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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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



For the quarterly period ended March 31, 2005



or



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



For the transition period from  to



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Commission file number 0-27914



SIRNA THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)



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|                         |  |                                     
|------------------------ |  | ------------------------------------
|Delaware                 |  | 34-1697351                          
|(State of incorporation) |  | (I.R.S. Employer Identification No.)



2950 Wilderness
Place

Boulder, Colorado 80301

(Address of principal executive offices)



Registrants telephone number: (303) 449-6500



______________________________________________________________________________________________________

Former name, if changed
since last report



Check whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes x No ̈



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



The number of shares of the registrants
common stock, par value $0.01 per share, outstanding as of May 13, 2005 was 41,597,887.



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SIRNA THERAPEUTICS, INC.

INDEX TO FORM 10-Q



|                               |  |                                                                                             |  |   
|------------------------------ |  | ------------------------------------------------------------------------------------------- |  | --
|                               |  | PAGE                                                                                       
|PART 1 - FINANCIAL INFORMATION |  |                                                                                            
|                               |  |                                                                                            
|Item 1.                        |  | Financial Statements                                                                        |  |   
|                               |  |                                                                                            
|                               |  | Condensed Balance Sheets as of March 31, 2005 (unaudited) and December 31, 2004             |  | 3 
|                               |  |                                                                                            
|                               |  | Condensed Statements of Operations - Three Months Ended March 31, 2005 and 2004 (unaudited) |  | 4 
|                               |  |                                                                                            
|                               |  | Condensed Statements of Cash Flows - Three Months Ended March 31, 2005 and 2004 (unaudited) |  | 5 
|                               |  |                                                                                            
|                               |  | Notes to Unaudited Condensed 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                                  |  | 24
|Item 4.                        |  | Controls and Procedures                                                                     |  | 24
|                               | 
|PART II - OTHER INFORMATION    |  |                                                                                            
|                               |  |                                                                                            
|Item 1.                        |  | Legal Proceedings                                                                           |  | 25
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                 |  | 25
|Item 3.                        |  | Defaults upon Senior Securities                                                             |  | 25
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                         |  | 25
|Item 5.                        |  | Other Information                                                                           |  | 25
|Item 6.                        |  | Exhibits                                                                                    |  | 26
|                               | 
|SIGNATURES                     |  | 27                                                                                         
|                               | 
|Exhibit Index                  |  | 28                                                                                         



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PART I. FINANCIAL INFORMATION



|ITEM I. | FINANCIAL STATEMENTS
|------- | --------------------



SIRNA THERAPEUTICS, INC.

CONDENSED BALANCE SHEETS

(in thousands, except per share amounts)



|                                                 |  |               |          |   |                  |   |          |  
|------------------------------------------------ |  | ------------- | -------- | - | ---------------- | - | -------- | -
|                                                 |  | March 31,2005 |          |   | December 31,2004 |  
|                                                 |  | (unaudited)   |          |   |                  |  
|                                                 |  |              
|ASSETS                                           |  |               |          |   |                  |   |          |  
|                                                 |  |              
|Current assets                                   |  |               |          |   |                  |   |          |  
|Cash and cash equivalents                        |  | $             | 10,046   |   |                  | $ | 16,817   |  
|Securities available-for-sale                    |  |               | 14,862   |   |                  |   | 19,266   |  
|Accounts receivable                              |  |               | 312      |   |                  |   | 66       |  
|Inventories                                      |  |               | 590      |   |                  |   | 374      |  
|Prepaid expenses and other current assets        |  |               | 382      |   |                  |   | 527      |  
|                                                 |  |               |          |   |                  |   |          |  
|Total current assets                             |  |               | 26,192   |   |                  |   | 37,050   |  
|                                                 |  |              
|Property, plant and equipment, net               |  |               | 2,397    |   |                  |   | 2,507    |  
|                                                 |  |              
|Notes receivable-related parties                 |  |               | 130      |   |                  |   | 210      |  
|Deferred patent costs, net                       |  |               | 848      |   |                  |   | 946      |  
|Other assets                                     |  |               | 858      |   |                  |   | 844      |  
|                                                 |  |               |          |   |                  |   |          |  
|Total assets                                     |  | $             | 30,425   |   |                  | $ | 41,557   |  
|                                                 |  |               |          |   |                  |   |          |  
|                                                 |  |              
|LIABILITIES AND STOCKHOLDERS EQUITY             |  |               |          |   |                  |   |          |  
|                                                 |  |              
|Current liabilities                              |  |               |          |   |                  |   |          |  
|Accounts payable-trade                           |  | $             | 1,024    |   |                  | $ | 978      |  
|Accrued expenses                                 |  |               | 2,102    |   |                  |   | 2,541    |  
|Deferred revenue, current portion                |  |               | 55       |   |                  |   | 281      |  
|Current portion of convertible long-term debt    |  |               |         |   |                  |   | 3,055    |  
|                                                 |  |               |          |   |                  |   |          |  
|Total current liabilities                        |  |               | 3,181    |   |                  |   | 6,855    |  
|                                                 |  |              
|Other long term liabilities                      |  |               | 275      |   |                  |   | 375      |  
|                                                 |  |              
|Stockholders equity                             |  |               |          |   |                  |   |          |  
|Common stock                                     |  |               | 415      |   |                  |   | 414      |  
|Additional paid-in capital                       |  |               | 289,117  |   |                  |   | 288,599  |  
|Unrealized loss on securities available-for-sale |  |               | (30      | ) |                  |   | (27      | )
|Accumulated deficit                              |  |               | (261,216 | ) |                  |   | (253,207 | )
|Unearned compensation                            |  |               | (1,317   | ) |                  |   | (1,452   | )
|                                                 |  |               |          |   |                  |   |          |  
|Total stockholders equity                       |  |               | 26,969   |   |                  |   | 34,327   |  
|                                                 |  |               |          |   |                  |   |          |  
|Total liabilities and stockholders equity       |  | $             | 30,425   |   |                  | $ | 41,557   |  
|                                                 |  |               |          |   |                  |   |          |  



See
notes to condensed financial statements.



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SIRNA THERAPEUTICS, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except
per share amounts)



|                                           |  |                             |        |   |      |   |        |  
|------------------------------------------ |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                                           |  | Three months endedMarch 31, |       
|                                           |  | 2005                        |        |   | 2004 |  
|Revenues:                                  |  |                             |        |   |      |   |        |  
|Contract revenues                          |  | $                           | 43     |   |      | $ | 29     |  
|Contract revenues  manufacturing          |  |                             | 465    |   |      |   | 289    |  
|                                           |  |                             |        |   |      |   |        |  
|Total revenues                             |  |                             | 508    |   |      |   | 318    |  
|                                           |  |                            
|Expenses:                                  |  |                             |        |   |      |   |        |  
|Cost of goods sold                         |  |                             | 394    |   |      |   | 231    |  
|Research and development                   |  |                             | 6,104  |   |      |   | 4,459  |  
|General and administrative                 |  |                             | 2,170  |   |      |   | 1,561  |  
|                                           |  |                             |        |   |      |   |        |  
|Total expenses                             |  |                             | 8,668  |   |      |   | 6,251  |  
|                                           |  |                             |        |   |      |   |        |  
|Operating loss                             |  |                             | (8,160 | ) |      |   | (5,933 | )
|                                           |  |                            
|Other income (expense):                    |  |                             |        |   |      |   |        |  
|Interest income, expense and other expense |  |                             | 150    |   |      |   | (4     | )
|                                           |  |                             |        |   |      |   |        |  
|Net loss                                   |  | $                           | (8,010 | ) |      | $ | (5,937 | )
|                                           |  |                             |        |   |      |   |        |  
|Net loss per share (basic and diluted)     |  | $                           | (0.19  | ) |      | $ | (0.19  | )
|                                           |  |                             |        |   |      |   |        |  
|Shares used in computing                   |  |                             |        |   |      |   |        |  
|net loss per share                         |  |                             | 41,532 |   |      |   | 31,771 |  
|                                           |  |                             |        |   |      |   |        |  



See
notes to condensed financial statements.



