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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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(Mark one)

|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ---------------------------------------------------------------------------------------



FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003



OR



| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ----------------------------------------------------------------------------------------



Commission File Number: 0-19410



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POINT THERAPEUTICS, INC.

(Exact Name of
Registrant as Specified in Its Charter)



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|Delaware                                                       |  | 04-3216862                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)
|                                                              
|125 SUMMER STREET BOSTON, MASSACHUSETTS                        |  | 02110                               
|(Address of Principal Executive Offices)                       |  | (Zip Code)                          



Registrants Telephone Number, Including Area Code:    (617) 933-2130



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



Indicate by check mark whether
the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). ̈Yes    x  No



As of May 8, 2003, there were 9,275,755 shares of the Registrants Common Stock, $0.01 par value per share, outstanding.



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##### Table of Contents

POINT THERAPEUTICS, INC. AND SUBSIDIARIES

(A Development Stage Company)



QUARTERLY REPORT ON FORM 10-Q

INDEX



|               |  |                                                                                                                                                                              |  | Page Number
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------
|PART I.        |  | FINANCIAL INFORMATION                                                                                                                                                        |  |            
|              
|Item 1.        |  | Financial Statements (unaudited)                                                                                                                                             |  |            
|              
|               |  | Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002                                                                                                       |  | 3          
|              
|               |  | Consolidated Statements of Operations for the Three-Month Periods Ended March 31, 2003 and 2002 and for the Period From Inception (September 3, 1996) through March 31, 2003 |  | 4          
|              
|               |  | Consolidated Statements of Cash Flows for the Three-Month Periods Ended March 31, 2003 and 2002 and for the Period From Inception (September 3, 1996) through March 31, 2003 |  | 5          
|              
|               |  | Notes to Consolidated Financial Statements                                                                                                                                   |  | 6          
|              
|Item 2.        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                                        |  | 9          
|              
|Item 3.        |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                   |  | 13         
|              
|Item 4.        |  | Controls and Procedures                                                                                                                                                      |  | 13         
|              
|PART II.       |  | OTHER INFORMATION                                                                                                                                                            |  |            
|              
|Item 6.        |  | Exhibits and Reports on Form 8-K                                                                                                                                             |  | 14         
|              
|SIGNATURES     |  | 15                                                                                                                                                                          
|              
|CERTIFICATIONS |  | 16                                                                                                                                                                          



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##### Table of Contents

PART I.
FINANCIAL INFORMATION



Item 1.
Financial Statements



POINT THERAPEUTICS, INC. AND SUBSIDIARIES

(A Development Stage Company)



CONSOLIDATED BALANCE SHEETS

(unaudited)



|                                                                                                                                                              |  | March 31,2003 |             |   | December 31, 2002 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ----------------- | -
|Assets                                                                                                                                                        |  |               |             |   |                   |  
|Current assets:                                                                                                                                               |  |               |             |   |                   |  
|Cash and cash equivalents                                                                                                                                     |  | $             | 10,092,239  |   |                   | $
|Prepaid expenses and other current assets                                                                                                                     |  |               | 505,937     |   |                   |  
|                                                                                                                                                              |  |               |             |   |                   |  
|Total current assets                                                                                                                                          |  |               | 10,598,176  |   |                   |  
|                                                                                                                                                             
|Office and laboratory equipment, net                                                                                                                          |  |               | 261,579     |   |                   |  
|                                                                                                                                                              |  |               |             |   |                   |  
|Total assets                                                                                                                                                  |  | $             | 10,859,755  |   |                   | $
|                                                                                                                                                              |  |               |             |   |                   |  
|Liabilities and stockholders equity                                                                                                                          |  |               |             |   |                   |  
|Current liabilities:                                                                                                                                          |  |               |             |   |                   |  
|Accounts payable                                                                                                                                              |  | $             | 758,196     |   |                   | $
|Accrued expenses                                                                                                                                              |  |               | 431,722     |   |                   |  
|Accrued severance                                                                                                                                             |  |               | 250,000     |   |                   |  
|Accrued professional fees                                                                                                                                     |  |               | 121,010     |   |                   |  
|                                                                                                                                                              |  |               |             |   |                   |  
|Total current liabilities                                                                                                                                     |  |               | 1,560,928   |   |                   |  
|                                                                                                                                                             
|Patent liability, less current portion                                                                                                                        |  |               | 57,055      |   |                   |  
|                                                                                                                                                             
|Stockholders equity:                                                                                                                                         |  |               |             |   |                   |  
|Preferred stock, $0.01 par value, 1,000 shares authorized; no shares issued or
outstanding as of March 31, 2003 and December 31, 2002                         |  |               |            |   |                   |  
|Common stock, $0.01 par value, 35,000,000 shares authorized, 9,275,755 shares issued and
9,275,755 shares outstanding at March 31, 2003 and December 31, 2002 |  |               | 93,769      |   |                   |  
|Additional paid-in capital                                                                                                                                    |  |               | 28,151,130  |   |                   |  
|Treasury stock, 101,169 and 101,169 shares at cost, as of March 31, 2003 and December
31, 2002, respectively                                                  |  |               | (331,936    | ) |                   |  
|Deficit accumulated during the development stage                                                                                                              |  |               | (18,671,191 | ) |                   |  
|                                                                                                                                                              |  |               |             |   |                   |  
|Total stockholders equity                                                                                                                                    |  |               | 9,241,772   |   |                   |  
|                                                                                                                                                              |  |               |             |   |                   |  
|Total liabilities and stockholders equity                                                                                                                    |  | $             | 10,859,755  |   |                   | $
|                                                                                                                                                              |  |               |             |   |                   |  



