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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K/A

(Amendment No. 1)



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



For the fiscal year ended December 31, 2004



Commission file number 0-27914



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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.)



185 Berry Street,
Suite 6504, San Francisco, CA 94107

(Address of principal executive offices)



(415) 512-7624

(Registrants telephone number, including area code)



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SECURITIES REGISTERED UNDER SECTION 12(b) OF THE
EXCHANGE ACT:

NONE



SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:

COMMON STOCK, PAR VALUE $0.01 PER SHARE



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



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



Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy of information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
10-K.  x



The aggregate market
value of the voting stock held by non-affiliates of the registrant, as of March 29, 2005, was approximately $53,010,306.



As of March 29, 2005, the registrant had 41,527,292 shares of common stock, par value $.01 per share, outstanding.



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##### Table of Contents

TABLE OF CONTENTS



|         |  |                                                                                                |  |     
|-------- |  | ---------------------------------------------------------------------------------------------- |  | ----
|         |  |                                                                                                |  | Page
|         |  | PART III                                                                                       |  |     
|         |  |                                                                                               
|Item 10. |  | Directors and Executive Officers of Registrant                                                 |  | 3   
|         |  |                                                                                               
|Item 11. |  | Executive Compensation                                                                         |  | 5   
|         |  |                                                                                               
|Item 12  |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |  | 13  
|         |  |                                                                                               
|Item 13. |  | Certain Relationships and Related Transactions                                                 |  | 15  
|         |  |                                                                                               
|Item 14. |  | Principal Accounting Fees and Services                                                         |  | 16  
|         |  |                                                                                               
|         |  | PART IV                                                                                        |  |     
|         |  |                                                                                               
|Item 15. |  | Exhibits and Financial Statement Schedules                                                     |  | 18  



EXPLANATORY NOTE



This Amendment No. 1 on Form 10-K/A (this Amendment) amends
the Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 2004, originally filed on March 31, 2005 (the Original Filing). The Registrant is refiling Part III to include the information required by items 10,
11, 12, 13 and 14 to Part III within the period required by General Instruction G(3) to Form 10-K. In addition, in connection with the filing of this Amendment and pursuant to the rules of the Securities and Exchange Commission, the Registrant is
including with this Amendment certain currently dated certifications. The Registrant will also include the information contained herein in its proxy statement for its 2004 Annual Meeting of Stockholders.



Except as described above, no other changes have been made to the Original Filing.



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PART III



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT



Certain information regarding our directors is set forth below.



|                                  |  |     |  |                                                
|--------------------------------- |  | --- |  | -----------------------------------------------
|Name                              |  | Age |  | Position                                       
|Howard W. Robin                   |  | 52  |  | Chief Executive Officer, President and Director
|Jeremy L. Curnock Cook (1)(2)     |  | 55  |  | Director                                       
|Douglas Fambrough, Ph.D. (2)      |  | 36  |  | Director                                       
|James Niedel, M.D., Ph.D. (2) (3) |  | 61  |  | Chairperson of the Board                       
|Bryan Roberts, Ph.D. (1)(3)       |  | 38  |  | Director                                       
|R. Scott Greer (1)(3)             |  | 46  |  | Director                                       

---

|(1) | Member of the Audit Committee.
|--- | ------------------------------

|(2) | Member of the Nominating and Corporate Governance Committee.
|--- | ------------------------------------------------------------

|(3) | Member of the Compensation Committee.
|--- | -------------------------------------



James Niedel, M.D., Ph.D., has served as Chairperson of the Board since April 2003. He joined the Sprout Group as a Venture Partner on May 1, 2002. Prior to that
appointment, Dr. Niedel was Chief Science and Technology Officer for GlaxoSmithKline, a pharmaceutical company, and from 1995 to 2001 he was a member of the board of directors of Glaxo Wellcome plc with responsibility for Global Research and
Development, Information Technology and Product Strategy. From 1988 to 1995 he was VP Research and SVP R&D for the US subsidiary of Glaxo. Before joining the pharmaceutical industry, Dr. Niedel was Professor of Medicine and Chief of the division
of Clinical Pharmacology at Duke Medical School, where he had completed an Internal Medicine residency and a Hematology-Oncology fellowship. He received M.D. and Ph.D. (Biochemistry) degrees from the University of Miami, was selected a Searle
Scholar, and is a Fellow of the Royal College of Physicians (London).



R.
Scott Greerhas served as a director since July 2003. Mr. Greer is currently Managing Director of Numenor Ventures, LLC. Mr. Greer has served as Chairperson of the Board of Abgenix, Inc., a biopharmaceutical company, since May 2000. Mr. Greer
served as Chief Executive Officer of Abgenix from June 1996 to April 2002. Currently, he is also Chairman of Acologix, Inc., a privately-held biotechnology company. From 1991 to 1996, Mr. Greer held several senior positions with a gene therapy
company, Cell Genesys, Inc. including Senior Vice President of Corporate Development and Chief Financial Officer. From 1986 to 1991, Mr. Greer held various positions, including Director of Corporate Development, with Genetics Institute, Inc., a
biotechnology firm. Mr. Greer received a B.A. in Economics from Whitman College, an M.B.A. from Harvard University and was a Certified Public Accountant.



Douglas Fambrough, Ph.D.,has served as a director since April 2003 and is a Principal with Oxford Bioscience Partners, specializing in investments in
technology-based drug discovery companies. In addition to representing Oxford on the Companys board, Dr. Fambrough also represents Oxford as an observer to the boards of RibX Pharmaceuticals Inc., Avalon Pharmaceuticals Inc., and Xantos
Biomedicine AG. Prior to joining Oxford in 1999, Dr. Fambrough spent ten years in academic research, most recently at the Whitehead/MIT Center for Genome Research. He graduated from Cornell University and obtained his Ph.D. in genetics from the
University of California, Berkeley.



Bryan Roberts, Ph.D.,has served as
director since April 2003. He joined Venrock in 1997 and is now a General Partner involved with the firms activities in healthcare, and is based in Menlo Park, California. Dr. Roberts currently serves on the boards of several private companies
including athenahealth, Inc., Biomedicines, Inc., Intarcia Therapeutics, Inc., Microbia, Inc., Nanosys, Inc., Satiety, Inc. and Xenoport, Inc. Prior to joining Venrock, Dr. Roberts worked at Kidder Peabody & Co., Inc. in corporate finance. Dr.
Roberts received his Ph.D. in Chemistry and Chemical Biology at Harvard University and graduated from Dartmouth College, where he obtained a B.A. in Chemistry.



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Howard W. Robinhas served as Chief Executive Officer, President and a director since July 2001. From January 2001
to June 2001, Mr. Robin was Chief Operating Officer, President and a director. From 1991 to 2001 Mr. Robin was Corporate Vice President and General Manager of Therapeutics at Berlex Laboratories, Inc., a subsidiary of Schering, AG, and from 1987 to
1991 he served as its Vice President of Finance and Business Development and Chief Financial Officer. From 1984 to 1987 Mr. Robin was Director of Business Planning & Development at Berlex. He was a Senior Associate with Arthur Andersen & Co.
prior to joining Berlex. He received his B.S. in Accounting & Finance from Fairleigh Dickinson University in 1974.