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SIRNA THERAPEUTICS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands, except
per share amounts)



|                                                                            |  |                             |        |   |      |   |        |  
|--------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                                                                            |  | Three months endedMarch 31, |       
|                                                                            |  | 2005                        |        |   | 2004 |  
|Operating Activities                                                        |  |                             |        |   |      |   |        |  
|Net loss                                                                    |  | $                           | (8,010 | ) |      | $ | (5,937 | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                             |        |   |      |   |        |  
|Depreciation and amortization                                               |  |                             | 464    |   |      |   | 428    |  
|Compensation related to common stock and options                            |  |                             | 186    |   |      |   | 106    |  
|Purchase of license through issuance of stock                               |  |                             | 488    |   |      |   |       |  
|Compensation for forgiveness of notes receivable-related parties            |  |                             | 80     |   |      |   | 80     |  
|Accrued interest included in convertible debt                               |  |                             | 20     |   |      |   | 60     |  
|Changes in operating assets and liabilities:                                |  |                             |        |   |      |   |        |  
|Accounts receivable                                                         |  |                             | (246   | ) |      |   | 84     |  
|Inventory                                                                   |  |                             | (216   | ) |      |   |       |  
|Prepaid expenses and other current assets                                   |  |                             | 130    |   |      |   | 180    |  
|Accounts payable-trade                                                      |  |                             | 46     |   |      |   | (338   | )
|Accrued expenses                                                            |  |                             | (539   | ) |      |   | (585   | )
|Deferred revenue                                                            |  |                             | (225   | ) |      |   | 22     |  
|                                                                            |  |                             |        |   |      |   |        |  
|Net cash used in operating activities                                       |  |                             | (7,822 | ) |      |   | (5,900 | )
|                                                                            |  |                            
|Investing activities                                                        |  |                             |        |   |      |   |        |  
|Additions to property, plant and equipment                                  |  |                             | (185   | ) |      |   | (90    | )
|Additions to deferred patent costs                                          |  |                             | (71    | ) |      |   | (41    | )
|Net sales of securities available-for-sale                                  |  |                             | 6,398  |   |      |   | 7,503  |  
|Net purchases of securities available-for-sale                              |  |                             | (1,997 | ) |      |   | (4,901 | )
|                                                                            |  |                             |        |   |      |   |        |  
|Net cash provided by investing activities                                   |  |                             | 4,145  |   |      |   | 2,471  |  
|                                                                            |  |                            
|Financing activities                                                        |  |                             |        |   |      |   |        |  
|Net proceeds from issuance of common and preferred stock                    |  |                             | (19    | ) |      |   | 116    |  
|Conversion of debt                                                          |  |                             | 5      |   |      |   | 15     |  
|Payments under loan facilities                                              |  |                             | (3,080 | ) |      |   | (1,117 | )
|                                                                            |  |                             |        |   |      |   |        |  
|Net cash used in financing activities                                       |  |                             | (3,094 | ) |      |   | (986   | )
|                                                                            |  |                            
|Net decrease in cash and cash equivalents                                   |  |                             | (6,771 | ) |      |   | (4,415 | )
|Cash and cash equivalents at beginning of period                            |  |                             | 16,817 |   |      |   | 18,793 |  
|                                                                            |  |                             |        |   |      |   |        |  
|Cash and cash equivalents at end of period                                  |  | $                           | 10,046 |   |      | $ | 14,378 |  
|                                                                            |  |                             |        |   |      |   |        |  



See
notes to condensed financial statements.



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SIRNA THERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2005

(Unaudited)



|Note 1: | Basis of Presentation
|------- | ---------------------



The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United
States for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles in the United
States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31,
2005 are not necessarily indicative of the results that may be expected for the entire year. For further information, refer to the financial statements and disclosures thereto included in our annual report on Form 10-K for the year ended December
31, 2004 as filed with the Securities and Exchange Commission.



|Note 2: | Liquidity
|------- | ---------



Development of the Companys products has required substantial funds (including both private and public financings), and will continue to require
substantial funds to conduct the costly and time-consuming research, preclinical and clinical testing necessary to bring its proposed products to market. The Companys ability to raise funds in the future will depend on many factors, including,
among others, the progress of the Companys research, development and drug delivery efforts, the ability of the Company to establish collaborative arrangements for clinical testing, progress with preclinical studies and clinical trials, the
time and cost involved in obtaining regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, competing technological and market developments, the determination as to the
commercial potential of the Companys potential products, and the cost and availability of third-party financing.



Failure to generate sufficient revenues or raise additional capital could have a material adverse effect on the Companys ability to achieve its
intended business objectives, which include the completion of development and commercialization of its product candidates and the continuation of its research and development programs. Management plans on raising additional funds to meet future
working capital and capital expenditure needs. There can be no assurance that such additional financing will be available or, if available, that such financing can be obtained on terms satisfactory to the Company.



|Note 3: | Inventories
|------- | -----------



The Companys inventories are as follows (in thousands):



|                  |  |               |     |                  |   |    
|----------------- |  | ------------- | --- | ---------------- | - | ---
|                  |  | March 31,2005 |     | December 31,2005
|Raw materials     |  | $             | 97  |                  | $ | 135
|Work in progress  |  |               | 482 |                  |   | 228
|Finished goods    |  |               | 11  |                  |   | 11 
|                  |  |               |     |                  |   |    
|Total inventories |  | $             | 590 |                  | $ | 374
|                  |  |               |     |                  |   |    



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|Note 4: | Stock-Based Compensation
|------- | ------------------------



Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation defined a fair value method of accounting for stock
options and other equity instruments. Under the fair value method, compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. As provided for
in SFAS 123, the Company has elected to apply Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its stock-based compensation plans. Under APB 25, if the exercise
price of the Companys employee and director stock options equals or exceeds the fair value of the underlying stock on the date of grant, no compensation expense is recognized. For the period ending March 30, 2005, the Company has elected to
follow the intrinsic value method prescribed by APB 25. However, in 2006, the Company will be required to adopt SFAS No. 123(R) which requires stock based compensation to be recognized in the financial statements.



Pro forma information regarding net loss and loss per share is required by
SFAS 123, which also requires that the information be determined as if the Company has accounted for its employee stock options under the fair value method of SFAS 123. For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options vesting period. Pro forma amounts may not be representative of future years. The Companys pro forma information follows (in thousands, except per share data):



|                                                                                                                 |  |                            |        |   |                |   |        |  
|---------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ------ | - | -------------- | - | ------ | -
|                                                                                                                 |  | For the Three Months Ended |       
|                                                                                                                 |  | March 31, 2005             |        |   | March 31, 2004 |  
|Net loss as reported                                                                                             |  | $                          | (8,010 | ) |                | $ | (5,937 | )
|Add: Stock-based employee compensation expense included in reported income                                       |  |                            | 186    |   |                |   | 106    |  
|Deduct: Total stock-based employee compensation expense determined under fair value based methods for all awards |  |                            | (872   | ) |                |   | (1,059 | )
|                                                                                                                 |  |                            |        |   |                |   |        |  
|Pro forma net loss                                                                                               |  | $                          | (8,696 | ) |                | $ | (6,890 | )
|                                                                                                                 |  |                            |        |   |                |   |        |  
|Pro forma loss per share (basic and diluted)                                                                     |  | $                          | (0.21  | ) |                | $ | (0.22  | )
|                                                                                                                 |  |                            |        |   |                |   |        |  



In February 2003, the
Company, pursuant to its transition from Ribozyme Pharmaceuticals to Sirna Therapeutics and related recapitalization, granted options to purchase approximately 4.8 million shares of common stock to employees and consultants at an exercise price of
$2.10 per share, subject to stockholder approval, which was granted on April 16, 2003. Related to the February 2003 grants, the Company recorded compensation expense of $186,000 for the three-month period ended March 31, 2005. As of March 31, 2005,
$1.3 million of unearned compensation is deferred and will be expensed as the options vest, generally over the next three to four years.



|Note 5: | Use of Estimates
|------- | ----------------



The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management
to make estimates and assumptions that affect the reporting amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could materially differ from those estimates.



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|Note 6: | Reclassifications
|------- | -----------------



For the three month period ended March 31, 2004, the Company reclassified net patent expense of $415,000, from research and development to general
and administrative expense.



|Note 7: | Subsequent Event
|------- | ----------------



In May 2005, in an effort to reduce expenses, the Company executed a restructuring of its programs and a reduction in force. Eleven employees were
included in the termination, resulting in an annualized salary and benefits savings of $2.1 million. Severance and other costs related to the reduction in force will be $350,000. As a result of the restructuring and the reduction in force, the
Company projects that its net cash expenditure in 2005 will be approximately $23.7 million, expects to reduce budgeted expenditure in 2005 by approximately $5.5 million (net of severance costs), and anticipates budgeted expense reductions in future
years, in each case subject to significant variation resulting from, among other things, product development and access to capital markets.



