**UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549**

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**Form 10-K/A**

##### **(Amendment No. 1)**

| x      | **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                    |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                         |
|   | **For the fiscal year ended December 31, 2006**                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                         |
| o      | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                         |
|   | **For the transition period from                      to                      ** |

 

**Commissionfile number: 0-24663**

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**NitroMed,Inc.**(Exactname of Registrant as Specified in Its Charter)

| **Delaware**                              |   | **22-3159793**       |
|-------------------------------------------|--------|----------------------|
| (State or Other  Jurisdiction of          |   | (I.R.S. Employer     |
| Incorporation or  Organization)           |   | Identification  No.) |
| ** **                                |   | ** **           |
| **45  Hayden Avenue, Suite 3000**         |   | ** **           |
| **Lexington,  Massachusetts**             |   | **02421**            |
| (Address of  Principal Executive Offices) |   | (Zip Code)           |

 

**781-266-4000Registrant’s telephone number, including area code**

**Securities registered pursuant toSection 12(b) of the Act:**

**None**

**Securitiesregistered Pursuant to Section 12(g) of the Act:**

| **Title of Each Class**                      | ** ** | **Name of  Exchange on Which Registered** |
|----------------------------------------------|------------|-------------------------------------------|
| **Common  Stock, $0.01 Par Value Per Share** |       | **NASDAQ  Global Market**                 |

 

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

Indicate by check mark if the registrant is notrequired to file reports pursuant to Section 13 or Section 15(d) ofthe Act.    Yes   o   No   x

Indicate by check mark whether the registrant(1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required tofile such reports), and (2) has been subject to such filing requirementsfor the past 90 days.    Yes   x   No   o

Indicate by check mark if disclosure of delinquentfilers pursuant to Item 405 of Regulation S-K is not containedherein, and will not be contained, to the best of registrant’s knowledge, indefinitive proxy or information statements incorporated by reference inPart III of this Form 10-K or any amendment to thisForm 10-K   x.

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, or a non-accelerated filer. Seedefinition of “accelerated filer and large accelerated filer” inRule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer  o       Accelerated file  x      Non-accelerated filer  o.

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the ExchangeAct).    Yes   o   No   x

The aggregate market value of the voting stock held bynon-affiliates of the registrant as of June 30, 2006 (based on the closingprice as quoted by the Nasdaq National Market as of such date) was$102,706,000. The registrant had 37,259,870 shares of Common Stock, $0.01 parvalue per share, outstanding as of March 1, 2007.

**DOCUMENTSINCORPORATED BY REFERENCE**

None.

 

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**ExplanatoryNote**

This Amendment No. 1 toAnnual Report on Form 10-K/A (“Amendment No. 1”) amends and restates “Part III,Item 11-Executive Compensation” and “Part IV, Item 15-Exhibits and FinancialStatement Schedules” of NitroMed, Inc.’s Annual Report on Form 10-K for thefiscal year ended December 31, 2006, filed with the Securities and ExchangeCommission on March 8, 2007 (“Original Form 10-K”) solely for the purpose ofcorrecting certain information set forth in the subsections titled “SummaryCompensation Table” and “Director Compensation Table.” 

Except for the mattersdescribed above, Amendment No. 1 does not modify or update disclosure in, orexhibits to, the Original Form 10-K. Furthermore, except for the matters described above, Amendment No. 1 doesnot change any previously reported financial results, nor does it reflectevents occurring after the date of the Original Form 10-K. Any information notaffected by Amendment No. 1 is unchanged and reflects the disclosures made atthe time the Original Form 10-K was filed. 

As used in Amendment No.1, unless the context otherwise requires, the terms “we,” “us,” “our,” “NitroMed”and the “Company” refer to NitroMed, Inc.

