##### Table of Contents



SECURITIES AND EXCHANGE
    COMMISSION
 Washington, DC 20549
  Form 10-K
  þ

ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2005oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          
    to   Commission file number 0-29993
  IntraBiotics Pharmaceuticals,
    Inc.
 (Exact name of Registrant as
    specified in its charter)
  Delaware

94-3200380(State or Other Jurisdiction
    of
    Incorporation or Organization)

(IRS Employer
    Identification No.)1009 Oak Hill Road,
    Suite 201, Lafayette, CA.(Address of principal
    executive offices)

94549(Zip
    code)   Registrants telephone number, including area code:
 (925) 906-5331
  Securities registered under Section 12(b) of the
    Exchange Act:
 None.
  Securities registered under Section 12(g) of the
    Exchange Act:
 Common Stock, par value $.001 per share
 (Title of Class)
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
 o o þ
  Rule 12b-2 þ o




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##### 



TABLE OF
    CONTENTS
  PagePART IItem 1.

Business


1Item 1A

Risk Factors


2Item 1B

Unresolved Staff
    Comments


5Item 2.

Properties


5Item 3.

Legal
    Proceedings


5Item 4.

Submission of
    Matters to a Vote of Security Holders


5PART IIItem 5.

Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


6Item 6.

Selected Financial
    Data


7Item 7.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


8Item 7A.

Quantitative and
    Qualitative Disclosure About Market Risk


16Item 8.

Financial
    Statements and Supplementary Data


18Item 9A.

Controls and
    Procedures


40Item 9B.

Other
    Information


40PART IIIItem 10.

Directors and
    Executive Officers of the Registrant


41Item 11.

Executive
    Compensation


43Item 12.

Security Ownership
    of Certain Beneficial Owners and Management


47Item 13.

Certain
    Relationships and Related Transactions


50Item 14.

Principal
    Accountant Fees and Services


51PART IVItem 15.

Exhibits and
    Financial Statement Schedules


52EXHIBIT 10.32EXHIBIT 23.1EXHIBIT 23.2EXHIBIT 31.1EXHIBIT 32.1




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##### Table of Contents



PART I  This report contains forward-looking statements. These
    forward-looking statements are based on our current
    expectations, estimates, projections and assumptions about our
    business and industry. In some cases, these statements may be
    identified by terminology such as may,
    will, should, expects,
    plans, anticipates,
    believes, estimates,
    predicts, potential or
    continue, or the negative of such terms and other
    comparable terminology. These statements involve known and
    unknown risks and uncertainties that may cause our
    industrys results, levels of activity, performance or
    achievements to be materially different from those expressed or
    implied by the forward-looking statements. Factors that may
    cause or contribute to such differences include, among others,
    those discussed under the captions Business,
    Risk Factors and Managements Discussion
    and Analysis of Financial Condition and Results of
    Operations. Except as required by law, we undertake no
    obligation to update any forward-looking statement to reflect
    events after the date of this report.
  Item 1.
    Business  Overview
    day-to-day
      Clinical
    Supplies and Manufacturing
    Clinical
    Pipeline
     1




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##### Table of Contents



Marketing
    and Sales
    Competition
    Intellectual
    Property
    Government
    Regulation
    Employees
    Item 1A.
    Risk
    Factors    The
    recent delisting of our common stock could have a substantial
    effect on the price and liquidity of our common
    stock.
   2




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##### Table of Contents



paid-in-capital
  We are
    currently a party to a securities litigation class action
    lawsuit, which, if determined adversely, could negatively affect
    or limit our strategic alternatives, our financial results or
    business.
  Form 10-K.
  Directors,
    principal stockholders and affiliated entities beneficially own
    or control at least 48% of our capital stock outstanding and may
    be able to exert control over our activities, and the results of
    our operations and financial condition may suffer.
    The
    holders of our Series A preferred stock have rights that
    they could exercise against the best interests. of our common
    stockholders.
     3




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##### Table of Contents



Anti-takeover
    provisions in our charter documents and under Delaware law may
    make it more difficult to acquire us.
    
    provide for a classified board of directors of which
    approximately one-third of the directors will be elected each
    year;
    allow the authorized number of directors to be changed only by
    resolution of the Board;
    require that stockholder actions must be effected at a duly
    called stockholder meeting and prohibit stockholder action by
    written consent;
    establish advance notice requirements for nominations to the
    Board or for proposals that can be acted on at stockholder
    meetings;
    authorize our Board to issue blank check preferred stock to
    increase the amount of outstanding shares; and limit who may
    call stockholder meetings.    Our
    stock price has been, and will be volatile, and the value of
    your investment may continue to decline.
    We may
    continue to incur net losses.
    We may
    not be able to complete the strategic alternative we initially
    elected to pursue, resulting in increased expenses and a delay
    in finally completing a selected alternative.
   4




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##### Table of Contents



We
    face risks associated with clinical trial liability claims in
    the event that the prior use, or misuse, of our product
    candidates in clinical trials, that have since been terminated,
    results in personal injury or death.
    Item 1B.
    Unresolved
    Staff Comments  None.
  Item 2.
    Properties    Item 3.
    Legal
    Proceedings      Item 4.
    Submission
    of Matters to a Vote of Security Holders   5




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##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    for Common Equity
    High


Low1st Quarter ended
    March 31, 2004

$
19.25


$
13.252nd Quarter ended
    June 30, 2004

$
18.00


$
3.703rd Quarter ended
    September 30, 2004

$
4.38


$
3.354th Quarter ended
    December 31, 2004

$
4.20


$
3.461st Quarter ended
    March 31, 2005

$
4.07


$
3.572nd Quarter ended
    June 30, 2005

$
3.62


$
3.343rd Quarter ended
    September 30, 2005

$
3.75


$
3.404th Quarter ended
    December 31, 2005

$
3.95


$
3.40     Dividend
    Policy
   6




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##### Table of Contents



Item 6.
    Selected
    Financial Data  Form 10-K Form 10-K.
  Year Ended
    December 31,2005


2004


2003


2002


2001(In thousands, except per share
    amounts)Statement of Operations
    Data:Operating expenses:Research and development

$
255


$
11,519


$
7,727


$
23,053


$
38,034General and administrative


2,980



4,819



5,782



8,617



9,202Restructuring and other charges


648



858







6,118



21,956Arbitration settlement














(3,600
)


Impairment of acquired workforce














1,365



Total operating expenses


3,883



17,196



13,509



35,553



69,192Operating loss


(3,883
)


(17,196
)


(13,509
)


(35,553
)


(69,192
)Interest income


1,502



700



166



703



2,843Interest expense














(459
)


(1,110
)Other income/(expense), net


(1
)


(204
)


31



856



93Change in fair value on
    revaluation of warrants


(789
)














Net loss


(3,171
)


(16,700
)


(13,312
)


(34,453
)


(67,366
)Non-cash deemed dividend related
    to beneficial conversion feature of Series A preferred stock










(1,436
)






Non-cash dividends on
    Series A preferred stock


(240
)


(260
)


(182
)






Net loss applicable to common
    stockholders

$
(3,411
)

$
(16,960
)

$
(14,930
)

$
(34,453
)

$
(67,366
)Basic and diluted net loss per
    share applicable to common stockholders

$
(0.37
)

$
(2.24
)

$
(4.01
)

$
(11.25
)

$
(27.47
)Shares used to compute basic and
    diluted net loss per share applicable to common stockholders


9,134



7,559



3,720



3,064



2,453Balance Sheet Data:Cash, cash equivalents, restricted
    cash and short-term investments

$
48,830


$
50,743


$
26,644


$
13,315


$
35,470Working capital


48,815



50,462



25,424



15,191



29,629Total assets


49,171



51,185



27,326



16,226



42,465Long term obligations, less
    current portion


















5,000Accumulated deficit


(235,570
)


(232,159
)


(215,199
)


(200,269
)


