SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2007

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT

                         COMMISSION FILE NO. 333-134987

                        TETRAGENEX PHARMACEUTICALS, INC.
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

<TABLE>
<C>                                    <C>                                     <C>
          DELAWARE                               0-2834                          22-3781895
  (State or other jurisdiction of      (Primary Standard Industrial           (I.R.S. Employer
incorporation or organization)         Classification Code Number)               I.D No.)
</TABLE>

                            1 Maynard Drive Suite 105
                          Park Ridge, New Jersey 07656
                    (Address of Principal Executive Offices)

                                 (201) 505-1300
                           (Issuer's Telephone Number)

Check  whether  the  issuer:  1) filed all  reports  required  to be filed under
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter  period that the Issuer was required to file such  reports);  and 2) has
been subject to such filing requirements for the past 90 days. [X] Yes [ ] No

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). [ ] Yes [X] No

APPLICABLE  ONLY TO  ISSUERS  INVOLVED  IN  BANKRUPTCY  PROCEEDINGS  DURING  THE
PRECEDING FIVE YEARS:

Check whether the  registrant  filed all  documents  and reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. Yes [X] No [ ]

Number of shares  outstanding  of  Issuer's  common  stock,  $0.001  par  value,
outstanding on June 30, 2007: 15,901,126.

Documents Incorporated by Reference: NONE

Transitional Small Business Disclosure Format (Check one): Yes [ ]; No [X]



<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               PAGE
                                                                                                               ----
<S>                                                                                                            <C>
PART I:  FINANCIAL INFORMATION....................................................................................1

   ITEM 1       CONDENSED FINANCIAL STATEMENTS....................................................................1
   ITEM 2       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS................2
   ITEM 3       CONTROLS AND PROCEDURES...........................................................................6

PART II:  OTHER INFORMATION.......................................................................................7

   ITEM 1       LEGAL PROCEEDINGS.................................................................................7
   ITEM 2       UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.......................................7
   ITEM 3       DEFAULTS ON SENIOR SECURITIES.....................................................................7
   ITEM 4       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...............................................7
   ITEM 5       OTHER INFORMATION.................................................................................7
   ITEM 6       EXHIBITS..........................................................................................7

SIGNATURES........................................................................................................8


EXHIBITS..........................................................................................................9

</TABLE>


                                       i


<PAGE>


                          PART I: FINANCIAL INFORMATION



ITEM 1 FINANCIAL STATEMENTS


                          INDEX TO FINANCIAL STATEMENTS


<TABLE>
<CAPTION>

                                                                                                             PAGE
                                                                                                             ----
<S>                                                                                                           <C>
Unaudited Condensed Balance Sheet as of June 30, 2007 ........................................................F-1

Unaudited Condensed Statement of Operations for the Six Month Periods
   Ended June 30, 2007 and 2006...............................................................................F-2

Unaudited  Condensed Statement of Cash Flows for the Six Month Periods Ended June 30, 2007 and
   2006............. .........................................................................................F-3

Notes to Unaudited Condensed Financial Statements.............................................................F-4

</TABLE>


                                       1


<PAGE>


                        UNAUDITED CONDENSED BALANCE SHEET
                             AS OF JUNE 30, 2007 AND
                              AUDITED BALANCE SHEET
                             AS OF DECEMBER 31, 2006

<TABLE>
<CAPTION>

                                                                                      DECEMBER         JUNE
ASSETS                                                                                 31, 2006       30, 2007
                                                                                      ----------      --------
                                                                                                    (unaudited)
<S>                                                                               <C>              <C>
CURRENT ASSETS
      Cash and cash equivalents                                                   $   1,965,960    $   1,200,826
      Prepaid insurance and other current assets                                         18,169           23,257
                                                                                  -------------    -------------
                                                                                      1,984,129        1,224,083

Property and equipment, net                                                               9,647            6,917
Security Deposit                                                                         18,958           18,958
Patents, net                                                                            399,595          426,592
                                                                                  -------------    -------------

                                                                                  $   2,412,329    $   1,676,550
                                                                                  =============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
      Accounts payable and accrued expenses                                             873,206          989,569
      Accrued interest                                                                  120,955          149,634
                                                                                  -------------    -------------

                                  Total current liabilities                             994,161        1,139,203

LONG TERM LIABILITY
              Notes payable                                                           1,882,362        1,882,362
                                                                                  -------------    -------------

                                  Total liabilities                                   2,876,523        3,021,565
                                                                                  -------------    -------------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
      Class A preferred stock - $.01 par value - 5,000,000
                  shares authorized; 0 shares outstanding                                  --               --
      Common stock - $.001 par value - 50,000,000 shares authorized
                  15,901,126 shares issued and outstanding                               15,901           15,901
      Additional paid-in capital                                                     98,932,619       99,705,137
      Accumulated deficit                                                           (99,412,714)    (101,066,053)
                                                                                  -------------    -------------

      Total stockholders' equity                                                       (464,194)      (1,345,015)
                                                                                  -------------    -------------
                                                                                  $   2,412,329    $   1,676,550
                                                                                  =============    =============

