UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC 20549




FORM
10-K/A


(Amendment
No. 1)




x
            ANNUAL
      REPORT UNDER SECTION 13 OR 15(d)

                OF
      THE SECURITIES EXCHANGE ACT OF
1934







For
the Fiscal Year Ended December 31, 2009


OR





o
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d)OF
      THE SECURITIES EXCHANGE ACT OF
1934







For the Transition Period
from      to




Commission
File Number 001-33038




ZIOPHARM
Oncology, Inc.


(Exact
Name of Registrant as Specified in Its Charter)





Delaware
            
            84-1475642(State
      or Other Jurisdiction of
              Incorporation
      or Organization)
            
            (IRS
      Employer
              Identification
      No.)





1180
      Avenue of the Americas, 19th Floor, New York, NY
            
            10036(Address
      of Principal Executive Offices)
            
            (Zip
      Code)




(646)
214-0700


(Issuer’s
Telephone Number, Including Area Code)




(Former
Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)




Securities
registered pursuant to Section 12(b) of the Act:




Common
Stock (Par Value $0.001 per Share)




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o No x




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act. o




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 registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes x
No o




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 during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes o No o




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




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
definition of “large accelerated filer,” “accelerate filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):




Large
      Accelerated Filer o
            
            Accelerated
      Filer o
            
            Non-
      Accelerated Filer o
            
            Smaller
      Reporting Companyx




Indicate
by check mark whether the registration is a shell company (as defined in Rule
12b-2 of the Act). Yes o No x




The
aggregate market value of the registrant’s common stock held by non-affiliates
was $31,745,280 as of June 30, 2009 (the last business day of the registrant’s
most recently completed second fiscal quarter), based upon the closing price of
the registrant’s common stock as reported on the NASDAQ Capital Market on that
date. Shares of common stock held by each executive officer and director of the
registrant and by each entity that owns 10% or more of the registrant’s
outstanding common stock have been excluded in that such persons may be deemed
to be affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.




As of
April 23, 2010, there were 41,765,445 shares of the registrant’s common stock,
$.001 par value per share, outstanding.




DOCUMENTS
INCORPORATED BY REFERENCE:




None.







EXPLANATORY
NOTE




ZIOPHARM
Oncology, Inc. (“ZIOPHARM,” the “Company,” “we” or “us”) is filing this
Amendment No. 1 to its Annual Report on Form 10-K for the year ended
December 31, 2009 filed with the Securities and Exchange Commission on
April  30, 2010 solely for the purpose of providing certain information
required by Part III of Form 10-K and to reflect exhibits filed with
this Amendment No. 1. Unless otherwise expressly stated, this Amendment
No. 1 does not reflect events occurring after the filing of the original
Form 10-K, or modify or update in any way disclosures contained in the
original Form 10-K.







TABLE
OF CONTENTS




PART
      IIIItem
      10.
                              Directors,
      Executive Officers and Corporate Governance
                            4Item
      11.
                              Executive
      Compensation
                            9Item
      12.
                              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                            15Item
      13.
                              Certain
      Relationships and Related Transactions, and Director
      Independence
                            18Item
      14.
                              Principal
      Accountant Fees and Services
                            18PART
      IVItem
      15.
                              Exhibits
      and Financial Statement Schedules
                            19SignaturesExhibit
    Index
                            A-1


3




PART
III




Item
10. Directors, Executive Officers and Corporate Governance





Set forth
below is information regarding the individuals currently serving as directors of
the Company, which includes information that each director has given us about
his age, all positions he holds within the Company, his principal occupation and
business experience for the past five years, and the names of other
publicly-held companies of which he currently serves as a director or has served
as a director during the past five years, as well as each director’s specific
experience, qualifications, attributes and skills.





Name and Age of
                          Director and Nominee
                        
                        Principal Occupation, Business Experience
                          for the Past Five Years and Directorships in Public Companies
                        
                        Director
                          SinceJonathan
      Lewis, M.D., Ph.D.
                          Age
      51
                        
                        Dr.
      Lewis is Chief Executive Officer and a director, serving in these
      capacities since the Company's September 2005 acquisition of ZIOPHARM,
      Inc. Dr. Lewis previously served as Chief Executive Officer and a Director
      of ZIOPHARM, Inc. since January 2004. From July 1994 until June 2001, Dr.
      Lewis served as Professor of Surgery and Medicine at Memorial
      Sloan-Kettering Cancer Center. He has been actively involved in leading
      translational and clinical research in cancer, and is widely recognized by
      patient advocacy groups. He has received numerous honors and awards in
      medicine and science, including the ASCO young investigator award, the
      Yale University Ohse award, and the Royal College of Surgeons Trubshaw
      Medal. He served as Chief Medical Officer and Chairman of the Medical
      Board at Antigenics, Inc. from June 2000 until November 2003. He serves as
      a Director on the Board of POPPA (the Police Organization Providing Peer
      Assistance) of the New York Police Department (NYPD) and on the Medical
      Advisory Board of the Sarcoma Foundation of America. Our Board
      believes that Dr. Lewis, along with Mr. Bagley, is an appropriate person
      to represent management on the Company’s Board of Directors given his
      position as the Company’s principal executive officer, his tenure with the
      Company, which dates back to the Company’s inception, and his professional
      credentials, his standing in the medical community and his clinical
      research experience.
                        
                        2005Richard
      E. Bagley
                          Age
      66
                        
                        Mr.
      Bagley is President, Chief Operating Officer, Chief Financial Officer,
      Treasurer and a director, serving in these capacities since the Company's
      September 2005 acquisition of ZIOPHARM, Inc. Mr. Bagley previously served
      ZIOPHARM, Inc. as its President and Chief Operating Officer since July
      2004, as a Director since December 2004 and as Chief Financial Officer and
      Treasurer since March 2005. Mr. Bagley initiated a career in
      pharmaceuticals in 1968 with Smith Kline and French Laboratories, leaving
      in 1985 after launching Tagamet in the U.S. as Vice President for Product
      Management and serving as President in the over-the-counter/consumer
      group. From 1985-1990, Mr. Bagley served in several capacities at Squibb
      Corporation including as President of E. R. Squibb & Sons, U.S. in
      1988 and 1989. He subsequently worked in the biotechnology industry as
      Director, Chief Executive Officer and President of ImmuLogic
      Pharmaceutical Corporation from 1990 to 1994, as Director, Chief Executive
      Officer and Chairman of ProScript, Inc. from 1994 to 1998, as Director,
      President and Chief Executive Officer of AltaRex Corp. from 1998 to May
      2003, and thereafter as a part time consultant and senior advisor. Along
      with Dr. Lewis, our Board of Directors believes that Mr. Bagley, as
      President, Chief Operating Officer and Chief Financial Officer, is an
      appropriate person to represent management on the Company’s Board of
      Directors given his positions and role within the Company, his tenure with
      the Company, which dates back to the Company’s inception, and his
      extensive experience with pharmaceutical development in an executive
      capacity.
                        
                        2005


4





Murray
      Brennan, M.D.
                      Age
      70
                    Dr.
      Brennan, who currently serves as the Board of Directors’ non-executive
      Lead Director, has been a director of the Company since its September 2005
      acquisition of ZIOPHARM, Inc. and previously served as a director of
      ZIOPHARM, Inc. since December 2004. Dr. Brennan is Emeritus Chairman of
      Memorial Sloan-Kettering's Department of Surgery and previously served as
      Chairman since 1985. Dr. Brennan is the Benno C. Schmidt Chair in Clinical
      Oncology at the Memorial Sloan Kettering Cancer Center, continues to
      operate at this institution and currently serves as its Vice President for
      International Programs.  He actively lectures at major
      institutions throughout the world and has authored or co-authored more
      than 1000 scientific papers.  He previously served as Director
      of the American Board of Surgery, Chairman of the American College of
      Surgeons Commission on Cancer, President of the Society of Surgical
      Oncology, President of the American Surgical Association, President of the
      Society of Clinical Surgery and Vice President of the American College of
      Surgeons.  Dr. Brennan is a member of the Institute of Medicine
      of The National Academy of Sciences.  He is the recipient of
      numerous honors, honorary degrees and fellowships for his leadership role
      in surgery and oncology worldwide.  Dr. Brennan serves as a
      non-executive Director on the Board of QSII (a medical information
      company) and as a member of its compensation committee.  He also
      serves on the Board of the de Beaumont Foundation, a charitable foundation
      designed to support public health in the United States and
      elsewhere.  Dr. Brennan’s credentials and standing in the
      medical community worldwide, and the oncology community specifically,
      along the leadership roles is which he has served at various esteemed
      organizations, provides experience and credibility that our Board of
      Directors believes make him well suited to serve on the Board and as its
      non-executive Lead Director.
                    2005George
      B. Abercrombie
                      Age
      55
                    Mr.
      Abercrombie, who has been a director of the Company since its April 2010,
      most recently served as the President and CEO of Hoffmann-La Roche Inc.
      and Head of North American Pharmaceutical Operations from 2001 through
      December 2009. Prior to joining Hoffmann-La Roche Inc. in 2001, Mr.
      Abercrombie held the position of Senior Vice President, Commercial
      Operations at Glaxo Wellcome Inc. and prior to joining Glaxo, held
      progressively senior positions at Merck and Company in Merck’s Human
      Health Division in the United States.  Mr. Abercrombie currently
      serves as a member of the Board of Directors of Inspire Pharmaceuticals,
      Inc. Mr. Abercrombie was recently elected to our Board of Directors
      in light of his leadership positions and extensive executive experience
      with large pharmaceutical companies.  The Board of Directors
      believes that Mr. Abercrombie will be an extremely valuable resource to
      the Board and to Company management as the Company and its drug
      development efforts continue to mature.
                    2010James
      A. Cannon
                      Age
      71
                    James
      (Jim) Cannon has been a director of the Company since its September 2005
      acquisition of ZIOPHARM, Inc. and previously served as a Director of
      ZIOPHARM, Inc. since December 2004. Mr. Cannon is Vice Chairman, Chief
      Financial Officer and a member of the Board of Directors of BBDO
      Worldwide. In these capacities, he oversees the financial management of
      BBDO operations in 77 countries. Jim joined BBDO in 1967, was promoted to
      Chief Financial Officer of the agency in 1984, and was elected to its
      Board of Directors one year later. An integral member of the team that
      formed Omnicom via a unique three-agency merger of BBDO, DDB and Needham
      Harper & Steers, Jim became Comptroller of the new group (NYSE: OMC)
      and a member of its Board of Directors in 1986, a position he held through
      2002. In 1987, he was appointed Director of Financial Operations of the
      Omnicom Group, serving in this capacity until early 1989 when he rejoined
      BBDO Worldwide as Executive Vice President and Chief Financial Officer.
      His return was concurrent with that of Allen Rosenshine who became
      Chairman and Chief Executive officer of BBDO after heading Omnicom. Jim
      was promoted to Vice Chairman of the agency in 1990. Jim is a graduate of
      Pace University and served in the US Marine Corps. Our Board of
      Directors believes that Mr. Cannon is qualified to serve as a director of
      the Company based on his financial skills and overall business judgment.
      In addition, the role played by Mr. Cannon at BBDO, where he oversees the
      financial management of that company’s international operations, uniquely
      qualifies him to serve as Chair of the Company’s audit
      committee.
                    2005


