
the fiscal year ended December 31, 2009
 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 No. 001-15281
  
 Repros
Therapeutics Inc.
 (Exact
name of registrant as specified in its charter)
 
 Delaware
                76-0233274(State
      or other jurisdiction of
                (IRS
      Employerincorporation
      or organization)
                Identification
      No.)2408
      Timberloch Place, Suite B-7
                77380The
      Woodlands, Texas
                (Zip
      Code)(Address
      of principal executive offices)
 (281)
719-3400
 (Registrant's
telephone number, including area code)


Securities
registered pursuant to Section 12(b) of the Act:
 Title of Each Class
                  Name of Each
                    Exchange on Which RegisteredCommon
      Stock, $.001 par value
                  Nasdaq
      Capital MarketRights
      to purchase Series One Junior
                  Nasdaq
      Capital MarketParticipating
      Preferred Stock
 Indicate
by check mark whether the registrant is a well-known seasoned issuer (as defined
in Rule 405 of the Securities Act).  Yes  ̈   No
x
  Indicate
by check mark whether the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Securities 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 Exchange Act 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 whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files. Yes  ̈ No
 ̈
  Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of 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.  ̈
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer.  See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange
Act. (Check one):
  Large
      accelerated filer  ̈
                Accelerated
      filer x
                Non-accelerated
      filer  ̈
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Securities Exchange Act).  Yes  ̈   No
x
  The
aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $69,725,000 as of June 30, 2009, the last business
day of the registrant's most recently completed second fiscal quarter, based on
the closing sales price of the registrant's common stock on the Nasdaq Global
Market on such date of $7.19 per share.  For purposes of the preceding
sentence only, all directors, executive officers and beneficial owners of ten
percent or more of the shares of the registrant's common stock are assumed to be
affiliates.
  As of
March 6, 2010, there were 26,011,054 shares of the registrant's common stock
outstanding.
  Documents incorporated by
reference:  Portions of the registrant's definitive proxy
statement relating to the registrant's 2010 Annual Meeting of Shareholders,
which proxy statement will be filed under the Exchange Act within 120 days of
the end of the registrant's fiscal year ended December 31, 2009, are
incorporated by reference into Part III of this Form 10-K.
  
 
  REPROS
THERAPEUTICS INC
 2009
FORM 10-K ANNUAL REPORT
  TABLE
OF CONTENTS
  PagePART
      I
                  
                  2Item
      1.
                  Business
                  2Item
      1A.
                  Risk
      Factors
                  9Item
      1B.
                  Unresolved
      Staff Comments
                  21Item
      2.
                  Properties
                  21Item
      3.
                  Legal
      Proceedings
                  21Item
      4.
                  (Removed
      and Reserved)
                  22PART
      II
                  
                  22Item
      5.
                  Market
      for the Registrant's Common Equity, Related Stockholder Matters &
      Issuer Purchases of Equity Securities
                  22Item
      6.
                  Selected
      Consolidated Financial Data
                  25Item
      7.
                  Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                  26Item
      7A.
                  Quantitative
      and Qualitative Disclosures About Market Risk
                  35Item
      8.
                  Financial
      Statements and Supplementary Data
                  36Item
      9.
                  Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
                  36Item
      9A.
                  Controls
      and Procedures
                  36Item
      9B.
                  Other
      Information
                  36PART
      III
                  
                  37Item
      10.
                  Directors,
      Executive Officers and Corporate Governance
                  37Item
      11.
                  Executive
      Compensation
                  37Item
      12.
                  Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                  37Item
      13.
                  Certain
      Relationship and Related Transactions, and Director
      Independence
                  37Item
      14.
                  Principal
      Accountant Fees and Services
                  37PART
      IV
                  
                  38Item
      15.
                  Exhibits
      and Financial Statement Schedules
                  38
 
 This
Annual Report on Form 10-K contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. The words "may,"
"anticipate," "believe," "expect," "estimate," "project," "suggest," "intend"
and similar expressions are intended to identify forward-looking statements.
Such statements reflect our current views with respect to future events and
financial performance and are subject to certain risks, uncertainties and
assumptions, including those discussed in "Item 1. Description of Business —
Business Risks." Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, believed, expected, estimated, projected,
suggested or intended.
  
  PART
I
  ITEM
      1.
                BUSINESS
  Overview
  Repros
Therapeutics Inc. ("the Company", "RPRX," “Repros”, or "we," "us" or "our") was
organized on August 20, 1987.  We are a development stage
biopharmaceutical company focused on the development of oral small molecule
drugs for major unmet medical needs.  As of December 31, 2009, we had
accumulated losses of $174.5 million, approximately $1.9 million in cash and
cash equivalents, and our accounts payable and accrued expenses were
approximately $2.4 million. The amount of cash on hand is not sufficient to
fund our future clinical trials of Androxal®, complete all necessary activities
relating to the suspension of our clinical trial program for Proellex®, and pay
our accounts payable and accrued expenses as well as our normal corporate
overhead and expenses. The foregoing and other matters raise substantial
doubt about our ability to continue as a going concern.  We continue
to explore potential additional financing alternatives that may allow us to
maintain our current reduced level of operations; however, there can be no
assurance that we will be successful in raising any such additional funds on a
timely basis or at all.  Significant additional
capital will be required for us to continue development of either of our product
candidates.
 
 Our
current product pipeline (with the respective status of development) consists of
the following:
  Androxal®(male reproductive
health):
  ·
              Completed
      Phase 2b proof-of-concept trial in men being treated for low testosterone
      levels who want to improve or maintain their fertility and/or sperm number
      and function; and
  ·
              Our
      Investigational New Drug Application, or IND, for the study of oral
      Androxal® in the treatment of hypogonadal men with type 2 diabetes was
      accepted by the FDA and, thus, we may initiate a Phase 2a
      trial.
  Proellex®(female reproductive
health):  All ongoing clinical trial activities for Proellex® have been put on hold by
the FDA.
  Any
further development efforts for either of our product candidates is dependent on
our ability to raise additional capital.  We also continue to maintain
our patent portfolio of our phentolamine-based products for the treatment of
sexual dysfunction and try to create value from these assets in various ways
which includes product out-licensing.
  Androxal®
 Product
Overview
  Our
primary product candidate, Androxal® (the trans isomer of clomiphene),
is a single isomer of clomiphene citrate and is an orally active proprietary
small molecule compound.
  We are
developing Androxal® for men of reproductive age with low testosterone levels
who want to improve or maintain their fertility and/or sperm function while
being treated for low testosterone.  In addition, we submitted a new
IND to the Division of Metabolic and Endocrine Products, or DMEP, for the
investigation of Androxal® as a potential treatment for type 2
diabetes.  On February 1, 2010, we received confirmation from the DMEP
that our new IND was accepted and, as a result, we may initiate a Phase 2a
trial.  This new indication replaces our previously announced plan to
develop Androxal® in men with adult-onset idiopathic hypogonadotrophic
hypogonadism, or AIHH, with concomitant plasma glucose and lipid elevations, all
of which are components of Metabolic Syndrome.
  Data
relating to the findings of Androxal®’s potential treatment for AIHH associated
with glucose and lipid dysregulation was discovered after a retrospective review
of our clinical data from our 200 patient non-pivotal U.S. Phase 3 clinical
trial.  Our findings showed that Androxal® therapy resulted in a
significant reduction in mean glucose levels in men with a body mass index, or
BMI, >26 and glucose levels >104 mg/dL, an outcome not seen in the placebo
or AndroGel® arms of this study.  AndroGel® is the current leading
therapy for testosterone replacement.  Men with AIHH are characterized
as having both low testosterone and LH, often accompanied by obesity and
elevated blood glucose, among other signs.  Our clinical trial data
suggests that Androxal® modifies the endocrinologic profile in terms of both
hormones and glucose.  There can be no assurance that clinical trials
performed for these two new indications will be successful.
 We
believe Androxal® may have advantages over current therapies for the treatment
of low testosterone due to secondary hypogonadism because it is designed as an
oral therapy that acts centrally to restore testicular function and hence normal
testosterone  in the body, as compared to currently approved products
that simply replace diminished testosterone either through injections, nasal
spray or the application of a gel or cream containing testosterone over a
percentage of body area.
  -2-
 We
believe Androxal® will be superior to the existing administration of exogenous
testosterone products used to normalize testosterone as only Androxal® has the
property of restoring both LH and FSH levels.  LH and FSH are the
pituitary hormones that stimulate testicular testosterone and sperm production,
respectively.
  Testosterone
is an important male hormone.  Testosterone deficiency in men is
linked to several negative physical and mental conditions, including loss of
muscle tone, reduced sexual desire, and deterioration of memory and certain
other cognitive functions. Testosterone production normally decreases as men
age, sometimes leading to testosterone deficiency.  According to the
Urology Channel, recent estimates show that approximately 13 million men in the
United States experience testosterone deficiency.  The leading therapy
is AndroGel®, a commercially available testosterone replacement cream marketed
by Solvay Pharmaceuticals for the treatment of low testosterone, which we
believe has had and continues to have significant sales in North
America.
  Based on
our own clinical trial screening data, we believe over 70% of men that have low
testosterone suffer from secondary hypogonadism, caused by failure of the
pituitary to provide appropriate hormone signaling to the testes, which we
believe causes testosterone levels to drop to the point where pituitary
secretions fall under the influence of estrogen.  In this state, we
also believe that estrogen further suppresses the testicular stimulation from
the pituitary.  These men are readily distinguished from those that
have primary testicular failure via assessment of the levels of secretions of
pituitary hormones (i.e., men with primary testicular failure experience
elevated secretions of pituitary hormones).  Secondary hypogonadism is
not relegated only to older men although the condition becomes more prevalent as
men age.
 Androxal®
is considered a new chemical entity by the FDA which means that the compound
will be required to undergo the full regulatory approval process.  We
must still meet additional clinical requirements including pre-clinical, Phase
1, Phase 2, pivotal Phase 3 trials and long-term Open Label Safety Studies as
well as other requirements.  Although Androxal® is considered a new
chemical entity for purposes of requirements for approval, it is closely related
chemically to the drug, Clomid®, which is approved for use in women to treat
certain infertility disorders.  The FDA has indicated that testicular
tumors, gynecomastia and adverse ophthalmologic events, which have been reported
in males taking Clomid®, are potential risks that should be included in informed
consent forms for our Androxal® clinical trials.  We do not believe
that Androxal® will present with the same adverse events given its accelerated
half-life in the human body as compared to Clomid®.  In our
preclinical studies and our clinical trials to date, we have observed no
evidence of any of these events except for certain ophthalmologic events in our
preclinical dog study at doses significantly higher than those administered in
the clinical trials.
 All
clinical trial results are subject to review by the FDA, and the FDA may
disagree with our conclusions about safety and efficacy.  We caution
that the results discussed herein are based on data from non-pivotal trials and
that our Phase 2 trials, pivotal Phase 3 and long-term Open Label Safety Trial
data may not agree with these results which will be based upon significantly
larger and more diverse patient populations treated for longer periods of
time.
 Secondary
Hypogonadism with Fertility Maintenance/Improvement
 During
the second quarter of 2008, we initiated a 24-patient Phase 2b proof-of-concept
clinical trial (ZA-201) for a new indication in which we are monitoring the
effects of Androxal® on male fertility and testicular function in patients being
treated for low testosterone as compared to Testim®, a popular marketed topical
testosterone medication.  On October 6, 2009 we announced that
Androxal® was able to maintain sperm counts in men being treated for their low
testosterone levels. Testim® resulted in suppressed sperm levels while men were
being treated with that topical gel. We requested a meeting with the FDA to
discuss such results.  In correspondence leading up to such meeting,
the FDA stated that it could not agree with such proposed indication for
Androxal® at that time because the patient population had not been adequately
defined and that it was not aware of certain data to support our
position.  On January 25, 2010, we participated in a teleconference
with the FDA relating to the future clinical path for
Androxal®.  During such teleconference, the FDA requested that we (i)
propose a label that better defines the population of individuals for whom we
believe will benefit from the use of Androxal®and (ii) conduct a
literature review of the incidence of infertility associated with the use of
exogenous testosterone as supportive of our data.  The FDA suggested
that if it finds the submission appropriate, no additional clarifying meeting
regarding this indication for Androxal®may be required.On February 8, 2010, we
announced that we submitted the requested information to the FDA and we are
currently awaiting the FDA’s response to such submissions.  Given that
there is currently an acceptable treatment regimen for men with low
testosterone, there is significant uncertainty as to whether or not an
additional approach such as Androxal® would be approved by the FDA or accepted
in the market.  At this time it is too early in the clinical
development process to estimate when or even if an NDA for Androxal® will be
submitted for this indication.
  Type
2 Diabetes
 In April
2008, we submitted a White Paper, based on the results from a previously
conducted non-pivotal Phase 2 clinical trial (ZA-003) with Androxal® for the
treatment of testosterone deficiency due to secondary hypogonadism, to the
Division of Reproductive and Urology Products.  The data we believe
demonstrated that in subjects with a serum glucose of greater than or equal to
105mg/dL, there was a statistically significant reduction in fasting serum
glucose and a higher response rate to treatment in the Androxal®-group than the
placebo or Androgel® groups. In November 2008, after the FDA reviewed this paper
we received guidance from them suggesting that we open a new IND with the
Division of Metabolic and Endocrine Products, or DMEP, for the investigation of
Androxal® as a potential treatment for type 2 diabetes in
mellitus.  In December 2009, we submitted a new IND to the DMEP for
the investigation of Androxal® for such purpose. On February 1, 2010, we
received confirmation from the DMEP that our new IND was accepted and, as a
result, we may initiate a Phase 2a trial.  This new indication
replaces our previously announced plan to develop Androxal® in men with
adult-onset idiopathic hypogonadotrophic hypogonadism, or AIHH, with concomitant
plasma glucose and lipid elevations, all of which are components of Metabolic
Syndrome.
  -3-
  Proellex®
  Proellex®,
our product candidate for female reproductive health, is a new chemical entity
that acts as a selective blocker of the progesterone receptor and is being
developed for the treatment of symptoms associated with uterine fibroids and
endometriosis. However, as a result of the recent liver toxicity exhibited by
Proellex® in our previous Phase 2 and 3 clinical trials to endometriosis and
uterine fibroids, respectively, all ongoing clinical trial activities have been
put on hold by the FDA.  There is currently no FDA-approved orally
administered drug treatment for the long-term treatment of uterine fibroids or
endometriosis.
  Our
estimates regarding the timing of our Proellex® clinical development program are
completely on hold at this time in light of the FDA clinical hold and our recent
discontinuation of ongoing clinical trials. In addition, any future development
efforts are totally dependent on our ability to raise sufficient capital or find
an appropriate partner to proceed and on decisions by the FDA regarding the
current clinical hold on Proellex® clinical trials. If the FDA were to lift the
clinical hold on Proellex®, and if the FDA requires a lower dosage of Proellex®
to be used for future clinical trials, we would be required to commence Phase 2
studies again with the required lower dosage, thereby resulting in extensive
additional costs and delays. The length of time required to complete Phase 1,
Phase 2 and Phase 3 clinical trials and long-term Open Label Safety Trials may
vary substantially according to factors relating to the particular trial, such
as the type and intended use of the drug candidate, the clinical, trial design
and the ability to enroll suitable patients. We have also, in the past, had
difficulty recruiting patients into our Proellex® clinical trials primarily due
to the various test procedures that are required, including multiple endometrial
biopsies. Recruiting patients would likely be even more difficult due to the
recent liver toxicity exhibited by Proellex®.
 
 Other Products
 We
continue limited out-licensing efforts for our phentolamine-based product
candidates, including VASOMAX®, which had previously been approved for marketing
in several countries in Latin America for the treatment of male erectile
dysfunction under the brand name, Z-Max.  VASOMAX is currently on
partial clinical hold in the U.S.
  Business
Strategy
  Provided
we are able to obtain sufficient funds to continue our business, we plan to
focus our clinical program on Androxal®. Should the FDA permit the resumption of
the Proellex® clinical trials, we will assess whether there are sufficient funds
available to continue development ourselves of such product candidate or whether
such program would be more appropriately funded by a corporate
partner.  Therefore, we will continue to explore corporate partnering
opportunities for assistance in the clinical development funding and
commercialization of our products, as appropriate; however, there can be no
assurance that a corporate partnering opportunity will be found.
 
 Research
and Development
 We have
limited resources and utilize consultants and outside entities to perform
clinical development and limited research activities in connection with
preclinical studies and clinical trials.  Our primary research and
development, or R&D, expenses for 2009 were for the payment of contract
research organizations and consultants in connection with our clinical trials of
Proellex® for the treatment of uterine fibroids, endometriosis and for Androxal®
for testosterone deficiency.  We believe that these expenses will
continue to be our primary R&D expenses in the near future.
  Proellex®
License Agreement with National Institutes of Health
  In 1999,
we licensed rights to Proellex® from the National Institutes of Health, or NIH,
under an exclusive, worldwide license in the field of treatment of human
endocrinologic pathologies or conditions in steroid sensitive tissues which
expires upon the expiration of the last licensed patent.  Under the
terms of the agreement, we are obligated to meet developmental milestones as
outlined in a commercial development plan, which has been amended and revised
from time to time as circumstances warrant.  In 2009, we finalized a
Seventh Amendment with the NIH which establishes a new set of milestones for
development.  This set of milestones may need to be amended again
depending on when or if the clinical hold is lifted.  Should the FDA
determine that the clinical hold on Proellex® shall not be lifted even at a
lower dosage, the license with the NIH provides us with an opportunity to
satisfy milestones under such license with a second generation
drug.
  -4-
  We
provide annual updates to the NIH on the progress of our development of
Proellex®.  Based on our interaction with the NIH to date, we believe
our license and relationship with NIH are in good standing.  The NIH
has the ability to terminate the agreement for lack of payment or if we are not
meeting milestones as outlined in the commercial development plan and for other
reasons as outlined in the agreement.  Although we believe that we
have a good working relationship with the NIH, there can be no assurance that
all of the objectives and conditions in the commercial development plan will be
met on a timely basis or at all, or that, if we fail to meet any of such
objectives, the NIH will again agree to amend this agreement to our
satisfaction.  Failure to comply with the material terms contained in
the license agreement could result in termination of such agreement, which would
prohibit us from further development of Proellex® and severely harm our business
prospects.  The NIH retains, on behalf of the government, a
nonexclusive, nontransferable, worldwide license to practice the inventions
licensed under the licensed patents by or on behalf of the
government.  For the purpose of encouraging basic research, the NIH
retains the right to grant nonexclusive research licenses to third
parties.  Due to the work that was done on Proellex® at the NIH prior
to our license agreement, the government also has certain rights to use the
product in the event of a national emergency pursuant to the Patent and
Trademark Laws Amendments Act of 1980, as amended.
  Manufacturing
  Due to
the clinical hold on Proellex®, we cancelled our development and supply contract
with Gedeon Richter for the production of the active pharmaceutical ingredient,
or API, for Proellex®.  We remain in contact with Gedeon Richter and
should the clinical hold be lifted, we believe we can reestablish our supply
contract with Gedeon Richter.
  We have a
five year supply agreement with Diagnostic Chemical Limited, doing business as
BioVectra, for the supply of the bulk active pharmaceutical ingredient used in
Androxal®.  We have obtained all of our supply of Androxal® to date
from BioVectra.  We have not faced any material problems with
BioVectra in supplying us with our necessary quantities of Androxal® for our
clinical trials and anticipate utilizing them for commercial production if we
are able to raise sufficient additional capital to commence clinical
trials.  Though our relationship with BioVectra remains good we
believe that alternate manufacturers capable of manufacturing Androxal® could be
developed.
  For the
foreseeable future, we expect to continue to rely on third-party manufacturers
and other third parties to produce, package and store sufficient quantities of
Androxal®, Proellex® and any future product candidates for use in our clinical
trials.  These product candidates are complicated and expensive to
manufacture.  If our third-party manufacturers fail to deliver our
product candidates for clinical use on a timely basis, with sufficient quality,
and at commercially reasonable prices, we may be required to delay or suspend
clinical trials or otherwise discontinue development and production of our
product candidates.  While we may be able to identify replacement
third-party manufacturers or develop our own manufacturing capabilities for
these product candidates, this process would likely cause a delay in the
availability of our product candidates and an increase in costs.  In
addition, third-party manufacturers may have a limited number of facilities in
which our product candidates can be produced, and any interruption of the
operation of those facilities due to events such as equipment malfunction or
failure or damage to the facility could result in the cancellation of shipments,
loss of product in the manufacturing process or a shortfall in available product
candidates.
  Sales
and Marketing
  We have
no experience in the sales, marketing and distribution of pharmaceutical
products. We anticipate that we will outsource such activities, as well as
possibly later stage pivotal trials of our product candidates, to larger
pharmaceutical companies more capable of distributing the products to the market
place. In the normal course of business we continue to explore possible
partnerships with various pharmaceutical companies. If in the future we fail to
reach or elect not to enter into an arrangement with a collaborative partner
with respect to the sales and marketing of any of our future potential product
candidates, we would need to develop a sales and marketing organization with
supporting distribution capability in order to market such products directly.
Significant additional expenditures would be required for us to develop such a
sales and marketing organization.
  Patents and Proprietary
Information
 Our
ability to compete effectively with other companies is materially dependent on
the proprietary nature of our patents and technologies.  We actively
seek patent protection for our proprietary technology in the United States and
abroad.
 Under a
license agreement with the National Institutes of Health, we have exclusive
rights to three issued U.S. patents, which expire in 2017, two pending U.S.
patent applications, and several foreign patents and pending
applications made by the NIH regarding Proellex®.  We also have
five pending U.S. patent applications, four foreign PCT
applications and 45 foreign pending patent applications that cover various
formulations of Proellex® and methods for using Proellex®.
  -5-
 Our
Androxal® product candidate and its uses are covered in the United States by two
issued U.S. patents and six pending patent applications.  Foreign
coverage of our Androxal® product candidate includes 35 issued foreign patents
and 67 foreign pending patent applications.  The issued patents and
pending applications relate to methods and compositions for treating certain
conditions including the treatment of testosterone deficiency in men, the
treatment of metabolic syndrome and conditions associated therewith, and the
treatment of infertility in hypogonadal men.  Androxal® (the
trans-isomer of clomiphene) is purified from clomiphene citrate.  A
third party individual holds two issued patents related to the use of an
anti-estrogen such as clomiphene citrate and others for use in the treatment of
androgen deficiency and disorders related thereto.  In our prior
filings with the SEC, we have described our request to the U.S. Patent and
Trademark Office, or PTO, for re-examination of one of these patents based on
prior art.  The third party amended the claims in the re-examination
proceedings, which led the PTO to determine that the amended claims are
patentable in view of those publications under consideration and a
re-examination certificate was issued.  However, we believe that the
amended claims are invalid based on additional prior art publications, and our
request for re-examination by the PTO in light of a number of these additional
publications and other publications cited by the PTO, has been granted. All of
the claims have been finally rejected in the re-examination and the patent
holder has appealed the rejections to the PTO Board of Patent Appeals and
Interferences (“the Board”).  A decision has been rendered by the
Board affirming the rejection of all of the claims.  The patent holder
has filed a request for rehearing.  If the Board maintains the
rejections on rehearing or the request for rehearing is denied, the patent
holder will have the opportunity to appeal the rejections to the United States
Court of Appeals for the Federal Circuit.  We also believe that the
second of these two patents is invalid in view of published prior art not
considered by the PTO.  Nevertheless, there is no assurance that
either patent will ultimately be found invalid over the prior art. If such
patents are not invalidated by the PTO we may be required to obtain a license
from the holder of such patents in order to develop Androxal® further or
attempts may be made to undertake further legal action to invalidate such
patents.  If such licenses were not available on acceptable terms, or
at all, we may not be able to successfully commercialize or out-license
Androxal®.
  All of
our employees and consultants have signed assignment of invention and
confidentiality agreements, and each corporate partner we enter into discussions
with or engage to assist in our clinical trials or manufacturing process is also
required to execute appropriate confidentiality and assignment agreements
protecting our intellectual property.
 Competition
  We are
engaged in pharmaceutical product development, an industry that is characterized
by extensive research efforts and rapid technological progress.  Many
established pharmaceutical and biotechnology companies, universities and other
research institutions with financial, scientific and other resources
significantly greater than ours are marketing or may develop products that
directly compete with any products we may develop.  These entities may
succeed in developing products that are safer, more effective or less costly
than products we may develop.  Even if we can develop products which
should prove to be more effective than those developed by other companies, other
companies may be more successful than us because of greater financial resources,
greater experience in conducting preclinical studies and clinical trials and in
obtaining regulatory approval, stronger sales and marketing efforts, earlier
receipt of approval for competing products and other factors.  If we
commence significant commercial sales of any products, we or our collaborators
may compete in areas in which we have no experience, such as manufacturing and
marketing.  There can be no assurance that our products, if
commercialized, will be accepted and prescribed by healthcare
professionals.
  Our main
competitors for the treatment of testosterone deficiency are the testosterone
replacement therapies currently being marketed.  The current most
common standard of care is AndroGel, a topical gel for the replacement of
testosterone in North America.  AndroGel is marketed by Solvay
Pharmaceuticals, a considerably larger company than we are.  There is
another topical gel, Testim®, currently marketed by Auxilium Pharmaceuticals,
and a transdermal patch, AndroDerm®, marketed by Watson
Pharmaceuticals.  In addition, other companies are developing other
products that would compete with Androxal®.  We believe we can compete
with AndroGel and the other replacement therapies because Androxal® would have
th advantage of being orally administered.  Based on our clinical
trial supply cost to date, we currently expect that Androxal®, if approved, can
compete favorably on a cost basis with current testosterone replacement
therapies.
  Our main
competitors for the treatment of uterine fibroids and endometriosis are GnRH
agonists, especially Lupron, the current most common therapeutic standard of
care for uterine fibroids.  In addition, surgical treatment of both
uterine fibroids and endometriosis competes with Proellex® by removing uterine
fibroids and by removing misplaced tissue in women with
endometriosis.  We believe we can potentially compete with Lupron and
other GnRH agonists because we believe that Proellex® will not present the same
side effect of a decrease in bone mineral density given its specific focus on
progesterone inhibition, which differentiates it from GnRH agonists that create
a low estrogen state.  There are additional companies developing
similar progesterone-blocking technology.  Asoprisnil, an
anti-progestin, formerly being developed by TAP Pharmaceuticals in partnership
with Schering AG, has been tested and discontinued due to side effects up
through Phase 3 clinical trials.
  Governmental
Regulation
 Our
research and development activities, preclinical studies and clinical trials,
and the manufacturing, marketing and labeling of any products we may develop,
are subject to extensive regulation by the FDA and other regulatory authorities
in the United States and other countries.  The U.S. Federal Food,
Drug, and Cosmetic Act and the regulations promulgated thereunder and other
federal and state statutes and regulations govern, among other things, the
testing, manufacture, storage, record keeping, labeling, advertising, promotion,
marketing and distribution of any products we may
develop.  Preclinical study and clinical trial requirements and the
regulatory approval process take many years and require the expenditure of
substantial resources.  Additional government regulation may be
established that could prevent or delay regulatory approval of our product
candidates.  Delays in obtaining or rejections of regulatory approvals
would adversely affect our ability to commercialize any product candidate we
develop and our ability to receive product revenues or to receive milestone
payments or royalties from any product rights we might license to
others.  If regulatory approval of a product candidate is granted, the
approval may include significant limitations on the indicated uses for which the
product may be marketed or may be conditioned on the conduct of post-marketing
surveillance studies.
  -6-
 The
standard process required by the FDA before a pharmaceutical agent may be
marketed in the United States includes: (1) preclinical tests; (2) submission to
the FDA of an IND application which must become effective before human clinical
trials may commence; (3) adequate and well-controlled human clinical trials to
establish the safety and efficacy of the drug for its intended application; (4)
submission of a new drug application, or NDA, to the FDA; and (5) FDA approval
of the NDA prior to any commercial sale or shipment of the drug.
 Clinical
trials typically are conducted in three sequential phases, but the phases may
overlap.  Phase 1 typically involves the initial introduction of the
drug into human subjects.  In Phase 1, the drug is tested for safety
and, as appropriate, for absorption, metabolism, distribution, excretion,
pharmacodynamics and pharmacokinetics.  Phase 2 usually involves
studies in a limited patient population to evaluate preliminarily the efficacy
of the drug for specific targeted indications, determine dosage tolerance and
optimal dosage and identify possible adverse effects and safety
risks.
 Phase 3
clinical trials are undertaken to further evaluate clinical efficacy and to test
further for safety within an expanded patient population at geographically
dispersed clinical study sites.  Phase 1, Phase 2 or Phase 3 testing
may not be completed successfully within any specific time period, if at all,
with respect to any products being tested by a sponsor.  Furthermore,
the FDA or the Investigational Review Board, or IRB may suspend clinical trials
at any time on various grounds, including a finding that the healthy volunteers
or patients are being exposed to an unacceptable health risk.  This
was evidenced when Proellex®, our product candidate for uterine fibroids and
endometriosis, was placed on clinical hold by the FDA in summer 2009 due to
liver toxicity data resulting from the Phase 3 clinical trials.  There
can be no assurance that the clinical hold will be lifted at any
time.
 Even if
regulatory approvals for any products we may develop are obtained, we, our
potential collaborators, our products, and the facilities manufacturing our
products would be subject to continual review and periodic
inspection.  The FDA will require post-marketing reporting to monitor
the safety of our products.  Each drug-manufacturing establishment
supplying the United States must be registered with the
FDA.  Manufacturing establishments are subject to periodic inspections
by the FDA and must comply with the FDA’s requirements regarding current Good
Manufacturing Practices, or GMP.  In complying with current GMP,
manufacturers must expend funds, time and effort in the area of production and
quality control to ensure full technical compliance.  We do not have
any drug manufacturing capabilities and must rely on outside firms for this
capability.  The FDA stringently applies regulatory standards for
manufacturing.  Identification of previously unknown problems with
respect to a product, manufacturer or facility may result in restrictions on the
product, manufacturer or facility, including warning letters, suspensions of
regulatory approvals, operating restrictions, delays in obtaining new product
approvals, withdrawal of the product from the market, product recalls, fines,
injunctions and criminal prosecution.
 Before
any products we may develop could be marketed outside of the United States, they
would be subject to regulatory approval similar to FDA requirements in the
United States, although the requirements governing the conduct of clinical
trials, product licensing, pricing, and reimbursement vary widely from country
to country.  No action can be taken to market any drug product in a
country until the regulatory authorities in that country have approved an
appropriate application.  FDA approval does not assure approval by
other regulatory authorities.  The current approval process varies
from country to country, and the time spent in gaining approval varies from that
required for FDA approval.  In some countries, the sale price of a
drug product must also be approved.  The pricing review period often
begins after market approval is granted.  Even if a foreign regulatory
authority approves any products we may develop, no assurance can be given that
it will approve satisfactory prices for the products.
 Our
research and development involves the controlled use of hazardous materials and
chemicals.  Although we believe that our procedures for handling and
disposing of those materials comply with state and federal regulations, the risk
of accidental contamination or injury from these materials cannot be
eliminated.  If such an accident occurs, we could be held liable for
resulting damages, which could be material to our financial condition and
business.  We are also subject to numerous environmental, health and
workplace safety laws and regulations, including those governing laboratory
procedures, exposure to blood-borne pathogens, and the handling of biohazardous
materials.  Additional federal, state and local laws and regulations
affecting us may be adopted in the future. Any violation of, and the cost of
compliance with, these laws and regulations could materially and adversely
affect us.
 Third-Party Reimbursement and
Pricing Controls
 In the
United States and elsewhere, sales of pharmaceutical products depend in
significant part on the availability of reimbursement to the consumer from
third-party payers, such as government and private insurance
plans.  Since we have no commercial products, we have not had to face
this issue yet.  However, third-party payers are increasingly
challenging the prices charged for medical products and services.  It
will be time consuming and expensive for us to go through the process of seeking
reimbursement from Medicaid, Medicare and private payers.
  -7-
 Our
products may not be considered cost effective, and coverage and reimbursement
may not be available or sufficient to allow us to sell our products on a
competitive and profitable basis.  The passage of the Medicare
Prescription Drug and Modernization Act of 2003 imposes new requirements for the
distribution and pricing of prescription drugs which may affect the marketing of
our products.
 In many
foreign markets, including the countries in the European Union, pricing of
pharmaceutical products is subject to governmental control.  In the
United States, there have been, and we expect that there will continue to be, a
number of federal and state proposals to implement similar governmental pricing
control.  While we cannot predict whether such legislative or
regulatory proposals will be adopted, the adoption of such proposals could have
a material adverse effect on our profitability.
 The Hatch-Waxman
Act
 Under the
U.S. Drug Price Competition and Patent Term Restoration Act of 1984, known as
the Hatch-Waxman Act, newly approved drugs and indications benefit from a
statutory period of non-patent marketing exclusivity.  The
Hatch-Waxman Act provides five year marketing exclusivity to the first applicant
to gain approval of an NDA for a new chemical entity, or NCE, meaning that the
FDA has not previously approved any other new drug containing the same active
ingredient.  Both of our current product candidates are considered
NCEs.  The Hatch-Waxman Act prohibits approval of an abbreviated new
drug application, or ANDA, for a generic version of the drug during the
five-year exclusivity period.  Protection under the Hatch-Waxman Act
will not prevent the filing or approval of another full NDA, however, the
applicant would be required to conduct its own adequate and well-controlled
clinical trials to demonstrate safety and effectiveness.  The
Hatch-Waxman Act also provides three years of marketing exclusivity for the
approval of new NDAs with new clinical trials for previously approved drugs and
supplemental NDAs, for example, for new indications, dosages, or strengths of an
existing drug, if new clinical investigations are essential to the
approval.  This three year exclusivity covers only the new changes
associated with the supplemental NDA and does not prohibit the FDA from
approving ANDAs for drugs containing the original active ingredient or
indications.
 The
Hatch-Waxman Act also permits a patent extension term of up to five years as
compensation for patent term lost during product development and the FDA
regulatory review process.  However, patent extension cannot extend
the remaining term of a patent beyond a total of 14 years.  The patent
term restoration period is generally one-half the time between the effective
date of an IND and the submission date of an NDA, plus time of active FDA review
between the submission date of an NDA and the approval of that
application.  Only one patent applicable to an approved drug is
eligible for the extension and it must be applied for prior to expiration of the
patent and within 60 days of the approval of the NDA.  The PTO, in
consultation with the FDA, reviews and approves or rejects the application for
patent term extension.
 Litigation
  See Item
3 of Part I of this Annual Report on Form 10-K for our fiscal year ended
December 31, 2009.
  Employees
and Consultants
  Employees
  As of
March 15, 2010, we had 5 full-time employees.  We also utilize
consultants as well as contract research organizations and other outside
specialty firms for various services such as preclinical and clinical trial
support, manufacturing, regulatory approval advice and accounting and human
resource management.  We believe our relationship with our employees
is good.
  Scientific
Advisors and Consultants
  We
benefit from consultation with prominent scientists active in fields related to
our technology.  For this purpose, we have part-time consulting
relationships with a number of scientific advisors.  At our request,
these advisors review the feasibility of product development programs under
consideration, provide advice about advances in areas related to our technology,
and aid in recruiting personnel.  All of the advisors are employed by
academic institutions or other entities and may have commitments to or advisory
agreements with other entities that limit their availability to
us.  Our advisors are required to sign an agreement providing that, if
appropriate, they are to disclose and assign to us any ideas, discoveries and
inventions they develop in the course of providing consulting
services.  We also use consultants for various administrative
needs.
  Available
Information
  Our
Internet site (www.reprosrx.com) makes available free of charge to all
interested parties our annual report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K, and all amendments to those reports, as well
as all other reports and schedules filed electronically with the Securities and
Exchange Commission, or SEC, as soon as reasonably practicable after such
material is electronically filed with or furnished to the
SEC.  Interested parties may also find reports, proxy and information
statements and other information on issuers that file electronically with the
SEC at the SEC's Internet site (http://www.sec.gov).
  -8-
  ITEM
      1A.
              RISK
      FACTORS
  You should carefully consider the
risks described below before making an investment decision.  You
should also refer to the other information in this report, including our
financial statements and the related notes incorporated by
reference.  The risks and uncertainties described below are not the
only risks and uncertainties we face.  Additional risks and
uncertainties not presently known to us or that we currently deem immaterial
also may impair our business operations.  If any of the following
risks actually occur, our business, results of operations and financial
condition could suffer.  In that event the trading price of our common
stock could decline, and you may lose all or part of your investment in our
common stock.  The risks discussed below also include forward-looking
statements and our actual results may differ substantially from those discussed
in these forward-looking statements.
 
