##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 001-34637
 Anthera Pharmaceuticals, Inc.
 (Exact Name of Registrant as Specified in Its Charter)
 Delaware
    
    20-1852016(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer
Identification No.)25801 Industrial Boulevard, Suite B 
Hayward, California
    
    94545(Address of Principal Executive Offices)
    
    (Zip Code)
 (510) 856-5600  (Registrants Telephone Number, Including Area Code)
 
 þ o
 . o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
 .




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##### 



ANTHERA PHARMACEUTICALS, INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2010
 INDEX
  
 PagePart I  Financial Information
    
    
    3Item 1. Financial Statements (unaudited)
    
    
    3Condensed Balance Sheets as of June 30, 2010 and December 31, 2009
    
    
    3Condensed Statements of Operations for the Three and Six Months Ended June 30, 2010 and 2009
and for the period from September 9, 2004 (Date of Inception) to June 30, 2010
    
    
    4Condensed Statement of Stockholders Equity (Deficit) and Comprehensive Loss for the period from
December 31, 2009 to June 30, 2010
    
    
    5Condensed Statements of Cash Flows for the Six Months Ended June 30, 2010 and 2009 and cumulative
period from September 9, 2004 (Date of Inception) to June 30, 2010
    
    
    6Notes to Condensed Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    28Item 4T. Controls and Procedures
    
    
    28Part II  Other Information
    
    
    29Item 1. Legal Proceedings
    
    
    29Item 1A. Risk Factors
    
    
    30Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    48Item 3. Defaults Upon Senior Securities
    
    
    48Item 4. (Removed and Reserved)
    
    
    48Item 5. Other Information
    
    
    48Item 6. Exhibits
    
    
    49Signatures
    
    
    50EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 ANTHERA PHARMACEUTICALS, INC
(A Development Stage Company)
 
 CONDENSED BALANCE SHEETS
 June 30,
    
    
    December 31,2010
    
    
    2009ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    35,787,481
    
    
    $
    3,803,384Short term investments
    
    
    15,250,803
    
    
    
    Prepaid expenses and other current assets
    
    
    993,139
    
    
    
    19,825Total current assets
    
    
    52,031,423
    
    
    
    3,823,209Property and equipmentnet
    
    
    27,358
    
    
    
    12,994Deferred financing cost
    
    
    
    
    
    
    1,922,183Other assets
    
    
    
    
    
    
    130,403TOTAL
    
    $
    52,058,781
    
    
    $
    5,888,789LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)CURRENT LIABILITIES:Accounts payable
    
    $
    1,694,931
    
    
    $
    3,145,706Accrued clinical study
    
    
    931,394
    
    
    
    565,034Accrued liabilities
    
    
    299,228
    
    
    
    767,663Accrued payroll and related costs
    
    
    305,308
    
    
    
    153,235Warrant and derivative liabilities
    
    
    
    
    
    
    406,130Convertible promissory notes
    
    
    
    
    
    
    13,129,877Total current liabilities
    
    
    3,230,861
    
    
    
    18,167,645Total liabilities
    
    
    3,230,861
    
    
    
    18,167,645Commitments and Contingencies (Note 9)Stockholders equity (deficit)Preferred stock, $0.001 par value, 5,000,000 and
11,948,557 shares authorized, 0 and 8,146,308
shares issued and outstanding as of June 30, 2010
and December 31, 2009, respectively; (aggregate
liquidation value of $0 and $52,597,692 as of June
30, 2010 and December 31, 2009, respectively)
    
    
    
    
    
    
    8,146Common stock, $0.001 par value, 95,000,000 and
18,443,341 shares authorized; 22,266,055 and
1,566,199 shares issued and outstanding as of June
30, 2010 and December 31, 2009, respectively
    
    
    22,266
    
    
    
    1,566Additional paid-in capital
    
    
    133,107,495
    
    
    
    52,941,384Accumulated comprehensive income (loss)
    
    
    (31,734
    )
    
    
    Deficit accumulated the during the development stage
    
    
    (84,270,107
    )
    
    
    (65,229,952
    )Total stockholders equity (deficit)
    
    
    48,827,920
    
    
    
    (12,278,856
    )TOTAL
    
    $
    52,058,781
    
    
    $
    5,888,789
  3




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##### Table of Contents



ANTHERA PHARMACEUTICALS, INC.
(A Development Stage Company)
 
 CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
 CumulativePeriodfromSeptember 9,2004(Date ofInception)Three months ended
    
    
    Six months ended
    
    
    toJune 30,
    
    
    June 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010OPERATING EXPENSES:Research and development
    
    $
    6,438,149
    
    
    $
    2,286,415
    
    
    $
    11,679,963
    
    
    $
    5,201,181
    
    
    $
    63,003,944General and administrative
    
    
    1,509,869
    
    
    
    999,331
    
    
    
    2,733,979
    
    
    
    1,845,574
    
    
    
    12,651,546Total operating expenses
    
    
    7,948,018
    
    
    
    3,285,746
    
    
    
    14,413,942
    
    
    
    7,046,755
    
    
    
    75,655,490LOSS FROM OPERATIONS
    
    
    (7,948,018
    )
    
    
    (3,285,746
    )
    
    
    (14,413,942
    )
    
    
    (7,046,755
    )
    
    
    (75,655,490
    )OTHER EXPENSE:Interest and other income
    
    
    11,655
    
    
    
    8,591
    
    
    
    14,956
    
    
    
    21,637
    
    
    
    1,034,716Interest and other expense
    
    
    
    
    
    
    (58,901
    )
    
    
    (4,641,169
    )
    
    
    (96,298
    )
    
    
    (5,340,789
    )Beneficial conversion features
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,308,544
    )Total other expense
    
    
    11,655
    
    
    
    (50,310
    )
    
    
    (4,626,213
    )
    
    
    (74,661
    )
    
    
    (8,614,617
    )NET LOSS
    
    $
    (7,936,363
    )
    
    $
    (3,336,056
    )
    
    $
    (19,040,155
    )
    