5





Senator
      Wyche Fowler, Jr., J.D.
                    Age
      69
                  Senator
      Wyche Fowler, Jr. has been a director of the Company since its September
      2005 acquisition of ZIOPHARM, Inc. and previously served as a Director of
      ZIOPHARM, Inc. since December 2004. Senator Fowler served for 16 years in
      the United States Congress. In the U.S. Senate he served as assistant
      floor leader, helping mould a bipartisan consensus for major public policy
      issues. Senator Fowler was a member of the U.S. Senate Appropriations,
      Budget, Energy and Agriculture Committees. First elected to the U.S. House
      of Representatives, he was a member of the Ways and Means and Foreign
      Affairs Committees, as well as the Select Committee on Intelligence.
      President Clinton appointed Senator Fowler U.S. Ambassador to the Kingdom
      of Saudi Arabia from 1996 through 2001. On his return, the FBI awarded him
      its highest civilian honor, The Jefferson Cup, for his assistance in
      combating terrorism and for helping solve terrorism crimes against the
      U.S. military in Saudi Arabia. He was named Lion of Judah by the State of
      Israel for successfully freeing Soviet Jew Yakov Gluzman. Senator Fowler
      is now engaged in an international business and law practice, and also
      serves as Chairman of the Board of the Middle East Institute, a non-profit
      foundation in Washington, DC. Senator Fowler’s background and
      experience in the United States Congress, and the leadership qualities
      exemplified during and since his tenure in Congress, are attributes that
      the Company believes benefits our overall Board operations. In addition,
      his international business and law experience qualify him to serve on our
      Board of Directors.
                  2005Gary
      S. Fragin
                    Age
      63
                  Gary
      S. Fragin has been a Director of the Company since its September 2005
      acquisition of ZIOPHARM, Inc. and previously served as a Director of
      ZIOPHARM, Inc. since December 2004. Mr. Fragin has more than 30 years of
      experience on Wall Street. He is currently managing partner of Fragin
      Asset Management, L.P. and General Partner of Ducat Investment Group, L.P.
      Mr. Fragin was the general partner and Chief Administrative / Operating
      Officer of Steinhardt Organization, one of the largest and most successful
      hedge funds in existence at that time. Prior to that, Mr. Fragin was a
      Partner, Director of Trading, and member of the Management Committee and
      Executive Committee at Oppenheimer and Co. He holds a BE degree from
      Vanderbilt University, and an MBA from Columbia University.  Mr.
      Fragin’s experience in the banking industry and his leadership ability
      qualifies him to serve on the Company’s Board of
Directors.
                  2005Timothy
      McInerney
                    Age
      49
                  Timothy
      McInerney has been a director of the Company since its September 2005
      acquisition of ZIOPHARM, Inc. and previously served as a Director of
      ZIOPHARM, Inc. since July 2005. In June of 2007, Mr. McInerney joined
      Riverbank Capital who specializes in financing for the biotech and
      specialty pharmaceutical industry as a Partner. From 1992 to March 2007,
      Mr. McInerney was a Managing Director of Paramount BioCapital, Inc. where
      he oversaw the overall distribution of Paramount’s private equity product.
      Prior to 1992, Mr. McInerney was a research analyst focusing on the
      biotechnology industry at Ladenburg, Thalman & Co. Prior to that, Mr.
      McInerney held equity sales positions at Bear Sterns & Co. and
      Shearson Lehman Brothers, Inc. Mr. McInerney also worked in sales and
      marketing for Bristol-Myers Squibb. He received his B.S. in pharmacy from
      St. John's University at New York. He also completed a post-graduate
      residency at the New York University Medical Center in drug information
      systems. Other public companies on which Mr. McInerney has formerly served
      as a director during the past five years includes Manhattan
      Pharmaceuticals, Inc. Mr. McInerney’s experiences with investment banking
      firms that have specialized in forming and raising capital for
      pharmaceutical development companies makes him uniquely qualified to serve
      of on the Company’s Board. The Company has benefitted and continues to
      benefit from the various contacts that Mr. McInereny has in the investment
      community and his involvement with other biotechnology companies provides
      valuable context to Board discussions.
                  2005


6





Michael
      Weiser, M.D., Ph.D.
                Age
      47
              Dr.
      Weiser has been a director of the Company since its September 2005
      acquisition of ZIOPHARM, Inc. and previously served as a Director of
      ZIOPHARM, Inc. since its inception in September 2003. Dr. Weiser is
      currently founder and co-chairman of Actin Biomed, a New York based
      healthcare investment firm. Prior to joining Actin, Dr. Weiser was the
      Director of Research of Paramount BioCapital, Inc. Dr. Weiser completed
      his Ph.D. in Molecular Neurobiology at Cornell University Medical College
      and received his M.D. from New York University School of Medicine. He
      performed his post-graduate medical training in the Department of
      Obstetrics and Gynecology at New York University Medical Center. Dr.
      Weiser also completed a Postdoctoral Fellowship in the Department of
      Physiology and Neuroscience at New York University School of Medicine and
      received his B.A. in Psychology from University of Vermont. Dr. Weiser is
      a member of The National Medical Honor Society, Alpha Omega Alpha. Dr.
      Weiser currently serves on the board of directors of Manhattan
      Pharmaceuticals, Inc., Chelsea Therapeutics International, Ltd., Emisphere
      Technologies, Inc. and Hana Biosciences, Inc. as well as several privately
      held companies.  Other public companies on which Dr. Weiser has
      formerly served as a director during the past five years includes Vioquest
      Pharmaceuticals, Inc. Dr. Weiser’s medical education and background
      coupled with his experiences as co-chairman of a healthcare investment
      firm and former Director of Research for a biotechnology investment
      banking firm, provide him with a unique background and skill set that have
      added and continue to add value to our Board.  In addition, Dr.
      Weiser’s service on the boards of directors of various public
      biotechnology companies and his knowledge of compensation trends also
      makes him well suited to serve on the Company’s compensation
      committee.
              2005




SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE




Section
16(a) of the Exchange Act requires the Company’s officers and directors, and
persons who own more than ten percent of a registered class of the Company’s
equity securities, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission. Officers, directors and
greater-than-ten-percent stockholders are required by Securities and Exchange
Commission regulations to furnish the Company with copies of all Section 16(a)
forms they file.




Based
solely on review of the copies of the Forms 3, 4 and 5 (and amendments thereto)
that we received with respect to transactions occurring during fiscal 2009, we
believe that the Company’s officers, directors and greater-than-ten-percent
beneficial owners complied with all applicable Section 16(a) filing
requirements, except as listed in the table below.




Name of Filer
              
              Description of Transaction
              
              Transaction Date
              
              Filing DateJonathan
      Lewis
              
              Received
      of gifts of common stock as custodian for minor children
                (450
      shares)
              
              February
      1, 2008 and February 7, 2008
              
              May
      15, 2009Essex
      Woodlands Health Ventures Fund VI, LP
              
              Acquisition
      of common stock
                (328,766
      Shares) and warrants (328,766 warrant shares)
              
              September
      15, 2009
              
              December
      10, 2009





AUDIT
COMMITTEE OF THE BOARD OF DIRECTORS




The
Company maintains a three member audit committee of the Board of Directors. The
current members of the audit committee are Mr. James A. Cannon, who serves as
the committee’s Chairman, and Mr. Gary S. Fragin and Senator Wyche Fowler,
Jr.  The audit committee operates under a written charter adopted by
the Board of Directors, a copy of which is available on the Company’s website at
www.ziopharm.com. As set forth in the charter, the primary responsibility of the
audit committee is to oversee the Company’s financial reporting processes and
internal control system on behalf of the Board of Directors. In that regard, the
audit committee is, among other things, responsible for the appointment,
compensation, retention and oversight of the work performed by the independent
registered public accounting firm employed by the Company.




7


Each
member of the audit committee is an “independent director,” as such term is
defined in the NASDAQ Stock Market’s Marketplace Rule 5605(a)(2), and meets the
criteria for independence set forth in Rule 10A-3(b)(1) under the Securities
Exchange Act of 1934, as amended. The Board of Directors has also determined
that each of the audit committee members is able to read and understand
fundamental financial statements and that at least one member of the audit
committee has past employment experience in finance or accounting. The Board of
Directors has determined that at least one member of the audit committee, Mr.
James A. Cannon, is an “audit committee financial expert,” as that term is
defined in Item 407(d)(5)(ii) of Regulation S-K promulgated under the Securities
Exchange Act of 1934, as amended. Mr. Cannon’s relevant experience includes his
current service as the Chief Financial Officer of BBDO Worldwide, a position he
has held for the past 20 years, and his past service as director of financial
operations of the Omnicom Group.




8




Item
11. Executive Compensation


Summary
Compensation Table




The table
below summarizes the total compensation earned during the fiscal years ended
December 31, 2009, 2008 and 2007 by (i) each individual serving as our principal
executive officer during the fiscal year ended December 31, 2009; and (ii) up to
two of the other most highly compensated individuals who served as an executive
officer of the Company as of December 31, 2009 and whose total compensation
received from the Company during such fiscal year (other than non-qualified
deferred compensation earnings, if any) exceeded $100,000 (collectively, the
“named executive officers”).




Restricted
                                                      
                                                      
                                                      Stock
      Option
                                                      
                                                      
                                                      All
      OtherName
      of Principal Position
                                                      
                                                      Year
                                                      
                                                      Salary
                                                      
                                                      
                                                      Bonus
                                                      
                                                      
                                                      Stock Awards(1)
                                                      
                                                      
                                                      Grants(1)
                                                      
                                                      
                                                      Compensation
                                                      
                                                      
                                                      TotalJonathan
      Lewis, M.D., Ph.D.
                                                      
                                                      2009
                                                      
                                                      $
                                                      420,000
                                                      
                                                      
                                                      $
                                                      200,000
                                                      (2)
                                                      
                                                      $
                                                      1,045,500
                                                      (5)
                                                      
                                                      $
                                                      384,500
                                                      (7)
                                                      
                                                      $
                                                      77,343
                                                      (9)
                                                      
                                                      $
                                                      2,127,343Chief
      Executive Officer
                                                      
                                                      2008
                                                      
                                                      $
                                                      419,215
                                                      
                                                      
                                                      $
                                                      250,000
                                                      (3)
                                                      
                                                      $
                                                      449,500
                                                      (6)
                                                      
                                                      $
                                                      -
                                                      
                                                      
                                                      $
                                                      5,169
                                                      (10)
                                                      
                                                      $
                                                      1,123,884Richard
      E. Bagley
                                                      
                                                      2007
                                                      
                                                      $
                                                      385,000
                                                      
                                                      
                                                      $
                                                      315,000
                                                      (4)
                                                      
                                                      $
                                                      -
                                                      
                                                      
                                                      $
                                                      324,661
                                                      (8)
                                                      
                                                      $
                                                      5,289
                                                      (11)
                                                      
                                                      $
                                                      1,029,950President
      , Chief Operating
                                                      
                                                      2009
                                                      
                                                      $
                                                      315,000
                                                      
                                                      
                                                      $
                                                      100,000
                                                      (12)
                                                      
                                                      $
                                                      348,500
                                                      (15)
                                                      
                                                      $
                                                      163,500
                                                      (18)
                                                      
                                                      $
                                                      2,880
                                                      (21)
                                                      
                                                      $
                                                      929,880Officer
      and Chief Financial
                                                      
                                                      2008
                                                      
                                                      $
                                                      308,750
                                                      
                                                      
                                                      $
                                                      50,000
                                                      (13)
                                                      
                                                      $
                                                      41,500
                                                      (16)
                                                      
                                                      $
                                                      93,926
                                                      (19)
                                                      
                                                      $
                                                      -
                                                      
                                                      
                                                      $
                                                      494,176Officer
                                                      
                                                      2007
                                                      
                                                      $
                                                      275,000
                                                      
                                                      
                                                      $
                                                      105,000
                                                      (14)
                                                      
                                                      $
                                                      68,250
                                                      (17)
                                                      
                                                      $
                                                      239,078
                                                      (20)
                                                      
                                                      $
                                                      -
                                                      
                                                      
                                                      $
                                                      687,328




(1)
            Amounts
      listed reflect the aggregate grant date fair value related to stock awards
      and option awards, as applicable, granted during the fiscal years ended
      December 31, 2009, 2008 and 2007, respectively, computed in accordance
      with FASB ASC Topic 718, but net of any estimate for forfeitures related
      to service based vesting conditions. Assumptions used in the calculation
      of these amounts are included in Note 3 to the Company’s audited financial
      statements for the fiscal year ended December 31, 2009, which are
      contained in the Company’s Annual Report on Form 10-K filed with the
      Securities and Exchange Commission on March 17,
  2010.