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**PART III**

**Item 11.  Executive Compensation.**

**CompensationDiscussion and Analysis**

        Thiscompensation discussion describes the material elements of compensation awardedto, earned by, or paid to our executive officers. In addition, this sectiondiscusses the principles underlying our executive compensation policies anddecisions and the factors relevant to an analysis of these policies anddecisions.

        Thecompensation committee of our board of directors oversees our executivecompensation program. In this role, the compensation committee reviews andapproves all compensation decisions relating to our named executive officers onat least an annual basis.

**Our Executive Officers**

        Ourcurrent executive officers are: Kenneth M. Bate, president and chief executiveofficer; Gerald W. Bruce, senior vice president, commercial operations;James G. Ham, III, vice president, chief financial officer, secretary andtreasurer; William “B.J.” Jones, vice president, marketing and businessdevelopment; Jane A. Kramer, vice president, corporate affairs; L. GordonLetts, Ph.D., senior vice president, research and development and chiefscientific officer; and Manuel Worcel, M.D., chief medical officer. Of theseexecutive officers, Mr. Bate, Ms. Kramer and Dr. Letts are namedexecutive officers for purposes of the executive compensation disclosure rulesof the SEC.

        In theexecutive compensation tables below, we also include information with respectto the following former officers of NitroMed: Argeris N. Karabelas, Ph.D.,former interim president and chief executive officer; Michael D. Loberg, Ph.D.,former president and chief executive officer; Lawrence E. Bloch, M.D., formerchief financial officer, chief business officer, secretary and treasurer; andMichael Sabolinski, M.D., former senior vice president and chief medicalofficer.

**Philosophy, Objectives and Process**

        Theprimary objectives of the compensation committee with respect to executivecompensation are to:

·     attract,motivate and retain the best possible executive talent;

·               ensure executive compensation is tied toour corporate strategies and the achievement of our business objectives;

·               promote the achievement of key strategicand financial performance measures by linking short- and long-term cash andequity incentives to the achievement of measurable corporate and individualperformance goals; and

·     alignexecutives’ incentives with the creation of stockholder value.

        Inorder to achieve these objectives, the compensation committee evaluates ourexecutive compensation program with the goal of setting compensation at levelsthe committee believes are competitive with those of other companies of similarsize and stage of development in our industry and geographic area that competewith us for executive talent. In addition, our executive compensation programties a substantial portion of each executive’s overall compensation to keystrategic, financial and operational goals such as clinical trial progress,implementation of appropriate financing strategies, establishment of keystrategic business relationships and growth of our customer base. We alsoprovide a portion of our executive compensation in the form of equity incentiveawards of our common stock that vest over time, which we believe helps us toretain our executives and aligns their interests with

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those of our stockholders by allowing those executivesto participate in the longer-term success of our company, as reflected in stockprice appreciation.

        Wecompete with many other companies for executive personnel. Accordingly, thecompensation committee generally targets overall compensation for executivesnear the median of compensation paid to similarly situated executives.Variations to this general target may occur as dictated by the experience levelof the individual executive as well as by market forces. In making compensationdecisions, the compensation committee relies upon data provided by third partysources, including the Radford Biotechnology Surveys. The third-party data onwhich we rely compares companies of comparable size, market capitalization,stage of development and geographic presence. Although the compensationcommittee reviews the total compensation paid to each of our executiveofficers, we view each compensation element to be distinct.

        Theprimary elements of our executive compensation program are:

·     basesalary;

·     annualcash incentive awards;

·     equityawards;

·     employeebenefits, including retirement plans and health, dental and life insurance; and

·     severanceand change in control benefits.

        Wehave no policy, formal or informal, regarding the allocation of compensationbetween long-term and short-term or between cash and non-cash. We do notbelieve that it is appropriate to establish compensation levels primarily basedon benchmarking. However, we recognize that information regarding pay practicesat other companies is useful both to ensure that our compensation practices arecompetitive in the marketplace and to assess the reasonableness of ourcompensation programs. Our compensation committee reviews information compiledfrom independent third-party sources and determines subjectively what theappropriate mix of compensation components should be.