(165,816
)Total stockholders equity


48,815



50,508



25,628



15,480



26,212  7




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##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following discussion and analysis of our financial
    condition and results of operations should be read together with
    our financial statements and related notes appearing elsewhere
    in this
    Form 10-K.
    This discussion and analysis contains forward-looking statements
    that involve risks, uncertainties and assumptions. The actual
    results may differ materially from those anticipated in these
    forward-looking statements as a result of many factors,
    including but not limited to those set forth under Risk
    Factors. All forward-looking statements included in this
    document are based on information available to us on the date of
    this document and we assume no obligation to update any
    forward-looking statements contained in this
    Form 10-K.
  Overview
    day-to-day
    Form 10-K.
  one-for-one
 8




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##### Table of Contents



Form 10-K.
    Critical
    Accounting Policies and Estimates
      Stock-Based
    Compensation
  one-for-one
  Accounting
    for Stock-Based Compensation, Accounting for
    Stock-Based Compensation  Transition and
    Disclosure, one-for-one
 9




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##### Table of Contents



No. 96-18, Accounting for Equity Instruments That Are Issued to
    Other Than Employees for Acquiring, or in Conjunction with
    Selling, Goods or Services
  Clinical
    Trial Accruals
    Results
    of Operations
  Comparison
    of Years Ended December 31, 2005, 2004, and
    2003
  Revenues
    Expenses
  Research
    and Development
  2005


Change


2004


Change


2003(In thousands)Research and development

$
255



(98
)%

$
11,519



49
%

$
7,727      10




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##### Table of Contents



General
    and Administrative
  2005


Change


2004


Change


2003(In thousands)General and administrative

$
2,980



(38
)%

$
4,819



(16
)%

$
5,782         Restructuring
    and Other Charges
  2005


2004


2003(In thousands)Restructuring and other charges

$
648


$
858


$
      11




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##### Table of Contents



Interest
    Income and Expense
  2005


Change


2004


Change


2003(In thousands)Interest income

$
1,502



115
%

$
700



322
%

$
166Interest expense

$




n/m


$




n/m


$
     Other
    Income/(Expense), net
  2005


Change


2004


Change


2003(In thousands)Other income/ (expense), net

$
(1
)


(100
)%

$
(204
)


(758
)%

$
31Change in fair value on
    revaluation of warrants

$
(789
)


n/a


$




n/a


$
     paid-in-capital
  Income
    Taxes
  Form 10-K
 12




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##### Table of Contents



Liquidity
    and Capital Resources
  2005


Change


2004


Change


2003(Dollars in thousands)Cash, cash equivalents, restricted
    cash and short-term investments

$
48,830



(4
)%

$
50,743



90
%

$
26,644     2005


2004


2003(In thousands)Net cash used in operating
    activities

$
(2,460
)

$
(17,242
)

$
(8,823
)Net cash provided by (used in)
    investing activities


2,981



(37,043
)


(9,211
)Net cash provided by financing
    activities


496



41,754



22,150Net increase (decrease) in cash
    and cash equivalents

$
1,017


$
(12,531
)

$
4,116         
    In May 2004, in a public offering on
    Form S-1,
    the Company sold 3,450,000 shares of newly issued common
    stock, $0.001 par value, at $13.00 per share resulting
    in net cash proceeds of $41.5 million after issuance costs
    of $3.3 million.
    In October 2003, in a private placement transaction, the Company
    sold 1,774,000 shares of newly issued common stock,
    $0.001 par value, at $10.85 per share, and issued
    warrants to purchase 354,800 shares of the Companys
    common stock, resulting in net cash proceeds of
    $18.5 million. The warrants have an exercise price of
    $10.85 per share, subject to adjustment upon a subdivision
    or combination of the Companys outstanding common stock,
    and will expire on October 10, 2008, if not previously
    exercised.
    In May 2003, the Company sold 350 shares of a newly created
    Series A convertible preferred stock and issued warrants to
    purchase 920,699 shares of common stock, resulting in net
    cash proceeds of $3.2 million. The warrants have an
    exercise price of $1.033 per share, subject to adjustment
    upon a subdivision or combination of the Companys
    outstanding common stock, and expire in May 1, 2008, if not
    previously exercised.
    Cash proceeds from exercises of stock options were $497,000,
    $242,000, and $380,000 for the years ended December 31,
    2005, 2004, and 2003, respectively. 13




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##### Table of Contents



Contractual
    Obligations
        Off-Balance
    Sheet Arrangements
  Regulation S-K)
  Indemnifications
    Future
    Capital Requirements
    Recent
    Accounting Pronouncements
   14




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##### Table of Contents




    EITF Issue
    No. 03-1,
    The Meaning of
    Other-Than-Temporary
    Impairment and Its Application to Certain Investments.
    In December 2004, the FASB issued SFAS No. 153
    Exchanges of Non-monetary Assets  an
    amendment of APB opinion No. 29, or SFAS 153.
    SFAS 153 clarifies that exchanges of non-monetary assets
    should be measured based on the fair value of the assets
    exchanged, with a general exception for exchanges that have no
    commercial substance. SFAS 153 is effective for
    non-monetary asset exchanges occurring in fiscal periods
    beginning after June 15, 2005.
    In March 2005, the SEC released SEC Staff Accounting
    Bulletin No. 107, Share-Based Payment
    (SAB 107). SAB 107 provides the SEC
    staffs position regarding the application of
    SFAS 123(R) and certain SEC rules and regulations, and also
    provides the staffs views regarding the valuation of
    share-based payment arrangements for public companies.
    In March 2005, the FASB issued FIN 47, Accounting for
    Conditional Asset Retirement Obligations, an interpretation of
    FASB Statement No. 143 (FIN 47), which requires an
    entity to recognize a liability for the fair value of a
    conditional asset retirement obligation when incurred if the
    liabilitys fair value can be reasonably estimated.
    FIN 47 is effective for fiscal years ending after
    December 15, 2005.
    In May 2005, the FASB issued SFAS No. 154
    Accounting Changes and Error
    Corrections  a replacement of APB Opinion
    No. 20, and FASB Statement No. 3.
    (SFAS 154) SFAS 154 replaces APB Opinion
    No. 20, Accounting Changes, and FASB Statement No. 3,
    Reporting Accounting Changes in Interim Financial Statements,
    and changes the requirements for the accounting for and
    reporting of a change in accounting principle. This statement
    applies to all voluntary changes in accounting principle. It
    also applies to changes required by an accounting pronouncement
    in the unusual instance that the pronouncement does not include
    specific transition provisions. When a pronouncement includes
    specific transition provisions, those provisions should be
    followed. SFAS 154 is effective for accounting changes and
    corrections of errors made in fiscal years beginning after
    December 31, 2005.  FAS 123R-4 FAS 123R-4 FAS 123R-4
 15




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##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosure About Market Risk      Fair


AverageTotal


Market


InterestShort-Term Investments

Cost


Value


RateDecember 31, 2005

$
46,093


$
46,058



4.06%December 31, 2004

$
49,055


$
48,988



2.39%   available-for-sale
  December, 31 2005Gross


GrossAmortized


Unrealized


Unrealized


EstimatedCost


Gains


Losses


Fair ValueGovernment agencies

$
30,611


$



$
(30
)

$
30,581Commercial Paper


15,482







(5
)


15,477Money market funds


2,638











2,638Total
    available-for-sale
    investments

$
48,731


$



$
(35
)


48,696Less; amounts classified as cash
    equivalents














(2,638
)$
46,058   December, 31 2004Gross


GrossAmortized


Unrealized


Unrealized


EstimatedCost


Gains


Losses


Fair ValueUS government agencies

$
30,590


$



$
(67
)

$
30,523Auction rate securities


18,465











18,465Money market funds


784











784Total
    available-for-sale
    investments

$
49,839


$



$
(67
)