(2)
            Reflects
      a discretionary year-end bonus of $200,000 for performance during fiscal
      year 2009.




(3)
            Includes
      an annual guaranteed bonus of $250,000 required under the terms of Dr.
      Lewis’ prior employment agreement with the Company for work performed in
      fiscal 2007, which was paid in fiscal 2008.  Dr. Lewis received
      a grant of restricted stock in lieu of a cash bonus that he would
      otherwise have been eligible to receive in respect of work performed in
      fiscal 2008. See Note 6 below.




(4)
            Includes
      an annual guaranteed bonus of $250,000 required under the terms of Dr.
      Lewis’ employment agreement with the Company for work performed in fiscal
      2006, which was paid in fiscal 2007, and an additional $65,000
      discretionary bonus based on Dr. Lewis’ fiscal 2007 job
      performance.




(5)
            During
      fiscal 2009, the Company granted Dr. Lewis a total of 450,000 restricted
      shares of the Company’s common stock as follows: (i) 300,000 shares were
      granted on September 23, 2009, which shares are subject to transfer and
      forfeiture restrictions that lapse on the one-year anniversary of the
      grant date; and (ii) 150,000 shares were granted on December 31, 2009,
      which shares are subject to transfer and forfeiture restrictions that
      lapse in annual installments over three years commencing on the one-year
      anniversary of the grant date.




(6)
            During
      fiscal 2008, the Company granted Dr. Lewis a total of 250,000 restricted
      shares of the Company’s common stock as follows: (i) 100,000 shares were
      granted in connection with Dr. Lewis entering into his current employment
      agreement on January 8, 2008, which shares are subject to transfer and
      forfeiture restrictions that lapse in annual installments over three years
      commencing on the one-year anniversary of the grant date; and (ii) 150,000
      shares were granted on December 3, 2008 in lieu of a year-end cash bonus
      for fiscal 2008, which shares are subject to transfer and forfeiture
      restrictions that lapse on the one year anniversary of the grant
      date.




(7)
            On
      May 13, 2009, the Company granted to Dr. Lewis options to purchase 100,000
      shares of the Company’s common stock at an exercise price of $0.70, which
      options vest or vested in four equal installments on each of May 13, 2009,
      August 13, 2009, November 13, 2009, and February 13, 2010. On December 31,
      2009, the Company granted Dr. Lewis options to purchase 150,000 shares of
      the Company’s common stock at a per share exercise price of $2.85. Such
      options vest in equal annual installments over three years commencing on
      the one year anniversary of the grant
date.




(8)
            During
      fiscal 2007, the Company granted Dr. Lewis options to purchase 135,000
      shares of the Company’s common stock as follows: (i) options to purchase
      35,000 shares of common stock at a per share exercise price of $4.85 were
      granted on June 18, 2007; and (ii) options to purchase 100,000 shares of
      common stock at a per share exercise price of $2.73 were granted on
      December 12, 2007.  Such options vest in annual installments
      over three years commencing on the one year anniversary of the grant
      date.




(9)
            Of
      such amount, (i) $5,492 represents the dollar value of life insurance
      premiums paid by the Company for the benefit of Dr. Lewis during fiscal
      2009, (ii) $71,851 represents taxable perquisites including $5,569 for
      health club dues, and $41,725 for transportation costs, and (iii) $24,557
      represents “gross up” amounts reimbursed to Dr. Lewis for the payment of
      taxes on such perquisites.




(10)
            Amount
      represents the dollar value of life insurance premiums paid by the Company
      for the benefit of Dr. Lewis during fiscal
2008.




(11)
            Amount
      represents the dollar value of life insurance premiums paid by the Company
      for the benefit of Dr. Lewis during fiscal
2007.




9


(12)
            Includes
      a discretionary year-end bonus of $100,000 for performance during fiscal
      year 2009.




(13)
            Includes
      an annual guaranteed bonus of $50,000 required under Mr. Bagley’s prior
      employment agreement with the Company for worked performed for the period
      from July 2007 to July 2008. Mr. Bagley received a grant of restricted
      stock in lieu of a cash bonus that he would otherwise have been eligible
      to receive in respect of work performed in fiscal 2008. See Note 17
      below.




(14)
            Includes
      an annual guaranteed bonus of $50,000 required under Mr. Bagley’s prior
      employment agreement with the Company for worked performed for the period
      from July 2006 to July 2007 and an additional $55,000 discretionary bonus
      based on Mr. Bagley’s fiscal 2007 job
  performance.




(15)
            During
      fiscal 2009, the Company granted Mr. Bagley a total of 150,000 restricted
      shares of the Company’s common stock as follows: (i) 100,000 shares were
      granted on September 23, 2009, which shares are subject to transfer and
      forfeiture restrictions that lapse on the one-year anniversary of the
      grant date; and (ii) 50,000 shares were granted on December 31, 2009,
      which shares are subject to transfer and forfeiture restrictions that
      lapse in annual installments over three years commencing on the one-year
      anniversary of the grant date.




(16)
            On
      December 3, 2007, the Company granted 50,000 shares of the Company’s
      common stock to Mr. Bagley in lieu of a year-end cash bonus for fiscal
      2008, which shares are subject to transfer and forfeiture restrictions
      that lapse on the one-year anniversary of the grant
  date.




(17)
            On
      December 12, 2007, the Company granted 25,000 shares of the Company’s
      common stock to Mr. Bagley, which shares are subject to transfer and
      forfeiture restrictions that lapse in their entirety on December 1,
      2008.




(18)
            During
      fiscal 2009, the Company granted Mr. Bagley options to purchase a total of
      150,000 shares of the Company’s common stock as follows: (i) options to
      purchase 100,000 shares of common stock at a per share exercise price of
      $0.70 were granted on May 13, 2009, which options vest or vested in four
      equal installments on each of May 13, 2009, August 13, 2009, November 13,
      2009, and February 13, 2010; and (ii) options to purchase 50,000 shares of
      common stock at a per share exercise price of $2.85 were granted on
      December 31, 2009, which options vest in equal annual installments over
      three years commencing on the one year anniversary of the grant
      date.




(19)
            On
      June 25, 2008, the Company granted Mr. Bagley options to purchase 60,000
      shares of the Company’s common stock at a per share exercise price of
      $2.14, which options vest in annual installments over three years
      commencing on the one year anniversary of the grant
  date.




(20)
            During
      fiscal 2007, the Company granted Mr. Bagley options to purchase 100,000
      shares of the Company’s common stock as follows: (i) options to purchase
      25,000 shares of common stock at a per share exercise price of $4.85 were
      granted on June 18, 2007; and (ii) options to purchase 75,000 shares of
      common stock at a per share exercise price of $2.73 were granted on
      December 12, 2007.  Such options vest in annual installments
      over three years commencing on the one year anniversary of the grant
      date.




(21)
            Of
      such amount, $1,905 represents the dollar value of group term life
      insurance premiums paid by the Company for the benefit of Mr. Bagley
      during fiscal 2009, and $975 represents “gross up” amounts reimbursed to
      Mr. Bagley for the payment of
taxes.




Description
of Employment Agreements and Related Compensation




Employment
Agreement with Jonathan Lewis, M.D., Ph.D.




During
the fiscal year ended December 31, 2007, Dr. Jonathan Lewis served as the
Company’s Chief Executive Officer under an employment agreement dated January 8,
2004. Under that agreement, as amended, Dr. Lewis received an annual base salary
of $385,000 and a guaranteed annual bonus of $250,000. In addition, Dr. Lewis
was eligible to receive an annual discretionary bonus of up to 100% of his base
salary, as determined by the compensation committee of our Board of Directors,
as well as stock options that may be granted in the discretion of the
compensation committee.




The
Company’s practice has been to evaluate compensation and related job performance
at the end of each fiscal year and grant cash bonuses and/or stock options to
employees based upon such evaluation.  During fiscal 2007, the
compensation committee determined to pay Dr. Lewis a discretionary cash bonus of
$65,000 for his job performance in fiscal 2007. This determination was based on
the Company meeting or exceeding previously set 2007 operational goals. In
addition, the Company granted Dr. Lewis a stock option to purchase 35,000 shares
of common stock at a per share exercise price of $4.85 on June 18, 2007 and a
year-end stock option to purchase 100,000 shares of common stock at a per share
exercise price of $2.73.  Such options vest in annual installments
over three years commencing on the one year anniversary of the date of
grant.




On
January 18, 2008, the Company entered into a new employment agreement with Dr.
Lewis that was retroactively effective as of the January 8, 2008 expiration date
of his prior agreement. Under the new agreement, which has a three year term
commencing January 8, 2008, Dr. Lewis received an initial annual base salary of
$420,000, which is subject to increase at the discretion of the Board of
Directors based on an annual review. Based on its year-end review for fiscal
2009, the Board of Directors increase Dr. Lewis’ annual base salary for 2010 to
$460,000.  In addition, Dr. Lewis is eligible to receive an annual
bonus based on his performance as determined by the Board of Directors. The
target amount of the annual performance is a range from $250,000 to
$360,000.  The agreement contemplates that Dr. Lewis and the Company’s
compensation committee will agree on certain performance targets each
year.  The actual amount received will be based on whether each of
these targets have been achieved by the Company, with lesser amounts paid if
substantial progress has been made to achieve the goal or it has been abandoned
by the Company, and greater amounts paid if expectations are exceeded. Dr. Lewis
is also eligible to receive an additional annual discretionary bonus in such
amounts determined by the Board of Directors.




10


On
December 5, 2008, the employment agreement with Dr. Lewis was amended to provide
for a restricted stock grant of 150,000 shares, with restrictions that lapsed on
December 3, 2009, in lieu of the cash bonus for fiscal year 2008 that Dr. Lewis
would otherwise have been eligible to receive. Replacing Dr. Lewis’ cash bonus
potential with a restricted stock grant was in accordance with the Company’s
efforts to conserve cash. The Company’s other senior management employees also
received restricted stock grants in accordance with these efforts.