 Risks Relating to
Our Business
 
 Our
ability to continue as a going concern requires that we raise additional funds
in the first half of 2010, without which we will need to cease our business
operations and begin bankruptcy or liquidation proceedings.
  Our
ability to continue as a going concern is dependent upon our ability to obtain
financing in the first half of 2010, our ability to control our operating
expenses and our ability to achieve a level of revenues adequate to support our
capital and operating requirements. In particular, we are exploring various
financing alternatives to address our short term liquidity needs. No assurance
can be given that we will be successful in obtaining financing on acceptable
terms or at all.  We anticipate that if we are able to secure
financing, that such financing will result in significant dilution of the
ownership interests of our current stockholders and may provide certain rights
to the new investors senior to the rights of our current stockholders, including
but not limited to voting rights and rights to proceeds in the event of a sale
or liquidation of the Company. The current FDA clinical hold of our clinical
trials for Proellex® will make it more difficult for us to obtain additional
financing. In addition, the recently filed class action lawsuits will make our
ability to raise funds even more difficult. As described above, we expect to
continue to incur significant losses for the foreseeable future, and we may
never achieve or sustain profitability. In the event that we are unable to
obtain adequate financing in the first half of 2010, we will need to cease our
business operations and begin bankruptcy or liquidation
proceedings.
  We
may need to seek protection under the provisions of the U.S. Bankruptcy Code,
and in that event, it is unlikely that stockholders would receive any value for
their shares.
  We have
not generated any significant revenues to date, and we have incurred losses in
each year since our inception. As of December 31, 2009, we had approximately
$1.9 million in cash and cash equivalents and our accounts payable and accrued
expenses were approximately $2.4 million.  The  amount of
cash on hand is not sufficient to fund future clinical trials of Androxal®,
complete all necessary activities relating to the lifting of the hold associated
with Proellex®, pay our accounts payable and accrued expenses as well as our
normal corporate overhead and expenses. We cannot assure you that any actions
that we take would raise or generate sufficient capital to fully address the
uncertainties of our financial position.  As a result, we may be
unable to realize value from our assets and discharge our liabilities in the
normal course of business and we may need to seek protection under the
provisions of the U.S. Bankruptcy Code.  In that event, we may seek to
reorganize our business, or we or a trustee appointed by the court may be
required to liquidate our assets. In either of these events, whether the
stockholders receive any value for their shares is highly uncertain. If we
needed to liquidate our assets, we would likely realize significantly less from
them than the values at which they are carried on our financial statements. The
funds resulting from the liquidation of our assets would be used first to pay
off the debt owed to any secured and unsecured creditors before any funds would
be available to pay our stockholders, and any shortfall in the proceeds would
directly reduce the amounts available for distribution, if any, to our creditors
and to our stockholders. In the event we were required to liquidate under the
federal bankruptcy laws, it is highly unlikely that stockholders would receive
any value for their shares.
 
 Although
we recently amended our exclusive license agreement with the National Institutes
of Health, failure to meet our agreed upon milestones could result in a loss of
our rights to Proellex®.
  On
October 28, 2009, the Company amended its exclusive license with the NIH dated
April 16, 1999.  This seventh amendment extends the time period by
which the Company is required to obtain certain financing and/or licensing
consideration.  In addition, the seventh amendment allows the
Company time to attempt to lift the clinical hold on Proellex® for purposes
of proceeding with a lower dose program.  If the clinical hold is lifted,
the Company must reach certain developmental milestones for such lower dose
program, such as commencing   Phase II and III
studies and obtaining U. S. FDA approval for treatment of uterine fibroids,
each by a specified date.  In the event the  FDA does not
approve Proellex® for further clinical trials, at a lower dosage, by a
certain date, the Company is required to identify a second generation
compound from those covered by the original Exclusive License Agreement, and the
Company must reach certain developmental milestones for such second generation
compound, such as completing Phases I, II and III studies of such second
generation compound, each by a specified date.  Even
though such amendment allows the Company additional time to reach such
benchmarks, there can be no assurance that the Company will be successful
in obtaining such financing, that the FDA will agree to allow the Company
to resume clinical trials at a lower dosage or that the Company will be
successful in identifying a second generation drug.  In addition, the
license may be terminated by the NIH immediately upon notice to the Company
following a filing of a petition in bankruptcy or a letter from the Company to
the NIH stating that it is insolvent.  In the event that any of the
conditions contained in the license agreement for termination by the NIH are
triggered, the Company's license agreement may be terminated and the Company
would lose its exclusive rights to Proellex®.  Any such termination of
the license agreement could have a material adverse effect on the Company's
financial position and results of operations, and in such event, the value of
the Company's common stock may be materially adversely affected.
  -9-
  We
believe we have identified a dose-related increase in liver enzymes in Proellex®
clinical trial patients, leading to the suspension of Proellex® studies and the
FDA's notice of clinical hold on all Proellex® clinical trials.
  In our
clinical trials program for Proellex®, we believe we have identified a
dose-related increase in liver enzymes in a limited number of patients that
resulted in our decision to suspend all clinical trials relating to
Proellex®.  In August 2009, the FDA placed all Proellex® clinical
studies on hold.  There can be no assurance whether and when the FDA
will remove the clinical hold; whether Proellex® can be further developed,
financed or commercialized in a timely manner without significant additional
studies or patient data or significant expense; and whether any future
development will be sufficient to support product approval.  If we are
unable to resolve the FDA's concerns, we will not be able to proceed further to
obtain regulatory approval for Proellex®.
  We have no clear clinical path for
Androxal® at this time.
  We are
developing Androxal® for men of reproductive age with low testosterone levels
who want to maintain their fertility while being treated for their low
testosterone condition. During the second quarter of 2008, we initiated a Phase
2b proof-of-concept clinical trial in which we are monitoring the effects of
Androxal® on male fertility and testicular function in patients being treated
for low testosterone as compared to Testim®, a popular marketed topical
testosterone medication. Given that there is already an acceptable treatment
regimen for men with low testosterone, there is significant uncertainty as to
whether or not an additional approach such as Androxal® would be approved by the
FDA or accepted in the market.  At this time it is too early in the
clinical development process to estimate when or even if an NDA for Androxal®
will be submitted for this indication.
  We
are currently not in compliance with Nasdaq rules for continued listing on
the Nasdaq Capital Market and are at risk of being delisted, which may subject
us to the SEC’s penny stock rules and decrease the liquidity of our common
stock.
 
 On
January 12, 2010, we received a letter from the Nasdaq Hearings Panel (the
“Panel”) stating that our shares would be transferred from the Nasdaq Global
Market to the Nasdaq Capital Market, effective at the open of the trading
session on Thursday, January 14, 2010.   As previously announced, we
have not been in compliance with Marketplace Rules 5450(a)(1) and 5450(b)(2)(A)
and (C), requiring (i) a minimum $1.00 bid price per share, (ii) a minimum $50
million market value of listed securities and (iii) a minimum market value of
publicly held shares of $15 million, respectively, for continued inclusion on
the Nasdaq Global Market. The Panel’s determination to transfer our shares to
the Nasdaq Capital Market follows our hearing before the Panel on December 3,
2009.  If we cannot demonstrate compliance with all the requirements
for continued listing on the Nasdaq Capital Market, including the requirement to
maintain a minimum bid price of $1.00 per share by June 14, 2010 and maintain
either stockholders’ equity of at least $2.5 million or a market value of listed
securities of $35 million, by May 5, 2010, our shares will be subject to
immediate delisting.
  If we are
delisted from The Nasdaq Capital Market, our common stock may be traded
over-the-counter on the OTC Bulletin Board or in the “pink
sheets.”  These alternative markets, however, are generally considered
to be less efficient than The Nasdaq Capital Market.  Many
over-the-counter stocks trade less frequently and in smaller volumes than
securities traded on the Nasdaq markets, which would likely have a material
adverse effect on the liquidity of our common stock.
 
 If our
common stock is delisted from The Nasdaq Capital Market, there may be a limited
market for our stock, trading in our stock may become more difficult and our
share price could decrease even further.  In addition, if our common
stock is delisted, our ability to raise additional capital may be
impaired.
 
 In
addition, our common stock may become subject to penny stock
rules.  The SEC generally defines “penny stock” as an equity security
that has a market price of less than $5.00 per share, subject to certain
exceptions.  We are not currently subject to the penny stock rules
because our common stock qualifies for an exception to the SEC’s penny stock
rules for companies that have an equity security that is quoted on The Nasdaq
Stock Market.  However, if we were delisted, our common stock would
become subject to the penny stock rules, which impose additional sales practice
requirements on broker-dealers who sell our common stock.  If our
common stock were considered penny stock, the ability of broker-dealers to sell
our common stock and the ability of our stockholders to sell their shares in the
secondary market would be limited and, as a result, the market liquidity for our
common stock would be adversely affected.  We cannot assure that
trading in our securities will not be subject to these or other regulations in
the future.
  -10-
  The
Company and certain of its officers and directors were named as a party in
several class action lawsuits which could result in a material adverse affect on
our business and financial condition.
 
 The
Company and certain of its officers were named as parties in several shareholder
class action lawsuits alleging, among other things, that the Company and such
officers violated certain provisions of the Exchange Act by issuing materially
false and misleading press releases regarding the results of clinical trials for
its drug Proellex®.  Our bylaws require us to indemnify our officers
in certain proceedings, subject to certain limited exceptions. In addition, each
of our directors has an indemnification agreement with the Company providing for
certain additional indemnification benefits for such persons in the event of a
lawsuit.  As a result of the class action lawsuits, we are obligated
to pay for certain costs and expenses of our officers and directors and may be
liable for substantial damages, costs and expenses if such class action is
successful.  Such litigation could also divert the attention of our
management and our resources in general from day-to-day
operations.  Further, it is possible that additional claims beyond
those that have already been filed will be brought by the current plaintiffs or
by others in an effort to seek monetary relief from us.
 
 Additionally,
such class action lawsuits are covered by the Company's director and officer
insurance policy.  In the event there are adverse judgments against
the Company in such lawsuits, the Company's insurance coverage may not be
adequate to cover such judgments and the Company's cash position may not be
sufficient to satisfy such judgment. Such adverse judgments could have a
material and adverse affect on the Company.
 
 If
we fail to obtain the capital necessary to fund our operations, we will have to
delay, reduce or eliminate our research and development programs or
commercialization efforts.
 
 We expect
to make additional capital outlays and to increase operating expenditures over
the next several years to support our preclinical development and clinical trial
activities, particularly with respect to pivotal clinical trials for Androxal®
and, if and when the clinical hold on Proellex® is lifted, for
Proellex®.  Based on our current planned clinical programs, we will
need to raise additional capital in the first half of
2010.  Thereafter we will need to seek additional funding through
public or private financings, including equity or debt financings, and/or
through other means, including collaborations and license
agreements.  We do not know whether additional financing will be
available when needed, or that, if available, we will obtain financing on terms
favorable to our stockholders or us.  If adequate funds are not
available to us, we may be required to:
 
 ·
                delay,
      reduce the scope of or eliminate one or more of our development
      programs;
 ·
                relinquish,
      license or otherwise dispose of rights to technologies, product candidate
      or products that we would otherwise seek to develop or commercialize
      ourselves at an earlier stage or on terms that are less favorable than
      might otherwise be available; or
 ·
                liquidate
      and dissolve our company.
 Our
future capital requirements will depend upon a number of factors,
including:
 
 ·
                the
      size, complexity, results and timing of our clinical
    programs;
 ·
                the
      cost to obtain sufficient supply of the compounds necessary for our
      product candidates at a reasonable
cost;
 ·
                the
      time and cost involved in obtaining regulatory
  approvals;
 ·
                the
      costs involved in preparing, filing, prosecuting, maintaining, defending
      and enforcing patent claims; and
 ·
                competing
      technological and market
developments.
 These
factors could result in variations from our currently projected operating and
liquidity requirements.
 
 The
current economic downturn may affect our ability to raise capital, as well as
our suppliers and contractors, and could materially affect our ability to
continue our business.
 
 The
current economic downturn has reduced the availability of liquidity and credit
to fund or support the continuation and expansion of business operations
worldwide. Recent financial market conditions have resulted in significant
write-downs of asset values by financial institutions, and have caused many
financial institutions to seek additional capital, to merge with larger and
stronger institutions and, in some cases, to fail. Many lenders and
institutional investors have reduced and, in some cases, ceased to provide
funding to borrowers. Continued disruption of the credit markets could adversely
affect the credit capacity of our suppliers, contractors and insurance
providers and could result in cancellations, suspensions or project delays. If
one or more of our suppliers or contractors experiences difficulties that result
in a reduction or interruption in supplies or services to us, or they fail to
meet any of our manufacturing requirements, our business could be adversely
impacted until we are able to secure alternative sources, if any.  The
equity capital markets have also been impacted, in that there are fewer private
equity, venture capital and hedge funds in existence today than in previous
years that are willing to invest in early stage biotechnology
companies.  Investment banks and major pharmaceutical companies are
also not pursuing as many new financings and deals as in the past due to the
lack of available capital and investors.  In addition to these
factors, please refer to the risk factor titled, "We rely on third parties to
conduct clinical trials for our product candidates, and their failure to timely
and properly perform their obligations may result in costs and delays that
prevent us from obtaining regulatory approval or successfully commercializing
our product candidates" for a discussion of additional adverse events that could
arise from the failure of our independent contractors.
  -11-
 
 Because
the data from our preclinical studies and early clinical trials for our product
candidates are not necessarily predictive of future results, we can provide no
assurances that any of them will have favorable results in clinical trials or
receive regulatory approval.
 
 Before we
can obtain regulatory approval for the commercial sale of any product candidate
that we develop, we are required to complete preclinical development and
extensive clinical trials in humans to demonstrate its safety and
efficacy.  Positive data from preclinical studies or early clinical
trials should not be relied upon as evidence that those studies or trials will
produce positive results, or that later or larger-scale clinical trials will
succeed.  Previous clinical trials for Androxal® have been conducted
only in limited numbers of patients that may not fully represent the diversity
present in larger populations.  In addition, these studies have not
been subjected to the exacting design requirements typically required by FDA for
pivotal trials.  Thus the limited data we have obtained may not
predict results from studies in larger numbers of patients drawn from more
diverse populations, and may not predict the ability of Androxal® to treat type
2 diabetes.  Furthermore, the only data that we obtained to date
relating to Androxal® is to treat testosterone deficiency.  We will be
required to demonstrate through larger-scale clinical trials that these product
candidates are safe and effective for use in a diverse population before we can
seek regulatory approvals for their commercial sale.  There is
typically an extremely high rate of attrition from the failure of drug
candidates proceeding through clinical trials.  We are also required
to complete our two-year rat carcinogenicity studies as well as other
preclinical studies before we are permitted to file a new drug application, or
NDA, for Androxal® and Proellex®.  If Androxal®, Proellex®, or any
other potential future product candidate fails to demonstrate sufficient safety
and efficacy in any clinical trial, we would experience potentially significant
delays in, or be required to abandon, development of that product
candidate.  If we delay or abandon our development efforts related to
Androxal® or Proellex®, we may not be able to generate sufficient revenues to
continue operations or become profitable.
 
 We
have a history of operating losses, and we expect to incur increasing net losses
and may not achieve or maintain profitability for some time or at
all.
 
 We have
experienced significant operating losses in each fiscal year since our
inception.  As of December 31, 2009, we had a deficit of approximately
$174.5million.  We
expect to continue incurring net losses and we may not achieve or maintain
profitability for some time if at all.  As we increase expenditures
for the clinical development of our products, we expect our total operating
losses to increase for at least the next few years.  Our ability to
achieve profitability will depend on, among other things, successfully
completing the development of our products, obtaining regulatory approvals,
establishing marketing, sales and manufacturing capabilities or collaborative
arrangements with others that possess such capabilities, and raising sufficient
funds to finance our activities.  There can be no assurance that we
will be able to achieve profitability or that profitability, if achieved, can be
sustained.  The uncertainties relating to the foregoing matters raise
substantial doubt about our ability to continue as a going
concern.
 
 Raising
additional funds by issuing securities or through collaboration and licensing
arrangements may cause dilution to existing stockholders, restrict our
operations or require us to relinquish proprietary rights.
  We may
raise additional funds through public or private equity offerings, debt
financings or potential regional corporate collaborations and licensing
arrangements.  We cannot be certain that additional funding will be
available on acceptable terms, or at all.  To the extent that we raise
additional capital by issuing equity securities, our stockholders’ ownership
will be diluted.  Any debt financing we enter into may involve
covenants that restrict our operations.  These restrictive covenants
may include limitations on borrowing and specific restrictions on the use of our
assets, as well as prohibitions on our ability to create liens, pay dividends,
redeem capital stock or make investments.  In addition, if we raise
additional funds through collaboration and licensing arrangements, it may be
necessary to relinquish potentially valuable rights to our potential products or
proprietary technologies, or grant licenses on terms that are not favorable to
us.  For example, we might be forced to relinquish all or a portion of
our sales and marketing rights with respect to Androxal®, Proellex®, or other
potential products or license intellectual property that enables licensees to
develop competing products.
  -12-
  Our
stock price could decline significantly based on the results and timing of
clinical trials of, and decisions affecting, our product
candidates.
 
 Results
of clinical trials and preclinical studies of our current and potential product
candidates may not be viewed favorably by us or third parties, including the FDA
or other regulatory authorities, investors, analysts and potential
collaborators.  The same may be true of how we design the clinical
trials of our product candidates and regulatory decisions affecting those
clinical trials. Biopharmaceutical company stock prices have declined
significantly when such results and decisions were unfavorable or perceived
negatively or when a product candidate did not otherwise meet
expectations.  The final results from our clinical development
programs may be negative, may not meet expectations or may be perceived
negatively.  The designs of our clinical trials (which may change
significantly and be more expensive than currently anticipated depending on our
clinical results and regulatory decisions) may also be viewed negatively by
third parties.  We may not be successful in completing these clinical
trials on our projected timetable, if at all.
 
 Failure
to initiate additional clinical trials or delays in existing clinical trials of
Androxal® and failure of the FDA to lift the clinical hold for lower doses of
Proellex® or any of our other current or future product candidates, or
unfavorable results or decisions or negative perceptions regarding any of such
clinical trials, could cause our stock price to decline
significantly.
 
 Delays
in the commencement of preclinical studies and clinical trials testing of our
current and potential product candidates could result in increased costs to us
and delay our ability to generate revenues.
 
 Our
product candidates will require continued preclinical studies and extensive
clinical trials prior to the submission of a regulatory application for
commercial sales.  Because of the nature of clinical trials and our
lack of sufficient capital, we do not know whether future planned clinical
trials will begin on time, if at all.  Delays in the commencement of
preclinical studies and clinical trials could significantly increase our product
development costs and delay any product commercialization.  In
addition, many of the factors that may cause, or lead to, a delay in the
commencement of clinical trials may also ultimately lead to denial of regulatory
approval of a product candidate.
 
 The
commencement of clinical trials can be delayed for a variety of reasons,
including delays in:
 
 ·
                demonstrating
      sufficient safety and efficacy in past clinical trials to obtain
      regulatory approval to commence a further clinical
  trial;
 ·
                convincing
      the FDA that we have selected valid endpoints for use in proposed clinical
      trials, such as those we recently changed in our Androxal® clinical trials
      after our meeting with the FDA;
 ·
                reaching
      agreements on acceptable terms with prospective contract manufacturers for
      manufacturing sufficient quantities of a product candidate;
      and
 ·
                obtaining
      institutional review board approval to conduct a clinical trial at a
      prospective site.
 In
addition, the commencement of clinical trials may be delayed due to insufficient
patient enrollment, which is a function of many factors, including the size of
the patient population, the nature of the protocol, the proximity of patients to
clinical sites, the availability of effective treatments for the relevant
disease, and the eligibility criteria for the clinical trial.
 
 Delays
in the completion of, or the termination of, clinical testing of our current and
potential product candidates could result in increased costs to us, and could
delay or prevent us from generating revenues.
 
 Once a
clinical trial has begun, it may be delayed, suspended or terminated by us or
the FDA, such as we are experiencing with Proellex®, or other regulatory
authorities due to a number of factors, including:
 
 ·
                lack
      of effectiveness of any product candidate during clinical
      trials;
 ·
                side
      effects experienced by trial participants or other safety
      issues;
 ·
                slower
      than expected rates of patient recruitment and enrollment or lower than
      expected patient retention rates;
 ·
                delays
      or inability to manufacture or obtain sufficient quantities of materials
      for use in clinical trials;
 ·
                inadequacy
      of or changes in our manufacturing process or compound
      formulation;
 ·
                delays
      in obtaining regulatory approvals to commence a trial, or “clinical holds”
      or delays requiring suspension or termination of a trial by a regulatory
      agency, such as the FDA, after a trial is
  commenced;
 ·
                changes
      in applicable regulatory policies and
  regulations;
  -13-
 ·
              delays
      in identifying and reaching agreement on acceptable terms with prospective
      clinical trial sites;
  ·
              uncertainty
      regarding proper dosing;
  ·
              unfavorable
      results from on-going clinical trials and preclinical
    studies;
  ·
              failure
      of our clinical research organizations to comply with all regulatory and
      contractual requirements or otherwise fail to perform their services in a
      timely or acceptable manner;
  ·
              scheduling
      conflicts with participating clinicians and clinical
      institutions;
  ·
              failure
      to construct appropriate clinical trial
  protocols;
  ·
              insufficient
      data to support regulatory
approval;
  ·
              inability
      or unwillingness of medical investigators to follow our clinical
      protocols;
  ·
              difficulty
      in maintaining contact with subjects during or after treatment, which may
      result in incomplete data;
  ·
              ongoing
      discussions with the FDA or other regulatory authorities regarding the
      scope or design of our clinical trials; as was the case with our
      development for the initial indication of Androxal® that we are no longer
      pursuing;
  ·
              acceptability
      to the FDA of data obtained from clinical studies conducted in Europe or
      other non-United States jurisdictions;
and
  ·
              lack
      of adequate funding to continue clinical
trials.
  Many of
these factors that may lead to a delay, suspension or termination of clinical
testing of a current or potential product candidate may also ultimately lead to
denial of regulatory approval of a current or potential product
candidate.
 
 If we
experience delays in the completion of, or termination of, clinical testing of
any product candidates in the future, our financial results and the commercial
prospects for our product candidates will be harmed, and our ability to generate
product revenues will be delayed.
 
 Even if we successfully complete
clinical trials for Androxal®and Proellex®, there are no assurances that we
will be able to submit, or obtain FDA approval of, a new drug
application.
 
 There can
be no assurance that, if our clinical trials for Androxal® and Proellex® are
successfully completed, we will be able to submit a new drug application, or
NDA, to the FDA or that any NDA we submit will be approved by the FDA in a
timely manner, if at all.  After completing clinical trials for a
product candidate in humans, a drug dossier is prepared and submitted to the FDA
as an NDA, and includes all preclinical studies and clinical trial data relevant
to the safety and effectiveness of the product at the suggested dose and
duration of use for the proposed indication, in order to allow the FDA to review
such drug dossier and to consider a product candidate for approval for
commercialization in the United States.  If we are unable to submit an
NDA with respect to Androxal® or Proellex®, or if any NDA we submit is not
approved by the FDA, we will be unable to commercialize that
product.  The FDA can and does reject NDAs and requires additional
clinical trials, even when drug candidates achieve favorable results in
large-scale Phase 3 clinical trials.  If we fail to commercialize
Androxal® or Proellex®, we will be unable to generate sufficient revenues to
continue operations or attain profitability and our reputation in the industry
and in the investment community would likely be damaged.
 
 The
results of preclinical studies and completed clinical trials are not necessarily
predictive of future results, and our current drug candidates may not have
favorable results in later studies or trials.
 
 Preclinical
studies and Phase 1 and Phase 2 clinical trials are not primarily designed to
test the efficacy of a drug candidate, but rather to test safety, to study
pharmacokinetics and pharmacodynamics, and to understand the drug candidate’s
side effects at various doses and schedules.  To date, long-term
safety and efficacy have not yet been demonstrated in clinical trials for any of
our product candidates and in fact, our product candidate Proellex® is currently
on clinical hold with the FDA due to safety issues experienced in our Phase 2
and Phase 3 clinical trials for endometriosis and uterine fibroids,
respectively.  Favorable results in our early studies or trials may
not be repeated in later studies or trials, including continuing preclinical
studies and large-scale clinical trials analyzed with more rigorous statistical
methods, and our drug candidates in later-stage trials may fail to show desired
safety and efficacy despite having progressed through earlier-stage
trials.  Unfavorable results from ongoing preclinical studies or
clinical trials could result in delays, modifications or abandonment of ongoing
or future clinical trials. Clinical results are frequently susceptible to
varying interpretations that may delay, limit or prevent regulatory
approvals.  Negative or inconclusive results or adverse medical events
during a clinical trial could cause a clinical trial to be delayed, repeated or
terminated. In addition, we may report top-line data from time to time, which is
based on a preliminary analysis of key efficacy and safety data; such data may
be subject to change following a more comprehensive review of the data related
to the applicable clinical trial.
  -14-
 
 If
commercialized, our product candidates may not be approved for sufficient
governmental or third-party reimbursements, which would adversely affect our
ability to market our product candidates.
 
 In the
United States and elsewhere, sales of pharmaceutical products depend in
significant part on the availability of reimbursement to the consumer from
third-party payers, such as government and private insurance
plans.  Since we have no commercial products, we have not had to face
this issue yet; however, third-party payers are increasingly challenging the
prices charged for medical products and services.  It will be time
consuming and expensive for us to go through the process of seeking
reimbursement from Medicaid, Medicare and private payers for Proellex® and
Androxal®.  Our products may not be considered cost effective, and
coverage and reimbursement may not be available or sufficient to allow us to
sell our products on a competitive and profitable basis.  The passage
of the Medicare Prescription Drug and Modernization Act of 2003 imposes new
requirements for the distribution and pricing of prescription drugs which may
negatively affect the marketing of our potential products.
 
 If
we successfully develop products but those products do not achieve and maintain
market acceptance, our business will not be profitable.
 
 Even if
our product candidates are approved for commercial sale by the FDA or other
regulatory authorities, the degree of market acceptance of any approved product
by physicians, healthcare professionals and third-party payers and our
profitability and growth will depend on a number of factors,
including:
 
 ·
                relative
      convenience and ease of
administration;
 ·
                the
      prevalence and severity of any adverse side
  effects;
 ·
                availability,
      effectiveness and cost of alternative
  treatments;
 ·
                pricing
      and cost effectiveness of our
drugs;
 ·
                effectiveness
      of our or collaborators’ sales and marketing strategies;
    and
 ·
                our
      ability to obtain sufficient third-party insurance coverage or
      reimbursement.
 If
Androxal® does not provide a treatment regime that is more beneficial than
AndroGel, the current standard of care for the treatment of testosterone
deficiency, or otherwise provide patient benefit, it likely will not be accepted
favorably by the market. If any products we may develop do not achieve market
acceptance, then we will not generate sufficient revenue to achieve or maintain
profitability.
 
 In
addition, even if our products achieve market acceptance, we may not be able to
maintain that market acceptance over time if:
 
 ·
                new
      products or technologies are introduced that are more favorably received
      than our products, are more cost effective or render our products
      obsolete;
 ·
                unforeseen
      complications arise with respect to use of our products;
  or
 ·
                sufficient
      third-party insurance coverage or reimbursement does not remain
      available.
 We
currently rely on third-party manufacturers and other third parties for
production of our product candidates, and our dependence on these manufacturers
may impair the development of our product candidates.
 
 Currently,
we do not have the ability internally to manufacture the product candidates that
we need to conduct our clinical trials. We recently terminated our supply
agreement with Gedeon Richter for the manufacturing of Proellex® due to the
clinical hold imposed by the FDA in August 2009.  We have not sought
an alternate manufacturer at this time, although we believe that other
manufacturers are available.
 
 We have a
five year supply agreement with Diagnostic Chemical Limited, doing business as
BioVectra, for the supply of the bulk active pharmaceutical ingredient used in
Androxal®.  We have obtained all of our supply of Androxal® to date
from BioVectra.  We have not faced any material problems with
BioVectra in supplying us with our necessary quantities of Androxal® for our
clinical trials and anticipate utilizing them for commercial production if
Androxal® is approved.  The Company believes that should an issue with
BioVectra arise an alternative supplier could be identified.
  -15-
 
 For the
foreseeable future, we expect to continue to rely on third-party manufacturers
and other third parties to produce, package and store sufficient quantities of
Androxal®, Proellex®, and any future product candidates for use in our clinical
trials.  These product candidates are complicated and expensive to
manufacture.  If our third-party manufacturers fail to deliver our
product candidates for clinical use on a timely basis, with sufficient quality,
and at commercially reasonable prices, we may be required to delay or suspend
clinical trials or otherwise discontinue development and production of our
product candidates.  While we may be able to identify replacement
third-party manufacturers or develop our own manufacturing capabilities for
these product candidates, this process would likely cause a delay in the
availability of our product candidates and an increase in costs.  In
addition, third-party manufacturers may have a limited number of facilities in
which our product candidates can be produced, and any interruption of the
operation of those facilities due to events such as equipment malfunction or
failure or damage to the facility by natural disasters could result in the
cancellation of shipments, loss of product in the manufacturing process or a
shortfall in available product candidates.
 
 Our
product candidates have only been manufactured in small quantities to date, and
we may face delays or complications in manufacturing quantities of our product
candidates in sufficient quantities to meet the demands of late stage clinical
trials and marketing.
 
 We cannot
assure that we will be able to successfully increase the manufacturing capacity
or scale-up manufacturing volume per batch, whether on our own or in reliance on
third-party manufacturers, for any of our product candidates in a timely or
economical manner, or at all.  To date our product candidates have
been manufactured exclusively by third parties in small quantities for
preclinical studies and clinical trials.  Future clinical trials of
our product candidates, if any, will require increased quantities for future
commercial sale in the event that such product candidates are approved by the
FDA or foreign regulatory bodies.  Significant scale-up of
manufacturing requires certain additional developmental work, which the FDA must
review and approve to assure product comparability.  If we or our
third-party manufacturers are unable to successfully increase the manufacturing
capacity for a product candidate, the regulatory approval or commercial launch
of that product candidate may be delayed or there may be a shortage in supply of
that product candidate.
 
 Our
product candidates require precise, high-quality manufacturing which may not be
available at acceptable costs.
 
 Androxal®
and Proellex® are novel compounds that have never been produced in large
scale.  As in the development of any new compound, there are
underlying risks associated with their manufacture.  These risks
include, but are not limited to, cost, process scale-up, process
reproducibility, construction of a suitable process plant, timely availability
of raw materials, as well as regulatory issues associated with the manufacture
of an active pharmaceutical agent.  Any of these risks may prevent us
from successfully developing Androxal® or Proellex®.  Our failure, or
the failure of our third-party manufacturers to achieve and maintain these high
manufacturing standards, including the incidence of manufacturing errors and
reliable product packaging for diverse environmental conditions, could result in
patient injury or death, product recalls or withdrawals, delays or failures in
product testing or delivery, cost overruns or other problems that could
seriously hurt our business.
 
 We
may experience delays in the development of our product candidates if the
third-party manufacturers of our product candidates cannot meet FDA requirements
relating to Good Manufacturing Practices.
 
 Our
third-party manufacturers are required to produce our product candidates under
FDA current Good Manufacturing Practices in order to meet acceptable standards
for our clinical trials.  If such standards change, the ability of
third-party manufacturers to produce our product candidates on the schedule we
require for our clinical trials may be affected.  In addition,
third-party manufacturers may not perform their obligations under their
agreements with us or may discontinue their business before the time required by
us to gain approval for or commercialize our product candidates.  Any
difficulties or delays in the manufacturing and supply of our product candidates
could increase our costs or cause us to lose revenue or postpone or cancel
clinical trials.
 