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



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POINT THERAPEUTICS, INC.

(A Development Stage Company)



CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



|                                                                          |  | Three-months endedMarch 31, |            |   | Period from Inception (September 3, 1996) through March
31, |  
|------------------------------------------------------------------------- |  | --------------------------- | ---------- | - | ----------------------------------------------------------- | -
|                                                                          |  | 2003                        |            |   | 2002                                                        |  
|Revenues                                                                  |  |                             |            |   |                                                             |  
|License revenue                                                           |  | $                           | 96,150     |   |                                                             | $
|Sponsored research revenue                                                |  |                             |           |   |                                                             |  
|                                                                          |  |                             |            |   |                                                             |  
|Total revenues                                                            |  |                             | 96,150     |   |                                                             |  
|                                                                         
|Operating expenses                                                        |  |                             |            |   |                                                             |  
|Research and development                                                  |  |                             | 1,486,573  |   |                                                             |  
|General and administrative                                                |  |                             | 496,114    |   |                                                             |  
|                                                                          |  |                             |            |   |                                                             |  
|Total operating expenses                                                  |  |                             | 1,982,687  |   |                                                             |  
|                                                                          |  |                             |            |   |                                                             |  
|Net loss from operations                                                  |  |                             | (1,886,537 | ) |                                                             |  
|                                                                         
|Interest income, net                                                      |  |                             |            |   |                                                             |  
|Interest income                                                           |  |                             | 24,936     |   |                                                             |  
|Interest expense                                                          |  |                             |           |   |                                                             |  
|                                                                          |  |                             |            |   |                                                             |  
|Total interest income, net                                                |  |                             | 24,936     |   |                                                             |  
|                                                                          |  |                             |            |   |                                                             |  
|Net loss                                                                  |  | $                           | (1,861,601 | ) |                                                             | $
|                                                                          |  |                             |            |   |                                                             |  
|Basic and diluted net loss per common share                               |  | $                           | (0.20      | ) |                                                             | $
|                                                                          |  |                             |            |   |                                                             |  
|Weighted average common shares for basic and diluted net loss
computation |  |                             | 9,275,755  |   |                                                             |  
|                                                                          |  |                             |            |   |                                                             |  



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



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POINT THERAPEUTICS, INC. AND SUBSIDIARIES

(A Development Stage Company)



CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)



