##### 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 June 30, 2008,
 or
 o
    
    Transition Period Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 For the Transition Period From  to .
 Commission file number 0-19591
 IDM PHARMA, INC.
  Delaware
    
    33-0245076(State or other jurisdiction of incorporation or 
organization)
    
    (I.R.S. Employer Identification No.)
 
 
 þ o
  Large
accelerated
filer oAccelerated
filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company þ o þ




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##### 



IDM PHARMA, INC.
QUARTERLY REPORT
FORM 10-Q
 COVER PAGE
TABLE OF CONTENTSPART I. FINANCIAL INFORMATIONITEM 1. Financial StatementsCondensed Consolidated Balance Sheets as of June 30, 2008 (unaudited) and December 30, 2007
    
    
    3Condensed Consolidated Statements of Operations for the three and six-month periods ended
June 30, 2008 and 2007 (unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows for the six month periods ended June 30,
2008 and 2007 (unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    6ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    28ITEM 4T. Controls and Procedures
    
    
    29PART 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
    
    
    45ITEM 5. Other Information
    
    
    *ITEM 6. Exhibits
    
    
    46SIGNATURES
    
    
    48EXHIBIT 10.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
  
 *
    
    No information provided due to inapplicability of item.




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PART I. FINANCIAL INFORMATION
 
 ITEM I. FINANCIAL STATEMENTS
 
 IDM PHARMA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    December 31,2008
    
    
    2007(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    23,197,000
    
    
    $
    28,382,000Related party accounts receivable
    
    
    
    
    
    
    3,201,000Accounts receivable
    
    
    162,000
    
    
    
    86,000Research and development tax credit, current portion
    
    
    899,000
    
    
    
    834,000Prepaid expenses and other current assets
    
    
    488,000
    
    
    
    665,000Total current assets
    
    
    24,746,000
    
    
    
    33,168,000Property and equipment, net
    
    
    370,000
    
    
    
    513,000Patents, trademarks and other licenses, net
    
    
    3,350,000
    
    
    
    2,734,000Goodwill
    
    
    2,812,000
    
    
    
    2,812,000Research and development tax credit, less current portion
    
    
    808,000
    
    
    
    749,000Other long-term assets
    
    
    
    
    
    
    83,000$
    32,086,000
    
    
    $
    40,059,000LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    3,298,000
    
    
    $
    5,202,000Accrued payroll and related expenses
    
    
    1,661,000
    
    
    
    2,041,000Deferred revenues, current portion
    
    
    420,000
    
    
    
    390,000Common stock warrants
    
    
    4,720,000
    
    
    
    450,000Other current liabilities
    
    
    4,768,000
    
    
    
    4,079,000Total current liabilities
    
    
    14,867,000
    
    
    
    12,162,000Long-term debt, less current portion
    
    
    381,000
    
    
    
    365,000Deferred revenues, less current portion
    
    
    148,000
    
    
    
    146,000Other non-current liabilities
    
    
    750,000
    
    
    
    1,363,000Total liabilities
    
    
    16,146,000
    
    
    
    14,036,000Stockholders equity:Preferred stock, $0.01 par value, 10,000,000 shares authorized and no shares issued
and outstanding at June 30, 2008 and December 31, 2007.
    
    
    
    
    
    
    Common stock, $0.01 par value, 55,000,000 shares authorized at June 30, 2008 and
December 31, 2007 and 25,176,539 and 25,148,380 shares issued and outstanding
at June 30, 2008 and December 31, 2007, respectively.
    
    
    252,000
    
    
    
    251,000Additional paid-in capital
    
    
    206,151,000
    
    
    
    205,105,000Accumulated other comprehensive income
    
    
    20,136,000
    
    
    
    18,742,000Accumulated deficit
    
    
    (210,599,000
    )
    
    
    (198,075,000
    )Total stockholders equity
    
    
    15,940,000
    
    
    
    26,023,000$
    32,086,000
    
    
    $
    40,059,000
  3




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IDM PHARMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 Three months ended June 30,
    
    Six months ended June 30,2008
    
    2007
    
    2008
    
    2007Revenues:Related party revenue
    
    $
    
    
    
    $
    3,078,000
    
    
    $
    2,401,000
    
    
    $
    5,881,000Research grants and contract revenue
    
    
    52,000
    
    
    
    30,000
    
    
    
    52,000
    
    
    
    55,000License fees, milestones and other revenues
    
    
    3,000
    
    
    
    10,000
    
    
    
    7,000
    
    
    
    20,000Total revenues
    
    $
    55,000
    
    
    $
    3,118,000
    
    
    $
    2,460,000
    
    
    $
    5,956,000Costs and expenses:Research and development
    
    
    3,236,000
    
    
    