</TABLE>


                                      F-1

THE ACCOMPANYING FOOTNOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS

<PAGE>


                   UNAUDITED CONDENSED STATEMENT OF OPERATIONS
  FOR THE THREE MONTH PERIODS ENDED AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006

<TABLE>
<CAPTION>

                                                        Three months ended June 30,       Six months ended June 30,
                                                       ----------------------------    ----------------------------

                                                             2007           2006             2007             2006
                                                       ------------    ------------    ------------    ------------
                                                                 (unaudited)                    (unaudited)
<S>                                                      <C>             <C>             <C>             <C>
REVENUE
       Contract revenue                                $       --      $       --      $       --      $       --
                                                       ------------    ------------    ------------    ------------
                                                               --              --              --              --
                                                       ------------    ------------    ------------    ------------

OPERATING EXPENSES
       Research and development                        $       (931)   $      3,659    $      4,469    $     36,708
       Compensation expense                                 183,094         256,636         419,338         450,743
       Travel                                                18,608           6,496          41,167          31,541
       General and administrative                            59,426          44,408         112,771         127,968
       Professional fees                                     46,752          12,697          83,646          92,096
       Payroll taxes and employee benefits                   17,983          27,486          46,336          48,902
       Consulting fees                                      817,510          67,645         876,589         152,281
       Rent and occupancy                                    22,971          21,916          50,073          52,686
       Depreciation and amortization                         11,073           9,165          21,439          20,811
                                                       ------------    ------------    ------------    ------------

LOSS BEFORE OTHER INCOME(EXPENSE) AND TAX BENEFIT        (1,176,486)       (450,108)     (1,655,828)     (1,013,736)

OTHER INCOME (EXPENSE)
       Interest income and other                             13,482          19,223          31,168          41,617
       Interest expense                                     (14,083)        (14,597)        (28,679)        (28,679)
                                                       ------------    ------------    ------------    ------------

LOSS BEFORE TAX BENEFIT                                  (1,177,087)       (445,482)     (1,653,339)     (1,000,798)

NET LOSS                                               $ (1,177,087)   $   (445,482)   $ (1,653,339)   $ (1,000,798)
                                                       ============    ============    ============    ============

Basic and diluted net loss per share                   $      (0.07)   $      (0.03)   $      (0.10)   $      (0.07)
                                                       ============    ============    ============    ============

Weighted average common shares outstanding               15,901,126      14,758,771      15,901,126      15,159,226
                                                       ============    ============    ============    ============

</TABLE>



                                      F-2


THE ACCOMPANYING FOOTNOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS




<PAGE>




                   UNAUDITED CONDENSED STATEMENT OF CASH FLOWS
             FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2007 AND 2006

<TABLE>
<CAPTION>

                                                                                                Six months ended June 30,
                                                                                            ------------------------------

                                                                                                   2007          2006
                                                                                            -----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES                                                            (unaudited)

<S>                                                                                          <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
      Net loss                                                                               $(1,653,339)   $(1,000,798)
      ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
       USED IN OPERATING ACTIVITIES
                       Depreciation and amortization                                              21,440         20,811
                       Stock, option and warrant compensation                                    772,518         13,950
      CHANGES IN OPERATING ASSETS AND LIABILITIES
                       Prepaid insurance and other current assets                                 (2,623)        32,390
                       Accounts payable and accrued expenses                                     113,898        (15,228)
                       Accrued interest payable                                                   28,679         28,679
                                                                                             -----------    -----------

                                       Net cash used in operating activities                    (719,427)      (920,196)
                                                                                             -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
      Cash paid for patents                                                                      (45,707)       (38,039)
                                                                                             -----------    -----------

                                       Net cash (used in) provided by investing activities       (45,707)       (38,039)
                                                                                             -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
      Proceeds from issuance of common stock                                                        --        1,327,127
                                                                                             -----------    -----------

                                       Net cash provided by financing activities                    --        1,327,127
                                                                                             -----------    -----------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                            (765,134)       368,892

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                                   1,965,960      2,273,702
                                                                                             -----------    -----------

CASH AND CASH EQUIVALENTS, END OF YEAR                                                       $ 1,200,826    $ 2,642,594
                                                                                             ===========    ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
      Cash paid for taxes                                                                    $     2,716    $     6,597
      Cash paid for interest                                                                 $      --      $      --
                                                                                             ===========    ===========

NON CASH TRANSACTIONS
      Stock, options, and warants issued for compensation                                        719,427         13,950

</TABLE>


                                      F-3


THE ACCOMPANYING FOOTNOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS




<PAGE>

               NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS


THE COMPANY

Tetragenex   Pharmaceuticals,   Inc.   ("Tetragenex"   or  the   "Company")  was
incorporated in 2001 in the State of Delaware and our  predecessor,  Innapharma,
Inc.,  was  incorporated  in 1989 in the State of Delaware  ("Innapharma").  The
corporate  headquarters of Tetragenex are located in Park Ridge, New Jersey.  On
November  23,  2004,   Innapharma   merged  into  its  wholly  owned  subsidiary
Tetragenex.  As part of the merger,  all existing  shares,  options and warrants
were  converted into  securities of Tetragenex on a 1-for-4  basis.  All numbers
relating  to shares of the  Company  have been  restated  to reflect the 1-for-4
conversion ratio.