|                                                     |  | Three-months ended March 31, |            |   | Period from Inception (September 3,
1996) through March 31, |  
|---------------------------------------------------- |  | ---------------------------- | ---------- | - | ----------------------------------------------------------- | -
|                                                     |  | 2003                         |            |   | 2002                                                        |  
|Cash flows from operating activities                 |  |                              |            |   |                                                             |  
|Net loss                                             |  | $                            | (1,861,601 | ) |                                                             | $
|Adjustments to reconcile net loss to net cash used:  |  |                              |            |   |                                                             |  
|Depreciation                                         |  |                              | 22,024     |   |                                                             |  
|Issuance of compensatory stock options               |  |                              | 8,157      |   |                                                             |  
|Common stock issued under license agreement          |  |                              |           |   |                                                             |  
|Patent costs                                         |  |                              |           |   |                                                             |  
|Accrued interest on convertible notes                |  |                              |           |   |                                                             |  
|Changes in assets and liabilities:                   |  |                              |            |   |                                                             |  
|Prepaid expenses and other                           |  |                              | (232,243   | ) |                                                             |  
|Accounts payable and accrued liabilities             |  |                              | 160,625    |   |                                                             |  
|                                                     |  |                              |            |   |                                                             |  
|Net cash used in operating activities                |  |                              | (1,903,038 | ) |                                                             |  
|                                                    
|Cash flows from investing activities                 |  |                              |            |   |                                                             |  
|Purchase of office and laboratory equipment          |  |                              | (10,218    | ) |                                                             |  
|                                                     |  |                              |            |   |                                                             |  
|Net cash used in investing activities                |  |                              | (10,218    | ) |                                                             |  
|                                                    
|Cash flows from financing activities                 |  |                              |            |   |                                                             |  
|Proceeds from merger between Point and HMSR Inc.     |  |                              |           |   |                                                             |  
|Proceeds from issuance of common stock, net of costs |  |                              |           |   |                                                             |  
|Proceeds from issuance of convertible note           |  |                              |           |   |                                                             |  
|Principal payments of patent liability               |  |                              |           |   |                                                             |  
|                                                     |  |                              |            |   |                                                             |  
|Net cash provided by financing activities            |  |                              |           |   |                                                             |  
|                                                     |  |                              |            |   |                                                             |  
|Net increase (decrease) in cash and cash equivalents |  |                              | (1,913,256 | ) |                                                             |  
|                                                    
|Cash and cash equivalents, beginning of period       |  |                              | 12,005,495 |   |                                                             |  
|                                                     |  |                              |            |   |                                                             |  
|Cash and cash equivalents, end of period             |  | $                            | 10,092,239 |   |                                                             | $
|                                                     |  |                              |            |   |                                                             |  



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



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POINT THERAPEUTICS, INC. AND SUBSIDIARIES

(A Development Stage Company)



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2003

(unaudited)



|1. |  | Nature of the Business
|-- |  | ----------------------



Point Therapeutics, Inc. (the Company) is developing small molecule drugs for the treatment of certain hematopoietic disorders
and for a variety of cancerous tumors. PT-100, the Companys lead product candidate, has the potential to treat a number of different hematopoietic disorders as well as certain cancerous tumors.



The Company was originally incorporated in December 1993 as a
Delaware corporation under the name Hemacor Inc. The Company changed its name to HemaSure Inc. in February of 1994. From 1994 to May 2001, the Company developed and supplied innovative blood filtration technologies. On May 28, 2001, the Company sold
substantially all of its non-cash assets to Whatman Biosciences, Inc. a Massachusetts corporation and a subsidiary of Whatman Plc (Whatman), a leader in separations technology. The Company changed its name from Hemasure, Inc. to HMSR
Inc. upon the sale to Whatman. From May 2001 until the merger on March 15, 2002 (described below) with Point Massachusetts, the Companys operations consisted primarily of investigating various strategic business combinations.



|2. |  | Merger between Point Massachusetts and HMSR Inc.
|-- |  | ------------------------------------------------



On November 15, 2001, HMSR and PT Acquisition Corp., a wholly-owned subsidiary of HMSR formed for the purpose of consummating a merger
transaction, entered into the Agreement and Plan of Merger (the Merger Agreement) with Point Therapeutics, Inc., a privately-held Massachusetts corporation (Point Massachusetts). At that time, HMSR paid Point Massachusetts a
$500,000 lock-up fee. The lock-up fee was included when determining the final stock conversion ratio between Point Massachusetts and HMSR, as described below.



On March 15, 2002, HMSR stockholders approved a 1-for-10 reverse split of HMSRs common stock and a name change from HMSR Inc. to
Point Therapeutics, Inc. The stockholders of Point Massachusetts also approved on March 15, 2002 the Merger Agreement previously entered into by both parties. In accordance with the terms of the Merger Agreement, immediately prior to the effective
time of the merger, and after taking into account the 1-for-10 reverse split with respect to HMSRs common stock prior to the merger, each share of Point Massachusetts common stock outstanding immediately prior to the effective time of the
merger (including all shares of Point Massachusetts preferred stock converted prior to the effective time) was converted into the right to receive 4.16168 shares of the HMSRs common stock. This ratio also took into account the $500,000 HMSR
deposit paid on November 15, 2001. In addition, all outstanding options and warrants of Point Massachusetts were converted at the same conversion rate of 4.16168.