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



The following Managements Discussion and Analysis of Financial Condition and Results of Operations, as well as
information contained elsewhere in this report, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended and the Private Securities
Litigation Reform Act of 1995. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current events. Forward-looking
statements use words such as anticipate, estimate, expect, will, may, intend, plan, believe and similar expressions in connection with discussion of
future operating or financial performance. The forward-looking statements include statements relating to future actions, prospective products and product approvals, future performance or results of current and anticipated products, sales efforts,
expenses and financial results. Forward-looking statements are not guarantees of future performance and they can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Actual results may differ materially from those
projected in the forward-looking statements as a result of various factors, including, without limitation, those listed under Risk Factors in this Quarterly Report on Form 10-Q and under Item 1. Business-Risk Factors in our
Annual Report on Form 10-K for the year ended December 31, 2004. Except to fulfill our obligations under the federal securities laws, we undertake no obligation to update forward-looking statements to reflect events or circumstances after the date
on which it is made.



We begin Managements Discussion and
Analysis of Financial Condition and Results of Operations (MD&A) with the Companys business overview to give you an understanding of the technology of our business and the direction in which our business and our product candidates are
moving. This is followed by a discussion of the Critical Accounting Estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results. We then discuss our Results of Operations for
the three months ended March 31, 2005 compared to the same period in 2004, separated by our functions. We then provide an analysis of changes in our balance sheet and cash flows, and discuss our financial commitments in the section entitled
Liquidity and Capital Resources.



Business Overview



RNA Interference



RNA interference (RNAi) is a natural, selective process for turning off
genes. RNAi is triggered by short interfering RNA (siRNA) molecules that engage a group of cellular proteins, known as RISC (RNA induced silencing complex). The RISC guides the siRNA to its target messenger RNA (mRNA, the messenger between DNA and
proteins) by complementary base pairing for the targeted break-up of the mRNA thus halting protein expression or viral replication. The RISC-siRNA-complex binds and cleaves multiple mRNA molecules in a catalytic fashion.



Harnessing the natural phenomenon of RNAi through the targeted delivery of
synthetic siRNAs holds potential for a new and important future class of drugs. Although there is widespread use of RNAi-based reagents for target validation in drug discovery, the development of RNAi-based pharmaceuticals for therapeutic uses to
treat disease is currently in an early stage of development.



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Product Candidate Programs



We are seeking to develop new drugs using siRNAs that address significant and unmet medical needs. We are continuing our
progress from an early-stage research company to a development company and have recently announced that we are refocusing our efforts around core programs. These programs, which are our most advanced, are in the following areas:



| |  |  | Age-related Macular Degeneration.Our first program to advance into the clinic targets age-related macular degeneration (AMD), a degenerative eye disease that is the leading
cause of blindness in the elderly in the United States. In November 2004, we initiated Phase 1 testing of Sirna-027, a chemically modified siRNA targeting Vascular Endothelial Growth Factor Receptor-1 (VEGFR-1), which is a key component of the
clinically validated vascular endothelial growth factor (VEGF) pathway. We plan to advance Sirna-027 into Phase 2 clinical trials by mid-2006.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Hepatitis C.Hepatitis C is a liver disease caused by the hepatitis C virus (HCV) and, when chronic, may ultimately cause cirrhosis or liver cancer. In the US, an estimated
3.9 million (1.8%) have been infected with HCV, of whom 2.7 million are chronically infected. In 2003, in the US alone, 30,000 new cases of HCV were diagnosed. Current combination therapies can get rid of the virus in only 50% of patients treated.
We are in the preclinical stages of development of siRNAs that target the viral RNA to treat the hepatitis C infection. We plan to begin Phase 1 clinical trials for a product candidate targeting HCV by the end of 2006.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Dermatology (Hair Removal).In December 2004, we launched a dermatology division following the acquisition of Skinetics Biosciences, Inc. (Skinetics). Our first dermatology
program is focused on the permanent removal of unwanted hair. Skinetics founder, and a leader in the field of hair biology, Dr. Angela Christiano of Columbia University, is an exclusive consultant to Sirna. We are in the preclinical stages of
developing siRNA targeting the hairless protein. We plan to file an investigational new drug (IND) with the FDA by the end of 2006.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our earlier stage programs - Huntingtons disease, asthma, oncology and diabetes - will be advanced with a combination of internal and external
support. In Huntingtons disease, in January 2005 we entered into a collaboration with Targeted Genetics Corporation for the development of adeno-associated viral (AAV) vector delivery of siRNAs that target the expression of Huntingtons
protein. We are also collaborating with Dr. Beverly Davidson at the University of Iowa, who has published data in this area. In asthma, we are in the preclinical stages of developing a drug candidate to treat asthma via local delivery and are
working with Dr. Erwin Gelfand of the National Jewish Medical & Research Center to test siRNAs that target inflammation and bronchconstriction in the airways. In oncology we have a collaboration with Eli Lilly and Company as described below.



Collaborations



Eli Lilly and Company In January 2004, we initiated a
collaboration with Lilly to apply our RNAi technology against Lillys proprietary models in oncology. Under the terms of the eighteen-month collaboration, Lilly is providing oncology targets, preclinical in vivo models and research
funding. We are providing the RNAi expertise and a non-exclusive research license for our oncology technologies during the term of the collaboration. The goal is to establish a proof of concept that could lead to the development of novel RNAi
therapies for oncology. To date, the collaboration has demonstrated target mRNA knockdown in vitro in human and mouse cell lines. Demonstration of in vivo target knockdown is currently in progress. Under the terms of the agreement with
Lilly, we may receive $1.8 million in August 2005 upon the completion of certain milestones.



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Targeted Genetics In January 2005, we entered into a collaboration with Targeted Genetics
Corporation to develop siRNAs targeting Huntingtons disease gene using an adeno-associated virus (AAV) vector. Under the terms of the collaboration, Sirna and Targeted Genetics will share the costs and revenues associated with research and
development of AAV-based siRNA product for the treatment of Huntingtons disease.



ProtivaIn February 2005, we entered into a Strategic Alliance Agreement with Protiva Biotherapeutics Inc. (Protiva) for delivery technology applicable to RNAi products. The alliance will expand our
delivery capability with respect to a limited number of targets and provide Protiva with access to our RNAi technology against a limited number of other targets.



Process Development and Pilot Manufacturing Activities



Archemix In addition to our work with RNAi, we also have developed an extensive expertise in nucleic acid
technologies. We intend to leverage our nucleic acid expertise through licensing, process development and pilot manufacturing opportunities. In July 2004, we entered into an exclusive four-year process development and manufacturing alliance with
Archemix Corporation (Archemix), a privately held company. Archemix is currently developing ARC183, an anti-thrombin aptamer. Pursuant to the agreement, we will manufacture all of Archemixs aptamers through Phase 2a clinical development.



Intellectual Property



Obtaining patent protection as well as protecting patents and other
proprietary rights is crucial to developing our business. In addition to patents, we rely upon trade secrets, know-how and continuing technological innovations. As part of our overall intellectual property strategy, we selectively enter into
agreements with third parties, such as academic institutions, either to license pre-existing technology or to support the development of new technologies. For example, in 2003 we entered into a worldwide licensing agreement with the University of
Massachusetts (UMass) Medical School for its undivided interest in intellectual property relating to the seminal RNA interference technology covering siRNA (the Tuschl 1 Patent) for uses relating to human and veterinary therapeutic,
prophylactic, diagnostic and health care applications. This pending Tuschl 1 Patent broadly covers siRNAs, including those with blunt ends and ends with 3-overhangs. In 2003, we obtained a non-exclusive license to the early RNAi patents filed
jointly by Carnegie Institution of Washington and UMASS (Carnegie Patent). The Carnegie Patent is based on the work of Drs. Andrew Fire and Craig Mello governing genetic inhibition of genes by double-stranded RNA via RNAi. In June 2004, we entered
into a worldwide exclusive license agreement with the University of Iowa Research Foundation for intellectual property relating to RNAi technology covering siRNA for targeting neurological disease indications, including Huntingtons disease and
Alzheimers Disease. In December 2004, we entered into a worldwide exclusive license agreement with Columbia University for intellectual property relating to genes involved in the hair growth pathway. This license includes rights to siRNAs
targeting the hairless gene that can be used to inhibit hair growth. This intellectual property is based on pioneering work of Dr. Angela Christiano at Columbia University on identifying genes involved in promotion and inhibition of hair
growth.