Jeremy L. Curnock Cookhas served as a director since July 1995. Mr. Cook is Executive Chairperson of Bioscience Managers Ltd., a corporate advisory company, and
Non-Executive Chairperson of Targeted Genetics Corporation. He is also Chairperson of atugen AG and a member of the boards of Inflazyme Pharmaceuticals, Ltd. and Biocompatibles International plc. He was a director of Rothschild Asset Management, an
investment management company, where he was responsible for the Rothschild Bioscience Unit from 1987 until his retirement in 2000. Mr. Cook founded the International Biochemicals Group in 1975, which he subsequently sold to Royal Dutch Shell in
1985, remaining as Managing Director until 1987. Mr. Cook received an M.A. in Natural Sciences from Trinity College Dublin.



There is no family relationship between any of our directors or executive officers.



Information concerning our executive officers and key employees is incorporated by reference from Part I of our Annual Report on Form 10-K
for the fiscal year ended December 31, 2004 filed with the SEC on March 31, 2005.



AUDIT COMMITTEE



The Company has a
separately-designated standing Audit Committee, which consists of Mr. Greer (Chairperson), Mr. Cook and Dr. Roberts. The Board has determined that all members of the Audit Committee are independent as that term is defined in the listing
standards of the Nasdaq National Market and also meet the additional criteria for independence of Audit Committee members set forth by the Securities and Exchange Commission. In addition, the Board of Directors has determined that Mr. Greer is an
audit committee financial expert as defined by the Securities and Exchange Commission. Since the date of the Companys Proxy Statement in connection with the Companys Annual Meeting of Stockholders, there have been no changes
to the procedures by which security holders may recommend nominees to the Companys Board of Directors.



SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE



Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity
securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission, the NASD, and the Company.



Based solely on our review of Section 16(a) forms received by us and written representations that no other reports were required, we believe that, during the last fiscal
year, all Section 16(a) filing requirements applicable to our executive officers, directors and 10% beneficial owners were complied with.



CODE OF ETHICS



The Company has adopted a Code of Business Conduct and Ethics (the Code) that applies to all employees, officers and Board members. A copy of the Code is
available on our website at www.sirna.com and may be obtained upon request, without charge, by writing to us at Sirna Therapeutics, Inc., 185 Berry Street, Suite 6504, San Francisco, CA 94107. Amendments to the Code and any waivers from provisions
of the Code requiring disclosure under applicable Securities and Exchange Commission and Nasdaq National Market rules will be disclosed on our website at www.sirna.com.



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ITEM 11. EXECUTIVE COMPENSATION



Summary
Compensation Table



The following table summarizes the compensation paid
to or earned by the Companys Chief Executive Officer and the four other most highly compensated executive officers whose annual compensation exceeded $100,000 in 2004 (the Named Executive Officers).



Summary Compensation Table



|                                                                                            |  |                     |  |           |                        |          |   |                      |  |   |                                    |           |                        |                       |  |   |                
|------------------------------------------------------------------------------------------- |  | ------------------- |  | --------- | ---------------------- | -------- | - | -------------------- |  | - | ---------------------------------- | --------- | ---------------------- | --------------------- |  | - | ---------------
|                                                                                            |  | Annual Compensation |  |           | Long-term Compensation
|Name and Principal Position                                                                 |  | Year                |  | Salary($) |                        | Bonus($) |   | OtherAnnualComp. ($) |  |   | SharesUnderlyingOptionsGranted(#)* |           | All OtherComp. ($) (1)
|Howard W. RobinChief Executive Officer andPresident                                         |  | 200420032002        |  | $         | 358,110351,051344,500  |          | $ | 82,365103,500155,025 |  | $ | 135,776135,776181,203              | (2)(2)(2) |                        | 40,0001,434,16662,834 |  | $ |             
|                                                                                            |  |                     |  |           |                        |         
|Nassim UsmanChief Operating Officer andSenior Vice President (3)                            |  | 200420032002        |  | $         | 263,652257,842254,000  |          | $ | 50,80076,200        |  | $ | 23,36633,10123,367                 | (4)(4)(4) |                        | 20,000470,83326,984   |  | $ | 6,5015,9975,500
|                                                                                            |  |                     |  |           |                        |         
|Roberto Guerciolini, M.D.Chief Medical Officer andSenior Vice President (5)                 |  | 200420032002        |  | $         | 217,115              |          | $ | 60,000             |  | $ | 345,632                          | (6)       |                        | 300,000             |  | $ | 4,925        
|                                                                                            |  |                     |  |           |                        |         
|Barry A. PoliskyChief Scientific Officer and Senior VicePresident (7)                       |  | 200420032002        |  | $         | 231,058222,600114,833  |          | $ | 53,14455,65053,000   |  | $ | 49,24549,24547,781                 | (8)(8)(8) |                        | 20,000291,66622,833   |  | $ | 8,0006,9996,502
|                                                                                            |  |                     |  |           |                        |         
|Bharat M. ChowriraChief Patent Counsel,Vice President Legal Affairs,and Corporate Secretary |  | 200420032002        |  | $         | 220,500210,000191,938  |          | $ | 41,89552,50050,000   |  | $ | 35,82934,82933,854                 | (9)(9)(9) |                        | 20,000250,00013,683   |  | $ | 6,5015,9975,500

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|* | All option grant amounts reflect a reverse split ratio of one-for-six, effected April 16, 2003.
|- | -----------------------------------------------------------------------------------------------

|(1) | The All Other Compensation column shows the dollar value of matching contributions in common stock made by the Company under the 401(k) Savings Plan.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes for 2004 and 2003: (a) $80,000 for partial forgiveness of a loan, and (b) $55,776 for taxes related to the forgiveness of the loan. Includes for 2002: (a) reimbursement of
relocation expenses of $17,220; (b) $14,876 for taxes related to relocation; (c) $80,000 for partial forgiveness of a loan; and (d) $69,107 for taxes related to the forgiveness of the loan.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Dr. Usman left the Company effective March 16, 2005.
|--- | ----------------------------------------------------

|(4) | Includes (a) $12,000 in each of 2004, 2003 and 2002 for partial forgiveness of a loan; (b) $18,101 in 2003 and $8,367 in 2004 and 2002 for taxes related to partial forgiveness of
the loan; and (c) approximately $3,000 in each of 2004, 2003 and 2002 for dependent daycare expenses.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Dr. Guerciolini joined the Company on April 12, 2004.
|--- | -----------------------------------------------------