    $
    (7,121,416
    )
    
    $
    (84,270,107
    )Net loss per sharebasic and
diluted
    
    $
    (0.36
    )
    
    $
    (2.23
    )
    
    $
    (1.07
    )
    
    $
    (4.80
    )Weighted-average number of
shares used in per share
calculationbasic and diluted
    
    
    22,223,941
    
    
    
    1,496,011
    
    
    
    17,843,335
    
    
    
    1,483,524
  4




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##### Table of Contents



Anthera Pharmaceuticals, Inc.
(A Development Stage Company)
 
 STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) AND COMPREHENSIVE LOSS
(unaudited)
 DeficitAccumulated
    
    
    Accumulated
    
    
    TotalConvertible
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    Other
    
    
    During
    
    
    StockholdersPreferred Stock
    
    
    Common Stock
    
    
    Paid-In
    
    
    Comprehensive
    
    
    Development
    
    
    EquityShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Loss
    
    
    Stage
    
    
    (Deficit)BALANCEDecember 31, 2009
    
    
    8,146,308
    
    
    $
    8,146
    
    
    
    1,566,199
    
    
    $
    1,566
    
    
    $
    52,941,384
    
    
    $
    
    
    
    $
    (65,229,952
    )
    
    $
    (12,278,856
    )Conversion of convertible
preferred stock to common
stock at a ratio of 1:1
    
    
    (8,146,308
    )
    
    
    (8,146
    )
    
    
    8,146,308
    
    
    
    8,146
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of common stock for
cash at $7.00 per sharenet
of issuance cost of
$3,021,966
    
    
    
    
    
    
    
    
    
    
    6,000,000
    
    
    
    6,000
    
    
    
    37,075,034
    
    
    
    
    
    
    
    
    
    
    
    37,081,034Issuance of common stock
upon conversion of
convertible promissory notes
and accrued interest at
$5.25 and $6.28 per share
    
    
    
    
    
    
    
    
    
    
    2,511,235
    
    
    
    2,511
    
    
    
    13,880,601
    
    
    
    
    
    
    
    
    
    
    
    13,883,112Issuance of common stock
upon release of escrow funds
    
    
    
    
    
    
    
    
    
    
    2,598,780
    
    
    
    2,599
    
    
    
    17,097,373
    
    
    
    
    
    
    
    
    
    
    
    17,099,972Issuance of common stock
upon cashless exercise of
warrants
    
    
    
    
    
    
    
    
    
    
    194,474
    
    
    
    194
    
    
    
    (194
    )
    
    
    
    
    
    
    
    
    
    
    Issuance of common stock to
collaborator in lieu of
milestone payment
    
    
    
    
    
    
    
    
    
    
    531,914
    
    
    
    532
    
    
    
    3,499,468
    
    
    
    
    
    
    
    
    
    
    
    3,500,000Issuance of common stock
upon exercise of
overallotment by
underwriters net of issuance
cost of $17,291
    
    
    
    
    
    
    
    
    
    
    604,492
    
    
    
    605
    
    
    
    3,959,661
    
    
    
    
    
    
    
    
    
    
    
    3,960,266Issuance of common stock
upon exercise of stock
options
    
    
    
    
    
    
    
    
    
    
    99,815
    
    
    
    100
    
    
    
    78,654
    
    
    
    
    
    
    
    
    
    
    
    78,754Net change of early exercise of
stock options and liability
    
    
    
    
    
    
    
    
    
    
    12,838
    
    
    
    13
    
    
    
    (12,203
    )
    
    
    
    
    
    
    
    
    
    
    (12,190
    )Reclass of warrant and
derivative liability to
equity in conjunction with
conversion of convertible
promissory notes into common
stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,473,491
    
    
    
    
    
    
    
    
    
    
    
    4,473,491Stock-based compensation
expense related to
consultant options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,399
    
    
    
    
    
    
    
    
    
    
    
    8,399Stock-based compensation
expense related to employee
options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    105,827
    
    
    
    
    
    
    
    
    
    
    
    105,827Change in other
comprehensive
lossunrealized gain on
investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,734
    )
    
    
    
    
    
    
    (31,734
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,040,155
    )
    
    
    (19,040,155
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,071,889
    )BALANCEJune 30, 2010
    
    
    
    
    
    
    
    
    
    
    22,266,055
    
    
    $
    22,266
    
    
    $
    133,107,495
    
    
    $
    (31,734
    )
    
    $
    (84,270,107
    )
    
    $
    48,827,920
  5




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##### Table of Contents



ANTHERA PHARMACEUTICALS, INC.
(A Development Stage Company)
 
 CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
 September 9, 2004(Date of Inception)Six Months Ended June 30,
    
    
    to June 30,2010
    
    
    2009
    
    
    2010CASH FLOW FROM OPERATING ACTIVITIES:Net loss
    
    $
    (19,040,155
    )
    
    $
    (7,121,416
    )
    
    $
    (84,270,107
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation
    
    
    7,209
    
    
    
    9,545
    
    
    
    79,536Amortization of discount on short-term investments
    
    
    
    
    
    
    
    
    
    
    (130,248
    )Realized loss on short-term investments
    
    
    
    
    
    
    1,160
    
    
    
    8,682Realized gain from disposal of property and equipment
    
    
    
    
    
    
    
    
    
    
    (214
    )Stock-based compensation expenseemployees
    
    
    105,827
    
    
    
    133,524
    
    
    
    582,706Stock-based compensation expenseconsultants
    
    
    8,399
    
    
    
    1,153
    
    
    
    166,344Issuance of common stock for consulting service
    
    
    
    
    
    
    
    
    
    
    41,366Issuance of common and preferred stock for service and license fee
    
    
    3,500,000
    
    
    
    
    
    
    
    5,750,000Issuance of common and preferred stock in lieu of interest payment
    
    
    173,194
    
    
    
    
    
    
    
    640,493Beneficial conversion feature
    
    
    
    
    
    
    
    
    
    
    4,308,544Amortization of debt issuance cost and discount on convertible promissory notes
    
