##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
 For the quarterly period ended March 31, 2007,
 or
 o
    
    Transition Period Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
 For the Transition Period From&n
bsp; to.
 Commission file number 0-19591
 IDM PHARMA, INC.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    33-0245076
(I.R.S. Employer
Identification No.)
 
 (949) 470-4751
 þ o
  o o þ
 o þ




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##### 



IDM PHARMA, INC.
QUARTERLY REPORT
FORM 10-Q
  
 COVER PAGE
    
    
    1TABLE OF CONTENTS
    
    
    2PART I. FINANCIAL INFORMATIONITEM 1. Financial StatementsCondensed Consolidated Balance Sheets as of March 31,
2007 (unaudited) and December 31, 2006
    
    
    3Condensed Consolidated Statements of Operations for the Three-Months Ended March 31,
2007 and 2006 (unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2007
and 2006 (unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    6ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    28ITEM 4. Controls and Procedures
    
    
    28PART II. OTHER INFORMATIONITEM 1. Legal Proceedings
    
    
    30ITEM 1A. Risk Factors
    
    
    30ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    *ITEM 3. Defaults upon Senior Securities
    
    
    *ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    *ITEM 5. Other Information
    
    
    *ITEM 6. Exhibits
    
    
    44SIGNATURES
    
    
    46EXHIBIT 10.56EXHIBIT 10.57EXHIBIT 10.58EXHIBIT 10.59EXHIBIT 31.1EXHIBIT 31.2EXHIBTI 32.1
  
 *
    
    No information provided due to inapplicability of item.




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IDM PHARMA, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    December 31,2007
    
    
    2006(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    18,465,000
    
    
    $
    10,181,000Related party accounts receivable
    
    
    3,199,000
    
    
    
    3,353,000Accounts receivable
    
    
    58,000
    
    
    
    39,000Research and development tax credit, current portion
    
    
    203,000
    
    
    
    201,000Prepaid expenses and other current assets
    
    
    1,454,000
    
    
    
    1,380,000Total current assets
    
    
    23,379,000
    
    
    
    15,154,000Property and equipment, net
    
    
    1,326,000
    
    
    
    1,711,000Patents, trademarks and other licenses, net
    
    
    3,256,000
    
    
    
    3,323,000Goodwill
    
    
    2,812,000
    
    
    
    2,812,000Research and development tax credit, less current portion
    
    
    1,375,000
    
    
    
    1,300,000Other long-term assets
    
    
    94,000
    
    
    
    82,000Total assets
    
    $
    32,242,000
    
    
    $
    24,382,000LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    5,543,000
    
    
    $
    4,935,000Common stock warrants
    
    
    1,657,000
    
    
    
    Accrued payroll and related expenses
    
    
    1,669,000
    
    
    
    1,251,000Related party deferred revenues, current portion
    
    
    1,152,000
    
    
    
    769,000Other current liabilities
    
    
    2,763,000
    
    
    
    3,681,000Total current liabilities
    
    
    12,784,000
    
    
    
    10,636,000Long-term debt, less current portion
    
    
    510,000
    
    
    
    505,000Related party deferred revenues, less current portion
    
    
    2,434,000
    
    
    
    2,593,000Other non-current liabilities
    
    
    460,000
    
    
    
    452,000Total liabilities
    
    
    16,188,000
    
    
    
    14,186,000Stockholders equity:Preferred stock, $.01 par value, 10,000,000 shares
authorized and no shares issued and
outstanding at March 31, 2007 and December 31, 2006.
    
    
    
    
    
    
    Common stock, $.01 par value, 55,000,000 shares
authorized at March 31, 2007 and
December 31, 2006 and 17,955,724 and 13,401,071
shares issued and outstanding
at March 31, 2007 and December 31, 2006, respectively.
    
