SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-Q




[X]
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31,
  2009




OR




[
      ]
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




COMMISSION
FILE NO. 333-134987




TETRAGENEX
PHARMACEUTICALS, INC.








DELAWARE
              
              22-3781895(State
      or other jurisdiction of
                incorporation
      or organization)
              
              (I.R.S.
      Employer
                Identification No.)








560
      Sylvan AveEnglewood
      Cliffs, New Jersey  07632(Address of Principal Executive Offices) (Zip
      Code)




(201)
408-5335


(Registrant’s
Telephone Number Including Area Code)




Indicate
by check mark whether the registrant: 1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the 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 has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). [  ]Yes
[  ]No


Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.


Large
      accelerated filer o
            Accelerated
      filer oNon-accelerated
      filer o
            Smaller
      reporting company þ




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
May 15, 2009: 15,926,126.




Documents
Incorporated by Reference: NONE











TABLE
OF CONTENTS




PART
      I: FINANCIAL INFORMATION
                                    1ITEM
      1.
                                    FINANCIAL
      STATEMENTS
                                    1ITEM
      2.
                                    MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
      OPERATIONS
                                    2ITEM
      3.
                                    QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                                    4ITEM
      4T.
                                    CONTROLS
      AND PROCEDURES
                                    5PART
      II: OTHER INFORMATION
                                    6ITEM
      1.
                                    LEGAL
      PROCEEDINGS
                                    6ITEM
      1A.
                                    RISK
      FACTORS
                                    6ITEM
      2.
                                    UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
                                    6ITEM
      3.
                                    DEFAULTS
      ON SENIOR SECURITIES
                                    6ITEM
      4.
                                    SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
                                    6ITEM
      5.
                                    OTHER
      INFORMATION
                                    7ITEM
      6.
                                    EXHIBITS
                                    7SIGNATURES
                                    8





















PART
I: FINANCIAL INFORMATION






ITEM
      1.
            FINANCIAL
      STATEMENTS






Index
to Financial Statements




PageUnaudited
      Condensed Balance Sheet as of March 31, 2009 and Audited Balance Sheet as
      of December 31, 2008
                      F-1Unaudited
      Condensed Statement of Operations for the Three Month Periods Ended
      March 31, 2009 and 2008
                      F-2Unaudited
      Condensed Statement of Cash Flows for the Three Month Periods Ended March
      31, 2009 and 2008
                      F-3Notes
      to Unaudited Condensed Financial Statements
                      F-4












The
Accompanying Notes are an Integral Part of the Financial Statements





1





TETRAGENEX
PHARMACEUTICALS, INC.


Unaudited
Condensed Balance Sheet


as
of March 31, 2009 and


Audited
Balance Sheet


as
of December 31, 2008




December
                                                        
                                                        March31,
      2008
                                                        
                                                        
                                                        
                                                        31,
      2009ASSETSCurrent
      assetsCash
      and cash equivalents
                                                        
                                                        $
                                                        329,863
                                                        
                                                        
                                                        $
                                                        225,964Prepaid
      insurance and other current assets
                                                        
                                                        
                                                        18,780
                                                        
                                                        
                                                        
                                                        6,740348,643
                                                        
                                                        
                                                        
                                                        232,704Property
      and equipment, net
                                                        
                                                        
                                                        6,255
                                                        
                                                        
                                                        
                                                        6,557Security
      Deposit
                                                        
                                                        
                                                        4,188
                                                        
                                                        
                                                        
                                                        4,188Patents,
      net
                                                        
                                                        
                                                        449,671
                                                        
                                                        
                                                        
                                                        444,287$
                                                        808,757
                                                        
                                                        
                                                        $
                                                        687,736LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesNotes
      payable
                                                        
                                                        
                                                        1,882,362
                                                        
                                                        
                                                        
                                                        1,882,362Accounts
      payable and accrued expenses
                                                        
                                                        
                                                        1,610,729
                                                        
                                                        
                                                        
                                                        1,609,183Accrued
      interest
                                                        
                                                        
                                                        254,354
                                                        
                                                        
                                                        
                                                        279,306Total
      current liabilities
                                                        
                                                        
                                                        3,747,445
                                                        
                                                        
                                                        