Under his
current agreement, Dr. Lewis is eligible for reimbursement of reasonable
out-of-pocket expenses incurred by him in furtherance of the business and
affairs of the Company, including reasonable travel and entertainment expenses,
as well as for medical licensing fees, professional dues and memberships,
journal subscriptions and up to $10,000 per year in costs associated with
certain corporate consultants retained by Dr. Lewis. In addition, the Company
has agreed to reimburse Dr. Lewis for premiums on life insurance policies having
aggregate coverage limits of up $800,000 and premiums on disability insurance
policies covering Dr. Lewis in amounts up to $20,000 per month.




In
connection with entering into the current agreement, the Company granted Dr.
Lewis an award of restricted stock in the amount of 100,000 shares. The
restricted stock award is governed by an agreement that prohibits Dr. Lewis from
transferring the restricted shares and provides that the shares will be
forfeited without consideration if Dr. Lewis’s employment with the Company is
terminated. The transfer restrictions and forfeiture obligations lapse in three
equal annual installments on January 8, 2009, January 8, 2010 and January 8,
2011. Accordingly, 66,666 shares have vested effective as of January 8, 2010.
Dr. Lewis will also be eligible to receive additional equity awards as
determined by the Board of Directors in its sole discretion from time to
time.




On May
13, 2009, the Company granted to Dr. Lewis options to purchase 100,000 shares of
the Company’s common stock at an exercise price of $0.70, which options vest or
vested in four equal installments on each of May 13, 2009, August 13, 2009,
November 13, 2009, and February 13, 2010. Effective as of December 31, 2009, the
Board of Directors’ adopted the compensation committee’s recommendations for
2009 end-of-year cash bonuses, awards of restricted stock and grants of stock
options under the Company’s 2003 Stock Option Plan.  Dr. Lewis
received a cash bonus of $200,000 and was awarded 150,000 shares of the
Company’s common stock with transfer and forfeiture restrictions.  The
stock vests and the restrictions lapse in annual installments over three years
commencing on the one-year anniversary of the grant date.  The Company
also granted Dr. Lewis options to purchase 150,000 shares of the Company’s
common stock at an exercise price of $2.85, which options vest in equal annual
installments over three years commencing on the one year anniversary of the
grant date.




Dr.
Lewis’ employment agreement provides that he will continue to receive his base
salary, benefits and a pro-rata portion of his target performance bonus for a
period of one year if he is terminated by the Company for a reason other than
death, disability or “Cause,” or if Dr. Lewis resigns for “Good Reason,” each as
defined in the employment agreement. In connection with any such termination,
the pro rata potion of Dr. Lewis’s performance bonus will be based on the number
of days Dr. Lewis has been employed by the Company during the year of
termination. In the event Dr. Lewis’s employment is terminated without “Cause”
prior to and in connection with a “Change in Control,” or within 18 months
thereafter, he will continue to receive his base salary and benefits for a
period of two years following such termination and will also receive the greater
of the amount of his performance bonus for the year of termination or the
average of the amounts received as a performance bonus under the new employment
agreement or guaranteed bonus under the previous employment agreement for the
two years preceding the year of termination. If Dr. Lewis’s employment is
terminated as a result of death or disability, Dr. Lewis (or his estate, as
applicable) will receive his base salary for a period of one year following the
date of termination. Upon occurrence of any of the above termination events, all
stock options and restricted stock grants scheduled to vest by the end of the
calendar year in which such termination occurs will be accelerated and deemed to
vest as of the termination date.




The
employment agreement provides that Dr. Lewis will not compete with the Company,
or solicit employees, clients or customers of the Company, for twelve months
after the termination of his employment with the Company; provided, however,
that the Company will be obligated to pay Dr. Lewis his base salary and his
performance bonus (based on Dr. Lewis’s average performance bonus received for
the prior two years) if the Company desires such non-competition and
non-solicitation provisions to have effect following expiration of the
employment agreement without renewal.




Employment
Agreement with Richard E. Bagley




During
the fiscal year ended December 31, 2007, Mr. Richard E. Bagley served as the
Company’s President, Chief Operating Officer, Chief Financial Officer, and
Treasurer under a written three-year employment agreement dated July 21, 2004
and effective July 1, 2004. Under the agreement, Mr. Bagley initially received
an annual base salary of $250,000 (subject to adjustment) and a guaranteed
annual bonus of $50,000. In addition, Mr. Bagley was eligible to receive an
annual discretionary bonus as determined by the compensation committee of our
Board of Directors, as well as stock options that may be granted at the
discretion of the compensation committee.  Following approval by the
Company’s Board of Directors at a meeting held June 18, 2007, the Company
entered into an Employment Agreement Extension with Mr. Bagley, pursuant to
which the Company extended the term of Mr. Bagley’s employment for an additional
one-year period at his then-current annual base salary of $275,000.




During
fiscal 2007, the compensation committee determined to pay Mr. Bagley a
discretionary cash bonus of $55,000 for his job performance in fiscal
2007.  This determination was based on the Company’s meeting or
exceeding its previously set 2007 operational goals.  In addition, the
Company granted Mr. Bagley a stock option to purchase 25,000 shares of common
stock at a per share exercise price of $4.85 on June 18, 2007 and a year-end
stock option to purchase 75,000 shares of common stock at a per share exercise
price of $2.73. Such options vested in annual installments over three years
commencing on the one year anniversary of the date of grant.  As part
of a year-end grant of stock awards to certain of the Company’s employees, the
Company granted 25,000 shares of the Company’s common stock to Mr. Bagley on
December 1, 2008, which shares were subject to transfer and forfeiture
restrictions that lapsed on the one-year anniversary of the grant
date.




11


Effective
June 25, 2008, the Company entered into a new employment agreement with Mr.
Bagley that provides for a three-year employment term beginning on July 1, 2008.
Under the new agreement, Mr. Bagley is entitled to receive an annual base salary
of $315,000, which is subject to increase at the discretion of the Board of
Directors based on an annual review. Based on its year-end review for fiscal
2009, the Board of Directors increase Dr. Lewis’ annual base salary for 2010 to
$347,000.  In addition, Mr. Bagley is eligible to receive an annual
bonus based on his performance as determined by the Board of Directors. The
target amount of the annual performance bonus is $100,000, and the actual amount
to be received will be based on the achievement of certain performance goals to
be agreed upon by Mr. Bagley and the Board’s compensation committee for each
calendar year. Mr. Bagley is also eligible to receive an additional annual
discretionary bonus in such amount as may be determined by the Board of
Directors.




On
December 5, 2008, the employment agreement with Mr. Bagley was amended to
provide for a restricted stock grant of 50,000 shares, with restrictions that
lapsed on December 3, 2009, in lieu of the cash bonus for fiscal 2008 that Mr.
Bagley would otherwise have been eligible to receive. Replacing Mr. Bagley’s
cash bonus potential with a restricted stock grant was in accordance with the
Company’s efforts to conserve cash. The Company’s other senior management
employees also received restricted stock grants in accordance with these
efforts.




Under his
new agreement, Mr. Bagley is eligible for reimbursement of reasonable
out-of-pocket expenses incurred by him in furtherance of the business and
affairs of the Company, including reasonable travel and entertainment expenses,
as well as reasonable professional dues.




In
connection with entering into the new employment agreement on June 25, 2008, the
Company granted Mr. Bagley an award of 60,000 options to purchase the Company’s
common stock at a per share exercise price of $2.14, which options vest in three
equal annual installments on June 25, 2009, June 25, 2010 and June 25,
2011.




On May
13, 2009, the Company granted to Mr. Bagley options to purchase 100,000 shares
of the Company’s common stock at an exercise price of $0.70, which options vest
or vested in four equal installments on each of May 13, 2009, August 13, 2009,
November 13, 2009, and February 13, 2010. On December 31, 2009, the Board of
Directors’ adopted the compensation committee’s recommendations for 2009
end-of-year cash bonuses, awards of restricted stock and grants of stock options
under the Company’s 2003 Stock Option Plan.  Mr. Bagley received a
cash bonus of $100,000 and was awarded 50,000 shares of the Company’s common
stock with transfer and forfeiture restrictions.  The stock vests and
the restrictions lapse in annual installments over three years commencing on the
one-year anniversary of the grant date.  The Company also granted Mr.
Bagley options to purchase 50,000 shares of the Company’s common stock with an
exercise price of $2.85 per share, which options vest in equal annual
installments over three years commencing on the one year anniversary of the
grant date.




The new
employment agreement provides that Mr. Bagley will continue to receive his base
salary and benefits for a period of one year if (i) he is terminated by the
Company for a reason other than death, disability or “Cause,” as that term
defined in the employment agreement, (ii) Mr. Bagley resigns for “Good Reason,”
as that term defined in the employment agreement, or (iii) Mr. Bagley’s
employment is terminated without Cause prior to and in connection with a “Change
of Control,” as that term is defined in the employment agreement, or within 18
months thereafter. In connection with any such termination, any of Mr. Bagley’s
stock options that have vested as of the date of the termination shall remain
exercisable for a period of 90 days and any unvested stock options shall be
deemed to have expired as of the date of termination. In the event of a Change
of Control, Mr. Bagley’s stock options that are scheduled to vest by the end of
the calendar year in which the Change of Control occurs shall be accelerated and
deemed to have vested as of the date immediately preceding the Change of
Control. If Mr. Bagley’s employment is terminated as a result of his death or
disability, Mr. Bagley (or his estate, as applicable) will receive his base
salary for a period of one year and any accrued but unpaid bonus
payments.




The
employment agreement provides that Mr. Bagley will not compete with the Company,
or solicit employees, clients or customers of the Company, for twelve months
after the termination of his employment with the Company; provided, however,
that the Company will be obligated to pay Mr. Bagley his base salary if the
Company desires such non-competition and non-solicitation provisions to have
effect following expiration of the employment agreement without
renewal.