 The FDA
also requires that we demonstrate structural and functional comparability
between the same drug product produced by different third-party
manufacturers.  Because we may use multiple sources to manufacture
Androxal® and Proellex®, we may need to conduct comparability studies to assess
whether manufacturing changes have affected the product safety, identity, purity
or potency of any commercial product candidate compared to the product candidate
used in clinical trials.  If we are unable to demonstrate
comparability, the FDA could require us to conduct additional clinical trials,
which would be expensive and significantly delay commercialization of our
product candidates.
  -16-
 
 We
rely on third parties to conduct clinical trials for our product candidates, and
their failure to timely and properly perform their obligations may result in
costs and delays that prevent us from obtaining regulatory approval or
successfully commercializing our product candidates.
 
 We rely
on independent contractors, including researchers at clinical research
organizations, or CROs, and universities, in certain areas that are particularly
relevant to our research and product development plans, such as the conduct of
clinical trials.  The competition for these relationships is intense,
and we may not be able to maintain our relationships with them on acceptable
terms.  Independent contractors generally may terminate their
engagements at any time, subject to notice.  As a result, we can
control their activities only within certain limits, and they will devote only a
certain amount of their time conducting research on and trials of our product
candidates and assisting in developing them.  If they do not
successfully carry out their duties under their agreements with us, fail to
inform us if these trials fail to comply with clinical trial protocols, or fail
to meet expected deadlines, our clinical trials may need to be extended, delayed
or terminated.  We may not be able to enter into replacement
arrangements without undue delays or excessive expenditures.  If there
are delays in testing or regulatory approvals as a result of the failure to
perform by our independent contractors or other outside parties, our drug
development costs will increase and we may not be able to attain regulatory
approval for or successfully commercialize our product
candidates.
 
 In
addition, we have no control over the financial health of our independent
contractors.  The current economic downturn may contribute to the
likelihood of the financial failure of one or more of our independent
contractors.  Several of our independent contractors are in possession
of valuable and sensitive information relating to the safety and efficacy of our
product candidates, and several others provide services to a significant
percentage of the patients enrolled in the respective clinical trials in which
such independent contractors participate.  Should one or more of these
independent contractors become insolvent, or otherwise are not able to continue
to provide services to us, as a result of the current economic downturn or
otherwise, the clinical trial in which such contractor participates could become
significantly delayed and we may be adversely affected as a result of the delays
and additional expenses associated with such event.
 
 Our
liability insurance may neither provide adequate coverage nor may it always be
available on favorable terms or at all.
 
 Neither
Androxal® nor Proellex® has been approved for commercial
sale.  However, the current and future use of our product candidates
by us and potential corporate collaborators in clinical trials, and the sale of
any approved products in the future, may expose us to liability
claims.  These claims might be made directly by consumers or
healthcare providers or indirectly by pharmaceutical companies, potential
corporate collaborators or others selling such products.  We may
experience financial losses in the future due to product liability
claims.  We have obtained limited general commercial liability
insurance coverage for our clinical trials.  We intend to expand our
insurance coverage to include the sale of commercial products if we obtain
marketing approval for any of our product candidates.  However, we may
not be able to maintain insurance coverage at a reasonable cost or in sufficient
amounts to protect us against losses.  If a successful product
liability claim or series of claims is brought against us for uninsured
liabilities or for liabilities in excess of our insurance limits, our assets may
not be sufficient to cover such claims and our business operations could be
impaired.
 
 We
face significant competition with many companies with substantially greater
resources than we have and other possible advantages.
 
 We are
engaged in biopharmaceutical product development, an industry that is
characterized by extensive research efforts and rapid technological
progress.  The biopharmaceutical industry is also highly
competitive.  Our success will depend on our ability to acquire,
develop and commercialize products and our ability to establish and maintain
markets for any products for which we receive marketing
approval.  Potential competitors in North America, Europe and
elsewhere include major pharmaceutical companies, specialty pharmaceutical
companies and biotechnology firms, universities and other research institutions
and government agencies. Many of our competitors have substantially greater
research and development and regulatory capabilities and experience, and
substantially greater management, manufacturing, distribution, marketing and
financial resources, than we do.  Accordingly, our competitors
may:
 
 ·
              develop
      or license products or other novel technologies that are more effective,
      safer or less costly than the product candidates that we are
      developing;
  ·
              obtain
      regulatory approval for products before we do;
  or
  ·
              commit
      more resources than we can to developing, marketing and selling competing
      products.
 
 Our main
competitors for the treatment of testosterone deficiency are the testosterone
replacement therapies currently being marketed.  The current standard
of care is AndroGel, a topical gel for the replacement of testosterone developed
by Solvay Pharmaceuticals.  Solvay is a much larger company than we
are, with greater resources and marketing ability.  Androxal® would
also compete with other forms of testosterone replacement therapies such as oral
treatments, patches, injectables and a tablet applied to the upper
gum.  There is another topical gel currently marketed by Auxilium
Pharmaceuticals called Testim®, and a transdermal patch marketed by Watson
Pharmaceuticals called AndroDerm.  There can be no assurance that our
product candidates will be more successful than competitive
products.  In addition, other potential competitors may be developing
testosterone therapies similar to ours.
  -17-
 
 The main
therapeutic products competitive with Proellex® for the treatment of uterine
fibroids and endometriosis are GnRH agonists, including Lupron and the use of
approved progestin-based contraceptives for the treatment of
endometriosis.  In addition, surgical treatment of both uterine
fibroids and endometriosis would compete with Proellex®, if approved, by
removing uterine fibroids and by removing misplaced tissue in women with
endometriosis.  Furthermore, Neurocrine Biosciences Inc. is developing
a GnRH antagonist for the treatment of endometriosis.
 
 We
are thinly staffed and highly dependent on a limited number of management
persons and key personnel, and if we lose these members of our team or are
unable to attract and retain additional qualified personnel, our future growth
and ability to compete would suffer.
 
 The
competition for qualified personnel in the biopharmaceutical field is intense,
and our future success depends upon our ability to attract, retain and motivate
highly skilled scientific, technical and managerial employees.  We
have only 5 full-time employees at the present time, including Joseph S.
Podolski.  We are highly dependent on our professional staff for the
management of our company and the development of our
technologies.  Mr. Podolski has an employment agreement with
us.  There can be no assurance that any of these employees will remain
with us through development of our current product candidates.  We do
not maintain key person life insurance on any of our directors, officers or
employees.  The loss of the services of any of our employees could
delay or curtail our research and product development
efforts.
 
 Our
plan to use collaborations to leverage our capabilities may not be
successful.
 
 As part
of our business strategy, we intend to enter into collaboration arrangements
with strategic partners to develop and commercialize our product
candidates.  For our collaboration efforts to be successful, we must
identify partners whose competencies complement ours.  We must also
successfully enter into collaboration agreements with them on terms attractive
to us and integrate and coordinate their resources and capabilities with our
own.  We may be unsuccessful in entering into collaboration agreements
with acceptable partners or negotiating favorable terms in these
agreements.  In addition, we may face a disadvantage in seeking to
enter into or negotiating collaborations with potential partners because other
potential collaborators may have greater management and financial resources than
we do.  Also, we may be unsuccessful in integrating the resources or
capabilities of these collaborators.  In addition, our collaborators
may prove difficult to work with or less skilled than we originally
expected.  If we are unsuccessful in our collaborative efforts, our
ability to develop and market product candidates could be severely
limited.
 
 Our
rights agreement and certain provisions in our charter documents and Delaware
law could delay or prevent a change in management or a takeover attempt that you
may consider to be in your best interest.
 
 We have
adopted certain anti-takeover provisions, including a rights
agreement.  The rights agreement will cause substantial dilution to
any person who attempts to acquire us in a manner or on terms not approved by
our board of directors.
 
 The
rights agreement and certain provisions in our certificate of incorporation and
bylaws and under Delaware law could delay or prevent the removal of directors
and other management and could make more difficult a merger, tender offer or
proxy contest involving us that you may consider to be in your best
interest.  For example, these provisions:
 
 ·
                allow
      our board of directors to issue preferred stock without stockholder
      approval;
 ·
                limit
      who can call a special meeting of stockholders;
  and
 ·
                establish
      advance notice requirements for nomination for election to the board of
      directors or for proposing matters to be acted upon at stockholder
      meetings.
 Risks Relating to
Our Intellectual Property
 
 We
licensed our rights to Proellex® from NIH and our inability to fulfill our
commitments and obligations under such license may result in forfeiture of our
rights.
 
 Our
rights to Proellex® are licensed exclusively to us from NIH under a license
agreement.  This license agreement contains numerous detailed
performance obligations, with time sensitive dates for compliance, relating to
clinical development and commercialization activities required by us or our
designated third-party providers, as well as additional financial milestones and
royalties.  Failure to achieve the benchmarks specified in the
commercial development plan attached to the license agreement or meet payment
obligations could result in termination of the license agreement and the loss of
our rights to develop and commercialize Proellex®.  We periodically
update the commercial development plan as such plans evolve.  There
can be no assurance that we will be able to meet any or all of the performance
objectives in the future on a timely basis or at all, or that, if we fail to
meet any of such objectives, NIH will agree to revised
objectives.  NIH has the ability to terminate the agreement for an
uncured material breach of the agreement, if we made a false statement or
willful omission in our license application, if we do not keep Proellex®
reasonably available to the public after commercial launch, if we cannot
reasonably satisfy unmet health and safety needs, or if we cannot reasonably
justify a failure to comply with the domestic production requirement unless such
requirement has been waived.
  -18-
 
 There is a third party individual
patent holder that claims priority over our patent application for
Androxal®.
 
 A third
party individual holds two issued patents related to the use of an anti-estrogen
such as clomiphene citrate and others for use in the treatment of androgen
deficiency and disorders related thereto.  In our prior filings with
the SEC, we have described our request to the U.S. Patent and Trademark Office,
or PTO, for re-examination of one of these patents based on prior
art.  The third party amended the claims in the re-examination
proceedings, which led the PTO to determine that the amended claims are
patentable in view of those publications under consideration and a
re-examination certificate was issued.  However, we believe that the
amended claims are invalid based on additional prior art publications, and our
request for re-examination by the PTO in light of a number of these additional
publications and other publications cited by the PTO, has been granted. All of
the claims have been finally rejected in the re-examination and the patent
holder has appealed the rejections to the PTO Board of Patent Appeals and
Interferences (“the Board”).  A decision has been rendered by the
Board affirming the rejection of all of the claims.  The patent holder
has filed a request for rehearing.  If the Board maintains the
rejections on rehearing or the request for rehearing is denied, the patent
holder will have the opportunity to appeal the rejections to the United States
Court of Appeals for the Federal Circuit.  We also believe that the
second of these two patents is invalid in view of published prior art not
considered by the PTO.  Nevertheless, there is no assurance that
either patent will ultimately be found invalid over the prior art. If such
patents are not invalidated by the PTO we may be required to obtain a license
from the holder of such patents in order to develop Androxal® further or
attempts may be made to undertake further legal action to invalidate such
patents.  If such licenses were not available on acceptable terms, or
at all, we may not be able to successfully commercialize or out-license
Androxal®.
 
 We
cannot assure that our manufacture, use or sale of our product candidates will
not infringe on the patent rights of others.
 
 There can
be no assurance that the manufacture, use or sale of any of our product
candidates will not infringe the patent rights of others.  We may be
unable to avoid infringement of the patent rights of others and may be required
to seek a license, defend an infringement action or challenge the validity of
the patents in court.  There can be no assurance that a license to the
allegedly infringed patents will be available to us on terms and conditions
acceptable to us, if at all, or that we will prevail in any patent
litigation.  Patent litigation is extremely costly and time-consuming,
and there can be no assurance that we will have sufficient resources to defend
any possible litigation related to such infringement.  If we do not
obtain a license on acceptable terms under such patents, or are found liable for
infringement, or are not able to have such patents declared invalid, we may be
liable for significant money damages, may encounter significant delays in
bringing our product candidates to market, or may be precluded from
participating in the manufacture, use or sale of any such product candidates,
any of which would materially and adversely affect our
business.
 
 A
dispute regarding the infringement or misappropriation of our proprietary rights
or the proprietary rights of others could be costly and result in delays in our
research and development activities.
 
 Our
commercial success also depends upon our ability to develop and manufacture our
product candidates and market and sell drugs, if any, and conduct our research
and development activities without infringing or misappropriating the
proprietary rights of others.  We may be exposed to future litigation
by others based on claims that our product candidates, technologies or
activities infringe the intellectual property rights of others. Numerous United
States and foreign issued patents and pending patent applications owned by
others also exist in the therapeutic areas in, and for the therapeutic targets
for, which we are developing drugs.  These could materially affect our
ability to develop our product candidates or sell drugs, and our activities, or
those of our licensor or future collaborators, could be determined to infringe
these patents.  Because patent applications can take many years to
issue, there may be currently pending applications, unknown to us, which may
later result in issued patents that our drug candidates or technologies may
infringe.  There also may be existing patents, of which we are not
aware, that our product candidates or technologies may infringe. Further, there
may be issued patents and pending patent applications in fields relevant to our
business, of which we are or may become aware, that we believe we do not
infringe or that we believe are invalid or relate to immaterial portions of our
overall drug discovery and development efforts.  We cannot assure you
that others holding any of these patents or patent applications will not assert
infringement claims against us for damages or seeking to enjoin our
activities.  We also cannot assure you that, in the event of
litigation, we will be able to successfully assert any belief we may have as to
non-infringement, invalidity or immateriality, or that any infringement claims
will be resolved in our favor.
 
 In
addition, others may infringe or misappropriate our proprietary rights, and we
may have to institute costly legal action to protect our intellectual property
rights.  We may not be able to afford the costs of enforcing or
defending our intellectual property rights against others.  There
could also be significant litigation and other administrative proceedings in our
industry that affect us regarding patent and other intellectual property
rights.  Any legal action or administrative action against us, or our
collaborators, claiming damages or seeking to enjoin commercial activities
relating to our drug discovery and development programs could:
  -19-
 
 ·
                require
      us, or potential collaborators, to obtain a license to continue to use,
      manufacture or market the affected drugs, methods or processes, which may
      not be available on commercially reasonable terms, if at
    all;
 ·
                prevent
      us from importing, making, using, selling or offering to sell the subject
      matter claimed in patents held by others and subject to potential
      liability for damages; or
 ·
                consume
      a substantial portion of our managerial, scientific and financial
      resources; or be costly, regardless of the
  outcome.
 Furthermore,
because of the substantial amount of pre-trial documents and witness discovery
required in connection with intellectual property litigation, there is risk that
some of our confidential information could be compromised by disclosure during
this type of litigation.  In addition, during the course of this kind
of litigation, there could be public announcements of the results of hearings,
motions or other interim proceedings or developments.  If securities
analysts or investors perceive these results to be negative, it could have a
substantial adverse effect on the trading price of our common
stock.
 
 We
face substantial uncertainty in our ability to protect our patents and
proprietary technology.
 
 Our
ability to commercialize our products will depend, in part, on our or our
licensor’s ability to obtain patents, to enforce those patents and preserve
trade secrets, and to operate without infringing on the proprietary rights of
others.  The patent positions of biopharmaceutical companies are
highly uncertain and involve complex legal and factual
questions.  There can be no assurance that:
 
 ·
                Patent
      applications for and relating to our products candidates, Androxal® and
      Proellex®, will result in issued
patents;
 ·
                Patent
      protection will be secured for any particular
  technology;
 ·
                Any
      patents that have been or may be issued to us, such as our pending patent
      applications relating to Proellex® or Androxal®, or any patents that have
      been or may be issued to our licensor, such as the patent(s) and
      application(s) underlying our Proellex® compound, when issued, will be
      valid and enforceable;
 ·
                any
      patents will provide meaningful protection to
  us;
 ·
                others
      will not be able to design around the patents;
  or
 ·
                our
      patents will provide a competitive advantage or have commercial
      application.
 The
failure to obtain and maintain adequate patent protection would have a material
adverse effect on us and may adversely affect our ability to enter into, or
affect the terms of, any arrangement for the marketing of any
product.
 
 We
cannot assure that our patents will not be challenged by
others.
 
 There can
be no assurance that patents owned by or licensed to us will not be challenged
by others.  We could incur substantial costs in proceedings, including
interference proceedings before the PTO and comparable proceedings before
similar agencies in other countries in connection with any claims that may arise
in the future.  These proceedings could result in adverse decisions
about the patentability of our or our licensor’s inventions and products, as
well as about the enforceability, validity or scope of protection afforded by
the patents.  Any adverse decisions about the patentability of our
product candidates could cause us to either lose rights to develop and
commercialize our product candidates or to license such rights at substantial
cost to us.  In addition, even if we were successful in such
proceedings, the cost and delay of such proceedings would most likely have a
material adverse effect on our business.
 
 Confidentiality
agreements with employees and others may not adequately prevent disclosure of
trade secrets and other proprietary information, may not adequately protect our
intellectual property, and will not prevent third parties from independently
discovering technology similar to or in competition with our intellectual
property.
 
 We rely
on trade secrets and other unpatented proprietary information in our product
development activities.  To the extent we rely on trade secrets and
unpatented know-how to maintain our competitive technological position, there
can be no assurance that others may not independently develop the same or
similar technologies.  We seek to protect trade secrets and
proprietary knowledge, in part, through confidentiality agreements with our
employees, consultants, advisors, collaborators and
contractors.  Nevertheless, these agreements may not effectively
prevent disclosure of our confidential information and may not provide us with
an adequate remedy in the event of unauthorized disclosure of such
information.  If our employees, scientific consultants, advisors,
collaborators or contractors develop inventions or processes independently that
may be applicable to our technologies, product candidates or products, disputes
may arise about ownership of proprietary rights to those inventions and
processes.  Such inventions and processes will not necessarily become
our property, but may remain the property of those persons or their
employers.  Protracted and costly litigation could be necessary to
enforce and determine the scope of our proprietary rights.  If we fail
to obtain or maintain trade secret protection for any reason, the competition we
face could increase, reducing our potential revenues and adversely affecting our
ability to attain or maintain profitability.
  -20-
 
 We
cannot protect our intellectual property rights throughout the
world.
 
 Filing,
prosecuting, and defending patents on all of our drug discovery technologies and
all of our potential drug candidates throughout the world would be prohibitively
expensive.  Competitors may use our technologies to develop their own
drugs in jurisdictions where we have not obtained patent
protection.  These drugs may compete with our drugs, if any, and may
not be covered by any of our patent claims or other intellectual property
rights.  The laws of some foreign countries do not protect
intellectual property rights to the same extent as the laws of the United
States, and many companies have encountered significant problems in protecting
and defending such rights in foreign jurisdictions.  Many countries,
including certain countries in Europe, have compulsory licensing laws under
which a patent owner may be compelled to grant licenses to third parties (for
example, the patent owner has failed to “work” the invention in that country or
the third party has patented improvements).  In addition, many
countries limit the enforceability of patents against government agencies or
government contractors.  In these countries, the patent owner may have
limited remedies, which could materially diminish the value of the
patent.  Compulsory licensing of life-saving drugs is also becoming
increasingly popular in developing countries either through direct legislation
or international initiatives.  Such compulsory licenses could be
extended to include some of our drug candidates, which could limit our potential
revenue opportunities.  Moreover, the legal systems of certain
countries, particularly certain developing countries, do not favor the
aggressive enforcement of patents and other intellectual property protection,
particularly those relating to biotechnology and/or pharmaceuticals, which makes
it difficult for us to stop the infringement of our
patents.  Proceedings to enforce our patent rights in foreign
jurisdictions could result in substantial cost and divert our efforts and
attention from other aspects of our business.
 
 ITEM
      1B.
              UNRESOLVED
      STAFF COMMENTS
  None.
  ITEM
      2.
              PROPERTIES
  We lease
our current property under a lease agreement that expires in June
2010.  This lease is for approximately 7,100 square feet of our
laboratory and office space located in The Woodlands, Texas.  We do
not own or lease any other property and believe that our current facilities are
sufficient for our needs for the foreseeable future.
  ITEM
      3.
              LEGAL
      PROCEEDINGS
  On August
7, 2009, R.M. Berry filed a putative class action lawsuit naming the Company,
Joseph Podolski, Paul Lammers, and Louis Ploth, Jr. as
defendants.  The lawsuit is pending in the United States District
Court for the Southern District of Texas, Houston Division.  The
lawsuit, styled R.M. Berry, on Behalf of Himself and all Others Similarly
Situated v. Repros Therapeutics, Inc., Joseph Podolski, Paul Lammers, and Louis
Ploth, Jr., alleges that the defendants made certain misleading statements
related to the Company’s Proellex® drug.  Among other claims, the
lawsuit contends that the defendants misrepresented the side effects of the drug
related to liver function, and the risk that these side effects could cause a
suspension of clinical trials of Proellex®. The lawsuit seeks to establish a
class of shareholders allegedly harmed by the misleading statements, and asserts
causes of action under the Securities Exchange Act of 1934.  On August
14, 2009, a lawsuit making similar allegations and naming the same defendants
was also filed in the United States District Court for the Southern District of
Texas.  This suit is styled Josephine Medina, Individually and On
Behalf of all Others Similarly Situated v. Repros Therapeutics, Inc., Joseph
Podolski, Paul Lammers, and Louis Ploth, Jr.  On September 25, 2009, a
lawsuit also making allegations similar to those in the Berry action, and naming
the same defendants, was filed in the United States District Court for the
Southern District of Texas.  That lawsuit is styled Shane Simpson,
Paul Frank and Clayton Scobie, on Behalf of Themselves and all Others Similarly
Situated v. Repros Therapeutics, Inc., Joseph Podolski, Paul Lammers, and Louis
Ploth, Jr.    The lawsuits have now been consolidated, and lead
plaintiffs appointed.  On January 27, 2010, the lead plaintiffs filed
a Consolidated Class Action Complaint styled In re Repros Therapeutics, Inc.
Securities Litigation, Civil Action No. 09 Civ. 2530 (VDG).  The
lawsuit names Repros Therapeutics, Inc., Joseph Podolski, Paul Lammers, and
Louis Ploth, Jr. as defendants.  The allegations in the Consolidated
Class Action Complaint are substantially the same as those contained in the
prior complaints, and focus on the claim that the defendants deliberately
withheld information concerning the negative side-effects of Proellex® related
to liver function.  Plaintiffs seek to establish a class action for
all persons who “purchased or otherwise acquired Repros common stock between
July 1, 2009, and August 2, 2009.”    No discovery has yet
occurred in the matter, and defendants intend to file a motion to dismiss the
Consolidated Class Action Complaint.  An estimate of the possible loss
or range of losses in connection with the lawsuits cannot be made at this
time.
  -21-
 
 On August
10, 2009, a vendor of the Company filed a lawsuit naming the Company as a
defendant.  The lawsuit claimed the Company owed it $147,000 in
accordance with the terms of its agreement with the Company.   On
August 20, 2009, another vendor of the Company filed a lawsuit naming the
Company as a defendant.  The lawsuit claimed the Company owed it
$443,600 in accordance with the terms of its agreement with the
Company.   On October 29, 2009, the Company entered into a Master
Settlement Agreement and Releases with certain trade creditors, pursuant to
which we issued 5,361,194 shares of our common stock, at $1.10 per share, and
paid approximately $2.77 million in cash to such creditors as payment in full
for our then outstanding liabilities and for the release of these claims held by
and the dismissal of the litigation commenced by these creditors against the
Company as described above.
 
 On
October 2, 2009, a vendor of the Company filed a lawsuit naming the Company as a
defendant.  The lawsuit claimed the Company owed it $294,718 in
accordance with the terms of its agreement with the Company.  On
December 1, 2009, the Company entered into a confidential settlement agreement
with this vendor which resolved the lawsuit.
 
 On
November 13, 2009, a vendor filed a lawsuit naming the company as a
defendant.  The lawsuit claimed the Company owed it $93,698 in
accordance with the terms of its agreement with the Company.   On
February 1, 2010, the Company entered into a confidential settlement agreement
with this vendor which resolved the lawsuit.
 
 On March
1, 2010, we were served with a lawsuit where we were named as a co-defendant
along with one of our clinical regulatory service providers (“CRO”) relating to
the Proellex® clinical trial study.  The lawsuit was filed in the
State of Tennessee, 30th
Judicial District Chancery Court at Memphis by an investigator and claims that
the CRO did not pay it amounts owing to it relating to the
Proellex® study.  We did not engage the investigator and under
our agreement with the CRO, we believe the CRO is responsible for any such
costs or damages regarding such lawsuit.  The amount claimed is
approximately $175,000.  An estimate of the possible costs or expenses
to defend ourselves in this matter or risk of exposure under the litigation
cannot be made at this time.  Pursuant to the October Settlement
Agreement, such CRO, on behalf of itself and its agents, released us from all
claims which could be asserted by them against us.  We believe such
release covers the claims set forth in this lawsuit.
  ITEM
      4.
              (REMOVED
      AND RESERVED)
 
 PART
II
  ITEM
      5.
              MARKET
      FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES
  Our
common stock is quoted on The Nasdaq Capital Market under the symbol
"RPRX."  The following table shows the high and low sale prices per
share of common stock, as reported by the Nasdaq Stock Market, during the
periods presented.
  Price RangeHigh
                            
                            
                            Low2008First
      Quarter
                            
                            $
                            10.20
                            
                            
                            $
                            8.11Second
      Quarter
                            
                            
                            11.09
                            
                            
                            
                            8.21Third
      Quarter
                            
                            
                            10.00
                            
                            
                            
                            5.31Fourth
      Quarter
                            
                            
                            11.25
                            
                            
                            
                            5.682009First
      Quarter
                            
                            $
                            13.94
                            
                            
                            $
                            5.84Second
      Quarter
                            
                            
                            8.30
                            
                            
                            
                            5.70Third
      Quarter
                            
                            
                            6.01
                            
                            
                            
                            0.65Fourth
      Quarter
                            
                            
                            2.48
                            
                            
                            
                            0.642010First
      Quarter (January 2nd through March 5th)
                            
                            $
                            1.22
                            
                            
                            $
                            0.68
  All of
the foregoing prices reflect interdealer quotations, without retail mark-up,
markdowns or commissions and may not necessarily represent actual transactions
in the common stock.
  On March
5, 2010, the last sale price of our common stock, as reported by the Nasdaq
Capital Market, was $0.80 per share.  On March 5, 2010, there were
approximately 177 holders of record and approximately 3,750 beneficial holders
of our common stock.
  -22-
  On
January 12, 2010, we received a letter from the Nasdaq Hearings Panel (the
“Panel”) stating that our shares would be transferred from the Nasdaq Global
Market to the Nasdaq Capital Market, effective at the open of the trading
session on Thursday, January 14, 2010.   As previously announced, we
have not been in compliance with Marketplace Rules 5450(a)(1) and 5450(b)(2)(A)
and (C), requiring (i) a minimum $1.00 bid price per share, (ii) a minimum $50
million market value of listed securities and (iii) a minimum market value of
publicly held shares of $15 million, respectively, for continued inclusion on
the Nasdaq Global Market. The Panel’s determination to transfer our shares to
the Nasdaq Capital Market follows our hearing before the Panel on December 3,
2009.  If we cannot demonstrate compliance with all the requirements
for continued listing on the Nasdaq Capital Market, including the requirement to
maintain a minimum bid price of $1.00 per share by June 14, 2010 and maintain
either stockholders’ equity of at least $2.5 million or a market value of listed
securities of $35 million, by May 5, 2010, our shares will be subject to
immediate delisting.
  Dividends
  General
  We have
never paid dividends on our common stock.  We currently intend to
retain earnings, if any, to support the development of our business and do not
anticipate paying dividends in the foreseeable future.  Payment of
future dividends, if any, will be at the discretion of our board of directors
after taking into account various factors, including our financial condition,
operating results, current and anticipated cash needs and plans for
expansion.
  Rights
Plan
  We are
party to a rights agreement, as amended, pursuant to which a dividend consisting
of one preferred stock purchase right was distributed for each share of our
common stock held as of the close of business on September 13, 1999, and to each
share of common stock issued thereafter until the earlier of (i) the
distribution date which is defined in the rights plan, (ii) the redemption date
which is defined in the rights plan or (iii) September 13, 2010.  The
rights plan is designed to deter coercive takeover tactics and to prevent an
acquirer from gaining control of us without offering fair value to our
stockholders.  The rights will expire on September 13, 2010, subject
to earlier redemption or exchange as provided in the rights
plan.  Each right entitles its holder to purchase from us one
one-hundredth of a share of a new series of Series One Junior Participating
Preferred Stock at a price of $20.00 per one one-hundredth of a share, subject
to adjustment.  The rights are generally exercisable only if a person
acquires beneficial ownership of 20% or more of our outstanding common
stock.
  A
complete description of the rights, the rights plan with Computershare Trust
Company, N.A., as rights agent, and the Series One Junior Participating
Preferred Stock is hereby incorporated by reference from the information
appearing under the caption "Item 1. Description of the Registrant's Securities
to be Registered" contained in the Registration Statement on Form 8-A filed on
September 3, 1999, and as amended by amendments to such Registration Statement
on Form 8-A/A filed on September 11, 2002, October 31, 2002, June 30, 2005,
January 10, 2008 and October 10, 2008.
  -23-
  Performance
Graph
  THIS
INFORMATION IS REQUIRED BY ITEM 201(E) OF REGULATION S-K.  SUCH
INFORMATION SHALL NOT BE DEEMED TO BE “FILED” OR INCORPORATED BY REFERENCE IN
FUTURE FILINGS WITH THE SEC, OR SUBJECT TO THE LIABILITIES OF SECTION 18 OF THE
SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THAT WE SPECIFICALLY
INCORPORATE IT BY REFERENCE INTO A DOCUMENT FILED UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES EXCHANGE ACT OF 1934.
  
  12/04
                  
                  
                  
                  12/05
                  
                  
                  
                  12/06
                  
                  
                  
                  12/07
                  
                  
                  
                  12/08
                  
                  
                  
                  12/09Repros
      Therapeutics Inc.
                  
                  
                  100.00
                  
                  
                  
                  118.01
                  
                  
                  
                  291.22
                  
                  
                  
                  215.24
                  
                  
                  
                  242.96
                  
                  
                  
                  18.40NASDAQ
      Composite
                  
                  
                  100.00
                  
                  
                  
                  101.41
                  
                  
                  
                  114.05
                  
                  
                  
                  123.94
                  
                  
                  
                  73.43
                  
                  
                  
                  105.89NASDAQ
      Pharmaceutical
                  
                  
                  100.00
                  
                  
                  
                  102.39
                  
                  
                  
                  105.36
                  
                  
                  
                  100.01
                  
                  
                  
                  92.37
                  
                  
                  
                  98.60
  -24-


ITEM
      6.
              SELECTED
      CONSOLIDATED FINANCIAL DATA




The
statement of operations data for the years ended December 31, 2009, 2008 and
2007, and the balance sheet data as of December 31, 2009 and 2008, have been
derived from our financial statements, included elsewhere in this Annual Report
on Form 10-K.  The statement of operations data for the years ended
December 31, 2006 and 2005, and the balance sheet data as of December 31, 2007,
2006 and 2005 have been derived from our financial statements not included in
this annual report on Form 10-K.  Our historical results are not
necessarily indicative of results to be expected for any future
period.  The data presented below have been derived from financial
statements that have been prepared in accordance with accounting principles
generally accepted in the United States and should be read with our financial
statements, including notes, and with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this annual
report on Form 10-K.




STATEMENTS
OF OPERATIONS DATA:




2009
                  
                  
                  2008
                  
                  
                  2007
                  
                  
                  2006
                  
                  
                  2005Revenues
      and Other Income:Interest
      income
                  
                  $
                  4
                  
                  
                  $
                  433
                  
                  
                  $
                  1,508
                  
                  
                  $
                  596
                  
                  
                  $
                  630Research
      and development grants
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  4Other
      income
                  
                  
                  547
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —Total
      revenues
                  
                  
                  551
                  
                  
                  
                  433
                  
                  
                  
                  1,508
                  
                  
                  
                  596
                  
                  
                  
                  634Expenses:Research
      and development
                  
                  
                  23,062
                  
                  
                  
                  22,575
                  
                  
                  
                  12,420
                  
                  
                  
                  11,912
                  
                  
                  
                  6,101General
      and administrative
                  
                  
                  4,723
                  
                  
                  
                  3,060
                  
                  
                  
                  2,788
                  
                  
                  
                  2,879
                  
                  
                  
                  1,924Total
      expenses
                  
                  
                  27,785
                  
                  
                  
                  25,635
                  
                  
                  
                  15,208
                  
                  
                  
                  14,791
                  
                  
                  
                  8,025Net
      loss
                  
                  $
                  (27,234
                  )
                  
                  $
                  (25,202
                  )
                  
                  $
                  (13,700
                  )
                  
                  $
                  (14,195
                  )
                  
                  $
                  (7,391
                  )Net
      loss per share – basic and diluted (1)
                  
                  $
                  (1.57
                  )
                  
                  $
                  (1.88
                  )
                  
                  $
                  (1.09
                  )
                  
                  $
                  (1.40
                  )
                  
                  $
                  (0.77
                  )Shares
      used in loss per share calculation
                  
                  
                  17,344
                  
                  
                  
                  13,372
                  
                  
                  
                  12,524
                  
                  
                  
                  10,147
                  
                  
                  
                  9,647BALANCE
      SHEET DATA:Cash,
      cash equivalents and marketable securities
                  
                  $
                  1,886
                  
                  
                  $
                  19,470
                  
                  
                  $
                  25,903
                  
                  
                  $
                  6,736
                  
                  
                  $
                  16,832Total
      assets
                  
                  
                  2,960
                  
                  
                  
                  22,603
                  
                  
                  
                  27,599
                  
                  
                  
                  7,849
                  
                  
                  
                  17,682Deficit
      accumulated during the development stage
                  
                  
                  (174,476
                  )
                  
                  
                  (147,242
                  )
                  
                  
                  (122,040
                  )
                  
                  
                  (108,340
                  )
                  
                  
                  (94,145
                  )Total
      stockholders' equity
                  
                  $
                  562
                  
                  
                  $
                  15,614
                  
                  
                  $
                  24,060
                  
                  
                  $
                  3,790
                  
                  
                  $
                  16,955





(1)
            See
      "Note 2. Summary of Significant Accounting Policies" of Notes to
      Consolidated Financial Statements for a description of the computation of
      loss per share.