                                                        3,770,851Long
      term liabilityNotes
      payable
                                                        
                                                        
                                                        308,823
                                                        
                                                        
                                                        
                                                        335,244Total
      liabilities
                                                        
                                                        
                                                        4,056,268
                                                        
                                                        
                                                        
                                                        4,106,095Commitments and
      contingenciesStockholders'
      equityClass
      A preferred stock - $.01 par value - 5,000,000shares
      authorized; 0 shares outstanding
                                                        
                                                        
                                                        -Common
      stock - $.001 par value - 50,000,000 shares authorized15,926,126
      shares issued and outstanding
                                                        
                                                        
                                                        15,926
                                                        
                                                        
                                                        
                                                        15,926Additional
      paid-in capital
                                                        
                                                        
                                                        101,836,042
                                                        
                                                        
                                                        
                                                        101,840,856Accumulated
      deficit
                                                        
                                                        
                                                        (105,099,479
                                                        )
                                                        
                                                        
                                                        (105,275,141
                                                        )Total
      stockholders' equity
                                                        
                                                        
                                                        (3,247,511
                                                        )
                                                        
                                                        
                                                        (3,418,359
                                                        )$
                                                        808,757
                                                        
                                                        
                                                        $
                                                        687,736





The
Accompanying Notes are an Integral Part of the Financial Statements





F-1





TETRAGENEX
PHARMACEUTICALS, INC.
 Unaudited
Condensed Statement of Operations


for
the Three-Month Periods Ended March 31, 2009 and 2008




Threemonths
                                                            endedMarch 312009
                                                          
                                                          
                                                          2008(unaudited)RevenueContract
      revenue
                                                          
                                                          $
                                                          -
                                                          
                                                          
                                                          $
                                                          --
                                                          
                                                          
                                                          
                                                          -Operating
      expensesResearch
      and development
                                                          
                                                          $
                                                          -
                                                          
                                                          
                                                          $
                                                          7,578Compensation
      expense
                                                          
                                                          
                                                          44,356
                                                          
                                                          
                                                          
                                                          172,083Travel
                                                          
                                                          
                                                          14,763
                                                          
                                                          
                                                          
                                                          26,502General
      and administrative
                                                          
                                                          
                                                          27,348
                                                          
                                                          
                                                          
                                                          58,123Professional
      fees
                                                          
                                                          
                                                          15,000
                                                          
                                                          
                                                          
                                                          38,587Payroll
      taxes and employee benefits
                                                          
                                                          
                                                          17,229
                                                          
                                                          
                                                          
                                                          24,008Consulting
      fees
                                                          
                                                          
                                                          3,183
                                                          
                                                          
                                                          
                                                          11,250Rent
      and occupancy
                                                          
                                                          
                                                          11,409
                                                          
                                                          
                                                          
                                                          20,818Depreciation
      and amortization
                                                          
                                                          
                                                          11,426
                                                          
                                                          
                                                          
                                                          10,568Loss
      before other income(expense) and tax benefit
                                                          
                                                          
                                                          (144,714
                                                          )
                                                          
                                                          
                                                          (369,517
                                                          )Other
      income (expense)Interest
      income
                                                          
                                                          
                                                          240
                                                          
                                                          
                                                          
                                                          1,848Interest
      expense
                                                          
                                                          
                                                          (31,188
                                                          )
                                                          
                                                          
                                                          (14,597
                                                          )Loss
      before tax benefit
                                                          
                                                          
                                                          (175,662
                                                          )
                                                          
                                                          
                                                          (382,266
                                                          )Net
      loss
                                                          
                                                          
                                                          (175,662
                                                          )
                                                          
                                                          
                                                          (382,266
                                                          )Basic
      and diluted net loss per share
                                                          
                                                          $
                                                          (0.01
                                                          )
                                                          
                                                          $
                                                          (0.02
                                                          )Weighted
      average common shares outstanding
                                                          
                                                          
                                                          15,926,126
                                                          
                                                          
                                                          