    5,437,000
    
    
    
    7,138,000
    
    
    
    10,698,000Selling and marketing
    
    
    86,000
    
    
    
    96,000
    
    
    
    236,000
    
    
    
    202,000General and administrative
    
    
    2,223,000
    
    
    
    3,790,000
    
    
    
    4,814,000
    
    
    
    6,739,000Restructuring expense
    
    
    1,187,000
    
    
    
    
    
    
    
    3,763,000
    
    
    
    Contract settlement income from related party
    
    
    (5,652,000
    )
    
    
    
    
    
    
    (5,652,000
    )
    
    
    Total costs and expenses
    
    
    1,080,000
    
    
    
    9,323,000
    
    
    
    10,299,000
    
    
    
    17,639,000Loss from operations
    
    
    (1,025,000
    )
    
    
    (6,205,000
    )
    
    
    (7,839,000
    )
    
    
    (11,683,000
    )Interest income
    
    
    212,000
    
    
    
    223,000
    
    
    
    450,000
    
    
    
    336,000Interest expense related to warrants
    
    
    458,000
    
    
    
    352,000
    
    
    
    (4,270,000
    )
    
    
    106,000Foreign exchange gain (loss)
    
    
    32,000
    
    
    
    (149,000
    )
    
    
    (820,000
    )
    
    
    (462,000
    )Loss before income tax
    
    
    (323,000
    )
    
    
    (5,779,000
    )
    
    
    (12,479,000
    )
    
    
    (11,703,000
    )Income tax expense
    
    
    (65,000
    )
    
    
    (56,000
    )
    
    
    (45,000
    )
    
    
    (100,000
    )Net loss
    
    $
    (388,000
    )
    
    $
    (5,835,000
    )
    
    $
    (12,524,000
    )
    
    $
    (11,803,000
    )Weighted average number of shares outstanding
    
    
    25,200,303
    
    
    
    18,428,528
    
    
    
    25,181,539
    
    
    
    16,932,966Basic and diluted loss per share
    
    $
    (0.02
    )
    
    $
    (0.32
    )
    
    $
    (0.50
    )
    
    $
    (0.70
    )Comprehensive loss:Net loss
    
    $
    (388,000
    )
    
    $
    (5,835,000
    )
    
    $
    (12,524,000
    )
    
    $
    (11,803,000
    )Other comprehensive (loss) gain
    
    
    (28,000
    )
    
    
    211,000
    
    
    
    1,394,000
    
    
    
    544,000$
    (416,000
    )
    
    $
    (5,624,000
    )
    
    $
    (11,130,000
    )
    
    $
    (11,259,000
    )
  4




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IDM PHARMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 Six Months Ended June 30,2008
    
    
    2007Operating activitiesNet loss
    
    $
    (12,524,000
    )
    
    $
    (11,803,000
    )Adjustments to reconcile net loss to net cash used in operating activities:Stock-based compensation
    
    
    1,046,000
    
    
    
    946,000Change in fair value of common stock warrants
    
    
    4,270,000
    
    
    
    (106,000
    )Depreciation and amortization
    
    
    346,000
    
    
    
    572,000Impairment of patents and licenses
    
    
    64,000
    
    
    
    43,000Impairment of property plant and equipment
    
    
    
    
    
    
    311,000Foreign exchange loss
    
    
    688,000
    
    
    
    584,000Change in operating assets and liabilities:Related party accounts receivable (sanofi-aventis)
    
    
    3,358,000
    
    
    
    (32,000
    )Accounts receivable
    
    
    158,000
    
    
    
    (74,000
    )Prepaid expenses and other current assets
    
    
    219,000
    
    
    
    484,000Research and development tax credit receivable
    
    
    
    
    
    
    (93,000
    )Other long-term assets
    
    
    87,000
    
    
    
    (6,000
    )Accounts payable and accrued liabilities
    
    
    (2,210,000
    )
    
    
    580,000Accrued payroll and related expenses
    
    
    (472,000
    )
    
    
    811,000Deferred revenues
    
    
    (9,000
    )
    
    
    (47,000
    )Other liabilities
    
    
    (1,083,000
    )
    
    
    (1,069,000
    )Net cash used in operating activities
    
    
    (6,062,000
    )
    
    
    (8,899,000
    )Investing activitiesProceeds from asset sale
    
    
    64,000
    
    
    
    Purchase of property and equipment
    
    
    (12,000
    )
    
    
    (167,000
    )Patents, trademarks and other licenses
    
    
    
    
    