49,772Less; amounts classified as cash
    equivalents














(784
)$
48,988    16




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##### Table of Contents



available-for-sale
  December, 31 2005


December, 31 2004Amortized


Estimated


Amortized


EstimatedCost


Fair Value


Cost


Fair ValueDue in less than one year

$
48,731


$
48,696


$
38,248


$
38,202Due in one year or more










11,591



11,570Total
    available-for-sale
    investments

$
48,731


$
48,696


$
49,839


$
49,772  17




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##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  INTRABIOTICS
    PHARMACEUTICALS, INC.
  INDEX TO
    FINANCIAL STATEMENTS
  Report of
    Stonefield Josephson, Inc., Independent Registered Public
    Accounting Firm


19Report of
    Ernst & Young LLP, Independent Registered Public
    Accounting Firm


20Balance Sheets


21Statements of
    Operations


22Statements of
    Stockholders Equity


23Statements of Cash
    Flows


24Notes to Financial
    Statements


25  18




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE
    STOCKHOLDERS AND BOARD OF DIRECTORS OF
    INTRABIOTICS PHARMACEUTICALS INC.
        STONEFIELD
    JOSEPHSON, INC.
      19




---



##### Table of Contents



REPORT OF
    ERNST & YOUNG, LLP INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM           ERNST &
    YOUNG LLP
    20




---



##### Table of Contents



INTRABIOTICS
    PHARMACEUTICALS, INC.
  BALANCE SHEETS
  December 31,


December 31,2005


2004(In thousands)ASSETSCurrent assets:Cash and cash equivalents

$
2,772


$
1,755Short-term investments


46,058



48,988Prepaid expenses and other current
    assets


341



396Total current assets


49,171



51,139Property and equipment, net






46Total assets

$
49,171


$
51,185LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
58


$
154Accrued clinical liabilities


99



161Accrued employee liabilities






89Other accrued liabilities


194



273Total current liabilities


351



677Commitments and contingencies
    (Note 6 & 12)Stockholders equity:Convertible preferred stock,
    $0.001 par value: 5,000,000 shares authorized; 300 and
    325 shares outstanding and $3,000 and $3,250 aggregate
    liquidation preference at December 31, 2005 and
    December 31, 2004, respectively


1,634



1,771Common stock, $0.001 par
    value: 70,000,000 shares authorized at December 31,
    2005 and December 31, 2004; 9,287,685 and
    8,880,344 shares outstanding at December 31, 2005 and
    December 31, 2004, respectively


9



9Additional paid-in capital


282,828



281,068Deferred stock compensation


(45
)


(114
)Accumulated other comprehensive
    loss


(36
)


(67
)Accumulated deficit


(235,570
)


(232,159
)Total stockholders equity


48,820



50,508Total liabilities and
    stockholders equity

$
49,171


$
51,185    21




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##### Table of Contents



INTRABIOTICS
    PHARMACEUTICALS, INC.
  STATEMENTS OF OPERATIONS
  Year Ended
    December 312005


2004


2003(In thousands, except per share
    amounts)Operating expenses:Research and development

$
255


$
11,519


$
7,727General and administrative


2,980



4,819



5,782Restructuring charge


648



858



Total operating expenses


3,883



17,196



13,509Operating loss


(3,883
)


(17,196
)


(13,509
)Interest Income


1,502



700



166Other Income (expense), net


(1
)


(204
)


31Change in fair value on
    revaluation of warrants


(789
)






Net loss


(3,171
)


(16,700
)


(13,312
)Non cash deemed dividend related
    to bebeficial conversion feature of Series A preferred stock










(1,436
)Non-cash dividends on
    Series A preferred stock


(240
)


(260
)


(182
)Net loss applicable to common
    stockholders

$
(3,411
)

$
(16,960
)

$
(14,930
)Basic and diluted net loss per
    share applicable to common stockholders

$
(0.37
)

$
(2.24
)

$
(4.01
)Shares used to compute basic and
    diluted net loss per share applicable to common stockholders


9,134



7,559



3,720     22




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##### Table of Contents



INTRABIOTICS
    PHARMACEUTICALS, INC.
  STATEMENTS OF STOCKHOLDERS EQUITY
  AccumulatedConvertible








Additional


Deferred


Other





TotalPreferred Stock


Common Stock


Paid-In


Stock


Comprehensive


Accumulated


StockholdersAmount


Shares


Amount


Capital


Compensation


Income (Loss)


Deficit


Equity(In thousands)Balances at December 31,
    2002

$




3,269


$
3


$
216,466


$
(720
)

$



$
(200,269
)

$
15,480Issuance of common stock upon
    exercise of options for cash






50







380















380Issuance of common stock and
    warrants on private placement, net of $710 issuance costs






1,774



2



18,536















18,538Issuance of Series A preferred
    stock and common stock warrants on private placement, net of
    $268 issuance costs


1,906











1,326















3,232Beneficial conversion feature on
    Series A preferred stock














1,436











(1,436
)


Issuance of common stock upon
    conversion of Series A preferred stock


(135
)


132







135















Issuance of common stock as
    dividend on series A preferred stock






18







117











(182
)


(65
)Issuance of common stock upon
    exercise of warrants






55























Amortization of deferred stock
    compensation


















126











126Stock compensation for variable
    option awards














993















993Stock compensation for consultant
    services














254















254Cancellation of stock options
    related to employee terminations














(406
)


406











Comprehensive loss:Net loss


























(13,312
)


(13,312
)Unrealized gain on securities






















2







2Comprehensive loss






























(13,310
)Balances at December 31,
    2003


1,771



5,298



5



239,237



(188
)


2



(215,199
)


25,628Issuance of common stock upon
    exercise of options for cash






87



1



241















242Issuance of common stock in a
    public offering, net of $3,337 issuance costs






3,450



3



41,509















41,512Issuance of common stock as
    dividend on series A preferred stock






41







260











(260
)


Issuance of common stock upon
    exercise of warrants






4























Amortization of deferred stock
    compensation


















61











61Stock compensation for variable
    option awards














(638
)














(638
)Stock compensation for consultant
    services














472















472Cancellation of stock options
    related to employee terminations














(13
)


13











Comprehensive loss:Net loss


























(16,700
)


(16,700
)Unrealized loss on securities






















(69
)






(69
)Comprehensive loss






























(16,769
)Balances at December 31,
    2004


1,771



8,880



9



281,068



(114
)


(67
)


(232,159
)


50,508Issuance of common stock upon
    exercise of options for cash






179







496















496Issuance of common stock as
    dividend on series A preferred stock






66







245











(240
)


5Issuance of common stock upon
    conversion of series A preferred stock


(137
)


132







137















Issuance of common stock upon
    exercise of warrants






31























Change due to revaluation of
    warrants














789















789Amortization of deferred stock
    compensation


















50











50Stock compensation for variable
    option awards














(38
)














(38
)Stock compensation for consultant
    services














150















150Cancellation of stock options
    related to employee terminations














(19
)


19











0Comprehensive loss:Net loss


























(3,171
)


(3,171
)Unrealized loss on securities






















31







31Comprehensive loss






























(3,140
)Balances at December 31,
    2005

$
1,634



9,288


$
9


$
282,828


$
(45
)

$
(36
)

$
(235,570
)

$
48,820    23




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##### Table of Contents



INTRABIOTICS
    PHARMACEUTICALS, INC.
  STATEMENTS OF CASH FLOWS
  Year Ended
    December 31,2005


2004


2003(In thousands)Operating activitiesNet loss

$
(3,171
)

$
(16,700
)

$
(13,312
)Adjustments to reconcile net loss
    to net cash used in operating activities:Change due to revaluation of
    warrants


789







Stock compensation for variable
    option awards


(38
)


(638
)


993Amortization of deferred stock
    compensation


50



61



126Stock compensation for consultant
    services


150



472



254Depreciation and amortization


9



35



92Loss on disposal of property and
    equipment


27



33



Change in assets and liabilities:Restricted cash






250



Prepaid expenses and other current
    assets


55



82



2,144Other assets






184



(7
)Accounts payable


(96
)