|(6) | Includes for 2004: (a) reimbursement of $202,395 of relocation expenses; (b) $141,112 for taxes related to relocation; and (c) $2,125 for dependent day care expenses.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Dr. Polisky joined the Company on June 17, 2002. He was promoted to Chief Scientific Officer and Senior Vice President of Research on March 17, 2005.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | Includes: (a) $30,000 for forgiveness of a loan; and (b) $12,829 for taxes related to the forgiveness of the loan in each of 2004 and 2003. Includes for 2002: (a) imputed interest
of $28,152 on a five year $150,000 forgivable loan; and (b) $19,629 for taxes related to the imputed interest on the loan.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(9) | Includes for 2004: (a) $20,000 for partial forgiveness of a loan; (b) $12,829 for taxes related to the forgiveness of the loan; and (c) $3,000 for dependent day care expenses.
Includes for 2003: (a) $22,000 for partial forgiveness of a loan, and (b) $12,829 for taxes related to the forgiveness of the loan. Includes for 2002: (a) imputed interest of $18,768 on a five year $75,000 forgivable loan; (b) $13,086 for taxes
related to the imputed interest on the loan; and (c) $2,000 for forgiveness of a loan.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The foregoing compensation table does not include certain fringe benefits made available on a non-discriminatory basis to all of the Companys employees such as group health insurance, dental insurance, long-term
disability insurance, vacation and sick leave. In addition, the Company may make available certain non-monetary benefits to its executive officers with a view to acquiring and retaining qualified personnel and facilitating job performance. The
Company considers such benefits to be ordinary and incidental business costs and expenses. The Company also did not include in the table the aggregate value of such benefits in the case of the executive officers, which cannot be precisely
ascertained but which is the lesser of either $50,000 or 10% of the total annual salary and bonus paid to each such executive officer.



Option Grants Table



The following table contains information about stock options granted to each of the Named Executive Officers during 2004 under the Companys stock option plan. The exercise price of each option was equal to the
fair market value of the common stock on the date of the option grant as determined by the Board of Directors. The options are granted for a term of ten years, subject to earlier termination if employment is terminated. In 2004, the Company granted
options representing an aggregate of 1,025,750 shares of the Companys common stock to employees and directors, including the Named Executive Officers.



Option Grants in Last Fiscal Year



|                    |  |                                             |  |                                             |   |                                                                                          |                         |      |  |            |  |        |         |  |   |          
|------------------- |  | ------------------------------------------- |  | ------------------------------------------- | - | ---------------------------------------------------------------------------------------- | ----------------------- | ---- |  | ---------- |  | ------ | ------- |  | - | ---------
|                    |  | Individual Grants                           |  | ExpirationDate                              |   | Potential Realizable Value at Annual Rate of Stock Price Appreciation for Option
Term(1)
|                    |  | Number ofSharesUnderlyingOptionsGranted (#) |  | % of TotalOptionsGrantedto Employeesin 2004 |   |                                                                                          | ExercisePrice ($/Share) |      |  | 5%($)      |  | 10%($)
|Howard W. Robin     |  | 40,000                                      |  | 3.9                                         | % |                                                                                          | $                       | 5.15 |  | 01-22-2014 |  | $      | 129,552 |  | $ | 328,311  
|Nassim Usman (2)    |  | 20,000                                      |  | 1.9                                         | % |                                                                                          | $                       | 5.15 |  | 01-22-2014 |  | $      | 64,776  |  | $ | 164,155  
|Roberto Guerciolini |  | 300,000                                     |  | 29.2                                        | % |                                                                                          | $                       | 4.20 |  | 04-12-2014 |  | $      | 792,407 |  | $ | 2,008,116
|Barry A. Polisky    |  | 20,000                                      |  | 1.9                                         | % |                                                                                          | $                       | 5.15 |  | 01-22-2014 |  | $      | 64,776  |  | $ | 164,155  
|Bharat M. Chowrira  |  | 20,000                                      |  | 1.9                                         | % |                                                                                          | $                       | 5.15 |  | 01-22-2014 |  | $      | 64,776  |  | $ | 164,155  

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|(1) | Amounts reported in these columns show hypothetical gains that may be realized upon exercise of the options, assuming the market price of common stock appreciates at the specified
annual rates of appreciation, compounded annually over the term of the options. These numbers are calculated based upon rules promulgated by the SEC. Actual gains, if any, depend on the future performance of common stock and overall market
conditions.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Dr. Usman left the Company effective March 16, 2005. Pursuant to his severance agreement, his option vesting period is extended for the duration of his severance period, which is
defined as the earlier of nine months or upon his attainment of employment.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Aggregated Option Exercises and Fiscal Year-End Option Values



The following table contains information about the stock options exercised in 2004 and the
number and value of stock options held by each Named Executive Officer as of December 31, 2004. A stock option is in-the-money if the closing market price of common stock exceeds the exercise price of the stock option. The value of
in-the-money unexercised stock options set forth in the table represents the difference between the exercise price of these options and the closing sales price of the common stock on December 31, 2004, as reported by the Nasdaq National
Market ($3.17 per share).



Aggregated Option Exercises in
Last Fiscal Year and

Fiscal Year-End Option Values



|                    |  |                                |  |                      |  |                                                                                                    |  |                                                                                             |                    
|------------------- |  | ------------------------------ |  | -------------------- |  | -------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------- | -------------------
|Name                |  | Shares Acquired OnExercise (#) |  | ValueRealized ($)(1) |  | Number ofSecurities UnderlyingUnexercised Options atDecember
31, 2004(#) Exercisable/Unexercisable |  | Value of Unexercised In-the-Money Options at December 31, 2004($) Exercisable/Unexercisable
|Howard W. Robin     |  |                               |  |                     |  | 579,276 /1,021,895                                                                                 |  | $                                                                                           | 522,439 /$1,033,952
|Nassim Usman (2)    |  |                               |  |                     |  | 213,171 / 338,043                                                                                  |  | $                                                                                           | 171,752 / $339,680 
|Roberto Guerciolini |  |                               |  |                     |  | 0 / 300,000                                                                                        |  | $                                                                                           | 0 / $0             
|Barry A. Polisky    |  |                               |  |                     |  | 139,862 / 197,637                                                                                  |  | $                                                                                           | 132,219 / $184,230 
|Bharat M.Chowrira   |  |                               |  |                     |  | 125,936 / 167,680                                                                                  |  | $                                                                                           | 113,645 / $158,221 

---

|(1) | Value realized is the difference between the exercise price and the closing market price of the common stock on the day of exercise.
|--- | ------------------------------------------------------------------------------------------------------------------------------------

|(2) | Dr. Usman left the Company effective March 16, 2005.
|--- | ----------------------------------------------------



COMPENSATION OF DIRECTORS



In 2004, all non-employee directors received $5,000 for each Board meeting attended in person. In addition, Audit Committee members are paid $1,000 for participating in
separate Committee meetings to review the quarterly and annual reports. Each non-employee director also received an initial stock option grant of 75,000 shares of common stock that vests monthly over three years. Mr. Greer received an additional
grant for 50,000 shares of common stock that vested immediately and were at a 20% discount to the fair market value on the date of grant, as compensation for his duties as Audit Committee chairman. All options expire at the end of ten years.



EMPLOYMENT AGREEMENTS



Howard W. Robin,our Chief Executive Officer and President, amended his
employment agreement with the Company on February 11, 2003 which became effective upon the consummation of our private placement financing on April 21, 2003.