Tetragenex  is a  biopharmaceutical  company  working to  discover,  develop and
commercialize  proprietary  pharmaceutical  products that treat serious diseases
for which  current  therapies  are  inadequate.  The Company has  developed  and
patented a novel platform of  pharmaceutical  "small chain"  peptides that treat
depression,  anxiety and other central nervous system  disorders.  The Company's
leading product candidate, the antidepressant compound Nemifitide,  is currently
in human clinical trials.

Tetragenex  has also  discovered,  synthesized  and is  currently  developing  a
platform of new and unique chemically modified tetracycline molecules to be used
in the treatment of certain types of cancer and  treatment  resistant  bacterial
infections.  These  tetracycline-based  product  candidates are currently in the
pre-clinical development stage.

On January 26, 2007 the  Securities  and Exchange  Commission  declared our SB-2
effective.  The Company is current in all of its  filings.  On June 14, 2007 the
NASD  approved  Tetragenex  Pharmaceuticals,  Inc.  to be quoted  on the  NASDAQ
Bulletin Board under the symbol TTRX.

RECENTLY ISSUED ACCOUNTING STANDARDS

The FASB has recently announced a new  interpretation,  FASB  Interpretation No.
48,  "Accounting  for  Uncertainty  in Income  Taxes"  (FIN 48),  which  will be
effective for fiscal years  beginning  after December 15, 2006, FIN 48 clarifies
the accounting for  uncertainty  in income taxes  recognized in an  enterprise's
financial  statements in accordance with FASB statement No. 109, "Accounting for
Income  Taxes".  FIN 48  prescribes  a  recognition  threshold  and  measurement
attribute for the  financial  statement  recognition  and  measurement  of a tax
position  taken or expected to be taken in a tax  return.  FIN 48 also  provides
guidance on de-recognition,  classification,  interest and penalties, accounting
in interim periods,  disclosure and transition. The Company does not believe the
adoption of FIN 48 will impact its consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157 "Fair Value Measurements" ("SFAS
157"). SFAS 157 provides accounting guidance on the definition of fair value and
establishes  a  framework  for  measuring  fair value in U.S.  GAAP and  expands
disclosures about fair value  measurements.  SFAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007. We plan to
adopt the provisions of SFAS 157 on November 1, 2008. The implementation of SFAS
157 is not expected to have a material  impact on our results of  operations  or
financial condition.


                                      F-4


<PAGE>


               NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                                    (con't)


Quantifying and evaluating the materiality of unrecorded misstatements.

In September  2006, the SEC issued SAB No. 108 ("SAB 108"),  which addresses the
process for considering the effects of prior year misstatements when quantifying
misstatements  in current year financial  statements.  SAB 108 expresses the SEC
Staff's  views  regarding  the  process  of  quantifying   financial   statement
misstatements.  The interpretations in SAB 108 are intended to address diversity
in practice in quantifying  financial statement  misstatements and the potential
under current practice for the build-up of improper  balance sheet amounts.  The
application  of SAB 108 is  effective  for  financial  statements  issued for an
interim  period of the first fiscal year ending after November 15, 2006. We will
adopt the  interpretations of SAB 108 on November 1, 2006. The implementation of
SAB 108 is not expected to have a material  impact on our results of  operations
or financial condition.

In February  2007,  the FASB issued  SFAS NO.  159.  "The Fair Value  Option for
Financial  Assets  and  Financial  Liabilities"("SFAS").  SFAS 159  permits  all
entities to chose to measure eligible items at fair value at specified  election
dates. The company is currently assessing the impact of adopting SFAS 159 on its
consolidated financial statements.

INTERIM FINANCIAL STATEMENTS

Financial  statements  as of June 30, 2007 and for the six month  periods  ended
June 30,  2007 and 2006,  have been  prepared  on the same  basis as the  annual
financial statements and, in the opinion of management, reflect all adjustments,
which include only normal recurring adjustments, necessary to present fairly the
Company's  financial  position,  results  of  operations  and cash flows for the
periods shown.  The results of operations  for such periods are not  necessarily
indicative of the results expected for a full year or for any future period. The
interim  condensed  financial  statements should be read in conjunction with the
audited  financial  statements for the years ended December 31, 2006 and 2005 as
appearing in the Company's form 10K SB filed on March 30, 2007.

NOTES PAYABLE

The Company has one $1,882,362 promissory note outstanding which is due on April
23, 2009, which carries 3% interest.  The note is convertible into common shares
at $5 per share at the discretion of the holder of the note. The note is secured
by the patents of the Company.

STOCKHOLDERS' EQUITY

STOCK OPTIONS

On June  30,  2007  there  were a total of  8,038,253  options  outstanding  all
exercisable at $1 per share expiring 15 years from issuance.




                                      F-5



<PAGE>



               NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                                    (con't)





WARRANTS

At June 30, 2007, the Company had  outstanding  warrants to purchase  11,863,514
shares of the Company's common stock at exercise prices of $1, $1.30,  $1.65 and
$6 per share.  These warrants have  expirations of November 30, 2009,  March 30,
2012, April 30, 2009 and November 30, 2011 respectively.