*BaseSalary*

        Basesalaries for our executive officers are established based on the scope of theexecutive’s responsibilities and his or her prior relevant training, skills,knowledge and experience. In addition, our compensation committee considerssalary data provided by third-party sources, as described above. We believethat our executives’ base salaries should generally target the median range ofsalaries for executives with similar responsibilities in companies ofcomparable size and scope to us. Our compensation committee also evaluates eachexecutive’s base salary in reference to the other components of the executive’scompensation to ensure that the executive’s total compensation is in line withour overall compensation philosophy.

        Ourexecutives’ base salaries are generally set initially pursuant to the terms ofan employment offer letter agreement that we enter into with each executiveofficer. Our compensation committee reviews the base salaries of our executiveson at least an annual basis. If necessary, base salaries are adjusted by thecompensation committee from time to time in order to reflect the promotion ofan executive officer or to realign salaries with market levels, after takinginto account such factors as individual performance, scope of responsibilityand experience.

        InMarch 2006, the chairman of our board of directors, Argeris N. Karabelas,Ph.D., assumed responsibilities as interim chief executive officer andpresident upon the resignation of our then-chief executive and president,Michael D. Loberg, Ph.D. In May 2006, the independent members of our boardof directors granted Dr. Karabelas an option to purchase 200,000 shares ofour common stock at an exercise price equal to the fair market value on thedate of grant in consideration for his agreement

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to forego the salary and bonus that he would haveotherwise been entitled to receive pursuant to an employment offer letter thatwe had entered into with him in March 2006.

*AnnualCash Incentive Awards*

        Ourexecutive officers are each eligible to receive an annual cash incentive award.These discretionary annual cash incentive awards are intended to provideincentives and to compensate executives for the achievement of both individualperformance objectives and company-wide strategic, operational and financialgoals. The target amounts of these annual cash incentive awards are calculatedas a percentage of the applicable executive’s base salary, with higher rankedexecutives typically compensated at a higher target percentage of base salary.Individual performance objectives are based upon the particular area ofexpertise of the executive and the executive’s performance in attaining thoseobjectives. Our board of directors and management prepare and adopt companywide goals that are based upon the metrics within our internal business plan.

        Thecompensation committee works with the chief executive officer to developcorporate and individual goals that the committee believes can reasonably beachieved over the next year. The compensation committee reviews thecompany-wide goals and individual performance goals for each executive, theweighting of various goals for each executive and determines the formula usedin determining potential bonus amounts based upon the achievement of thosegoals.

        Thetarget award for each named executive officer as a percentage of base salaryand the amounts earned for fiscal 2006 as a percentage of target level are asset forth below. For fiscal 2006, our compensation committee determined togenerally pay all employees, including our named executive officers, annualcash incentive awards at 60% of target level. Of our named executive officers,the compensation committee determined to pay Michael Sabolinski at 66% of histarget level in recognition of his efforts and achievements in fiscal year2006.
| Name                      | ** ** | **Cash Incentive  Award Target  Percentage of  Base Salary** | ** ** | **Cash Incentive  Award Amount  Paid for  2006 Service** | ** ** |
|---------------------------|------------|----------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------|------------|
| Kenneth M. Bate           |       | 50                                                                               | %          | $                                                                            | 90,000     |   |
| Jane A. Kramer            |       | 35                                                                               | %          | $                                                                            | 44,688     |   |
| L. Gordon Letts,  Ph.D.   |       | 35                                                                               | %          | $                                                                            | 56,746     |   |
| Michael Sabolinski,  M.D. |       | 35                                                                               | %          | $                                                                            | 62,394     |   |

 

*EquityAwards*

        Ourequity incentive program is the primary vehicle we utilize to create long-termincentives for our executive officers. We believe that equity grants provideour executives with a direct, tangible link to our long-term performance andsuccess. The vesting schedules for our equity awards complement our executiveretention objectives by providing an incentive for our executive officers toremain in our employ for the duration of the vesting period. In addition,equity awards further align the interests of our executive officers and ourstockholders. In determining the size of equity awards to our executiveofficers, the compensation committee considers third-party data related toexecutives in comparable positions, the executive’s individual performance, thenumber of equity awards previously granted to the executive, the performance ofour company and the recommendations of our management.