-25-


ITEM
      7.
            MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS




The
following management's discussion and analysis should be read in conjunction
with our historical consolidated financial statements and their notes included
elsewhere in this Form 10-K. This discussion contains forward-looking statements
that reflect our current views with respect to future events and financial
performance. Our actual results may differ materially from those anticipated in
these forward-looking statements as a result of certain factors, such as those
set forth under "Risk Factors" and elsewhere in this Form 10-K.




Overview




Repros
Therapeutics Inc. ("the Company", "RPRX," “Repros”, or "we," "us" or "our") was
organized on August 20, 1987.  We are a development stage
biopharmaceutical company focusedon the development of oral small
molecule drugs for major unmet medical needs.




Our
current product pipeline (with the respective status of development) consists of
the following:




Androxal®(male reproductive
health):




·
            Completed
      Phase 2b proof-of-concept trial in men being treated for low testosterone
      levels who want to improve or maintain their fertility and/or sperm number
      and function; and




·
            Our
      Investigational New Drug Application, or IND, for the study of oral
      Androxal® in the treatment of hypogonadal men with type 2 diabetes was
      accepted by the FDA and, thus, we may initiate a Phase 2a
      trial.




Proellex®(female reproductive
health):  All ongoing clinical trial activities for Proellex® have
been put on hold by the FDA.




Any
further development efforts for either of our product candidates is dependent on
our ability to raise additional capital.  We also continue to maintain
our patent portfolio of our phentolamine-based products for the treatment of
sexual dysfunction and try to create value from these assets in various ways
which includes product out-licensing.




Our
primary product candidate, Androxal® (thetransisomer of clomiphene),is a
single isomer of clomiphene citrate and is an orally active proprietary small
molecule compound.  We are developing Androxal® for men of
reproductive age with low testosterone levels who want to improve or maintain
their fertility and/or sperm function while being treated for low
testosterone.  In addition, we submitted a new IND to the Division of
Metabolic and Endocrine Products, or DMEP, for the investigation of Androxal® as
a potential treatment for type 2 diabetes.  On February 1, 2010, we
received confirmation from the DMEP that our new IND was accepted and, as a
result, we may initiate a Phase 2a trial.  This new indication
replaces our previously announced plan to develop Androxal® in men with
adult-onset idiopathic hypogonadotrophic hypogonadism, or AIHH, with concomitant
plasma glucose and lipid elevations, all of which are components of Metabolic
Syndrome.




During
the second quarter of 2008, we initiated a 24-patient Phase 2b proof-of-concept
clinical trial (ZA-201) for a new indication in which we are monitoring the
effects of Androxal® on male fertility and testicular function in patients being
treated for low testosterone as compared to Testim®, a popular marketed topical
testosterone medication.  On October 6, 2009 we announced that
Androxal® was able to maintain sperm counts in men being treated for their low
testosterone levels. Testim® resulted in suppressed sperm levels while men were
being treated with that topical gel. We requested a meeting with the FDA to
discuss such results.  In correspondence leading up to such meeting,
the FDA stated that it could not agree with such proposed indication for
Androxal®at that timebecause the patient population had not
been adequately defined and that it was not aware of certain data to support our
position.On January 25, 2010, we participated in
a teleconference with the FDA relating to the future clinical path for
Androxal®.  During such teleconference,
the FDA requested that we (i) propose a label that better defines the population
of individuals for whom we believe will benefit from the use of
Androxal®and (ii) conduct a literature review of
the incidence of infertility associated with the use of exogenous testosterone
as supportive of our data.  The FDA suggested that if it finds the
submission appropriate, no additional clarifying meeting regarding this
indication for Androxal®may be required.  On February
8, 2010, weannounced that
wesubmitted the requested
information to the FDA andwe are currentlyawaiting the FDA’s response to such
submissions.Given that there is
currently an acceptable treatment regimen for men with low testosterone, there
is significant uncertainty as to whether or not an additional approach such as
Androxal® would be approved by the FDA or accepted in the market.  At
this time it is too early in the clinical development process to estimate when
or even if an NDA for Androxal® will be submitted for this
indication.




In April
2008, we submitted a White Paper, based on the results from a previously
conducted non-pivotal Phase 2 clinical trial (ZA-003) with Androxal® for the
treatment of testosterone deficiency due to secondary hypogonadism, to the
Division of Reproductive and Urology Products.  The data we believe
demonstrated that in subjects with a serum glucose of greater than or equal to
105mg/dL, there was a statistically significant reduction in fasting serum
glucose and a higher response rate to treatment in the Androxal®-group than the
placebo or Androgel® groups. In November 2008, after the FDA reviewed this paper
we received guidance from them suggesting that we open a new IND with the
Division of Metabolic and Endocrine Products, or DMEP, for the investigation of
Androxal® as a potential treatment for type 2 diabetes in
mellitus.  In December 2009, we submitted a new IND to the DMEP for
the investigation of Androxal® for such purpose. On February 1, 2010, we
received confirmation from the DMEP that our new IND was accepted and, as a
result, we may initiate a Phase 2a trial.  This new indication
replaces our previously announced plan to develop Androxal® in men with
adult-onset idiopathic hypogonadotrophic hypogonadism, or AIHH, with concomitant
plasma glucose and lipid elevations, all of which are components of Metabolic
Syndrome.




-26-




Proellex®,
our product candidate for female reproductive health, is a new chemical entity
that acts as a selective blocker of the progesterone receptor and is being
developed for the treatment of symptoms associated with uterine fibroids and
endometriosis.  However, as a result of the recent liver toxicity exhibited
by Proellex® in our previous Phase 2 and 3 clinical trials to endometriosis and
uterine fibroids, respectively, all ongoing clinical trial activities have been
put on hold by the FDA.  There is currently no FDA-approved orally
administered drug treatment for the long-term treatment of uterine fibroids or
endometriosis.




Our
estimates regarding the timing of our Proellex® clinical development program are
completely on hold at this time in light of the FDA clinical hold and our recent
discontinuation of ongoing clinical trials. In addition, any future development
efforts are totally dependent on our ability to raise sufficient capital or find
an appropriate partner to proceed and on decisions by the FDA regarding the
current clinical hold on Proellex® clinical trials. If the FDA were to lift the
clinical hold on Proellex®, and if the FDA requires a lower dosage of Proellex®
to be used for future clinical trials, we would be required to commence Phase 2
studies again with the required lower dosage, thereby resulting in extensive
additional costs and delays. The length of time required to complete Phase 1,
Phase 2 and Phase 3 clinical trials and long-term Open Label Safety Trials may
vary substantially according to factors relating to the particular trial, such
as the type and intended use of the drug candidate, the clinical, trial design
and the ability to enroll suitable patients. We have also, in the past, had
difficulty recruiting patients into our Proellex® clinical trials primarily due
to the various test procedures that are required, including multiple endometrial
biopsies. Recruiting patients would likely be even more difficult due to the
recent liver toxicity exhibited by Proellex®.




We also
continue to maintain our patent portfolio of our phentolamine-based products for
the treatment of sexual dysfunction.  We continue to try to create
value from these assets in various ways which includes product
out-licensing.




The
clinical development of pharmaceutical products is a complex undertaking, and
many products that begin the clinical development process do not obtain
regulatory approval.  The costs associated with our clinical trials
may be impacted by a number of internal and external factors, including the
number and complexity of clinical trials necessary to obtain regulatory
approval, the number of eligible patients necessary to complete our clinical
trials and any difficulty in enrolling these patients, and the length of time to
complete our clinical trials.  Given the uncertainty of these
potential costs, we recognize that the total costs we will incur for the
clinical development of our product candidates may exceed our current
estimates.  We do, however, expect these costs to decrease in year
2010 as compared to year 2009 due to the clinical hold on
Proellex®.  Continued development of either of our programs is
contingent on raising additional capital.




As with
most biotechnology companies with drug candidates in development, the path to
marketing approval by the U.S. Food and Drug Administration, or the FDA, and
comparable foreign agencies for each such candidate is long and uncertain. The
regulatory process, both domestically and abroad, is a multi-year process with
no certainty when and if a drug candidate will be approved for commercial use.
The development path for a particular drug candidate typically includes a
variety of clinical trials. While we have a general estimate of the timeframe
for our clinical trials, the actual anticipated completion dates for each of our
drug candidates are uncertain due to a wide variety of risks, including those
described in the risk factors in this 2009 Form 10-K.  The length of
time for a clinical trial may vary substantially according to factors relating
to the particular clinical trial, such as the type and intended use of the drug
candidate, the clinical trial design and the ability to enroll suitable
patients.  A clinical hold, can also result in unpredictable delays
and added costs.  We will not receive any revenue from commercial
sales unless we, or a potential partner, complete the clinical trial process,
obtain regulatory approval, and successfully commercialize one or more of our
product candidates.  Similarly, we do not have a reasonable basis to
predict when or if material net cash inflows from the commercialization and sale
of our drug candidates will occur.  To date, we have not
commercialized any of our drug candidates to any material extent and in fact may
never do so.  For a discussion of the risks and uncertainties
associated with the timing and costs of completing the development of the
Company’s drug candidates, see the section titled “Risk Factors.”




Our
results of operations may vary significantly from year to year and quarter to
quarter, and depend, among other factors, on our ability to be successful in our
clinical trials, the regulatory approval process in the United States and other
foreign jurisdictions and the ability to complete new licenses and product
development agreements.  The timing of our revenues may not match the
timing of our associated product development expenses.  To date,
research and development expenses have generally exceeded revenue in any
particular period and/or fiscal year.




As of
December 31, 2009, the Company had an accumulated deficit of $174.5 million and
had cash and cash equivalents of $1.9 million.  We have experienced
negative cash flows from operations since inception and have funded our
activities to date primarily from equity financings and corporate
collaborations.  Based on our current planned clinical programs, we
will need to raise additional capital during the first half of
2010.  We believe we can secure additional cash resources through the
sale of our equity securities; however, there can be no assurance that the
Company will be able to raise sufficient capital.  Failure to raise
sufficient funds will likely result in either bankruptcy or the dissolution of
the Company.  The uncertainties relating to the foregoing matters
raise substantial doubt about our ability to continue as a going
concern.




-27-




Our
common stock is traded on the Nasdaq Capital Market under our ticker symbol,
RPRX.




We are an
accelerated filer and are subject to additional financial regulatory
requirements, including Section 404 of Sarbanes-Oxley, which requires us to
include in this annual report a report by management on our internal control
over financial reporting and an accompanying auditor’s report.  These
additional activities have resulted in increased costs to us and will result in
future increased costs as we maintain compliance with these
requirements.




We have 5
full-time employees who utilize the services of contract research organizations,
contract manufacturers and various consultants to assist us in performing
clinical and regulatory services for the clinical development of our
products.  We are substantially dependent on our various contract
groups to adequately perform the activities required to obtain regulatory
approval of our products.




The value
of the tax asset associated with the December 31, 2009 accumulated deficit can
be substantially diminished in value to us due to various tax regulations,
including change in control provisions in the tax code.  For
additional information relating to our net operating loss carryforward, see
"Note 6. Federal Income Taxes" of the Notes to Consolidated Financial
Statements.  Losses have resulted principally from costs incurred in
conducting clinical trials for our product candidates, in research and
development activities related to efforts to develop our products and from the
associated administrative costs required to support those efforts. There can be
no assurance that we will be able to successfully complete the transition from a
development stage company to the successful introduction of commercially viable
products.  Our ability to achieve profitability will depend, among
other things, on successfully completing the clinical development of our
products in a reasonable time frame and at a reasonable cost, obtaining
regulatory approvals, establishing marketing, sales and manufacturing
capabilities or collaborative arrangements with others that possess such
capabilities, our and our partners' ability to realize value from our research
and development programs through the commercialization of those products and
raising sufficient funds to finance our activities.  There can be no
assurance that we will be able to achieve profitability or that profitability,
if achieved, can be sustained.  See "Item 1. Business — Risk Factors"
and "Note 1. Organization and Operations" of Notes to Consolidated Financial
Statements.




Critical
Accounting Policies and the Use of Estimates




The
preparation of our financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in our financial statements and
accompanying notes.  Please see Note 2, "Summary of Significant
Accounting Policies", for a detailed discussion of our critical accounting
policies.  A brief summary of our accounting policies is provided
below.




Investments




Management
determines the appropriate classification of investments in debt and equity
securities at the time of purchase and re-evaluates such designation as of each
subsequent balance sheet date.  Debt securities for which we have the
ability and intent to hold to maturity are classified as “held to
maturity”.  Securities we designate as “trading securities” are
recorded at fair value.  Gains and losses on trading securities,
realized and unrealized, are included in earnings and are calculated using the
specific identification method.  Any other securities are classified
as “available for sale.”  Due to the volatility of the financial
markets at December 31, 2009, we had no marketable securities and held our cash
in either an insured bank account or a money market mutual fund backed by U.S.
government issued securities.




Prior to
the disruption of the financial markets, our investments typically included
corporate bonds and notes, Euro-dollar bonds, taxable auction securities and
asset-backed securities.  Our policy is to require minimum credit
ratings of A2/A and A1/P1 with maturities of up to three years, excluding
taxable auction securities.  These securities were classified as
trading securities and were valued in our financial statements at their fair
value.  Our policy required that the average life of the investment
portfolio, excluding taxable auction securities, may not exceed 24
months.




Capitalized
Patent Costs




The
Company capitalizes the cost associated with building its patent library for its
Androxal® and Proellex®
products.  As of December 31, 2009 and 2008, other assets consist of
capitalized patent costs in the amount of $885,000 and $1,713,000
respectively.  Patent costs, which include legal and application costs
related to the patent portfolio, are being amortized over the lesser of 20 years
or the estimated economic life of the patent.  Amortization of patent
cost expense was $54,000, $27,000 and $10,350 in 2009, 2008 and 2007,
respectively.  All of the $885,000 in capitalized patent costs as of
December 31, 2009 related to Androxal® patent and patent application
costs.




-28-




We review
capitalized patent and patent application costs for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable.  An impairment exists when estimated undiscounted
cash flows expected to result from the patent are less than its carrying
amount.  The impairment loss recognized represents the excess of the
patent cost as compared to its estimated fair value.




Due to
the clinical hold on Proellex® and the uncertainty of future cash flows related
to the Proellex® patent applications, the Company recorded an impairment charge
of approximately $957,000 in 2009 related to these patent
applications.  Additionally, the Company concluded that it will no
longer seek to protect the specific matter covered in certain Androxal® patent
applications and recorded an impairment charge of approximately $318,000 to
abandon these patent applications.  These charges were recorded in
Research and Development expenses on the consolidated statement of
operations.  The remaining capitalized patent and patent application
costs relating to Androxal® can continue to be used, outlicensed or sold to
third parties for at least an amount management believes is sufficient to
recover the carrying value of the capitalized patent costs.




Should
the Company not continue development of Androxal® or should the Company not
continue as a going concern, the remaining capitalized patent and patent
application costs may not be recoverable, which would result in charges to
operating results in future periods.




Accrued
Expenses




We
estimate accrued expenses as part of our process of preparing financial
statements. Examples of areas in which subjective judgments may be required
include costs associated with services provided by contract organizations for
clinical trials, preclinical development and manufacturing of clinical
materials.  We accrue for costs incurred as the services are being
provided by monitoring the status of the trials or services provided and the
invoices received from our external service providers.  In the case of
clinical trials, a portion of the estimated cost normally relates to the
projected cost to treat a patient in our trials, and we recognize this cost over
the estimated term of the study based on the number of patients enrolled in the
trial on an ongoing basis, beginning with patient enrollment.  As
actual costs become known to us, we adjust our accruals.  To date, our
estimates have not differed significantly from the actual costs
incurred.  Due to the clinical hold on Proellex® and our current
financial condition, any further development of our product candidates is
dependent on our ability to raise additional capital.  As a result, we
anticipate that our estimated accruals for clinical services will be
significantly reduced in future periods.  However, subsequent changes
in estimates may result in a material change in our accruals, which could also
materially affect our balance sheet and results of operations.




R&D
Expense




Research
and development, or R&D, expenses include salaries and related employee
expenses, contracted regulatory affairs activities, insurance coverage for
clinical trials and prior product sales, contracted research and consulting
fees, facility costs and internal research and development
supplies.  We expense research and development costs in the period
they are incurred.  These costs consist of direct and indirect costs
associated with specific projects as well as fees paid to various entities that
perform research on our behalf.




Share-Based
Compensation




We have
two stock-based compensation plans at December 31, 2009, the 2000 Non-Employee
Directors’ Stock Option Plan, or 2000 Director Plan and the 2004 Stock Option
Plan, or 2004 Plan.  Accounting standards generally require the
recognition of the cost of employee services for share-based compensation based
on the grant date fair value of the equity or liability instruments
issued.  We use the Black-Scholes option pricing model to estimate the
fair value of our stock options.  Expected volatility is determined
using historical volatilities based on historical stock prices for a period
equal to the expected term.  The expected volatility assumption is
adjusted if future volatility is expected to vary from historical
experience.  The expected term of options represents the period of
time that options granted are expected to be outstanding and falls between the
options’ vesting and contractual expiration dates.  The risk-free
interest rate is based on the yield at the date of grant of a zero-coupon U.S.
Treasury bond whose maturity period equals the option’s expected
term.




Income
Taxes




We have
had losses since inception and, therefore, have not been subject to federal
income taxes.  We have accumulated approximately $2.5 million of
research and development tax credits.  As of December 31, 2009, we had
approximately $152 million of net operating loss, or NOL, carry-forwards for
federal income tax purposes.  Additionally, approximately $3.4 million
of NOLs, and approximately $120,000 of research and development tax credits,
expired in 2009.  Accounting standards require the recognition of a
deferred tax asset.  However, a valuation allowance must be recorded
for deferred tax assets whose recovery is deemed unlikely.  As we have
incurred losses since inception, and there is no certainty of future revenues,
our deferred tax assets have been reserved in full in the accompanying
consolidated financial statements.  Additionally, if the Company has
an opportunity to use this NOL to off-set tax liabilities in the future, the use
of this asset would be restricted based on Internal Revenue Service, state and
local NOL use guidelines.  The Company’s public offerings completed on
February 5, 2007, October 2, 2008, September 11, 2009, October 13, 2009, and the
issuances of unregistered shares as part of the October 29, 2009 Settlement
Agreement and Subsequent Settlement Agreements may have created a change of
ownership for Federal Income tax purposes.  The Company has not
undertaken a study to determine if this has occurred.  A change in
ownership for Federal Income tax purposes may result in a limitation on the use
of net operating loss and tax credit carryforwards in future
periods.




-29-




RECENT
ACCOUNTING PRONOUNCEMENTS




In
September 2006, FASB issued new accounting guidance which defines fair value,
established a framework for measuring fair value in generally accepted
accounting principles and expanded disclosures about fair value
measurements.  This guidance is effective for financial statements
issued for fiscal years beginning after November 15, 2007 and interim periods
within those fiscal years.  In February 2008, the FASB deferred the
effective date of this new guidance for all nonfinancial assets and nonfinancial
liabilities to fiscal years beginning after November 15, 2008.  The
implementation of this guidance for financial assets and financial liabilities,
effective January 1, 2008, did not have a material impact on Repros'
consolidated financial position and results of operations.  The
implementation of this guidance for nonfinancial assets, effective January 1,
2009, and nonfinancial liabilities did not have a material impact on the
Company's consolidated financial position and results of
operations.




In May
2009, the FASB issued new accounting guidance on management's assessment of
subsequent events and incorporates this guidance into accounting
literature.  This guidance is effective prospectively for interim and
annual period ending after June 15, 2009.  The implementation of this
standard did not have a material impact on our consolidated financial position
and results of operations.




Results
of Operations




Comparison
of Years Ended December 31, 2009 and 2008




Revenues
and Other Income




Total
revenues and other income increased 27% to $551,000 in 2009 as compared to
$433,000 for 2008.  This increase was primarily due to an increase of
$547,000 in other income, offset by a decrease in interest income of
$429,000.  The Company recognized $547,000 in non-cash other income
related to debt relief from settlements with certain vendors in the fourth
quarter of 2009.  The decrease in interest income is due to lower
combined cash, cash equivalents and marketable securities balances and reduced
interest rate yields that have occurred as we moved our cash investments solely
into money market mutual fund.




Research
and Development Expenses




Research
and development, or R&D, expenses include contracted services relating to
our clinical product development activities which include preclinical studies,
clinical trials, regulatory affairs and bulk manufacturing scale-up activities
and bulk active ingredient purchases for preclinical and clinical trials
primarily relating to our two products in clinical development, which are
Proellex® and Androxal®.  Research and
development expenses also include internal operating expenses relating to our
general research and development activities.  R&D expenses
increased 2% or approximately $487,000 to $23.1 million for the year ended 2009
as compared to $22.6 million in 2008.  Our primary R&D expenses
for 2009 and 2008 are shown in the following table (in thousands):




Research and Development
                
                December 31,
                  2009
                
                
                December 31,
                  2008
                
                
                Variance
                
                
                Change (%)Androxal®
      clinical development
                
                $
                786
                
                
                $
                2,370
                
                
                $
                (1,584
                )
                
                
                (67
                )%Proellex®
      clinical development
                
                
                18,376
                
                
                
                17,788
                
                
                
                588
                
                
                
                3
                %Payroll
      and benefits
                
                
                1,384
                
                
                
                1,154
                
                
                
                230
                
                
                
                20
                %Operating
      and occupancy
                
                
                2,516
                
                
                
                1,263
                
                
                
                1,253
                
                
                
                99
                %Total
                
                $
                23,062
                
                
                $
                22,575
                
                
                $
                487
                
                
                
                2
                %




To date
through December 31, 2009 we have incurred approximately $14.4 million for the
development of Androxal® and approximately $55.2 million for the development of
Proellex®.  These
accumulated costs exclude any internal operating expenses. We are currently
developing Androxal® as a treatment for men with low testosterone that want to
maintain or improve their fertility and sperm function.  In addition,
we are exploring the feasibility of developing Androxal® as a treatment for Type
2 diabetes.  Prior to 2008, we were developing Androxal® as a
treatment for men with low testosterone due to secondary
hypogonadism.  Before
the recent clinical hold on further Proellex® development we were developing
Proellex® for three indications which included a pre-surgical treatment of
anemia associated with uterine fibroids, a chronic treatment of symptoms
associated with uterine fibroids and as a chronic treatment of symptoms
associated with endometriosis.




-30-




Androxal®




Androxal®
clinical development expenses decreased 67% or approximately $1.6 million to
$786,000 for the year ended 2009 as compared to $2.4 million in
2008.  The decrease in Androxal® clinical development expenses
is shown in the following table (in thousands):




Androxal® Clinical
                    Development
                  
                  December 31,
                    2009
                  
                  
                  December 31,
                    2008
                  
                  
                  Variance
                  
                  
                  Change (%)Clinical
      trials
                  
                  $
                  395
                  
                  
                  $
                  1,006
                  
                  
                  $
                  (611
                  )
                  
                  
                  (61
                  )%Preclinical
      studies
                  
                  
                  282
                  
                  
                  
                  1,178
                  
                  
                  
                  (896
                  )
                  
                  
                  (76
                  )%Formulation
      and dosage
                  
                  
                  19
                  
                  
                  
                  161
                  
                  
                  
                  (142
                  )
                  
                  
                  (88
                  )%Other
                  
                  
                  90
                  
                  
                  
                  25
                  
                  
                  
                  65
                  
                  
                  
                  260
                  %Total
                  
                  $
                  786
                  
                  
                  $
                  2,370
                  
                  
                  $
                  (1,584
                  )
                  
                  
                  (67
                  )%




Prior to
2008 we were developing Androxal® as a treatment for testosterone
deficiency due to secondary hypogonadism by restoring normal testosterone
production in males with functional testes.  As a result of a Type “C”
meeting held with the Food and Drug Administration, or FDA, on October 15, 2007
we discontinued clinical efforts for that indication.  During 2008 we
initiated a clinical development program with Androxal® as a treatment for men being
treated for low testosterone that want to maintain their fertility.




Clinical
trial expenses during 2009 primarily reflect a Phase 2b proof-of-concept
clinical trial.  Clinical trial expenses during 2008 primarily reflect
a long-term Open Label Safety study activities.  The decrease in
clinical trial expenses in 2009 as compared to 2008 is primarily due to the
winding down of the long-term Open Label Safety study in the first quarter of
2009.  Preclinical study expenses reflect animal safety activities
required by the FDA to file an NDA.  The decrease in preclinical
expenses in 2009 as compared to 2008 is primarily due to the completion of a two
carcinogenicity studies in the first quarter of 2009.  Formulation and
dosage expenses reflect the purchase of active drug to conduct clinical trials
and to meet any potential future NDA submission requirements.




Proellex®




Proellex®
clinical development expenses increased 3% or approximately $588,000 to
approximately $18.4 million for the year ended 2009 as compared to $17.8 million
in 2008.  The increase in Proellex® clinical development expenses is
shown in the following table (in thousands):




Proellex® Clinical
                    Development
                  
                  December 31,
                    2009
                  
                  
                  December 31,
                    2008
                  
                  
                  Variance
                  
                  
                  Change (%)Clinical
      trials
                  
                  $
                  15,202
                  
                  
                  $
                  14,547
                  
                  
                  $
                  655
                  
                  
                  
                  5
                  %Preclinical
      studies
                  
                  
                  500
                  
                  
                  
                  1,679
                  
                  
                  
                  (1,179
                  )
                  
                  
                  (70
                  )%Formulation
      and dosage
                  
                  
                  2,130
                  
                  
                  
                  1,378
                  
                  
                  
                  752
                  
                  
                  
                  55
                  %Other
                  
                  
                  544
                  
                  
                  
                  184
                  
                  
                  
                  360
                  
                  
                  
                  196
                  %Total
                  
                  $
                  18,376
                  
                  
                  $
                  17,788
                  
                  
                  $
                  588
                  
                  
                  
                  3
                  %




Prior to
2008 we began developing Proellex® for two indications which include a chronic
treatment of symptoms associated with uterine fibroids and
endometriosis.  During the first quarter of 2008 we filed an IND with
Proellex® for a new indication as a short course pre-surgical treatment of
anemia associated with uterine fibroids.  On August 3, 2009, we suspended all
ongoing clinical trials of Proellex® pending resolution of certain safety issues
relating to such trials as described more fully above.  Proellex®
clinical expenses for theyear ended December 31, 2009include Phase 1, Phase 2, Phase 3 and
long-term Open Label Safety study activities and costs to close out all clinical
trials of Proellex®.Of the $15.2 million in
clinical trial expenses for 2009, $14.5 million was incurred through September
30, 2009.  The increase in clinical trials expenses for Proellex® as
compared to 2008 is primarily due to increased activity in Phase 3 studies prior
to the suspension of such trials and approximately $700,000 in costs to close
out the clinical trials in the third and fourth quarters of
2009.




Preclinical
study expenses reflect animal safety activities required by the FDA to file a
NDA.  Formulation and dosage expenses reflect activities associated
with the bulk scale-up and purchase of active drug to conduct clinical trials
and to meet any potential future NDA submission requirements.




Formulation and dosage expenses for theyear ended December 31,
2009include a charge for
$1.5 million previously reflected in Prepaid Expense and Other Current Assets in
conjunction with our commitment to purchase the bulk active ingredient of
Proellex® from Gedeon Richter under a new scaled-up amended manufacturing
process.  As of September 4, 2009 this agreement was terminated and
Repros accepted the material produced through this date and as a result expensed
the $1.5 million prepaid asset to R&D Expenseduring the third quarter of
2009.




-31-




Payroll
and Benefits




R&D
payroll and benefit expense include salaries, non-cash stock option compensation
expense and fringe benefits which increased 20% or approximately $230,000 to
$1.4 million for the year ended 2009 as compared to $1.2 million in
2008.  This increase is primarily due to an increase in headcount and
an increase in non-cash stock option compensation of
$96,000.  Included in payroll and benefit expense is a charge for
non-cash stock option expense of $485,000 for the year ended 2009 as compared to
$389,000 in the year 2008.




Operating
and Occupancy




R&D
operating and occupancy increased 99% or approximately $1.3 million to
approximately $2.5 million for the year ended 2009 as compared to $1.3 million
in 2008.  Due to the
clinical hold on Proellex® and the uncertainty of future cash flows related to
the Proellex®patent applications, the Company
recorded an impairment charge of approximately $957,000 in2009 related to these patent
applications.  Additionally, the Company concluded that it will no
longerseek to protect the specific matter covered in certain Androxal®
patent applications and recorded an impairment charge of approximately $318,000
to abandon these patent applications in 2009.




General
and Administrative Expenses




General
and administrative expenses, or G&A, increased 54% to approximately $4.7
million for 2009 as compared to $3.1 million for 2008.  Our primary
G&A expenses for 2009 and 2008 are shown in the following table (in
thousands):




General and Administrative
                
                December 31,
                  2009
                
                
                December 31,
                  2008
                
                
                Variance
                
                
                Change (%)Payroll
      and benefits
                
                $
                2,039
                
                
                $
                1,478
                
                
                $
                561
                
                
                
                38
                %Operating
      and occupancy
                
                
                2,684
                
                
                
                1,582
                
                
                
                1,102
                
                
                
                70
                %Total
                
                $
                4,723
                
                
                $
                3,060
                
                
                $
                1,663
                
                
                
                54
                %




G&A
payroll and benefit expense for both 2009 and 2008, include salaries, bonuses,
non-cash stock option compensation expense and fringe
benefits.  Included in payroll and benefit expense is a charge for
non-cash stock option expense of $799,000 for the year ended 2009 as compared to
$482,000 in the year 2008.  Additionally, salaries for the year ended
2009 were $949,000 as compared to $891,000 for 2008.




G&A
operating and occupancy expenses, which include expenses to operate as a public
company, increased 70% or approximately $1.1 million to $2.7 million in 2009 as
compared to $1.6 million in 2008.  The increase is primarily due to an
increase in professional services.




Comparison
of Years Ended December 31, 2008 and 2007




Revenues
and Other Income.  Total revenues and other income, which was
comprised of interest income for the years ended 2008 and 2007, decreased 71% to
$433,000 in 2008 as compared to $1.5 million for 2007.  This decrease
was primarily due to lower combined cash, cash equivalents and marketable
securities balances and reduced interest rate yields that have occurred as we
moved our cash investments solely into money market mutual fund.




Research
and Development Expenses.  Research and development, or R&D,
expenses include contracted services relating to our clinical product
development activities which include preclinical studies, clinical trials,
regulatory affairs and bulk manufacturing scale-up activities and bulk active
ingredient purchases for preclinical and clinical trials primarily relating to
our two products in clinical development, which are Proellex® and Androxal®.  Research and
development expenses also include internal operating expenses relating to our
general research and development activities.  R&D expenses
increased 82% or approximately $10.2 million to $22.6 million for the year ended
2008 as compared to $12.4 million in 2007.  Our primary R&D
expenses for 2008 and 2007 are shown in the following table (in
thousands):




Research and Development
                
                December 31,
                  2008
                
                
                December 31,
                  2007
                
                
                Variance
                
                
                Change (%)Androxal®
      clinical development
                
                $
                2,370
                
                
                $
                3,938
                
                
                $
                (1,568
                )
                
                
                (40
                )%Proellex®
      clinical development
                
                
                17,788
                
                
                
                6,661
                
                
                
                11,127
                
                
                
                167
                %Payroll
      and benefits
                
                
                1,154
                
                
                
                889
                
                
                
                265
                
                
                
                30
                %Operating
      and occupancy
                
                
                1,263
                
                
                
                932
                
                
                
                331
                
                
                
                36
                %Total
                
                $
                22,575
                
                
                $
                12,420
                
                
                $
                10,155
                
                
                
                82
                %





-32-




To date
through December 31, 2008 we have incurred approximately $13.6 million for the
development of Androxal® and approximately $36.8 million for the development of
Proellex®.  These accumulated costs exclude any internal operating
expenses.  We are currently developing Androxal® as a treatment for
men with low testosterone that want to maintain or improve their fertility and
sperm function.  In addition, we are exploring the feasibility of
developing Androxal® as a treatment for Type 2 diabetes.  Prior to
2008, we were developing Androxal® as a treatment for men with low testosterone
due to secondary hypogonadism.  We are currently developing Proellex®
for three indications which include a pre-surgical treatment of anemia
associated with uterine fibroids, a chronic treatment of symptoms associated
with uterine fibroids and as a chronic treatment of symptoms associated with
endometriosis.




Androxal®




Androxal®
clinical development expenses decreased 40% or approximately $1.6 million to
$2.4 million for the year ended 2008 as compared to $3.9 million in
2007.  The decrease in Androxal® clinical development expenses is
shown in the following table (in thousands):




Androxal® Clinical
                    Development
                  
                  December 31,
                    2008
                  
                  
                  December 31,
                    2007
                  
                  
                  Variance
                  
                  
                  Change (%)Clinical
      trials
                  
                  $
                  1,006
                  
                  
                  $
                  2,587
                  
                  
                  $
                  (1,581
                  )
                  
                  
                  (61
                  )%Preclinical
      studies
                  
                  
                  1,178
                  
                  
                  
                  967
                  
                  
                  
                  211
                  
                  
                  
                  22
                  %Formulation
      and dosage
                  
                  
                  161
                  
                  
                  
                  304
                  
                  
                  
                  (143
                  )
                  
                  
                  (47
                  )%Other
                  
                  
                  25
                  
                  
                  
                  80
                  
                  
                  
                  (55
                  )
                  
                  
                  (69
                  )%Total
                  
                  $
                  2,370
                  
                  
                  $
                  3,938
                  
                  
                  $
                  (1,568
                  )
                  
                  
                  (40
                  )%




Prior to
2008 we were developing Androxal® as a treatment for testosterone deficiency due
to secondary hypogonadism by restoring normal testosterone production in males
with functional testes.  As a result of a Type “C” meeting held with
the Food and Drug Administration, or FDA, on October 15, 2007 we believe that we
do not have a clear clinical path to develop Androxal® for this indication in
the U.S. at this time and discontinued clinical efforts for that indication
except for the continuation of a long-term Open Label Safety study that was
already underway and we believe could be used as safety data for our other
indications.  During 2008 we initiated a clinical development program
with Androxal® as a treatment for men being treated for low testosterone that
want to maintain or improve their sperm function during treatment.