    
    180,000
    
    
    
    134,000Additional paid-in capital
    
    
    183,241,000
    
    
    
    171,892,000Accumulated other comprehensive income
    
    
    17,034,000
    
    
    
    16,701,000Accumulated deficit
    
    
    (184,401,000
    )
    
    
    (178,531,000
    )Total stockholders equity
    
    
    16,054,000
    
    
    
    10,196,000Total liabilities and stockholders equity
    
    $
    32,242,000
    
    
    $
    24,382,000
 See
accompanying notes.
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IDM PHARMA, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited)
 Three Months ended March 31,2007
    
    2006Revenues:Related party revenue
    
    $
    2,803,000
    
    
    $
    2,208,000Research grants and contract revenue
    
    
    25,000
    
    
    
    49,000License fees, milestones and other revenues
    
    
    10,000
    
    
    
    7,000Total revenues
    
    
    2,838,000
    
    
    
    2,264,000Costs and expenses:Research and development
    
    
    5,261,000
    
    
    
    5,583,000General and administrative
    
    
    2,949,000
    
    
    
    2,792,000Selling and marketing
    
    
    106,000
    
    
    
    84,000Total costs and expenses
    
    
    8,316,000
    
    
    
    8,459,000Loss from operations
    
    
    (5,478,000
    )
    
    
    (6,195,000
    )Interest income (expense), net
    
    
    (133,000
    )
    
    
    156,000Other expense, net
    
    
    
    
    
    
    (33,000
    )Foreign exchange loss
    
    
    (313,000
    )
    
    
    (671,000
    )Loss before income tax benefit
    
    
    (5,924,000
    )
    
    
    (6,743,000
    )Income tax benefit
    
    
    54,000
    
    
    
    108,000Net loss
    
    $
    (5,870,000
    )
    
    $
    (6,635,000
    )Weighted average number of shares
outstanding
    
    
    15,420,788
    
    
    
    13,289,577Basic and diluted loss per share
    
    $
    (0.38
    )
    
    $
    (0.50
    )Comprehensive loss:Net loss
    
    $
    (5,870,000
    )
    
    $
    (6,635,000
    )Other comprehensive gain
    
    
    333,000
    
    
    
    953,000$
    (5,537,000
    )
    
    $
    (5,682,000
    )
 See accompanying notes.
 4




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IDM PHARMA, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited)
 Three months ended March 31,2007
    
    
    2006Operating activitiesNet loss
    
    $
    (5,870,000
    )
    
    $
    (6,635,000
    )Adjustments to reconcile net loss to net cash used in
operating activities:Stock-based compensation expense
    
    
    231,000
    
    
    
    266,000Change in fair value of common stock warrants
    
    
    262,000
    
    
    
    Depreciation and amortization
    
    
    295,000
    
    
    
    325,000Impairment of property and equipment
    
    
    286,000
    
    
    
    Foreign exchange loss
    
    
    367,000
    
    
    
    578,000Change in operating assets and liabilities:Related party accounts receivable (sanofi-aventis)
    
    
    195,000
    
    
    
    138,000Accounts receivable
    
    
    (16,000
    )
    
    
    262,000Prepaid expenses and other current assets
    
    
    (57,000
    )
    
    
    311,000Research and development tax credit receivable
    
    
    (56,000
    )
    
    
    (116,000
    )Other long-term assets
    
    
    (11,000
    )
    
    
    1,000Accounts payable and accrued liabilities
    
    
    433,000
    
    
    
    187,000Accrued payroll and related expenses
    
    
    393,000
    
    
    
    (1,161,000
    )Related party deferred revenues (sanofi-aventis)
    
    
    174,000
    
    
    
    (20,000
    )Other liabilities
    
    
    (1,033,000
    )
    
    
    (186,000
    )Net cash used in operating activities
    
    
    (4,407,000
    )
    
    
    (6,050,000
    )Investing activitiesPurchase of property and equipment
    
    
    (81,000
    )
    
    
    (101,000
    )Patents, trademarks and other licenses
    
    
    
    
    
    
    (98,000
    )Net cash used in investing activities
    
    
    (81,000
    )
    
    
    (199,000
    )Financing activitiesProceeds from issuance of common stock, net
    
    
    12,680,000
    
    
    
    43,000Net cash provided by financing activities
    
    
    12,680,000
    
    
    
    43,000Effect of exchange rate on cash and cash equivalents
    
    
    92,000
    
    
    
    369,000Increase (decrease) in cash and cash equivalents
    
    
    8,284,000
    
    
    
    (5,837,000
    )Cash and cash equivalents at beginning of year
    
    
    10,181,000
    
    
    