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         Ourcompensation committee generally makes an initial equity award to newexecutives upon their hiring and then makes annual equity awards as part of ouroverall compensation program. These annual equity awards are typically grantedto executives in conjunction with the review of the executive’s individualperformance and the achievement of company-wide objectives, which generallytakes place at a meeting of the compensation committee held in the firstquarter of each year. Additional equity awards may be made at meetings of thecompensation committee throughout the year in connection with an executive’s promotionor if the compensation committee determines that it is in our company’s bestinterests to make an additional award to an individual or group of executiveofficers. All equity awards to executive officers are approved by ourcompensation committee. Compensation committee meetings at which equity awardsare made are scheduled without regard to anticipated earnings of other majorannouncements. Our compensation committee reviews all components of anexecutive’s compensation when determining annual equity awards to ensure thatan executive’s total compensation conforms to our overall philosophy andobjectives. In addition, we do not have any equity ownership guidelines for ourexecutive officers.

*        StockOption Awards.*     Our equity awards havetypically taken the form of grants of options to purchase shares of our commonstock. Our compensation committee sets the exercise price of all stock optionsto equal the closing price of our common stock as reported on the Nasdaq GlobalMarket on the date of grant of the stock option. Typically, the options ourcompensation committee grants to executive officers to purchase shares of ourcommon stock vest in annual increments of 25% per year over the first fouryears of a ten-year option term. Vesting and exercise rights generally cease90 days after the termination of an executive officer’s employment, exceptin the case of death or disability. Prior to the exercise of an option, theholder of the option has no rights as a stockholder with respect to the sharesof common stock subject to the option, including voting rights and the right toreceive dividends or dividend equivalents.

        InMarch 2006, in connection with a restructuring of our company, ourcompensation committee granted our executive officers additional retentionawards of stock options that vested in increments of 50% six months after thedate of grant and 50% on the first anniversary of the date of grant. InJanuary 2007, in connection with Argeris N. Karabelas’ relinquishmentof his responsibilities as interim chief executive officer and president, theindependent members of our board of directors modified the terms of certainoption grants previously made to Dr. Karabelas in order to extend the termof exerciseability of the vested portion of the options from three monthsfollowing the cessation of Dr. Karabelas’ employment to five yearsfollowing the cessation of employment. The independent directors took thisaction in recognition of Dr. Karabelas’ past service and contributions tothe company.

*        RestrictedStock Awards.*     Our compensationcommittee has not generally granted restricted stock awards to our executiveofficers. However, in March 2007, our compensation committee grantedawards of restricted common stock to key employees and executive officers.These restricted stock awards are intended to help retain our employees,including our executive officers, by providing an opportunity for substantialcapital appreciation and more predictable long-term incentive value.

        Pursuantto the terms and conditions of each restricted stock award, the restrictedshares will vest on the following schedule: 25% of the restricted shares willvest on the date that is six months after the grant date; 25% of the restrictedshares will vest on the first anniversary of the grant date; and 50% of therestricted shares will vest on the second anniversary of the grant date. Upon achange in control of our company or upon the termination of the officer’semployment without cause, all unvested restricted shares shall immediately vestin full. In the event that the executive officer ceases to be employed by usfor any reason or no reason, except as described in the preceding sentence, allof the restricted shares that are unvested at the time of the termination ofemployment will be immediately and automatically forfeited to us, without thepayment of any consideration to the executive officer.