As a result of the merger, HMSR acquired all of the outstanding shares of Point Massachusetts capital stock.
For accounting purposes, the acquisition has been treated as the acquisition of HMSR by Point Massachusetts with Point Massachusetts as the acquiror. The historical financial statements of the Company presented prior to March 15, 2002 are those of
Point Massachusetts. Point Massachusetts capital structure has been restated to reflect all stock issuances as if the merger had taken place prior to all periods presented. In addition, if the merger with HMSR had occurred at the beginning of
the periods presented, the effect of the inclusion of HMSRs operating results on the financial statements presented would not be material.



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|3. |  | Significant Accounting Policies
|-- |  | -------------------------------



Unaudited Interim Financial Statements



The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in
the United States and applicable Securities and Exchange Commission (SEC) regulations for interim financial information. These financial statements are unaudited and, in the opinion of management, include all adjustments necessary to
present fairly the balance sheets, statements of operations, and statements of cash flows for the periods presented in accordance with accounting principles generally accepted in the United States. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to SEC rules and regulations. It is presumed that users of this interim
financial information have read or have access to the audited financial statements and footnote disclosure of Point Therapeutics Massachusetts, Inc. for the year ended December 31, 2002, contained in a Form 10-K/A filed with the Securities and
Exchange Commission on April 30, 2003. Operating results for the quarter ended March 31, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003.



Use of Estimates



The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.



Net Loss Per Share



Basic and diluted net loss per common share amounts are
presented in conformity with Statement of Financial Accounting Standards No. (SFAS) 128, Earnings per Share, for all periods presented. In accordance with SFAS 128, basic and diluted net loss per common share amounts have
been computed using the weighted-average number of shares of common stock outstanding for the three-month periods ended March 31, 2003 and 2002. Potentially dilutive securities, consisting of stock options and warrants, have been excluded from the
diluted earnings per share calculations since their effect is antidilutive.



Stock-Based Compensation



The Company has elected to follow Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees (APB No. 25), in accounting for its stock based
employee compensation plans using the intrinsic value method, rather than the alternative fair value accounting method provided for under SFAS No. 123, Accounting for Stock Based Compensation (SFAS No. 123), as SFAS No. 123 requires the
use of option valuation models that were not developed for use in valuing employee stock options. Under APB No. 25, when the exercise price of options granted to employees under these plans equals the market price of the underlying stock on the date
of grant, no compensation expense is required.



The reconciliation of net loss and net loss per share, as reported, to pro forma net loss and net loss per share giving effect to employee stock-based compensation accounted for using the fair value accounting method, is as follows:



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|                                                                                                                                                                                                            |  | Three Months Ended March 31, |           
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ----------
|                                                                                                                                                                                                            |  | 2003                         |           
|Net loss, as reported                                                                                                                                                                                       |  | $                            | (1,861,601
|Deduct: Stock compensation cost as computed under APB No.25                                                                                                                                                 |  |                              | 8,157     
|Add: Stock based employee compensation cost, net of related tax effects, that would have
been included in the determination of net loss as reported if the fair value method had been applied to all awards |  |                              | (98,152   
|                                                                                                                                                                                                            |  |                              |           
|Pro Net Pro Forma Net loss                                                                                                                                                                                  |  |                              | (1,951,596
|                                                                                                                                                                                                            |  |                              |           
|Diluted net loss per share, as reported                                                                                                                                                                     |  | $                            | (0.20     
|                                                                                                                                                                                                            |  |                              |           
|Diluted net loss per share, pro forma                                                                                                                                                                       |  | $                            | (0.21     
|                                                                                                                                                                                                            |  |                              |           



The
weighted-average per share fair value of options granted during the three months ended March 31, 2003 and 2002 was $0.65 and $3.00, respectively.



The fair value of stock options and common shares issued pursuant to the stock option and stock purchase plans at the date of grant were
estimated using the Black-Scholes model with the following weighted-average assumptions:



|                      |  | 2003 |   |  | 2002 |  
|--------------------- |  | ---- | - |  | ---- | -
|Expected life (years) |  | 4.0  |   |  | 4.0  |  
|Interest rate         |  | 3.50 | % |  | 4.69 | %
|Volatility            |  | .93  |   |  | .93  |  



|4. |  | License Revenue
|-- |  | ---------------



On March 5, 2003, Whatman sold the non-cash assets it had previously purchased from Hemasure to Pall Corporation. In connection with that
sale, the ongoing patent litigation among Pall Corporation, Whatman and the Company was settled, and the litigation was dismissed, with prejudice, in the United States District Court in the Eastern District of New York and in the District of
Colorado. From March 15, 2002, the effective date of the merger of the Company and Point Massachusetts, through March 5, 2003, the effective date of the sale of the Whatman assets to Pall Corporation, $96,150 of net royalties was accrued and is
payable to the Company. As of March 31, 2003, the Company has recognized $96,150 of license revenue and the related accounts receivable.