    
    768,948
    
    
    
    
    
    
    
    985,314Mark to market adjustment on warrant and derivative liability
    
    
    3,796,491
    
    
    
    
    
    
    
    3,795,776Changes in assets and liabilities:Prepaid expenses and other assets
    
    
    (973,315
    )
    
    
    30,614
    
    
    
    (993,141
    )Accounts payable
    
    
    156,157
    
    
    
    1,487,765
    
    
    
    1,540,833Accrued clinical study
    
    
    366,360
    
    
    
    (659,591
    )
    
    
    931,394Accrued liabilities
    
    
    (169,078
    )
    
    
    (16,792
    )
    
    
    253,196Accrued payroll and related costs
    
    
    152,073
    
    
    
    29,655
    
    
    
    305,308License fee payable
    
    
    
    
    
    
    (500,000
    )
    
    
    Net cash used in operating activities
    
    
    (11,147,890
    )
    
    
    (6,604,383
    )
    
    
    (66,004,218
    )INVESTING ACTIVITIES:Property and equipment purchases
    
    
    (21,572
    )
    
    
    
    
    
    
    (107,079
    )Proceeds from disposal of property and equipment
    
    
    
    
    
    
    
    
    
    
    400Purchase of short-term investments
    
    
    (15,282,537
    )
    
    
    
    
    
    
    (30,083,101
    )Proceeds from sale of short-term investments
    
    
    
    
    
    
    
    
    
    
    14,922,132Net cash provided by (used in) investing activities
    
    
    (15,304,109
    )
    
    
    
    
    
    
    (15,267,648
    )FINANCING ACTIVITIES:Proceeds from issuance of convertible notes
    
    
    
    
    
    
    
    
    
    
    26,560,000Payment of debt issuance cost
    
    
    (210,282
    )
    
    
    
    
    
    
    (307,599
    )Net proceeds from issuance of preferred stock
    
    
    
    
    
    
    
    
    
    
    32,210,278Payment of financing cost for initial public offering
    
    
    (2,611,276
    )
    
    
    
    
    
    
    (2,885,160
    )Proceeds from issuance of common stock
    
    
    61,178,900
    
    
    
    
    
    
    
    61,179,015Proceeds from exercise of stock options
    
    
    78,754
    
    
    
    
    
    
    
    302,813Net cash provided by financing activities
    
    
    58,436,096
    
    
    
    
    
    
    
    117,059,347NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    31,984,097
    
    
    
    (6,604,383
    )
    
    
    35,787,481CASH AND CASH EQUIVALENTSBeginning of period
    
    
    3,803,384
    
    
    
    7,895,113
    
    
    
    CASH AND CASH EQUIVALENTSEnd of period
    
    $
    35,787,481
    
    
    $
    1,290,730
    
    
    $
    35,787,481SUPPLEMENTAL CASH DISCLOSURES OF CASH FLOW INFORMATION:Interest paid
    
    $
    
    
    
    $
    
    
    
    $
    15,229Taxes paid
    
    $
    14,745
    
    
    $
    
    
    
    $
    44,332NONCASH INVESTMENT AND FINANCING ACTIVITIES:Conversion of convertible promissory notes and accrued interest into common stock,
Series A-2 convertible preferred stock and Series B-2 convertible preferred stock
    
    $
    13,709,918
    
    
    $
    
    
    
    $
    27,200,493Beneficial conversion feature
    
    $
    
    
    
    $
    
    
    
    $
    4,308,544Unamortized debt discount charged to equity in conjunction with conversion of
promissory notes into common stock
    
    $
    185,833
    
    
    $
    
    
    
    $
    185,833Reclassification of warrant and derivative liabilities to additional paid-in capital
    
    $
    406,130
    
    
    $
    
    
    
    $
    406,130IPO issuance costs charged to equity
    
    $
    3,039,257
    
    
    $
    
    
    
    $
    3,039,257Accrued and deferred financing costs
    
    $
    
    
    
    $
    
    
    
    $
    154,097
  6




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##### Table of Contents



ANTHERA PHARMACEUTICALS, INC.
(A Development Stage Company)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
 2
    2. BASIS OF PRESENTATION
   7




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##### Table of Contents



3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Unaudited Interim Financial Information
  Use of Estimates
  Cash and Cash Equivalents
    Concentration of Credit Risk
  Property and EquipmentNet
  8




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##### Table of Contents



Deferred Financing Cost
 Other Assets and Deferred Costs
 Long-Lived Assets
 Property, Plant, and Equipment
 Fair Value of Financial Instruments
 Fair Value Measurements and Disclosures
   Level 1
 Level 2
 Level 3
    9




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##### Table of Contents



Stock-Based Compensation
 Compensation 
Stock Compensation
  Expected Term
 Expected Volatility
 Expected Dividend
 Risk-Free Interest Rate
 Estimated Forfeitures
 Equity
 Research and Development
  Research and Development
  10




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##### Table of Contents



Income Taxes
 Income Taxes
  Segments
  Adoption of Accounting Standards
 Derivatives and Hedging
  4. NET LOSS PER SHARE
 Earnings Per Share
 11




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##### Table of Contents



Three Months Ended June 30
    
    
    Six Months Ended June 302010
    
    
    2009
    
    
    2010
    
    
    2009Net loss per shareNumeratorNet loss
    
    $
    (7,936,363
    )
    
    $
    (3,336,056
    )
    
    $
    (19,040,155
    )
    
    $
    (7,121,416
    )DenominatorWeighted-average common shares outstanding
    
    
    22,280,192
    
    
    
    1,616,534
    
    
    
    17,896,770
    
    
    
    1,616,534Less: Weighted-average shares subject to repurchase
    
    
    (56,251
    )
    
    
    (120,523
    )
    
    
    (53,435
    )
    
    
    (133,010
    )Denominator for basic and diluted net loss per share
    
    
    22,223,941
    
    
    
    1,496,011
    
    
    
    17,843,335
    
    
    