                                                          15,926,126




The
Accompanying Notes are an Integral Part of the Financial Statements





F-2




TETRAGENEX
PHARMACEUTICALS, INC.
 Unaudited
Condensed Statement of Cash Flows


for
Three-Month Periods Ended March 31, 2009 and 2008




Three
      Months Ended March 31,2009
                                                        
                                                        
                                                        2008Cash
      flows from operating activitiesNet
      loss
                                                        
                                                        $
                                                        (175,662
                                                        )
                                                        
                                                        $
                                                        (382,266
                                                        )Adjustments
      to reconcile net loss to net cash used
      in operating activitiesAmortization of debt discount
                                                        
                                                        
                                                        6,235
                                                        
                                                        
                                                        
                                                        -Depreciation
      and amortization
                                                        
                                                        
                                                        11,426
                                                        
                                                        
                                                        
                                                        -Changes
      in operating assets and liabilities
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        -Prepaid
      insurance and other current assets
                                                        
                                                        
                                                        12,040
                                                        
                                                        
                                                        
                                                        12,162Accounts
      payable and accrued expenses
                                                        
                                                        
                                                        (1,546
                                                        )
                                                        
                                                        
                                                        129,205Accrued
      interest payable
                                                        
                                                        
                                                        24,952
                                                        
                                                        
                                                        
                                                        14,597Net
      cash used in operating activities
                                                        
                                                        
                                                        (122,555
                                                        )
                                                        
                                                        
                                                        (215,734
                                                        )Cash
      flows from investing activitiesCash
      paid for property and equipment
                                                        
                                                        
                                                        (844
                                                        )
                                                        
                                                        
                                                        -Patent
      Costs
                                                        
                                                        
                                                        (5,500
                                                        )
                                                        
                                                        
                                                        (18,068
                                                        )Net
      cash (used in) provided by investing activities
                                                        
                                                        
                                                        (6,344
                                                        )
                                                        
                                                        
                                                        (18,068
                                                        )Cash
      flows from financing activitiesProceeds
      from notes payable
                                                        
                                                        
                                                        25,000
                                                        
                                                        
                                                        
                                                        -Net
      cash provided by financing activities
                                                        
                                                        
                                                        25,000
                                                        
                                                        
                                                        
                                                        -Net
      (decrease) increase in cash and cash equivalents
                                                        
                                                        
                                                        (103,899
                                                        )
                                                        
                                                        
                                                        (233,802
                                                        )Cash
      and cash equivalents, beginning of year
                                                        
                                                        
                                                        329,863
                                                        
                                                        
                                                        
                                                        527,737Cash
      and cash equivalents, end of year
                                                        
                                                        $
                                                        225,964
                                                        
                                                        
                                                        $
                                                        293,935Supplemental
      disclosures of cash flow informationCash
      paid for taxes
                                                        
                                                        
                                                        500
                                                        
                                                        
                                                        
                                                        -Cash
      paid for interest
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -




The
Accompanying Notes are an Integral Part of the Financial
Statements


F-3





TETRAGENEX
PHARMACEUTICALS, INC.




1.
The Company




Tetragenex
Pharmaceuticals, Inc. (referred to herein as “we”, “our” or “us”) is
headquartered in Englewood Cliffs, New Jersey, and we were a wholly owned
subsidiary of Innapharma, Inc. (“Innapharma”). Innapharma was founded in 1989 in
the State of Delaware as a biotechnology company that has discovered and intends
to commercialize proprietary pharmaceutical products for use in treatment
resistant depression and other central nervous system diseases




Tetragenex
is a biopharmaceutical Company which has developed a platform of peptides which
have shown activity in the treatment of central nervous system diseases
(“CNS”).  Nemifitide, the Company’s lead compound, was initially
entered into human clinical trials in the late 1990’s.  Over 12
clinical trials have been conducted with Nemifitide for various types of
depression. Tetragenex believes that Nemifitide is active in refractory or
treatment resistant patients.  Treatment resistant patients are
typically difficult to treat and normally don’t respond to other CNS treatments.
Nemifitide has shown a rapid and robust onset of action after 10-14 days of
treatment (10-15 subcutaneous injections) with lasting benefits of approximately
four months following treatment. Nemifitide is well tolerated, without any
current evidence of significant side effects as compared to the current drugs
that are used in the treatment of major depressive disorder.