|5. |  | New Accounting Standards
|-- |  | ------------------------



In January 2003, the FASB issued FIN 46, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51. The
primary objective of the Interpretation is to provide guidance on the identification of, and financial reporting for, entities over which control is achieved through means other than voting rights. Such entities are known as variable-interest
entities (VIEs). Although the FASBs initial focus was on special-purpose entities (SPEs), the final guidance applies to a wide range of entities. FIN 46 applies to new entities that are created after the effective date, as well as applies to
existing entities. The FIN is effective to preexisting entities as of the beginning of the first interim period beginning after June 15, 2003, and to any new entities beginning February 1, 2003. Once it goes into effect, FIN 46 will be the guidance
that determines (1) whether consolidation is required under the controlling financial interest model of Accounting Research Bulletin No. 51 (ARB 51), Consolidated Financial Statements, or other existing authoritative guidance, or,
alternatively, (2) whether the variable-interest model under FIN 46 should be used to account for existing and new entities. The Company does not expect FIN 46 to have a material impact on the consolidated financial statements.



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|Item |  | 2.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|---- |  | ----------------------------------------------------------------------------------------



Cautionary Factors with Respect to Forward-Looking Statements



Readers are cautioned that certain statements contained in this Managements Discussion and Analysis of Financial
Condition and Results of Operations that are not related to historical results are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. This information includes statements on the prospects for
our drug development activities and results of operations based on our current expectations, such as statements regarding certain milestones with respect to our clinical program and our product candidates. Forward-looking statements are statements
that are not historical facts, and can be identified by, among other things, the use of forward-looking language, such as believe, expect, may, will, should, seeks,
plans, schedule to, anticipates or intends or the negative of those terms, or other variations of those terms of comparable language, or by discussions of strategy or intentions. A number of important
factors could cause actual results to differ materially from those projected or suggested in the forward looking statement, including, but not limited to, the ability of the Company to (i) successfully develop products, (ii) obtain the necessary
governmental approvals, (iii) effectively commercialize any products developed before its competitors and (iv) obtain and enforce intellectual property rights, as well as the risk factors described in the Companys Annual Report on Form 10-K/A
for the fiscal year ended December 31, 2002 as filed with the Securities and Exchange Commission on April 30, 2003 and from time to time in the Companys other reports filed with the Securities and Exchange Commission.



Overview



Point is a development stage enterprise in the business of developing small molecule drugs for the treatment of certain
hematopoietic disorders and a variety of cancerous tumors. PT-100, the Companys lead product candidate, has the potential to treat a number of different hematopoietic disorders as well as certain cancerous tumors. PT-100 is currently being
evaluated in a Phase I/II clinical study where cancer patients undergoing chemotherapy are treated with PT-100 as an adjunct therapy for the treatment of neutropenia. The Company is also developing PT-100 as a potential therapy to inhibit the growth
of a variety of cancerous tumors. Point has completed the preclinical research on the anti-tumor effects of PT-100 in combination with Rituxan®and the Company filed an amendment in February 2003 to its IND with the FDA in order to initiate a clinical program to
test the safety and efficacy of PT-100 in combination with Rituxan®. Point
expects to initiate a human clinical study in 2003 to assess the safety and efficacy of this combination therapy, initially in patients with non-Hodgkins lymphoma.



Besides the hematopoeitic and anti-tumor applications described above, the Company is also exploring a number of different
applications for PT-100 and its clinical analogues on a pre-clinical basis. In addition, the Company from time to time evaluates new technology opportunities to broaden its portfolio of potential products, including in-licensing opportunities,
collaboration arrangements as well as more expansive corporate relationships, such as mergers and acquisitions.



To date, the Company has generated no revenues from product sales and has depended upon equity financings, interest earned on invested funds, and collaboration payments received from pharmaceutical
companies to provide the working capital required to pursue its intended business activities. The Company has a net accumulated deficit of $18,671,000 through March 31, 2003. The accumulated deficit has resulted principally from the Companys
efforts to develop drug candidates and the associated administrative costs required to support these efforts. The Company expects to incur significant additional operating losses over the next several years due to its ongoing developmental and
clinical efforts. The Companys potential for future profitability is dependent on its ability to effectively develop its current pharmaceutical product candidate, PT-100, and to license and develop new pharmaceutical compounds.