    
    (67,000
    )Net cash provided by (used in) investing activities
    
    
    52,000
    
    
    
    (234,000
    )Financing activitiesNet proceeds from issuance of common stock
    
    
    1,000
    
    
    
    36,036,000Net cash provided by financing activities
    
    
    1,000
    
    
    
    36,036,000Effect of exchange rate on cash and cash equivalents
    
    
    824,000
    
    
    
    240,000(Decrease) increase in cash and cash equivalents
    
    
    (5,185,000
    )
    
    
    27,143,000Cash and cash equivalents at beginning of period
    
    
    28,382,000
    
    
    
    10,181,000Cash and cash equivalents at end of period
    
    $
    23,197,000
    
    
    $
    37,324,000Supplemental disclosure of non-cash investing and financing activitiesMilestone payment accrual to Novartis
    
    $
    750,000
    
    
    $
    
  5




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IDM PHARMA, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
June 30, 2008
 1. The Company
   2. Basis of Presentation
   Accounting for Uncertainty in
Income Taxes  an Interpretation of SFAS No. 109, Accounting for Income Taxes
 6




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1st
    
    
    
    
    
    2nd1st
    
    Quarter
    
    2nd
    
    Quarter
    
    6 months ended
    
    6 months endedQuarter
    
    As
    
    Quarter
    
    As
    
    June 30, 2007
    
    June 30, 20072007
    
    As Filed
    
    Amended
    
    As Filed
    
    Amended
    
    As Filed
    
    As AmendedStatement of Operations:Revenues
    
    $
    2.8
    
    
    $
    2.8
    
    
    $
    3.1
    
    
    $
    3.1
    
    
    $
    5.9
    
    
    $
    5.9Loss from operations
    
    
    (5.5
    )
    
    
    (5.5
    )
    
    
    (6.2
    )
    
    
    (6.2
    )
    
    
    (11.7
    )
    
    
    (11.7
    )Income tax (expense) benefit
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    0.1
    
    
    
    (0.1
    )Net loss
    
    
    (5.9
    )
    
    
    (6.0
    )
    
    
    (5.7
    )
    
    
    (5.8
    )
    
    
    (11.6
    )
    
    
    (11.8
    )Basic and diluted net loss per share
    
    
    (0.38
    )
    
    
    (0.39
    )
    
    
    (0.31
    )
    
    
    (0.32
    )
    
    
    (0.69
    )
    
    
    (0.70
    )Balance Sheet Amounts:Other non-current liabilities
    
    $
    0.5
    
    
    $
    1.7
    
    
    $
    0.5
    
    
    $
    1.7Total liabilities
    
    
    16.2
    
    
    
    17.5
    
    
    
    19.1
    
    
    
    20.5Accumulated deficit
    
    
    184.4
    
    
    
    185.7
    
    
    
    190.1
    
    
    
    191.5Total stockholders equity
    
    
    16.1
    
    
    
    14.8
    
    
    
    31.7
    
    
    
    30.3Total liabilities and stockholders equity
    
    
    32.2
    
    
    
    32.2
    
    
    
    50.8
    
    
    
    50.8
  3. Recent Operating Results and Liquidity
     7




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4. Summary of Significant Accounting Policies
  Concentration of credit risk
   Impairment of long lived assets
 Accounting for Impairment or Disposal of Long Lived Assets
 8




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Net Loss Per Share
 Earnings
per Share.
 June 30, 2008
    
    June 30, 2007Options outstanding
    
    
    1,657,775
    
    
    
    1,912,998Restricted stock awards
    
    
    679,649
    
    
    
    182,141Warrants outstanding
    
    
    3,377,412
    
    
    
    3,377,412Reserved pursuant to option liquidity agreements
    
    
    372,465
    
    
    
    372,868Total
    
    
    6,087,301
    
    
    
    5,845,419
 Stock-Based Compensation
 Share-Based Payment
   9




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Three months ended
    
    Six months endedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Research and development
    
    $
    148,000
    
    
    $
    68,000
    
    
    $
    233,000
    
    
    $
    150,000General and administrative
    
    
    435,000
    
    
    
    646,000
    
    
    
    794,000
    
    
    
    796,000Selling and marketing
    
    
    16,000
    
    
    
    
    
    
    
    19,000
    
    
    
    Total stock-based compensation expense
    
    $
    599,000
    
    
    $
    714,000
    
    
    $
    1,046,000
    
    
    $
    946,000
  Restricted Stock Awards
    5. Sale of Common Stock and Warrants
  10




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Accounting for Derivative Financial Instruments Indexed To, and
Potentially Settled In, a Companys Own Stock,
  11