The following table presents,  for each of the following  classes of warrants as
determined  by range of  exercise  price,  the  information  regarding  warrants
outstanding and weighted-average exercise price as of June 30, 2007.



                                         WARRANTS OUTSTANDING
                            ------------------------------------------------
                                                        WEIGHTED AVERAGE
RANGE OF EXERCISE PRICE       NUMBER OF WARRANTS         EXERCISE PRICE
-------------------------   -----------------------   ----------------------
      $1.00                       7,058,796                 $1.00
      $1.30                         875,000                 $1.30
      $1.65                         645,322                 $1.65
      $6.00                       3,284,396                 $6.00
-------------------------   -----------------------   ----------------------


COMMON STOCK TRANSACTIONS

There were no common stock transactions during the second quarter of 2007.

COMMITMENTS AND CONTINGENCIES

EMPLOYMENT AGREEMENTS

On December 15, 1999, the Company entered into a three-year employment agreement
with its co-Chief  Co-CEO Officer and  co-Chairman of the Board (the  "Co-CEO").
The  agreement  provided  for an annual  base salary of  $160,000,  subject to a
minimum  ten  percent  annual  increase.  On  February  6, 2001,  in view of the
Co-CEO's  efforts on behalf of the Company and his  performance,  the  Company's
Board of Directors (i) increased his annual salary to $250,000 with no automatic
annual  increases,  and extended  the term of his  employment  agreement  for an
additional  two years and (ii)  granted the Co-CEO a ten-year  option to acquire
125,000  shares of the  Company's  common stock at an exercise  price of $17 per
share,  one third of which  vested  immediately,  one  third of which  vested on
February 6, 2002,  and the final third  vested on February 6, 2003.  On December
11, 2001, in  consideration  of services  provided to the Company,  the Board of
Directors  (i) further  increased  his annual  salary to $300,000,  (ii) further
extended the term of the agreement by one year,  through and including  December
15,  2005 and  (iii)  granted  the  Co-CEO  an  additional,  immediately  vested
five-year  option to acquire 125,000 shares of the Company's  common stock at an
exercise price of $17 per share.  On April 6, 2003, as a result of the Company's
cost  reduction,  the Co-CEO agreed to defer half of his $300,000 yearly salary.
In December  2005 the Co-CEO agreed to convert  $177,000 of his deferred  salary
into 177,000  options to purchase  shares of  Tetragenex  common stock at $1 per
share  expiring  December  20,  2020.  On June 30, 2007 the Co-CEO had  deferred
compensation totaling $276,432. The Co-CEO was granted an aggregate of 1,420,000
options exercisable at $1 per share and expiring in 2020 during 2005 and another
115,000 in 2006 under



                                      F-6


<PAGE>



               NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                                    (con't)




the same  terms.  The  co-CEO is the  nephew  of the  Company's  other  co-Chief
Executive Officer, David Abel.

All  officers,  directors  and  employees  of the  Company  at the  time  of the
bankruptcy agreed to defer a portion or all of their  compensation.  On June 30,
2007, there was $805,191  deferred  compensation from officers and employees and
$143,750 from board members.  During 2006,  additional salaries and compensation
in the amounts of $341,124 was accrued from  officers and  employees and $50,000
from directors.

It is anticipated  that the majority of accrued  payments will be converted into
warrants of the Company on a 1-for-1 basis.

LITIGATION

At June 30, 2007 the Company was not involved in any ongoing litigation.

RISKS AND UNCERTAINTIES

The Company is subject to risks  common to  companies  in the  biopharmaceutical
industry, including, but not limited to, successful commercialization of product
candidates,  protection of proprietary  technology and compliance  with Food and
Drug Administration (the "FDA") regulations.

As reflected in the accompanying consolidated financial statements,  the Company
has incurred significant recurring losses from operations and negative operating
cash flows,  which have been financed  primarily by proceeds from stock and debt
issuances.  As a result, the Company had an accumulated  deficit of $101,066,052
and $97,442,534 at June 30, 2007 and 2006, respectively.

Management  plans to provide for  additional  working  capital and funds for the
continued  development  of its products  through  private or public sales of the
Company's  common  stock.  The  Company's  ability to obtain such  financing  is
contingent  upon  continued  progress  in its drug  development  efforts and its
ability to access capital resources. Management is also attempting to enter into
an  agreement   with  a  major   pharmaceutical   company  to   co-develop   its
antidepressant  drug, which may generate significant cash flows for the Company.
However,  no assurance  can be given as to the  Company's  ability to enter into
such an agreement or  successfully  complete an IPO, or complete  future private
placements.

LEASE OBLIGATIONS

On March 12, 2003, the Company  entered into an operating  lease for its current
office space in Park Ridge,  New Jersey.  The lease commenced on March 31, 2003,
and expires on March 31,  2007,  and required  monthly  base rental  payments of
$10,200 plus certain annual  escalation.  In December 2006, the Company  entered
into a 5-year lease operating lease to rent different space in the same building
where it is currently  situated which requires  monthly base rental  payments of
$6,300 per month and expires in December 2011.