The Company was originally incorporated in December 1993 as a Delaware
corporation under the name Hemacor Inc. The Company changed its name to HemaSure Inc. in February of 1994. From 1994 to May 2001, the Company developed and supplied innovative blood filtration technologies. On May 28, 2001, the Company sold
substantially all of its non-cash assets to Whatman. The Company changed its name from Hemasure, Inc. to HMSR Inc. upon the sale to Whatman. From May 2001 until the merger on March 15, 2002 (described below) with Point Massachusetts, the
Companys operations consisted primarily of investigating various strategic business combinations.



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On November 15, 2001, HMSR and
PT Acquisition Corp., a wholly-owned subsidiary of HMSR formed for the purpose of consummating a merger transaction, entered into the Agreement and Plan of Merger (the Merger Agreement) with Point Therapeutics, Inc., a privately-held
Massachusetts corporation (Point Massachusetts). At that time, HMSR paid Point Massachusetts a $500,000 lock-up fee. The lock-up fee was included when determining the final stock conversion ratio between Point Massachusetts and HMSR, as
described below.



On March 15, 2002, the Companys
stockholders approved a 1-for-10 reverse split of the Companys common stock and a name change of the Company from HMSR Inc. to Point Therapeutics, Inc. The stockholders of Point Massachusetts also approved on March 15, 2002 the Merger
Agreement previously entered into by both parties. In accordance with the terms of the Merger Agreement, immediately prior to the effective time of the merger, and after taking into account the 1-for-10 reverse split with respect to the
Companys common stock prior to the merger, each share of Point Massachusetts common stock outstanding immediately prior to the effective time of the merger (including all shares of Point Massachusetts preferred stock converted prior to the
effective time) was converted into the right to receive 4.16168 shares of the Companys common stock. This ratio also took into account the $500,000 HMSR Inc. lock-up fee paid on November 15, 2001. In addition, all outstanding options and
warrants of Point Massachusetts were converted at the same conversion rate of 4.16168.



As a result of the merger, the Company acquired all of the outstanding shares of Point Massachusetts capital stock. For accounting purposes, the acquisition has been treated as the acquisition of HMSR Inc. by Point
Massachusetts with Point Massachusetts as the acquiror. The historical financial statements of the Company presented prior to March 15, 2002 are those of Point Massachusetts. Point Massachusetts capital structure has been restated to reflect
all stock issuances as if the merger had taken place prior to all periods presented. In addition, if the merger with HMSR Inc. had occurred at the beginning of the periods presented, the effect of the inclusion of HMSR Inc. operating results on the
financial statements presented would not be material.



Critical Accounting Policies and Significant Judgments and Estimates



Critical accounting policies



In December of 2001, the Securities and Exchange Commission (SEC) requested that all registrants list their most critical accounting policies in Managements Discussion and Analysis of Financial
Condition and Results of Operations. The SEC indicated that a critical accounting policy is one which is both important to the portrayal of our financial condition and results and requires managements most difficult, subjective or
complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our significant accounting policies are fully described in Note 3 to our consolidated financial statements, included
elsewhere in this Quarterly Report on Form 10-Q.



Revenue
recognition



Revenue is deemed earned when all of the
following have occurred: all obligations of the Company relating to the revenue have been met and the earning process is complete; the monies received or receivable are not refundable, irrespective of research results; and there are neither future
obligations nor future milestones to be met by the Company with respect to such revenue incurred.



Revenues from corporate collaborations are earned based upon research expenses incurred and milestones achieved. Non-refundable payments upon initiation of contracts are deferred and amortized over the
period which the company is obligated to participate on a continuing and substantial basis in the research and development activities outlined in each contract. Amounts received in advance of reimbursable expenses are recorded as deferred revenue
until the related expenses are incurred. Milestone payments are recognized as revenue in the period in which the parties agree that the milestone has been achieved.



For the three-months ended March 31, 2003, the Company recognized $96,000 of license revenue related to royalties payable to
Point as successor to HMSR following the merger. The Company generated no revenues during the quarter ended March 31, 2002. Royalty revenue is recognized upon the sale of the related products, provided the royalty amounts are fixed or determinable
and collection of the related receivable is reasonably assured.



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Clinical trial accrual



The Company accrues the estimated cost of patient
recruitment and related supporting functions for its clinical trial as patients are enrolled in the trial. These costs consist primarily of payments made to the clinical centers, investigators and patients for participating in the Companys
clinical trial. As actual or expected costs become known, they may differ from estimated costs previously accrued for and this clinical trial accrual would be adjusted accordingly.