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6. Research and Development and Other Agreements
 Novartis-Jenner
    Agreement with sanofi-aventis (Related Party)
  ®
 12




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
  Three months ended
    
    Six months endedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Amortization of upfront fee
    
    
    
    
    
    
    60,000
    
    
    
    
    
    
    
    117,000Amortization of phase 1 milestone payment
    
    
    
    
    
    
    70,000
    
    
    
    
    
    
    
    139,000Amortization of initial R&D expenses from 1999 to 2001
    
    
    
    
    
    
    56,000
    
    
    
    
    
    
    
    111,000Reimbursement of current R&D expenses
    
    
    
    
    
    
    2,892,000
    
    
    
    2,401,000
    
    
    
    5,514,000Total revenues
    
    
    
    
    
    
    3,078,000
    
    
    
    2,401,000
    
    
    
    5,881,000
  Cambridge Labs
  7. Obligations under collaboration, licensing and contract research organization agreements
  13




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8 Government Research Funding
  9. Restructuring, Severance and Retention Related Charges
 January 2008 Restructuring Plan
  Accounting for Costs Associated with Exit or Disposal
Activities Employers
Accounting for Postemployment Benefits
   14




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Severance
    
    
    Facility Shutdown
    
    
    TotalLiability at December 31, 2007
    
    $
    500,000
    
    
    $
    
    
    
    $
    500,000Additional expenses incurred
    
    
    3,200,000
    
    
    
    600,000
    
    
    
    3,800,000Payments made
    
    
    (3,100,000
    )
    
    
    (600,000
    )
    
    
    (3,700,000
    )Liability at June 30, 2008
    
    $
    600,000
    
    
    $
    
    
    
    $
    600,000
   Employee Retention
      15




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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
 11. Fair Value Measurements
 Fair Value Measurements )
  16




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The Fair Value Option for Financial Assets and
Financial Liabilities.
 12. New Accounting Standards
 Accounting for Non-refundable
Advance Payments for Goods or Services to Be Used in Future Research and Development Activities
 Business Combinations
 Disclosures About Derivative Instruments and
Hedging Activities  an amendment of FASB Statement No. 133
 The Hierarchy of Generally Accepted Accounting
Principles The Meaning of
Present Fairly in Conformity with Generally Accepted Accounting Principles.
  17




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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 2007 audited financial statements and notes
thereto included in our Form 10-K filed with the Securities and Exchange Commission on March 21,
2008.
 Operating results for the three months ended June 30, 2008 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
     18




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Results of Operations for the Three Months Ended June 30, 2008 and 2007
 Revenues.
  Research and Development Expenses.
  21




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Selling and Marketing Expenses.
 General and Administrative Expenses.
 Restructuring Expenses.
 Interest Income.
 Interest Expense related to warrants.
 Foreign Exchange Gain or Loss.
 Income Tax Benefit or Liability.
  Net Loss.
 Results of Operations for the Six Months Ended June 30, 2008 and 2007
 Revenues.
  22




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Research and Development Expenses.
  Selling and Marketing Expenses.
 General and Administrative Expenses.
 Restructuring Expenses.
 Interest Income.
 Interest Expense related to warrants.
 Foreign Exchange Gain or Loss.
 23




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Income Tax Benefit or Liability.
  Net Loss.
 Liquidity and Capital Resources
        24




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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;
    
    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
   26




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    28




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ITEM 4T. CONTROLS AND PROCEDURES
   
    
    Supplement internal staff expertise by consulting with independent, third party experts
regarding accounting treatment of unusual or non-routine compensation-related transactions;
and
    
    Revise and enhance the review process for unusual, non-routine compensation-related
transactions;
  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, L-MTP-PE, may never obtain regulatory approval.
    30




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* Even if we receive regulatory approval for L-MTP-PE, we would not be able to commercialize it
immediately or market it successfully.
   31




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* We are evaluating our research and development programs and considering strategic transactions,
but we may not be able to complete any transaction successfully.
   * Our substantial additional capital requirements will require that we obtain additional funding if
we do not complete a strategic transaction; if we are not able to obtain additional funding when
needed, we may be required to sell our assets or our company, or dissolve and liquidate all of our
assets.
  
    
    whether we are able to secure additional financing on favorable terms, or at all;
 32




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
    
    the costs associated with, and the success of, obtaining marketing approval and,
as applicable, pricing approval, for L-MTP-PE for the treatment of osteosarcoma
in the U.S., Europe and other jurisdictions and the timing of any such approval;
    
    the success or failure of the product launch and commercialization of L-MTP-PE;
    
    the costs associated with the launch and the commercialization of L-MTP-PE in the
U.S., Europe and other jurisdictions upon obtaining marketing approval;
    
    the costs associated with our clinical trials for our product candidates,
including IDM-2101, our lung cancer vaccine candidate;
    