    26,702,000Cash and cash equivalents at end of period
    
    $
    18,465,000
    
    
    $
    20,865,000
 See accompanying notes.
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IDM PHARMA INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
March 31, 2007
 1. The Company
  
    
    to destroy cancer cells remaining after conventional therapies, and
    
    to prevent tumor recurrence.
 tm
 tm
    6




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2. Basis of Presentation
    3. Recent Operating Results and Liquidity
    4. Summary of Significant Accounting Policies
  7




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Foreign Currency Translation
     Reporting Comprehensive Income
 Cash and Cash Equivalents
  Major customer and concentration of credit risk
   Revenue recognition
 Revenue Recognition, Revenue Arrangements with Multiple Deliverables.
 8




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Research and development expenses and related tax credit.
    Patents, trademarks and licenses
 Accounting for the Impairment or
Disposal of Long-Lived Assets
  9




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Impairment of long lived assets
   Fair value of financial instruments
  Property and equipment  net
  Laboratory Equipment:
    
    5 yearsComputer Equipment:
    
    3 yearsFurniture:
    
    5 yearsOffice Equipment:
    
    8 yearsLeasehold improvements:
    
    Shorter of useful life or lease term
  Income taxes
 Accounting for Contingencies Accounting for Uncertainty in
Income Taxes, an interpretation of FASB Statement No. 109
 10




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Segment information
  Goodwill
   Goodwill and Other Intangible Assets
 Net Loss Per Share
 Earnings
per Share.
 March 31,2007
    
    
    2006Options outstanding
    
    
    1,640,318
    
    
    
    1,094,862Restricted stock awards
    
    
    42,141
    
    
    
    49,283Warrants outstanding
    
    
    994,450
    
    
    
    325,056Reserved pursuant to option liquidity agreements
    
    
    373,137
    
    
    
    403,984Reserved pursuant to put/call agreements
    
    
    
    
    
    
    78,600Total
    
    
    3,050,046
    
    
    
    1,951,785
 11




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Share-Based Compensation Plans
 Description of Share-Based Compensation Plans
        12




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Overview
 Share-Based Payment Accounting for Stock Issued
to Employees Accounting for
Stock-Based Compensation
  2007
    
    2006Research and development
    
    $
    82,000
    
    
    $
    26,000General and administrative
    
    
    70,000
    
    
    
    139,000Sales and marketing
    
    
    
    
    
    
    1,000Expense related to options under SFAS 123R
    
    
    152,000
    
    
    
    166,000Expense related to restricted stock (general and administrative)
    
    
    79,000
    
    
    
    100,000Total stock-based compensation expense
    
    $
    231,000
    
    
    $
    266,000
 Adoption of SFAS 123R
  13




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Three monthsended March 31,2006Average expected term (years)
    
    
    6.00-7.00Expected volatility (range)
    
    
    90% - 96
    %Risk-free interest rate
    
    
    4.73Expected dividend yield
    
    
    0
    %Weighted average fair value of options granted
    
    $
    5.81
  Stock Option Activity and Share-Based Compensation Expense
  Weighted
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    AverageRemaining
    
    Weighted
    
    
    
    
    
    Exercise PriceOptions
    
    Life in
    
    Average
    
    Options
    
    of OptionsRange of Exercise Prices
    
    Outstanding
    
    Years
    
    Exercise Price
    
    Exercisable
    
    Exercisable$2.75 to $4.99
    
    
    928,007
    
    
    
    4.91
    
    
    $
    3.02
    
    
    
    378,447
    
    
    $
    2.98$5.00 to $9.99
    
    
    268,888
    
    
    
    8.30
    
    
    
    5.94
    
    
    
    111,310
    
    
    
    5.98$10.00 to $19.99
    
    
    390,995
    
    
    
    1.92
    
    
    
    12.74
    
    
    
    384,296
    
    
    
    12.70$20.00 to $29.99
    
    
    342,372
    
    
    
    5.22
    
    
    
    27.14
    
    
    
    323,853
    
    
    
    27.08$30.00 and above
    
    
    83,193
    
    
    
    5.64
    
    
    
    33.33
    
    
    
    72,316
    
    
    