13



(204
)Accrued clinical liabilities


(62
)


(885
)


1,046Accrued employee liabilities


(89
)


(12
)


(34
)Accrued restructuring charges


(5
)


5



(64
)Other accrued liabilities


(79
)


(142
)


143Net cash used in operating
    activities


(2,460
)


(17,242
)


(8,823
)Investing activitiesCapital expenditures






(94
)


Proceeds from sale of property and
    equipment


10







Purchase of short term investments


(193,022
)


(65,167
)


(12,106
)Proceeds from sale or maturity of
    short-term investments


195,993



28,218



2,895Net cash provided by (used in)
    investing activities


2,981



(37,043
)


(9,211
)Financing activitiesProceeds from sale of
    Series A Preferred stock in private placement, net










3,232Proceeds from sale of common stock
    in private placement, net










18,538Proceeds from issuance of common
    stock, net of issuance costs


496



41,754



380Net cash provided by financing
    activities


496



41,754



22,150Net increase (decrease) in cash
    and cash equivalents


1,017



(12,531
)


4,116Cash and cash equivalents at
    beginning of the year


1,755



14,286



10,170Cash and cash equivalents at end
    of the year

$
2,772


$
1,755


$
14,286Supplemental disclosure of
    non-cash information:Net deferred stock compensation
    (cancellations due to employee termination)

$
(19
)

$
(13
)

$
(406
)Issuance of common stock dividend
    on Series A preferred stock

$
(245
)

$
(260
)

$
(182
)Issuance of common stock upon
    conversion of Series A preferred stock

$
(137
)

$



$
(135
)Beneficial conversion feature on
    Series A preferred stock

$



$



$
(1,436
)    24




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##### Table of Contents



INTRABIOTICS
    PHARMACEUTICALS, INC.
  NOTES TO FINANCIAL STATEMENTS
  1.
    Description
    of Business    day-to-day
  2.
    Summary
    of Significant Accounting Policies and Concentrations of
    Risk  Use of
    Estimates
      Concentrations
    of Credit Risk and Fair Value of Financial
    Instruments
      Cash
    Equivalents and Short-Term Investments
   25




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##### Table of Contents



INTRABIOTICS
    PHARMACEUTICALS, INC.
  NOTES TO FINANCIAL
    STATEMENTS  (Continued)
  available-for-sale. available-for-sale available-for-sale
  Property
    and Equipment
    Research
    and Development
    Restructuring
    Charges
    Clinical
    Trial Accruals
    Stock-Based
    Compensation
  Accounting for
    Stock-Based Compensation Accounting for
    Stock-Based Compensation  Transition and
    Disclosure, one-for-one
 26




---



##### Table of Contents



INTRABIOTICS
    PHARMACEUTICALS, INC.
  NOTES TO FINANCIAL
    STATEMENTS  (Continued)
    one-for-one
  No. 96-18, Accounting for Equity Instruments That Are Issued to
    Other Than Employees for Acquiring, or in Conjunction with
    Selling, Goods or Services
      Year Ended
    December 31,2005


2004


2003(In thousands, exceptper share amounts)Net loss applicable to common
    stockholders, as reported

$
(3,411
)

$
(16,960
)

$
(14,930
)Add: Stock-based employee
    compensation expense (recovery) included in reported net loss
    applicable to common stockholders


12



(577
)


1,119Deduct: Total stock-based employee
    compensation expense determined under fair value based method
    for all awards


(1,824
)


(7,049
)


(1,577
)Net loss applicable to common
    stockholders, pro forma

$
(5,223
)

$
(24,586
)

$
(15,388
)Net loss per share applicable to
    common stockholders:Basic and
    diluted  as reported

$
(0.37
)

$
(2.24
)

$
(4.01
)Basic and
    diluted  pro forma

$
(0.57
)

$
(3.25
)

$
(4.14
)     Year Ended
    December 31,2005


2004


2003Risk-free interest rate


3.79
%


3.55
%


2.92
%Volatility


0.25



1.00



1.00Dividend yield


0.00
%


0.00
%


0.00
%Expected life of option


6.1 years



5 years



5 years    27




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##### Table of Contents



INTRABIOTICS
    PHARMACEUTICALS, INC.
  NOTES TO FINANCIAL
    STATEMENTS  (Continued)
   Comprehensive
    Loss
    Year Ended
    December 31,2005


2004


2003Net loss

$
(3,171
)

$
(16,700
)

$
(13,312
)Unrealized gain (loss) on
    available-for-sale
    securities


31



(69
)


2Comprehensive loss

$
(3,140
)

$
(16,769
)

$
(13,310
)   Net
    Loss Per Share
  Earnings
    Per Share
  Recent
    Accounting Pronouncements
      
    EITF Issue
    No. 03-1,
    The Meaning of
    Other-Than-Temporary
    Impairment and Its Application to Certain Investments. 28




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##### Table of Contents



INTRABIOTICS
    PHARMACEUTICALS, INC.
  NOTES TO FINANCIAL
    STATEMENTS  (Continued)
   
    In December 2004, the FASB issued SFAS No. 153
    Exchanges of Non-monetary Assets  an
    amendment of APB opinion No. 29, or SFAS 153.
    SFAS 153 clarifies that exchanges of non-monetary assets
    should be measured based on the fair value of the assets
    exchanged, with a general exception for exchanges that have no
    commercial substance. SFAS 153 is effective for
    non-monetary asset exchanges occurring in fiscal periods
    beginning after June 15, 2005.
    In March 2005, the SEC released SEC Staff Accounting
    Bulletin No. 107, Share-Based Payment
    (SAB 107). SAB 107 provides the SEC
    staffs position regarding the application of
    SFAS 123(R) and certain SEC rules and regulations, and also
    provides the staffs views regarding the valuation of
    share-based payment arrangements for public companies.
    In March 2005, the FASB issued FIN 47, Accounting for
    Conditional Asset Retirement Obligations, an interpretation of
    FASB Statement No. 143 (FIN 47), which requires an entity
    to recognize a liability for the fair value of a conditional
    asset retirement obligation when incurred if the
    liabilitys fair value can be reasonably estimated.
    FIN 47 is effective for fiscal years ending after
    December 15, 2005.
    In May 2005, the FASB issued SFAS No. 154
    Accounting Changes and Error
    Corrections  a replacement of APB Opinion
    No. 20, and FASB Statement No. 3.
    (SFAS 154) SFAS 154 replaces APB Opinion
    No. 20, Accounting Changes, and FASB Statement No. 3,
    Reporting Accounting Changes in Interim Financial Statements,
    and changes the requirements for the accounting for and
    reporting of a change in accounting principle. This statement
    applies to all voluntary changes in accounting principle. It
    also applies to changes required by an accounting pronouncement
    in the unusual instance that the pronouncement does not include
    specific transition provisions. When a pronouncement includes
    specific transition provisions, those provisions should be
    followed. SFAS 154 is effective for accounting changes and
    corrections of errors made in fiscal years beginning after
    December 31, 2005.  FAS 123R-4 FAS 123R-4 FAS 123R-4
 29




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##### Table of Contents



INTRABIOTICS
    PHARMACEUTICALS, INC.
  NOTES TO FINANCIAL
    STATEMENTS  (Continued)
   3.
    Available-For-Sale
    Investments  available-for-sale
  December 31, 2005Gross


GrossAmortized


Unrealized


Unrealized


EstimatedCost


Gains


Losses


Fair ValueGovernment agencies

$
30,611


$



$
(30
)

$
30,581Commercial Paper


15,482







(5
)


15,477Money market funds


2,638











2,638Total
    available-for-sale
    investments

$
48,731


$



$
(35
)


48,696Less; amounts classified as cash
    equivalents














(2,638
)$
46,058   December 31, 2004Gross


GrossAmortized


Unrealized


Unrealized


EstimatedCost


Gains


Losses


Fair ValueUS government agencies

$
30,590


$



$
(67
)