The  approximate  aggregate  minimum  rental  commitments on these leases are as
follows:



                                      F-7



<PAGE>



               NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                                    (con't)


YEAR ENDING
DECEMBER 31,
--------------------------------------------------

2007                                     87,300
2008                                     75,600
2009                                     75,600
2010                                     75,600
2011                                     75,600
                                    --------------
Total minimum lease payments        $   389,700
                                    ==============

The rental  expense was $124,039  and $133,504 for the years ended  December 31,
2006 and 2005, respectively.

401(k) PROFIT SHARING PLAN

In December 1993, the Company  adopted a 401(k) Profit Sharing Plan (the "401(k)
Plan"),  effective as of January 1, 1994.  All employees of the Company who have
attained  the age of 21 are  eligible to  participate  in the 401(k)  Plan.  The
401(k) Plan permits  eligible  employees to make voluntary  contributions to the
401(k) Plan up to the dollar  limit set by law.  The Company  may,  but does not
currently,  contribute  discretionary matching contributions in any amount to be
determined  on an  annual  basis  by  the  Board  of  Directors.  Each  eligible
participant's share of the Company's contribution vests over a seven-year period
beginning  with the first full year of service at the rate of 15% per year.  The
Company is in the process of terminating its 401(k) Plan.

SUBSEQUENT EVENTS

On July 26,  2007 the board  unanimously  approved  the  granting of 3.7 million
options  which  initially  was granted on May 29, 2007 to  officers,  directors,
employees and  consultants of the Company  outside of the 2007 Stock Option Plan
(the "Plan") in the event the Plan is not approved by the Company's stockholders
for  unforeseen  reasons.  A Form 8-K was filed with the Securities and Exchange
Commission (the "Commission") with regards to this transaction. In addition each
officer and director filed a Form S-4 as needed.

An aggregate of 55,000 warrants to purchase the Company's  common stock at $1.30
per share was issued to three  individuals  who agreed to become  members of the
Company's revised Scientific Advisory Board.


                                      F-8


<PAGE>


ITEM 2 MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND PLAN OF
       OPERATIONS

MANAGEMENT'S DISCUSSION AND ANALYSIS:

The following  discussion  should be read in conjunction  with the  consolidated
historical  financial  statements  of the  Company  and  related  notes  thereto
included  elsewhere in this Form 10-QSB and the Annual Report on Form 10-KSB for
the year ended December 31, 2006 as filed with the Commission on March 30, 2007.
This discussion contains  forward-looking  statements regarding the business and
industry of the Company within the meaning of the Private Securities  Litigation
Reform  Act of 1995.  These  statements  are  based  on the  current  plans  and
expectations of the Company and involve risks and uncertainties that could cause
actual future  activities  and results of operations to be materially  different
from those set forth in the forward-looking statements.

The  information set forth and discussed below for the six months ended June 30,
2007 and June 30, 2006, is derived from the  consolidated  financial  statements
included  elsewhere  herein.  The financial  information set forth and discussed
below is un-audited but, in the opinion of management,  reflects all adjustments
(consisting of normal recurring  adjustments)  necessary for a fair presentation
of such  information.  The results of  operations  of the Company for the fiscal
quarter ended June 30, 2007,  may not be indicative of results  expected for the
entire fiscal year ending December 31, 2007.

LIQUIDITY AND CAPITAL RESOURCES:

The Company currently has approximately $1.1 million in current assets and has a
core burn rate of  approximately  $85,000  per month.  These  funds will be used
primarily to operate the Company going forward.  Additional funds will be needed
to fund further studies required by the FDA to bring its lead compound, Nemifide
to market.  We currently  have several  protocols in place for future studies as
funding  dictates.  Future  funds will be derived from  additional  sales of our
common stock in the public or private markets and/or a licensing  agreement with
a pharmaceutical  company.  We anticipate  commencing a  multi-centered  pivotal
human clinical trial while we are working on securing a licensing  agreement for
Nemifitide.  On June 29,  2007 we filed  our  application  with the State of New
Jersey to sell our state tax losses as part of the New Jersey  Development Plan.
We have  received  significant  resources  in the past from this program and are
hopeful to again benefit from it. Our only  long-term  debt consists of the $1.8
million  convertible  note  payable in April  2009 to the former  holders of our
Series D Preferred Stock in April 2009.

RESULTS OF OPERATIONS AND FINANCIAL CONDITION:

The Company's  predecessor  successfully emerged from bankruptcy and merged with
the  Company in  November  2004.  The  Company  raised over $4 million in equity
throughout  the Chapter 11 process and had  significant  expenses  directly  and
indirectly  relating to the bankruptcy from April of 2003 to November of 2004. A
significant  portion of the proceeds from its Private Placement was committed to
general and  administrative  overhead and  completing  the  preclinical  studies
required by the FDA. The majority of the net loss in 2005 was  attributed to the
value of the options  granted to the  officers,  directors  and employees of the
Company.

For the past  four  years,  the  Company  has sold a portion  of its tax  losses
through a program sponsored by the State of New Jersey.  The program generated a
net check to the Company in 2003 in excess of $200,000,  it generated a check of
over $400,000 in December of 2004, and an additional  $315,000 in December 2005.
In  2006,  due to the  elimination  of  Innapharma  and thus the loss of its tax
credits, the




                                       2


<PAGE>

Company  only  received  $5,000 as part of the  program.  The Company  filed its
application to sell its state tax losses in June.