Significant judgments and estimates



The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the
United States requires that we make estimates and assumptions that affect the reported amounts and disclosure of certain assets and liabilities at our balance sheet date. Such estimates include the carrying value of property and equipment and the
value of certain liabilities. Actual results may differ from such estimates.



Results of Operations



Three-months
Ended March 31, 2003 and March 31, 2002



Revenues



The Company recorded license revenue in the first quarter
ended March 31, 2003 totaling $96,000, representing royalties payable to Point as successor to HMSR following the merger. The Company generated no revenues during the quarter ended March 31, 2002.



Operating expenses



Research and development expenses increased 60.9% to $1,487,000 for the
three-month period ended March 31, 2002 from $924,000 for the three-month period ended March 31, 2002. The increase was primarily due to costs associated with the hiring of additional employees in the clinical and regulatory area to support the
Companys PT-100 clinical program and preclinical research and development efforts in the Companys hematopoietic and anti-tumor programs.



Since inception, the Company has incurred $18,850,000 in expenses on research and development activities. Almost all of the Companys research and
development efforts have been focused on the pre-clinical and clinical development of PT-100 for hematopoietic disorders and for the treatment of cancer. The Company has no other material research and development programs and thus the $18,850,000
disclosed for research and development in the Companys financial statements has primarily been directed towards developing PT-100. PT-100 is currently in early-stage clinical trials for its first indication, to treat neutropenia, and in late
stage preclinical development to study PT-100s ability to inhibit the growth of certain cancerous tumors. The Company cannot predict whether the results of further testing will be successful or will result in FDA approvals. Thus, due to the
uncertainties inherent in clinical testing and the regulatory process, the Company is not able to estimate at this time when PT-100 may be commercially available for any application, if at all, nor the costs associated with completing the clinical
trial process.



General and administrative expenses decreased
28.6% to $496,000 for the three-month period ended March 31, 2003 from $695,000 for the three-month period ended March 31, 2002. The decrease was primarily due to costs incurred during the first quarter of 2002 associated with the merger between
Point Massachusetts and HMSR.



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Interest income, net



Interest income, net for the three-month period ended March
31, 2003 was $25,000 compared to $30,000 for the same period in 2002, a decrease of $5,000 or 20.0%. The decrease in interest income for the three-month period resulted from lower interest rates earned on the invested cash balance in 2003 as
compared to the same period in 2002, offset in part by a higher invested cash balance compared to the same period in 2002.



Net loss



As a result of the foregoing, the Company incurred a net loss of $1,862,000, or $0.20 per share, for the three-month period ended March 31, 2003 compared to a net loss of $1,588,000, or $0.21
per share, for the three-month period ended March 31, 2002.



Liquidity and Capital Resources



The
Company has financed its operations since inception principally through private placements of equity securities and collaboration payments received from pharmaceutical companies. Since the Companys inception in September 1996, the Company has
raised approximately $12,400,000, net of costs of raising capital, in private equity financings and $7,500,000 from licensing and sponsored research collaborations with pharmaceutical companies. In addition, the Company received $14,335,000 as a
result of the merger between Point Massachusetts and HMSR, including a $500,000 lock-up fee received upon the signing of the Merger Agreement. The Company has also received $932,000 from interest earned in invested cash balances.



At March 31, 2003, the Companys cash and cash equivalents decreased
$1,913,000 as compared to December 31, 2002. The decrease was primarily due to $1,903,000 used in operations for the three-month period ended March 31, 2003, primarily to fund the clinical program for PT-100 and other research and development
initiatives. The Company also increased its investment in office and laboratory equipment by $10,000 from December 31, 2002 to $423,000 at March 31, 2003. The increase resulted from purchases of computers and furniture. The Company currently plans
to spend approximately $50,000 during the remainder of 2003 on office and laboratory equipment.



At March 31, 2003, the Company had $10,092,000 in cash and cash equivalents. The Company currently anticipates that its existing capital resources and interest to be received should enable it to
maintain current and planned operations into the first quarter of 2004. Over the next year, the Company will be considering all strategic options in order to ensure the continued funding of its operations after 2003 including, but not limited to,
raising additional funds through corporate partnerships, the sale of securities in both public and private offerings as the markets allow and merger and acquisition activities and consolidations.



The Company has no off-balance sheet arrangements as of March 31, 2003.