    1,483,524Basic and diluted net loss per share
    
    $
    (0.36
    )
    
    $
    (2.23
    )
    
    $
    (1.07
    )
    
    $
    (4.80
    )
  Three Months Ended June 30
    
    
    Six Months Ended June 302010
    
    
    2009
    
    
    2010
    
    
    2009Options to purchase common stock
    
    
    1,026,259
    
    
    
    527,960
    
    
    
    1,064,288
    
    
    
    525,896Common stock subject to repurchase
    
    
    56,251
    
    
    
    120,523
    
    
    
    53,435
    
    
    
    133,010Warrants to purchase common stock
    
    
    357,136
    
    
    
    194,474
    
    
    
    357,136
    
    
    
    194,474Convertible preferred stock
    
    
    
    
    
    
    8,146,308
    
    
    
    
    
    
    
    8,146,308Total
    
    
    1,439,646
    
    
    
    8,989,265
    
    
    
    1,474,859
    
    
    
    8,999,688
 5. CASH EQUIVALENTS AND INVESTMENTS
  GrossAmortized
    
    
    UnrealizedCost
    
    
    Gain/(Losses)
    
    
    Fair ValueCash
    
    $
    2,166,311
    
    
    $
    
    
    
    $
    2,166,311Money market funds
    
    
    32,875,345
    
    
    
    
    
    
    
    32,875,345Certificates of deposit
    
    
    11,989,000
    
    
    
    (27,322
    )
    
    
    11,961,678Corporate bonds
    
    
    4,039,362
    
    
    
    (4,412
    )
    
    
    4,034,950Total
    
    $
    51,070,018
    
    
    $
    (31,734
    )
    
    $
    51,038,284Less amounts classified as cash and cash equivalents
    
    
    (35,787,481
    )
    
    
    
    
    
    
    (35,787,481
    )Total investments
    
    $
    15,282,537
    
    
    $
    (31,734
    )
    
    $
    15,250,803
  6. FAIR VALUE
  12




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EstimatedFair Value
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Cash
    
    $
    2,166,311
    
    
    $
    2,166,311
    
    
    $
    
    
    
    $
    Money market funds
    
    
    32,875,345
    
    
    
    32,875,345
    
    
    
    
    
    
    
    Certificates of deposits
    
    
    11,961,678
    
    
    
    11,961,678
    
    
    
    
    
    
    
    Corporate bonds
    
    
    4,034,950
    
    
    
    4,034,950
    
    
    
    
    
    
    
    Total Investments
    
    $
    51,038,284
    
    
    $
    51,038,284
    
    
    $
    
    
    
    $
    
  7. PROPERTY AND EQUIPMENT
  Computers and software
    
    $
    77,319Office equipment and furniture
    
    
    16,730Leasehold Improvements
    
    
    10,802Total property and equipment
    
    
    104,851Less accumulated depreciation
    
    
    (77,493
    )Property and equipment, net
    
    $
    27,358
  8. DEFERRED FINANCING COST
  9. COMMITMENTS AND CONTINGENCIES
 2 2
 13




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10. CONVERTIBLE PROMISSORY NOTES AND EQUITY FINANCING
   14




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11. STOCKHOLDERS EQUITY
 Preferred Stock
   Common Stock
   Warrants for purchase of common stock
    
    
    357,136Common stock options outstanding
    
    
    1,239,129Restricted stock units outstanding
    
    
    273,000Common stock options available for future grant under stock option plan
    
    
    171,314Total
    
    
    2,040,579
 Reverse Stock Split
  Warrants
   15




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March 31,
    
    
    December 31,
    
    
    September 30,2010
    
    
    2009
    
    
    2009Expected Volatility
    
    
    94
    %
    
    
    78
    %
    
    
    78
    %Dividend Yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Risk-Free Interest Rate
    
    
    2.28
    %
    
    
    2.34
    %
    
    
    2.38
    %Expected Term (years)
    
    
    4.50
    
    
    
    5.00
    
    
    
    5.00
   Embedded Derivative
  16




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##### Table of Contents



12. STOCK OPTIONS
 Option Plan
  Early Exercise of Employee Options
   Weighted-AverageUnvested Shares
    
    Shares
    
    
    Grant PriceBalance as of December 31, 2009
    
    
    69,424
    
    
    $
    0.45Early exercise of options
    
    
    18,011
    
    
    $
    1.37Vested
    
    
    (30,849
    )
    
    $
    0.41Repurchases
    
    
    (6,267
    )
    
    $
    0.26Balance as of June 30, 2010
    
    
    50,319
    
    
    $
    0.83
 17




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##### Table of Contents



Weighted-Weighted-
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateNumber of
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    
    Price
    
    
    Life in Years
    
    
    ValueBalance as of December 31, 2009
    
    
    1,323,776
    
    
    $
    0.92
    
    
    
    7.94
    
    
    $
    17,312,745Options granted
    
    
    25,000
    
    
    $
    6.99Options exercised
    
    
    (99,815
    )
    
    $
    0.79Options cancelled
    
    
    (9,832
    )
    
    $
    1.50Balance as of June 30, 2010
    
    
    1,239,129
    
    
    $
    1.05
    
    
    
    7.52
    
    
    $
    5,408,406Ending Vested Stock Options as of June 30, 2010
    
    
    980,724
    
    
    $
    0.83
    
    
    
    7.32Ending Vested and Expected to Vest Stock Options as of June 30, 2010
    
    
    1,239,129
    
    
    $
    1.05
    
    
    
    7.52
  Outstanding, Vested and Expected to Vest
    
    






    Options VestedWeighted-Average
    
    
    Weighted-Remaining
    
    
    AverageNumber of
    
    
    Contractual Life
    
    
    Exercise
    
    
    Number ofRange of Exercise Price
    
    Shares
    
    
    (in Years)
    
    
    Price
    
    
    Shares$0.14    $0.14
    
    
    4,672
    
    
    
    5.80
    
    
    $
    0.14
    
    
    
    4,672$0.26    $0.26
    
    
    581,844
    
    
    