12


Outstanding
Equity Awards at Fiscal Year-End




The
following table sets forth information concerning stock options held by the
named executives at December 31, 2009:





Option Grants
                                                                    
                                                                    
                                                                    Stock AwardsName
                                                                    
                                                                    Number of
                                                                      Securities
                                                                      Underlying
                                                                      Unexercised
                                                                      Options
                                                                      No. Exercisable
                                                                    
                                                                    
                                                                    Number ofSecurities
                                                                      Underlying
                                                                      UnexercisedOptions
                                                                      No. Unexercisable
                                                                    
                                                                    
                                                                    Option
                                                                      Exercise
                                                                      Price
                                                                    
                                                                    
                                                                    Option
                                                                      Expiration
                                                                      Date
                                                                    
                                                                    
                                                                    Number of
                                                                      Shares of
                                                                      Stock That
                                                                      Have Not
                                                                      Vested
                                                                    
                                                                    
                                                                    Market
                                                                      Value of
                                                                      Shares of
                                                                      Stock That
                                                                      Have Not
                                                                      Vested(15)Jonathan
      Lewis, M.D.,
                                                                    
                                                                    
                                                                    25,674
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    0.08
                                                                    
                                                                    
                                                                    1/7/2014
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -Ph.D.
                                                                    
                                                                    
                                                                    242,979
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    0.08
                                                                    
                                                                    
                                                                    1/26/2014
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -87,789
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    4.31
                                                                    
                                                                    
                                                                    6/8/2015
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -54,161
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    4.31
                                                                    
                                                                    
                                                                    9/13/2015
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -75,000
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    5.01
                                                                    
                                                                    
                                                                    4/25/2016
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -139,315
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    5.01
                                                                    
                                                                    
                                                                    4/25/2016
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -30,000
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    6.49
                                                                    
                                                                    
                                                                    12/13/2016
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -23,333
                                                                    
                                                                    
                                                                    
                                                                    11,667
                                                                    (1)
                                                                    
                                                                    $
                                                                    4.85
                                                                    
                                                                    
                                                                    6/18/2017
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -66,667
                                                                    
                                                                    
                                                                    
                                                                    33,333
                                                                    (2)
                                                                    
                                                                    $
                                                                    2.73
                                                                    
                                                                    
                                                                    12/12/2017
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -75,000
                                                                    
                                                                    
                                                                    
                                                                    25,000
                                                                    (3)
                                                                    
                                                                    $
                                                                    0.70
                                                                    
                                                                    
                                                                    5/13/2019150,000
                                                                    (4)
                                                                    
                                                                    $
                                                                    2.85
                                                                    
                                                                    
                                                                    12/31/2019-
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    66,667
                                                                    (5)
                                                                    
                                                                    $
                                                                    197,334-
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    300,000
                                                                    (6)
                                                                    
                                                                    $
                                                                    888,000-
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    150,000
                                                                    (7)
                                                                    
                                                                    $
                                                                    444,000Richard
      E. Bagley
                                                                    
                                                                    
                                                                    150,668
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    1.70
                                                                    
                                                                    
                                                                    7/1/2014
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -63,197
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    4.31
                                                                    
                                                                    
                                                                    6/8/2015
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -27,417
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    4.31
                                                                    
                                                                    
                                                                    9/13/2015
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -40,000
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    5.01
                                                                    
                                                                    
                                                                    4/25/2016
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -54,873
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    5.01
                                                                    
                                                                    
                                                                    4/25/2016
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -20,000
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    6.49
                                                                    
                                                                    
                                                                    12/13/2016
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -1,666
                                                                    
                                                                    
                                                                    
                                                                    8,333
                                                                    (8)
                                                                    
                                                                    $
                                                                    4.85
                                                                    
                                                                    
                                                                    6/18/2017
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -50,000
                                                                    
                                                                    
                                                                    
                                                                    25,000
                                                                    (9)
                                                                    
                                                                    $
                                                                    2.73
                                                                    
                                                                    
                                                                    12/12/2017
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -20,000
                                                                    
                                                                    
                                                                    
                                                                    40,000
                                                                    (10)
                                                                    
                                                                    $
                                                                    2.14
                                                                    
                                                                    
                                                                    6/25/2018
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -75,000
                                                                    
                                                                    
                                                                    
                                                                    25,000
                                                                    (11)
                                                                    
                                                                    $
                                                                    0.70
                                                                    
                                                                    
                                                                    5/13/2019-
                                                                    
                                                                    
                                                                    
                                                                    50,000
                                                                    (12)
                                                                    
                                                                    $
                                                                    2.85
                                                                    
                                                                    
                                                                    12/31/2019-
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    100,000
                                                                    (13)
                                                                    
                                                                    $
                                                                    296,000-
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    50,000
                                                                    (14)
                                                                    
                                                                    $
                                                                    148,000










(1)
            Vests
      with respect to 11,666 option shares on June 18,
  2010.




(2)
            Vests
      with respect to 33,333 option shares on December 12,
  2010.




(3)
            Vests
      with respect to 25,000 option shares on February 13,
  2010.




(4)
            Vests
      with respect to 50,000 option shares on each of December 31, 2010,
      December 31, 2011 and December 31,
2012.




(5)
            Such
      shares are subject to transfer and forfeiture restrictions that lapse with
      respect to 33,333 shares on January 8, 2010, and lapse with respect to
      33,334 shares on January 8, 2011.




(6)
            Such
      shares are subject to transfer and forfeiture restrictions that lapse with
      respect to 300,000 shares on September 23,
2010.




(7)
            Such
      shares are subject to transfer and forfeiture restrictions that lapse with
      respect to 50,000 shares on each December 31, 2010, December 31, 2011 and
      December 31, 2012.




(8)
            Vests
      with respect to 8,333 option shares on June 18,
  2010.




(9)
            Vests
      with respect to 25,000 option shares on December 12,
  2010.




(10)
            Vests
      with respect to 20,000 option shares on each of June 25, 2010 and
      2011.




(11)
            Vests
      with respect to 25,000 option shares on February 13,
  2010.




(12)
            Vests
      with respect to 16,667 shares on each of December 31, 2010 and December
      31, 2011, and vests with respect to 16,666 shares on December 31,
      2012.




(13)
            Such
      shares are subject to transfer and forfeiture restrictions that lapse with
      respect to 100,000 shares on September 23,
2010.




13


(14)
            Such
      shares are subject to transfer and forfeiture restrictions that lapse with
      respect to 16,667 shares on of each December 31, 2010 and December 31,
      2011 and vests with respect to 16,666 shares on December 31,
      2012.




(15)
            Market
      value calculations based on the Company’s closing stock price of $2.96 on
      December 31, 2009.




Severance
or Change of Control Payments




Depending
upon the events surrounding a possible termination of employment with Dr. Lewis
or Mr. Bagley, they may continue to receive compensation following such
termination and the vesting of Dr. Lewis or Mr. Bagley’s stock options may
accelerate in whole or in part upon such termination. Arrangements related to
post-termination compensation and benefits applicable to Dr. Lewis and Mr.
Bagley are discussed above under the headings “Description of Employment
Agreements and Related Compensation - Employment Agreement with Jonathan Lewis,
M.D., Ph.D.” and “Description of Employment Agreements and Related Compensation
- Employment Agreement with Richard E. Bagley.”




Director
Compensation




Under the
Company’s director compensation policy in effect for fiscal 2009, each
non-employee director of the Company received a $3,750 quarterly cash retainer
paid in arrears plus $2,000 for each Board of Director’s meeting attended by
such director. In addition, the chairmen of the Company’s audit committee and
compensation committee receive an additional quarterly cash retainer of $2,500
paid in arrears. With the exception of the chairmen of the audit committee and
compensation committee, each other non-employee director serving on the
Company’s audit committee, compensation committee and corporate governance and
nominating committee received a $1,000 cash payment for each committee meeting
attended by such director. In addition, the Company’s general practice has been
to approve year-end equity incentive grants to non-employee directors in
consideration for services provided to the Company as directors during the
preceding year.  On December 31, 2009, the Board of Directors awarded
each non-employee director 7,500 restricted shares of  the Company’s
common stock and an option to purchase 7,500 shares of the Company’s common
stock at an exercise price equal to $2.85 per share.  The restricted
shares are subject to transfer and forfeiture restrictions that lapse, and the
options vest, in two equal annual installments of 3,750 each on December 31,
2010 and 2011. In addition to the year-end equity incentive grants, each
non-employee director also received a grant of 30,000 restricted shares
of  the Company’s common stock on September 23, 2009. These additional
one-time grants were made as part of the Company’s overall personnel retention
program and in respect of the considerable additional time and attention that
the directors contributed to the Company during 2009 in overseeing the Company’s
product development and capital raising endeavors. The transfer and forfeiture
restrictions applicable to these grants are scheduled to lapse in their entirety
on the one year anniversary of the grant date.




The table
below summarizes the compensation paid by the Company to its non-employee
directors for the fiscal year ended December 31, 2009.




Name
                  
                  Fees Earnedor Paid inCash
                  
                  
                  Option
                    Awards(1)
                  
                  
                  Restricted
                    StockAwards
                  
                  
                  All Other
                    Compensation
                  
                  
                  TotalJonathan
      Lewis, M.D., Ph.D.(2)
                  
                  $
                  -
                  
                  
                  
                  
                  
                  
                  
                  
                  $
                  -
                  
                  
                  $
                  -Richard
      E. Bagley(2)
                  
                  $
                  -
                  
                  
                  
                  
                  
                  
                  
                  
                  $
                  -
                  
                  
                  $
                  -Murray
      Brennan
                  
                  $
                  37,000
                  (3)
                  
                  $
                  24,525
                  
                  
                  $
                  83,175
                  
                  
                  $
                  -
                  
                  
                  $
                  144,700James
      A. Cannon
                  
                  $
                  35,000
                  (4)
                  
                  $
                  24,525
                  
                  
                  $
                  83,175
                  
                  
                  $
                  -
                  
                  
                  $
                  142,700Gary
      S, Fragin
                  
                  $
                  29,000
                  (5)
                  
                  $
                  24,525
                  
                  
                  $
                  83,175
                  
                  
                  $
                  -
                  
                  
                  $
                  136,700Wyche
      Fowler, Jr., J.D.
                  
                  $
                  30,000
                  (6)
                  
                  $
                  24,525
                  
                  
                  $
                  83,175
                  
                  
                  $
                  -
                  
                  
                  $
                  137,700Timothy
      McInerney
                  
                  $
                  26,000
                  (7)
                  
                  $
                  24,525
                  
                  
                  $
                  83,175
                  
                  
                  $
                  -
                  
                  
                  $
                  133,700Michael
      Weiser, M.D., Ph.D.
                  
                  $
                  26,000
                  (8)
                  
                  $
                  24,525
                  
                  
                  $
                  83,175
                  
                  
                  $
                  -
                  
                  
                  $
                  133,700





(1)
            Amounts
      listed reflect the aggregate grant date fair value related to stock awards
      and option awards, as applicable, granted during the fiscal year ended
      December 31, 2009, computed in accordance with FASB ASC Topic 718, but net
      of any estimate for forfeitures related to service based vesting
      conditions. Assumptions used in the calculation of these amounts are
      included in Note 3 to the Company’s audited financial statements for the
      fiscal year ended December 31, 2009, which are contained in the Company’s
      Annual Report on Form 10-K filed with the Securities and Exchange
      Commission on March 17, 2010.




(2)
            Employee
      directors.




(3)
            Includes
      cash retainers totaling $27,000 and $10,000 in fees related to Dr.
      Brennan’s attendance at committee
meetings.




(4)
            Includes
      cash retainers totaling $25,000 and payments totaling $10,000 for Mr.
      Cannon’s attendance at committee meetings and his service as chairman of
      the audit committee.




(5)
            Includes
      cash retainers totaling $25,000 and $4,000 in fees related to Mr. Fragin’s
      attendance at committee meetings.




(6)
            Includes
      cash retainers totaling $25,000 and $5,000 in fees related to Mr. Fowler’s
      attendance at committee meetings.




(7)
            Includes
      cash retainers totaling $25,000 and $1,000 in fees related to Mr.
      McInerney’s attendance at committee
meetings.




14


(8)
            Includes
      cash retainers totaling $25,000 and $1,000 in fees related to Dr. Weiser’s
      attendance at committee meetings.