    33.55Total
    
    
    2,013,455
    
    
    
    4.86
    
    
    $
    10.65
    
    
    
    1,270,222
    
    
    $
    14.07
  Weighted
    
    Weighted AverageAverage
    
    Remaining
    
    AggregateExercise
    
    Contractual Term
    
    IntrinsicShares
    
    Price
    
    (years)
    
    ValueOptions outstanding, December 31, 2006
    
    
    2,272,655
    
    
    $
    9.84Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Cancelled, forfeited or expired
    
    
    259,200
    
    
    
    3.99Options outstanding, March 31, 2007
    
    
    2,013,455
    
    
    
    10.65
    
    
    
    4.86
    
    
    $
    300,000Options exercisable, March 31, 2007
    
    
    1,270,222
    
    
    $
    14.07
    
    
    
    3.85
    
    
    $
    142,000
  14




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Performance-Based Stock Options and Awards
  Accounting for Equity Instruments That Are
Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.
  5. Private Placement of Common Stock and Warrants
   15




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Accounting for Derivative Financial Instruments Indexed To,
and Potentially Settled In, a Companys Own Stock,
  6. Research and Development and Other Agreements
 Novartis -Jenner
   16




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Agreement with sanofi-aventis (Related Party)
    Three months
    
    Three monthsended March
    
    ended March31, 2007
    
    31, 2006Amortization of upfront fee
    
    $
    58,000
    
    
    $
    53,000Amortization of phase I milestone payment
    
    
    68,000
    
    
    
    63,000Amortization of initial R&D expenses from 1999 to 2001
    
    
    55,000
    
    
    
    50,000Reimbursement of current R&D expenses
    
    
    2,622,000
    
    
    
    2,042,000Total revenues
    
    $
    2,803,000
    
    
    $
    2,208,000
   17




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Medarex (Related Party)
  Cambridge Labs
     7. Commitments
 Obligations under collaboration, licensing and contract research organization agreements
  Commitment with Biotecnol
  Commitment with Accovion
  18




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PEA Shares
 Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and
Equity,
 8 Government Research Funding
  9. Restructuring Charges
 Accounting for Costs
Associated with Exit or Disposal Activities
   19




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10. FIN 48 Uncertain Tax Positions
 Accounting for Uncertainty in Income Taxes, an
interpretation of  SFAS No. 109, Accounting
for Income Taxes
    New Accounting Standards Not Yet Adopted
 Fair Value
Measurements
 The Fair Value Option for Financial Assets
and Financial Liabilities
 11. Subsequent Event
  20




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 This discussion and analysis should be read in conjunction with our financial statements and
accompanying notes included in this report and our 2006 audited financial statements and notes
thereto included in our Form 10-K filed on April 2, 2007.
 Operating results for the three months ended March 31, 2007 are not necessarily indicative of
results that may occur in future periods.
 Except for the historical information contained herein, the following discussion contains
forward-looking statements that involve risks and uncertainties. When used herein, the words
believe, anticipate, expect, estimate and similar expressions are intended to identify such
forward-looking statements. There can be no assurance that these statements will prove to be
correct. Our actual results could differ materially from those discussed here. Factors that could
cause or contribute to such differences include, but are not limited to, those discussed in this
report. We undertake no obligation to update any of the forward-looking statements contained herein
to reflect any future events or developments.
 Overview
  in vivo
     21




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22




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Results of Operations for the Three Months Ended March 31, 2007 and 2006
 Revenues.
    Research and Development Expenses.
 23




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Selling and Marketing Expenses.
 General and Administrative Expenses.
 Interest Income (Expense), Net.
 Foreign Exchange Gain or Loss.
 Income Tax Benefit.
  Net Loss.
 Liquidity and Capital Resources
  24




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25




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Off-Balance Sheet Arrangements
  
    
    any obligations under a guarantee contract;
    
    a retained or contingent interest in assets transferred to an unconsolidated entity or
similar arrangement that serves as credit, liquidity or market risk support for such assets;
 26




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
    
    any obligation under a derivative instrument that is both indexed to our stock and
classified in shareholders equity, or not reflected, in our statement of financial
position; or
    
    any obligation, including a contingent obligation, arising out of a variable interest, in
an unconsolidated entity that is held by, and material to, us, where such entity provides
financing, liquidity, market risk or credit risk support to us, or engages in leasing,
hedging or research and development services with us.
 Trends
     27