Clinical
trial expenses during 2008 and 2007 primarily reflect a non-Pivotal Phase 3 and
long-term Open Label Safety study activities.  Preclinical study
expenses reflect animal safety activities required by the FDA to file a
NDA.  Formulation and dosage expenses reflect activities associated
with the bulk scale-up and purchase of active drug to conduct clinical trials
and to meet any potential future NDA submission requirements.




Proellex®




Proellex®
clinical development expenses increased 167% or approximately $11.1 million to
approximately $17.8 million for the year ended 2008 as compared to $6.7 million
in 2007.  The increase in Proellex® clinical development expenses is
shown in the following table (in thousands):




Proellex® Clinical
                    Development
                  
                  December 31,
                    2008
                  
                  
                  December 31,
                    2007
                  
                  
                  Variance
                  
                  
                  Change (%)Clinical
      trials
                  
                  $
                  14,547
                  
                  
                  $
                  3,301
                  
                  
                  $
                  11,246
                  
                  
                  
                  341
                  %Preclinical
      studies
                  
                  
                  1,679
                  
                  
                  
                  1,639
                  
                  
                  
                  40
                  
                  
                  
                  2
                  %Formulation
      and dosage
                  
                  
                  1,378
                  
                  
                  
                  1,486
                  
                  
                  
                  (108
                  )
                  
                  
                  (7
                  )%Other
                  
                  
                  184
                  
                  
                  
                  235
                  
                  
                  
                  (51
                  )
                  
                  
                  (22
                  )%Total
                  
                  $
                  17,788
                  
                  
                  $
                  6,661
                  
                  
                  $
                  11,127
                  
                  
                  
                  167
                  %




Prior to
2008 we were developing Proellex® for two indications which include a chronic
treatment of symptoms associated with uterine fibroids and
endometriosis.  During the first quarter of 2008 we filed an IND with
Proellex® for a new indication as a short course pre-surgical treatment of
anemia associated with uterine fibroids.  Proellex® clinical expenses
for the years ended 2008 and 2007 include Phase 1, Phase 2, Phase 3 and
long-term Open Label Safety study activities.




Preclinical
study expenses reflect animal safety activities required by the FDA to file a
NDA.  Formulation and dosage expenses reflect activities associated
with the bulk scale-up and purchase of active drug to conduct clinical trials
and to meet any potential future NDA submission requirements.




-33-




R&D
payroll and benefit expense include salaries, non-cash stock option compensation
expense and fringe benefits which increased 30% or approximately $265,000 to
$1.2 million for the year ended 2008 as compared to $889,000 in
2007.  This increase is primarily due to an increase in headcount and
an increase in non-cash stock option compensation of
$135,000.  Included in payroll and benefit expense is a charge for
non-cash stock option expense of $389,000 for the year ended 2008 as compared to
$255,000 in the year 2007.




R&D
operating and occupancy increased 36% or approximately $331,000 to approximately
$1.3 million for the year ended 2008 as compared to $932,000 in
2007.  The increase in 2008 is primarily due to an increase in
clinical development related consulting expenses of approximately
$348,000.




General
and Administrative Expenses.  General and administrative expenses, or
G&A, increased 10% to approximately $3.1 million for 2008 as compared to
$2.8 million for 2007.  Our primary G&A expenses for 2008 and 2007
are shown in the following table (in thousands):




General and Administrative
                  
                  December 31,
                    2008
                  
                  
                  December 31,
                    2007
                  
                  
                  Variance
                  
                  
                  Change (%)Payroll
      and benefits
                  
                  $
                  1,478
                  
                  
                  $
                  1,489
                  
                  
                  $
                  (11
                  )
                  
                  
                  (1
                  )%Operating
      and occupancy
                  
                  
                  1,582
                  
                  
                  
                  1,299
                  
                  
                  
                  283
                  
                  
                  
                  22
                  %Total
                  
                  $
                  3,060
                  
                  
                  $
                  2,788
                  
                  
                  $
                  272
                  
                  
                  
                  10
                  %




G&A
payroll and benefit expense of $1.5 million for both 2008 and 2007, include
salaries, bonuses, non-cash stock option compensation expense and fringe
benefits.  Included in payroll and benefit expense is a charge for
non-cash stock option expense of $482,000 for the year ended 2008 as compared to
$625,000 in the year 2007.  Additionally, salaries for the year ended
2008 were $891,000 as compared to $763,000 for 2007.




G&A
operating and occupancy expenses, which include expenses to operate as a public
company, increased 22% or approximately $283,000 to $1.6 million in 2008 as
compared to $1.3 million in 2007.  The increase is primarily due to an
increase in professional services of $321,000 offset by a decrease in various
administrative and travel expenses.




Off-Balance
Sheet Arrangements




As of
December 31, 2009, we did not have any off-balance sheet arrangements except
operating leases.




Liquidity
and Capital Resources




Since our inception, we have financed
our operations primarily with proceeds from private placements and public
offerings of equity securities and with funds received under collaborative
agreements.  We have experienced negative cash flows from operations
since inception.  We will require substantial funds for research and
development, including preclinical studies and clinical trials of our product
candidates, and to commence sales and marketing efforts if appropriate, if the
FDA or other regulatory approvals are obtained.  Based on our existing
and projected accounts payable and commitments, we believe we do not have
sufficient cash to continue normal operations and need to raise additional
capitalin the first half
of 2010in order to
continue operations on a normal basis.We believe we can
secure additional cash resources through the sale of our equity securities;
however, there can be no assurance that the Company will be able to raise
sufficient capital.  Failure to raise sufficient funds will likely
result in either bankruptcy or the dissolution of the Company




On September 11, 2009, we completed a
direct registered offering of 1.5 million shares of our common stock at a
purchase price of $0.65 per share for net proceeds after expenses of
approximately $869,000 pursuant to an effective shelf registration
statement.




On October 13, 2009, we completed a
direct registered offering of 3.5 million shares of our common stock at a
purchase price of $1.27 per share for net proceeds after expenses of
approximately $4.1 million pursuant to an effective shelf registration
statement.




On October 29, 2009, we entered into a
Master Settlement Agreement and Releases (the “October Settlement Agreement”)
with certain trade creditors, pursuant to which we issued 5,361,194 shares of
our common stock, at $1.10 per share, and paid approximately $2.77 million in
cash to such creditors as payment in full for our then-outstanding liabilities
of approximately $8.7 million and for the release of the claims held by and the
dismissal of the litigation commenced by such creditors against the
Company.  Pursuant to the terms of the October Settlement Agreement,
we filed a registration statement on Form S-3 (File No. 333-163510), which was
filed with the Securities and Exchange Commission on December 4, 2009, to
register the resale of such shares by such creditors.  Such
registration statement was declared effective by the Securities and Exchange
Commission on January 7, 2010.




On November 17, 2009, in a special
meeting of our stockholders, an amendment to the Restated Certificate of
Incorporation was approved, increasing the number of authorized shares of our
common stock from 30,000,000 to 75,000,000.




-34-




Between November 30, 2009 and March 2,
2010, the Company entered into settlement agreements and mutual releases (the
“Subsequent Settlement Agreements”) with certain of its creditors, pursuant to
which the Company issued an aggregate of 352,459 shares (the “Additional
Settlement Shares”) of common stock in 2010 and paid an aggregate of $140,571 in
cash as payment in full for its then-outstanding liabilities to such
creditors.   Pursuant to the Subsequent Settlement Agreements, the
Company agreed to use its best efforts to prepare and file a registration
statement to register the Additional Settlement Shares as soon as possible
following the date of each Subsequent Settlement Agreement, to use its best
efforts to have such registration statement declared effective as soon as
possible and to maintain such registration statement until all such Additional
Settlement Shares registered thereunder to such creditors have been sold or for
a period of one year, whichever comes first.




Our primary use of cash to date has been
in operating activities to fund research and development, including preclinical
studies and clinical trials, and general and administrative
expenses.  We had cash and cash equivalents of approximately
$1.9 million as of December
31,2009 as compared to
$19.5 million as of December 31, 2008. Additionally, we had accounts payable and
accrued expenses of $2.4 million as of December 31, 2009 as compared to $7.0
million as of December 31, 2008.




Net cash of approximately $22.1million, $21.7 millionand $13.6million was used in operating
activities during2009,
2008 and 2007,
respectively.  The major use of cash for operating activities during
2009 was to fund our clinical development programs and associated administrative
costs, partially offset by an increase in our accounts payable and accrued
expenses, non-cash stock
based compensation and a non-cash patent impairment charge.




Our capital requirements will depend on
many factors, including: the costs associated with the suspension of dosing in
our clinical trials relating to Proellex® and the potential costs to reestablish
the dosing in such clinical trials should the FDA’s clinical hold be lifted; the
costs and timing of seeking regulatory approvals of our products; our ability to
successfully defend ourself in the recently filed class action lawsuits; our
ability to realize a clear clinical path for Androxal®; the problems, delays,
expenses and complications frequently encountered by development stage
companies; the progress of our preclinical and clinical activities; the costs
associated with any future collaborative research, manufacturing, marketing or
other funding arrangements; our ability to obtain regulatory approvals; the
success of our potential future sales and marketing programs; the cost of
filing, prosecuting and defending and enforcing any patent claims and other
intellectual property rights; changes in economic, regulatory or competitive
conditions of our planned business; and additional costs associated with being a
publicly-traded company. To satisfy our capital requirements, we are exploring
ways toraise additional fundsin the first half of 2010.  Our announcements regarding
the liver toxicity in our Proellex® clinical trials have significantly depressed
our stock price and, these announcements, along with the clinical hold imposed
by the FDA, receipt of the Nasdaqletter regarding our failure to meet
the current Nasdaqlisting requirements and announcement
ofvariouslawsuitsand other eventshave severely impaired our ability to
raise additional capital funds or to outlicense the technology.There can be no assurance
that any such funding will be available to us on favorable terms or at
all.  If we are successful in obtaining additional financing, we
anticipate that such financing will result in significant dilution of the
ownership interests of our current stockholders and may provide certain rights
to the new investors senior to the rights of our current stockholders, including
but not limited to voting rights and rights to proceeds in the event of a sale
or liquidation of the Company.  The uncertainties relating to the
foregoingand othermatters raise substantial
doubt about our ability to continue as a going concern.




Contractual
Obligations and Commercial Commitments




The
Company leases laboratory and office space, and equipment pursuant to leases
accounted for as operating leases.  The lease for the Company’s
laboratory and office space expires in June 2010.  Rental expense for
the years ended December 31, 2009, 2008 and 2007, was approximately $60,000,
$59,000 and $63,000, respectively.  There are no future minimum lease
payments under non-cancelable leases with original terms in excess of one year
as of December 31, 2009 as our lease expires in June 2010.




In December 2008, Repros committed to
the purchase of at least $3 million of the bulk active ingredient of Proellex®
which was to be produced under a new scaled-up amended manufacturing process by
Gedeon Richter.  Under this Purchase Request, as amended, the Company
paid $750,000 in the first quarter of 2009 and $750,000 in the second quarter of
2009.  As of June 30, 2009, $1.5 million was reflected under Prepaid
Expenses and Other Current Assets on the balance sheet.  Repros was
obligated to make two additional payments of $750,000 each for the final two
batches of Proellex® to be delivered in the third and fourth quarters of
2009.  As of September 4, 2009 this agreement was terminated and the
remaining two payments due to Gedeon Richter were
waived.  Additionally, Repros accepted the material produced through
this date and as a result expensed the $1.5 million prepaid asset to R&D
Expenseduring the third
quarter of 2009.




ITEM
      7A.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK




Interest
Rate Risk. We had cash and cash equivalents of approximately $1.9 million as of
December 31, 2009 which is primarily held in a money market mutual fund backed
by U.S. government securities.  Although this cash account is subject
to fluctuations in interest rates and market conditions, no significant gain or
loss on this account is expected to be recognized in earnings.  We do
not invest in derivative securities.




-35-




ITEM
      8.
            FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA




The
financial statements required by this item are set forth in Item 15 of this
Report.




ITEM
      9.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE




Not
applicable.




ITEM
      9A.
            CONTROLS
      AND PROCEDURES




Evaluation
of Disclosure Controls and Procedures




We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed with the Securities
and Exchange Commission, or SEC, pursuant to the Securities Exchange Act of
1934, or the Exchange Act, is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the Commission and
that such information is accumulated and communicated to our management,
including our Chief Executive Officer (CEO) and Principal Financial Officer
(PFO), as appropriate, to allow timely decisions regarding required
disclosures.




Management,
with the participation of our CEO and PFO, has evaluated the effectiveness of
our disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) of the Exchange Act) as of the end of the period covered by this
report. Based on such evaluation, our CEO and PFO have each concluded that as of
the end of such period, our disclosure controls and procedures were effective to
ensure that information required to be disclosed by us in reports that we file
or submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and forms and that such
information is accumulated and communicated to our management, including the CEO
and PFO, as appropriate, to allow timely decisions regarding required
disclosures.




Management’s
Report on Internal Control Over Financial Reporting




Management is responsible for
establishing and maintaining adequate internal control over financial reporting
as defined in Rule 13a-15(f) under the Exchange Act.  Our internal
control over financial reporting was designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles.




Management evaluated the effectiveness
of internal control over financial reporting based on the criteria inInternal Control -
Integrated Frameworkissued
by the Committee of Sponsoring Organizations of the Treadway
Commission.  Due to its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.  Also,
projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may
deteriorate.




Based on management’s evaluation,
management has concluded that internal control over financial reporting was
effective as of December 31, 2009.




PricewaterhouseCoopers LLP, an
independent registered public accounting firm, has audited and issued their
report on the effectiveness of our internal control over financial reporting as
of December 31, 2009, which appears herein.




Changes
in Internal Control




There have been no changes in our
internal control over financial reporting during our quarter ended December 31,
2009 that have materially affected, or is reasonable likely to materially
affect, our internal control over financial reporting.




ITEM
      9B.
            OTHER
      INFORMATION




Not
applicable.


-36-


PART
III




ITEM
      10.
            DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE




The
information required by this item is hereby incorporated by reference from the
information in our proxy statement for our 2010 annual meeting of
stockholders.  Such proxy statement will be filed with the SEC
pursuant to the Exchange Act within 120 days of the end of our fiscal year ended
December 31, 2009.




ITEM
      11.
            EXECUTIVE
      COMPENSATION




The
information required by this item is hereby incorporated by reference from the
information in our proxy statement for our 2010 annual meeting of
stockholders.  Such proxy statement will be filed with the SEC
pursuant to the Exchange Act within 120 days of the end of our fiscal year ended
December 31, 2009.




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




The
information required by this item is hereby incorporated by reference from the
information in our proxy statement for our 2010 annual meeting of
stockholders.  Such proxy statement will be filed with the SEC
pursuant to the Exchange Act within 120 days of the end of our fiscal year ended
December 31, 2009.




ITEM
      13.
            CERTAIN
      RELATIONSHIP AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE




The
information required by this item is hereby incorporated by reference from the
information in our proxy statement for our 2010 annual meeting of
stockholders.  Such proxy statement will be filed with the SEC
pursuant to the Exchange Act within 120 days of the end of our fiscal year ended
December 31, 2009.




ITEM
      14.
            PRINCIPAL
      ACCOUNTANT FEES AND SERVICES




The
information required by this item is hereby incorporated by reference from the
information in our proxy statement for our 2010 annual meeting of
stockholders.  Such proxy statement will be filed with the SEC
pursuant to the Exchange Act within 120 days of the end of our fiscal year ended
December 31, 2009.


-37-


PART
IV




ITEM
      15.
            EXHIBITS
      AND FINANCIAL STATEMENT SCHEDULES




(a)    Documents
Filed as a Part of this Report.




Financial Statements
                  
                  PageReport
      of Independent Registered Public Accounting Firm
                  
                  F-1Reports
      of Independent Public Accountants
                  
                  F-3Consolidated
      Balance Sheets as of December 31, 2009 and 2008
                  
                  F-9Consolidated
      Statements of Operations for the Years Ended
                    December
      31, 2009, 2008 and 2007 and (unaudited)
                    from
      Inception (August 20, 1987) through December 31, 2009
                  
                  F-10Consolidated
      Statement of Stockholders' Equity (from inception)
                  
                  F-11Consolidated
      Statements of Cash Flows for the Years Ended
                    December
      31, 2009, 2008 and 2007 and (unaudited) from Inception
                    (August
      20, 1987) through December 31, 2009
                  
                  F-17Notes
      to Consolidated Financial Statements
                  
                  F-18




All
financial statement schedules are omitted because they are not applicable, not
required, or because the required information is included in the financial
statements or the notes thereto.




(b)   Exhibits.




Exhibits
to the Form 10-K have been included only with the copies of the Annual Report on
Form 10-K filed with the Securities and Exchange Commission.  Upon
request to the Company and payment of a reasonable fee, copies of the individual
exhibits will be furnished.




Exhibit Number
                                
                                Identification
      Of Exhibit3.1(a)
                                —
                                Restated
      Certificate of Incorporation. Exhibit 3.3 to the Company's Registration
      Statement on Form SB-2 (No. 33-57728-FW), as amended ("Registration
      Statement"), is incorporated herein by reference.3.1(b)
                                —
                                Certificate
      of Amendment to the Company's Restated Certificate of Incorporation, dated
      as of May 2, 2006.  Exhibit 3.1 to the Company's Current Report
      on Form 8-K as filed with the Commission on May 2, 2006 is incorporated
      herein by reference.3.1(c)
                                —
                                Certificate
      of Designation of Series One Junior Participating Preferred Stock dated
      September 2, 1999. Exhibit A to Exhibit 4.1 to the Company's
      Registration Statement on Form 8-A as filed with the Commission on
      September 3, 1999 (the "Rights Plan Registration Statement"), is
      incorporated herein by reference.3.1(d)
                                —
                                Certificate
      of Amendment to Restated Certificate of Incorporation, dated as of
      December 16, 2008.  Exhibit 3.1(d) to the Company’s Current
      Report on Form 8-K as filed with the Commission on December 23, 2008 is
      incorporated herein by reference.3.1(e)
                                —
                                Certificate
      of Amendment to Restated Certificate of Incorporation, dated as of
      November 18, 2009. Exhibit 3.1(e) to the Company’s Current Report on
      Form 8-K dated November 19, 2009 is incorporated herein by
      reference.3.2
                                —
                                Restated
      Bylaws of the Company. Exhibit 3.4 to the Registration Statement is
      incorporated herein by reference.4.1
                                —
                                Specimen
      Certificate of Common Stock, $.001 par value, of the Company. Exhibit 4.1
      to the Registration Statement is incorporated herein by
      reference.4.2
                                —
                                Rights
      Agreement dated September 1, 1999 between the Company and
      Computershare Investor Services LLC (as successor in interest to Harris
      Trust & Savings Bank), as Rights Agent. Exhibit 4.1 to the Rights
      Plan Registration Statement is incorporated herein by
      reference.




-38-





Exhibit Number
                                                
                                                Identification
      Of Exhibit4.3
                                                —
                                                First
      Amendment to Rights Agreement, dated as of September 6, 2002, between
      the Company, Harris Trust & Savings Bank and Computershare Investor
      Services LLC. Exhibit 4.3 to Amendment No. 1 to the Rights Plan
      Registration Statement on Form 8-A/A as filed with the Commission on
      September 11, 2002 is incorporated herein by
    reference.4.4
                                                —
                                                Second
      Amendment to Rights Agreement, dated as of October 30, 2002, between
      the Company and Computershare Investor Services LLC. Exhibit 4.4 to
      Amendment No. 2 to the Rights Plan Registration Statement on
      Form 8-A/A as filed with the Commission on October 31, 2002 is
      incorporated herein by reference.4.5
                                                —
                                                Third
      Amendment to Rights Agreement, dated as of June 30, 2005, between the
      Company and Computershare Trust Company, Inc. (as successor in interest to
      Computershare Investor Services, LLC).  Exhibit 4.4 to the
      Company's Current Report on Form 8-K as filed with the Commission on June
      30, 2005 is incorporated herein by reference.4.6
                                                —
                                                Fourth
      Amendment to Rights Agreement, dated as of January 9, 2008, between the
      Company and Computershare Trust Company, Inc. (as successor in interest to
      Computershare Investor Services, LLC).  Exhibit 4.5 to the
      Company's Current Report on Form 8-K as filed with the Commission on
      January 10, 2008 is incorporated herein by reference.4.7
                                                —
                                                Fifth
      Amendment to Rights Agreement, sated as of October 10, 2008, between the
      Company and Computershare Trust Company, Inc. (as successor in interest to
      Computershare Investor Services, LLC).  Exhibit 4.6 to the
      Company’s Current Report on Form 8-K as filed with the Commission on
      January 10, 2008 is incorporated herein by reference.4.8
                                                —
                                                Form
      of Rights Certificate. Exhibit B to Exhibit 4.1 to the Rights Plan
      Registration Statement is incorporated herein by
  reference.10.1+
                                                —
                                                Amended
      and Restated 1993 Employee and Consultant Stock Option Plan. Exhibit 10.3
      to the Registration Statement is incorporated herein by
      reference.10.2+
                                                —
                                                First
      Amendment to the Repros Therapeutics Inc. Amended and Restated 1993 Stock
      Option Plan. Exhibit 10.22 to the Company's Annual Report on Form 10-K for
      the year ended December 31, 1999 (the "1999 Form 10-K") is
      incorporated herein by reference.10.3+
                                                —
                                                1994
      Employee and Consultant Stock Option Plan. Exhibit 4.2 to the Company's
      Registration Statement on Form S-8 (File No. 033-83406) as filed with the
      Commission on August 29, 1994 is incorporated herein by
      reference.10.4+
                                                —
                                                2000
      Non-Employee Directors' Stock Option Plan. Appendix B to the Company's
      Definitive Proxy Statement filed on April 26, 2000 is incorporated
      herein by reference.10.5+
                                                —
                                                First
      Amendment to the Repros Therapeutics Inc. 2000 Non-Employee Directors'
      Stock Option Plan. Exhibit 10.21 to the 2000 Form 10-K is incorporated
      herein by reference.10.6+
                                                —
                                                Second
      Amendment to 2000 Non-Employee Directors' Stock Option Plan. Exhibit 10.6
      to the Company's Annual Report on Form 10-K for the year ended
      December 31, 2002 (the "2002 Form 10-K") is incorporated herein by
      reference.10.7+
                                                —
                                                Repros
      Therapeutics Inc. 2004 Stock Option Plan.  Exhibit 10.17 to the
      Company's Registration Statement on Form S-1 (No. 333-119861), as amended,
      is incorporated herein by reference.10.8+
                                                —
                                                Employment
      Agreement between the Company and Joseph S. Podolski. Exhibit 10.5 to the
      Registration Statement is incorporated herein by
  reference.10.9+
                                                —
                                                First
      Amendment to Employment Agreement between the Company and Joseph S.
      Podolski. Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for
      the fiscal quarter ended March 31, 2001 is incorporated herein by
      reference.10.10+
                                                —
                                                Second
      Amendment to Employment Agreement between the Company and Joseph S.
      Podolski. Exhibit 10.17 to the 2002 Form 10-K is incorporated herein by
      reference.




-39-





Exhibit Number
                                                
                                                Identification
      Of Exhibit10.11+
                                                
                                                Third
      Amendment to Employment Agreement dated effective March 11, 2009,
      between the Company and Joseph S. Podolski.  Exhibit 10.1 to the
      Company’s Current Report on Form 8-K as filed with the Commission on March
      17, 2009 is incorporated herein by reference10.12+
                                                
                                                Consulting
      Agreement dated October 29, 2009 by and between the Company and Katherine
      Anderson.  Exhibit 10.2 to the Company’s Current Report on Form
      8-K as filed with the Commission on November 3, 2009 is incorporated
      herein by reference10.13
                                                —
                                                Lease
      Agreement dated May 11, 2004 between the Company and Sealy Woodlands,
      L.P.  Exhibit 10.14 to the Company's Annual Report on Form 10-K
      for the year ended December 31, 2004 is incorporated herein by
      reference.10.14
                                                —
                                                Amendment
      to Lease Agreement between the Company and Sealy Woodlands, L.P., dated
      May 17, 2006.  Exhibit 10.1 to the Company's Quarterly Report on
      Form 10-Q for the fiscal quarter ended March 31, 2006 is
      incorporated herein by reference.10.15++
                                                —
                                                Letter
      Agreement dated July 15, 2002 between the Company, Schering Plough
      Ltd. and Schering-Plough Corporation. Exhibit 10.1 to the Company's
      Quarterly Report on Form 10-Q for the fiscal quarter ended
      June 30, 2002 is incorporated herein by reference.10.16++
                                                —
                                                PHS
      Patent License Agreement dated April 16, 1999 between the Company and
      certain agencies of the United States Public Health Service within the
      Department of Health and Human Services, with amendments. Exhibit 10.1 to
      the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
      September 30, 2003 is incorporated herein by
    reference.10.17
                                                —
                                                Fourth
      Amendment to PHS Patent License Agreement, as amended, dated December 9,
      2003 between the Company and certain agencies of the United States Public
      Health Service within the Department of Health and Human
      Services.  Exhibit 10.1 to the Company’s Current Report on Form
      8-K as filed with the Commission on March 19, 2007 is incorporated herein
      by reference.10.18
                                                —
                                                Waiver
      to PHS Patent License Agreement, as amended, dated March 8, 2007 between
      the Company and certain agencies of the United States Public Health
      Service within the Department of Health and Human
      Services.  Exhibit 10.2 to the Company’s Current Report on Form
      8-K as filed with the Commission on March 19, 2007 is incorporated herein
      by reference.10.19++
                                                —
                                                Fifth
      Amendment to PHS Patent License Agreement, as amended, dated March 15,
      2007 between the Company and certain agencies of the United States Public
      Health Service within the Department of Health and Human
      Services.  Exhibit 10.3 to the Company’s Current Report on Form
      8-K as filed with the Commission on March 19, 2007 is incorporated herein
      by reference.10.20++
                                                
                                                Sixth
      Amendment to PHS Patent License Agreement, as amended, dated July 7, 2009
      between the Company and certain agencies of the United States Public
      Health Service within the Department of Health and Human
      Services.  Exhibit 10.1 to the Company’s Current Report on Form
      8-K/A as filed with the Commission on December 22, 2009 is incorporated
      herein by reference10.21++*
                                                
                                                Seventh
      Amendment to PHS Patent License Agreement, as amended, dated October 28,
      2009 between the Company and certain agencies of the United States Public
      Health Service within the Department of Health and Human
      Services.10.22
                                                
                                                Master
      Settlement Agreement and Releases dated October 29, 2009 by and among the
      Company and its creditors signatory thereto.  Exhibit 10.1 to
      the Company’s Current Report on Form 8-K as filed with the Commission on
      November 3, 2009 is incorporated herein by reference10.23
                                                —
                                                Securities
      Purchase Agreement dated October 7, 2009, among the Company and the
      purchasers identified on the signature pages thereto.  Exhibit
      10.1 to the Company’s Current Report on Form 8-K as filed with the
      Commission on October 14, 2009 is incorporated herein by
      reference10.24
                                                
                                                Securities
      Purchase Agreement between the Company and Enable Growth Partners LP dated
      September 8, 2009.  Exhibit 10.1 to the Company’s Current Report
      on Form 8-K as filed with the Commission on September 10, 2009 is
      incorporated herein by reference10.25
                                                
                                                Form
      of Indemnification Agreement entered into between the Company and each of
      its directors.  Exhibit 10.1 to the Company’s Current Report on
      Form 8-K as filed with the Commission on May 20, 2009 is incorporated
      herein by reference23.1*
                                                —
                                                Consent
      of PricewaterhouseCoopers
LLP




-40-





Exhibit Number
                        
                        Identification
      Of Exhibit31.1*
                        —
                        Certification
      Pursuant to Rule 13(a)-14(a) or 15(d)-14(a) of the Exchange Act, As
      Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief
      Executive Officer)31.2*
                        —
                        Certification
      Pursuant to Rule 13(a)-14(a) or 15(d)-14(a) of the Exchange Act, As
      Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
      (Principal Financial Officer)32.1*
                        —
                        Certification
      Furnished Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive
      Officer)32.2*
                        —
                        Certification
      Furnished Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002 (Principal Financial
      Officer)









*
            Filed
      herewith.




+
            Management
      contract or compensatory plan.




++
            Portions
      of this exhibit have been omitted based on a request for confidential
      treatment pursuant to Rule 24b-2 of the Exchange Act. Such omitted
      portions have been filed separately with the
  Commission.




-41-


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.




REPROS THERAPEUTICS
      INC.By:
                /s/ Joseph S. PodolskiJoseph
      S. PodolskiPresident
      and Chief Executive
Officer




Dated:  March
15, 2010




Signature
            
            Title
            
            Date/s/ Joseph S. Podolski
            
            President,
      Chief Executive Officer and Director
            
            March
      15, 2010Joseph
      S. Podolski
            
            (Principal
      Executive Officer)/s/ Katherine A. Anderson
            
            Chief
      Accounting Officer and Secretary
            
            March
      15, 2010Katherine
      A. Anderson
            
            (Principal
      Financial Officer andPrincipal
      Accounting Officer)/s/ Nola Masterson
            
            Chair
      of the Board
            
            March
      15, 2010Nola
      Masterson/s/ Daniel F. Cain
            
            Director
            
            March
      15, 2010Daniel
      F. Cain/s/ Jean L. Fourcroy, M.D., Ph.D.,
      M.P.H.
            
            Director
            
            March
      15, 2010Jean
      L. Fourcroy, M.D., Ph.D., M.P.H./s/ Jaye Thompson, Ph.D.
            
            Director
            
            March
      15, 2010Jaye
      Thompson, Ph.D.


-42-


Report
of Independent Registered Public Accounting Firm





To the
Board of Directors and Stockholders of Repros Therapeutics, Inc.:





In our
opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations and cash flows for each of the three years
in the period ended December 31, 2009, and the statements of stockholders'
equity for each of the eight years in the period ended December 31, 2009 present
fairly, in all material respects, the financial position of Repros Therapeutics,
Inc. and  subsidiary (collectively, the "Company"), a development
stage company, at December 31, 2009 and 2008, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2009, and cumulatively for the period January 1, 2002 through
December 31, 2009 (not separately presented) in conformity with accounting
principles generally accepted in the United States of America.  Also
in our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2009, based on
criteria established in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).  The Company's management is responsible
for these financial statements, for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting, included in Management's Report on Internal
Control Over Financial Reporting appearing under Item 9A.  Our
responsibility is to express opinions on these financial statements and on the
Company's internal control over financial reporting based on our
audits.  We did not audit the cumulative totals of the Company for the
period from August 20, 1987 (date of inception) to December 31, 2001, which
totals reflect a deficit of $75.8 million accumulated during the development
stage.  The cumulative totals for the period January 1, 1994 to
December 31, 2001 were audited by other auditors who have ceased
operations.  Those auditors expressed unqualified opinions on the
consolidated financial statements for the three years in the period ended
December 31, 2001, the three years in the period ended December 31, 2000, the
three years in the period ended December 31, 1999, the three years in the period
ended December 31, 1998, the three years in the period ended December 31, 1997,
and the three years in the period ended December 31, 1996 dated February 6,
2002, February 2, 2001, February 2, 2000, January 26, 1999, March 24, 1998, and
March 11, 1997, respectively.  We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United
States).  Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and whether effective internal control over financial
reporting was maintained in all material respects.  Our audits of the
financial statements included examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation.  Our audit of
internal control over financial reporting included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk.  Our
audits also included performing such other procedures as we considered necessary
in the circumstances. We believe that our audits provide a reasonable basis for
our opinions.





The accompanying consolidated financial
statements have been prepared assuming that the Company will continue as a going
concern.  As discussed in Note 1 to the consolidated financial
statements, the Company is a development stage company, has an accumulated
deficit,projects it will
need to raise additional capital in 2010 and there can be no assurance that the
Company will be able to raise sufficient capital.  These and other
mattersraise substantial
doubt about the Company's ability to continue as a going
concern.  Management's plans in regard to this matter are also
described in Note 1.   The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.





A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles.  A company’s internal
control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of
the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and
(iii) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the Company’s assets that
could have a material effect on the financial statements.





F-1




Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.




/s/
PricewaterhouseCoopers LLP





Houston,
Texas


March 15,
2010




F-2




THE
FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY AR THUR


ANDERSEN
LLP AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP.





REPORT
OF INDEPENDENT PUBLIC ACCOUNTANTS




To
Zonagen, Inc.:





We have
audited the accompanying consolidated balance sheets of Zonagen, Inc. (a
Delaware corporation in the development stage), and subsidiary (collectively,
"the Company") as of December 31, 2001 and 2000, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 2001. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our
audits.





We
conducted our audits in accordance with auditing standards generally accepted in
the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Zonagen, Inc., and subsidiary as of
December 31, 2001 and 2000, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2001, in conformity
with accounting principles generally accepted in the United States.





As
explained in Note 2 to the consolidated financial statements, effective January
1, 2000, the Company changed its method of accounting for revenue
recognition.





/S/
ARTHUR ANDERSEN LLP





Houston,
Texas


February
6, 2002




F-3





THE
FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY AR THUR


ANDERSEN
LLP AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP.





REPORT
OF INDEPENDENT PUBLIC ACCOUNTANTS





To
Zonagen, Inc.:





We have
audited the accompanying consolidated balance sheets of Zonagen, Inc. (a
Delaware corporation in the development stage), and subsidiary (collectively,
"the Company") as of December 31, 2000 and 1999, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 2000. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our
audits.





We
conducted our audits in accordance with auditing standards generally accepted in
the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Zonagen, Inc., and subsidiary as of
December 31, 2000 and 1999, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2000, in conformity
with accounting principles generally accepted in the United States.





As
explained in Note 2 to the consolidated financial statements, effective January
1, 2000, the Company changed its method of accounting for revenue
recognition.





/S/
ARTHUR ANDERSEN LLP





Houston,
Texas


February
2, 2001




F-4




THE
FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY AR THURANDERSEN
LLP AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP.