Pursuant to the employment agreement, as amended, he is entitled to the following:



| |  |  | an annual base salary of $358,110 subject to increase at the discretion of the Board of Directors;
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | annual bonuses of up to 30% of his then current base salary;
| | - |  | ------------------------------------------------------------



| |  |  | stock options for common stock as reflected in the tables elsewhere in this proxy statement;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | employee benefits, including term life insurance in the amount of $500,000;
| | - |  | ---------------------------------------------------------------------------



| |  |  | pursuant to his employment agreement with the Company dated January 4, 2001, as amended, the $400,000 interest-free loan he previously received from the Company will be forgiven
over a specified period of time ($320,000 of the loan has been forgiven as of April 19, 2005) and the Company also shall make a gross-up payment to Mr. Robin equal to his tax liability associated with such forgiveness;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | upon a termination without cause or his leaving for good reason, 50% of his unvested stock options shall vest, the outstanding balance of the interest-free
loan shall be forgiven and the Company shall pay him the gross-up payment; he shall receive his base salary plus a bonus for twelve (12) months after termination, subject to (a) increase if there is a change of control of the Company
within twelve (12) months of termination, or (b) decrease if he obtains other employment during the severance period; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | upon a change of control of the Company, all of his unvested stock options shall vest one (1) year after the change of control, the interest-free loan will be forgiven and the
gross-up payment will be made; and, if the change of control results in his termination, he will receive his severance payment as described above and all of his unvested stock options will vest immediately.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Nassim Usman,our former Chief Operating Officer and Senior Vice
President, amended his employment agreement with the Company on February 11, 2003 which became effective upon the consummation of our private placement financing on April 21, 2003. Pursuant to the employment agreement, as amended, he was entitled to
the following:



| |  |  | an annual base salary of $263,652 subject to increase at the discretion of the Board of Directors;
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | annual bonuses of up to 20% of his then current base salary;
| | - |  | ------------------------------------------------------------



| |  |  | stock options for common stock as reflected in the tables elsewhere in this proxy statement;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | employee benefits, including term life insurance in the amount of $500,000;
| | - |  | ---------------------------------------------------------------------------



| |  |  | the $60,000 interest-free loan he previously received from the Company was forgiven pursuant to his employment agreement with the Company dated as of May 2, 1996, as amended on May
30, 1997 and September 30, 1999, over a specified period of time and the Company also made a gross-up payment to Mr. Usman equal to his tax liability associated with such forgiveness;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | upon a termination without cause or his leaving for good reason, his unvested stock options shall continue to vest on a monthly basis during an applicable
nine (9) or twelve (12) month severance period; he shall receive his base salary plus a bonus for nine (9) months after termination, subject to (a) increase if there is a change of control of the Company within twelve (12) months of termination, or
(b) decrease if he obtains other employment during the severance period; and the Company shall continue to pay for all costs related to maintaining healthcare coverage for him and his dependents for a period no longer than eighteen (18) months; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | upon a change of control of the Company, all of his unvested stock options shall vest immediately if he terminates his employment for good reason within six (6) months
after the change of control or if, under some circumstances, the Company terminates his employment other than for cause, and, if the change of control results in his termination, he will receive his severance payment as described above
and all of his unvested stock options will vest immediately.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Dr.
Usman stepped down from his position effective as of March 16, 2005 (the Severance Date). On March 30, 2005, the Company entered into an Addendum (the Addendum) to the Employment Letter dated February 11, 2003, as Amended by
Letter dated April 14, 2003, with Dr. Usman.



The Addendum provides, in
general, for



| |  |  | payment of accrued but unpaid salary and vacation time as of the Severance Date;
| | - |  | --------------------------------------------------------------------------------



| |  |  | continued vesting of unvested stock options from the Severance Date through the earlier of December 15, 2005 or Dr. Usman obtaining other comparable employment (the Severance
Period);
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an extension of the option exercise period for up to three (3) years following the Severance Period;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | a severance payment equal to the aggregate of (i) Dr. Usmans 2004 base salary and (ii) $19,050, paid in monthly installments, subject to reduction if Dr. Usman obtains other
employment during the Severance Period;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the engagement of Dr. Usman as a consultant to the Company for up to three (3) years following the termination of the Severance Period, at an annual rate of $10,000 per year, in
addition to symposium fees and reimbursement of reasonable expenses;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | healthcare coverage for up to eighteen (18) months following the Severance Date; and
| | - |  | ------------------------------------------------------------------------------------



| |  |  | six (6) months of outplacement assistance, at a cost not to exceed $4,000.
| | - |  | --------------------------------------------------------------------------



The Addendum further provides for a waiver and release of claims against the Company by Dr. Usman and a reaffirmance of Dr. Usmans continuing obligations under
previously executed agreements, including confidentiality, assignment of inventions and non-competition, as well as an agreement to arbitrate any disputes arising under the Addendum.



Martin Schmieg, our former Chief Financial Officer and Senior Vice President, entered into a letter employment
agreement with the Company on August 19, 2004 (the Letter Agreement). The Letter Agreement sets forth the terms of Mr. Schmiegs employment with the Company, and provides for:



| |  |  | an annual salary of $250,000;
| | - |  | -----------------------------



| |  |  | participation in the company-wide bonus plan with an initial target of 25% of his annual salary;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | an option to purchase 250,000 shares of the Companys common stock, subject to a four (4) year vesting schedule;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | participation in the Companys health, insurance and employee benefit plans;
| | - |  | ----------------------------------------------------------------------------



| |  |  | acceleration of up to nine (9) months of vesting of his option pursuant to his termination without cause and the acceleration of up to 50% of his unvested option or the continued
vesting of his option for twelve (12) months in connection with his termination following a change of control of the Company; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reimbursement of certain moving expenses.
| | - |  | -----------------------------------------



Mr. Schmieg resigned his position with the Company effective April 15, 2005. He received no severance or accelerated vesting of his option.



Roberto Guerciolini, our Chief Medical Officer and Senior Vice President
entered into a letter employment agreement with the Company on March 12, 2004 (the Letter Agreement). The Letter Agreement sets forth the terms of Dr. Guerciolinis employment with the Company, which provides for:



| |  |  | an annual salary of $300,000;
| | - |  | -----------------------------



| |  |  | participation in the company-wide bonus plan with an initial target of 25% of his annual salary;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | an option to purchase 300,000 shares of the Companys common stock, subject to a four (4) year vesting schedule;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | participation in the Companys health, insurance and employee benefit plans;
| | - |  | ----------------------------------------------------------------------------



| |  |  | acceleration of up to nine (9) months of vesting of his option pursuant to his termination without cause and the acceleration of up to 50% of his unvested option or the continued
vesting of his option for twelve (12) months in connection with his termination following a change of control of the Company; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the reimbursement of certain moving expenses.
| | - |  | ---------------------------------------------



The Letter Agreement will continue to govern the terms of Dr. Guerciolinis employment with the Company while he serves as Senior Vice President and Chief Medical
Officer.