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
      
    
    Consolidate operating and financial reporting locations and structure;
 28




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
    
    Implement additional review and approval procedures over accruals;
    
    Formalize process and documentation related to financial statement close and
consolidation review, including face-to-face meeting of all members of our financial staff
involved in preparation of financial statements and a review of those financial statements
by the entire staff as a group;
    
    Formalize and enhance documentation, oversight and review procedures related to
accounting records of our foreign subsidiary to ensure compliance with U.S. generally
accepted accounting principles;
    
    Supplement internal staff expertise by consulting with independent, third party experts
regarding accounting treatment of unusual or non-routine transactions, and the impact of the
adoption of new accounting pronouncements, when and if necessary;
    
    Review and make appropriate staffing adjustments at all company locations to enhance accounting expertise;
    
    Revise and enhance the review process for unusual and acquisition related transactions;
    
    Improve training for, and integration and communication among, accounting and financial staff; and
    
    In May 2007, we hired a full-time experienced Chief Financial Officer.
   29




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PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
 We wish to caution readers that the following important factors, among others, in some cases
have affected our results and in the future could cause our actual results and needs to vary
materially from forward-looking statements made from time to time by us on the basis of
managements then-current expectations. The business in which we are engaged is in a rapidly
changing and competitive market and involves a high degree of risk, and accuracy with respect to
forward-looking projections is difficult.
 The Company has marked with an asterisk those risk factors that reflect changes from the risk
factors included in the Companys Annual Report on Form 10-K filed with the SEC.
 *Our lead product candidate, Junovan, may never obtain regulatory approval.
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*Even if we receive regulatory approval for Junovan, we may not be able to commercialize it
immediately or market it successfully.
    Even if we obtain regulatory approval for our products, we may be required to perform additional
clinical trials or change the labeling of our products if we or others identify side effects after
our products are on the market, which could harm sales of the affected products.
  
    
    regulatory approval may be withdrawn;
    
    reformulation of our products, additional clinical trials, changes in labeling of our
products or changes to or re-certifications of our manufacturing facilities may be required;
    
    sales of the affected products may drop significantly;
    
    our reputation in the marketplace may suffer; and
    
    lawsuits, including costly and lengthy class action suits, may be brought against us.
  *Our substantial additional capital requirements and potentially limited access to financing may
harm our ability to develop products and fund our operations, and if we do not obtain additional
funding we may be required to sell our assets or our company, or dissolve and liquidate all of our
assets.
  31




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
    
    whether we are able to secure additional financing on favorable terms, or at all;
    
    The costs associated with, and the success of, obtaining marketing approval and, as
applicable, pricing approval, for Junovan for the treatment of osteosarcoma in the United
States, Europe and other jurisdictions and the timing of any such approval;
    
    the success or failure of the product launch and commercialization of Junovan;
    
    the costs associated with the launch and the commercialization of Junovan in the United
States, Europe and other jurisdictions upon obtaining marketing approval;
    
    the costs associated with our clinical trials for our product candidates, including our
Dendritophages and lung cancer vaccine candidates;
    
    progress with other preclinical testing and clinical trials in the future;
    
    our ability to establish and maintain collaboration and license agreements and any government contracts and grants;
    
    the actual revenue we receive under our collaboration and license agreements;
    
    the actual costs we incur under our collaboration agreements;
    
    the time and costs involved in obtaining regulatory approvals for our products;
    
    the costs involved in filing, prosecuting, enforcing and defending patent claims and any other proprietary rights;
    
    competing technological and market developments; and
    
    the magnitude of our immunotherapeutic product discovery and development programs.
  ®
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The process of developing immunotherapeutic products requires significant research and development,
preclinical testing and clinical trials, all of which are extremely expensive and time-consuming
and may not result in a commercial product.
  