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It is our policy to file patent applications when appropriate to protect technology, inventions and
improvements that are considered important in the development of our business. We seek patent protection in the United States as well as in several key foreign countries. The following table summarizes the Companys current intellectual
property estate (excluding ribozyme technology):



|                                                                                                                             |  |                          |  |              
|---------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ |  | -------------
|Sirna Controlled and Licensed Intellectual Property                                                                          |  | U.S. Filings             |  | Status       
|Seminal RNAi or siRNA Technology:                                                                                            |  |                          |  |              
|Tuschl et al. PatentWorldwide Exclusive License from UMass Medical School                                                    |  | 2 patent applications    |  | Pending      
|Fire et al. PatentWorldwide Nonexclusive License Carnegie Institution                                                        |  | 3 patent applications    |  | 1 Issued     
|Sirna  No-ribo siNA Technology                                                                                            |  | 10 patent applications   |  | 1 granted(UK)
|Sirna - Multifunctional siRNA Technology                                                                                     |  | 5 patent applications    |  | Pending      
|Sirna - RNAi Gene Targets (including those covering targets in the VEGF, IL-4, IL-13, Hairless, PTP-1B, HCV and HD pathways) |  | >135 patent applications |  | 1 granted(UK)
|                                                                                                                             |  |                         
|Sirna - Oligonucleotide Chemistry & Delivery Technology                                                                      |  | >70 patent applications  |  | 23 Issued    
|Sirna - Oligonucleotide Manufacturing & Process Technology                                                                   |  | >25 patent applications  |  | 15 Issued    
|                                                                                                                             |  |                          |  |              
|                                                                                                                             |  |                         
|Summary of Intellectual Property Estate:                                                                                     |  | >250 PatentApplications  |  | 41 Issued    
|                                                                                                                             |  |                          |  |              



We believe our
intellectual property holdings adequately enable the Company to pursue its business plans. We cannot however guarantee that any patents will issue from any pending or future patent applications owned by or licensed to us or that such patents, if
issued, will have scope sufficient to prevent competing products. In addition, the scope of our present or future patents may not be sufficiently broad to prevent competitive products. The Company, to the best of its ability, will defend its
intellectual property estate from infringement. There is however inherent uncertainty in administrative proceedings and litigation relating to our patents that could cause us to incur substantial costs and delays in obtaining and enforcing our
patents and other proprietary rights. The ultimate result of any patent litigation could be the loss of some or all protection for the patent involved. We may also decide to oppose or challenge third party patents. When prudent and for appropriate
consideration, the Company is willing to out license its intellectual property. The manufacture, use or sale of our products may infringe on the patent rights of others. We may not have identified all United States and foreign patents and patent
applications that pose a risk of infringement. We may be forced to in-license or litigate if an intellectual property dispute arises.



The Drug Discovery and Development Process



The new drug discovery and development process is generally considered a long (5 to 7 years or greater) and expensive (greater than $100 million)
undertaking, which is subject to many uncertainties and substantial regulatory oversight. These generalized timelines and costs are estimates and as such involve known and unknown risks, uncertainties and other factors that may cause our actual
results, performance or achievements to be materially different from estimates. Research and development project costs, among others, include costs of salaries, benefits, clinical trial site costs, outside services, materials and supplies incurred
to support the clinical programs. Indirect costs allocated to projects include facility and occupancy costs, license and royalty payments. The primary phases of new drug discovery and development include:



| |  |  | Preclinical research - Preclinical research includes development from conception to small scale manufacturing of the drug and through completion of animal toxicity and
pharmacokinetic studies necessary to file an IND application.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Phase 1 clinical trials Phase 1 clinical trials are generally conducted with small groups of patients or healthy volunteers to determine the drugs safety profile
and its blood concentration profile over time.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Phase 2 clinical trials  Phase 2 clinical trials are generally expanded safety, optimal dosing and efficacy studies in small groups of patients afflicted with the
targeted disease.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Phase 3 clinical trials Phase 3 clinical trials are large-scale, multi-center, comparative trials with patients afflicted with the targeted disease in order to provide
enough data to demonstrate the efficacy and safety required by the FDA prior to commercialization of the drug.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The most significant costs associated with clinical development are the Phase 3 trials, as they tend to be the longest and largest studies conducted
during the drug development process. The FDA closely monitors the progress of each phase of clinical testing. The FDA may, at its discretion, re-evaluate, alter, suspend or terminate testing based upon the data accumulated to that point and the
FDAs assessment of the risk/benefit ratio to patients. If Phase 3 trials are successful, the final step in a drug approval timeline is submission of a New Drug Application (NDA) with the FDA. The NDA process may last several years.



In addition, development stage companies, like Sirna Therapeutics, often
seek collaborations and/or partnerships with large, established pharmaceutical companies to assist in the cost and complexities of developing and marketing new drugs. At this time, the Company believes it may be too early to enter into such business
arrangements as the full potential and value of its product candidate programs are unknown.



Critical Accounting Policies and Estimates



The methods, estimates and judgments we use in applying our accounting policies may have an impact on the results we report in our financial statements, which we discuss under the heading Results of
Operations following this section of our MD&A. Some of our accounting policies require us to make subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain.



Revenue Recognition



Revenues recorded from our collaborative agreements may consist of research
revenue, contract manufacturing revenue, milestone revenue and license or royalty revenue. We generally recognize revenue when we have satisfied all contractual obligations and we are reasonably assured of collecting the resulting receivable. Given
the nature of our business and the infrastructure that we need to support, we often enter into collaborations where we receive nonrefundable up-front payments for prior or future expenditures. In compliance with current accounting rules, we
recognize revenue related to up-front payments over the period of the contractual arrangements as we satisfy our performance obligations. Occasionally, we are required to estimate the period of a contractual arrangement or our performance obligation
when the information is not clearly defined in the agreements we enter into. Should different estimates prevail, revenue recognized could be different. As of March 31, 2005, we evaluated our estimates for the periods of contractual arrangements and
determined that our estimates are appropriate.



Patent Expenses



Due to the early stage of development of RNAi technology,
we expense all legal costs directly incurred in connection with patent applications or patents until we determine that the estimated recoverability of such costs is sufficiently probable, at which time such costs are capitalized. If capitalized,
such deferred patent costs are then amortized over the estimated economic life of the patent on a straight-line basis. We review all capitalized patent costs on a quarterly basis and, if we decide to abandon a patent or a patent application or
determine that an issued patent or a patent application no longer has significant



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economic value based on future cash flows, the unamortized balance in deferred patent costs related to that patent or patent application is immediately
expensed.



Results of Operations



Three Months Ended March 31, 2005 and 2004



Revenues



The following table sets forth information on revenues earned from our collaborations for the periods indicated (in
thousands):



|                                |  |                        |     |      |   |    
|------------------------------- |  | ---------------------- | --- | ---- | - | ---
|                                |  | Quarter endedMarch 31,
|                                |  | 2005                   |     | 2004
|Revenues                        |  |                        |     |      |   |    
|Contract revenues               |  |                        |     |      |   |    
|Eli Lilly                       |  | $                      | 42  |      | $ | 28 
|Atugen                          |  |                        | 1   |      |   | 1  
|                                |  |                        |     |      |   |    
|Total contract revenues         |  |                        | 43  |      |   | 29 
|                                |  |                       
|Contract revenuesmanufacturing |  |                        |     |      |   |    
|Archemix                        |  |                        | 465 |      |   | 289
|                                |  |                        |     |      |   |    
|Total Revenues                  |  | $                      | 508 |      | $ | 318
|                                |  |                        |     |      |   |    



Our revenues for the
quarter ended March 31, 2005 were $508,000, an increase of $190,000 compared to the same period in 2004. The increase is primarily a result of our Archemix revenues which were $465,000 for the first quarter of 2005. In addition, during the first
quarter of 2004, we entered into an eighteen-month collaboration with Lilly to jointly investigate our proprietary modified siRNAs against specific oncology targets provided by Lilly. Revenues recognized during the first quarter of 2005 are from
Lillys access to a non-exclusive research license of certain of our technologies in oncology during the eighteen-month collaboration.



At the completion of the Lilly contract, a milestone payment of $1.8 million may be earned by us in August 2005. Since this is a substantive at risk
milestone, it has not yet been recognized in 2005 as contract success has not been determined. The collaborations with Lilly and Archemix are expected to continue in 2005, however, we are actively pursuing additional partnerships and collaborations
to fund our research and development programs.