Barry M. Poliskywas promoted to the position of
Chief Scientific Officer and Senior Vice President of Research effective as of March 17, 2005. In connection with his previous position of Senior Vice President of Research, Mr. Polisky entered into a letter employment agreement in June 2002.
Pursuant to the agreement, as amended, he is entitled to the following:



| |  |  | an annual base salary of $231,059 subject to increase at the discretion of the Board of Directors;
| | - |  | --------------------------------------------------------------------------------------------------



9



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| |  |  | annual bonuses of up to 25% of his then-current base salary;
| | - |  | ------------------------------------------------------------



| |  |  | stock options for common stock as reflected in the tables elsewhere in this Proxy Statement;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | employee benefits, including term life insurance in the amount of $500,000;
| | - |  | ---------------------------------------------------------------------------



| |  |  | an interest-free loan of $150,000 made in July 2002 prior to Mr. Poliskys appointment as an executive officer of the Company, forgiven in five (5) equal annual installments (a
total of $60,000 has been forgiven as of April 19, 2005), grossed-up for taxes, as long as Dr. Polisky remains employed by the Company; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | upon termination without cause, nine (9) months severance pay at his then current salary.
| | - |  | --------------------------------------------------------------------------------------------



Mr. Polisky and the Company contemplate entering into an amended letter employment agreement
in connection with his promotion, the terms of which are currently being negotiated.



Bharat M. Chowrira,our Chief Patent Counsel, Vice President, Legal Affairs and Corporate Secretary, entered into a letter employment agreement in April 2002. Pursuant to the agreement, as amended, he is entitled to the
following:



| |  |  | an annual base salary of $220,500 subject to increase at the discretion of the Board of Directors;
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | annual bonuses of up to 25% of his then current base salary;
| | - |  | ------------------------------------------------------------



| |  |  | stock options for common stock as reflected in the tables elsewhere in this proxy statement;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | employee benefits, including term life insurance in the amount of $500,000;
| | - |  | ---------------------------------------------------------------------------



| |  |  | interest-free loans of $75,000 and $25,000 made in April 2002 and June 2002, respectively, prior to Dr. Chowriras appointment as an executive officer of the Company, forgiven
in five (5) equal annual installments (a total of $40,000 has been forgiven as of April 19, 2005), grossed-up for taxes, as long as Dr. Chowrira remains employed by the Company; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | upon termination without cause, nine (9) months severance pay at his then current salary.
| | - |  | -------------------------------------------------------------------------------------------



Marvin Tancer, our former Chief Financial Officer and Vice President of Operations, stepped down from his position effective
as of December 31, 2003 (the Severance Date). On February 11, 2004, the Company entered into an Addendum to the Employment Letter (the Addendum), with Mr. Tancer.



The Addendum provides, in general, for



| |  |  | payment on February 27, 2004 of Mr. Tancers 2003 bonus equal to $25,270;
| | - |  | -------------------------------------------------------------------------



| |  |  | continued vesting of unvested stock options from the Severance Date through the earlier of September 30, 2004 or Mr. Tancer obtaining other comparable employment (the
Severance Period);
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an extension of the option exercise period for ninety (90) days following the Severance Period;
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | a severance payment equal to the aggregate of (i) Mr. Tancers 2003 base salary of $266,000 and (ii) an annual target bonus equal to 20% of Mr. Tancers 2003 base salary,
paid in monthly installments, for the duration of the Severance Period;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | healthcare coverage for Mr. Tancers son, for the duration of the Severance Period; and
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | six (6) months of outplacement assistance, at a cost not to exceed $6,000.
| | - |  | --------------------------------------------------------------------------



The Addendum further provides for a waiver and release of claims against the Company by Mr. Tancer and a reaffirmance of Mr. Tancers continuing obligations under
previously executed agreements, including confidentiality and assignment of inventions, as well as an agreement to arbitrate any disputes arising under the Addendum.



10



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##### Table of Contents

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION



No member of the Compensation Committee was at any time during fiscal 2004 an officer or
employee of the Company. In addition, none of our executive officers serves as a member of the Board of Directors or Compensation Committee of any company that has one or more executive officers serving as a member of our Board of Directors or
Compensation Committee.



COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION



The information contained in this report shall
not be deemed to be soliciting material or filed or incorporated by reference in future filings with the Securities and Exchange Commission, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934,
except to the extent that the Company specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended, or Securities Exchange Act of 1934, as amended.



Responsibilities and Objectives.The Committee establishes and administers the general
compensation policies and plans for the Company and the specific compensation levels for the executive officers and other key employees. The Committee is responsible for conducting, at a minimum, annual reviews of executive compensation and for
taking certain actions regarding the compensation of senior executives of the Company. The Committee determines the salary levels for senior executives, and other key employees, and the types and amounts of cash and other bonuses to be distributed
to these individuals in accordance with the Bonus Plan. The Committee also determines grants of stock options pursuant to the stock option plan.



The Compensation Committee operates pursuant to a written charter adopted by the Board of Directors, which is available on the Companys website at www.sirna.com.



This report is submitted by members of the Committee summarizing their
involvement in the compensation decisions and policies adopted by the Company for the Companys executive officers.



General Policy. The Companys executive compensation practices are designed to reward and provide an incentive for executives based on the achievements of
annual and long-term corporate and individual performance goals. Compensation levels for executives are established after giving consideration to a variety of quantitative measures including, but not limited to, Company financial and operating
performance, peer group comparisons and labor market conditions. Before making decisions, the Committee elicits the recommendations and advice of the CEO regarding appropriate or desired levels of compensation for management personnel generally. The
Committee has complete access to all necessary Company personnel records, financial reports and other data, and may seek the advice of experts and analysts.



The ultimate purpose of the Companys compensation structure is to attract and retain executives of the highest caliber and to motivate these executives to put forth
maximum effort toward the achievement of Company goals identified through the strategic planning process of the Board and management. Also, the compensation design emphasizes long-term incentives in the form of stock options that will encourage
these individuals to maintain their focus on the paramount importance of long-term stockholder interests.



Under Section 162(m) of the Internal Revenue Code, the Company may not receive a federal income tax deduction for compensation paid to the Chief Executive Officer or any of the four most highly compensated
executive officers to the extent that any of the persons receive more than $1,000,000 in compensation in any one year. However, if the Company pays compensation that is performance-based under Section 162(m) it can receive a federal
income tax deduction for the compensation paid even if such compensation exceeds $1,000,000 in a single year. To maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Compensation
Committee has not adopted a policy that all compensation must be deductible on the Companys federal income tax.



Components of Compensation. In evaluating executive compensation, the Committee focuses upon several fundamental components: salary, annual bonus and long-term
incentive compensation consisting of stock options. The Committees recommendations are offered to the full Board of Directors and are ultimately ratified, changed or rejected by the full Board.