    6.65
    
    
    $
    0.26
    
    
    
    565,417$1.34    $1.34
    
    
    266,352
    
    
    
    7.66
    
    
    $
    1.34
    
    
    
    167,490$1.51    $1.51
    
    
    349,579
    
    
    
    8.65
    
    
    $
    1.51
    
    
    
    231,463$6.99    $7.70
    
    
    36,682
    
    
    
    9.60
    
    
    $
    7.70
    
    
    
    11,6821,239,129
    
    
    
    7.52
    
    
    $
    0.83
    
    
    
    980,724
 Restricted Stock Units
  18




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Stock-Based Compensation Expense
  Period fromSeptember 9,2004(Date ofInception)Three Months Ended June 30,
    
    
    Six Months Ended June 30,
    
    
    to June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Research and development
    
    $
    16,835
    
    
    $
    43,144
    
    
    $
    32,862
    
    
    $
    57,616
    
    
    $
    226,863General and administrative
    
    
    40,580
    
    
    
    46,902
    
    
    
    72,965
    
    
    
    75,908
    
    
    
    355,842Total stock-based compensation
    
    $
    57,415
    
    
    $
    90,046
    
    
    $
    105,827
    
    
    $
    133,524
    
    
    $
    582,705
    Period fromSeptember 9,2004 (Date ofInception) toThree Months Ended June 30,
    
    Six Months Ended June 30,
    
    June 30,2010
    
    2009
    
    2010
    
    2009
    
    2010Expected Volatility
    
    
    N/A
    
    
    
    74
    %
    
    
    89
    %
    
    
    74
    %
    
    
    80
    %Dividend Yield
    
    
    N/A
    
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Risk-Free Interest Rate
    
    
    N/A
    
    
    
    2.17
    %
    
    
    3.02
    %
    
    
    2.10
    %
    
    
    3.95
    %Expected Term (years)
    
    
    N/A
    
    
    
    6.25
    
    
    
    6.25
    
    
    
    6.25
    
    
    
    6.25
  Nonemployee Stock-Based Compensation
   19




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##### Table of Contents



Period fromSeptember 9,2004 (Date ofInception) toThree Months Ended June 30,
    
    Six Months Ended June 30,
    
    June 30,2010
    
    2009
    
    2010
    
    2009
    
    2010Expected Volatility
    
    
    98
    %
    
    
    N/A
    
    
    
    98
    %
    
    
    98
    %
    
    
    98
    %Dividend Yield
    
    
    0
    %
    
    
    N/A
    
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Risk-Free Interest Rate
    
    
    3.16
    %
    
    
    N/A
    
    
    
    3.16
    %
    
    
    2.85
    %
    
    
    3.67
    %Expected Term (years)
    
    
    7.86
    
    
    
    N/A
    
    
    
    7.86
    
    
    
    9.52
    
    
    
    9.63
  13. RELATED PARTY TRANSACTIONS
  14. SUBSEQUENT EVENT
  20




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, a amended, and Section 21E of the Securities Exchange
Act of 1934, as amended (the Exchange Act), which are subject to the safe harbor created by
those sections. Forward-looking statements are based on our managements beliefs and assumptions
and on information currently available to our management. All statements other than statements of
historical factors are forward-looking statements for purposes of theses provisions. In some
cases you can identify forward-looking statements by terms such as may, will, should,
could, would, expect, plan, anticipate, believe, estimate, project, predict, and
potential, and similar expressions intended to identify forward-looking statements. Such
forward-looking statements are subject to risks, uncertainties and other important factors that
could cause actual results and the timing of certain events to differ materially from future
results expressed or implied by such forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those identified below, and those
discussed in the section titled Risk Factors in this report. Furthermore, such forward-looking
statements speak only as of the date of this report. Except as required by law, we undertake no
obligation to update any forward-looking statements to reflect events or circumstances after the
date of such statements.
 Overview
 2 2
   Revenue
  21




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Research and Development Expenses
    For the PeriodSeptember 9,2004 (Date ofInception)Three Months Ended June 30,
    
    
    Six Months Ended June 30,
    
    
    to June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010Allocated costs:A-001
    
    $
    21,378
    
    
    $
    39,351
    
    
    $
    113,107
    
    
    $
    121,460
    
    
    $
    6,633,153Varespladib
    
    
    3,694,984
    
    
    
    1,743,710
    
    
    
    7,962,469
    (1)
    
    
    3,829,160
    
    
    
    35,823,114A-623
    
    
    1,856,471
    
    
    
    4,385
    
    
    
    2,158,120
    
    
    
    9,958
    
    
    
    8,301,537
    (2)Unallocated costs
    
    
    865,316
    
    
    
    498,969
    
    
    
    1,446,267
    
    
    
    1,240,603
    
    
    
    12,246,140Total development
    
    $
    6,438,149
    
    
    $
    2,286,415
    
    
    $
    11,679,963
    
    
    $
    5,201,181
    
    
    $
    63,003,944
 
 (1)
    
    Includes milestone payments of $3.5 million pursuant to amendments to the license agreements
with each of Eli Lilly and Shionogi & Co. Ltd.(2)
    
    Includes a one-time license initiation fee of $6.0 million pursuant to a license agreement
with Amgen.   22




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##### Table of Contents




    
    the number of sites included in the studies;
    
    the length of time required to enroll suitable patient subjects;
    
    the number of patients that participate in the studies;
    
    the number of doses that patients receive;
    
    the drop-out or discontinuation rates of patients; and
    
    the duration of patient follow-up.
    General and Administrative Expenses
  Critical Accounting Policies and Estimates
  23




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##### Table of Contents



Accrued Clinical Expenses
  
    
    fees paid to CROs in connection with clinical studies;
    
    fees paid to investigative sites in connection with clinical studies;
    
    fees paid to contract manufacturers in connection with the production of clinical study
materials; and
    
    fees paid to vendors in connection with the preclinical development activities.
  Stock-Based Compensation
 Compensation  Stock
Compensation
  24