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Expenses



Research and Development



The following table sets forth information on research and development expenses for the periods indicated (in thousands):



|                         |  |                        |       |      |   |      
|------------------------ |  | ---------------------- | ----- | ---- | - | -----
|                         |  | Quarter endedMarch 31,
|                         |  | 2005                   |       | 2004
|Research and development |  |                        |       |      |   |      
|Personnel expense        |  | $                      | 2,178 |      | $ | 1,920
|Chemicals and supplies   |  |                        | 905   |      |   | 721  
|License fees             |  |                        | 1,241 |      |   | 239  
|Outside services         |  |                        | 551   |      |   | 243  
|Depreciation             |  |                        | 295   |      |   | 359  
|Other                    |  |                        | 934   |      |   | 977  
|                         |  |                        |       |      |   |      
|Total R&D expenses       |  | $                      | 6,104 |      | $ | 4,459
|                         |  |                        |       |      |   |      
|R&D average staffing     |  |                        | 66    |      |   | 59   
|                         |  |                        |       |      |   |      



Our research and
development expenses for the quarter ended March 31, 2005 were $6.1 million, an increase of $1.6 million compared to the same period in 2004. The increase is primarily due to a $988,000 expense we took in connection with our strategic alliance
agreement with Protiva for delivery technology applicable to RNAi products. The alliance will expand our delivery capability with respect to a limited number of targets and provide Protiva with access to our RNAi technology against a limited number
of other targets. Pursuant to the alliance agreement, Protiva received 155,763 shares of our common stock, valued at $488,000 (subsequently converted to cash) and $500,000 in cash (subject to the release from escrow pursuant to the terms of the
agreement). The increase is also due to the scale-up of our research and outside services as we progress in our clinical activities for Sirna-027, our RNAi drug candidate targeting AMD. Also, personnel related expenses for the first quarter of 2004
was $2.2 million, an increase of $258,000 compared to the same period in 2004 due to an increase in average staffing and annual salary increases which became effective in January.



General and Administrative.



The following table sets forth information on general and administrative expenses for the periods indicated (in thousands):



|                                |  |                        |       |      |   |      
|------------------------------- |  | ---------------------- | ----- | ---- | - | -----
|                                |  | Quarter endedMarch 31,
|                                |  | 2005                   |       | 2004
|General and administrative      |  |                        |       |      |   |      
|Personnel costs                 |  | $                      | 961   |      | $ | 659  
|Patent and amortization expense |  |                        | 552   |      |   | 415  
|Other                           |  |                        | 657   |      |   | 487  
|                                |  |                        |       |      |   |      
|Total G&A expenses              |  | $                      | 2,170 |      | $ | 1,561
|                                |  |                        |       |      |   |      
|G&A average staffing            |  |                        | 15    |      |   | 11   
|                                |  |                        |       |      |   |      



General and
administrative expenses for the quarter ended March 31, 2005 were $2.2 million, compared to $1.6 million for the same period in 2004. The increase is primarily due to the increase in



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staffing and related expenses. Other expenses increased in 2005 as a result of increased legal and professional fees in connection with business development
efforts.



Interest income, expense and other
expense.Interest income was $175,000 for the quarter ended March 31, 2005, compared to $104,000 for the same period in 2004. The fluctuation from year to year is due to the fluctuation of average balances in our
cash, cash equivalents and securities available-for-sale. Interest expense was $26,000 for the first quarter of 2005, compared to $109,000 during the same period in 2004. The reduction in interest expense is a result of paying off a $1.0 million
loan that we carried through a credit institution in February 2004, as well as paying off our $3.0 loan from Schering in January 2005.



Liquidity and Capital Resources



We had cash, cash equivalents and securities available-for-sale of $24.9 million at March 31, 2005 compared with $36.1 million at December 31, 2004. The
$11.2 million decrease in cash, cash equivalents and securities available-for-sale is primarily the result of $3.1 million to pay off our debt obligation; $7.8 million used for operations, which includes $500,000 for the Protiva strategic alliance
payment, net of revenues of $508,000; and $256,000 used for investments in equipment, leasehold improvements and patents.



Our securities available-for-sale consist of interest bearing, investment-grade securities.



Accounts receivable at March 31, 2005 were $312,000 compared to $66,000 at December 31, 2004. Accounts receivable at March
31, 2005 were primarily due from Archemix related to our manufacturing agreement.



Total additions for property, plant and equipment for the three months ended March 31, 2005 were $185,000. We anticipate future property, plant and equipment needs to be financed either through credit facilities,
equity sales or revenues, all of which are yet to be determined.



Schering AG  In January 2005, we paid off an outstanding convertible loan, including accrued interest, of $3.1 million from Schering AG.



Liquidity - We have financed our operations through sales of equity securities in public offerings, private placements of preferred and common
stock, funds received under our collaborative agreements and financing under equipment and tenant improvement loans. We anticipate that our existing financial resources and expected revenues from collaborations, our cash should be sufficient to meet
our anticipated operating and capital requirements through 2005. We will need to raise additional capital through any or all of the following: public or private financing, merger or acquisition, new collaborative relationships, new credit facilities
and/or other sources. If we raise funds by issuing and selling more stock, your ownership in us will be diluted. We may grant future investors rights superior to those of existing stockholders. In addition, we do not know if additional funding will
be available or available on acceptable terms when needed.



We
expect to incur substantial additional costs, including costs related to:



| |  |  | our research, drug discovery and development programs;
| | - |  | ------------------------------------------------------



| |  |  | preclinical studies of our product candidates, if developed;
| | - |  | ------------------------------------------------------------



| |  |  | prosecuting and enforcing patent claims;
| | - |  | ----------------------------------------



| |  |  | general administrative and legal fees; and
| | - |  | ------------------------------------------



| |  |  | manufacturing and marketing of our products, if any.
| | - |  | ----------------------------------------------------



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Recently Issued Accounting Standards



In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS)
No. 123(R), Share-Based Payment, which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees,and amends SFAS No. 95,
Statement of Cash Flows. SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an
alternative.



SFAS No. 123(R) must be adopted in 2006. We
expect to adopt SFAS No. 123(R) in the first quarter of 2006. SFAS No. 123(R) permits companies to adopt its requirements using one of two methods:



| |  |  | A modified prospective method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS No. 123(R) for all
share-based payments granted after the effective date and (b) based on the requirements of SFAS No. 123 for all awards granted to employees prior to the effective date of SFAS No. 123(R) that remain unvested on the effective date.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A modified retrospective method which includes the requirements of the modified prospective method described above, but also permits entities to restate based on the
amounts previously recognized under SFAS No. 123 for purposes of pro forma disclosures either (a) all prior periods presented or (b) prior interim periods of the year of adoption.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We are still assessing the appropriate transition method.



As permitted by SFAS No. 123, we currently account for share-based payments
to employees using the APB No. 25 intrinsic value method and, as such, generally recognize no compensation cost for employee stock options. Accordingly, the adoption of SFAS No. 123(R)s fair value method will have an impact on our results of
operations, although it will have no impact on our overall financial position or cash flows. We have not yet determined the method of adoption or the effect of adopting SFAS 123R will have on our results of operations, and also have not determined
whether the adoption will result in amounts that are similar to the current pro forma disclosures under SFAS No. 123.



Risk Factors



Risks Relating to our Business, Industry and Common Stock



We are a biotechnology company in the early stage of development and have only a limited operating history for you to review in evaluating our current business and its prospects.



Our focus is directed towards RNAi technology, which is in an early stage of
pre-clinical and clinical development and will require substantial further testing. There can be no assurance that our technologies will enable us to discover and develop therapeutic products.



All of our product candidates are in early stages of development, have never
generated any sales and require extensive testing before commercialization. Our RNAi-based drugs, which are the focus of our business, may require more than five years to bring to market, and may never reach the market. You must consider, based on
our limited history, our ability to:



| |  |  | obtain the human and financial resources necessary to develop, test, manufacture and market products;
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | engage corporate partners to assist in developing, testing, manufacturing and marketing our products;
| | - |  | -----------------------------------------------------------------------------------------------------



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| |  |  | satisfy the requirements of clinical trial protocols, including patient enrollment;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | establish and demonstrate the clinical efficacy and safety of our products;
| | - |  | ---------------------------------------------------------------------------



| |  |  | obtain necessary regulatory approvals; and
| | - |  | ------------------------------------------



| |  |  | market our products to achieve acceptance and use by the medical community in general.
| | - |  | --------------------------------------------------------------------------------------



We have a history of losses, expect future losses, a continuing need to raise additional capital, and cannot assure you that we will ever
become or remain profitable.



We have incurred significant
losses and have had negative cash flows from operations since inception. To date, we have dedicated most of our financial resources to research and development and general and administrative expenses. We have financed our operations through sales of
equity securities in public offerings, private placements of preferred and common stock, funds received under our collaborative agreements and financing under equipment and tenant improvement loans. We anticipate that our existing financial
resources and expected revenues from collaborations, our cash should be sufficient to meet our anticipated operating and capital requirements through 2005. We will need to raise additional capital through any or all of the following: public or
private financing, merger or acquisition, new collaborative relationships, new credit facilities and/or other sources. If we raise funds by issuing and selling more stock, your ownership in us will be diluted. We may grant future investors rights
superior to those of existing stockholders. In addition, we do not know if additional funding will be available or available on acceptable terms when needed.