The Companys expectations regarding its rate of spending
and the sufficiency of its cash resources over future periods are forward-looking statements. The Companys funding requirements are expected to increase over the next several years as the Company continues with the clinical development of
PT-100 and initiates human clinical trials for additional clinical indications for PT-100 and additional product candidates. The rate of spending and sufficiency of such resources will be affected by numerous factors including the success of the
Companys clinical trials and the rate of acquisition of new products and technologies. Success in early-stage clinical trials or acquisition of new products and technologies would lead to an increase in working capital requirements. The
Companys actual cash requirements may vary materially from those now planned because of the results of research and development, clinical trials, product testing, relationships with strategic partners, acquisition of new products and
technologies, changes in the focus and direction of the Companys research and development programs, competitive and technological advances, the process of obtaining United States Food and Drug Administration or other regulatory approvals and
other factors.



New Accounting Pronouncements



In January 2003, the FASB issued FIN 46,
Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51. The primary objective of the Interpretation is to provide guidance on the identification of, and financial reporting for, entities over which control is
achieved through means other than voting rights. Such entities are known as variable-interest entities (VIEs). Although the FASBs initial focus was on special-purpose entities (SPEs), the final guidance applies to a wide range of entities. FIN
46 applies to new entities that are created after the effective date, as well as applies to existing entities. The FIN is effective to preexisting entities as of the beginning of the first interim period beginning after June 15, 2003, and to any new
entities beginning February 1, 2003. Once it goes into effect, FIN 46 will be the guidance that determines (1) whether consolidation is required under the controlling financial interest model of Accounting Research Bulletin No. 51 (ARB
51), Consolidated Financial Statements, or other existing authoritative guidance, or, alternatively, (2) whether the variable-interest model under FIN 46 should be used to account for existing and new entities. The Company does not expect FIN 46 to
have a material impact on the consolidated financial statements.



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Item 3.
QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



The Companys proceeds from private placements and the merger have been invested in money market funds that invest primarily in short-term, highly-rated investments, including U.S. Government securities, commercial
paper and certificates of deposit guaranteed by banks. The Companys current policies do not use interest rate derivative instruments to manage exposure to interest rate changes. Because of the short-term maturities of the Companys
investments, it does not believe that a decrease in market rates would have a significant negative impact on the value of its investment portfolio. Declines in interest rates will, however, reduce the Companys interest income while increases
in interest rates will increase the Companys interest income.



Item 4.
CONTROLS AND PROCEDURES



|(a) |  | Evaluation of disclosure controls and procedures. The Companys chief executive officer and chief financial officer, after evaluating the effectiveness of the
Companys disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c)) as of a date (the Evaluation Date) within 90 days before the filing date of this quarterly
report, have concluded that as of the Evaluation Date, the Companys disclosure controls and procedures were adequate and designed to ensure that material information relating to the Company and its consolidated subsidiary would be made known
to them by others within those entities.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) |  | Changes in internal controls. There were no significant changes in the Companys internal controls or to the Companys knowledge, in other factors that
could significantly affect the Companys internal controls and procedures subsequent to the Evaluation Date.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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PART II
OTHER INFORMATION



Item 6.
Exhibits and Reports on Form 8-K



|(a) |  | Exhibits
|--- |  | --------



|Exhibit Number |  | Description                                                                                                                            
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------
|              
|99.1           |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, filed herewith.
|99.2           |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, filed herewith.



|(b) |  | Reports on Form 8-K
|--- |  | -------------------





The Company filed the following Report on Form 8-K during the
first quarter of 2003 and through May 15, 2003:



|Date of Report |  | Reported                                                                                                                                                                                                                              
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              
|May 9, 2003    |  | Current Report on Form 8-K to report, pursuant to Item 9 (Regulation FD Disclosure),
that the Company had issued a press release on May 8, 2003 announcing the Companys financial results
for the first quarter ended March 31, 2003.



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##### Table of Contents



SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.



|                    
|--------------------
|                    
|                    
|Date:   May 15, 2003
|                    



|                    
|--------------------
|Date:   May 15, 2003
|                    



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##### Table of Contents

CERTIFICATIONS



I, Donald R. Kiepert,
Jr., certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of Point Therapeutics, Inc.;
| | -- |  | -------------------------------------------------------------------------------



| | 2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of the registrants board of directors (or persons performing the equivalent function):
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. |  | The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Date: May 15, 2003



/s/    DONALD R. KIEPERT,
JR.Name:

Donald R. Kiepert, Jr. Chief Executive Officer




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##### Table of Contents



I, Richard N. Small, certify
that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of Point Therapeutics, Inc.;
| | -- |  | -------------------------------------------------------------------------------



| | 2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of the registrants board of directors (or persons performing the equivalent function):
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. |  | The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Date: May 15, 2003



/s/    RICHARD N.
SMALLName:

Richard N. Small Chief Financial Officer




17