*Benefitsand Other Compensation*

        Wemaintain broad-based benefits that are provided to all employees, includinghealth insurance, life and disability insurance, dental insurance andparticipation in a 401(k) plan. Executives are eligible to participate in all 

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of our employee benefit plans, in each case on thesame basis as other employees. With respect to our 401(k) plan, we matchemployee contributions with shares of our common stock, subject to certainlimitations and vesting rules.

        InMarch 2006, the independent members of our board approved, upon therecommendation of the compensation committee, cash retention bonuses in theamount of $25,000 to each of L. Gordon Letts, our senior vice president ofresearch and development and chief scientific officer, and Michael Sabolinski,our then-chief medical officer.

        Pursuantto the terms of their offer letter agreements, we reimburse certain executiveofficers for expenses related to relocation to the Boston area, including forsuch items as moving household contents, buying and selling commissions andtemporary housing. In addition, we provide certain executives with cost ofliving payments that are designed to assist those executives in theirtransition to the Boston area. In 2006, we reimbursed Jane A. Kramer, ourvice president, corporate affairs, for relocation expenses in the amount of $50,000,plus applicable state and local taxes. In addition, we reimbursedArgeris N. Karabelas an aggregate amount of $40,000 for living expenses in2006, representing a payment of $5,000 per month during his tenure as ourthen-interim president and chief executive officer in 2006.

        Wealso utilize cash signing bonuses when certain executives and seniornon-executives join us. Whether a signing bonus is paid and the amount thereofis determined on a case-by-case basis under the specific hiring circumstances.For example, we will consider paying signing bonuses to compensate for amountsforfeited by an executive upon terminating prior employment and/or to createadditional incentive for an executive to join our company. In June 2006,in accordance with the terms of Kenneth M. Bate’s March 2006employment offer letter, we paid Mr. Bate a sign-on bonus in the amount of$50,000.

*Severanceand Change in Control Benefits*

        Wehave entered into retention agreements with our executive officers. In addition,we have established an executive severance benefit plan in which our executiveofficers participate. The terms of the executive severance benefit plan providethat officers must relinquish any severance benefits they would receivepursuant to their respective employment offer letters in order to participatein the plan. Pursuant to these arrangements, our executive officers areentitled to specified benefits in the event of a termination of theiremployment under specified circumstances, including termination following achange in control of our company. We have provided more detailed informationregarding these benefits, as well as estimates of their value under variouscircumstances, under the caption, “Potential Payments Upon Termination orChange in Control” below.

        Wehave reviewed the practices of comparable companies, and believe that ourseverance and change in control benefits are generally in line with severancebenefits provided to executives in comparable circumstances. We believe thatproviding these benefits assists us in competing for and retaining executivetalent. Our retention agreements, which address what benefits an executivewould receive in the event that his or her employment were terminated as aresult of a change in control of our company, are structured on a “doubletrigger” basis. The “double trigger” structure means that a change in controlof the company does not itself trigger the benefits offered under theagreement; rather, benefits are only paid if the executive’s employment isterminated during a specified period after the change in control. We believethat a “double trigger” benefit maximizes shareholder value by preventing anunintended windfall to executives in the event of a “friendly” change incontrol, while also providing our executives with appropriate incentives tocooperate in negotiating any potential change in control transaction which theybelieve may result in the termination of their employment.

**Tax Considerations**

        Section 162(m)of the Internal Revenue Code of 1986, as amended, generally disallows a taxdeduction for compensation in excess of $1.0 million paid to our chiefexecutive officer and our four other most highly paid executive officers.Qualifying performance-based compensation is not subject to the deductionlimitation if specified requirements are met. We periodically review thepotential consequences of Section 162(m) and we generally intend 

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to structure the performance-based portion of ourexecutive compensation, where feasible, to comply with exemptions inSection 162(m) so that the compensation remains tax deductible to ourcompany. However, the compensation committee may, in its judgment, authorizecompensation payments that do not comply with the exemptions in Section 162(m)when it believes that such payments are appropriate to attract and retainexecutive talent.