On March
31, 2010, the Company adopted an amended policy governing director compensation
for 2010 and beyond. Under the amended policy, each non-employee director
receives a $40,000 annualized cash retainer and additional annualized payments
for service on the committee(s) to which they are assigned, as set forth in the
table below:




Chair
                    
                    
                    MemberAudit
      Committee
                    
                    $
                    15,000
                    
                    
                    $
                    8,000Compensation
      Committee
                    
                    $
                    10,000
                    
                    
                    $
                    6,000Corporate
      Governance and Nominating Committee
                    
                    $
                    6,000
                    
                    
                    $
                    4,000





The
non-executive Lead Director will also receive further annualized cash
compensation of $15,000. All cash retainers are paid on a quarterly basis in
arrears to non-employee directors that continue to serve as members of the Board
on the last business day of each calendar quarter. In addition, at the end of
each calendar year (commencing with 2010), each non-employee director will
receive annual equity incentive grants comprised of restricted shares of the
Company’s common stock and options to purchase shares of the Company’s common
stock. These grants, which will vest in their entirety on the one year
anniversary of the date of grant, will be in consideration for services to be
provided to the Company as directors during the next year. The number of
restricted shares and options comprising each grant will be determined by the
Board of Directors prior to the end of each calendar year upon recommendation
from the compensation committee. Equity awards representing consideration for
2010 service were granted upon the March 31, 2010 amendment to the director
compensation policy, such grants being in respect of grants that would have been
made had the amended policy been in place on December 31, 2009. Effective upon a
director’s initial election to the Board, he or she will receive 25,000
restricted shares of the Company’s common stock and an option to purchase 25,000
shares of the Company’s common stock.  The restricted stock will be
subject to transfer and forfeiture restrictions that will lapse on the one year
anniversary of the grant date and the stock option will vest in three equal
annual installments.




As set
forth in its written charter, the compensation committee annually, or more
frequently if deemed advisable, reviews director compensation practices and
recommends any changes for adoption by the full Board of Directors. As such, the
director compensation described above is subject to change at the discretion of
the Board of Directors.





Our Board
of Directors adopted a Code of Business Conduct and Ethics to be applicable to
all officers, directors and employees. The Code of Business Conduct and Ethics
is intended to be designed to deter wrong-doing and promote honest and ethical
behavior, full, fair, timely, accurate and understandable disclosure, and
compliance with applicable laws. The Code of Ethics is available on our website
at www.ziopharm.com and
a copy may be obtained without charge upon written request to the Company’s
President at the Company’s headquarters address.




Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters




The
Company’s 2003 Stock Option Plan (the “2003 Plan”), which is currently the
Company’s only equity compensation plan, has been approved by the Company's
stockholders. The following table sets forth certain information as of December
31, 2009 with respect to the 2003 Plan:





Plan Category
                    
                    Number of
                      Securities to Be
                      Issued Upon
                      Exercise of
                      Outstanding
                      Options
                      (A)
                    
                    
                    Weighted-
                      Average Exercise
                      Price of
                      Outstanding
                      Options
                      (B)
                    
                    
                    Number of
                      Securities
                      Remaining
                      Available for
                      Future Issuance
                      Under Equity
                      Compensation
                      Plans (Excluding
                      Securities Reflected
                      in Column (A))
                      (C)Equity
      compensation plans approved by stockholders:2003
      Stock Option Plan
                    
                    
                    3,533,436
                    
                    
                    $
                    2.82
                    
                    
                    
                    368,817Total:
                    
                    
                    3,533,436
                    
                    
                    $
                    2.82
                    
                    
                    
                    368,817Equity
      compensation plans not approved by stockholders:2000
      individual option grant (1)
                    
                    
                    1,250
                    
                    
                    $
                    20.00
                    
                    
                    
                    —Total:
                    
                    
                    1,250
                    
                    
                    $
                    20.00
                    
                    
                    
                    —


15







(1)   Represents a stock option that is
scheduled to expire on December 20, 2010.




Additional
information in response to this Item is incorporated herein by reference to our
definitive proxy statement to be filed pursuant to Regulation 14A within 120
days after the end of the fiscal year covered by this form 10-K.





The
following table summarizes certain information regarding the beneficial
ownership (as such term is defined in Rule 13d-3 under the Securities Exchange
Act of 1934) of our outstanding common stock as of April 27, 2010 by (i) each
person known by us to be the beneficial owner of more than 5% of our outstanding
common stock, (ii) each of our directors, (iii) each of the named executives,
and (iv) all current executive officers and directors as a group. Except as
indicated in the footnotes below, the persons listed below possess sole voting
and investment power with respect to their shares. Except as otherwise
indicated, the address of the persons listed below is 1180 Avenue of the
Americas, 19th Floor, New York, NY 10036.




Name and Address of Beneficial Owner
                                      
                                      Shares of
                                        Common Stock
                                        Beneficially Owned (#)
                                        (1)
                                      
                                      
                                      Percentage of
                                        Common Stock
                                        Beneficially Owned
                                        (%)Jonathan
      Lewis, M.D., Ph.D.
                                      
                                      
                                      1,502,060
                                      (2)
                                      
                                      
                                      3.52
                                      %Richard
      E. Bagley
                                      
                                      
                                      780,280
                                      (3)
                                      
                                      
                                      1.84
                                      %George
      B. Abercrombie
                                      
                                      
                                      25,000
                                      
                                      
                                      
                                      *Murray
      Brennan, M.D.
                                      
                                      
                                      150,863
                                      (4)
                                      
                                      
                                      *James
      A. Cannon
                                      
                                      
                                      413,363
                                      (5)
                                      
                                      
                                      *Senator
      Wyche Fowler, Jr., J.D.
                                      
                                      
                                      150,863
                                      (4)
                                      
                                      
                                      *Gary
      S. Fragin
                                      
                                      
                                      150,863
                                      (4)
                                      
                                      
                                      *Timothy
      McInerney
                                      
                                      
                                      596,507
                                      (6)
                                      
                                      
                                      1.42
                                      %Michael
      Weiser, M.D., Ph.D.
                                      
                                      
                                      263,193
                                      (7)
                                      
                                      
                                      *All
      current executive officers and directors as a group
                                      
                                      
                                      4,057,962
                                      (8)
                                      
                                      
                                      9.20
                                      %QVT
      Financial GP LLC
                                      
                                      
                                      5,806,500
                                      (9)
                                      
                                      
                                      13.29
                                      %1177
      Avenue of the Americas, 9th FloorNew
      York, NY 10036Austin
      W. Marxe and David M. Greenhouse
                                      
                                      
                                      3,332,001
                                      (10)
                                      
                                      
                                      7.73
                                      %c/o
      Special Situations Funds527
      Madison Avenue, Suite 2600New
      York, NY 10022Merlin
      BioMed Private Equity Advisors, LLC
                                      
                                      
                                      2,419,500
                                      (11)
                                      
                                      
                                      5.79
                                      %230
      Park Avenue, Suite 928New
      York, NY 10169Great
      Point Partners, LLC
                                      
                                      
                                      2,419,500
                                      (12)
                                      
                                      
                                      5.68
                                      %165
      Mason Street, 3rd FloorGreenwich,
      CT 06830Essex
      Woodlands Health Ventures Fund VI LP
                                      
                                      
                                      2,296,652
                                      (13)
                                      
                                      
                                      5.45
                                      %1001
      Woodloch Forest Drive, Suite 175The
      Woodlands, TX 77380








* Less
than 1%




(1)
            Beneficial
      ownership is determined in accordance with SEC rules, and includes any
      shares as to which the security or stockholder has sole or shared voting
      power or investment power, and also any shares which the security or
      stockholder has the right to acquire within 60 days of the date hereof,
      whether through the exercise or conversion of any stock option,
      convertible security, warrant or other right. The indication herein that
      shares are beneficially owned is not an admission on the part of the
      security or stockholder that he, she or it is a direct or indirect
      beneficial owner of those shares.




(2)
            Includes
      856,585 shares issuable upon the exercise of stock options that are
      currently exercisable or will become exercisable within the next 60 days.
      Also includes 450 shares indirectly held as custodian for his minor
      children under the Connecticut Uniform Gift to Minors
  Act.




(3)
              Includes
      571,125 shares issuable upon the exercise of stock options that are
      currently exercisable or will become exercisable within the next 60
      days.(4)
              Includes
      83,363 shares issuable upon the exercise of stock options that are
      currently exercisable or will become exercisable within the next 60
      days.




16




(5)
            Includes
      87,500 shares issuable upon the exercise of warrants and 83,363 shares
      issuable upon the exercise of stock options that are currently exercisable
      or will become exercisable within the next 60
  days.




(6)
              Includes
      282,439 shares issuable upon the exercise of warrants and 83,363 shares
      issuable upon the exercise of stock options that are currently exercisable
      or will become exercisable within the next 60 days.(7)
              Includes
      53,855 shares issuable upon the exercise of warrants and 83,363 shares
      issuable upon the exercise of stock options that are currently exercisable
      or will become exercisable within the next 60 days.(8)
              Includes
      423,824 shares issuable upon the exercise of warrants and 1,927,888 shares
      issuable upon the exercise of stock options that are currently exercisable
      or will become exercisable within the next 60
days.




(9)
            Based
      on the most recent Schedule 13G filed with the Securities and Exchange
      Commission on December 14, 2009. QVT Financial LP (“QVT Financial”) is the
      investment manager of QVT Fund LP (the “Fund”) and Quintessence Fund L.P.
      (“Quintessence”). The shares beneficially owned by QVT Financial include
      3,509,061 shares held by the Fund and 361,939 shares held by Quintessence,
      and also include 1,754,531 and 180,969 shares that are issuable upon the
      exercise of warrants held by the Fund and Quintessence, respectively, that
      are currently exercisable or will become exercisable within the next 60
      days. QVP Financial GP LLC (“Financial GP”) is the general partner of QVT
      Financial. QVT Associates GP LLC, as general partner of the Fund and
      Quintessence, along with Financial GP and QVT Financial, may be deemed to
      beneficially own and have shared power to vote and dispose of the
      securities held by the Fund and Quintessence. The warrants to purchase
      shares held by the Fund and Quintessence contain “blocker” provisions that
      limits their ability exercise such warrants to the extent that such
      exercise would cause the shareholder’s and certain related parties’
      beneficial ownership in the Company to exceed 9.99% of the Company’s
      shares outstanding. The calculation of beneficial ownership does not take
      into account the effect of such “blocker”
  provisions.




(10)
            Based
      on the most recent 13G filed with the Securities and Exchange Commission
      on February 12, 2010. Austin M. Marxe (“Marxe”) and David M. Greenhouse
      (“Greenhouse”) are the controlling principals of AWM Investment Company,
      Inc. (“AWM”), the general partner of MGP Advisers Limited Partnership
      (“MGP”), the general partner of Special Situations Fund III QP, L.P.
      (“SSFQP”). Marxe and Greenhouse are members of MG Advisers L.L.C. (“MG”),
      the general partner of Special Situations Private Equity Fund, L.P.
      (“SSPE”). Marxe and Greenhouse are also members of LS Advisers L.L.C.
      (“LS”), the general partner of Special Situations Life Sciences Fund, L.P.
      (“Life Sciences”). AWM serves as the investment adviser to SSFQP, SSPE,
      and Life Sciences (SSFQP, SSPE, and Life Sciences are referred to as the
      “Funds”). The shares beneficially owned by Marxe and Greenhouse include
      (i) 240,000 shares held by SSPE and 120,000 shares that are issuable upon
      the exercise of warrants held by SSPE that are currently exercisable or
      will become exercisable within the next 60 days; (ii) 1,500,000 shares
      held by SSFPQ and 750,000 shares that are issuable upon the exercise of
      warrants held by the SSFPQ that are currently exercisable or will become
      exercisable within the next 60 days and (iii) 448,028 shares held by Life
      Sciences and 448,028 shares that are issuable upon the exercise of
      warrants held by the Life Sciences that are currently exercisable or will
      become exercisable within the next 60 days. Marxe and Greenhouse shares
      power to vote and dispose of the securities held by the
    Funds.