The
Company intends to find a licensing partner to continue the development of
Nemifitide, primarily in treatment resistant patients which currently represents
approximately 5 to 10 percent of the overall patient population suffering from
the disease.  Nemifitide is currently administered thru subcutaneous
injection and is given intermittently with 10 or 15 doses or 2 or 3 weeks.
Patients who respond tend to stay healthy for several months after the initial
dosing regimen.




2.
Summary of significant accounting policies




Going Concern and
Liquidity




The
financial statements of the Company have been prepared assuming the Company will
continue as a going concern, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business. The Company
incurred losses of $1,106,807 and $4,579,958 for years ended December 31, 2008
and 2007 respectively, and another $175,662 for the quarter ended March 31,
2009. At March 31, 2009 the Company has a working capital deficiency of
$2,034,890, short term debt of approximately $3,770,000 and a deficiency in
stockholder’s equity of $3,418,359. The Company has less than 12 months working
capital in the bank currently and its main source of funds has been private
investments. These factors raise doubt about the Company’s ability to continue
as a going concern. To address the Company’s immediate cash requirements which
are necessary for the Company to continue in business, several members of the
Board of directors made investments into a bridge loan to the Company. Several
other individuals participated as well. The Company will seek to undertake an
offering of equity and/or debt in an effort to raise funds. However, the
Company’s low stock price and its continuing losses may make it difficult to
obtain either equity or debt financing, and, there can be no assurances that
additional financing which is necessary for the Company to continue its business
will be available to the Company on acceptable terms, or at all. The Company
believes that its lead compound, Nemifitide is a revolutionary treatment for
depression and should it reach the market or become licensed to a pharmaceutical
Company, could prove extremely lucrative to the Company. The Company’s ability
to continue its operations is dependent upon its ability to generate sufficient
funds from financing to meet its obligations on a timely basis and to further
develop and market its products. The accompanying financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.





F-4




TETRAGENEX
PHARMACEUTICALS, INC.
 NOTES TO THE
FINANCIAL STATEMENTS




Recently Issued Accounting
Standards




In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements – an amendment of ARB No. 151.” (“SFAS 160”).
SFAS 160 requires all entities to report non-controlling (minority) interests in
subsidiaries as equity in the consolidated financial statements. Its intention
is to eliminate the diversity in practice regarding the accounting for
transactions between an entity and non-controlling interests. This Statement is
effective for the Company as of January 1, 2009. Earlier adoption is prohibited.
The Company is currently assessing the impact, if any, of SFAS 160 on its
consolidated financial statements.




In
December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (“SFAS
141R”). SFAS 141R provides guidance to improve the relevance, representational
faithfulness, and comparability of the information that a reporting entity
provides in its financial reports about its business combinations and its
effects. SFAS 141R establishes principles and requirements for how the acquirer
recognizes and measures in its financial statements the identifiable assets
acquired, liabilities assumed, the goodwill acquired and determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. SFAS 141R is
effective for acquisitions beginning in our fiscal year beginning December 1,
2009 and earlier application is prohibited.  The Company does not
believe the adoption of SFAS 141R will have a material impact on its financial
condition, results of operations or cash flows.




In May
2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles (“SFAS No. 162”). This statement identifies the
sources of accounting principles and the framework for selecting the principles
to be used in the preparation of financial statements of nongovernmental
entities that are presented in conformity with generally accepted accounting
principles in the United States (“GAAP”). This Statement shall be effective
sixty days following the Securities and Exchange Commission’s (the “SEC”)
approval of the Public Company Accounting Oversight Board amendments to AU
Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted
Accounting Principles. The Company does not believe the adoption of SFAS No. 162
will have a material impact on its financial condition, results of operations or
cash flows.




Interim Financial
Statements




Financial
statements as of March 31, 2009, and for three month periods ended March 31,
2009 and 2008, 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, 2008 and 2007 as
appearing in the Company’s Annual Reports on Form 10-K and Form 10-KSB,
respectively, filed with the Securities and Exchange Commission on March 31,
2009 and May 14, 2008, respectively.




3.
Notes Payable




The
Company has $1,882,362 in notes payable plus 3% interest due on April 23, 2009.
The notes are convertible into common shares at $5 per share at the discretion
of the holders of the notes. The notes are secured by the patents of the
Company.  The Company is attempting to negotiate with the holders of
the note to either convert or extent the note.