$
30,523Auction rate securities


18,465











18,465Money market funds


784











784Total
    available-for-sale
    investments

$
49,839


$



$
(67
)


49,772Less; amounts classified as cash
    equivalents














(784
)$
48,988     available-for-sale
  December 31, 2005


December 31, 2004Amortized


Estimated


Amortized


EstimatedCost


Fair Value


Cost


Fair ValueDue in less than one year

$
48,731


$
48,696


$
38,248


$
38,202Due in one year or more










11,591



11,570Total
    available-for-sale
    investments

$
48,731


$
48,696


$
49,839


$
49,772  30




---



##### Table of Contents



INTRABIOTICS
    PHARMACEUTICALS, INC.
  NOTES TO FINANCIAL
    STATEMENTS  (Continued)
   4.
    Property
    and Equipment    December 31,2005


2004Machinery and equipment

$



$
373Less: Accumulated depreciation


0



(327
)Property and equipment, net

$



$
46     5.
    Other
    Accrued Liabilities    December 31,2005


2004Accrued professional fees

$
104


$
144Accrued dividends on Series A
    convertible stock


60



65Other accrued liabilities


30



64Total other accrued liabilities

$
194


$
273   6.
    Commitments
    and contingencies    7.
    Restructuring
    and Other Charges  2004
    Restructuring
      2005
    Restructuring
   31




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##### Table of Contents



INTRABIOTICS
    PHARMACEUTICALS, INC.
  NOTES TO FINANCIAL
    STATEMENTS  (Continued)
   8.
    Acquisition        9.
    Stockholders
    Equity  Preferred
    Stock
     32




---



##### Table of Contents



INTRABIOTICS
    PHARMACEUTICALS, INC.
  NOTES TO FINANCIAL
    STATEMENTS  (Continued)
              paid-in-capital
   33




---



##### Table of Contents



INTRABIOTICS
    PHARMACEUTICALS, INC.
  NOTES TO FINANCIAL
    STATEMENTS  (Continued)
   Common
    Stock
      Common
    Stock Reserved for Future Issuance
    Equity incentive plans


2,006,758Warrants


1,148,138Series A convertible
    preferred stock


1,578,346Total shares reserved for future
    issuance


4,733,242     Warrants
       34




---



##### Table of Contents



INTRABIOTICS
    PHARMACEUTICALS, INC.
  NOTES TO FINANCIAL
    STATEMENTS  (Continued)
    10.
    Employee
    Benefit Plans  Stock
    Option Plans
             35




---



##### Table of Contents



INTRABIOTICS
    PHARMACEUTICALS, INC.
  NOTES TO FINANCIAL
    STATEMENTS  (Continued)
     Outstanding OptionsWeighted-Number of


Average ExerciseShares


PriceBalance at December 31, 2002


631,335


$
39.24Granted


822,527


$
2.97Exercised


(49,863
)

$
7.68Cancelled


(581,018
)

$
40.93Balance at December 31, 2003


822,981


$
3.73Granted


1,064,750


$
15.01Exercised


(87,423
)

$
2.75Cancelled


(638,575
)

$
13.97Balance at December 31, 2004


1,161,733


$
8.51Granted


145,500


$
3.98Exercised


(178,716
)

$
3.56Cancelled


(557,850
)

$
8.73Balance at December 31, 2005


570,667


$
8.92     Options Outstanding


Options ExercisableWeighted-Average


Weighted





Weighted-Remaining


Average





AverageNumber of


Contractual Life


Exercise


Number of


ExerciseRange of Exercise
    Prices

Shares


(Years)


Price


Shares


Price$ 2.28 - 2.40


8,333



0.8


$
2.40



8,333


$
2.40$ 2.76


203,334



4.58


$
2.76



144,995


$
2.76$ 3.80 - 4.08


62,500



9.01


$
4.00



57,500


$
4.00$13.06 - 16.49


296,500



8.2


$
14.40



172,750


$
14.50570,667



7.08


$
8.92



383,578


$
8.14   2000
    Employee Stock Purchase Plan
     36




---



##### Table of Contents



INTRABIOTICS
    PHARMACEUTICALS, INC.
  NOTES TO FINANCIAL
    STATEMENTS  (Continued)
   Stock
    Compensation
    Year Ended
    December 31,2005


2004


2003Stock compensation for variable
    option awards

$
(38
)

$
(638
)

$
993Amortization of deferred stock
    compensation expense


51



61



126Stock compensation for consulting
    services


148



472



254Total stock compensation expense

$
161


$
(105
)

$
1,373   Stock Compensation for Variable Option
    Awards. one-for-one
  Amortization of Deferred Stock Compensation
    Expense. ,
  Stock Compensation for Consultant Services.
  Retirement
    Savings Plan
   37




---



##### Table of Contents



INTRABIOTICS
    PHARMACEUTICALS, INC.
  NOTES TO FINANCIAL
    STATEMENTS  (Continued)
   11.
    Income
    Taxes    Year Ended
    December 31,2005


2004


2003U.S. federal (benefit) at
    statutory rate

$
(1,078
)

$
(5,678
)

$
(4,526
)State taxes










Unutilized net operating losses


753



5,875



4,050Stock based compensation


55



(200
)


467Non deductible warrant expense


268







Other


2



3



9Total

$



$



$
     December 31,2005


2004Net operating loss carryforwards

$
74,900


$
74,000Research and development tax
    credits


5,400



5,500Capitalized research and
    development costs


8,600



8,200Other, net


1,100



100Total Deferred Tax Assets

$
90,000


$
87,800Valuation Allowance

$
(90,000
)

$
(87,800
)Net Deferred Tax Assets

$



$
         12.
    Legal
    Proceedings   38




---



##### Table of Contents



INTRABIOTICS
    PHARMACEUTICALS, INC.
  NOTES TO FINANCIAL
    STATEMENTS  (Continued)
      13.
    Quarterly
    Financial Data (Unaudited)  2005


2004First


Second


Third


Fourth


First


Second


Third


FourthOperating loss

$
(1,383
)

$
(1,585
)

$
(540
)

$
(375
)

$
(6,310
)

$
(5,252
)

$
(4,007
)

$
(1,627
)Net loss


(1,074
)


(1,246
)


(144
)


(707
)


(6,237
)


(5,138
)


(3,961
)


(1,364
)Net loss applicable to common
    stockholders


(1,134
)


(1,306
)


(204
)


(767
)


(6,302
)


(5,203
)


(4,026
)


(1,429
)Basic and diluted loss per share
    applicable to common stockholders

$
(0.13
)

$
(0.14
)

$
(0.02
)

$
(0.08
)

$
(1.19
)

$
(0.73
)

$
(0.46
)

$
(0.16
)  39




---



##### Table of Contents



Item 9A.
    Controls
    and Procedures  Section 13a-15(e) 15d-15(e)
    Disclosure
    Controls and Procedures
    Scope of
    the Controls Evaluation
  Form 10-Q Form 10-K.
  Future
    Requirements
  Form 10-K
   Item 9B.  Other
    Information   40




---



##### Table of Contents



12,500-share 25,000-share
    PART III  Item 10.
    Directors
    and Executive Officers of the Registrant  Executive
    Officers and Directors
    Name

Age

Position with the
    CompanyDenis Hickey


61


Chief Executive Officer and Chief
    Financial OfficerHenry J. Fuchs, M.D.


48


DirectorJack S. Remington, M.D.