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##### Table of Contents



Results of Operations
 Comparison of the Three Months Ended June 30, 2010 and 2009
 Research and Development Expenses.
 General and Administrative Expenses.
 Interest and Other Income.
 Interest and Other Expense.
 Comparison of the Six Months Ended June 30, 2010 and 2009
 Research and Development Expenses.
 General and Administrative Expenses.
 Interest and Other Income.
 Interest and Other Expense.
 Liquidity and Capital Resources
  25




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Cash Flows
 Six Months Ended June 30, 2010
     Six Months Ended June 30, 2009
    Contractual Obligations and Commitments
  Payments Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsOperating lease obligations (1)
    
    $
    35,952
    
    
    $
    29,712
    
    
    $
    6,240
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Operating lease obligations reflect our obligation to make payments in connection with a
sublease that commenced in October 2008 and will expire on September 30, 2010 for
approximately 7,800 square feet of office space and office equipment leases that commenced in
October 2007 and will expire in June 2013. 2
 26




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##### Table of Contents



Funding Requirements
  
    
    continue clinical development of the Phase 3 VISTA-16 study for varespladib;
    
    continue clinical development of the Phase 2b PEARL-SC study for A-623;
    
    hire additional clinical, scientific and management personnel; and
    
    implement new operational, financial and management information systems.
  
    
    the progress of preclinical development and clinical studies of our product candidates;
    
    the time and costs involved in obtaining regulatory approvals;
    
    delays that may be caused by evolving requirements of regulatory agencies;
    
    the costs involved in filing and prosecuting patent applications and enforcing or
defending patent claims;
    
    our ability to establish, enforce and maintain selected strategic alliances; and
    
    the acquisition of technologies, product candidates and other business opportunities that
require financial commitments.
   27




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Off-Balance Sheet Arrangements
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  
 ITEM 4T. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  28




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
   29




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ITEM 1A. RISK FACTORS
 Investing in our common stock involves a high degree of risk. You should carefully consider
the risks described below and the other information in this Quarterly Report on Form 10-Q . If any
of such risks actually occur, our business, operating results or financial condition could be
adversely affected. In those cases, the trading price of our common stock could decline and you may
lose all or part of your investment.
 Risks Related to Our Financial Condition and Capital Requirements
 We have incurred significant losses since our inception and anticipate that we will incur
continued significant losses for the foreseeable future.
   We have never generated any revenue and may never be profitable.
  
    
    obtain favorable results for and advance the development of our lead product candidate,
varespladib, for the treatment of acute coronary syndrome, including successfully launching and
completing the VISTA-16 study;
    
    obtain favorable results for and advance the development of our product candidate A-623,
for the treatment of B-cell mediated autoimmune diseases, including successfully launching
and completing a Phase 2b clinical study in patients with systemic lupus erythematosus
(lupus);
    
    obtain favorable results for and advance the development of our product candidate A-001,
for the prevention of acute chest syndrome associated with sickle cell disease, including
completing a multi-center Phase 2 clinical study;
    
    successfully execute our planned preclinical studies in animals and clinical studies in
human beings for our other product candidates;
    
    obtain regulatory approval for varespladib, A-623, A-001 and our other product candidates;
 30




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##### Table of Contents




    
    if regulatory approvals are obtained, begin the commercial manufacturing of our product
candidates with our third-party manufacturers;
    
    launch commercial sales and effectively market our product candidates, either
independently or in strategic collaborations with third parties; and
    
    achieve broad market acceptance of our product candidates in the medical community and
with third-party payors.
    Because we will need substantial additional capital in the future to fund our operations, our
independent registered public accounting firm included a paragraph regarding concerns about our
ability to continue as a going concern in their report on our financial statements. If
additional capital is not available, we will have to delay, reduce or cease operations.
  
    
    the rate of progress of our VISTA-16 study for varespladib and our Phase 2b clinical study for
A-623;
    
    the scope, size, rate of progress, results and costs of our preclinical studies, clinical
studies and other development activities for one or more of our other product candidates;
    
    the cost, timing and outcomes of regulatory proceedings;
    
    payments received under any strategic collaborations;
    
    the filing, prosecution and enforcement of patent claims;
    
    the costs associated with commercializing our product candidates if they receive
regulatory approval, including the cost and timing of developing sales and marketing
capabilities, or entering into strategic collaboration with others relating to the
commercialization of our product candidates; and
    
    revenues received from approved products, if any, in the future.
 31




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##### Table of Contents




    
    terminate, reduce or delay preclinical studies, clinical studies or other development
activities for one or more of our product candidates; or
 
    
    terminate, reduce or delay our (i) establishment of sales and marketing capabilities,
(ii) pursuit of strategic collaborations with others relating to the sales, marketing and
commercialization of our product candidates or (iii) other activities that may be necessary
to commercialize our product candidates, if approved for sale.
 The timing of the milestone and royalty payments we are required to make to each of Eli Lilly
and Company, Shionogi & Co., Ltd. and Amgen Inc. is uncertain and could adversely affect our
cash flows and results of operations.
 2 2 2
 Our limited operating history makes it difficult to evaluate our business and prospects.
  Risks Associated with Development and Commercialization of Our Product Candidates
 We depend substantially on the success of our three primary product candidates, varespladib, A-623 and
A-001, which are still under clinical development. We cannot assure you that these product
candidates or any of our other product candidates will receive regulatory approval or be
successfully commercialized.
  32




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
    
    offer therapeutic or other improvement over existing, comparable therapeutics;
    
    be proven safe and effective in clinical studies;
    
    meet applicable regulatory standards;
    
    be capable of being produced in sufficient quantities at acceptable costs;
    
    be successfully commercialized; or
    
    obtain favorable reimbursement.
   Any termination or suspension of, or delays in the commencement or completion of, clinical
testing of our product candidates could result in increased costs to us, delay or limit our
ability to generate revenue and adversely affect our commercial prospects.
  