Additionally
during 2008 the Company raised $350,000 as part of a bridge loan.  In
exchange for the funds the company issued notes payable totaling $350,000 plus
12% interest per annum.  The notes are due in 2 years or upon the
closing of at least $2 million in funding.  An aggregate of 1,400,000
warrants exercisable at $.40 per share expiring in 2013 were issued to the
holders of the notes as well.





F-5




TETRAGENEX
PHARMACEUTICALS, INC.
 NOTES TO THE
FINANCIAL STATEMENTS




4.
Stockholders’ Equity




STOCK
OPTIONS




All of
the Company’s outstanding stock options vest immediately. The options are not
actively trading and the fair market value is not readily ascertainable, the
options are taxable at the time of exercise as opposed to the time of the
grant.






On March
31, 2009 there were a total of 11,838,253 options outstanding all exercisable at
$1 per share expiring between 2017 and 2020.




All
options are vested immediately. The options are not actively trading and the
fair market value is not readily ascertainable, the options are taxable at the
time of exercise as opposed to the time of the grant.





The
following table presents information regarding weighted-average exercise price
and weighted average remaining contractual life as of March 31,
2009:




Options
      Outstanding and ExercisableRange
      of
                    Exercise
      Price
                Number
      of
                    Options
                Weighted
                    Average
                    Exercise
      Price
                Weighted
                    Average
                    Remaining
                    Life$1.00
                11,838,253
                $1.00
                9.7





WARRANTS




On May
28, 2008, the Company issued promissory notes carrying 12% interest per annum
having an aggregate face value of $175,000, together with warrants to purchase
an aggregate of 350,000 shares of the Company’s common stock at $0.50 per share,
to seven individuals.




As part
of the same financing, on July 28, 2008 the Company issued promissory notes
carrying 12% interest per annum having an aggregate face value of $75,000,
together with warrants to purchase an aggregate of 150,000 shares of the
Company’s common stock at $0.50 per share, to three individuals.




Further,
and as part of the same financing, on February 23, 2009 the Company issued a
promissory note carrying 12% interest per annum having an aggregate face value
of $25,000, together with warrants to purchase 50,000 shares of the Company’s
common stock at $0.40  per share, to one individual.





AtMarch 31, 2009, the Company had outstanding warrants to purchase
13,468,514shares of the
Company’s common stock at exercise prices of$.40, $1, $1.30, $1.65 and
$6per share.These warrants have expirations of July
2013, November 30, 2009, March 30, 2012, April 30, 2009 and November 30, 2011
respectively.





F-6




TETRAGENEX
PHARMACEUTICALS, INC.
 NOTES TO THE
FINANCIAL STATEMENTS




The following table presents, for each
of the following classes of warrants as determined by range of exercise price,
information regarding warrants outstanding and weighted-average exercise price
as ofMarch 31,
2009.




Warrants
      OutstandingRange
      of
                  Exercise
      Price
              Number
      of
                  Warrants
              WeightedAverage
                  ExercisePrice$1.00
              7,058,796
              $1.00$1.30
              1,030,000
              $1.30$1.65
              645,322
              $1.65$6.00
              3,284,396
              $6.00$0.40
              1,450,000
              $0.40





COMMON
STOCK TRANSACTIONS





On March
31, 2009 there were 15,926,126common shares outstanding At March 31, 2009, the
Company has authorized 50,000,000 shares of common stock, $.001 stated value.
The following table represents the approximate allocation of reserved shares at
March 31, 2009:




Common
      Stock
              15,926,126Stock
      Options
              11,838,253Warrants
              13,468,51441,232,893





EMPLOYMENT
AGREEMENTS





On
December 15, 1999, the Company entered into a three-year employment agreement
with its co-Chief Executive Officer and Chairman of the Board, Martin F.
Schacker (“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 executive 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 executive 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. At March 31,
2009, the Co-CEO had deferred compensation totaling $478,413. 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 March 31, 2009, there
was $1,298,056 deferred from officers and employees and $206,250 from
directors.  It is anticipated that the majority of accrued salaries will be
converted into warrants of the Company on a 1-for-1 basis.  In April
2008 at the Board’s request all salaried employees of the Company were subject
to a minimum of 50% temporary cash salary reduction while the Company sought
financing for its operations.  In October 2008, the Company ceased
accruing salary reductions for all officers, directors and
employees.