(11)
            Based
      on the most recent Schedule 13G filed with the Securities and Exchange
      Commission on January 26, 2010. Dominique Sémon (“Sémon”), the managing
      member of Merlin BioMed Private Equity Advisors, LLC (“Merlin”), may be
      deemed to be the beneficial owner of the referenced securities. Each of
      Sémon and Merlin have shared power to vote and dispose of the Company’s
      referenced securities.





(12)
            Based
      on the most recent Schedule 13G filed with the Securities and Exchange
      Commission on December 14, 2009. Included (i) 1,056,580 shares held by
      Biomedical Value Fund, L.P. (“BVF”) and 532,290 shares that are issuable
      upon the exercise of warrants held by BVF that are currently exercisable
      or will become exercisable within the next 60 days; and (ii) 548,420
      shares held by Biomedical Offshore Value Fund, Ltd. (“BOVF”) and 274,210
      that are issuable upon the exercise of warrants held by BVF that are
      currently exercisable or will become exercisable within the next 60 days.
      Great Point Partners, LLC (“Great Point”), acts as the investment manager
      of each of BVF and BOVF. Dr. Jeffrey R. Jay, M.D. acts as senior managing
      member of Great Point, and David Kronin acts as special managing member of
      Great Point. Great Point, by virtue of its management position to each of
      BVF and BOVF, and Dr. Jay and Mr. Kronin, by virtue of their management
      positions with Great Point, may be deemed to beneficially own and share
      the power to vote and dispose of the securities held by BVG and
      BOVF.





(13)
            Based
      on the most recent 13G filed with the Securities and Exchange Commission
      on March 12, 2007. Includes 382,776 shares issuable upon the exercise of
      warrants that are currently exercisable or will become exercisable within
      the next 60 days. The securities were purchased by Essex Woodlands Health
      Ventures Fund VI, L.P., a Delaware limited partnership (the
      “Partnership”). Essex Woodlands Health Ventures VI, L.P., a Delaware
      limited partnership (the “GP Partnership”), is the general partner of the
      Partnership. Essex Woodlands Health Ventures VI, L.L.C., a Delaware
      limited liability company (the “General Partner”), is the general partner
      of the GP Partnership. James L. Currie, Martin P. Sutter, Immanuel
      Thangaraj, Petri Vainio, Mark Pacala and Jeff Himawan (each a “Manager”,
      collectively, the “Managers”, and together with the Partnership, GP
      Partnership and the General Partner, the “Reporting Persons”). The General
      Partner may be deemed to have voting control and investment discretion
      over securities owned by the Partnership. The Managers may be deemed to be
      the beneficial owners of any shares deemed to be beneficially owned by the
      General Partner. The foregoing should not be construed in and of itself as
      an admission by the General Partner or the Managers as to beneficial
      ownership of the shares owned by the
  Partnership.




17




Item
13. Certain Relationships and Related Transactions, and Director
Independence




Related
Party Transactions




In
consideration for serving as a sub-placement agent in connection with our
private placement of common stock and warrants that was completed on September
15, 2009 (the “Offering”), we paid Riverbank Capital Securities, Inc.
(“Riverbank”) approximately $185,000 and issued to Riverbank and its designees
warrants to purchase a total of 65,843 shares of our common stock at an exercise
price of $2.04 per share (the “Placement Warrants”).  Timothy
McInerney, who serves as a member of the our Board of Directors, is an officer
of Riverbank. Riverbank may allocate or may have allocated to Mr. McInerney a
portion of the compensation that it received for serving as a sub-placement
agent.  In light of the relationship between Mr. McInerney and
Riverbank, Mr. McInerney abstained from voting as a director on matters related
to the selection of the placement agents in the Offering and the terms of the
Offering were reviewed and approved by a special financing committee of which
Mr. McInerney was not a member.




Director
Independence




The Board
has determined that Dr. Murray Brennan, Mr. George B. Abercrombie, Mr. James A.
Cannon, Senator Wyche Fowler, Jr., Mr. Gary S. Fragin, Mr. Timothy McInerney and
Dr. Michael Weiser are “independent directors,” as such term is defined in the
NASDAQ Stock Market’s Marketplace Rule 5605(a)(2). The Board of Directors has
appointed an independent director, Dr. Murray Brennan, to serve as its
non-executive Lead Director. The Board has elected to separate the Lead Director
function from that of the Chief Executive Officer, who serves as the Company’s
principal executive officer, due to a belief that separating these functions,
and empowering an independent director to chair the Board meetings, will result
in increased Board oversight of management activities.The Board of Directors has
a standing audit committee, compensation committee and corporate governance and
nominating committee. The current members of the
committees are as follows:





Director
                    
                    Audit
                    
                    Compensation
                    
                    Corporate
                      Governanceand
                      NominatingGeorge
      B. Abercrombie
                    
                    
                    
                    
                    
                    
                    X
                    
                    
                    
                    
                    XMurray
      Brennan
                    
                    
                    
                    
                    
                    
                    X
                    
                    (Chair)
                    
                    
                    XJames
      A. Cannon
                    
                    
                    X
                    
                    (Chair)Gary
      S, Fragin
                    
                    
                    XWyche
      Fowler, Jr., J.D.
                    
                    
                    X
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    XTimothy
      McInerney
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    X
                    
                    (Chair)Michael
      Weiser, M.D., Ph.D.
                    
                    
                    
                    
                    
                    
                    
                    X




Item
14. Principal Accountant Fees and Services




Fees
Billed to Company by Its Independent Registered Public Accounting
Firm




Caturano and
Company, P.C. served as the Company’s independent registered public accounting
firm for each of the fiscal years ended December 31, 2009 and 2008. The
following table presents fees billed by Caturano and Company, P.C. during such
years.




For the Fiscal Year Ended December 31,2009
                    
                    
                    2008Audit
      Fees(1)
                    
                    $
                    159,291
                    
                    
                    $
                    106,136Audit
      Releated Fees(2)
                    
                    
                    -
                    
                    
                    
                    -Tax
      Fees
                    
                    
                    -
                    
                    
                    
                    -All
      Other Fees
                    
                    
                    -
                    
                    
                    
                    -Total
                    
                    $
                    159,291
                    
                    
                    $
                    106,136







(1)
            Represents
      amounts related to the audit of the Company’s annual financial statements
      and the review of the Company’s financial statements included in the
      Company’s quarterly reports on Form
10-Q.


(2)
            Audit-related
      fees represent amounts reasonably related to the performance of the audit
      or review of the Company’s financial statements but are not reported under
      the Audit Fees category.




18






The audit
committee of the Board of Directors has reviewed the services provided by
Caturano and Company, P.C. during the fiscal year ended December 31, 2009
and the amounts billed for such services. After consideration, the audit
committee has determined that the receipt of these fees by Caturano and
Company, P.C. is compatible with the provision of independent audit services.
The audit committee has discussed these services and fees with Caturano and
Company, P.C. and Company management to determine that they are appropriate
under the rules and regulations concerning auditor independence promulgated by
the U.S. Securities and Exchange Commission to implement the Sarbanes-Oxley Act
of 2002, as well as under guidelines of the American Institute of Certified
Public Accountants.




Audit Committee
Pre-Approval Policy




The audit
committee charter provides that all audit and non-audit accounting services that
are permitted to be performed by the Company’s independent registered public
accounting firm under applicable rules and regulations must be pre-approved by
the audit committee or by designated independent members of the audit committee,
other than with respect to de minimis exceptions permitted under Section 202 of
the Sarbanes-Oxley Act of 2002. Following adoption of the audit committee
charter, all services performed by Caturano & Company, P.C. have been
pre-approved in accordance with the charter.




Prior to
or as soon as practicable following the beginning of each fiscal year, a
description of audit, audit-related, tax, and other services expected to be
performed by the independent registered public accounting firm in the following
fiscal year is presented to the audit committee for approval. Following such
approval, any requests for audit, audit-related, tax, and other services not
presented and pre-approved must be submitted to the audit committee for specific
pre-approval and cannot commence until such approval has been granted. Normally,
pre-approval is provided at regularly scheduled meetings. However, the authority
to grant specific pre-approval between meetings, as necessary, may be delegated
to one or more members of the audit committee who are independent directors. In
the event such authority is so delegated, the full audit committee must be
updated at the next regularly scheduled meeting with respect to any services
that were granted specific pre-approval by delegation. During fiscal year 2009,
the audit committee has functioned in conformance with these
procedures.




PART
IV




Item
15. Exhibits, Financial Statement Schedules


(1)
Financial Statements:




See
Part II, Item 8 — Financial Statements of our original filing of
this Form 10-K.




(2)
Financial Statement Schedules:




Schedules
are omitted because they are not applicable, or are not required, or because the
information is included in the financial statements and notes
thereto.




(3)
Exhibits:




The exhibits which are filed or
furnished with this report or which are incorporated herein by reference are set
forth in the Exhibit Index beginning on pageA-1, which is incorporated herein by
reference.


19




SIGNATURES




Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this Amendment No. 1 to this report to be
signed on its behalf by the undersigned, thereunto duly authorized.





ZIOPHARM
      ONCOLOGY, INC.Date:
      April 30, 2010
              
              By:
              /s/ Jonathan LewisJonathan
      Lewis
                Chief
      Executive Officer
                (Principal
      Executive Officer)Date:
      April 30, 2010
              
              By:/s/ Richard BagleyRichard
      Bagley
                President,
      Chief Financial Officer, Treasurer and
                Chief
      Operating Officer
                (Principal
      Financial and Accounting
Officer)


20




INDEX





Exhibit
                        No.
                      