The Company believes that the burn rate may increase by approximately $15,000 to
$20,000  per  month  for costs  related  to  additional  employees  and  various
continued costs that will be incurred as a result of the Company  becoming fully
reporting  and  publicly  traded  and  once we  begin a  human  clinical  trial,
including  but not limited to attorney's  fees,  accounting  fees,  filing fees,
public relations expenses, and additional necessary insurance,  etc. The Company
has committed $75,000 to the continued  development of its tetracyclines  within
the past 12 months.

As of the date of this quarterly  report, we currently have  approximately  $1.1
million in liquid funds  available to us. We believe this is  sufficient to last
us between 12 and 16 months from the date of filing.  Our current core burn rate
is  approximately  $85,000 per month.  Employee and consultant  salaries are the
major component in our burn rate. Our current payroll is  approximately  $32,000
per month. Additionally our scientific consultants receive approximately $10,000
per month and work on a part time basis.  Our rent expense is  currently  $6,300
per month.  Director and officer insurance and product liability insurance total
approximately  $12,000 per month. This has increased by approximately $5,000 per
month  as a  result  of our be  quoted  on a public  exchange.  Included  in the
remainder are car allowances, telephone and internet expenses, general corporate
expenses,  outsourced  accounting and legal fees and office  supplies.  Our core
burn rate may  increase to  approximately  $100,000 per month as a result of our
need for additional staff and increased expenses incurred in connection with our
being a public entity.  Future funds will be derived from additional sale of our
common stock in the public or private markets and/or a licensing  agreement with
a  pharmaceutical  company as well as potentially  the  continuing  sales of our
state tax losses through the New Jersey  Development  Plan. We have a successful
track record in raising  funds,  having  completed 13 private  financings  since
1994, which resulted in the raising of over $75 million.  Our only debt consists
of the $1.8 million convertible note payable to the former holders of our Series
D Preferred Stock in April 2009.



THE SIX MONTHS  ENDING JUNE 30, 2007 AS COMPARED TO THE PERIOD OF THE SIX MONTHS
ENDED JUNE 30, 2006

Revenue - The Company had no revenue from any source for the sixth months ending
June 30, 2007 and 2006.

Research and Development - Research and development costs decreased from $36,708
to $4,468 for the six months  ending June 30, 2007 versus the same six months of
2006.  No  studies  have been  performed  during  2007 thus there have only been
incidental  expenses.  In 2006 we  commenced a  preclinical  study on one of our
tetracyclines.

Compensation Expense - Compensation expense remained virtually unchanged for the
first six months of 2007 versus the same six months in 2006.

Travel  Expense - Travel  expense  increased  from $33,040  during the first six
months  of 2006 to  $41,166  in the  first  six  months  of  2007.  This was due
primarily  to meetings  with Dr. Stahl  during  negotiations  as well as several
proposed members of the Company's newly formed Scientific Advisory Board.

Professional  Fees -  Professional  fees decreased to $83,646 for the six months
ending  June 30,  2007,  versus  $92,095 in the same  quarter of 2006.  This was
mainly  attributed to a decrease in legal and accounting fees once the Company's
Registration  Statement on Form SB-2 became  effective as well as the  increased
work performed by in house staff.





                                       3
<PAGE>

Telephone  Expense-  Telephone fees increased to $13,993 through the 2nd quarter
of 2007 from  $11,303 in the same time  period of 2006 due mainly to a new phone
system  installed in the Company's new office  space.  The Company  believes the
monthly  savings  from the new system  will allow it to recoup the  installation
costs within 12 months.

Insurance Expense- Insurance costs decreased from $63,342 for the 2nd quarter of
2006 to  $48,532  through  the 2nd  quarter  of 2007  due to a  decrease  in the
Company's  product  liability costs.  Because the Company did not administer its
drug to any individual  during 2006,  its product  liability  premium  decreased
substantially for 2007.

Consulting Fees - Consulting  expenses  increased to $876,589 through the second
quarter of 2007 from $153,531 in the same period of 2006.  This increase was the
result of warrants  issued to several new  consultants  who became involved with
the  Company.  Dr.  Stephen  Stahl  received an  aggregate  of 650,000  warrants
exercisable at $1.30 per share expiring in 2012 and 50,000 warrants  exercisable
at $1 per share  expiring on  November  30,  2009 to become the  Company's  lead
scientific  consultant and chair of the Company's Scientific Advisory Board. Dr.
Murray Rosenthal received 125,000 warrants  exercisable at $1.30 per share which
expire in 2012. Darius Shayegan  received 100,000 warrants  exercisable at $1.30
and expiring in 2012.  These three  consultants  will primarily focus on meeting
with  pharmaceutical  companies with hopes of securing licensing  agreements for
our lead compound Nemifitide. Further details are available in the Company's 8-K
filed with the  Commission  on May 31, 2007.  The warrants were valued using the
Black Scholes method.

Rent and  Occupancy - Rent and occupancy  expenses  decreased to $50,073 for the
period  ended June 30, 2007,  from $52,685 in the same period of 2006.  This was
the result of the  beginning of the decreased  rent upon the Company  moving its
primary  offices into new space in its previous  building.  The Company will now
save approximately $4,000 per month versus the previous rent.