F-7




TETRAGENEX
PHARMACEUTICALS, INC.
 NOTES TO THE
FINANCIAL STATEMENTS




5.
Litigation




At March
31, 2009 the Company was not involved in any ongoing litigation.




6.  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 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 $105,275,141
and $104,374,938 on March 31, 2009 and 2008, respectively.




The
Company plans to provide for additional working capital and funds for the
continued development of its products through the private or public sale of
equity or debt. 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. The Company 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. No assurance
can be given as to the Company’s ability to enter into such an agreement or
successfully complete future funding.




7.
Subsequent Events




On April 23, 2009 the Company was
required to remit $1,882,323 plus accrued interest of $249,407 (the “Sum”) to
KBC Bank N.V., and/or its affiliates  under a certain secured
promissory note issued by the Company dated October 25, 2004 (the
“Note”).  The Note is secured by all of the Company’s patents that
were issued prior to October 25, 2004.




The Company did not remit the Sum to the
Lenders on April 23, 2009, and as a result is in default pursuant to Section
5(b) of the Note.   The Company is seeking to negotiate with the
lender.







F-8




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




The
following discussion and analysis should be read in conjunction with the
Financial Statements and notes thereto appearing elsewhere in this Quarterly
Report.




Certain
statements contained herein may constitute forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Exchange Act of 1934, as amended and the
Private Securities Litigation Reform Act of 1995.  Because such
statements include risks and uncertainties, actual results may differ materially
from those expressed or implied by such forward-looking
statements.  Factors that could cause actual results to differ
materially include, but are not limited to, risks associated with our clinical
trials, our lack of revenue, and our inability to maintain working capital
requirements to fund future operations or our inability to attract and retain
highly qualified management.





You
should read the following discussion and analysis in conjunction with the
Financial Statements and Notes attached thereto, and the other financial
information appearing elsewhere in this Annual Report





2




OVERVIEW




Tetragenex
Pharmaceuticals, Inc. (referred to herein as “Tetragenex,” the “Company,” “we,”
“our” or “us”) was a wholly owned subsidiary of Innapharma, Inc. (“Innapharma”).
Innapharma was founded in 1989 in the State of Delaware as a biotechnology
company that has discovered and intends to commercialize proprietary
pharmaceutical products for use in treatment resistant depression and other
central nervous system diseases.  Innapharma filed for protection
under Chapter 11 of the United States Bankruptcy Code on April 15,
2003.  As part of the bankruptcy restructuring, Innapharma merged into
and with Tetragenex.  Effective November 23, 2004 the combined company
emerged from bankruptcy under the name Tetragenex Pharmaceuticals,
Inc.   We are headquartered in Englewood Cliffs, New Jersey, with
small satellite offices in Melville, New York and Syosset, New
York.




We have a
platform of peptides which have shown activity in the treatment of central
nervous system (“CNS”) diseases.  Nemifitide, our lead compound, was
initially entered into human clinical trials in the late 1990’s.  Over
12 clinical trials have been conducted with Nemifitide for various types of
depression. We believe that Nemifitide is active in refractory or
treatment-resistant patients, who are typically difficult to treat and normally
don’t respond to other CNS treatments., Nemifitide has shown a rapid and robust
onset of action after 10-14 days of treatment (10-15 subcutaneous injections)
with lasting benefits of approximately four months following treatment.
Nemifitide is generally well tolerated, without any current evidence of
significant side effects, as compared to the current drugs that are used in the
treatment of major depressive disorders.




We intend
to find a licensing partner to continue our development of Nemifitide, primarily
in treatment- resistant patients which currently represents approximately 5 to
10 percent of the overall patient population suffering from the
disease.  Nemifitide is currently administered through subcutaneous
injection and is given intermittently with 10 or 15 doses, over a 2 or 3 week
period. Patients who respond tend to stay healthy for several months after the
initial dosing regimen.