Salary levels for senior executives and other officers are reviewed by the Committee
annually. The Company has entered into employment agreements with its executive officers, as amended from time to time, which set forth the salary level for each executive. In establishing salary levels, the Committee has relied upon salary survey
data and other publicly available information. The Committee also considers the experience of each executive officer as well as his or her past performance and expected future performance.



The annual bonus component of executive compensation has historically been provided to an
executive, if and as appropriate, for obtaining pre-determined corporate and individual goals. The Committee typically determines whether annual bonuses will be awarded to executives for attainment of these goals at the end of each year. Pursuant



11



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##### Table of Contents

to the Bonus Plan, the Committee may award bonuses comprised of cash, stock options and loan forgiveness based on the
executive officers fulfillment of annual goals previously established by the Committee. At that time, the Committee also sets the performance goals for the upcoming year.



The third component of the Companys executive compensation strategy is long-term incentive compensation pursuant to which executives
receive stock options pursuant to the 2001 Stock Option Plan which are tied to the long-term appreciation of the value of the Companys common stock. The 2001 Stock Option Plan offers executives the possibility of future gains depending upon
the executives continued employment by, and contributions to, the Company. The Committee believes that a portion of the total compensation of senior executives over a period of years should consist of such long-term incentive awards.



Executive officers of the Company also are permitted to participate in the
Purchase Plan which is open to all of the Companys full-time employees. The Purchase Plan enables the Companys employees, including executive officers, to acquire Company common stock at a discount to the market price by allocating up to
15 % of their base salary (subject to certain limits) to the acquisition of such stock.



Review of Executive Compensation.The Committee, in making its recommendations and determinations at year end 2004 regarding executive compensation, was influenced by a few primary considerations, namely, that executive management
completed the principal goals to file the Sirna-027 Investigational New Drug application with the Food and Drug Administration and advanced toward the clinic other product candidates in the Companys pipeline, advanced our knowledge of RNAi
biology and expanded fundamental RNAi design technologies. However, the Committee also contemplated other factors such as the Companys market capitalization and the Companys year-end cash position.



In light of the results in 2004, and in consideration of the Companys cash burn rate,
executive management volunteered, and the Committee concurred, that no increases in executive compensation were practical for 2005. However, the Committee approved bonuses that it believes reflected appropriate rewards for managements
performance in 2004. The Committee also granted stock options to the executive officers in February 2004.



Compensation of Chief Executive Officer. In assessing appropriate types and amounts of compensation for the Chief Executive Officer, the Committee evaluates both corporate and individual performance. Corporate
factors included in the evaluation are (i) progress and number of products in clinical and preclinical development, (ii) levels and quality of research, and (iii) current and potential funds raised in equity offerings and collaborations. Individual
factors include initiation and implementation of successful business strategic partnerships, maintenance of an effective management team and various personal qualities, including leadership, commitment and professional standing.



Conclusion.For these and other reasons, the Committee concurred with
managements recommendation to waive executive compensation increases and approved the continuation of Mr. Robins salary of $358,110 in 2005. In addition, the Committee approved and recommended payment of an $82,365 cash bonus to Mr.
Robin. The Committee also granted stock options for 50,000 shares of common stock under the 2001 Stock Option Plan to Mr. Robin in February 2005. The Committee believes that these compensation amounts and awards reflect appropriate levels given the
Companys performance in 2004 and the individual performance of management. The Committee also believes that these awards evidence the Committees philosophy to emphasize long-term incentive rewards tied to the Companys performance.



|                          
|--------------------------
|Compensation Commitee     
|Bryan Roberts, Chairperson
|James Niedel              
|R. Scott Greer            



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PERFORMANCE GRAPH



The following line graph presents the cumulative total stockholder return for the Companys common stock since December 31, 1999,
compared with the Nasdaq Composite (US) index and Nasdaq Biotech index. Trade prices are not always disclosed to management. The graph assumes that $100 was invested on December 31, 1999 and that dividends were reinvested.



LOGO



|                         |  |          |        |          |   |          |  |          |        |          |   |          |  |   |       |  |   |      
|------------------------ |  | -------- | ------ | -------- | - | -------- |  | -------- | ------ | -------- | - | -------- |  | - | ----- |  | - | -----
|                         |  | 12/31/99 |        | 12/31/00 |   | 12/31/01 |  | 12/31/02 |        | 12/31/03 |   | 12/31/04
|Sirna Therapeutics, Inc. |  | $        | 100.00 |          | $ | 136.31   |  | $        | 43.52  |          | $ | 2.29     |  | $ | 8.25  |  | $ | 5.03 
|Nasdaq Biotech           |  | $        | 100.00 |          | $ | 122.99   |  | $        | 103.06 |          | $ | 56.35    |  | $ | 82.12 |  | $ | 87.16
|Nasdaq Composite         |  | $        | 100.00 |          | $ | 60.71    |  | $        | 47.93  |          | $ | 32.82    |  | $ | 49.23 |  | $ | 53.46



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



The following table sets forth the shares of our common stock beneficially owned by (1) each of our directors (including the director nominees), (2) our Chief Executive
Officer and each of the Named Executive Officers, (3) all of our directors and executive officers as a group, and (4) all persons known by us to beneficially own more than 5% of our outstanding stock. Except as otherwise indicated in the
accompanying footnotes, beneficial ownership is shown as of April 19, 2005.



|                                                                                         |  |                                        |  |                                     |  
|---------------------------------------------------------------------------------------- |  | -------------------------------------- |  | ----------------------------------- | -
|Name and Address                                                                         |  | Number of SharesBeneficially Owned (1) |  | Percentage ofShares Outstanding (2) |  
|Sprout Group (3)11 Madison Avenue, 26th Floor New York,New York 10010                    |  | 14,573,724                             |  | 33.1                                | %
|Venrock Associates (4)30 Rockefeller Plaza, Suite 5508New York, New York 10112           |  | 7,486,122                              |  | 17.5                                | %
|Oxford Bioscience Partners (5)222 Berkeley Street, Suite 1650Boston, Massachusetts 02116 |  | 5,515,683                              |  | 13.0                                | %
|Techno Venture Management (6)101 Arch Street, Suite 1950Boston, Massachusetts 02110      |  | 3,047,665                              |  | 7.2                                 | %
|James Niedel (3)                                                                         |  | 14,627,891                             |  | 33.2                                | %
|Bryan Roberts (4)                                                                        |  | 7,540,289                              |  | 17.6                                | %
|Douglas Fambrough (5)                                                                    |  | 5,569,850                              |  | 13.1                                | %
|R. Scott Greer (7)                                                                       |  | 123,263                                |  | *                                   |  
|Jeremy L. Curnock Cook (8)                                                               |  | 60,833                                 |  | *                                   |  
|Howard W. Robin (9)                                                                      |  | 760,389                                |  | 1.8                                 | %
|Nassim Usman (10)                                                                        |  | 271,264                                |  | *                                   |  
|Martin Schmieg (11)                                                                      |  | 3,137                                  |  | *                                   |  
|Roberto Guerciolini (12)                                                                 |  | 98,795                                 |  | *                                   |  
|Barry A. Polisky (13)                                                                    |  | 192,651                                |  | *                                   |  
|Bharat M. Chowrira (14)                                                                  |  | 177,122                                |  | *                                   |  
|Current executive officers and directors as a group (11 persons) (15)                    |  | 29,425,484                             |  | 61.6                                | %