Employee  Benefits-  Employee benefits  decreased from $27,029 to $19,952 in the
first half of 2007 vs. 2006 due to the loss of Dr. Feighner.

PLAN OF OPERATIONS

We are a  biopharmaceutical  company.  We discovered and are developing  several
novel  compounds to address  unmet needs in the area of  depression,  antibiotic
resistance  and  anticancer.  Tetragenex is the successor  company to Innapharma
through a reverse merger,  which was completed upon Innapharma's  emergence from
Chapter  11 in  2004.  Innapharma  was  founded  in 1989  and has  insignificant
operating revenues.

OPERATING HISTORY: PLAN OF OPERATION

The Company is currently  developing  an  antidepressant  compound,  Nemifitide,
which  is in late  Phase 2 human  clinical  trials.  During  Phase  2,  clinical
development  of  the  Company's  flagship  antidepressant  compound  was  put on
clinical  hold by the FDA, as a result of some  toxicity  issues in a Beagle dog
study that was completed in 2003. The FDA asked the Company to repeat the animal
study and  generate  additional  preclinical  data with  regard to the  toxicity
issue.  The  Company  completed  a dog study and a primate  study to address the
concerns of the FDA.  After the final reports from these studies were  submitted
to the FDA, the FDA confirmed that this was a complete  response to the clinical
hold and therefore,  the clinical hold was lifted on March 29, 2006. The Company
intends to push forward  simultaneously  with two strategies.  First the Company
intends to license the drug out for the final stage of  development.  During the
completion of that task,  the Company also intends to raise  additional  capital
and continue the Phase 3 development  of Nemifitide.  The Company  believes that
upon a  successful  licensing  agreement,  there will be  significant  milestone
payments,  as well as permanent  royalty  against




                                       4

<PAGE>

the revenues of the drug. To further the push for a licensing agreement,  during
this quarter the Company hired Dr. Stephen  Stahl,  who is world renowned and is
considered an opinion leader in the Central  Nervous  System (CNS) field,  to be
its chief scientific  consultant and chairman of its Scientific  Advisory Board.
Dr. Stahl is currently  restructuring  the Scientific  Advisory Board to include
several  additional  opinion leaders in the CNS field.  Additionally the Company
solicited  Dr. Murray  Rosenthal and Darius  Shayegan to assist in the licensing
process.  Dr.  Rosenthal has extensive  experience  with patients that have been
administered Nemifitide as his site was part of our phase II trials.

Nemifitide  is a  five-chain  peptide  and  part  of a  significant  library  of
patent-protected  compounds.  The Company, in its preclinical development plans,
will  evaluate the  potential  of other  patented  neuropeptides  to treat other
disorders,  such as anorexia,  bulimia,  panic disorder,  anxiety  disorders and
post-traumatic   stress   disorder.   The  Company   currently   has  three  GMP
manufacturers  synthesizing its compound, all of whom are located in Europe. The
Company believes that it has sufficient Nemifitide bulk to meet its requirements
for the foreseeable future.

Tetracyclines  belong to a family of naturally  occurring  antibiotics that have
been demonstrated to be potent inhibitors of matrix metalloproteinases  (enzymes
which  are key in the  promotion  of  many  human  disorders).  The  Company  is
currently   developing  a  platform  of  new  and  unique  chemically   modified
tetracycline  molecules to be used in the  treatment of certain  types of cancer
(prostate and breast) and antibiotic-resistant bacterial infections.

Our  tetracycline-based  drugs are in the preclinical  development stage. Our IN
VITRO  studies have  identified a series of chemically  modified  tetracyclines,
which we believe can be used in the treatment of cancer and antibiotic-resistant
infections.   To  date,  we  have  prepared  and  developed   approximately  100
tetracycline-based  derivatives.  We filed a patent  application  on  October 5,
2002, covering our tetracycline  product candidates.  We intend to complete some
additional  in-vivo and in-vitro  studies,  prepare an  Invetigational  New Drug
Application  and  attempt  to  license  both the  anti-cancer  compound  and the
treatment resistant bacteria compound out for development.

In addition to the in-house development program, the Company intends to research
and acquire existing  compounds and re-platform them for other therapeutic uses,
and pursue a licensing agreement with the original inventor.

During the past 24 months the Company  completed two private  offerings  raising
$4,087,047  of equity  capital.  The Company's  core burn rate is  approximately
$85,000 per month and with  approximately $1.1 million cash on hand it gives the
Company  12-16  months  of  operating  capital.  The  Company  intends  to  hire
appropriate scientific personnel to strengthen its licensing acquisition program
and  to  assist  in the  preparation  and  filing  of IND  submissions  for  the
tetracycline  compounds.  The Company recently  received NASD approval and began
trading on the NASDAQ Bulletin Board under the symbol TTRX.

The Company  believes it has very good patent  protection in all the significant
worldwide markets.