STATE
OF NEW JERSEY DEVELOPMENT PLAN




Since
2003, we have sold a portion of our tax losses through a development program
sponsored by the State of New Jersey (the “Development Plan”). The Development
Plan generated a net check to us in 2003 in excess of $200,000; a check of over
$400,000 in December of 2004 and an additional $315,000 in December 2005. In
2006, due to our merger with Innapharma, we received $5,000 as part of the
Development Plan.  Although we have applied to sell a portion of our
tax losses, due to a change in the standards of the Development Plan, our
application was declined in 2007. In 2008, we were approved to sell a portion of
our New Jersey tax losses and we received approximately $280,000 in December
2008.




3




LIQUIDITY
AND CAPITAL RESOURCES




As of
March 31, 2009 we had approximately $275,000 in cash and have a core burn rate
of approximately $30,000 per month.  As of May 15, 2009, we have
approximately $190,000 in current assets and have a core burn rate of
approximately $30,000 per month, which we believe is sufficient for 6 months
absent of the current debt  due. The $190,000 will be used primarily
for operations going forward. Additional funds will be needed to fund further
studies required by the FDA to bring our lead compound, Nemifide to market.
Future funds will be derived from sales of equity or debt in the public or
private markets and/or a licensing agreement with a pharmaceutical company as
well as possibly the sale of our state tax losses through the Development Plan.
Our debt consists of a $1.8 million dollar note that came due April 23, 2009 and
the $375,000 promissory notes derived from our bridge financing.




THE THREE MONTHS ENDED MARCH 31,
2009 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2008




Revenue – We had no revenue
from any source for the three months ending March 31, 2009 and
2008.




Research and Development –
Research and development costs decreased by $7,578, to zero from $7,578 for the
three months ended March 31, 2009, as compared the three months ending March 31,
2008. No studies were performed during the first quarter of 2009 and therefore
there have been no related expenses.




Compensation Expense –
Compensation expense decreased by $127,727 to $44,356 for the three months ended
March 31, 2009 as compared to $172,083 for the three months ended March 31,
2008.  This decrease was attributable to a reduction in salaries and a
reduction in staff.




Travel Expense – Travel
expense decreased by $11,739 to $14,763 for the three months ended March 31,
2009, as compared to $26,502 for the three months ended March 31,
2008.  This decrease was attributable to decreased travel by our
management.




Professional Fees –
Professional fees decreased by $23,587 to $15,000 for the three months ended
March 31, 2009, as compared to $38,587 for the three months ended March 31,
2008.  This decrease was attributable to lower legal
fees.




Insurance Expense – Insurance
costs decreased by $17,437 to $17,346 for the three months ending March 31,
2009, as compared to $34,783 for the three months ending March 31,
2008.  This decrease was attributable to the elimination of product
liability insurance, which management decided to eliminate until we commence
additional human trials.




Consulting Fees – Consulting
expenses decreased by $8,067 to $3,183 for the quarter ended March 31, 2009, as
compared to $11,250 for the three months ending March 31, 2008.  This
decrease was attributable to our terminating payments to all scientific
consultants until further notice in February 2008.




Rent and Occupancy Fees–Rent
and occupancy expenses decreased by $9,409 to $11,409 for the three months
ending March 31, 2009, as compared to $20,818 for the three months ended March
31, 2008. This decrease was attributable to our relocating into smaller office
space at a reduced rate.






ITEM
      3.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.




Not
applicable.





4




ITEM
      4T.
            CONTROLS
      AND PROCEDURES




(A)
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES




We
maintain a system of disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that
information required to be disclosed in our Securities and Exchange Commission
(the “SEC”) reports is recorded, processed, summarized and reported within the
time periods specified in the SEC’s rules and forms, and to ensure that such
information is accumulated and communicated to our management, including the
Chief Executive Officer and the Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosure. Management necessarily
applied its judgment in assessing the costs and benefits of such controls and
procedures, which, by their nature, can provide only reasonable assurance
regarding management’s control objectives.




Management,
with the participation of our Chief Executive Officer and Chief Financial
Officer, has evaluated the effectiveness of our disclosure controls and
procedures, as of the end of the period covered by this Quarterly Report on Form
10-Q. Based upon this evaluation, management concluded that our disclosure
controls and procedures were not effective as of the end of the fiscal quarter.
In making this evaluation, the Chief Executive Officer and Chief Financial
Officer considered, among other matters, the material weakness in our internal
control over financial reporting described in our Annual Report on Form 10-K,
filed with the SEC on March 31, 2009.