    
    obtaining regulatory approval to commence a clinical study or complying with conditions
imposed by a regulatory authority regarding the scope or design of a clinical study;
    
    reaching agreement on acceptable terms with prospective clinical research organizations,
or CROs, and study sites, the terms of which can be subject to extensive negotiation and may
vary significantly among different CROs and study sites;
 33




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##### Table of Contents




    
    manufacturing, including manufacturing sufficient quantities of a product candidate or
other materials for use in clinical studies;
    
    obtaining institutional review board (IRB), approval or the approval of other reviewing
entities to conduct a clinical study at a prospective site;
    
    recruiting and enrolling patients to participate in clinical studies for a variety of
reasons, including size of patient population, nature of clinical study protocol, the
availability of approved effective treatments for the relevant disease and competition from
other clinical study programs for similar indications;
    
    severe or unexpected drug-related adverse effects experienced by patients in a clinical
study; and
    
    retaining patients who have initiated a clinical study, but may withdraw due to treatment
protocol, adverse effects from the therapy, lack of efficacy from the treatment, personal
issues or who are lost to further follow-up.
  
    
    failure to conduct the clinical study in accordance with regulatory requirements or our
clinical protocols;
    
    inspection of the clinical study operations or study sites by the FDA or other regulatory
authorities resulting in the imposition of a clinical hold;
    
    unforeseen safety issues or any determination that a clinical study presents unacceptable
health risks; and
    
    lack of adequate funding to continue the clinical study, including the incurrence of
unforeseen costs due to enrollment delays, requirements to conduct additional clinical
studies and increased expenses associated with the services of our CROs and other third
parties.
   The results of biomarker assays in earlier clinical studies in varespladib are not necessarily
predictive of future results, and therefore the results of biomarker assays in the VISTA-16
study may not be similar to those observed previously.
 2
 34




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##### Table of Contents



Because the results of preclinical testing or earlier clinical studies are not necessarily
predictive of future results, varespladib, A-623, A-001 or any other product candidate we advance into
clinical studies may not have favorable results in later clinical studies or receive regulatory
approval.
  If we breach the license agreements for our primary product candidates, we could lose the
ability to continue the development and commercialization of our primary product candidates.
 2
  Our industry is subject to intense competition. If we are unable to compete effectively, our
product candidates may be rendered non-competitive or obsolete.
  2
 35




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##### Table of Contents



2
  Our product candidates may cause undesirable adverse effects or have other properties that could
delay or prevent their regulatory approval or limit the commercial profile of any approved
label.
  
    
    regulatory authorities may withdraw their approval of the product;
    
    regulatory authorities may require the addition of labeling statements, such as warnings
or contraindications;
    
    we may be required to change the way the product is administered, conduct additional
clinical studies or change the labeling of the product;
    
    we could be sued and held liable for harm caused to patients; and
    
    our reputation may suffer.
  36




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##### Table of Contents



After the completion of our clinical studies, we cannot predict whether or when we will obtain
regulatory approval to commercialize our product candidates and we cannot, therefore, predict
the timing of any future revenue from these product candidates.
  We have reached agreement with the FDA on an SPA for our VISTA-16 study of varespladib for the
potential treatment of acute coronary syndrome, which does not guarantee any particular outcome
from regulatory review of the study or the product candidate.
  Even if our product candidates receive regulatory approval, they may still face future
development and regulatory difficulties.
  
    
    issue warning letters or untitled letters;
    
    seek an injunction or impose civil or criminal penalties or monetary fines;
    
    suspend or withdraw regulatory approval;
    
    suspend any ongoing clinical studies;
    
    refuse to approve pending applications or supplements to applications filed by us;
 37




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
    
    suspend or impose restrictions on operations, including costly new manufacturing
requirements; or
    
    seize or detain products, refuse to permit the import or export of products, or require
us to initiate a product recall.
  New legal and regulatory requirements could make it more difficult for us to obtain approvals
for our product candidates and could limit or make more burdensome our ability to commercialize
any approved products.
  If any of our product candidates for which we receive regulatory approval does not achieve broad
market acceptance, the revenue that we generate from its sales, if any, will be limited.
  
    
    demonstration of clinical safety and efficacy compared to other products;
    
    the relative convenience, ease of administration and acceptance by physicians and payors
of varespladib in the treatment of acute coronary syndrome, A-623 in the treatment of lupus and
A-001 in the prevention of acute chest syndrome associated with sickle cell disease;
    
    the prevalence and severity of any adverse effects;
    
    limitations or warnings contained in a products FDA-approved labeling;
    
    availability of alternative treatments, including, in the case of varespladib, a number of
competitive products being studied for anti-inflammatory benefits in patients with acute
coronary syndrome or expected to be commercially launched in the near future;
    
    pricing and cost-effectiveness;
    
    the effectiveness of our or any future collaborators sales and marketing strategies;
    
    our ability to obtain and maintain sufficient third-party coverage or reimbursement from
government health care programs, including Medicare and Medicaid; and
 38




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
    
    the willingness of patients to pay out-of-pocket in the absence of third-party coverage.
  Our future success depends on our ability to retain our chief executive officer and other key
executives and to attract, retain and motivate qualified personnel.
  Legislative or regulatory reform of the health care system in the United States and foreign
jurisdictions may affect our ability to sell our products profitably.
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We face potential product liability exposure, and, if successful claims are brought against
us, we may incur substantial liability.
  