                                       5

<PAGE>



DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

THIS QUARTERLY  REPORT INCLUDES  FORWARD LOOKING  STATEMENTS WHICH INVOLVE RISKS
AND   UNCERTAINTIES.   SUCH   STATEMENTS   CAN  BE  IDENTIFIED  BY  THE  USE  OF
FORWARD-LOOKING LANGUAGE SUCH AS "WILL LIKELY RESULT", "MAY", "ARE EXPECTED TO",
"IS ANTICIPATED",  "ESTIMATE",  "BELIEVES",  "PROJECTED",  OR SIMILAR WORDS. ALL
STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACT INCLUDED IN THIS SECTION ARE
FORWARD-LOOKING STATEMENTS.  ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS
REFLECTED IN SUCH  FORWARD-LOOKING  STATEMENTS  ARE  REASONABLE,  IT CAN GIVE NO
ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT.  THE COMPANY'S
ACTUAL  RESULTS  COULD  DIFFER  MATERIALLY  FROM THOSE  ANTICIPATED  IN ANY SUCH
FORWARD-LOOKING  STATEMENTS  AS A RESULT OF VARIOUS  RISKS,  INCLUDING,  WITHOUT
LIMITATION,  THE  DEPENDENCE ON A SINGLE LINE OF BUSINESS;  THE FAILURE TO CLOSE
PROPOSED FINANCING;  RAPID TECHNOLOGICAL CHANGE; INABILITY TO ATTRACT AND RETAIN
KEY PERSONNEL;  THE POTENTIAL FOR SIGNIFICANT FLUCTUATIONS IN OPERATING RESULTS;
THE LOSS OF A MAJOR  CUSTOMER;  AND THE  POTENTIAL  VOLATILITY  OF THE COMPANY'S
COMMON STOCK.

ITEM 3(a)T CONTROLS AND PROCEDURES

As of the end of the period covered by this Quarterly  Report, we carried out an
evaluation, under the supervision and with the participation of our Chief Co-CEO
Officer and our Chief Financial Officer,  of the effectiveness of the design and
operation of our disclosure  controls and procedures.  Based on this evaluation,
our Chief Co-CEO Officer and Chief Financial  Officer concluded that information
required to be disclosed is recorded.  The Company maintains disclosure controls
and  procedures  that are  designed  to ensure that  information  required to be
disclosed  in  the  Company's  Exchange  Act  reports  is  recorded,  processed,
summarized and reported within the time periods specified in the SEC's rules and
forms,  and  that  such  information  is  accumulated  and  communicated  to the
Company's  management,  including the Chief Co-CEO  Officer and Chief  Financial
Officer,  as  appropriate,  to allow for  timely  decisions  regarding  required
disclosure  based  closely  on  the  definition  of  "disclosure   controls  and
procedures"  in Rule  13a-15(e).  In designing  and  evaluating  the  disclosure
controls and procedures, management recognized that any controls and procedures,
no matter how well designed and operated,  can provide only reasonable assurance
of achieving the desired  control  objectives,  and management  necessarily  was
required to apply its judgment in evaluating the  cost-benefit  relationship  of
possible controls and procedures.  The Company carried out an evaluation,  under
the  supervision  and  with  the  participation  of  the  Company's  management,
including  the  Chief  Co-CEO  Officer  and  Chief  Financial   Officer  of  the
effectiveness of the design and operation of the Company's  disclosure  controls
and procedures as of the end of the period covered by this report.  Based on the
foregoing,  the Chief Co-CEO Officer and Chief Financial  Officer concluded that
our  disclosure  controls  and  procedures  were  effective  at  the  reasonable
assurance level.

There have been no changes in our internal  controls  over  financial  reporting
during the Company's most recent fiscal quarter that has materially affected, or
is reasonably likely to materially  affect,  the Company's internal control over
financial reports.



                                       6
<PAGE>


                           PART II: OTHER INFORMATION


ITEM 1 LEGAL PROCEEDINGS

In the  normal  course of  business,  there may be  various  legal  actions  and
proceedings  pending which seek damages against the Company. As of June 30, 2007
there were no claims asserted or threatened against the Company.


ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.


ITEM 3 DEFAULTS ON SENIOR SECURITIES

None.

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the quarter ended
June 30, 2007.

ITEM 5 OTHER INFORMATION

None.

ITEM 6 EXHIBITS

EXHIBITS

31.1      Certification of Co-Chief Operating Officer Pursuant to Section 302 of
          the Sarbanes-Oxley Act of 2002

31.2      Certification  of Chief Financial  Officer  Pursuant to Section 302 of
          the Sarbanes-Oxley Act of 2002

32.1      Certification of the Co-Chief Executive Officer  Pursuant to 18 U.S.C.
          Section 1350, Section 906 of the Sarbanes-Oxley Act of 2002

32.2      Certification  of the Chief  Financial  Officer  Pursuant to 18 U.S.C.
          Section 1350, Section 906 of the Sarbanes-Oxley Act of 2002







                                       7
<PAGE>


                         SIGNATURES

Pursuant  to the  requirements  of  Section  13(a) and  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.



TETRAGENEX PHARMACEUTICALS, INC.

August 14, 2007                                 /s/Martin Schacker
-----------------                               ---------------------------
Date                                            Martin Schacker
                                                Co-Chief Executive Officer


August 14, 2007                                 /s/Neil Martucci
-----------------                               ---------------------------
Date                                            Neil Martucci
                                                Chief Financial Officer





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