As of March 31, 2005, our accumulated deficit was approximately $261.2 million. We expect that the ability to use our net operating loss as a tax benefit
have been significantly restricted as a result of the change of control associated with the 2003 private placement transaction with the Sprout Group, Venrock Associates, Oxford Bioscience Partners IV, TVM V Life Science Ventures GmbH & Co. KG
and Granite Global Ventures (collectively, the Investors).



We expect to incur losses for at least the next several years because we plan to spend substantial amounts on research and development of our product candidates, including preclinical studies and clinical trials.



Because we must obtain regulatory approval to market our products in the United States and
foreign jurisdictions, we cannot predict whether or when we will be permitted to commercialize our products.



The pharmaceutical industry is subject to stringent regulation by a wide range of authorities. We cannot predict whether regulatory clearance will be
obtained for any product we develop. A pharmaceutical product cannot be marketed in the United States until it has completed rigorous preclinical testing and clinical trials and an extensive regulatory clearance process implemented by the Food and
Drug Administration, the FDA. Satisfaction of regulatory requirements typically takes many years, depends upon the type, complexity and novelty of the product, and requires the expenditure of substantial resources. Of particular significance are the
requirements covering research and development, testing, manufacturing, quality control, labeling and promotion of drugs for human use.



Before commencing clinical trials in human beings, we must submit and receive approval from the FDA for an investigational new drug, or IND. In addition
to the FDA regulations, clinical trials are subject to oversight by institutional review boards at the universities or research institutions where we plan to carry out our clinical trials. The clinical trials:



| |  |  | must be conducted in conformity with the FDAs good laboratory practice regulations;
| | - |  | ------------------------------------------------------------------------------------



| |  |  | must meet requirements for institutional review board oversight;
| | - |  | ----------------------------------------------------------------



| |  |  | must meet requirements for informed consent;
| | - |  | --------------------------------------------



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| |  |  | must meet requirements for good clinical practices;
| | - |  | ---------------------------------------------------



| |  |  | are subject to continuing FDA oversight;
| | - |  | ----------------------------------------



| |  |  | may require large numbers of test subjects; and
| | - |  | -----------------------------------------------



| |  |  | may be suspended by the FDA or us at any time if it is believed that the subjects participating in these trials are being exposed to unacceptable health risks or if the FDA finds
deficiencies in the IND or the conduct of these trials.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Before receiving FDA clearance to market a product, we must demonstrate that the product is safe and effective on the patient population that would be treated. Data obtained from preclinical and clinical activities are susceptible to
varying interpretations that could delay, limit or prevent regulatory clearances. In addition, delays or rejections may be encountered based upon additional government regulation from future legislation or administrative action or changes in FDA
policy during the period of product development, clinical trials and FDA regulatory review.



Failure to comply with applicable FDA or other applicable regulatory requirements may result in criminal prosecution, civil penalties, recall or seizure of products, total or partial suspension of production or
injunction, as well as other regulatory action against our potential products or us. Additionally, we have limited experience in conducting and managing the clinical trials necessary to obtain regulatory approval.



If regulatory clearance for a product is granted, this clearance will be
limited to those disease states and conditions for which the product is demonstrated through clinical trials to be safe and efficacious. We cannot ensure that any compound developed by us, alone or with others, will prove to be safe and efficacious
in clinical trials and will meet all the applicable regulatory requirements needed to receive marketing clearance.



Outside the United States, our ability to market a product is contingent upon receiving a marketing authorization from the appropriate regulatory
authorities. This foreign regulatory approval process includes all of the risks associated with FDA clearance described above.



We may experience negative results, problems or delays in our clinical trials with Sirna-027, or subsequent clinical trials, that could adversely affect our stock
price, financial position and our commercial prospects.



We are required to do extensive testing in animal models with our product candidates before we can be approved by the FDA to initiate clinical trials in humans. We cannot be sure that our drugs will be safely tolerated by humans or be
efficacious. Therefore, as our clinical trials progress we will closely monitor results for both safety and efficacy. Results from our early stage clinical trials are based on a limited number of patients and may, upon review, be revised or negated
by authorities or by later stage clinical trials. Historically, the results from preclinical testing and early clinical trials have often not been predictive of results obtained in later clinical trials. A number of new drugs and biologics have
shown promising results in clinical trials, but subsequently failed to establish sufficient safety and efficacy data to obtain necessary regulatory approvals. Data obtained from preclinical and clinical activities are susceptible to varying
interpretations, which may delay, limit or prevent regulatory approval. In addition, we may encounter regulatory delays or rejections as a result of many factors, including: changes in regulatory policy during the period of product development;
delays in obtaining regulatory approvals to commence a study; lack of efficacy during clinical trials; or unforeseen safety issues. Problems with our clinical trials may result in a decline in our stock price, failure to raise capital when needed
and would harm our business, financial condition and results of operations.



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There is inherent uncertainty in administrative proceedings and litigation relating to our patents that could cause us
to incur substantial costs and delays in obtaining and enforcing our patents and other proprietary rights. The ultimate result of any patent litigation could be the loss of some or all protection for the patent involved or the loss of ability to
pursue business opportunity. We may also decide to oppose or challenge third party patents.



We have filed patent applications on various aspects of RNAi technology, a majority of which have not yet been approved. We cannot guarantee that any
patents will issue from any pending or future patent applications owned by or licensed to us or that such patents, if issued, will have scope sufficient to prevent competing products. In addition, the scope of our present or future patents may not
be sufficiently broad to prevent competitive products. We have received issuance of patents covering various aspects of basic RNA and other oligonucleotide technology, and we have filed patent applications for other technology improvements and
modifications that have not yet been approved.



We are involved
in a re-examination proceeding involving one of our patents in the United States that relates to oligonucleotides. Additionally, we have filed documents in opposition to two RNAi-related European patents granted to potential competitors. Also, we
have filed opposition documents against an RNA interference-related Australian patent granted to a competitor.



Additionally, we cannot be certain that the patents and patent applications that we own or have licensed represent named inventors or assignees who were
the first to invent or the first to file patent applications, or that those persons are proper assignees for these inventions.



The manufacture, use or sale of our products may infringe on the patent rights of others. We may not have identified all United States and foreign patents and patent
applications that pose a risk of infringement. We may be forced to in-license or litigate if an intellectual property dispute arises.



If we infringe or are alleged to have infringed another partys patent rights, we may be required to seek a license, defend an infringement action or
challenge the validity of the patents in court. Patent litigation is costly and time consuming and unpredictable. We may not have sufficient resources to bring these actions to a successful conclusion. In addition, if we do not obtain a license, do
not successfully defend an infringement action, or are unable to have infringed patents declared invalid, we may:



| |  |  | incur substantial monetary damages;
| | - |  | -----------------------------------



| |  |  | encounter significant delays in marketing our products;
| | - |  | -------------------------------------------------------



| |  |  | be unable to conduct or participate in the manufacture, use or sale of products or methods of treatment requiring licenses;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | lose patent protection for our inventions and products; or
| | - |  | ----------------------------------------------------------



| |  |  | find our patents are unenforceable, invalid, or have a reduced scope of protection.
| | - |  | -----------------------------------------------------------------------------------



In addition, we regularly enter into agreements to license technologies and patent rights. Should we fail to comply with the
terms of those license agreements, including payment of any required maintenance fees or royalties, or should the licensors fail to maintain their licensed interest in the licensed patents, we could lose the rights to those technologies and patents.



We are aware of a number of issued patents and patent
applications that are owned by third parties and that purport to cover chemically modified oligonucleotides as well as their manufacture and use. We have investigated the breadth and validity of these patents to determine their impact upon the
companys programs in the field of RNAi. Based on our review of these patents and, in some instances, the advice of outside patent counsel, we believe that our technology does not infringe any valid claims of such patents and that these patents
are not likely to impede the advancement of the companys programs. There can be no assurance, however, that third parties will not assert infringement claims against the companys programs



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with respect to these patents or otherwise, or that any such assertions will not result in costly litigation or require the company to obtain a license to
intellectual property rights of such parties. There can be no assurance that any such licenses would be available on terms acceptable to us, if at all. Parties making such claims may be able to obtain injunctive relief that could effectively block
the companys ability to further develop or commercialize our products in the United States and abroad and could result in the award of substantial damages. Defense of any lawsuit or failure to obtain any such license could substantially harm
the company. Litigation, regardless of outcome, could result in substantial cost to and a diversion of efforts by the company.