(C)
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING




There
have been no significant changes in our internal controls over financial
reporting during the quarter ended March 31, 2009 that have altered our
conclusion as to the ineffectiveness of such controls.





5




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 us. As of March 31, 2009, we are not party to
any material legal proceedings, nor to our knowledge, are there any proceedings
threatened against us.




ITEM
1A.               RISK
FACTORS




Not
applicable.




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




On May
28, 2008, we issued promissory notes carrying 12% interest per annum having
an aggregate face value of $175,000, together with warrants to purchase an
aggregate of 350,000 shares of our common stock at $0.50 per share, to seven
individuals.   As part of the same issuance, on July 28, 2008 we
issued promissory notes carrying 12% interest per annum having an aggregate face
value of $75,000, together with warrants to purchase an aggregate of 150,000
shares of our common stock at $0.50 per share, to three
individuals.  As part of the same issuance, in October 2008, we issued
promissory notes carrying 12% interest per annum having an aggregate face value
of $100,000, together with warrants to purchase an aggregate of 400,000 shares
of our common stock at $0.40 per share, to two individuals.  Further,
and as part of the same financing, on February 23, 2009 the Company issued a
promissory note carrying 12% interest per annum having an aggregate face value
of $25,000, together with warrants to purchase 50,000 shares of the Company’s
common stock at $0.40 per share, to one individual.  As a result of
changes to the terms of the offering, we adjusted prior investor’s warrants by
issuing an aggregate of 1,000,000 warrants exercisable at $.40 per share and
which expire within 5 years from the date of issuance, to each of the ten
individuals who participated in the previous closings.  These warrants
replaced the previously issued 500,000 warrants exercisable at $.50 per
share.  All of the warrants are exercisable at $.40 per share and
expire within 5 years from the date of issuance.  The notes are all
payable the earlier of 2 years from issuance or a funding, either public or
private, of at least $2 million.




These
securities were issued in transactions not registered under the Securities Act
in reliance upon the exemption provided under Section 4(2) of the Securities Act
and/or Regulation D promulgated by the Securities and Exchange
Commission.  We believed that the exemption was available because the
offer and sale of the securities did not involve a public offering and because
of the limited number of recipients, each purchaser’s representation of
sophistication in financial matters, and his access to information concerning
our business.





We used
the proceeds from the sale of these securities for general working capital
purposes.




ITEM
      3.
            DEFAULTS
      ON SENIOR SECURITIES




Not applicable.




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
March 31, 2009.





6




ITEM
      5.
            OTHER
      INFORMATION




None.




ITEM
      6.
            EXHIBITS




ExhibitNo.
            Description31.1
            Certification of Co-Chief
      Operating Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
      200231.2
            Certificationof Chief FinancialOfficerPursuant to Section 302 of the
      Sarbanes-Oxley Act of 200232.1
            Certification of the Co-Chief
      Executive Officer Pursuant to 18 U.S.C. Section 1350, Section 906 of the
      Sarbanes-Oxley Act of 200232.2
            Certificationof the ChiefFinancialOfficerPursuant to 18 U.S.C. Section
      1350, Section 906 of the Sarbanes-Oxley Act of
  2002








7




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.May
      15, 2009
                /s/Martin
      SchackerMartin
      Schacker
                  Co-Chief
      Executive OfficerMay
      15, 2009
                /s/Neil
      MartucciNeil
      Martucci
                  Chief
      Financial Officer










8





EXHIBIT
INDEX




Exhibit
              No.
            Description31.1
            Certification of Co-Chief
      Operating Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
      200231.2
            Certificationof Chief FinancialOfficerPursuant to Section 302 of the
      Sarbanes-Oxley Act of 200232.1
            Certification of the Co-Chief
      Executive Officer Pursuant to 18 U.S.C. Section 1350, Section 906 of the
      Sarbanes-Oxley Act of 200232.2
            Certificationof the ChiefFinancialOfficerPursuant to 18 U.S.C. Section
      1350, Section 906 of the Sarbanes-Oxley Act of
  2002