75


DirectorKevin C. Tang


38


Director   Denis Hickey.
  Henry J. Fuchs, M.D. ® ®
  Jack S. Remington, M.D.
 41




---



##### Table of Contents



Kevin C. Tang.
  Section 16(a)
    Beneficial Ownership Reporting Compliance
      Code of
    Business Conduct and Ethics
  Regulation S-K.
  Board
    Committees and Meetings
     42




---



##### Table of Contents



Item 11.
    Executive
    Compensation  Directors
    Compensation
      12,500-share 25,000-share
 43




---



##### Table of Contents



Executive
    Compensation
  Named Executive
    Officers
  Summary
    Compensation Table
  Long TermCompensationSecuritiesAnnual Compensation


Underlying


All OtherName and Principal
    Position

Year


Salary ($)


Bonus ($)


Options


Compensation ($)Hickey & Hill, Denis
    Hickey(1)


2005















96,000
(1)Chief Executive Officer andChief Financial officerHenry J. Fuchs, M.D.(2)


2005



199,323







368,333



583,602
(3)Former President and


2004



360,000







160,000



10,808
(4)Chief Executive Officer


2003



313,750



40,000



200,000Gregory Schafer(5)


2005



120,000
(6)Former Principal Financial OfficerSteven B. Ketchum(7)


2005



104,504Former Senior Vice President of


2004



256,515Operation & Regulatory
    Affairs


2003



235,083



20,000



125,000     (1)
    
    In consideration for Hickey & Hills services to
    the Company, including Denis Hickeys services as Chief
    Executive Officer and Chief Financial Officer, pursuant to the
    Services Agreement described under Employment Contracts
    and Termination of Employment and
    Change-in-Control
    Arrangements, Hickey & Hill was paid
    (i) a one-time fee of $20,000, (ii) monthly fees in
    the aggregate amount of $72,000 and (iii) a bonus in the
    amount of $10,000.(2)
    
    Dr. Fuchs was appointed Chief Executive Officer of
    IntraBiotics on January 27, 2003. Dr. Fuchs was
    terminated as part of a restructuring on June  15,
    2005, but has retained his position as a member of the board.(3)
    
    Represents (i) a severance payment of $547,832,
    (ii) continued health care coverage at the Companys
    expense between June 15, 2005 and December 31, 2005
    (valued at $25,772), and (iii) Dr. Fuchs $10,000
    board retainer fee.(4)
    
    Represents Dr. Fuchs 10,000 board retainer fee and
    payments for life insurance made by the Company on behalf of
    Mr. Fuchs in the aggregate amount of $808.(5)
    
    Gregory Schafer was appointed Principal Financial Officer of
    IntraBiotics in a consulting capacity on January 15, 2005,
    and was terminated as part of a restructuring on August 24,
    2005.(6)
    
    Mr. Schafer was paid a monthly consulting fees in the
    aggregate amount of $120,000, as described under
    Employment Contracts, and Termination of Employment and
    Change-in-Control
    Arrangements.(7)
    
    Steven B. Ketchum was appointed an officer and Senior Vice
    President of Operations and Regulatory Affairs on May 7,
    2004, and was terminated as part of a restructuring on
    June 15, 2005. 44




---



##### Table of Contents



Option
    Grants in Last Fiscal Year
    Potential RealizableIndividual Grants


Value at AssumedNumber of


Percent of








Annual Rates ofSecurities


Total Options








Stock PriceUnderlying


Granted to


Exercise





Appreciation forOptions


Employees in


Price


Expiration


Option Term ($)Name

Granted


Fiscal Year


($/Sh)


Date


5%


10%Gregory Schafer


20,000



N/A



3.80



Cancelled



47,796



121,124     (1)
    
    Mr. Schafers option was granted a ten year term
    ending March 2, 2015, subject to earlier termination upon
    the termination of Mr. Schafers consulting
    arrangement with the Company. The option terminated and ceased
    to be outstanding in connection with the termination of
    Mr. Schafers consulting arrangement prior to any
    shares becoming vested or exercisable under such option grant.  Aggregated
    Option Exercises in Last Fiscal Year and
    Fiscal Year-End Option Values
    Number of SecuritiesUnderlying Unexercised


Value of UnexercisedShares





Options at


In-the-Money
    Options atAcquired


Value


December 31, 2005


December 31, 2005(1)
    ($)Name

on Exercise


Realized ($)


Exercisable


Unexercisable


Exercisable


UnexercisableHenry J. Fuchs










217,077



151,256



396,379



160,457Steven B. Ketchum


67,706


$
231,600



N/A



N/A



N/A



N/A     (1)
    
    Based on the market price of $3.61 per share, determined on
    the basis of the closing selling price per share of common stock
    on the Pink Sheets on December 31, 2005 less the option
    exercise price per share.  Employment
    Contracts and Termination of Employment and
    Change-in-Control
    Arrangements
   45




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##### Table of Contents



Compensation
    Committee Interlocks and Insider Participation.
   46




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##### Table of Contents



Item 12.
    Security
    Ownership of Certain Beneficial Owners and
    Management    Beneficial
    Ownership(1)Number of


Percent ofName and Address of Beneficial
    Owner

Shares


TotalEntities affiliated with Baker
    Biotech Funds(2)


2,261,926



21.6
%655 Madison Avenue, 19th FloorNew York, NY 10021Entities affiliated with Tang
    Capital Partners(3)


2,017,610



19.0
%4401 Eastgate MallSan Diego, CA 92121Kellogg Capital Group


1,095,395



11.8
%55 Broadway, 4th FloorNew York, NY 10006Deutsche Bank AG(4)


912,916



9.8
%Taunusanlage 12, D-60325Frankfurt am MainFederal Republic of GermanyHenry J. Fuchs, M.D.(5)


229,120



2.4
%Jack S. Remington, M.D.(6)


43,334



*Denis Hickey






*Kevin Tang(3)


2,017,610



19.0
%All executive officers and
    directors as a group (4 persons)(7)


2,290,064



21.0
%     *
    
    Less than one percent of the outstanding common shares.(1)
    
    Unless otherwise indicated below, this table is based upon
    information supplied by officers, directors and principal
    stockholders. Unless otherwise indicated in the footnotes to
    this table and subject to community property laws where
    applicable, IntraBiotics believes that each of the stockholders
    named in this table has sole voting and investment power with
    respect to the shares indicated as beneficially owned. Unless
    otherwise indicated, the principal address of each of the
    stockholders named in this table is: c/o IntraBiotics
    Pharmaceuticals, Inc., 1009 Oak Hill Rd., Suite 201,
    Lafayette, CA 94549. Applicable percentages are based on
    9,287,685 shares outstanding on January 31, 2005.
    Shares of common stock that (a) may be issued upon the
    conversion of Series A preferred stock, (b) may be
    issued upon the exercise of warrants and (c) are subject to
    options to purchase common stock which are currently exercisable
    or which will become exercisable within 60 days after
    January 31, 2006 are deemed outstanding for computing the
    percentage of the person or group holding such convertible
    stock, warrants or options, but are not deemed outstanding for
    computing the percentage of any other person or group.(2)
    
    Pursuant to a Form 4 filed on April 14, 2005 with the
    Securities and Exchange Commission, includes 6,377 shares
    held by Baker/Tisch Investments, L.P. Baker/Tisch Capital (GP),
    LLC is the sole general partner of Baker/Tisch Investments, L.P.
    Pursuant to various Form 4 filings filed on July 19,
    2005 with the Securities and Exchange Commission, includes the
    following: (i) 44,515 shares held by Baker Bros.
    Investments, L.P. and 51,257 shares held by Baker Bros.
    Investments II, L.P., and are each limited partnerships of
    which the sole general partner is Baker Bros. Capital L.P., a
    limited partnership of which the sole general partner is Baker
    Bros. Capital (GP), LLC; (ii) 461,650 shares held by
    Baker Biotech Fund I, L.P., a limited partnership of which
    the sole general partner is Baker Biotech Capital, L.P., a
    limited partnership of which the sole general partner is Baker
    Biotech Capital (GP), LLC; (iii) 435,854 shares held
    by Baker Biotech Fund II, L.P. a limited partnership of
    which the soled general partner is Baker Biotech
    Capital II, L.P., a limited partnership of which the sole
    general partner is Baker Biotech Capital II (GP), LLC;
    (iv) 53,540 shares held by Baker Biotech Fund II
    (Z), L.P., a limited partnership of which 47