    
    the results of preclinical studies may be inconclusive, or they may not be indicative of
results that will be obtained in human clinical trials;
    
    after reviewing test results, we may abandon projects that we might previously have
believed to be promising;
    
    after reviewing test results, our collaborators may abandon projects that we might
believe are still promising and we would either have to bear the operating expenses and
capital requirements of continued development of our therapeutic cancer vaccines or abandon
the projects outright;
    
    we, our collaborators or government regulators may suspend or terminate clinical trials
if the participating subjects or patients are being exposed to unacceptable health risks;
    
    clinical trials may be delayed as a result of difficulties in identifying and enrolling
patients who meet trial eligibility criteria;
    
    safety and efficacy results attained in early human clinical trials may not be indicative
of results that are obtained in later clinical trials; and
    
    the effects of our product candidates may not have the desired effects or may include
undesirable side effects that preclude regulatory approval or limit their commercial use, if
approved.
  *Our principal source of revenues and cash receipts currently is a collaboration agreement under
which our partner has limited obligations.
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*Our revenues and operating results are likely to fluctuate.
  
    
    any payments from sanofi-aventis and any other current or future collaborative partners;
    
    any government and European Union grants and contracts; and
    
    investment income.
    *Our history of operating losses and our expectation of continuing losses may hurt our ability to
reach profitability or continue operations.
  *If we lose our key scientific and management personnel or are unable to attract and retain
qualified personnel, it could delay or hurt our research and product development efforts.
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*Unexpected or undesirable side effects or other characteristics of our products and technology may
delay or otherwise hurt the development of our drug candidates, or may expose us to significant
liability that could cause us to incur significant costs.
   Adverse publicity regarding the safety or side effects of the technology approach or products of
others could negatively impact us and cause the price of our common stock to decline.
  Our treatment approach may not prove effective.
  
    
    the targeted antigens are not sufficiently different from those normal cells to cause an
immune reaction;
    
    the tumor cells do not express the targeted antigen or other target structures at all or
in sufficient quantities to be recognized by immune system cells, such as T cells or
macrophages;
    
    the immune response stimulated by the immunotherapeutic agent is not strong enough to destroy all of the cancer cells; or
    
    cancer cells may, through various biochemical mechanisms, escape an immune response.
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If we cannot enter into and maintain strategic collaborations on acceptable terms in the future, we
may not be able to develop products in markets where it would be too costly or complex to do so on
our own.
  If our collaboration or license arrangements are unsuccessful, our revenues and product development
may be limited.
  
    
    collaborations and licensee arrangements may be terminated, in which case we will
experience increased operating expenses and capital requirements if we elect to pursue
further development of the product candidate;
    
    collaborators and licensees may delay clinical trials and prolong clinical development,
under-fund a clinical trial program, stop a clinical trial or abandon a product candidate;
    
    expected revenue might not be generated because milestones may not be achieved and
product candidates may not be developed;
    
    collaborators and licensees could independently develop, or develop with third parties,
products that could compete with our future products;
    
    the terms of our contracts with current or future collaborators and licensees may not be
favorable to us in the future;
    
    a collaborator or licensee with marketing and distribution rights to one or more of our
products may not commit enough resources to the marketing and distribution of our products,
limiting our potential revenues from the commercialization of a product; and
    
    disputes may arise delaying or terminating the research, development or commercialization
of our product candidates, or result in significant and costly litigation or arbitration.
 We may not be able to license technology necessary to develop products.
  *Our supplies of certain materials necessary to our business may be limited and key raw materials
of desired quantity and quality may be difficult to obtain.
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*If we and/or our collaborators cannot cost-effectively manufacture our immunotherapeutic product
candidates in commercial quantities or for clinical trials in compliance with regulatory
requirements, we and/or our collaborators may not be able to successfully commercialize the
products.
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
    
    non-compliance by these third parties with regulatory and quality control standards;
    
    breach by these third parties of their agreements with us; and
    
    Termination or non-renewal of these agreements for reasons beyond our control.
    We are subject to extensive and uncertain government regulation and we may not be able to obtain
necessary regulatory approvals.
  
    
    fines and penalties;
    
    injunctions;
    
    seizure of products;
    
    total or partial suspension of product marketing;
    
    failure of a regulatory agency to grant marketing authorization;
    
    withdrawal of marketing approvals; and
    
    criminal prosecution.
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We may not be able to commercialize products under development by us if those products infringe
claims in existing patents or patents that have not yet issued, and this would materially harm our
ability to operate.
  Our failure to obtain issued patents and, consequently, to protect our proprietary technology,
could hurt our competitive position.
  