REPORT
OF INDEPENDENT PUBLIC ACCOUNTANTS





To
Zonagen, Inc.:





We have
audited the accompanying consolidated balance sheets of Zonagen, Inc. (a
Delaware corporation in the development stage), and subsidiary (collectively,
"the Company") as of December 31, 1999 and 1998, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1999. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our
audits.





We
conducted our audits in accordance with auditing standards generally accepted in
the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Zonagen, Inc., and subsidiary as of
December 31, 1999 and 1998, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United
States.





/S/
ARTHUR ANDERSEN LLP





Houston,
Texas


February
2, 2000




F-5




THE
FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY AR THUR


ANDERSEN
LLP AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP.





REPORT
OF INDEPENDENT PUBLIC ACCOUNTANTS




To
Zonagen, Inc.:





We have
audited the accompanying balance sheets of Zonagen, Inc. (a Delaware corporation
in the development stage), and subsidiary (collectively, "the Company") as of
December 31, 1998 and 1997, and the related statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.





We
conducted our audits in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Zonagen, Inc., and subsidiary as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1998, in conformity
with generally accepted accounting principles.





/S/
ARTHUR ANDERSEN LLP





Houston,
Texas


January
26, 1999





F-6




THE
FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY AR THUR


ANDERSEN
LLP AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP.





REPORT
OF INDEPENDENT PUBLIC ACCOUNTANTS





To
Zonagen, Inc.:





We have
audited the accompanying balance sheets of Zonagen, Inc. (a Delaware corporation
in the development stage), and subsidiary (collectively, "the Company") as of
December 31, 1997 and 1996, and the related statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1997.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to
express an opinion on these financial statements based on our
audits.





We
conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.





In
our opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Zonagen, Inc., and subsidiary as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.





/S/
ARTHUR ANDERSEN LLP




Houston,
Texas


March 24,
1998





F-7




THE
FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY AR THUR


ANDERSEN
LLP AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP.





REPORT
OF INDEPENDENT PUBLIC ACCOUNTANTS





To
Zonagen, Inc.:





We have
audited the accompanying consolidated balance sheets of Zonagen, Inc. (a
Delaware corporation in the development stage), and subsidiary as of December
31, 1996 and 1995, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.





We
conducted our audits in accordance with generally accepted audited standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.





As
discussed in Note 1 to the consolidated financial statements, the Company has
operated as a development stage enterprise since its inception by devoting
substantially all of its efforts to raising capital and performing research and
development. In order to complete the research and development and other
activities necessary to commercialize its products, additional financing will be
required. Management's current projections indicate that the Company can
conserve its cash resources to maintain the Company's operations through 1997.
Management's plans in regard to those matters are also described in Note
1.





In our
opinion, based on our audits, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Zonagen, Inc., and subsidiary as of December 31, 1996 and 1995, and the results
of their operations and cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.





/S/
ARTHUR ANDERSEN LLP


Houston,
Texas


March 11,
1997


F-8




REPROS
THERAPEUTICS INC. AND SUBSIDIARY


(A
development stage company)





CONSOLIDATED
BALANCE SHEETS


(in
thousands except share and per share amounts)





December
      31,
                
                
                December
      31,2009
                
                
                2008ASSETSCurrent
      AssetsCash
      and cash equivalents
                
                $
                1,886
                
                
                $
                19,470Prepaid
      expenses and other current assets
                
                
                177
                
                
                
                1,392Total
      current assets
                
                
                2,063
                
                
                
                20,862Fixed Assets,net
                
                
                12
                
                
                
                28Other Assets,
      net
                
                
                885
                
                
                
                1,713Total
      assets
                
                $
                2,960
                
                
                $
                22,603LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesAccounts
      payable
                
                $
                2,043
                
                
                $
                5,132Accrued
      expenses
                
                
                355
                
                
                
                1,857Total
      current liabilities
                
                
                2,398
                
                
                
                6,989Commitments
      and Contingencies (note 10)Stockholders'
      EquityPreferred
      Stock, $.001 par value, 5,000,000 shares authorized, none issued and
      outstanding
                
                
                -
                
                
                
                -Common
      Stock, $.001 par value, 75,000,000 and 30,000,000 shares authorized,
      respectively, 25,987,998 and 17,111,939 shares issued, respectively;
      25,538,598 and 15,174,904  shares outstanding,
      respectively
                
                
                26
                
                
                
                17Additional
      paid-in capital
                
                
                176,392
                
                
                
                168,787Cost
      of treasury stock, 449,400 and 1,937,035 shares,
    respectively
                
                
                (1,380
                )
                
                
                (5,948
                )Deficit
      accumulated during the development stage
                
                
                (174,476
                )
                
                
                (147,242
                )Total
      stockholders' equity
                
                
                562
                
                
                
                15,614Total
      liabilities and stockholders' equity
                
                $
                2,960
                
                
                $
                22,603





The
accompanying notes are an integral part of these consolidated financial
statements.





F-9





REPROS
THERAPEUTICS INC. AND SUBSIDIARY


(A
development stage company)





CONSOLIDATED
STATEMENTS OF OPERATIONS


(in
thousands except per share amounts)





From
      Inception(August
      20, 1987)throughFor
      the Year Ended December 31,
                        
                        
                        December
      31,2009
                        
                        
                        2008
                        
                        
                        2007
                        
                        
                        2009(unaudited)Revenues
      and other incomeLicensing
      fees
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        28,755Product
      royalties
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        627Research
      and development grants
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        1,219Interest
      income
                        
                        
                        4
                        
                        
                        
                        433
                        
                        
                        
                        1,508
                        
                        
                        
                        16,297Gain
      on disposal of fixed assets
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        102Other
      income
                        
                        
                        547
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        582Total
      revenues and other income
                        
                        
                        551
                        
                        
                        
                        433
                        
                        
                        
                        1,508
                        
                        
                        
                        47,582ExpensesResearch
      and development
                        
                        
                        23,062
                        
                        
                        
                        22,575
                        
                        
                        
                        12,420
                        
                        
                        
                        170,330General
      and administrative
                        
                        
                        4,723
                        
                        
                        
                        3,060
                        
                        
                        
                        2,788
                        
                        
                        
                        41,997Other
      expense
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        388Total
      expenses
                        
                        
                        27,785
                        
                        
                        
                        25,635
                        
                        
                        
                        15,208
                        
                        
                        
                        212,715Loss
      from continuing operations
                        
                        
                        (27,234
                        )
                        
                        
                        (25,202
                        )
                        
                        
                        (13,700
                        )
                        
                        
                        (165,133
                        )Loss
      from discontinued operations
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (1,828
                        )Gain
      on disposal of discontinued operations
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        939Net
      loss before cumulative effect of changes in accounting
      principles
                        
                        
                        (27,234
                        )
                        
                        
                        (25,202
                        )
                        
                        
                        (13,700
                        )
                        
                        
                        (166,022
                        )Cumulative
      effect of changes in accounting principles
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (8,454
                        )Net
      loss
                        
                        $
                        (27,234
                        )
                        
                        $
                        (25,202
                        )
                        
                        $
                        (13,700
                        )
                        
                        $
                        (174,476
                        )Loss
      per share - basic and diluted
                        
                        $
                        (1.57
                        )
                        
                        $
                        (1.88
                        )
                        
                        $
                        (1.09
                        )Shares
      used in loss per share calculation:Basic
                        
                        
                        17,344
                        
                        
                        
                        13,372
                        
                        
                        
                        12,524Diluted
                        
                        
                        17,344
                        
                        
                        
                        13,372
                        
                        
                        
                        12,524





The
accompanying notes are an integral part of these consolidated financial
statements.





F-10





REPROS THERAPEUTICS INC. AND SUBSIDIARY


(A
development stage company)





CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY


(in
thousands except share and per share amounts)





DeficitAccumulatedAdditional
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  During
      the
                  
                  
                  TotalPreferred
      Stock
                  
                  
                  Common
      Stock
                  
                  
                  Paid-in
                  
                  
                  Deferred
                  
                  
                  Treasury
      Stock
                  
                  
                  Development
                  
                  
                  Stockholders'Shares
                  
                  
                  Amount
                  
                  
                  Shares
                  
                  
                  Amount
                  
                  
                  Capital
                  
                  
                  Compensation
                  
                  
                  Shares
                  
                  
                  Amount
                  
                  
                  Stage
                  
                  
                  EquityExchange
      of common stock ($.004 per share) for technology rights and services from
      founding stockholders
                  
                  
                  -
                  
                  
                  $
                  -
                  
                  
                  
                  245,367
                  
                  
                  $
                  -
                  
                  
                  $
                  1
                  
                  
                  $
                  -
                  
                  
                  
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  1Net
      Loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (28
                  )
                  
                  
                  (28
                  )BALANCE
      AT DECEMBER 31, 1987 (unaudited)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  245,367
                  
                  
                  
                  -
                  
                  
                  
                  1
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (28
                  )
                  
                  
                  (27
                  )Net
      Loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (327
                  )
                  
                  
                  (327
                  )BALANCE
      AT DECEMBER 31, 1988 (unaudited)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  245,367
                  
                  
                  
                  -
                  
                  
                  
                  1
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (355
                  )
                  
                  
                  (354
                  )Proceeds
      from issuance of common stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  65,431
                  
                  
                  
                  -
                  
                  
                  
                  3
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3Net
      Loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (967
                  )
                  
                  
                  (967
                  )BALANCE
      AT DECEMBER 31, 1989 (unaudited)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  310,798
                  
                  
                  
                  -
                  
                  
                  
                  4
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,322
                  )
                  
                  
                  (1,318
                  )Proceeds
      from issuance of common stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  467
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Net
      Loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,426
                  )
                  
                  
                  (1,426
                  )BALANCE
      AT DECEMBER 31, 1990 (unaudited)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  311,265
                  
                  
                  
                  -
                  
                  
                  
                  4
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (2,748
                  )
                  
                  
                  (2,744
                  )Net
      Loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,820
                  )
                  
                  
                  (1,820
                  )BALANCE
      AT DECEMBER 31, 1991 (unaudited)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  311,265
                  
                  
                  
                  -
                  
                  
                  
                  4
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (4,568
                  )
                  
                  
                  (4,564
                  )Conversion
      of 391,305 shares of Series C preferred stock into common
      stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  91,442
                  
                  
                  
                  -
                  
                  
                  
                  360
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  360Purchase
      of retirement of common stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (23,555
                  )
                  
                  
                  -
                  
                  
                  
                  (1
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1
                  )Proceeds
      from issuance of common stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  16,946
                  
                  
                  
                  -
                  
                  
                  
                  7
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  7Net
      Loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,583
                  )
                  
                  
                  (1,583
                  )BALANCE
      AT DECEMBER 31, 1992 (unaudited)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  396,098
                  
                  
                  
                  -
                  
                  
                  
                  370
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (6,151
                  )
                  
                  
                  (5,781
                  )Issuance
      of common stock for cash, April 1, 1993, and May 12, 1993 ($5.50 per
      share), net of offering costs of $1,403
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,534,996
                  
                  
                  
                  2
                  
                  
                  
                  7,037
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  7,039Issuance
      of common stock for cash and license agreement, December 9, 1993 ($10.42
      per share), net of offering costs of $47
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  239,933
                  
                  
                  
                  -
                  
                  
                  
                  2,453
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,453Conversion
      of Series A preferred stock to common stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  179,936
                  
                  
                  
                  -
                  
                  
                  
                  600
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  600Conversion
      of Series B preferred stock to common stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  96,013
                  
                  
                  
                  -
                  
                  
                  
                  378
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  378Conversion
      of Series C preferred stock to common stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  876,312
                  
                  
                  
                  1
                  
                  
                  
                  3,443
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,444Conversion
      of Series D preferred stock to common stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  280,248
                  
                  
                  
                  1
                  
                  
                  
                  599
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  600Conversion
      of bridge loan to common stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  64,000
                  
                  
                  
                  -
                  
                  
                  
                  256
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  256Net
      Loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (2,532
                  )
                  
                  
                  (2,532
                  )





(continued)





F-11




REPROS THERAPEUTICS INC. AND SUBSIDIARY (A
development stage company)
 
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
 (in
thousands except share and per share amounts)
 
 DeficitAccumulatedAdditional
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  During
      the
                                  
                                  
                                  TotalPreferred
      Stock
                                  
                                  
                                  Common
      Stock
                                  
                                  
                                  Paid-in
                                  
                                  
                                  Deferred
                                  
                                  
                                  Treasury
      Stock
                                  
                                  
                                  Development
                                  
                                  
                                  Stockholders'Shares
                                  
                                  
                                  Amount
                                  
                                  
                                  Shares
                                  
                                  
                                  Amount
                                  
                                  
                                  Capital
                                  
                                  
                                  Compensation
                                  
                                  
                                  Shares
                                  
                                  
                                  Amount
                                  
                                  
                                  Stage
                                  
                                  
                                  EquityBALANCE
      AT DECEMBER 31, 1993 (unaudited)
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  3,667,536
                                  
                                  
                                  $
                                  4
                                  
                                  
                                  $
                                  15,136
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  (8,683
                                  )
                                  
                                  $
                                  6,457Deferred
      compensation resulting from grant of options
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  188
                                  
                                  
                                  
                                  (188
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Amortization
      of deferred compensation
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  38
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  38Exercise
      of warrants to purchase common stock for cash, June 30, 1994 ($3.94 per
      share)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  39,623
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  156
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  156Issuance
      of common stock for purchase of FTI, October 13, 1994
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  111,111
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  1,567
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  1,567Net
      loss
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (3,970
                                  )
                                  
                                  
                                  (3,970
                                  )BALANCE
      AT DECEMBER 31, 1994
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  3,818,270
                                  
                                  
                                  
                                  4
                                  
                                  
                                  
                                  17,047
                                  
                                  
                                  
                                  (150
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (12,653
                                  )
                                  
                                  
                                  4,248Amortization
      of deferred compensation
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  37
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  37Exercise
      of options to purchase common stock for cash, January and April 1995 ($.10
      to $6.13 per share)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  4,546
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  14
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  14Issuance
      of common stock for cash and a financing charge, March 9,
    1995
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  16,000
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  76
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  76Issuance
      of Series A preferred stock for cash, October 4, 1995, and October 19,
      1995 ($10.00 per share), net of offering costs of $651
                                  
                                  
                                  598,850
                                  
                                  
                                  
                                  1
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  5,336
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  5,337Conversion
      of warrants to purchase common stock as a result of offering under
      antidilution clause, October 19, 1995 ($3.63 per share)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Conversion
      of Series A preferred stock into common stock, November and December
      1995
                                  
                                  
                                  (94,000
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  259,308
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Net
      loss
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (4,287
                                  )
                                  
                                  
                                  (4,287
                                  )BALANCE
      AT DECEMBER 31, 1995
                                  
                                  
                                  504,850
                                  
                                  
                                  
                                  1
                                  
                                  
                                  
                                  4,098,124
                                  
                                  
                                  
                                  4
                                  
                                  
                                  
                                  22,473
                                  
                                  
                                  
                                  (113
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (16,940
                                  )
                                  
                                  
                                  5,425Deferred
      compensation resulting from grant of options
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  86
                                  
                                  
                                  
                                  (86
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Amortization
      of deferred compensation Exercise of warrants to purchase common stock for
      cash,
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  54
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  54January
      through December 1996 ($3.63 per share)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  227,776
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  827
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  827Conversion
      of Series A preferred stock into common stock, January through November
      1996
                                  
                                  
                                  (507,563
                                  )
                                  
                                  
                                  (1
                                  )
                                  
                                  
                                  1,396,826
                                  
                                  
                                  
                                  2
                                  
                                  
                                  
                                  (1
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Issuance
      of options for services, January 12, 1996
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  99
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  99Exercise
      of options to purchase common stock for cash, February through November
      1996 ($.001 to $5.50 per share)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  23,100
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  75
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  75Issuance
      of common stock for agreement not to compete, April 13,
    1996
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  19,512
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  200
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  200Exercise
      of warrants to purchase Series A preferred stock under cashless exercise
      provision, June 5, 1996
                                  
                                  
                                  2,713
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Issuance
      of Series B preferred stock for cash, September 30, 1996, and October 11,
      1996 ($10.00 per share), net of offering costs of $2,557
                                  
                                  
                                  1,692,500
                                  
                                  
                                  
                                  2
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  14,366
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  14,368Conversion
      of Series B preferred stock into common stock, November through December
      1996
                                  
                                  
                                  (177,594
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  268,058
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Net
      loss
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (9,470
                                  )
                                  
                                  
                                  (9,470
                                  )
 
 (continued)
 
 F-12
 REPROS THERAPEUTICS INC. AND SUBSIDIARY
 (A
development stage company)
 
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
 (in
thousands except share and per share amounts)
 
 DeficitAccumulatedAdditional
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    During
      the
                    
                    
                    TotalPreferred
      Stock
                    
                    
                    Common
      Stock
                    
                    
                    Paid-in
                    
                    
                    Deferred
                    
                    
                    Treasury
      Stock
                    
                    
                    Development
                    
                    
                    Stockholders'Shares
                    
                    
                    Amount
                    
                    
                    Shares
                    
                    
                    Amount
                    
                    
                    Capital
                    
                    
                    Compensation
                    
                    
                    Shares
                    
                    
                    Amount
                    
                    
                    Stage
                    
                    
                    EquityBALANCE
      AT DECEMBER 31, 1996
                    
                    
                    1,514,906
                    
                    
                    $
                    2
                    
                    
                    
                    6,033,396
                    
                    
                    $
                    6
                    
                    
                    $
                    38,125
                    
                    
                    $
                    (145
                    )
                    
                    
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    (26,410
                    )
                    
                    $
                    11,578Deferred
      compensation resulting from grant of options
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    2,110
                    
                    
                    
                    (2,110
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Amortization
      of deferred compensation
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    854
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    854Exercise
      of options to purchase common stock for cash, January through December
      1997 ($0.00 to $22.25 per share)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    90,955
                    
                    
                    
                    -
                    
                    
                    
                    522
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    522Exercise
      of warrants to purchase common stock for cash, January through December
      1997 ($3.63 and $3.07 per share)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    22,368
                    
                    
                    
                    -
                    
                    
                    
                    75
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    75Issuance
      of common stock for a cashless exercise of Series A preferred stock
      warrants, February through September 1997
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    81,294
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Exercise
      of Series A preferred stock warrants to purchase common stock for cash,
      April 1997 ($11.00 per share)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    818
                    
                    
                    
                    -
                    
                    
                    
                    3
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    3Issuance
      of common stock for a cashless exercise of Series B preferred stock
      warrants, April through November 1997
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    88,223
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Exercise
      of Series B preferred stock warrants to purchase common stock for cash,
      April through July 1997 ($11.00 per share)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    17,169
                    
                    
                    
                    -
                    
                    
                    
                    125
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    125Issuance
      of common stock as final purchase price for acquisition of FTI, January
      31, 1997 ($9.833 per share)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    305,095
                    
                    
                    
                    1
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1Issuance
      of common stock as final debt payment on FTI acquisition, January 31, 1997
      ($9.833 per share)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    19,842
                    
                    
                    
                    -
                    
                    
                    
                    94
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    94Conversion
      of Series B preferred stock into common stock, January through October
      1997
                    
                    
                    (1,514,906
                    )
                    
                    
                    (2
                    )
                    
                    
                    2,295,263
                    
                    
                    
                    2
                    
                    
                    
                    (1
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (1
                    )Issuance
      of common stock for cash, July 25, 1997 ($30.00 per share), net of
      offering costs of $5,439
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    2,587,500
                    
                    
                    
                    3
                    
                    
                    
                    72,183
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    72,186Purchase
      of treasury stock, December 1997
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    61,500
                    
                    
                    
                    (1,287
                    )
                    
                    
                    -
                    
                    
                    
                    (1,287
                    )Net
      loss
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (13,174
                    )
                    
                    
                    (13,174
                    )
 
 (continued)
  F-13
  REPROS THERAPEUTICS INC. AND SUBSIDIARY
 (A
development stage company)
 
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
 (in
thousands except share and per share amounts)
 
 DeficitAccumulatedAdditional
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    During
      the
                    
                    
                    TotalPreferred
      Stock
                    
                    
                    Common
      Stock
                    
                    
                    Paid-in
                    
                    
                    Deferred
                    
                    
                    Treasury
      Stock
                    
                    
                    Development
                    
                    
                    Stockholders'Shares
                    
                    
                    Amount
                    
                    
                    Shares
                    
                    
                    Amount
                    
                    
                    Capital
                    
                    
                    Compensation
                    
                    
                    Shares
                    
                    
                    Amount
                    
                    
                    Stage
                    
                    
                    EquityBALANCE
      AT DECEMBER 31, 1997
                    
                    
                    -
                    
                    
                    $
                    -
                    
                    
                    
                    11,541,923
                    
                    
                    $
                    12
                    
                    
                    $
                    113,236
                    
                    
                    $
                    (1,401
                    )
                    
                    
                    61,500
                    
                    
                    $
                    (1,287
                    )
                    
                    $
                    (39,584
                    )
                    
                    $
                    70,976Deferred
      compensation resulting from grant of options
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    55
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    55Amortization
      of deferred compensation
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    422
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    422Forfeiture
      of stock options, December 1998
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (21
                    )
                    
                    
                    21
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Exercise
      of options to purchase common stock for cash, January through October 1998
      ($0.43 to $22.25 per share)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    63,022
                    
                    
                    
                    -
                    
                    
                    
                    344
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    344Issuance
      of common stock for services, January 15, 1998
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    5,000
                    
                    
                    
                    -
                    
                    
                    
                    103
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    103Issuance
      of common stock for a cashless exercise of Series B preferred stock
      warrants, May through July 1998
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    11,195
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Purchase
      of treasury stock, January through September 1998 ($13.00 to $20.65 per
      share)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    353,800
                    
                    
                    
                    (6,197
                    )
                    
                    
                    -
                    
                    
                    
                    (6,197
                    )Net
      loss
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (12,316
                    )
                    
                    
                    (12,316
                    )BALANCE
      AT DECEMBER 31, 1998
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    11,621,140
                    
                    
                    
                    12
                    
                    
                    
                    113,717
                    
                    
                    
                    (958
                    )
                    
                    
                    415,300
                    
                    
                    
                    (7,484
                    )
                    
                    
                    (51,900
                    )
                    
                    
                    53,387Deferred
      compensation resulting from grant of options
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (229
                    )
                    
                    
                    229
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Amortization
      of deferred compensation
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    239
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    239Exercise
      of options to purchase common stock for cash, February through September
      1999 ($0.04 to $8.375 per share)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    31,866
                    
                    
                    
                    -
                    
                    
                    
                    72
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    72Issuance
      of common stock for a cashless exercise of common stock warrants, February
      1999
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    4,775
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Issuance
      of common stock for a cashless exercise of Series A preferred stock
      warrants, April 1999
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    22,131
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Issuance
      of common stock for a cashless exercise of Series B preferred stock
      warrants, March through April 1999
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    876
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Exercise
      of Series B preferred stock warrants to purchase common stock for cash,
      January 1999 ($11.00 per share)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    536
                    
                    
                    
                    -
                    
                    
                    
                    4
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    4Net
      loss
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (11,952
                    )
                    
                    
                    (11,952
                    )BALANCE
      AT DECEMBER 31, 1999
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    11,681,324
                    
                    
                    
                    12
                    
                    
                    
                    113,564
                    
                    
                    
                    (490
                    )
                    
                    
                    415,300
                    
                    
                    
                    (7,484
                    )
                    
                    
                    (63,852
                    )
                    
                    
                    41,750Deferred
      compensation resulting from grant of options
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    77
                    
                    
                    
                    (34
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    43Amortization
      of deferred compensation
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    283
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    283Exercise
      of options to purchase common stock for cash, March through September 2000
      ($0.43 to $8.375 per share)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    49,416
                    
                    
                    
                    -
                    
                    
                    
                    112
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    112Issuance
      of common stock through employee stock purchase plan for cash, December
      2000
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    9,379
                    
                    
                    
                    -
                    
                    
                    
                    21
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    21Issuance
      of common stock to Board of Director members for services, May through
      December 2000
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    2,034
                    
                    
                    
                    -
                    
                    
                    
                    6
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    6Net
      loss
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (11,155
                    )
                    
                    
                    (11,155
                    )
 
 (continued)
  F-14
  REPROS
THERAPEUTICS INC. AND SUBSIDIARY
 (A
development stage company)
 
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
 (in
thousands except share and per share amounts)
 
 DeficitAccumulatedAdditional
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      During
      the
                      
                      
                      TotalPreferred
      Stock
                      
                      
                      Common
      Stock
                      
                      
                      Paid-in
                      
                      
                      Deferred
                      
                      
                      Treasury
      Stock
                      
                      
                      Development
                      
                      
                      Stockholders'Shares
                      
                      
                      Amount
                      
                      
                      Shares
                      
                      
                      Amount
                      
                      
                      Capital
                      
                      
                      Compensation
                      
                      
                      Shares
                      
                      
                      Amount
                      
                      
                      Stage
                      
                      
                      EquityBALANCE
      AT DECEMBER 31, 2000
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      
                      
                      11,742,153
                      
                      
                      $
                      12
                      
                      
                      $
                      113,780
                      
                      
                      $
                      (241
                      )
                      
                      
                      415,300
                      
                      
                      $
                      (7,484
                      )
                      
                      $
                      (75,007
                      )
                      
                      $
                      31,060Compensation
      resulting from grant of options
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      36
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      36Compensation
      resulting from extension of warrants
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      23
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      23Amortization
      of deferred compensation
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      230
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      230Exercise
      of options to purchase common stock for cash, February through December
      2001 ($0.64 to $4.00 per share)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      12,242
                      
                      
                      
                      -
                      
                      
                      
                      25
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      25Issuance
      of common stock through employee stock purchase plan for cash, June and
      December 2001
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      8,431
                      
                      
                      
                      -
                      
                      
                      
                      25
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      25Issuance
      of common stock to Board of Director members for services, February
      through December 2001
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      2,690
                      
                      
                      
                      -
                      
                      
                      
                      9
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      9Net
      loss
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (839
                      )
                      
                      
                      (839
                      )BALANCE
      AT DECEMBER 31, 2001
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      
                      
                      11,765,516
                      
                      
                      $
                      12
                      
                      
                      $
                      113,898
                      
                      
                      $
                      (11
                      )
                      
                      
                      415,300
                      
                      
                      $
                      (7,484
                      )
                      
                      $
                      (75,846
                      )
                      
                      $
                      30,569Amortization
      of deferred compensation
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      11
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      11Exercise
      of options to purchase common stock for cash, January and February 2002
      ($0.64 to $2.94 per share)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      31,265
                      
                      
                      
                      -
                      
                      
                      
                      21
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      21Issuance
      of common stock through employee stock purchase plan for cash, June
      2002
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      4,824
                      
                      
                      
                      -
                      
                      
                      
                      6
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      6Issuance
      of common stock to Employees
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      105,000
                      
                      
                      
                      -
                      
                      
                      
                      111
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      111Issuance
      of common stock to Board of Director members for services, March through
      December 2002
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      11,572
                      
                      
                      
                      -
                      
                      
                      
                      15
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      15Net
      loss
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (3,882
                      )
                      
                      
                      (3,882
                      )BALANCE
      AT DECEMBER 31, 2002
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      
                      
                      11,918,177
                      
                      
                      $
                      12
                      
                      
                      $
                      114,051
                      
                      
                      $
                      -
                      
                      
                      
                      415,300
                      
                      
                      $
                      (7,484
                      )
                      
                      $
                      (79,728
                      )
                      
                      $
                      26,851Issuance
      of common stock to Board of Director members for services, February
      through May 2003
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      10,871
                      
                      
                      
                      -
                      
                      
                      
                      14
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      14Purchase
      of treasury stock April ($1.37 to $1.50 per share)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      34,100
                      
                      
                      
                      (49
                      )
                      
                      
                      -
                      
                      
                      
                      (49
                      )Net
      loss
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (3,329
                      )
                      
                      
                      (3,329
                      )BALANCE
      AT DECEMBER 31, 2003
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      
                      
                      11,929,048
                      
                      
                      $
                      12
                      
                      
                      $
                      114,065
                      
                      
                      $
                      -
                      
                      
                      
                      449,400
                      
                      
                      $
                      (7,533
                      )
                      
                      $
                      (83,057
                      )
                      
                      $
                      23,487Self
      Tender Offer of 6,547,635 shares at $2.10 including 60,888 exercised
      options
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      60,888
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      6,547,635
                      
                      
                      
                      (13,665
                      )
                      
                      
                      -
                      
                      
                      
                      (13,665
                      )Costs
      associated with self tender offer
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (289
                      )
                      
                      
                      -
                      
                      
                      
                      (289
                      )Noncash
      stock compensation related to stock option bonus program
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      78
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      78Issuance
      of 354,474 stock options to employees onMarch
      29, 2004 and approved on September 29, 2004 (issue price of $2.72, fmv
      when approved $3.60)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      312
                      
                      
                      
                      (312
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Amortization
      of deferred compensation
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      78
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      78Net
      loss
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (3,697
                      )
                      
                      
                      (3,697
                      )BALANCE
      AT DECEMBER 31, 2004
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      
                      
                      11,989,936
                      
                      
                      $
                      12
                      
                      
                      $
                      114,455
                      
                      
                      $
                      (234
                      )
                      
                      
                      6,997,035
                      
                      
                      $
                      (21,487
                      )
                      
                      $
                      (86,754
                      )
                      
                      $
                      5,992Issuance
      of 5,060,000 shares of treasury stock at $4.00 per share February 1,
      2005
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      2,641
                      
                      
                      
                      -
                      
                      
                      
                      (5,060,000
                      )
                      
                      
                      15,539
                      
                      
                      
                      -
                      
                      
                      
                      18,180Exercise
      of options to purchase common stock for cash, January and February 2005
      ($2.94 to $3.47 per share)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      26,700
                      
                      
                      
                      -
                      
                      
                      
                      85
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      85Noncash
      stock compensation related to stock option bonus program
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (15
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (15
                      )Amortization
      of deferred compensation
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      104
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      104Net
      loss
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (7,391
                      )
                      
                      
                      (7,391
                      )BALANCE
      AT DECEMBER 31, 2005
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      
                      
                      12,016,636
                      
                      
                      $
                      12
                      
                      
                      $
                      117,166
                      
                      
                      $
                      (130
                      )
                      
                      
                      1,937,035
                      
                      
                      $
                      (5,948
                      )
                      
                      $
                      (94,145
                      )
                      
                      $
                      16,955Exercise
      of options to purchase common stock for cash, January and July 2006 ($1.70
      to $7.50 per share)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      71,361
                      
                      
                      
                      -
                      
                      
                      
                      241
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      241Reclassification
      of previous deferred compensation due to the adoption of FAS
      123(R)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (130
                      )
                      
                      
                      130
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Stock
      option compensation
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      789
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      789Net
      loss
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (14,195
                      )
                      
                      
                      (14,195
                      )
 
 (continued)
  F-15
  REPROS
THERAPEUTICS INC. AND SUBSIDIARY
 (A
development stage company)
 
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
 (in
thousands except share and per share amounts)
 
 DeficitAccumulatedAdditional
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          During
      the
                          
                          
                          TotalPreferred
      Stock
                          
                          
                          Common
      Stock
                          
                          
                          Paid-in
                          
                          
                          Deferred
                          
                          
                          Treasury
      Stock
                          
                          
                          Development
                          
                          
                          Stockholders'Shares
                          
                          
                          Amount
                          
                          
                          Shares
                          
                          
                          Amount
                          
                          
                          Capital
                          
                          
                          Compensation
                          
                          
                          Shares
                          
                          
                          Amount
                          
                          
                          Stage
                          
                          
                          EquityBalance
      at December 31, 2006
                          
                          
                          -
                          
                          
                          $
                          -
                          
                          
                          
                          12,087,997
                          
                          
                          $
                          12
                          
                          
                          $
                          118,066
                          
                          
                          $
                          -
                          
                          
                          
                          1,937,035
                          
                          
                          $
                          (5,948
                          )
                          
                          $
                          (108,340
                          )
                          
                          $
                          3,790Exercise
      of options to purchase common stock for cash, January and April @ $2.40
      & $8.00 per share
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          13,942
                          
                          
                          
                          -
                          
                          
                          
                          37
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          37Issuance
      of 2,610,000 shares of common stock at $13.75 per share February 5, 2007,
      net of offering costs of $2,835
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          2,610,000
                          
                          
                          
                          3
                          
                          
                          
                          33,050
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          33,053Stock
      option compensation
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          880
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          880Net
      loss
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (13,700
                          )
                          
                          
                          (13,700
                          )Balance
      at December 31, 2007
                          
                          
                          -
                          
                          
                          $
                          -
                          
                          
                          
                          14,711,939
                          
                          
                          $
                          15
                          
                          
                          $
                          152,033
                          
                          
                          $
                          -
                          
                          
                          
                          1,937,035
                          
                          
                          $
                          (5,948
                          )
                          
                          $
                          (122,040
                          )
                          
                          $
                          24,060Stock
      based option compensation
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          871
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          871Proceeds
      from a shareholder transaction
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          327
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          327Issuance
      of 2,400,000 shares of common stock at $6.50 per share October 2, 2008,
      net of offering costs of $41,458
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          2,400,000
                          
                          
                          
                          2
                          
                          
                          
                          15,556
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          15,558Net
      loss
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (25,202
                          )
                          
                          
                          (25,202
                          )Balance
      at December 31, 2008
                          
                          
                          -
                          
                          
                          $
                          -
                          
                          
                          
                          17,111,939
                          
                          
                          $
                          17
                          
                          
                          $
                          168,787
                          
                          
                          $
                          -
                          
                          
                          
                          1,937,035
                          
                          
                          $
                          (5,948
                          )
                          
                          $
                          (147,242
                          )
                          
                          $
                          15,614Exercise
      of stock option to purchase common stock for cash @ $3.71 per
      share
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          2,500
                          
                          
                          
                          -
                          
                          
                          
                          9
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          9Issuance
      of 1,500,000 shares of common stock at $0.65 per share September 11, 2009,
      net of offering costs of $106
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          1,500,000
                          
                          
                          
                          2
                          
                          
                          
                          867
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          869Issuance
      of 3,500,000 shares of common stock at $1.27 per share October 13, 2009,
      net of offering costs of $323
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          3,500,000
                          
                          
                          
                          3
                          
                          
                          
                          4,118
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          4,121Issuance
      of 5,361,194 shares of common stock at $1.10 per share October 29, 2009,
      as settlement with trade creditors
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          3,873,559
                          
                          
                          
                          4
                          
                          
                          
                          1,327
                          
                          
                          
                          -
                          
                          
                          
                          (1,487,635
                          )
                          
                          
                          4,568
                          
                          
                          
                          -
                          
                          
                          
                          5,899Stock
      based option compensation
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          1,284
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          1,284Net
      loss
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (27,234
                          )
                          
                          
                          (27,234
                          )Balance
      at December 31, 2009
                          
                          
                          -
                          
                          
                          $
                          -
                          
                          
                          
                          25,987,998
                          
                          
                          $
                          26
                          
                          
                          $
                          176,392
                          
                          
                          $
                          -
                          
                          
                          
                          449,400
                          
                          
                          $
                          (1,380
                          )
                          
                          $
                          (174,476
                          )
                          
                          $
                          562
 
 The
accompanying notes are an integral part of these consolidated financial
statements.