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##### Table of Contents



the sole general partner is Baker Biotech Capital II (Z),
    L.P., a limited partnership of which the sole general partner is
    Baker Biotech Capital II (Z) (GP), LLC;
    (v) 35,898 shares held by Baker Biotech Fund III,
    L.P., a limited partnership of which the sole general partner is
    Baker Biotech Capital III, L.P., a limited partnership of
    which the sole general partner is Baker Biotech Capital III
    (GP), LLC; (vi) 7,297 shares held by Baker Biotech
    Fund III (Z), L.P., a limited partnership of which the sole
    general partner is Baker Biotech Capital III (Z), L.P., a
    limited partnership of which the sole general partner is Baker
    Biotech Capital III (Z) (GP), LLC; and
    (vii) 2,883 shares held by 14159, L.P., a limited
    partnership of which the sole general partner is 14149 Capital,
    L.P., a limited partnership of which the sole general partner is
    14159 Capital (GP), LLC. Felix Baker and Julian Baker are the
    controlling members of Baker/Tisch Capital (GP), LLC, Baker
    Bros. Capital (GP), LLC, Baker Biotech Capital (GP), LLC, Baker
    Biotech Capital II (GP), LLC, Baker Biotech Capital II
    (Z) (GP), LLC, Baker Biotech Capital III (GP), LLC, Baker
    Biotech Capital III (Z) (GP), LLC and 14159 Capital (GP),
    LLC. Also includes 726,038 shares of common stock that may
    be issued upon the conversion of Series A preferred stock
    and 436,617 shares of commons stock that may be issued upon
    the exercise of warrants.(3)
    
    Pursuant to a Schedule 13G/A filed on February 13,
    2006, includes 685,677 shares held by Tang Capital
    Partners, L.P. Tang Capital Management, LLC is the general
    partner of Tang Capital Partners, L.P. and Kevin C. Tang is the
    Managing Director of Tang Capital Management, LLC. Includes
    583 shares held by Kevin C. Tang as custodian for his minor
    child. Also includes 852,308 shares of common stock that
    may be issued upon the conversion of Series A preferred
    stock and 450,154 shares of common stock that may be issued
    upon the exercise of warrants, as well as 28,888 shares of
    common stock issuable upon exercise of options owned by
    Mr. Tang that are exercisable or will become exercisable
    within 60 days of January 31, 2006. As a result of
    being a director of IntraBiotics, Mr. Tang is deemed to
    beneficially own the shares owned by Tang Capital Partners, L.P.(4)
    
    Pursuant to a Schedule 13G/A filed on January 31, 2005
    with the Securities and Exchange Commission, Deutsche Bank AG
    reported that it had sole voting power and sole dispositive
    power over 912,916 shares of common stock.(5)
    
    Includes 227,077 shares issuable upon exercise of options
    that are exercisable or will become exercisable within
    60 days of January 31, 2006.(6)
    
    Represents shares issuable upon exercise of options that are
    exercisable or will become exercisable within 60 days of
    January 31, 2006.(7)
    
    Includes 688,303 shares of common stock,
    1,302,462 shares of common stock that may be issued upon
    conversion of Series A preferred stock and exercise of
    warrants held by entities affiliated with certain directors and
    299,299 shares of common stock issuable upon exercise of
    stock options held by directors and executive officers that are
    exercisable within 60 days of January 31, 2006. 48




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##### Table of Contents



Equity
    Compensation Plan Information
    Number of





Number ofSecurities to be


Weighted-Average


Securities RemainingIssued Upon


Exercise Price of


Available for IssuanceExercise of Outstanding


Outstanding Options,


Under Equity CompensationOptions, Warrants and


Warrants and


Plans (Excluding SecuritiesRights (a)


Rights (b)


Reflected in Column
    (a)Equity compensation plans
    approved by security holdersAmended and Restated 1995 Stock
    Option Plan(1)


8,333


$
2.40



2000 Employee Stock Purchase
    Plan(2)


313,334


$
7.41



2004 Stock Incentive Plan


249,000


$
8.94



1,950,508Equity compensation plans not
    approved by security holders2002 Non-Officer Equity Incentive
    Plan





$
4.70



56,250Total


570,667


$
3.93



2,006,758     (1)
    
    No new stock awards may be granted under the Amended and
    Restated 1995 Stock Option Plan.(2)
    
    Generally, on each December 31, the 2000 Employee Stock
    Purchase Plan share reserve will increase automatically by the
    lesser of (i) 1% of the outstanding Common Stock,
    (ii) 41,666 shares, or (iii) a lesser amount
    determined by the Board. However, this plan was suspended in
    March 2003, and consequently there are currently no securities
    reserved for issuance under this plan.(3)
    
    The number of shares of common stock reserved for issuance under
    the 2004 Stock Incentive Plan will automatically increase on the
    first trading day in January each calendar year, beginning in
    calendar year 2005, by an amount equal to five percent of the
    sum of the following share numbers, calculated as of the last
    trading day in December of the immediately preceding calendar
    year: (i) the total number of shares of our common stock
    outstanding on that date and (ii) the number of shares of
    common stock into which the outstanding shares of our preferred
    stock are convertible on that date. In no event will any such
    annual increase exceed 2,000,000 shares. Accordingly, the
    number of shares available for issuance increased by 529,510
    from the number shown in the table above, on January 3,
    2006.    2002
    Non-Officer Equity Incentive Plan
  General. IntraBiotics 2002
    Non-Officer Equity Incentive Plan (the Non-Officer
    Equity Plan) provides for stock awards, including
    grants of nonstatutory
 49




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##### Table of Contents



Adjustment Provisions.
  Effect of Certain Corporate Transactions.
      Item 13.
    Certain
    Relationships and Related Party Transactions    Change-in-Control
 50




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##### Table of Contents



Item 14.
    Principal
    Accountant Fees and Services  Auditors
    Fees
      Fiscal Year EndedDecember 31,2005


2004Ernst & YoungAudit fees(a)

$
7,000


$
157,500Audit-related fees(b)






2,100Tax fees(c)






30,413All other fees(d)






Stonefield Josephson, Inc.:Audit fees(a)


123,000



85,000Audit-related fees(b)






10,000Tax fees(c)


3,200



19,000All other fees(d)


2,688



$
135,888


$
304,013     (a)
    
    Audit Fees. Includes fees for the audit of our annual financial
    statements included on
    Form 10-K,
    review of interim financial statements included on
    Forms 10-Q,
    review of documents filed with the SEC and the issuance of
    consents and comfort letters.(b)
    
    Audit-Related Fees. Includes fees for accounting consultations,
    due diligence assistance related to mergers and acquisitions and
    an annual subscription to online accounting updates.(c)
    
    Tax Fees. Includes fees for tax compliance, tax advice and tax
    planning.(d)
    
    All Other Fees. Includes all other fees for products and
    services other than the services included in (a)-(c) above.  Policy on
    Audit Committee Pre-Approval of Audit and Non-Audit Services of
    Independent Auditors
  case-by-case
 51




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##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  Financial Statements
  Form 10-K. Form 10-K.
  Financial Statement Schedules
  Form 10-K.
  Exhibit Index
  Form 10-K.
  Exhibits
  Form 10-K.
  Financial Statement Schedules
   52




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##### Table of Contents



SIGNATURES
  ST
    By:
    /s/  Denis Hickey    Principal Executive Officer, Principal Financial Officer,
    Principal accounting Officer
    Signature

Title

Date/s/  DENIS HICKEYDenis
    Hickey

Chief Executive Officer
    Chief Financial Officer

February 21, 2006/s/  HENRY J.
    FUCHS, M.D.Henry
    J. Fuchs, M.D.

Director

February 21, 2006/s/  KEVIN C. TANGKevin
    C. Tang

Director

February 21, 2006/s/  JACK S.
    REMINGTON, M.D.Jack
    S. Remington, M.D.