To develop, market or sell RNAi-based drugs, we may need to find partners for collaboration.



Engaging corporate partners and other third parties to help develop, manufacture and market our RNAi-based products may be a
requirement of a successful business strategy. Our partnership with Lilly is focused on developing novel RNAi therapeutics in oncology. During the eighteen-month collaboration that began in January 2004, the companies will jointly investigate
Sirnas proprietary modified small interfering RNAs against Lillys specific oncology targets. There can be no assurances that Lilly will extend the collaboration beyond the eighteen-month period when it concludes in July 2005 or that we
will be able to engage other partners.



Generally, if a partner
were to terminate its funding of the development of a particular product candidate from our collaboration, we may not have the right or resources to continue development of that product candidate on our own. Similarly, if we are unable to attract
partners for particular product candidates, then we may be unable to develop those candidates.



In addition, there are many aspects of our collaborations that have been and will continue to be outside of our control, including:



| |  |  | our ability to find and enter into agreements with appropriate collaborators for our RNAi-based product candidates;
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | the pace of development of our product candidates, including the achievement of performance milestones;
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | development by our collaborators of competing technologies or products;
| | - |  | -----------------------------------------------------------------------



| |  |  | exercise by our collaborators of marketing or manufacturing rights; and
| | - |  | -----------------------------------------------------------------------



| |  |  | the loss of our rights to products or the profits from our products if we are unable to fund our share of development costs.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



We currently lack sales and marketing experience and may need to rely upon
third parties to market our products which will result in a loss of control over the marketing process. These third parties, if engaged, may have significant control over important aspects of the commercialization of our products, including market
identification, marketing methods, pricing, sales force recruitment and management and promotional activities. We may be unable to control the actions of these third parties. We may be unable to make or maintain arrangements with third parties to
perform these activities on favorable terms.



Disclosure of our trade
secrets could reduce our competitiveness.



Because trade
secrets and other unpatented proprietary information are critical to our business, we attempt to protect our trade secrets by entering into confidentiality agreements with third parties, employees and consultants. However, these agreements can be
breached and, if they are, there may not be an adequate remedy available to us. In addition, third parties may independently discover trade secrets and proprietary information. Costly and time-consuming litigation could be necessary to enforce and
determine the scope of our proprietary rights.



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Our success depends on attracting and retaining qualified personnel.



We are highly dependant on qualified personnel in highly specialized
technological fields. We also depend on academic collaborators for each of our research and development programs. The loss of any of our key employees or academic collaborators could delay our discovery research program and the development and
commercialization of our product candidates or result in termination of them in their entirety. Our future success also will depend in large part on our continued ability to attract and retain other highly qualified scientific, technical and
management personnel, as well as personnel with expertise in clinical testing, governmental regulation and commercialization. We face competition for personnel from other companies, universities, public and private research institutions, government
entities and other organizations. We also rely on consultants, collaborators and advisors to assist us in formulating and conducting our research. All of our consultants, collaborators and advisors are employed by other employers or are
self-employed and may have commitments to or consulting contracts with other entities that may limit their ability to contribute to our company.



Our products require materials that may not be readily available or cost effective, which may reduce our competitiveness or reduce our profitability.



The products we are developing are new chemical entities that are not yet
available in commercial quantities. Raw materials necessary for the manufacture of our products may not be available in sufficient quantities or at a reasonable cost in the future. Therefore, our products may not be available at a reasonable cost in
the future.



Our competitors may develop and market drugs that are more
effective, safer, easier to use, or less expensive than our product candidates.



The pharmaceutical market is highly competitive. Many pharmaceutical and biotechnology companies have developed or are developing products that will compete with products we are developing. Several significant
competitors are working on, or already marketing drugs, for the same indications as Sirna-027, diabetes, chronic hepatitis, Huntingtons disease, oncology and asthma. It is possible that our competitors will develop and market products that are
more effective, safer, easier to use, or less expensive, than our future products, or will render our products obsolete. It is also possible that our competitors will commercialize competing products before any of our product candidates are approved
and marketed. We expect that competition from pharmaceutical and biotechnology companies, universities and public and private research institutions will increase. Many of these competitors have substantially greater financial, technical, research
and other resources than we do. We may not have the financial resources, technical and research expertise or marketing, distribution or support capabilities to compete successfully.



Our success may depend on third party reimbursement of patients costs for our products that could result in price pressure or
reduced demand for our products.



Our ability to market
products successfully will depend in part on the extent to which various third parties are willing to reimburse patients for the costs of our products and related treatments. These third parties include government authorities, private health
insurers and other organizations, such as health maintenance organizations. Third party payors are increasingly challenging the prices charged for medical products and services. Accordingly, if less costly drugs are available, third party payors may
not authorize or may limit reimbursement for our products, even if our products are safer or more effective than the alternatives. In addition, the trend toward managed healthcare and government insurance programs could result in lower prices and
reduced demand for our products. Cost containment measures instituted by healthcare providers and any general healthcare reform could affect our ability to sell our products and may have a material adverse effect on us. We cannot predict the effect
of future legislation or regulation concerning the healthcare industry and third party coverage and reimbursement on our business.



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Our common stock has limited trading volume and a history of volatility, which could impair your investment.



You may be unable to sell securities you purchase from us
at the time or price desired. The market price of our common stock has fluctuated dramatically in recent years. The trading price of our common stock may continue to fluctuate substantially due to:



| |  |  | our ability to raise additional funds
| | - |  | -------------------------------------



| |  |  | clinical trials of products;
| | - |  | ----------------------------



| |  |  | timing or denial by the FDA of clinical trial protocols or marketing applications;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | changes in the status of our corporate collaborative agreements;
| | - |  | ----------------------------------------------------------------



| |  |  | research activities, technological innovations or new products by us or our competitors;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | developments or disputes concerning patents or proprietary rights;
| | - |  | ------------------------------------------------------------------



| |  |  | quarterly variations in our operating results;
| | - |  | ----------------------------------------------



| |  |  | changes in earnings estimates by market research analysts;
| | - |  | ----------------------------------------------------------



| |  |  | concentrated ownership interest of our Investors;
| | - |  | -------------------------------------------------



| |  |  | purchases or sales of our stock by our executive officers, directors or substantial holders of our common stock;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | securities class actions or other litigation; and
| | - |  | -------------------------------------------------



| |  |  | changes in government regulations.
| | - |  | ----------------------------------



These fluctuations are not necessarily related to our operating performance. Additionally, future sales of our equity securities may dilute our
shareholders or cause our stock price to fluctuate. As a result, the value of your shares could vary significantly from time to time. The historical trading volume of our common stock has been limited.



A small number of investors can control the company.



As of March 31, 2005 the Investors in our April 2003 private placement
collectively own approximately 68.4% (after giving effect to the exercise of their warrants issued in connection with the private placement and the warrant restructuring, but prior to giving effect to exercise of any stock options) of our
outstanding common stock. Three of six members of our Board of Directors are affiliated with our three largest Investors and comprise majorities of the audit committee, nominations and corporate governance committee, and compensation committee. If
they were to act in concert, they could control the votes of the Board of Directors and each of these committees, although they have not indicated any present intent to do so. Also, in connection with the private placement transaction, our
stockholders agreed to amend our certificate of incorporation to permit stockholder action to be taken by written consent in addition to by means of an actual meeting. As a result, our Investors (if they acted together) are now able to take any
action without the need for a stockholders meeting. For example, if our Investors were to act in concert, they could decide to take us private, to sell some or all of our assets, or to effect a merger without holding a stockholders
meeting. If the Investors were to act in concert, they would have sufficient voting power to affect these types of transactions, although they have not indicated any present intent to do so.



Both our charter documents and Delaware law have anti-takeover provisions that may
discourage transactions involving actual or potential changes of control at premium prices.



Our corporate documents and provisions of Delaware law applicable to us include provisions that discourage change of control transactions. For example,
our charter documents authorize our board of directors to issue up to 5,000,000 shares of preferred stock without stockholder approval and to set the rights, preferences and other designations of preferred stock, including the voting rights, at its
discretion.



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In addition, we are subject to provisions of Delaware General Corporation Law that may make some business
combinations more difficult. As a result, transactions that otherwise could involve a premium over prevailing market prices to holders of our common stock may be discouraged or may be more difficult for us to effect as compared to companies
organized in other jurisdictions.