    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 license 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.
    33




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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.
  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 or put them on hold as we have done with our UVIDEM
development program following sanofi-aventis termination of its
participation in the program;
    
    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
    
    our product candidates may not have the desired effects or may have
undesirable side effects that preclude regulatory approval or limit
their commercial use, if approved.
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Our revenues and operating results are likely to fluctuate.
    * 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 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.
  36




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
    
    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 mechanisms, escape an immune response.
  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.
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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.
      * 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.
 * If we are unable to compete effectively in the highly competitive biotechnology industry, our
business will fail.
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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
    
    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.
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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 if we determine to market and commercialize our
products independently, which could adversely affect our results of operations.
  
    
    train, manage, motivate and retain our employee base
    
    accurately forecast demand for, and revenues from, our product candidates, particularly L-MTP-PE; and
    
    expand existing operational, financial and management information
systems to support development and commercialization activities.
  Our use of hazardous materials could expose us to significant costs.
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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 L-MTP-PE;
    
    whether we are able to secure additional financing on favorable terms, if 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
  
    
    The election of six directors to hold office until the 2009 Annual Meeting of
Stockholders. Elected to serve as directors were, Timothy P. Walbert, Dr. Robert Beck,
Michael G. Grey, Dr. John P. McKearn, Dr. Edward E. Penhoet and Gregory J. Tibbitts.
  Nominees
    
    For
    
    WithheldTimothy P. Walbert
    
    
    19,837,719
    
    
    
    247,361Robert Beck, M.D.
    
    
    19,841,446
    
    
    
    243,634Michael G. Grey
    
    
    19,385,601
    
    
    
    699,479John P. McKearn, Ph.D.
    
    
    19,652,192
    
    
    
    432,888Edward E. Penhoet, Ph.D.
    
    
    19,976,737
    
    
    
    108,343Gregory J. Tibbitts
    
    
    19,970,709
    
    
    
    114,371
 
    
    For approval of an amendment to the Companys 2000 Stock Plan to increase the aggregate
number of shares of Common Stock authorized for issuance under the Plan by 400,000 shares
from 2,828,571 to 3,228,571 shares.
  For:
    
    
    13,670,152Against:
    
    
    345,090Abstained:
    
    
    15,695Non-Votes:
    
    
    6,054,143
 
    
    To ratify the selection by the Board of Directors of Ernst & Young LLP, Independent
Registered Public Accounting Firm, as the independent registered public accounting firm of
the Company for its fiscal year ending December 31, 2008.
  For:
    
    
    19,972,525Against:
    
    
    88,510Abstained:
    
    
    24,044Non-Votes:
    
    
    0
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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)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, 2005.(10)3.14
    
    Certificate of Ownership and Merger, filed with the Secretary of
State of Delaware on August 15, 2005.(10)3.15
    
    Amended and Restated Bylaws of the Company. (12)4.1
    
    Reference is made to Exhibits 3.1 through 3.15.4.2
    
    Specimen certificate of the Common Stock. (14)4.3
    
    Unit Purchase Agreement, dated February 20, 2007, by and among the
Registrant and the purchasers listed on Exhibit A thereto. (11)4.4
    
    Form of Warrant. (11)4.5
    
    Form of Securities Purchase Agreement. (13)
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ExhibitNumber
    
    Document Description4.6
    
    Form of Warrant. (13)10.1
    
    2008 Retention Compensation and Bonus Plan for Certain Executive
Employees effective as of June 25, 2008.(*)10.2
    
    2000 Stock Plan, as amended.(15)(*)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, 2005.(11)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, filed on February 21, 2007.(12)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, filed on March 27, 2007.(13)
    
    Incorporated by reference to the Companys Current Report on Form 8-K, filed with the SEC on June
21, 2007.(14)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2007, filed with the SEC on March 21, 2008.(15)
    
    Incorporated by reference to the Companys Form 8-K, filed with the SEC on June 27, 2008. 47




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IDM PHARMA, INC.  SIGNATURES
  IDM PHARMA, INC.Dated: August 8, 2008
    By:
    /s/ Timothy P. WalbertTimothy P. WalbertPresident and Chief Executive Officer
(Principal Executive Officer)Dated: August 8, 2008
    By:
    /s/ Robert J. De VaereRobert J. De VaereSenior Vice President, Finance and
Administration and Chief Financial
Officer (Principal Financial and
Accounting Officer) 48