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---

|* | Less than 1%.
|- | -------------

|(1) | Shares are considered beneficially owned, for purposes of this table, only if held by the person indicated, or if such person, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise has or shares the power to vote, to direct the voting of and/or to dispose of or to direct the disposition of such security. The business address for each of the Companys directors and
officers listed in the table is 185 Berry Street, Suite 6504, San Francisco, California 94107.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Applicable percentages are based on 41,536,389 shares of common stock outstanding on April 19, 2005, adjusted as required by SEC rules.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------

|(3) | The number of shares beneficially owned consists of 11,237,333 shares and 2,265,664 shares of common stock issuable upon the exercise of warrants held by Sprout Capital IX, L.P., a
limited partnership; 518,946 shares and 104,628 shares of common stock issuable upon the exercise of warrants held by Sprout IX Plan Investors, L.P., a limited partnership; 44,286 shares and 8,928 shares of common stock issuable upon the exercise of
warrants held by Sprout Entrepreneurs Fund, L.P., a limited partnership; and 24,630 shares and 4,966 shares of common stock issuable upon the exercise of warrants held by DLJ Capital Corporation (collectively Sprout), which warrants are
immediately exercisable. In addition, amount includes 303,210 shares and 61,133 shares of common stock issuable upon the exercise of warrants held by Dr. James Niedel, a director of Company and a Venture Partner of each partnership, which warrants
are immediately exercisable. In addition, includes options to purchase 54,167 shares held by Dr. Niedel exercisable within 60 days of April 19, 2005. Except for shares he holds directly, Dr. Niedel expressly disclaims beneficial ownership of the
shares held by Sprout.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Share ownership for Venrock Associates and related parties is given as of December 30, 2004, and was obtained from a Schedule 13D/A, filed on January 4, 2005 with the Securities and
Exchange Commission. According to the Schedule 13D/A, the number of shares beneficially owned consists of 5,038,805 shares and 950,093 shares of common stock issuable upon the exercise of warrants held by Venrock Associates III, L.P., a limited
partnership, which warrants are immediately exercisable; 1,133,731 shares and 213,771 shares of common stock issuable upon the exercise of warrants held by Venrock Associates, a limited partnership, which warrants are immediately exercisable; and
125,970 shares and 23,752 shares of common stock issuable upon the exercise of warrants held by Venrock Entrepreneurs Fund III, L.P., a limited partnership (collectively Venrock), which warrants are immediately exercisable. In addition,
includes options to purchase 54,167 shares held by Dr. Roberts exercisable within 60 days of April 19, 2005. Dr. Roberts is one of our directors and a General Partner of Venrock Associates and a Member of Venrock Management III LLC and VEF
Management III LLC, which is the General Partner of Venrock Associates III, L.P. and Venrock Entrepreneurs Fund III, L.P., respectively. He expressly disclaims beneficial ownership of the shares held by Venrock except to the extent of his pecuniary
interest therein arising from his general partnership or member interests therein.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Share ownership for Oxford Bioscience Partners and related parties is given as of December 30, 2004, and was obtained from a Schedule 13D/A, filed on January 6, 2005 with the
Securities and Exchange Commission. According to the Schedule 13D/A, the number of shares beneficially owned consists of 4,569,545 shares and 891,346 shares of common stock issuable upon the exercise of warrants held by Oxford Bioscience Partners IV
L.P., a limited partnership, which warrants are immediately exercisable and 45,849 shares and 8,943 shares of common stock issuable upon the exercise of warrants held by mRNA Fund II L.P., a limited partnership, which warrants are immediately
exercisable. OBP Management IV L.P. serves as the General Partner of each partnership (collectively Oxford). In addition, includes options to purchase 54,167 shares held by Dr. Fambrough exercisable within 60 days of April 19, 2005. Dr.
Fambrough is one of our directors and a Principal of Oxford and expressly disclaims beneficial ownership of the shares held by Oxford except to the extent of his pecuniary interest therein arising from his general partnership interests therein.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Consists of 2,525,253 shares and 522,412 shares of common stock issuable upon the exercise of warrants held by TVM V Life Science Ventures GmbH & Co., KG, a limited partnership,
which warrants are exercisable within 60 days of April 19, 2005.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Includes options to purchase 54,167 shares held by Mr. Greer exercisable within 60 days of April 19, 2005.
|--- | ----------------------------------------------------------------------------------------------------------

|(8) | Includes options to purchase 60,833 shares held by Mr. Cook exercisable within 60 days of April 19, 2005.
|--- | ---------------------------------------------------------------------------------------------------------

|(9) | Includes options to purchase 746,728 shares held by Mr. Robin exercisable within 60 days of April 19, 2005.
|--- | -----------------------------------------------------------------------------------------------------------

|(10) | Includes options to purchase 264,498 shares exercisable within 60 days of April 19, 2005 and 6,766 shares held by Dr. Usman under our 401(k) Plan.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------

|(11) | Includes options to purchase 2,500 shares held by Mr. Schmieg exercisable within 60 days of April 19, 2005 and 637 shares held by Mr. Schmieg under our 401(k) Plan.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|12) | Includes options to purchase 89,833 shares exercisable within 60 days of April 19, 2005 and 1,544 shares held by Dr. Guerciolini under our 401(k) Plan
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|(13) | Includes options to purchase 186,944 shares exercisable within 60 days of April 19, 2005 and 5,373 shares held by Dr. Polisky under our 401(k) Plan.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------

|(14) | Includes options to purchase 164,354 shares exercisable within 60 days of April 19, 2005 and 6,766 shares held by Dr. Chowrira under our 401(k) Plan.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------

|(15) | Includes options to purchase 1,732,358 shares by all current directors and officers as a group that are exercisable within 60 days of April 19, 2005.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



Executive Loans.The Company has previously made interest-free loans to certain of its executive officers. These loans are not prohibited by the Sarbanes-Oxley Act of 2002 because they were made prior to the effectiveness of the
prohibition. The Company has forgiven all or a portion of the outstanding principal amount of each loan under the terms of each executive officers employment agreement. See Employment Agreements in Item 11 above.



|                   |  |             |         |     |                             |   |       
|------------------ |  | ----------- | ------- | --- | --------------------------- | - | ------
|Name               |  | Loan Amount |         |     | Balance as ofApril 19, 2005
|Howard W. Robin    |  | $           | 400,000 | (1) |                             | $ | 80,000
|Nassim Usman       |  | $           | 60,000  | (2) |                             | $ |      
|Barry A. Polisky   |  | $           | 150,000 | (3) |                             | $ | 90,000
|Bharat M. Chowrira |  | $           | 100,000 | (4) |                             | $ | 60,000

---

|(1) | $80,000 forgiven in each of January 2002, 2003, 2004 and 2005.
|--- | --------------------------------------------------------------

|(2) | $12,000 forgiven in each of October 2000, 2001, 2002, 2003 and 2004.
|--- | --------------------------------------------------------------------

|(3) | $30,000 forgiven in each of July 2003 and 2004.
|--- | -----------------------------------------------

|(4) | $15,000 forgiven in each of April 2003 and 2004; $5,000 forgiven in each of June 2003 and 2004.
|--- | -----------------------------------------------------------------------------------------------



Indemnity Agreements.The Company has entered into indemnity agreements with each of its officers (including the Named Executive
Officers) and directors (and affiliated venture funds, if applicable) which provide, among other things, that the Company will indemnify such officer or director (and affiliated venture funds, if applicable) under the circumstances and to the extent
provided for therein, for expenses, damages, judgments, fines and settlements he or she may be required to pay in actions or proceedings which he or she and their affiliated venture funds, if any, is or may be made a party to by reason of his or her
position as a director, officer or other agent of the Company, and otherwise to the full extent permitted under Delaware law and the Companys bylaws.