F-16




REPROS
THERAPEUTICS INC. AND SUBSIDIARY
 (A
development stage company)
 
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (in
thousands)
 
 From
      Inception(August
      20, 1987)throughFor
      the Year Ended December 31,
                        
                        
                        December
      31,2009
                        
                        
                        2008
                        
                        
                        2007
                        
                        
                        2009(unaudited)Cash
      Flows from Operating ActivitiesNet
      loss
                        
                        $
                        (27,234
                        )
                        
                        $
                        (25,202
                        )
                        
                        $
                        (13,700
                        )
                        
                        $
                        (174,476
                        )Gain
      on disposal of discontinued operations
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (939
                        )Gain
      on disposal of assets
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (102
                        )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Noncash
      financing costs
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        316Noncash
      inventory impairment
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        4,417Noncash
      patent impairment
                        
                        
                        1,275
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        2,614Noncash
      other income
                        
                        
                        (547
                        )
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (547
                        )Noncash
      decrease in accounts payable
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (1,308
                        )Depreciation
      and amortization
                        
                        
                        72
                        
                        
                        
                        50
                        
                        
                        
                        34
                        
                        
                        
                        3,954Noncash
      stock-based compensation
                        
                        
                        1,284
                        
                        
                        
                        871
                        
                        
                        
                        880
                        
                        
                        
                        6,641Common
      stock issued for agreement not to compete
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        200Series
      B Preferred Stock issued for consulting services
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        18Changes
      in operating assets and liabilities
                          (net
      effects of purchase of businesses in 1988 and 1994):Increase
      in receivables
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (199
                        )Increase
      in inventory
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (4,447
                        )(Increase)
      decrease in prepaid expenses and other current assets
                        
                        
                        1,215
                        
                        
                        
                        (913
                        )
                        
                        
                        (251
                        )
                        
                        
                        125Increase
      (decrease) in accounts payable and accrued expenses
                        
                        
                        1,854
                        
                        
                        
                        3,449
                        
                        
                        
                        (520
                        )
                        
                        
                        10,038Net
      cash used in operating activities
                        
                        
                        (22,081
                        )
                        
                        
                        (21,745
                        )
                        
                        
                        (13,557
                        )
                        
                        
                        (153,695
                        )Cash
      Flows from Investing ActivitiesChange
      in trading marketable securities
                        
                        
                        -
                        
                        
                        
                        24,124
                        
                        
                        
                        (18,527
                        )
                        
                        
                        (191
                        )Capital
      expenditures
                        
                        
                        -
                        
                        
                        
                        (4
                        )
                        
                        
                        (6
                        )
                        
                        
                        (2,371
                        )Purchase
      of technology rights and other assets
                        
                        
                        (502
                        )
                        
                        
                        (569
                        )
                        
                        
                        (357
                        )
                        
                        
                        (4,272
                        )Proceeds
      from sale of PP&E
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        225Cash
      acquired in purchase of FTI
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        3Proceeds
      from sale of subsidiary, less $12,345 for operating losses during 1990
      phase-out period
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        138Proceeds
      from sale of the assets of FTI
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        2,250Increase
      in net assets held for disposal
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (213
                        )Net
      cash provided by & (used in) investing activities
                        
                        
                        (502
                        )
                        
                        
                        23,551
                        
                        
                        
                        (18,890
                        )
                        
                        
                        (4,431
                        )Cash
      Flows from Financing ActivitiesProceeds
      from issuance of common stock, net of offering costs
                        
                        
                        4,990
                        
                        
                        
                        15,558
                        
                        
                        
                        33,053
                        
                        
                        
                        156,005Exercise
      of stock options
                        
                        
                        9
                        
                        
                        
                        -
                        
                        
                        
                        37
                        
                        
                        
                        372Proceeds
      from a shareholder transaction
                        
                        
                        -
                        
                        
                        
                        327
                        
                        
                        
                        -
                        
                        
                        
                        327Proceeds
      from issuance of preferred stock
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        23,688Purchase
      of treasury stock
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (21,487
                        )Proceeds
      from issuance of notes payable
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        2,839Principal
      payments on notes payable
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (1,732
                        )Net
      cash provided by financing activities
                        
                        
                        4,999
                        
                        
                        
                        15,885
                        
                        
                        
                        33,090
                        
                        
                        
                        160,012Net
      increase (decrease) in cash and cash equivalents
                        
                        
                        (17,584
                        )
                        
                        
                        17,691
                        
                        
                        
                        643
                        
                        
                        
                        1,886Cash
      and cash equivalents at beginning of period
                        
                        
                        19,470
                        
                        
                        
                        1,779
                        
                        
                        
                        1,136
                        
                        
                        
                        -Cash
      and cash equivalents at end of period
                        
                        $
                        1,886
                        
                        
                        $
                        19,470
                        
                        
                        $
                        1,779
                        
                        
                        $
                        1,886
 
 The
accompanying notes are an integral part of these consolidated financial
statements.




F-17




1.           ORGANIZATION
AND OPERATIONS:


Repros
Therapeutics Inc. ("the Company", "RPRX," or "we," "us" or "our"), was organized
on August 20, 1987.  We
are a development stage biopharmaceutical company focusedon the
development of oral small molecule drugs for major unmet medical needs that
treat male and female reproductive disorders.
  Our
primary product candidate, Androxal® (thetransisomer of clomiphene),is a
single isomer of clomiphene citrate and is an orally active proprietary small
molecule compound.  We are developing Androxal® for men of reproductive age
with low testosterone levels who want to improve or maintain their fertility
and/or sperm function while being treated for low testosterone.  In
addition, we submitted a new IND to the Division of Metabolic and Endocrine
Products, or DMEP, for the investigation of Androxal® as a potential treatment for
type 2 diabetes.  On February 1, 2010, we received confirmation from
the DMEP that our new IND was accepted and, as a result, we may initiate a Phase
2a trial.  This new indication replaces our previously announced plan
to develop Androxal® in men
with adult-onset idiopathic hypogonadotrophic hypogonadism, or AIHH, with
concomitant plasma glucose and lipid elevations, all of which are components of
Metabolic Syndrome.
  Previously
we were developing Androxal® in the United States to treat
testosterone deficiency due to secondary hypogonadism by restoring normal
testosterone production in males with functional testes and diminished pituitary
function, a common condition in the aging male.  Based on a Type “C”
meeting held with the Food and Drug Administration, or FDA, on October 15, 2007
we believe we do not have a clear clinical path to develop Androxal® for this indication in the U.S.
at this time.  Although we believe Androxal® could be developed outside of
the U.S., due to the limited European market for this indication and our limited
internal resources we do not intend to pursue approval outside of the U.S. at
this time.
  Proellex®,
our product candidate for female reproductive health, is a new chemical entity
that acts as a selective blocker of the progesterone receptor and is being
developed for the treatment of symptoms associated with uterine fibroids and
endometriosis.  However, as a result of the recent liver toxicity exhibited
by Proellex® in our previous Phase 2 and 3 clinical trials to endometriosis and
uterine fibroids, respectively, all ongoing clinical trial activities have been
put on hold by the FDA.  There is currently no FDA-approved orally
administered drug treatment for the long-term treatment of uterine fibroids or
endometriosis.
  We also
continue to maintain our patent portfolio of our phentolamine-based products for
the treatment of sexual dysfunction.  We continue to try to create
value from these assets in various ways which includes product
out-licensing.
  On
September 11, 2009, we completed a direct registered offering of 1.5 million
shares of our common stock at a purchase price of $0.65 per share for aggregate
proceeds after expenses of approximately $869,000.  On October 13,
2009, we completed a direct registered offering of 3.5 million shares of our
common stock at a purchase price of $1.27 per share for aggregate proceeds after
expenses of approximately $4.1 million.  Such registered direct
offerings resulted in an aggregate of approximately $5.0 million net proceeds to
us.  The shares of common stock offered by us in such offerings were
registered under our prior shelf registration statement on Form S-3 (File No.
333-155265), which was filed with the Securities and Exchange Commission on
November 10, 2008 and declared effective by the Securities and Exchange
Commission on November 26, 2008.
  On
October 29, 2009, we entered into a Master Settlement Agreement and Releases
(the “October Settlement Agreement”) with certain trade creditors, pursuant to
which we issued 5,361,194 shares of our common stock, at $1.10 per share, and
paid approximately $2.77 million in cash to such creditors as payment in full
for our then-outstanding liabilities of approximately $8.7 million and for the
release of the claims held by and the dismissal of the litigation commenced by
such creditors against the Company.  Pursuant to the terms of the
October Settlement Agreement, we filed a registration statement on Form S-3
(File No. 333-163510), which was filed with the Securities and Exchange
Commission on December 4, 2009, to register the resale of such shares by such
creditors.  Such registration statement was declared effective by the
Securities and Exchange Commission on January 7, 2010.
  On
November 17, 2009 at a Special Meeting of Stockholders’ our stockholders
approved an amendment to our Restated Certificate of Incorporation, as amended,
to increase the number of shares of our common stock authorized for issuance
from 30,000,000 shares to 75,000,000 shares, and, as a result, increase the
total number of authorized shares from 35,000,000 to 80,000,000.  The
number of authorized shares of preferred stock will remain at
5,000,000.
  F-18
  Between November 30, 2009 and March 2,
2010, the Company entered into settlement agreements and mutual releases (the
“Subsequent Settlement Agreements”) with certain of its creditors, pursuant to
which the Company issued an aggregate of 352,459 shares (the “Additional
Settlement Shares”) of common stock in 2010 and paid an aggregate of $140,571 in
cash as payment in full for its then-outstanding liabilities to such
creditors.   Pursuant to the Subsequent Settlement Agreements, the
Company agreed to use its best efforts to prepare and file a registration
statement to register the Additional Settlement Shares as soon as possible
following the date of each Subsequent Settlement Agreement, to use its best
efforts to have such registration statement declared effective as soon as
possible and to maintain such registration statement until all such Additional
Settlement Shares registered thereunder to such creditors have been sold or for
a period of one year, whichever comes first.
  In addition to the October Settlement
Agreement and Subsequent Settlement Agreements, the Company has settled with
several of its creditors during the fourth quarter of 2009 in an amount less
than its then-outstanding liabilities to such creditors.  These
settlements resulted in recognition of $547,000 in other income on the
Consolidated Statement of Operations.
  On
October 29, 2009, Katherine A. Anderson was engaged as the Chief Accounting
Officer of the Company.
  Effective
October 29, 2009, Dr. Paul Lammers, resigned his position of
President.
  Effective
October 30, 2009, the Company eliminated the position of Senior Vice President
of Regulatory and Clinical Affairs held by Dr. Andre van As.  The
Company is obligated to pay Dr. van As, under his employment contract, salary
and benefits for six months.  All contractual obligations relating to
the termination of personnel have been accrued in the accompanying financial
statements and did not have a material impact on the Company’s consolidated
financial position and results of operations.  Dr. Jean Fourcroy,
member of the Company’s Board of Directors and former Medical Officer at the
FDA’s Division of Reproductive and Urological Products, has agreed to serve as
Company’s Chief Medical Officer on an as needed basis.
 
 On
November 12, 2009, Mark Lappe resigned his position as a member of the Company’s
board of directors and chairperson of the board of directors.  Since
such date, Nola E. Masterson, a member of the Company’s board of directors since
2004, has been acting as chairperson of the Company’s board of
directors.
 
 On
November 12, 2009, Dr. Jaye Thompson was appointed to our board of directors and
to serve as a member of the audit committee of our board of
directors.
 
 On
November 16, 2009, our board of directors elected Joseph S. Podolski as
President of the Company.
 
 As
discussed in Note 10 of these Financial Statements, the Company is subject to
various legal proceedings that could have an adverse outcome on the
Company.
 
 On
January 12, 2010, we received a letter from the Nasdaq Hearings Panel (the
“Panel”) stating that our shares would be transferred from the Nasdaq Global
Market to the Nasdaq Capital Market, effective at the open of the trading
session on Thursday, January 14, 2010.   As previously announced, we
have not been in compliance with Marketplace Rules 5450(a)(1) and 5450(b)(2)(A)
and (C), requiring (i) a minimum $1.00 bid price per share, (ii) a minimum $50
million market value of listed securities and (iii) a minimum market value of
publicly held shares of $15 million, respectively, for continued inclusion on
the Nasdaq Global Market. The Panel’s determination to transfer our shares to
the Nasdaq Capital Market followed our hearing before the Panel on December 3,
2009.  The Company has until May 5, 2010 to maintain either
stockholders’ equity of at least $2.5 million or a market value of listed
securities of $35 million.  The Company must also maintain a minimum
bid price of $1.00 per share by June 14, 2010 to maintain its listing on the
Nasdaq Capital Market.  If we cannot demonstrate compliance with these
requirements for continued listing on the Nasdaq Capital Market, our shares will
be subject to immediate delisting.
  F-19
  Our
results of operations may vary significantly from year to year and quarter to
quarter, and depend on, among other factors, our ability to be successful in our
clinical trials, the regulatory approval process in the United States and other
foreign jurisdictions and the ability to complete new licenses and product
development agreements.  The timing of our revenues may not match the
timing of our associated product development expenses.  To date,
research and development expenses have generally exceeded revenue in any
particular period and/or fiscal year.
  Our
accumulated deficit of $174.5 million primarily relates to costs that were
incurred in research and development activities related to efforts to develop
our product candidates and from the associated administrative costs required to
support those efforts.  Due to various tax regulations, including
change in control provisions in the tax code, the value of the tax asset created
by these accumulated losses can be substantially diminished.  For
additional information relating to our net operating loss carryforward see “Note
6 Federal Income Taxes” of the Notes to Consolidated Financial
Statements.
  As of December
31, 2009, the Company had an accumulated deficit of $174.5 million, cash and
cash equivalents of $1.9 million and accounts payable and accrued expenses of
$2.4 million.  We have experienced negative cash flows from operations
since inception and have funded our activities to date primarily from equity
financings and corporate collaborations.  Our current financial
condition requires us to raise additional capital during the first half of 2010
and we are currently pursuing financing opportunities.  We believe we
can secure additional cash resources through the sale of our equity securities;
however, there can be no assurance that the Company will be able to raise
sufficient capital.  Failure to raise sufficient funds will likely
result in either bankruptcy or the dissolution of the Company.  The
uncertainties relating to the foregoing matters raise substantial doubt about
our ability to continue as a going concern.
  2.           SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES:
  USE OF
ESTIMATES
  The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from those
estimates.
  CERTAIN
RISKS AND UNCERTAINTIES
  In
addition to certain risks and uncertainties discussed in Note 1 of these
Financial Statements, our product candidates under development require approval
from the FDA or other international regulatory agencies prior to commercial
sales.  There can be no assurance our product candidates will receive
the necessary clearance.  If we are denied clearance or clearance is
delayed, it may have a material adverse impact on us.
  Our
product candidates are concentrated in rapidly changing, highly competitive
markets, which are characterized by rapid technological advances, evolving
regulatory requirements and industry standards.  Any failure by us to
anticipate or to respond adequately to technological developments in our
industry, changes in regulatory requirements or industry standards, or any
significant delays in the development or introduction of products or services,
could have a material adverse effect on our business, operating results and
future cash flows.
  CASH AND
CASH EQUIVALENTS
  The
Company considers all cash accounts and highly liquid investments having
original maturities of three months or less to be cash and cash
equivalents.
  PREPAID
EXPENSES AND OTHER CURRENT ASSETS
  Prepaid
expenses and other current assets primarily consist of prepaid insurance,
prepaid operating expenses and other miscellaneous assets, interest and other
receivables.
  FIXED
ASSETS
  Fixed
assets include lab equipment, furniture and leasehold improvements and are
recorded at cost, less accumulated depreciation and
amortization.  Depreciation is computed on the straight-line method
over an estimated useful life of three to five years or, in the case of
leasehold improvements, amortized over the shorter of the useful life or the
remaining term of the lease.  Maintenance and repairs that do not
improve or extend the life of assets are expensed as incurred.  When
assets are sold or retired, the cost and accumulated depreciation are removed
from the accounts and the resulting gain or loss is included in income during
the period in which the transaction occurred.
  F-20
  OTHER
ASSETS
  The
Company capitalizes the cost associated with building its patent library for its
Androxal® and Proellex®
products.  As of December 31, 2009 and 2008, other assets consist of
capitalized patent costs in the amount of $885,000 and $1,713,000
respectively.  Patent costs, which include legal and application costs
related to the patent portfolio, are being amortized over the lesser of 20 years
or the estimated economic life of the patent.  Amortization of patent
cost expense was $54,000, $27,000 and $10,350 in 2009, 2008 and 2007,
respectively.  All of the $885,000 in capitalized patent costs as of
December 31, 2009 related to Androxal® patent and patent application
costs.
  We review
capitalized patent and patent application costs for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable.  An impairment exists when estimated undiscounted
cash flows expected to result from the patent are less than its carrying
amount.  The impairment loss recognized represents the excess of the
patent cost as compared to its estimated fair value.
  Due to
the clinical hold on Proellex® and the uncertainty of future cash flows related
to the Proellex® patent applications, the Company recorded an impairment charge
of approximately $957,000 in 2009 related to these patent
applications.  Additionally, the Company concluded that it will no
longer seek to protect the specific matter covered in certain Androxal® patent
applications and recorded an impairment charge of approximately $318,000 in 2009
to abandon these patent applications.  These charges were recorded in
Research and Development expenses on the consolidated statement of
operations.  The remaining capitalized patent and patent application
costs relating to Androxal® can continue to be used, outlicensed or sold to
third parties for at least an amount management believes is sufficient to
recover the carrying value of the capitalized patent costs.
  Should
the Company not continue development of Androxal® or should the Company not
continue as a going concern, the remaining capitalized patent and patent
application costs may not be recoverable, which would result in charges to
operating results in future periods.
  RESEARCH
AND DEVELOPMENT EXPENSE
  Research
and development, or R&D, expenses include salaries and related employee
expenses, contracted regulatory affairs activities, insurance coverage for
clinical trials and prior product sales, contracted research and consulting
fees, facility costs, amortization of capitalized patent costs and internal
research and development supplies.  We expense research and
development costs in the period they are incurred.  These costs
consist of direct and indirect costs associated with specific projects as well
as fees paid to various entities that perform research on our
behalf.
  We
estimate accrued expenses as part of our process of preparing financial
statements. Examples of areas in which subjective judgments may be required
include costs associated with services provided by contract organizations for
clinical trials, preclinical development and manufacturing of clinical
materials.  We accrue for costs incurred as the services are being
provided by monitoring the status of the trials or services provided and the
invoices received from our external service providers.  In the case of
clinical trials, a portion of the estimated cost normally relates to the
projected cost to treat a patient in our trials, and we recognize this cost over
the estimated term of the study based on the number of patients enrolled in the
trial on an ongoing basis, beginning with patient enrollment.  As
actual costs become known to us, we adjust our accruals.  To date, our
estimates have not differed significantly from the actual costs
incurred.  Due to the clinical hold on Proellex® and our current
financial condition, any further development of our product candidates is
dependent on our ability to raise additional capital.  As a result, we
anticipate that our estimated accruals for clinical services will be
significantly reduced in future periods.  However, subsequent changes
in estimates may result in a material change in our accruals, which could also
materially affect our balance sheet and results of operations.
  LOSS PER
SHARE
  Basic
loss per share is computed by dividing net loss by the weighted average number
of shares of common stock outstanding during the year.  Diluted loss
per share is computed using the average share price for the period and applying
the treasury stock method to potentially dilutive outstanding
options.  In applicable years all potential common stock equivalents
were antidilutive and accordingly were not included in the
computation.
  F-21
  SHARE-BASED
COMPENSATION
  We had
two stock-based compensation plans at December 31, 2009, the 2000 Non-Employee
Directors' Stock Option Plan, or 2000 Director Plan and the 2004 Stock Option
Plan, or 2004 Plan.  Accounting for stock based compensation generally
requires the recognition of the cost of employee services for share-based
compensation based on the grant date fair value of the equity or liability
instruments issued.  We use the Black-Scholes option pricing model to
estimate the fair value of our stock options.  Expected volatility is
determined using historical volatilities based on historical stock prices for a
period equal to the expected term.  The expected volatility assumption
is adjusted if future volatility is expected to vary from historical
experience.  The expected term of options represents the period of
time that options granted are expected to be outstanding and falls between the
options' vesting and contractual expiration dates.  The risk-free
interest rate is based on the yield at the date of grant of a zero-coupon U.S.
Treasury bond whose maturity period equals the option's expected
term.
  INCOME
TAXES
  Our
losses from inception to date have resulted principally from costs incurred in
conducting clinical trials and in research and development activities related to
efforts to develop our products and from the associated administrative costs
required to support those efforts.  We have recorded a deferred tax
asset for our net operating losses (“NOL”); however, as the Company has incurred
losses since inception, and since there is no certainty of future profits, a
valuation allowance has been provided in full on our deferred tax assets in the
accompanying consolidated financial statements.  If the Company has an
opportunity to use this NOL to off-set tax liabilities in the future, the use of
this asset would be restricted based on Internal Revenue Service, state and
local NOL use guidelines.  The Company’s public offerings completed on
February 5, 2007, October 2, 2008, September 11, 2009, October 13, 2009, and the
issuances of unregistered shares as part of the October 29, 2009 Settlement
Agreement and Subsequent Settlement Agreements may have created a change of
ownership for Federal Income tax purposes.  The Company has not
undertaken a study to determine if this has occurred.  A change in
ownership for Federal Income tax purposes may result in a limitation on the use
of net operating loss and tax credit carryforwards in future
periods.
  RECENT
ACCOUNTING PRONOUNCEMENTS
  In
September 2006, FASB issued new accounting guidance which defines fair value,
established a framework for measuring fair value in generally accepted
accounting principles and expanded disclosures about fair value
measurements.  This guidance is effective for financial statements
issued for fiscal years beginning after November 15, 2007 and interim periods
within those fiscal years.  In February 2008, the FASB deferred the
effective date of this new guidance for all nonfinancial assets and nonfinancial
liabilities to fiscal years beginning after November 15, 2008.  The
implementation of this guidance for financial assets and financial liabilities,
effective January 1, 2008, did not have a material impact on Repros'
consolidated financial position and results of operations.  The
implementation of this guidance for nonfinancial assets, effective January 1,
2009, and nonfinancial liabilities did not have a material impact on the
Company's consolidated financial position and results of
operations.
  In May
2009, the FASB issued new accounting guidance on management's assessment of
subsequent events and incorporates this guidance into accounting
literature.  This guidance is effective prospectively for interim and
annual period ending after June 15, 2009.  The implementation of this
standard did not have a material impact on our consolidated financial position
and results of operations.
  3.           FIXED
ASSETS:
  Fixed
assets are as follows (in thousands):
  December 31,2009
                  
                  
                  2008Laboratory
      equipment
                  
                  $
                  20
                  
                  
                  $
                  20Office
      equipment
                  
                  
                  44
                  
                  
                  
                  44Leasehold
      improvements
                  
                  
                  38
                  
                  
                  
                  38Total
      fixed assets
                  
                  
                  102
                  
                  
                  
                  102Less
      — Accumulated depreciation and amortization
                  
                  
                  90
                  
                  
                  
                  74Net
      Fixed Assets
                  
                  $
                  12
                  
                  
                  $
                  28
  Depreciation
and amortization was $16,000, $22,000 and $24,000 for the years ended December
31, 2009, 2008, 2007, respectively.
  F-22
  4.           OPERATING
LEASES:
  The
Company leases laboratory and office space, and equipment pursuant to leases
accounted for as operating leases.  The lease for the Company’s
laboratory and office space expires in June 2010.  Rental expense for
the years ended December 31, 2009, 2008 and 2007, was approximately $60,000,
$59,000 and $63,000, respectively.  There are no future minimum lease
payments due under non-cancelable leases with original terms in excess of one
year as our lease expires on June 30, 2010.
  5.           ACCRUED
EXPENSES:
  Accrued
expenses consist of the following (in thousands):
  December 31,2009
                    
                    
                    2008Personnel
      related costs
                    
                    $
                    181
                    
                    
                    $
                    135Other
                    
                    
                    159
                    
                    
                    
                    68Patent
      costs
                    
                    
                    15
                    
                    
                    
                    81Research
      and development costs
                    
                    
                    —
                    
                    
                    
                    1,573Total
                    
                    $
                    355
                    
                    
                    $
                    1,857
  6.           FEDERAL
INCOME TAXES:
  The
Company has had losses since inception and, therefore, has not been subject to
federal income taxes.  As of December 31, 2009, the Company has
accumulated approximately $2.5 million of research and development tax
credits.  As of December 31, 2009, the Company had approximately $152
million of net operating loss (“NOL”) carry-forwards for federal income tax
purposes.  Additionally, approximately $3.9 million of NOLs, and
approximately $48,000 of research and development tax credits will expire in
2010.
  The Tax
Reform Act of 1986 provided for a limitation on the use of NOL and tax credit
carryforwards following certain ownership changes that could limit the Company’s
ability to utilize these NOLs and tax credits.  The sale of preferred
stock, together with changes in stock ownership, resulted in multiple ownership
changes for federal income tax purposes.  The Company estimates that
the amount of pre-2007 NOL carryforwards and the credits available to offset
taxable income is limited to approximately $7.6 million per year on a cumulative
basis. Accordingly, if the Company generates taxable income in any year in
excess of its then cumulative limitation, the Company may be required to pay
federal income taxes even though it has unexpired NOL carryforwards.
Additionally, because U.S. tax laws limit the time during which NOLs and tax
credit carryforwards may be applied against future taxable income and tax
liabilities, the Company may not be able to take full advantage of its NOLs and
tax credit carryforwards for federal income tax purposes.
  The
Company’s public offerings completed on February 5, 2007, October 2, 2008,
September 11, 2009, October 13, 2009, and the issuances of unregistered shares
as part of the October 29, 2009 Settlement Agreement and Subsequent Settlement
Agreements may have created a change of ownership for Federal Income tax
purposes.  The Company has not undertaken a study to determine if this
has occurred.  A change in ownership for Federal income tax purposes
may result in a limitation on the use of net operating loss and tax credit
carryforwards in future periods.
  Accounting
standards require the recognition of a deferred tax asset for NOLs. As the
Company has incurred losses since inception, and there is no certainty of future
revenues, a valuation allowance has been provided in full in the accompanying
consolidated financial statements.
  The tax
effects of temporary differences that give rise to significant portions of the
deferred tax assets are as follows (in thousands):
  December 31,2009
                  
                  
                  2008Net
      operating loss carryforwards
                  
                  $
                  51,714
                  
                  
                  $
                  44,169Research
      and development tax credits
                  
                  
                  2,483
                  
                  
                  
                  2,603Accrued
      expenses
                  
                  
                  1,510
                  
                  
                  
                  1,510Total
      deferred tax assets
                  
                  
                  55,707
                  
                  
                  
                  48,282Capitalized
      patent costs
                  
                  
                  (301
                  )
                  
                  
                  (582
                  )Total
      deferred tax liabilities
                  
                  
                  (301
                  )
                  
                  
                  (582
                  )Less
      — Valuation allowance
                  
                  
                  (55,406
                  )
                  
                  
                  (47,700
                  )Net
      deferred tax assets
                  
                  $
                  —
                  
                  
                  $
                  —
  F-23




7.           STOCKHOLDERS’
EQUITY:




PUBLIC
OFFERINGS




On
October 13, 2009, we completed a direct registered offering of 3.5 million
shares of our common stock at a purchase price of $1.27 per share for aggregate
proceeds after expenses of approximately $4.1 million.  Such
registered direct offerings resulted in an aggregate of approximately $5.0
million net proceeds to us.




On
September 11, 2009, we completed a direct registered offering of 1.5 million
shares of our common stock at a purchase price of $0.65 per share for aggregate
proceeds after expenses of approximately $869,000.




On
October 2, 2008, we completed a direct registered offering of 2.4 million shares
of our common stock at a purchase price of $6.50 per share for net proceeds
after expenses of approximately $15.6 million pursuant to an effective shelf
registration statement.  Certain of the purchasers under this offering
were granted in their purchase agreements an option to purchase an aggregate of
up to $10 million of additional shares of our common stock at the greater of the
fair market value, defined as the average of the closing prices for the 30
trading days immediately prior to the date of exercise, or $7.80 per
share.  Such option was exercisable at such time as we had less than
$10 million in cash and cash equivalents; this option expired on September 29,
2009.  In addition, the purchasers who received such option also
received a right of first offer to purchase their respective pro-rata portion of
any future financings, excluding certain corporate activities; this right
expires on September 29, 2010.




SETTLEMENT
WITH TRADE CREDITORS




On
October 29, 2009, we entered into a Master Settlement Agreement and Releases
(the “October Settlement Agreement”) with certain trade creditors, pursuant to
which we issued 5,361,194 shares of our common stock, at $1.10 per share, and
paid approximately $2.77 million in cash to such creditors as payment in full
for our then-outstanding liabilities of approximately $8.7 million and for the
release of the claims held by and the dismissal of the litigation commenced by
such creditors against the Company.  Pursuant to the terms of the
October Settlement Agreement, we filed a registration statement on Form S-3
(File No. 333-163510), which was filed with the Securities and Exchange
Commission on December 4, 2009, to register the resale of such shares by such
creditors.  Such registration statement was declared effective by the
Securities and Exchange Commission on January 7, 2010.




Between
November 30, 2009 and March 2, 2010, the Company entered into settlement
agreements and mutual releases (the “Subsequent Settlement Agreements”) with
certain of its creditors, pursuant to which the Company issued an aggregate of
352,459 shares (the “Additional Settlement Shares”) of common stock in 2010 and
paid an aggregate of $140,571 in cash as payment in full for its
then-outstanding liabilities to such creditors.   Pursuant to the
Subsequent Settlement Agreements, the Company agreed to use its best efforts to
prepare and file a registration statement to register the Additional Settlement
Shares as soon as possible following the date of each Subsequent Settlement
Agreement, to use its best efforts to have such registration statement declared
effective as soon as possible and to maintain such registration statement until
all such Additional Settlement Shares registered thereunder to such creditors
have been sold or for a period of one year, whichever comes first.




In
addition to the October Settlement Agreement and Subsequent Settlement
Agreements, the Company has settled with several of its creditors during the
fourth quarter of 2009 in an amount less than its then-outstanding liabilities
to such creditors.  These settlements resulted in recognition of
$547,000 in other income on the Consolidated Statement of
Operations.




LOSS PER
SHARE




The
following table presents information necessary to calculate loss per share for
the three years ended December 31, 2009, 2008 and 2007 (in thousands, except per
share amounts):


F-24




2009
                
                
                2008
                
                
                2007Net
      loss
                
                $
                (27,234
                )
                
                $
                (25,202
                )
                
                $
                (13,700
                )Weighted
      average common shares outstanding
                
                
                17,344
                
                
                
                13,372
                
                
                
                12,524Basic
      loss per share
                
                $
                (1.57
                )
                
                $
                (1.88
                )
                
                $
                (1.09
                )Weighted
      average common and dilutive potential common shares
      outstanding:Weighted
      average common shares outstanding
                
                
                17,344
                
                
                
                13,372
                
                
                
                12,524Assumed
      exercise of stock options
                
                
                —
                
                
                
                —
                
                
                
                —17,344
                
                
                
                13,372
                
                
                
                12,524Diluted
      earnings per share
                
                $
                (1.57
                )
                
                $
                (1.88
                )
                
                $
                (1.09
                )





Other
potential common stock of 1,824,211, 2,830,232 and 1,555,565 for the years ended
December 31, 2009, 2008 and 2007, respectively, were excluded from the above
calculation of diluted loss per share since they were antidilutive.




8.           STOCK
OPTION PLANS:




During
2009 the Company had two stock option plans available which were the 2000
Non-Employee Directors’ Stock Option Plan, or 2000 Director Plan; and the 2004
Stock Option Plan, or 2004 Plan.




As of
December 31, 2009, there were 1,119,679 options available under the 2004 Plan
and 469,419 options available options under the 2000 Director
Plan.  The 2000 Director Plan has an evergreen provision pursuant to
which the number of shares available under such plan are automatically increased
each year on the day after the Company’s Annual Shareholders’ Meeting by the
number of shares granted during the prior year under such plan (or by one-half
percent of the Company’s then outstanding common stock, if
greater).  At the Annual Meeting of Stockholders held on May 20, 2009,
the stockholders approved amendments of the 2004 Plan and 2000 Director Plan to
increase the number of shares of common stock issuable by 1,000,000 and 500,000,
respectively.  Additionally, the stockholders approved an amendment to
the 2000 Director Plan which extends the term of such plan by nine years to
April 17, 2019.  There are no significant differences between the
provisions of the two remaining plans other than with respect to the period of
exercisability following termination of services.  Typically, options
are granted with an exercise price per share which is equal to the fair market
value per share of common stock on the date of grant.  Vesting
provisions for each grant are determined by the board of directors and typically
vest quarterly over a three year period.  All options expire no later
than the tenth anniversary of the grant date.