We have moved our headquarters from
Colorado to California, and this move could reduce employee retention and efficiency and could add to our expenses.



In April 2005, we moved our headquarters from Boulder, Colorado to San Francisco, CA. For a period of at least two years and for potentially up to several
years, management will be based in San Francisco while research, development, and our other operations continue to be based in Boulder. This could impair managements ability to supervise employees and operations and could reduce employee
retention, morale, or efficiency or impair our focus. While we believe that our moving to the Bay area will facilitate recruiting top talent to Sirna, some of our employees who may be required to relocate, may be unwilling or unable to relocate and
we could lose talented personnel that are hard to replace. The cost of living in the San Francisco Bay area is substantially higher than in Boulder, Colorado, which could make retention of existing employees and recruiting of new employees more
difficult.



We anticipate that the move will result initially
in cost savings to Sirna because of lease restructuring and tax incentives. However, it is possible that costs of additional facilities in California will be significantly higher than we estimate. The move could potentially add significantly to our
real estate, payroll and other expenses.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------



We are exposed to changes in interest rates primarily from our investments in certain short-term investments. We invest our excess cash in highly liquid
short-term investments that are typically held for the duration of the term of the respective instrument. We do not utilize derivative financial instruments, derivative commodity instruments or other market risk sensitive instruments to manage
exposure to interest rate changes. Accordingly, we believe that, while the securities we hold are subject to changes in the financial standing of the issuer of such securities, we are not subject to any material risks arising from changes in
interest rates, foreign currency exchange rates, commodity prices, equity prices or other market changes that affect market risk sensitive instruments.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------



As of the end of the period covered by this report, we have carried out an evaluation, under the supervision and with the participation of our principal
executive officer and our principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon the evaluation, our principal executive officer and principal financial officer concluded
as of the end of the period covered by this report that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded,
processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) is accumulated and communicated to our management, including our principal executive officer and principal financial
officer, as appropriate to allow timely decisions regarding required disclosure.



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PART II  OTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------



Not Applicable.



|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------



Not Applicable.



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------



Not applicable.



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------



Not applicable.



|ITEM 5. | OTHER INFORMATION
|------- | -----------------



Not applicable.



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|ITEM 6. | EXHIBITS
|------- | --------



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



|     |  |                                                                                                                                                                                                                                                                        
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1  |  | Amended and Restated Certificate of Incorporation of the Company (1)                                                                                                                                                                                                   
|     | 
|3.2  |  | Amended and Restated By-Laws of the Company, including amendment executed on May 6, 2004 (2)                                                                                                                                                                           
|     | 
|4.1  |  | Specimen Stock Certificate (3)                                                                                                                                                                                                                                         
|     | 
|4.2  |  | Rights Agreement, dated November 22, 2000 between Ribozyme Pharmaceuticals, Inc. and American Stock Transfer & Trust Company, which includes the form of Certificate of Designation of
Series AA Junior Participating Preferred Stock attached as Exhibit A thereto (4)
|     | 
|4.3  |  | Amendment dated February 11, 2003 to Rights Agreement dated November 22, 2000 between Ribozyme Pharmaceuticals, Inc. and American Stock Transfer & Trust Company (5)                                                                                                   
|     | 
|4.4  |  | Common Stock and Warrant Purchase Agreement dated as of February 11, 2003 by and among Ribozyme Pharmaceuticals, Inc. and the Investors named therein (5)                                                                                                              
|     | 
|4.5  |  | Form of First Replacement Warrants (6)                                                                                                                                                                                                                                 
|     | 
|4.6  |  | Form of Five Year Replacement Warrant (6)                                                                                                                                                                                                                              
|     | 
|31.1 |  | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (7)                                                                                                                                                             
|     | 
|31.2 |  | Certification of Acting Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (7)                                                                                                                                                      
|     | 
|32.1 |  | Certification of Principal Executive Officer and Acting Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (7)                                                                                                                      

---

|(1) | Incorporated by reference to certain exhibits to the Companys Registration Statement on Form S-1 filed with the Securities and Exchange Commission on July 22, 2003 (File No.
333-107216).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Incorporated by reference herein to certain exhibits to the Companys Annual Report on Form 10-K for the year ended December 31, 2004 filed with the Securities and Exchange
Commission on March 31, 2005.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Incorporated by reference to certain exhibits to Ribozyme Pharmaceuticals Form SB-2 Registration Statement filed with the Securities and Exchange Commission on September 5,
1997 (File No. 333-1908-D).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | Incorporated by reference to certain exhibits to Ribozyme Pharmaceuticals Form 8-K filed with the Securities and Exchange Commission on December 5, 2000.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | Incorporated by reference to certain exhibits to Ribozyme Pharmaceuticals Form 8-K filed with the Securities and Exchange Commission on February 14, 2003.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



|(6) | Incorporated by reference herein to certain exhibits to the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on January 6, 2005
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(7) | Filed herewith.
|--- | ---------------



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SIGNATURES



Pursuant to the
requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|       |  |              |  |                          |  |     |  |                                                    
|------ |  | ------------ |  | ------------------------ |  | --- |  | ---------------------------------------------------
|       |  |              |  | SIRNA THERAPEUTICS, INC.
|       |  |              |  |                         
|Dated: |  | May 16, 2005 |  |                          |  | By: |  | /s/ Howard W. Robin                                
|       |  |              |  |                          |  |     |  | Howard W. Robin                                    
|       |  |              |  |                          |  |     |  | Chief Executive Officer and President              
|       |  |              |  |                          |  |     |  | (Principal Executive Officer)                      
|       |  |              |  |                         
|Dated: |  | May 16, 2005 |  |                          |  | By: |  | /s/ Patti Ketchner                                 
|       |  |              |  |                          |  |     |  | Vice President and Corporate Controller            
|       |  |              |  |                          |  |     |  | (Acting Principal Financial and Accounting Officer)



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Exhibit Index



|            |  |                                                                                                                                                                                                                                                                        
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit Description                                                                                                                                                                                                                                                    
|            | 
|3.1         |  | Amended and Restated Certificate of Incorporation of the Company (1)                                                                                                                                                                                                   
|            | 
|3.2         |  | Amended and Restated By-Laws of the Company, including amendment executed on May 6, 2004 (2)                                                                                                                                                                           
|            | 
|4.1         |  | Specimen Stock Certificate (3)                                                                                                                                                                                                                                         
|            | 
|4.2         |  | Rights Agreement, dated November 22, 2000 between Ribozyme Pharmaceuticals, Inc. and American Stock Transfer & Trust Company, which includes the form of Certificate of Designation of
Series AA Junior Participating Preferred Stock attached as Exhibit A thereto (4)
|            | 
|4.3         |  | Amendment dated February 11, 2003 to Rights Agreement dated November 22, 2000 between Ribozyme Pharmaceuticals, Inc. and American Stock Transfer & Trust Company (5)                                                                                                   
|            | 
|4.4         |  | Common Stock and Warrant Purchase Agreement dated as of February 11, 2003 by and among Ribozyme Pharmaceuticals, Inc. and the Investors named therein (5)                                                                                                              
|            | 
|4.5         |  | Form of First Replacement Warrants (6)                                                                                                                                                                                                                                 
|            | 
|4.6         |  | Form of Five Year Replacement Warrant (6)                                                                                                                                                                                                                              
|            | 
|31.1        |  | Certification of Acting Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (7)                                                                                                                                                      
|            | 
|31.2        |  | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (7)                                                                                                                                                             
|            | 
|32.1        |  | Certification of Principal Executive Officer and Acting Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (7)                                                                                                                      

---

|(1) | Incorporated by reference to certain exhibits to the Companys Registration Statement on Form S-1 filed with the Securities and Exchange Commission on July 22, 2003 (File No.
333-107216).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Incorporated by reference herein to certain exhibits to the Companys Annual Report on Form 10-K for the year ended December 31, 2004 filed with the Securities and Exchange
Commission on March 31, 2005.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Incorporated by reference to certain exhibits to Ribozyme Pharmaceuticals Form SB-2 Registration Statement filed with the Securities and Exchange Commission on September 5,
1997 (File No. 333-1908-D).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | Incorporated by reference to certain exhibits to Ribozyme Pharmaceuticals Form 8-K filed with the Securities and Exchange Commission on December 5, 2000.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | Incorporated by reference to certain exhibits to Ribozyme Pharmaceuticals Form 8-K filed with the Securities and Exchange Commission on February 14, 2003.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



|(6) | Incorporated by reference herein to certain exhibits to the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on January 6, 2005
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(7) | Filed herewith.
|--- | ---------------



28