Transaction with Targeted Genetics



In January 2005, the Company 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, the Company 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. Jeremy Curnock Cook, a member of our Board of Directors and Audit Committee, is the Chairperson of the board of directors of Targeted Genetics. Mr. Cook introduced the Company to Targeted Genetics but did not assist in the negotiations and
removed himself from the Companys board approval process. Mr. Curnock Cook has not received any compensation or other benefits, directly or indirectly, as a result of such collaboration. The Audit Committee has determined that the terms of
this transaction have not altered Mr. Curnock Cooks status as an independent director under applicable Nasdaq Stock Market and SEC regulations. Mr. Curnock Cook did not participate in such determination.



Warrant Exchange Transaction



On December 30, 2004, the Company entered into a Warrant Exchange Agreement with the Sprout
Group, Venrock Associates, Oxford Bioscience Partners, Granite Global Ventures and James Niedel (collectively, the Warrant Holders) to exchange existing warrants to purchase shares of our common stock held by the Warrant Holders for



15



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##### Table of Contents

new warrants. Each Warrant Holder exchanged its existing warrants for (1) one warrant exercisable for the same number of
shares into which such Warrant Holders existing warrant was exercisable (except that the Sprout Group and James Niedel each exchanged only 25% of their existing warrants) (the First Replacement Warrants) and (2) one warrant
exercisable for 110% of the number of shares into which such Warrant Holders existing warrant was exercisable (except that the Sprout Group and James Niedel each received approximately 27.5% of their existing warrants) (the Second
Replacement Warrants). The First Replacement Warrants were exercisable at an exercise price of $2.52, but only for cash and only if exchanged on or before February 7, 2005. On December 30, 2004, the Warrant Holders exercised all of the First
Replacement Warrants for 2,703,479 shares of our common stock, for an aggregate exercise price of approximately $6.8 million. The Second Replacement Warrants are exercisable at an exercise price of $3.85 (subject to downward adjustment) and expire
on December 30, 2009. On December 30, 2004, a special committee of independent, disinterested members of our Board of Directors recommended that the terms of the exchange of the warrants be approved by our Board of Directors. The Board of Directors
adopted the recommendations of the special committee.



ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES



Audit Fees



The following table sets forth the aggregate fees
billed by Ernst & Young LLP, the Companys independent registered public accounting firm, for the following services during fiscal 2004 and fiscal 2003:



|                       |  |      |         |      |   |        
|---------------------- |  | ---- | ------- | ---- | - | -------
|                       |  | 2004 |         | 2003
|Audit Fees (a)         |  | $    | 166,219 |      | $ | 213,197
|Audit Related Fees (b) |  | $    | 18,000  |      | $ | 20,000 
|Tax Fees (c)           |  | $    |        |      | $ | 11,342 
|All Other Fees         |  | $    |        |      | $ |       



(a) Audit Fees.Consist of fees
billed for professional services rendered for the audit of the Companys annual financial statements and review of the interim financial statements included in quarterly reports; statutory audits or financial audits for subsidiaries or
affiliates of the Company; services associated with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings; consultation concerning accounting or
disclosure treatment of transactions or events and actual or potential impact of final or proposed rules, standards or interpretations by the SEC, the Financial Accounting Standards Board, or other regulatory or standard setting bodies; and
assistance with and review of documents provided to the SEC in responding to SEC comments.



(b) Audit-Related Fees.Consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Companys financial statements and are not
reported under Audit Fees. These services include financial statement audits of employee benefit plans, internal control reviews and assistance with internal controls reporting requirements.



(c) Tax Fees.Consist of preparing the Companys federal and state tax returns.



Audit Committee Pre-Approval Policy



The Audit Committee has adopted a policy for the pre-approval of audit and non-audit
services performed by the independent registered public accounting firm, and the fees paid by the Company for such services, in order to assure that the provision of such services does not impair the auditors independence. Under the policy, at
the end of the previous fiscal year the Audit Committee pre-approves audit services, audit-related services and tax services for the next fiscal year. Pre-approval is detailed as to the particular service or category of services, and the Audit
Committee periodically reviews the list of pre-approved services. All other services, as well as any other audit services, audit-related services or tax services not pre-approved by the Audit Committee, must be separately pre-approved by the Audit
Committee.



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Pre-approved fee levels for all pre-approved services are established periodically by the Audit Committee. The Audit
Committee periodically reviews fees incurred to date for pre-approved services. Any proposed services exceeding the pre-approved fee levels require further pre-approval by the Audit Committee. With respect to each service for which separate
pre-approval is proposed, the independent registered public accounting firm will provide a detailed description of the services to permit the Audit Committee to assess the impact of the services on the independence of the independent registered
public accounting firm.



The Audit Committee may delegate pre-approval
authority to one or more of its members and has delegated such authority to the Chairperson of the Audit Committee. The Audit Committee member to whom such authority is delegated must report any pre-approval decisions to the Audit Committee at the
next scheduled meeting. The Audit Committee does not delegate its pre-approval responsibilities to management of the Company.



During the last fiscal year, no services were provided by Ernst & Young LLP that were approved by the Audit Committee pursuant to the de minimisexception to
pre-approval contained in the SECs rules.



The Audit Committee of the
Board has considered whether provision of the services described in sections (b) and (c) of Audit Fees above is compatible with maintaining the independent registered public accounting firms independence and has determined that
such services have not adversely affected Ernst & Young LLPs independence.



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PART IV



ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES



(a)(3) EXHIBITS



The information required by this
item is set forth on the exhibit index which follows the signature page of this report.



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SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized in Boulder, Colorado, on April 29, 2005.



SIRNA THERAPEUTICS, INC.By:

/s/ HOWARD W. ROBINHoward W. RobinChief Executive Officer and President




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EXHIBIT INDEX



|       |  |                                                                                                              
|------ |  | -------------------------------------------------------------------------------------------------------------
|Number |  | Description                                                                                                  
|31.1   |  | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002       
|       | 
|31.2   |  | Certification of Acting Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002



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