A summary
of the status of the Company’s option plans at December 31, 2009, 2008, and 2007
and changes during the years then ended is presented in the tables
below:





Stock
                                Options
                              
                              
                              Weighted
                                Average
                                Exercise
                                Price
                              
                              
                              Remaining
                                Weighted
                                Average
                                Contractual
                                Term
                                (Years)Outstanding
      at December 31, 2006
                              
                              
                              1,469,148
                              
                              
                              $
                              4.38Granted
                              
                              
                              141,000
                              
                              
                              
                              12.13Exercised
                              
                              
                              (13,942
                              )
                              
                              
                              2.64Forfeited
                              
                              
                              (40,641
                              )
                              
                              
                              19.51Outstanding
      at December 31, 2007
                              
                              
                              1,555,565
                              
                              
                              
                              4.70Granted
                              
                              
                              240,000
                              
                              
                              
                              9.01Exercised
                              
                              
                              —
                              
                              
                              
                              —Forfeited
                              
                              
                              (7,000
                              )
                              
                              
                              19.95Outstanding
      at December 31, 2008
                              
                              
                              1,788,565
                              
                              
                              
                              5.22Granted
                              
                              
                              736,647
                              
                              
                              
                              6.20Exercised
                              
                              
                              (2,500
                              )
                              
                              
                              3.71Forfeited
                              
                              
                              (698,501
                              )
                              
                              
                              7.98Outstanding
      at December 31, 2009
                              
                              
                              1,824,211
                              
                              
                              
                              4.56
                              
                              
                              4.81Exercisable
      at December 31, 2009
                              
                              
                              1,292,064
                              
                              
                              
                              4.75
                              
                              
                              4.14


F-25





The
following table summarizes information about stock options outstanding at
December 31, 2009:




Range Of Exercise Prices
                              
                              
                              Number
                                Outstanding
                              
                              
                              Weighted
                                Average
                                Remaining
                                Life
                              
                              
                              Weighted
                                Average
                                Exercise
                                Price
                              
                              
                              Number
                                Exercisable
                              
                              
                              Weighted
                                Average
                                Exercise
                                Price$
                              0.70
      to
                              
                              
                              $
                              5.00
                              
                              
                              
                              1,425,212
                              
                              
                              
                              4.3
                              
                              
                              $
                              2.89
                              
                              
                              
                              1,003,565
                              
                              
                              $
                              3.005.01
      to
                              
                              
                              
                              10.00
                              
                              
                              
                              167,999
                              
                              
                              
                              6.6
                              
                              
                              
                              8.20
                              
                              
                              
                              100,499
                              
                              
                              
                              8.0510.01
      to
                              
                              
                              
                              15.00
                              
                              
                              
                              226,000
                              
                              
                              
                              6.9
                              
                              
                              
                              11.80
                              
                              
                              
                              183,000
                              
                              
                              
                              11.9815.01
      to
                              
                              
                              
                              33.25
                              
                              
                              
                              5,000
                              
                              
                              
                              1.1
                              
                              
                              
                              30.24
                              
                              
                              
                              5,000
                              
                              
                              
                              30.241,824,211
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              1,292,064





The
intrinsic value of options exercised during the years ended December 31, 2009
and 2007 was approximately $10,000 and $144,000, respectively.




Stock-based
compensation is outlined in the following table (in thousands):




2009
                  
                  
                  2008
                  
                  
                  2007R&D
      expense
                  
                  $
                  485
                  
                  
                  $
                  389
                  
                  
                  $
                  255G&A
      expense
                  
                  
                  799
                  
                  
                  
                  482
                  
                  
                  
                  625Total
      expense
                  
                  $
                  1,284
                  
                  
                  $
                  871
                  
                  
                  $
                  880




At
December 31, 2009, there was approximately $606,000 of total unrecognized
compensation cost related to non-vested stock options.  This
compensation cost is expected to be recognized over a weighted-average period of
approximately six months.




Estimated
fair values of stock options granted have been determined using the
Black-Scholes option pricing model with the following assumptions:




2009
                  
                  
                  2008
                  
                  
                  2007Risk-free
      interest rate
                  
                  
                  2.4
                  %
                  
                  
                  3.2
                  %
                  
                  
                  4.6
                  %Expected
      term
                  
                  7
      years
                  
                  
                  7
      years
                  
                  
                  7
      yearsVolatility
                  
                  
                  74
                  %
                  
                  
                  77
                  %
                  
                  
                  82
                  %Dividend
      yield
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —Fair
      value
                  
                  $
                  4.24
                  
                  
                  $
                  6.51
                  
                  
                  $
                  9.29




Due to
our net operating loss position there are no anticipated windfall tax benefits
upon exercise of options.




The
Black-Scholes option pricing model and other existing models were developed for
use in estimating the fair value of traded options that have no vesting
restrictions and are fully transferable.  In addition, option
valuation models require the input of and are highly sensitive to subjective
assumptions including the expected stock price volatility.  The
Company’s employee stock options have characteristics significantly different
from those of traded options and changes in the subjective input assumptions can
materially affect the fair value estimate.





9.           LICENSE,
RESEARCH AND DEVELOPMENT AGREEMENTS:




NATIONAL
INSTITUTES OF HEALTH (NIH)




In 1999,
we licensed rights to Proellex® from the National Institutes of Health, or NIH,
under an exclusive, worldwide license in the field of treatment of human
endocrinologic pathologies or conditions in steroid sensitive tissues which
expires upon the expiration of the last licensed patent.  Under the
terms of the agreement, we are obligated to meet developmental milestones as
outlined in a commercial development plan, which has been amended and revised
from time to time as circumstances warrant.  In 2009, we finalized a
Seventh Amendment with the NIH which establishes a new set of milestones for
development.  This set of milestones may need to be amended again
depending on when or if the clinical hold is lifted.  Should the FDA
determine that the clinical hold on Proellex® shall not be lifted even at a
lower dosage, the license with the NIH provides us with an opportunity to
satisfy milestones under such license with a second generation
drug.


F-26


We
provide annual updates to the NIH on the progress of our development of
Proellex®.  Based on our interaction with the NIH to date, we believe
our license and relationship with NIH are in good standing.  The NIH
has the ability to terminate the agreement for lack of payment or if we are not
meeting milestones as outlined in the commercial development plan and for other
reasons as outlined in the agreement.  Although we believe that we
have a good working relationship with the NIH, there can be no assurance that
all of the objectives and conditions in the commercial development plan will be
met on a timely basis or at all, or that, if we fail to meet any of such
objectives, the NIH will again agree to amend this agreement to our
satisfaction.  Failure to comply with the material terms contained in
the license agreement could result in termination of such agreement, which would
prohibit us from further development of Proellex® and severely harm our business
prospects.  The NIH retains, on behalf of the government, a
nonexclusive, nontransferable, worldwide license to practice the inventions
licensed under the licensed patents by or on behalf of the
government.  For the purpose of encouraging basic research, the NIH
retains the right to grant nonexclusive research licenses to third
parties.  Due to the work that was done on Proellex® at the NIH prior
to our license agreement, the government also has certain rights to use the
product in the event of a national emergency pursuant to the Patent and
Trademark Laws Amendments Act of 1980, as amended.




10.         COMMITMENTS
AND CONTINGENCIES:




See
footnote 4 for a discussion of our operating lease commitments.




In
December 2008, Repros committed to the purchase of at least $3 million of the
bulk active ingredient of Proellex® which was to be produced under a new
scaled-up amended manufacturing process by Gedeon Richter.  Under this
Purchase Request, as amended, the Company paid $750,000 in the first quarter of
2009 and $750,000 in the second quarter of 2009.  As of June 30, 2009,
$1.5 million was reflected under Prepaid Expenses and Other Current Assets on
the balance sheet.  Repros was obligated to make two additional
payments of $750,000 each for the final two batches of Proellex® to be delivered
in the third and fourth quarters of 2009.  As of September 4, 2009
this agreement was terminated and the remaining two payments due to Gedeon
Richter were waived.  Additionally, Repros accepted the material
produced through this date and as a result expensed the $1.5 million prepaid
asset to R&D Expense during the third quarter of 2009.




Our
Androxal® product candidate and its uses are covered in the United States by two
issued U.S. patents and six pending patent applications.  Foreign
coverage of our Androxal® product candidate includes 35 issued foreign patents
and 67 foreign pending patent applications.  The issued patents and
pending applications relate to methods and compositions for treating certain
conditions including the treatment of testosterone deficiency in men, the
treatment of metabolic syndrome and conditions associated therewith, and the
treatment of infertility in hypogonadal men.  Androxal® (the
trans-isomer of clomiphene) is purified from clomiphene citrate.  A
third party individual holds two issued patents related to the use of an
anti-estrogen such as clomiphene citrate and others for use in the treatment of
androgen deficiency and disorders related thereto.  In our prior
filings with the SEC, we have described our request to the U.S. Patent and
Trademark Office, or PTO, for re-examination of one of these patents based on
prior art.  The third party amended the claims in the re-examination
proceedings, which led the PTO to determine that the amended claims are
patentable in view of those publications under consideration and a
re-examination certificate was issued.  However, we believe that the
amended claims are invalid based on additional prior art publications, and our
request for re-examination by the PTO in light of a number of these additional
publications and other publications cited by the PTO, has been granted. All of
the claims have been finally rejected in the re-examination and the patent
holder has appealed the rejections to the PTO Board of Patent Appeals and
Interferences (“the Board”).  A decision has been rendered by the
Board affirming the rejection of all of the claims.  The patent holder
has filed a request for rehearing.  If the Board maintains the
rejections on rehearing or the request for rehearing is denied, the patent
holder will have the opportunity to appeal the rejections to the United States
Court of Appeals for the Federal Circuit.  We also believe that the
second of these two patents is invalid in view of published prior art not
considered by the PTO.  Nevertheless, there is no assurance that
either patent will ultimately be found invalid over the prior art. If such
patents are not invalidated by the PTO we may be required to obtain a license
from the holder of such patents in order to develop Androxal® further or
attempts may be made to undertake further legal action to invalidate such
patents.  If such licenses were not available on acceptable terms, or
at all, we may not be able to successfully commercialize or out-license
Androxal®.


F-27





On August
7, 2009, R.M. Berry filed a putative class action lawsuit naming the Company,
Joseph Podolski, Paul Lammers, and Louis Ploth, Jr. as
defendants.  The lawsuit is pending in the United States District
Court for the Southern District of Texas, Houston Division.  The
lawsuit, styled R.M. Berry, on Behalf of Himself and all Others Similarly
Situated v. Repros Therapeutics, Inc., Joseph Podolski, Paul Lammers, and Louis
Ploth, Jr., alleges that the defendants made certain misleading statements
related to the Company’s Proellex® drug.  Among other claims, the
lawsuit contends that the defendants misrepresented the side effects of the drug
related to liver function, and the risk that these side effects could cause a
suspension of clinical trials of Proellex®. The lawsuit seeks to establish a
class of shareholders allegedly harmed by the misleading statements, and asserts
causes of action under the Securities Exchange Act of 1934.  On August
14, 2009, a lawsuit making similar allegations and naming the same defendants
was also filed in the United States District Court for the Southern District of
Texas.  This suit is styled Josephine Medina, Individually and On
Behalf of all Others Similarly Situated v. Repros Therapeutics, Inc., Joseph
Podolski, Paul Lammers, and Louis Ploth, Jr.  On September 25, 2009, a
lawsuit also making allegations similar to those in the Berry action, and naming
the same defendants, was filed in the United States District Court for the
Southern District of Texas.  That lawsuit is styled Shane Simpson,
Paul Frank and Clayton Scobie, on Behalf of Themselves and all Others Similarly
Situated v. Repros Therapeutics, Inc., Joseph Podolski, Paul Lammers, and Louis
Ploth, Jr.    The lawsuits have now been consolidated, and lead
plaintiffs appointed.  On January 27, 2010, the lead plaintiffs filed
a Consolidated Class Action Complaint styled In re Repros Therapeutics, Inc.
Securities Litigation, Civil Action No. 09 Civ. 2530 (VDG).  The
lawsuit names Repros Therapeutics, Inc., Joseph Podolski, Paul Lammers, and
Louis Ploth, Jr. as defendants.  The allegations in the Consolidated
Class Action Complaint are substantially the same as those contained in the
prior complaints, and focus on the claim that the defendants deliberately
withheld information concerning the negative side-effects of Proellex® related
to liver function.  Plaintiffs seek to establish a class action for
all persons who “purchased or otherwise acquired Repros common stock between
July 1, 2009, and August 2, 2009.”    No discovery has yet
occurred in the matter, and defendants intend to file a motion to dismiss the
Consolidated Class Action Complaint.  An estimate of the possible loss
or range of losses in connection with the lawsuits cannot be made at this
time.





On August
10, 2009, a vendor of the Company filed a lawsuit naming the Company as a
defendant.  The lawsuit claimed the Company owed it $147,000 in
accordance with the terms of its agreement with the Company.   On
August 20, 2009, another vendor of the Company filed a lawsuit naming the
Company as a defendant.  The lawsuit claimed the Company owed it
$443,600 in accordance with the terms of its agreement with the
Company.   On October 29, 2009, the Company entered into a Master
Settlement Agreement and Releases with certain trade creditors, pursuant to
which we issued 5,361,194 shares of our common stock, at $1.10 per share, and
paid  approximately $2.77 million in cash to such creditors as payment
in full for our then outstanding liabilities and for the release of these claims
held by and the dismissal of the litigation commenced by these creditors against
the Company as described above.





On
October 2, 2009, a vendor of the Company filed a lawsuit naming the Company as a
defendant.  The lawsuit claimed the Company owed it $294,718 in
accordance with the terms of its agreement with the Company.  On
December 1, 2009, the Company entered into a confidential settlement agreement
with this vendor which resolved the lawsuit.





On
November 13, 2009, a vendor filed a lawsuit naming the company as a
defendant.  The lawsuit claimed the Company owed it $93,698 in
accordance with the terms of its agreement with the Company.   On
February 1, 2010, the Company entered into a confidential settlement agreement
with this vendor which resolved the lawsuit.





On March
1, 2010, we were served with a lawsuit where we were named as a co-defendant
along with one of our clinical regulatory service providers (“CRO”) relating to
the Proellex® clinical trial study.  The lawsuit was filed in the
State of Tennessee, 30th
Judicial District Chancery Court at Memphis by an investigator and claims that
the CRO did not pay it amounts owing to it relating to the
Proellex® study.  We did not engage the investigator and under
our agreement with the CRO, we believe the CRO is responsible for any such
costs or damages regarding such lawsuit.  The amount claimed is
approximately $175,000.  An estimate of the possible costs or expenses
to defend ourselves in this matter or risk of exposure under the litigation
cannot be made at this time.  Pursuant to the October Settlement
Agreement, such CRO, on behalf of itself and its agents, released us from all
claims which could be asserted by them against us.  We believe such
release covers the claims set forth in this lawsuit.




Rights
Plan




We are
party to a rights agreement, as amended, pursuant to which a dividend consisting
of one preferred stock purchase right was distributed for each share of our
common stock held as of the close of business on September 13, 1999, and to each
share of common stock issued thereafter until the earlier of (i) the
distribution date which is defined in the rights plan, (ii) the redemption date
which is defined in the rights plan or (iii) September 13, 2010.  The
rights plan is designed to deter coercive takeover tactics and to prevent an
acquirer from gaining control of us without offering fair value to our
stockholders.  The rights will expire on September 13, 2010, subject
to earlier redemption or exchange as provided in the rights
plan.  Each right entitles its holder to purchase from us one
one-hundredth of a share of a new series of Series One Junior Participating
Preferred Stock at a price of $20.00 per one one-hundredth of a share, subject
to adjustment.  The rights are generally exercisable only if a person
acquires beneficial ownership of 20% or more of our outstanding common
stock.


F-28


11.
            RELATED
      PARTY TRANSACTIONS:




A former
member of our Board of Directors is also a shareholder of a law firm that
provides legal services to the Company.  He served on the Board of
Directors for a portion of 2009 and all of 2008 and 2007, and total
fees charged by the firm to the Company during the years ended December 31,
2009, 2008 and 2007 were $345,000, $275,000 and $256,000,
respectively.




12.
            QUARTERLY
      FINANCIAL INFORMATION (UNAUDITED):




First Quarter
                      Ended
                      March 31,
                      2009
                    
                    
                    Second Quarter
                      Ended
                      June 30,
                      2009
                    
                    
                    Third Quarter
                      Ended
                      September 30,
                      2009
                    
                    
                    Fourth Quarter
                      Ended
                      December 31,
                      2009(In thousands except per share amounts)Revenues
      and other income:Interest
      income
                    
                    $
                    3
                    
                    
                    $
                    1
                    
                    
                    $
                    —
                    
                    
                    $
                    —Other
      income
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    547Total
      revenues and other income
                    
                    
                    3
                    
                    
                    
                    1
                    
                    
                    
                    —
                    
                    
                    
                    547Expenses:Research
      and development
                    
                    
                    5,698
                    
                    
                    
                    7,784
                    
                    
                    
                    8,282
                    
                    
                    
                    1,298General
      and administrative
                    
                    
                    1,060
                    
                    
                    
                    1,105
                    
                    
                    
                    1,962
                    
                    
                    
                    596Total
      expenses
                    
                    
                    6,758
                    
                    
                    
                    8,889
                    
                    
                    
                    10,244
                    
                    
                    
                    1,894Net
      loss
                    
                    $
                    (6,755
                    )
                    
                    $
                    (8,888
                    )
                    
                    $
                    (10,244
                    )
                    
                    $
                    (1,347
                    )Net
      loss per share – basic and diluted
                    
                    $
                    (0.45
                    )
                    
                    $
                    (0.59
                    )
                    
                    $
                    (0.66
                    )
                    
                    $
                    (0.06
                    )Shares
      used in loss per share calculation
                    
                    
                    15,175
                    
                    
                    
                    15,175
                    
                    
                    
                    15,503
                    
                    
                    
                    23,450





First Quarter
                    Ended
                    March 31,
                    2008
                  
                  
                  Second Quarter
                    Ended
                    June 30,
                    2008
                  
                  
                  Third Quarter
                    Ended
                    September 30,
                    2008
                  
                  
                  Fourth Quarter
                    Ended
                    December 31,
                    2008(In thousands except per share amounts)Revenues
      and other income:Interest
      income
                  
                  $
                  269
                  
                  
                  $
                  91
                  
                  
                  $
                  45
                  
                  
                  $
                  28Total
      revenues and other income
                  
                  
                  269
                  
                  
                  
                  91
                  
                  
                  
                  45
                  
                  
                  
                  28Expenses:Research
      and development
                  
                  
                  6,166
                  
                  
                  
                  5,475
                  
                  
                  
                  5,874
                  
                  
                  
                  5,060General
      and administrative
                  
                  
                  797
                  
                  
                  
                  689
                  
                  
                  
                  750
                  
                  
                  
                  824Total
      expenses
                  
                  
                  6,963
                  
                  
                  
                  6,164
                  
                  
                  
                  6,624
                  
                  
                  
                  5,884Net
      loss
                  
                  $
                  (6,694
                  )
                  
                  $
                  (6,073
                  )
                  
                  $
                  (6,579
                  )
                  
                  $
                  (5,856
                  )Net
      loss per share – basic and diluted
                  
                  $
                  (0.52
                  )
                  
                  $
                  (0.48
                  )
                  
                  $
                  (0.51
                  )
                  
                  $
                  (0.39
                  )Shares
      used in loss per share calculation
                  
                  
                  12,775
                  
                  
                  
                  12,775
                  
                  
                  
                  12,775
                  
                  
                  
                  15,149


F-29





12.        SUBSEQUENT
EVENTS




On
January 12, 2010, the Company received a letter from the Nasdaq Hearings Panel
(the “Panel”) stating that our shares would be transferred from the Nasdaq
Global Market to the Nasdaq Capital Market, effective at the open of the trading
session on Thursday, January 14, 2010.   As previously announced, we
have not been in compliance with Marketplace Rules 5450(a)(1) and 5450(b)(2)(A)
and (C), requiring (i) a minimum $1.00 bid price per share, (ii) a minimum $50
million market value of listed securities and (iii) a minimum market value of
publicly held shares of $15 million, respectively, for continued inclusion on
the Nasdaq Global Market. The Panel’s determination to transfer our shares to
the Nasdaq Capital Market followed our hearing before the Panel on December 3,
2009.  The Company has until May 5, 2010 to maintain either
stockholders’ equity of at least $2.5 million or a market value of listed
securities of $35 million.  The Company must also maintain a minimum
bid price of $1.00 per share by June 14, 2010 to maintain its listing on the
Nasdaq Captial Market.  If we cannot demonstrate compliance with these
requirements for continued listing on the Nasdaq Capital Market, our shares will
be subject to immediate delisting.




Between
November 30, 2009 and March 2, 2010, the Company entered into settlement
agreements and mutual releases (the “Subsequent Settlement Agreements”) with
certain of its creditors, pursuant to which the Company issued an aggregate of
352,459 shares (the “Additional Settlement Shares”) of common stock in 2010 and
paid an aggregate of $140,571 in cash as payment in full for its
then-outstanding liabilities to such creditors.   Pursuant to the
Subsequent Settlement Agreements, the Company agreed to use its best efforts to
prepare and file a registration statement to register the Additional Settlement
Shares as soon as possible following the date of each Subsequent Settlement
Agreement, to use its best efforts to have such registration statement declared
effective as soon as possible and to maintain such registration statement until
all such Additional Settlement Shares registered thereunder to such creditors
have been sold or for a period of one year, whichever comes first.




On
February 12, 2010, the Company entered into an Equity Distribution Agreement
with Ladenburg Thalman & Co. Inc. (“Ladenburg”), pursuant to which the
Company may issue and sell from time to time through Ladenburg, as sales agent
and/or principal, shares of the Company’s common stock, par value $0.001 per
share (the “Common Stock”), having an aggregate offering price of up to
$10 million (the “Shares”). The Shares will be issued pursuant to the
Company’s shelf registration statement on Form S-3 (File
No. 333-163648).  Through the close of business on March 12,
2010, we have sold 303,986 shares of common stock for net proceeds of
approximately $234,000.




On
March 1, 2010, we were served with a lawsuit where we were named as a
co-defendant along with one of our clinical regulatory service providers (“CRO”)
relating to the Proellex® clinical trial study.  The lawsuit was filed
in the State of Tennessee, 30th
Judicial District Chancery Court at Memphis by an investigator and claims that
the CRO did not pay it amounts owing to it relating to the
Proellex® study.  We did not engage the investigator and under
our agreement with the CRO, we believe the CRO is responsible for any such
costs or damages regarding such lawsuit.  The amount claimed is
approximately $175,000.  An estimate of the possible costs or expenses
to defend ourselves in this matter or risk of exposure under the litigation
cannot be made at this time.  Pursuant to the October Settlement
Agreement, such CRO, on behalf of itself and its agents, released us from all
claims which could be asserted by them against us.  We believe such
release covers the claims set forth in this lawsuit.


F-30




INDEX
TO EXHIBITS
  Exhibit Number
                  
                  Identification Of Exhibit3.1(a)
                  —
                  Restated
      Certificate of Incorporation. Exhibit 3.3 to the Company's Registration
      Statement on Form SB-2 (No. 33-57728-FW), as amended ("Registration
      Statement"), is incorporated herein by reference.3.1(b)
                  —
                  Certificate
      of Amendment to the Company's Restated Certificate of Incorporation, dated
      as of May 2, 2006.  Exhibit 3.1 to the Company's Current Report
      on Form 8-K as filed with the Commission on May 2, 2006 is incorporated
      herein by reference.3.1(c)
                  —
                  Certificate
      of Designation of Series One Junior Participating Preferred Stock dated
      September 2, 1999. Exhibit A to Exhibit 4.1 to the Company's
      Registration Statement on Form 8-A as filed with the Commission on
      September 3, 1999 (the "Rights Plan Registration Statement"), is
      incorporated herein by reference.3.1(d)
                  —
                  Certificate
      of Amendment to Restated Certificate of Incorporation, dated as of
      December 16, 2008.  Exhibit 3.1(d) to the Company’s Current
      Report on Form 8-K as filed with the Commission on December 23, 2008 is
      incorporated herein by reference.3.1(e)
                  —
                  Certificate
      of Amendment to Restated Certificate of Incorporation, dated as of
      November 18, 2009. Exhibit 3.1(e) to the Company’s Current Report on
      Form 8-K dated November 19, 2009 is incorporated herein by
      reference.3.2
                  —
                  Restated
      Bylaws of the Company. Exhibit 3.4 to the Registration Statement is
      incorporated herein by reference.4.1
                  —
                  Specimen
      Certificate of Common Stock, $.001 par value, of the Company. Exhibit 4.1
      to the Registration Statement is incorporated herein by
      reference.4.2
                  —
                  Rights
      Agreement dated September 1, 1999 between the Company and
      Computershare Investor Services LLC (as successor in interest to Harris
      Trust & Savings Bank), as Rights Agent. Exhibit 4.1 to the Rights
      Plan Registration Statement is incorporated herein by
      reference.4.3
                  —
                  First
      Amendment to Rights Agreement, dated as of September 6, 2002, between
      the Company, Harris Trust & Savings Bank and Computershare Investor
      Services LLC. Exhibit 4.3 to Amendment No. 1 to the Rights Plan
      Registration Statement on Form 8-A/A as filed with the Commission on
      September 11, 2002 is incorporated herein by
    reference.4.4
                  —
                  Second
      Amendment to Rights Agreement, dated as of October 30, 2002, between
      the Company and Computershare Investor Services LLC. Exhibit 4.4 to
      Amendment No. 2 to the Rights Plan Registration Statement on
      Form 8-A/A as filed with the Commission on October 31, 2002 is
      incorporated herein by reference.4.5
                  —
                  Third
      Amendment to Rights Agreement, dated as of June 30, 2005, between the
      Company and Computershare Trust Company, Inc. (as successor in interest to
      Computershare Investor Services, LLC).  Exhibit 4.4 to the
      Company's Current Report on Form 8-K as filed with the Commission on June
      30, 2005 is incorporated herein by reference.4.6
                  —
                  Fourth
      Amendment to Rights Agreement, dated as of January 9, 2008, between the
      Company and Computershare Trust Company, Inc. (as successor in interest to
      Computershare Investor Services, LLC).  Exhibit 4.5 to the
      Company's Current Report on Form 8-K as filed with the Commission on
      January 10, 2008 is incorporated herein by reference.4.7
                  —
                  Fifth
      Amendment to Rights Agreement, sated as of October 10, 2008, between the
      Company and Computershare Trust Company, Inc. (as successor in interest to
      Computershare Investor Services, LLC).  Exhibit 4.6 to the
      Company’s Current Report on Form 8-K as filed with the Commission on
      January 10, 2008 is incorporated herein by
  reference.
 
 F-31
 
 Exhibit Number
                
                Identification Of Exhibit4.8
                —
                Form
      of Rights Certificate. Exhibit B to Exhibit 4.1 to the Rights Plan
      Registration Statement is incorporated herein by
  reference.10.1+
                —
                Amended
      and Restated 1993 Employee and Consultant Stock Option Plan. Exhibit 10.3
      to the Registration Statement is incorporated herein by
      reference.10.2+
                —
                First
      Amendment to the Repros Therapeutics Inc. Amended and Restated 1993 Stock
      Option Plan. Exhibit 10.22 to the Company's Annual Report on Form 10-K for
      the year ended December 31, 1999 (the "1999 Form 10-K") is
      incorporated herein by reference.10.3+
                —
                1994
      Employee and Consultant Stock Option Plan. Exhibit 4.2 to the Company's
      Registration Statement on Form S-8 (File No. 033-83406) as filed with the
      Commission on August 29, 1994 is incorporated herein by
      reference.10.4+
                —
                2000
      Non-Employee Directors' Stock Option Plan. Appendix B to the Company's
      Definitive Proxy Statement filed on April 26, 2000 is incorporated
      herein by reference.10.5+
                —
                First
      Amendment to the Repros Therapeutics Inc. 2000 Non-Employee Directors'
      Stock Option Plan. Exhibit 10.21 to the 2000 Form 10-K is incorporated
      herein by reference.10.6+
                —
                Second
      Amendment to 2000 Non-Employee Directors' Stock Option Plan. Exhibit 10.6
      to the Company's Annual Report on Form 10-K for the year ended
      December 31, 2002 (the "2002 Form 10-K") is incorporated herein by
      reference.10.7+
                —
                Repros
      Therapeutics Inc. 2004 Stock Option Plan.  Exhibit 10.17 to the
      Company's Registration Statement on Form S-1 (No. 333-119861), as amended,
      is incorporated herein by reference.10.8+
                —
                Employment
      Agreement between the Company and Joseph S. Podolski. Exhibit 10.5 to the
      Registration Statement is incorporated herein by
  reference.10.9+
                —
                First
      Amendment to Employment Agreement between the Company and Joseph S.
      Podolski. Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for
      the fiscal quarter ended March 31, 2001 is incorporated herein by
      reference.10.10+
                —
                Second
      Amendment to Employment Agreement between the Company and Joseph S.
      Podolski. Exhibit 10.17 to the 2002 Form 10-K is incorporated herein by
      reference.10.11+
                
                Third
      Amendment to Employment Agreement dated effective March 11, 2009,
      between the Company and Joseph S. Podolski.  Exhibit 10.1 to the
      Company’s Current Report on Form 8-K as filed with the Commission on March
      17, 2009 is incorporated herein by reference10.12+
                
                Consulting
      Agreement dated October 29, 2009 by and between the Company and Katherine
      Anderson.  Exhibit 10.2 to the Company’s Current Report on Form
      8-K as filed with the Commission on November 3, 2009 is incorporated
      herein by reference10.13
                —
                Lease
      Agreement dated May 11, 2004 between the Company and Sealy Woodlands,
      L.P.  Exhibit 10.14 to the Company's Annual Report on Form 10-K
      for the year ended December 31, 2004 is incorporated herein by
      reference.10.14
                —
                Amendment
      to Lease Agreement between the Company and Sealy Woodlands, L.P., dated
      May 17, 2006.  Exhibit 10.1 to the Company's Quarterly Report on
      Form 10-Q for the fiscal quarter ended March 31, 2006 is
      incorporated herein by reference.10.15++
                —
                Letter
      Agreement dated July 15, 2002 between the Company, Schering Plough
      Ltd. and Schering-Plough Corporation. Exhibit 10.1 to the Company's
      Quarterly Report on Form 10-Q for the fiscal quarter ended
      June 30, 2002 is incorporated herein by
  reference.
  F-32
 
 Exhibit Number
                
                Identification Of Exhibit10.16++
                —
                PHS
      Patent License Agreement dated April 16, 1999 between the Company and
      certain agencies of the United States Public Health Service within the
      Department of Health and Human Services, with amendments. Exhibit 10.1 to
      the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
      September 30, 2003 is incorporated herein by
    reference.10.17
                —
                Fourth
      Amendment to PHS Patent License Agreement, as amended, dated December 9,
      2003 between the Company and certain agencies of the United States Public
      Health Service within the Department of Health and Human
      Services.  Exhibit 10.1 to the Company’s Current Report on Form
      8-K as filed with the Commission on March 19, 2007 is incorporated herein
      by reference.10.18
                —
                Waiver
      to PHS Patent License Agreement, as amended, dated March 8, 2007 between
      the Company and certain agencies of the United States Public Health
      Service within the Department of Health and Human
      Services.  Exhibit 10.2 to the Company’s Current Report on Form
      8-K as filed with the Commission on March 19, 2007 is incorporated herein
      by reference.10.19++
                —
                Fifth
      Amendment to PHS Patent License Agreement, as amended, dated March 15,
      2007 between the Company and certain agencies of the United States Public
      Health Service within the Department of Health and Human
      Services.  Exhibit 10.3 to the Company’s Current Report on Form
      8-K as filed with the Commission on March 19, 2007 is incorporated herein
      by reference.10.20++
                
                Sixth
      Amendment to PHS Patent License Agreement, as amended, dated July 7, 2009
      between the Company and certain agencies of the United States Public
      Health Service within the Department of Health and Human
      Services.  Exhibit 10.1 to the Company’s Current Report on Form
      8-K/A as filed with the Commission on December 22, 2009 is incorporated
      herein by reference10.21++*
                
                Seventh
      Amendment to PHS Patent License Agreement, as amended, dated October 28,
      2009 between the Company and certain agencies of the United States Public
      Health Service within the Department of Health and Human
      Services.10.22
                
                Master
      Settlement Agreement and Releases dated October 29, 2009 by and among the
      Company and its creditors signatory thereto.  Exhibit 10.1 to
      the Company’s Current Report on Form 8-K as filed with the Commission on
      November 3, 2009 is incorporated herein by reference10.23
                —
                Securities
      Purchase Agreement dated October 7, 2009, among the Company and the
      purchasers identified on the signature pages thereto.  Exhibit
      10.1 to the Company’s Current Report on Form 8-K as filed with the
      Commission on October 14, 2009 is incorporated herein by
      reference10.24
                
                Securities
      Purchase Agreement between the Company and Enable Growth Partners LP dated
      September 8, 2009.  Exhibit 10.1 to the Company’s Current Report
      on Form 8-K as filed with the Commission on September 10, 2009 is
      incorporated herein by reference10.25
                
                Form
      of Indemnification Agreement entered into between the Company and each of
      its directors.  Exhibit 10.1 to the Company’s Current Report on
      Form 8-K as filed with the Commission on May 20, 2009 is incorporated
      herein by reference23.1*
                —
                Consent
      of PricewaterhouseCoopers LLP31.1*
                —
                Certification
      Pursuant to Rule 13(a)-14(a) or 15(d)-14(a) of the Exchange Act, As
      Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief
      Executive Officer)31.2*
                —
                Certification
      Pursuant to Rule 13(a)-14(a) or 15(d)-14(a) of the Exchange Act, As
      Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
      (Principal Financial Officer)
  F-33
  Exhibit Number
                
                Identification Of Exhibit32.1*
                —
                Certification
      Furnished Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive
      Officer)32.2*
                —
                Certification
      Furnished Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002 (Principal Financial
      Officer)
 
 *
              Filed
      herewith.
  +
              Management
      contract or compensatory plan.
  ++
              Portions
      of this exhibit have been omitted based on a request for confidential
      treatment pursuant to Rule 24b-2 of the Exchange Act. Such omitted
      portions have been filed separately with the
  Commission.
  F-34