    
    the pending patent applications we have filed or to which we have exclusive rights may
not result in issued patents or may take longer than we expect to result in issued patents;
    
    the allowed claims of any patents that issue may not provide meaningful protection;
    
    we may be unable to develop additional proprietary technologies that are patentable;
    
    the patents licensed or issued to us may not provide a competitive advantage;
    
    other companies may challenge patents licensed or issued to us;
    
    disputes may arise regarding inventions and corresponding ownership rights in inventions
and know-how resulting from the joint creation or use of our intellectual property and our
respective licensors or collaborators; and
    
    other companies may design around the technologies patented by us.
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If we are unable to compete effectively in the highly competitive biotechnology industry, our
business will fail.
     Litigation regarding intellectual property rights owned or used by us may be costly and
time-consuming.
    
    
    assert against others or defend ourselves against claims of infringement;
    
    enforce patents owned by, or licensed to us from another party;
    
    protect our trade secrets or know-how; or
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
    
    determine the enforceability, scope and validity of our proprietary rights or those of others.
 If we are unable to protect our trade secrets, we may be unable to protect from competitors our
interests in proprietary know-how that is not patentable or for which we have elected not to seek
patent protection.
  The U.S. government will fund some of our programs and, therefore, the U.S. government may have
rights to certain of our technology and could require us to grant licenses of our inventions to
third parties.
 .
 Successful commercialization of our future products will depend on our ability to gain acceptance
by the medical community.
  
    
    the extent to which our therapeutic product candidates are demonstrated to be safe and effective in clinical trials;
    
    convenience and ease of administration;
    
    the success of sales, marketing and public relations efforts;
    
    the availability of alternative treatments;
    
    competitive pricing;
    
    the reimbursement policies of governments and other third parties; and
    
    garnering support from well respected external advocates.
  We may experience difficulties managing our growth, which could adversely affect our results of
operations.
  
    
    train, manage, motivate and retain a growing employee base, particularly given our
operations in both California and France;
    
    accurately forecast demand for, and revenues from, our product candidates, particularly
Junovan; and
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
    
    expand existing operational, financial and management information systems to support our
development and planned commercialization activities and the multiple locations of our
offices.
  *Our use of hazardous materials could expose us to significant costs.
   Our financial results may be adversely affected by fluctuations in foreign currency exchange rates.
  *The volatility of the price of our common stock may adversely affect stockholders.
  
    
    the development and regulatory status of our product candidates, particularly Junovan;
    
    whether we are able to secure additional financing on favorable terms, or at all;
    
    announcements of technological innovations or new commercial immunotherapeutic products by us or others;
    
    governmental regulation that affects the biotechnology and pharmaceutical industries in general or us in particular;
    
    developments in patent or other proprietary rights by us;
    
    receipt of funding by us under collaboration and license agreements and government grants;
    
    developments in, or termination of, our relationships with our collaborators and licensees;
    
    public concern as to the clinical results and/or the safety of drugs developed by us or others; and
    
    announcements related to the sale of our common stock or other securities.
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*Our principal stockholders, executive officers and directors own a significant percentage of
shares of our common stock and, as a result, the trading price for shares of our common stock may
be depressed. These stockholders may make decisions that may be adverse to your interests.
   Future sales of shares of our common stock may cause the market price of your shares to decline.
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ITEM 6. EXHIBITS
 ExhibitNumber
    
    Document Description3.1
    
    Amended and Restated Certificate of Incorporation filed with the Secretary of State of Delaware on
December 2, 1991.(1)3.2
    
    Certificate of Designation of Series A Junior Participating Preferred Stock filed with the Secretary of
State of Delaware on April 2, 1993.(2)3.3
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation filed with the Secretary of
State of Delaware on July 5, 1995.(3)3.4
    
    Certificate of Increase of Series A Junior Participating Preferred Stock filed with the Secretary of
State of Delaware on July 5, 1995.3.5
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation filed with the Secretary of
State of Delaware on July 2, 1998.(4)3.6
    