    
    impairment of our business reputation;
    
    withdrawal of clinical study participants;
    
    costs of related litigation;
    
    distraction of managements attention from our primary business;
    
    substantial monetary awards to patients or other claimants;
    
    the inability to commercialize our product candidates; and
    
    decreased demand for our product candidates, if approved for commercial sale.
  If we use hazardous and biological materials in a manner that causes injury or violates
applicable law, we may be liable for damages.
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We rely on third parties to conduct, supervise and monitor our clinical studies, and those third
parties may perform in an unsatisfactory manner, such as by failing to meet established
deadlines for the completion of these clinical studies, or may harm our business if they suffer
a catastrophic event.
  Any failure by our third-party manufacturers on which we rely to produce our preclinical and
clinical drug supplies and on which we intend to rely to produce commercial supplies of any
approved product candidates may delay or impair our ability to commercialize our product
candidates.
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If we are unable to establish sales and marketing capabilities or enter into agreements with
third parties to market and sell our product candidates, we may be unable to generate any
revenue.
  Guidelines and recommendations published by various organizations may adversely affect the use
of any products for which we may receive regulatory approval.
  Risks Related to Our Intellectual Property
 If our or our licensors patent positions do not adequately protect our product candidates or
any future products, others could compete with us more directly, which would harm our business.
 2
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
    
    we or our licensors were the first to make the inventions covered by each of our pending
patent applications;
    
    we or our licensors were the first to file patent applications for these inventions;
    
    others will not independently develop similar or alternative technologies or duplicate
any of our technologies;
    
    any of our or our licensors pending patent applications will result in issued patents;
    
    any of our or our licensors patents will be valid or enforceable;
    
    any patents issued to us or our licensors and collaborators will provide a basis for
commercially viable products, will provide us with any competitive advantages or will not be
challenged by third parties;
    
    we will develop additional proprietary technologies or product candidates that are
patentable; or
    
    the patents of others will not have an adverse effect on our business.
 We may be unable to adequately prevent disclosure of trade secrets and other proprietary
information.
  We license patent rights from third-party owners. If we, or such owners, do not properly
maintain or enforce the patents underlying such licenses, our competitive position and business
prospects will be harmed.
 2
 2
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If we do not obtain protection under the Hatch-Waxman Act and similar foreign legislation to
extend our licensed patent terms and to obtain market exclusivity for our product candidates,
our business will be materially harmed.
  Our current patent positions and license portfolio may not include all patent rights needed for
the full development and commercialization of our product candidates. We cannot be sure that
patent rights we may need in the future will be available for license to us on commercially
reasonable terms, or at all.
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Litigation regarding patents, patent applications and other proprietary rights may be expensive
and time consuming. If we are involved in such litigation, it could cause delays in bringing
product candidates to market and harm our ability to operate.
    Risks Related to the Securities Markets and Investment in Our Common Stock
 Market volatility may affect our stock price and the value of your investment.
  
    
    plans for, progress in and results from clinical studies for varespladib, A-623, A-001 and our
other product candidates;
    
    announcements of new products, services or technologies, commercial relationships,
acquisitions or other events by us or our competitors;
    
    developments concerning proprietary rights, including those pertaining to patents held by
Eli Lilly and Shionogi & Co., Ltd. concerning our sPLA2 inhibitors and Amgen
concerning A-623;
    
    failure of any of our product candidates, if approved, to achieve commercial success;
    
    fluctuations in stock market prices and trading volumes of securities of similar
companies;
    
    general market conditions and overall fluctuations in U.S. equity markets;
    
    variations in our operating results, or the operating results of our competitors;
    
    changes in our financial guidance or securities analysts estimates of our financial
performance;
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
    
    changes in accounting principles;
    
    sales of large blocks of our common stock, including sales by our executive officers,
directors and significant stockholders;
    
    additions or departures of any of our key personnel;
    
    announcements related to litigation;
    
    changing legal or regulatory developments in the United States and other countries; and
    
    discussion of us or our stock price by the financial press and in online investor
communities.
  Management has discretion in allocating the net proceeds from our initial public offering and
may do so in ways that you and other stockholders may not approve.
  Because a small number of our existing stockholders own a majority of our voting stock, your
ability to influence corporate matters will be limited.
  Future sales of shares by existing shareholders could cause our stock price to decline.
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We may need to raise additional capital to fund our operations, which may cause dilution to our
existing stockholders, restrict our operations or require us to relinquish rights.
  We will continue to incur significant increased costs as a result of operating as a public
company, and our management will be required to divert attention from product development to
devote substantial time to compliance initiatives.
   We do not intend to pay dividends on our common stock so any returns will be limited to the
value of our stock.
  Anti-takeover provisions in our charter documents and under Delaware law could make an
acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent
attempts by our stockholders to replace or remove our current management.
  
    
    a classified and staggered board of directors whose members can only be dismissed for
cause;
    
    the prohibition on actions by written consent of our stockholders;
    
    the limitation on who may call a special meeting of stockholders;
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
    
    the establishment of advance notice requirements for nominations for election to our
board of directors or for proposing matters that can be acted upon at stockholder meetings;
    
    the ability of our board of directors to issue preferred stock without stockholder
approval, which would increase the number of outstanding shares and could thwart a takeover
attempt; and
    
    the requirement of at least 75% of the outstanding common stock to amend any of the
foregoing provisions.
  Our ability to use our net operating loss carryforwards may be subject to limitation and may
result in increased future tax liability to us.
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. (REMOVED AND RESERVED)
 
 ITEM 5. OTHER INFORMATION
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ITEM 6. EXHIBITS
  3.1
    
    Fifth Amended and Restated Certificate of Incorporation (filed as Exhibit 3.6 to the registrants Registration
Statement on Form S-1/A (File No. 333-161930) filed with the SEC on February 3, 2010, and incorporated herein by
reference).3.2
    
    Amended and Restated Bylaws (filed as Exhibit 3.7 to the registrants Registration Statement on Form S-1/A (File
No. 333-161930) filed with the SEC on February 3, 2010, and incorporated herein by reference).10.1
    
    Employment Agreement by and between the Company and James Pennington, effective as of May 1, 2010 (filed as
Exhibit 10.1 to the Registrants Current Report on Form 8-K filed with the SEC on June 4, 2010, and incorporated
herein by reference).31.1
    
    Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer and Vice President of Administration pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    Certification of President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer and Vice President of Administration pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
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SIGNATURES
  ANTHERA PHARMACEUTICALS, INC.August 12, 2010
    By:
    /s/ Paul F. TruexPaul F. TruexPresident and Chief Executive OfficerAugust 12, 2010
    By:
    /s/ Christopher P. LoweChristopher P. LoweChief Financial Officer and
Vice President of Administration 50