Director

February 21, 2006  53




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##### Table of Contents



EXHIBIT INDEX
  3.1

Certificate of Amendment of
    Amended and Restated Certificate of Incorporation; and Amended
    and Restated Certificate of Incorporation.(12)3.2

Amended and Restated Bylaws(16)3.3

Certificate of Amendment to
    Amended and Restated Certificate of Incorporation.(15)3.4

Certificate of Designation filed
    with the Delaware Secretary of State on May 1, 2003.(15)4.1

Amended and Restated Investor
    Rights Agreement dated October 15, 1999.(1)4.2

Form of Stock Purchase Agreement
    by and between the Company and each selling stockholder, dated
    January 29, 2002.(3)4.3

Form of Preferred Stock and
    Warrant Purchase Agreement, dated February 5, 2003, as
    amended on February 11, 2003.(8)4.4

Form of Second Amendment to
    Preferred Stock and Warrant Purchase Agreement of
    February 5, 2003, dated April 10, 2003.(10)4.5

Form of Warrant issued by the
    Company pursuant to Preferred Stock and Warrant Purchase
    Agreement of February 5, 2003, as amended of
    February 11, 2003 and April 10, 2003.(10)4.6

Form of Common Stock and Warrant
    Purchase Agreement, dated October 6, 2003.(11)4.7

Form of Warrant issued by the
    Company pursuant to the Common Stock and Warrant Purchase
    Agreement of October 6, 2003.(11)10.1

Form of Indemnity Agreement.(1)10.2

Amended and Restated 1995 Stock
    Option Plan, as amended on November 16, 2002.(7)(9)10.2.2

Amended and Restated Form of Stock
    Option Agreement and Notice of Grant of Stock Options and Option
    Agreement.(1)(7)10.3

2000 Equity Incentive Plan, as
    amended on February 11, 2003.(7)(9)10.9

2000 Employee Stock Purchase Plan
    and related documents.(1)(7)10.15

Senior Executive Severance Benefit
    Plan, as amended and restated on August 1, 2002.(5)(7)10.16

Executive Severance Benefit Plan,
    as amended and restated on August 1, 2002.(5)(7)10.17

Summary of Officer Incentive Bonus
    Plan.(2)(7)10.18

Release Agreement by and between
    the Company and Diversa Corporation dated July 27, 2001,
    including Warrant to Purchase Common Stock of the Company and
    Registration Rights Agreement.(4)10.22

2002 Non-Officer Equity Incentive
    Plan and related documents, as amended on February 3,
    2003.(7)(9)10.24

Lease Termination Agreement by and
    between the Company and EOP-Shoreline Technology Park, L.L.C.,
    dated November 22, 2002, including Common Stock Purchase
    Agreement.(6)10.27

Amendment and Assignment of Lease,
    Release and Assumption Agreement by and among the Company,
    PolyFuel, Inc. and 1245 Terra Bella Partners, LLC, dated
    December 20, 2002, including Warrant to Purchase Common
    Stock of the Company dated December 31, 2002.(9)10.29

Lease Agreement by and between the
    Company and Embarcadero Corporate Center, dated
    February 10, 2003.(9)10.30

Common Stock and Warrant Purchase
    Agreement, dated October 6, 2003 (the Purchase
    Agreement) by and among the Company and each Investor as
    defined therein.(11)10.31

Form of warrant issued by the
    Company in favor of each Investor, as defined in the Purchase
    Agreement.(11)10.32

2004 Stock Incentive Plan.*(7)10.33

First Amendment to Office Lease,
    dated March 11, 2004, between the Company and Embarcadero
    Corporate Center.(13)10.34

Consulting agreement between the
    Company and Kathleen A. Stafford the Companys Principal
    Financial Officer.(7)(15)10.35

Consulting Agreement between the
    Company and Gregory W. Schafer(7)(16)10.36

Services Agreement between the
    Company and Hickey & Hill(7)(17)16.1

Letter regarding Change in
    Certifying Accountants.(14)23.1

Consent of Stonefield Josephson,
    Inc., Independent Registered Public Accounting Firm*




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##### Table of Contents



23.2

Consent of Ernst & Young
    LLP, Independent Registered Public Accounting Firm*31.1

Certification of Chief Executive
    Officer and Chief Financial Officer pursuant to
    Rules 13a-14(a)
    or 15d-14(a)
    promulgated under the Securities Exchange Act of 1934, as
    amended.*32.1

Certifications of Chief Executive
    Officer and Chief Financial Officer as required by
    Rule 13a-14(b)
    or
    Rule 15d-14(b)
    and Section 1350 of Chapter 63 of Title 18 of the
    United States Code (18 U.S.C. 1350).*     *
    
    Filed hereto
    
    Confidential treatment request has been granted with respect to
    certain portions of this exhibit. Omitted portions have been
    filed separately with the Securities and Exchange Commission.(1)
    
    Incorporated by reference to exhibit to our Registration
    Statement on
    Form S-1
    (File
    No. 333-95461)
    initially filed with the Securities and Exchange Commission on
    January 27, 2000 as subsequently amended.(2)
    
    Incorporated by reference to exhibit to our
    Form 10-Q
    (File No.
    000-29993)
    filed with the Securities and Exchange Commission on
    August 14, 2001.(3)
    
    Incorporated by reference to exhibit to our Registration
    Statement on
    Form S-3
    (File
    No. 333-82934)
    filed with the Securities and Exchange Commission on
    February 15, 2002.(4)
    
    Incorporated by reference to exhibit to our Registration
    Statement on
    Form S-3
    (File
    No. 333-89840)
    filed with the Securities and Exchange Commission on
    June 5, 2002. (5) Incorporated by reference to exhibit
    to our
    Form 10-Q
    (File No.
    000-29993)
    filed with the Securities and Exchange Commission on
    November 14, 2002.(6)
    
    Incorporated by reference to exhibit to our
    Form 8-K
    (File
    No. 000-29993)
    filed with the Securities and Exchange Commission on
    November 27, 2002.(7)
    
    Management contract or compensatory plan, contract or
    arrangement.(8)
    
    Incorporated by reference to Appendix B to the Definitive
    Proxy Statement for the Special Meeting of Stockholders (File
    No. 000-29993)
    filed with the Securities and Exchange Commission on
    March 3, 2003.(9)
    
    Incorporated by reference to exhibit to our
    Form 10-K
    (File
    No. 000-29993)
    filed with the Securities and Exchange Commission on
    March 31, 2003.(10)
    
    Incorporated by reference to our
    Form 10-Q
    (File
    No. 000-29993)
    filed with the Securities and Exchange Commission on
    May 14, 2003.(11)
    
    Incorporated by reference to exhibit to our
    Form 8-K
    (File
    No. 000-29993)
    filed with the Securities and Exchange Commission on
    October 9, 2003.(12)
    
    Incorporated by reference to our
    Form 10-Q
    (File
    No. 000-29993)
    filed with the Securities and Exchange Commission on
    November 12, 2003.(13)
    
    Incorporated by reference to our Registration Statement on
    Form S-1
    (File
    No. 333-114451)
    initially filed with the Securities and Exchange Commission on
    April 14, 2004 as subsequently amended.(14)
    
    Incorporated by reference to our
    Form 8-K/A
    (File
    No. 000-29993)
    filed with the Securities and Exchange Commission on
    November 18, 2004.(15)
    
    Incorporated by reference to our
    Form 10-K
    (File
    No. 000-29993)
    filed with the Securities and Exchange Commission on
    March 10, 2005.(16)
    
    Incorporated by reference to our
    Form 10-Q
    (File
    No. 000-29993)
    filed with the Securities and Exchange Commission on
    May 12, 2005.(17)
    
    Incorporated by reference to our
    Form 10-Q
    (File
    No. 000-29993)
    filed with the Securities and Exchange Commission on
    July 21, 2005.