    Certificate of Increase of Series A Junior Participating Preferred Stock filed with the Secretary of
State of Delaware on July 2,
1998.(4)3.7
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation filed with the Secretary of
State of Delaware on November 12, 1998.(5)3.8
    
    Certificate of Designations of the Series S and Series S-1 Preferred Stock filed with the Secretary of
State of Delaware on June 29, 1999.(6)3.9
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation filed with the Secretary of
State of Delaware on July 1, 1999.(7)3.10
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation filed with the Secretary of
State of Delaware on September 23, 1999.(8)3.11
    
    Certificate of Decrease of Series A Junior Participating Preferred Stock filed with the Secretary of
State of Delaware on September 23, 1999.(8)3.12
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation filed with the Secretary of
State of Delaware on June 17, 2004.(9)3.13
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation filed with the Secretary of
State of Delaware on August 15, 2006.(10)3.14
    
    Certificate of Ownership and Merger, filed with the Secretary of State of Delaware on August 15, 2006.(10)3.15
    
    Amended and Restated Bylaws of the Company. (11)4.1
    
    Reference is made to Exhibits 3.1 through 3.15.4.2
    
    Specimen certificate of the Common Stock.(12)10.54
    
    Unit Purchase Agreement, dated February 20, 2007, by and among the Registrant and the purchasers listed
on Exhibit A thereto.(13)10.55
    
    Form of Warrant.(13)10.56
    
    Employment Agreement with Hervé Duchesne de Lamotte, dated March 15, 1998, as amended.
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ExhibitNumber
    
    Document Description10.57
    
    Employment Agreement with Bonnie Mills, Ph.D., dated as of June 6, 2005.10.58
    
    Consulting Agreement with John P. McKearn, Ph.D., dated as of May 1, 2007.10.59
    
    Employment Agreement with Robert J. De Vaere, dated as of May 2, 2007.31.1
    
    Certification of Principal Executive Officer pursuant to Section 302 of the Public Company Accounting
Reform and Investor Protection Act of 2002 (18 U.S.C. § 1350, as adopted).31.2
    
    Certification of Principal Financial Officer pursuant to Section 302 of the Public Company Accounting
Reform and Investor Protection Act of 2002 (18 U.S.C. § 1350, as adopted).32.1
    
    Certification pursuant to Section 906 of the Public Company Accounting Reform and Investor Protection Act
of 2002 (18 U.S.C. § 1350, as adopted).
 
 *
    
    Executive Compensation Plans and Arrangements(1)
    
    Incorporated by reference to the Companys Form S-1 Registration Statement and Amendments thereto filed with
Securities and Exchange Commission (the SEC) (File No. 33-43356).(2)
    
    Incorporated by reference to the Companys Form 8-K, filed with the SEC on March 22, 1993.(3)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the fiscal year ended December 31,
1994, filed with the SEC on March 31, 1995.(4)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the quarterly period ended June 30,
1998, filed with the SEC on August 14, 1998.(5)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the quarterly period ended September
30, 1998, filed with the SEC on November 16, 1998.(6)
    
    Incorporated by reference to the Companys Form 8-K, filed with the SEC on July 16, 1999.(7)
    
    Incorporated by reference to the Companys Definitive Proxy Statement, filed with the SEC on Form DEF 14A on July
28, 1999.(8)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the quarterly period ended September
30, 1999, filed with the SEC on November 15, 1999.(9)
    
    Incorporated by reference to the Companys Registration Statement on Form S-8, filed with the SEC on July 2, 2004.(10)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, filed with the SEC on August 17, 2006.(11)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, filed on March 27, 2007.(12)
    
    Incorporated by reference to the Companys Definitive Proxy Statement on Form DEFM14A, filed with the SEC on June
30, 2006.(13)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, filed with the SEC on February 21, 2007. 45




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IDM PHARMA, INC.
 
 SIGNATURES
  IDM PHARMA, INC.Dated: May 15, 2007
    By:
    /s/ Jean-Loup Romet-LemonneJean-Loup Romet-Lemonne, M.D.Chief Executive Officer

(Principal Executive Officer) Dated: May 15, 2007
    By:
    /s/ Robert J. De VaereRobert J. De VaereSenior Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer) 46