                      Description of Document1.1
                      
                      Underwriting
      Agreement dated December 4, 2009 between ZIOPHARM Oncology, Inc. and JMP
      Securities LLC, as representative of the several underwriters named
      thererin (incorporated by reference to Exhibit 1.1 to the Registrant’s
      Current Report of Form 8-K filed December 8, 2009).2.1
                      
                      Agreement
      and Plan of Merger among the Registrant (formerly “EasyWeb, Inc.”), ZIO
      Acquisition Corp. and ZIOPHARM, Inc., dated August 3, 2005 (incorporated
      by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed August 9,
      2005).3.1
                      
                      Amended
      and Restated Certificate of Incorporation, as filed with the Delaware
      Secretary of State on April 26, 2006 (incorporated by reference to Exhibit
      3.1 to the Registrant’s Current Report of Form 8-K filed April 26,
      2006).3.2
                      
                      Certificate
      of Merger dated September 13, 2005, relating to the merger of ZIO
      Acquisition Corp. with and into ZIOPHARM, Inc. (incorporated by reference
      to Exhibit 3.1 to the Registrant’s Form 8-K filed September 19,
      2005).3.3
                      
                      Certificate
      of Ownership of the Registrant (formerly “EasyWeb, Inc.”) dated as of
      September 14, 2005, relating the merger of ZIOPHARM, Inc. with and into
      the Registrant, and changing the Registrant’s corporate name from EasyWeb,
      Inc. to ZIOPHARM Oncology, Inc. (incorporated by reference to Exhibit 3.2
      to the Registrant’s Form 8-K filed September 19, 2005).3.4
                      
                      Bylaws,
      as amended to date (incorporated by reference to Exhibit 3.3 to the
      Registrant’s Form 8-K filed September 19, 2005).4.1
                      
                      Specimen
      common stock certificate. (incorporated by reference to Exhibit 4.1 to the
      Registrant’s Registration Statement on Form SB-2, SEC File No. 333-129020,
      filed October 14, 2005).4.2
                      
                      Form
      of Warrant issued to placement agents in connection with ZIOPHARM, Inc.
      2005 private placement (incorporated by reference to Exhibit 4.2 to the
      Registrant’s Registration Statement on Form SB-2, SEC File No. 333-129020,
      filed October 14, 2005).4.3
                      
                      Schedule
      identifying holders of Warrants in the form filed as Exhibit 4.2 to this
      Report (incorporated by reference to Exhibit 4.3 to the Registrant’s
      Registration Statement on Form SB-2, SEC File No. 333-129020, filed
      October 14, 2005).4.4
                      
                      Warrant
      for the Purchase of Shares of common stock dated December 23, 2004.
      (incorporated by reference to Exhibit 4.4 to the Registrant’s Registration
      Statement on Form SB-2, SEC File No. 333-129020, filed October 14,
      2005).4.5
                      
                      Option
      for the Purchase of common stock dated October 15, 2004 and issued to
      DEKK-Tec, Inc. (incorporated by reference to Exhibit 4.5 to the
      Registrant’s Annual Report on Form 10-KSB filed March 20,
      2006).4.6
                      
                      Form
      of Option for the Purchase of Shares of common stock dated August 30, 2004
      and issued to The University of Texas M. D. Anderson Cancer Center.
      (incorporated by reference to Exhibit 4.6 to the Registrant’s Annual
      Report on Form 10-KSB filed March 20, 2006).4.7
                      
                      Schedule
      identifying material terms of Options for the Purchase of Shares of common
      stock in the form filed as Exhibit 4.6 to this Report. (incorporated by
      reference to Exhibit 4.7 to the Registrant’s Annual Report on Form 10-KSB
      filed March 20, 2006).4.8
                      
                      Form
      of common stock Purchase Warrant issued to investors in connection with
      the Registrant’s 2006 private placement (incorporated by reference to
      Exhibit 4.1 to the Registrant’s Current Report of Form 8-K filed May 3,
      2006).4.9
                      
                      Form
      of common stock Purchase Warrant issued to placement agents in connection
      with the Registrant’s 2006 private placement (incorporated by reference to
      Exhibit 4.2 to the Registrant’s Current Report of Form 8-K filed May 3,
      2006).




A-1





Exhibit
                  No.
                
                Description of Document4.10
                
                Form
      of Warrant to Purchase Common Stock issued to investors in connection with
      the Registrant’s February 2007 private placement (incorporated by
      reference to Exhibit 4.1 to the Registrant’s Current Report of Form 8-K
      filed February 26, 2007).4.11
                
                Form
      of Warrant to Purchase Common Stock issued to placement agents in
      connection with the Registrant’s February 2007 private placement
      (incorporated by reference to Exhibit 4.2 to the Registrant’s Current
      Report of Form 8-K filed February 26, 2007).4.12
                
                Form
      of Warrant to Purchase Common Stock issued to investors in connection the
      Registrant’s September 2009 private placement (incorporated by reference
      to Exhibit 4.1 to the Registrant’s Current Report of Form 8-K filed
      September 15, 2009).4.13
                
                Form
      of Warrant to Purchase Common Stock issued to placement agents in
      connection with the Registrant’s September 2009 private placement
      (incorporated by reference to Exhibit 4.2 to the Registrant’s Current
      Report of Form 8-K filed September 15, 2009).4.14
                
                Form
      of Warrant to Purchase Common Stock issued to investors in connection with
      the Registrant’s December 2009 public offering (incorporated by reference
      to Exhibit 4.1 to the Registrant’s Current Report of Form 8-K filed
      December 8, 2009).4.15
                
                Form
      of Warrant to Purchase Common Stock issued to underwriters in connection
      with the Registrant’s December 2009 public offering (incorporated by
      reference to Exhibit 4.1 to the Registrant’s Current Report of Form 8-K
      filed December 8, 2009).10.1
                
                2003
      Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the
      Registrant’s Registration Statement on Form SB-2, SEC File No. 333-129020,
      filed October 14, 2005).10.2
                
                Amendment
      No. 1 to 2003 Stock Incentive Plan of ZIOPHARM Oncology, Inc.
      (incorporated by reference to Exhibit 3.1 to the Registrant’s Current
      Report on Form 8-K filed April 26, 2006).10.3
                
                Amendment
      No. 2 to 2003 Stock Incentive Plan of ZIOPHARM Oncology, Inc.
      (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly
      Report on Form 10-QSB filed May 2, 2007).10.4
                
                Amendment
      No. 3 to 2003 Stock Incentive Plan of ZIOPHARM Oncology, Inc.
      (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration
      Statement on Form SB-2, SEC File No. 333-160496, filed July 9,
      2009).10.5
                
                Employment
      Agreement dated as of January 8, 2008 by and between the Registrant and
      Dr. Jonathan Lewis. (incorporated by reference to exhibit 10.6 to the
      Registrant’s Annual Report on Form 10-KSB filed February 21,
      2008).10.6
                
                Employment
      Agreement dated as of June 25, 2008 between the Registrant and Richard E.
      Bagley (incorporated by reference to Exhibit 10.1 to the Registrant’s
      Quarterly Report on Form 10-Q filed July 30, 2008).10.7
                
                Patent
      and Technology License Agreement dated August 24, 2004, among ZIOPHARM,
      Inc. (predecessor to the Registrant), the Board of Regents of the
      University of Texas System on behalf of the University of Texas M.D.
      Anderson Cancer Center and the Texas A&M University System
      (incorporated by reference to Exhibit 10.5 to the Registrant’s
      Registration Statement on Form SB-2, SEC File No. 333-129020, filed
      October 14, 2005).++10.8
                
                License
      Agreement dated October 15, 2004, between ZIOPHARM, Inc. (predecessor to
      the Registrant) and DEKK-Tec, Inc. (incorporated by reference to Exhibit
      10.6 to the Registrant’s Registration Statement on Form SB-2, SEC File No.
      333-129020, filed October 14, 2005).++10.9
                
                Form
      of subscription agreement between the ZIOPHARM, Inc. and the investors in
      the Registrant’s 2005 private placement (incorporated by reference to
      Exhibit 10.7 to the Registrant’s Registration Statement on Form SB-2, SEC
      File No. 333-129020, filed October 14,
2005).




A-2





Exhibit
                  No.
                
                Description of Document10.10
                
                Form
      of Incentive Stock Option Agreement granted under 2003 Stock Option Plan
      (incorporated by reference to Exhibit 10.7 to the Registrant’s Annual
      Report on Form 10-KSB filed March 20, 2006).10.11
                
                Form
      of Employee Non-Qualified Stock Option Agreement granted under 2003 Stock
      Option Plan (incorporated by reference to Exhibit 10.8 to the Registrant’s
      Annual Report on Form 10-KSB filed March 20, 2006).10.12
                
                Form
      of Director Non-Qualified Stock Option Agreement granted under 2003 Stock
      Option Plan (incorporated by reference to Exhibit 10.9 to the Registrant’s
      Annual Report on Form 10-KSB filed March 20, 2006).10.13
                
                Form
      of Subscription Agreement by and between ZIOPHARM Oncology, Inc. and
      investors in the ZIOPHARM Oncology, Inc. 2006 private placement
      (incorporated by reference to Exhibit 10.1 to the Registrant’s Current
      Report of Form 8-K filed May 3, 2006).10.14
                
                Asset
      Purchase Agreement dated November 3, 2006 by and among Baxter Healthcare
      S.A., Baxter International, Inc., Baxter Oncology GmbH and ZIOPHARM
      Oncology, Inc. (incorporated by reference to Exhibit 10.1 to the
      Registrant’s Quarterly Report on Form 10-QSB filed November 13,
      2006).++10.15
                
                License
      Agreement dated November 3, 2006 by and among Baxter Healthcare S.A.,
      Baxter International, Inc. and ZIOPHARM Oncology, Inc. (incorporated by
      reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form
      10_QSB filed November 13, 2006).++10.16
                
                Amendment
      to License Agreement dated September 24, 2009 by and among Baxter
      Healthcare S.A., Baxter International, Inc. and ZIOPHARM Oncology,
      Inc.10.17
                
                Form
      of Securities Purchase Agreement by and between ZIOPHARM Oncology, Inc.
      and investors in the ZIOPHARM Oncology, Inc. February 2007 private
      placement (incorporated by reference to Exhibit 10.1 to the Registrant’s
      Current Report of Form 8-K filed February 26, 2007).10.18
                
                Form
      of Registration Rights Agreement by and between ZIOPHARM Oncology, Inc.
      and investors in the ZIOPHARM Oncology, Inc. February 2007 private
      placement (incorporated by reference to Exhibit 10.2 to the Registrant’s
      Current Report of Form 8-K filed February 26, 2007).10.19
                
                Form
      of Restricted Stock Agreement (incorporated by reference to Exhibit 10.1
      to the Registrant’s Current Report of Form 8-K filed December 18,
      2007).10.20
                
                Form
      of Securities Purchase Agreement dated September 9, 2009 by and between
      ZIOPHARM Oncology, Inc. and investors in the ZIOPHARM Oncology, Inc.
      September 2009 private placement (incorporated by reference to Exhibit
      10.1 to the Registrant’s Current Report of Form 8-K filed September 15,
      2009).10.21
                
                Form
      of Registration Rights Agreement dated September 9, 2009 by and between
      ZIOPHARM Oncology, Inc. and investors in the ZIOPHARM Oncology, Inc.
      September 2009 private placement (incorporated by reference to Exhibit
      10.2 to the Registrant’s Current Report of Form 8-K filed September 15,
      2009).23.1
                
                Consent
      of Independent Registered Public Accounting Firm — Caturano and
      Company, P.C. (Previously filed as an exhibit to the Registrant’s Form
      10-K for the year ended December 31, 2009 filed with the Commission on
      March 17, 2010.)31.1
                
                Certification
      of Chief Executive Officer pursuant to Securities Exchange Act Rule
      13a-15(e)/15d-15(e) as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.31.2
                
                Certification
      of Chief Financial Officer pursuant to Securities Exchange Act Rule
      13a-15(e)/15d-15(e) as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.32.1
                
                Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.




A-3





Exhibit
                  No.
                
                Description of Document32.2
                
                Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.




++
            Confidential
      treatment has been granted as to certain portions of this exhibit pursuant
      to Rule 406 of the Securities Act of 1933, as amended, or Rule 24b-2 of
      the Securities Exchange Act of 1934, as
amended.


A-4





Exhibit
                  No.
                
                Description of Document31.1
                
                Certification
      of Chief Executive Officer pursuant to Securities Exchange Act Rule
      13a-15(e)/15d-15(e) as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.31.2
                
                Certification
      of Chief Financial Officer pursuant to Securities Exchange Act Rule
      13a-15(e)/15d-15(e) as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.32.1
                
                Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.32.2
                
                Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.




A-5