        Beginningon January 1, 2006, we have accounted for stock-based payments inaccordance with Financial Accounting Standards Board Statement of FinancialAccounting Standards No. 123(R), or SFAS 123R. To date, the adoptionof SFAS 123R has not had a material impact on our executive compensationpolicies and practices.

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**Summary Compensation Table**

        Thetable below sets forth the total compensation paid or accrued for the fiscalyear ended December 31, 2006 to (i) all individuals serving as ourprincipal executive officer during fiscal year 2006, (ii) all individualsserving as our principal financial officer during fiscal year 2006 and (ii) eachof our three most highly compensated other executive officers who were servingas executive officers on December 31, 2006 and whose total annualcompensation exceeded $100,000 for the year ended December 31, 2006. Werefer to these officers collectively as our named executive officers.
| Name and Principal Position                                                          | ** ** | **Year** | ** ** | **Salary  ($)** | ** ** | **Bonus  ($)** | ** ** | **Stock  Awards  ($)** | ** ** | **Option  Awards  ($)(1)** | ** ** | **Non-Equity  Incentive  Plan  Compensation  ($)(2)** | ** ** | **Nonqualified  Incentive Plan  Compensation  ($)** | ** ** | **All Other  Compensation  ($)** | ** ** | **Total  ($)** | ** ** |
|-----------------------------------------------------------------------------------------------------|------------|----------|------------|-----------------|------------|----------------|------------|------------------------|------------|----------------------------|------------|-------------------------------------------------------|------------|----------------------------------------------------------|------------|---------------------------------------|------------|----------------|------------|
| Kenneth M. Bate(3)                                                                                  |       | 2006     |       | 236,539         |       | 50,000         |       | —                 |       | 747,518                    |       | 90,000                                                |       | —                                                   |       | 1,021                                 |       | 1,125,078      |       |
| President and Chief Executive Officer  (Former Chief Financial Officer and Chief Operating Officer) |       |     |       |            |       |           |       |                   |       |                       |       |                                                  |       |                                                     |       |                                  |       |           |       |
| Jane A. Kramer(4)                                                                              |       | 2006     |       | 212,800         |       | —         |       | —                 |       | 331,060                    |       | 44,688                                                |       | —                                                   |       | 85,107                                |       | 673,655        |       |
| Vice President, Corporate Affairs                                                                   |       |     |       |            |       |           |       |                   |       |                       |       |                                                  |       |                                                     |       |                                  |       |           |       |
| L. Gordon Letts, Ph.D.(5)                                                                           |       | 2006     |       | 270,217         |       | 25,000         |       | —                 |       | 826,318                    |       | 56,746                                                |       | —                                                   |       | 15,698                                |       | 1,193,979      |       |
| Senior Vice President, Research and  Development and Chief Scientific Officer                       |       |     |       |            |       |           |       |                   |       |                       |       |                                                  |       |                                                     |       |                                  |       |           |       |
| Argeris N.  Karabelas, Ph.D.(6)                                                                |       | 2006     |       | —          |       | —         |       | —                 |       | 1,528,124                  |       | —                                                |       | —                                                   |       | 81,000                                |       | 1,609,124      |       |
| Former Interim President and Chief Executive Officer                                                |       |     |       |            |       |           |       |                   |       |                       |       |                                                  |       |                                                     |       |                                  |       |           |       |
| Michael D. Loberg, Ph.D.(7)                                                                         |       | 2006     |       | 75,277          |       | —         |       | —                 |       | —                     |       | —                                                |       | —                                                   |       | 377,532                               |       | 452,809        |       |
| Former President and Chief Executive  Officer                                                       |       |     |       |            |       |           |       |                   |       |                       |       |                                                  |       |                                                     |       |                                  |       |           |       |
| Lawrence E. Bloch, M.D.(8)                                                                          |       | 2006     |       | 58,278          |       | —         |       | —                 |       | —                     |       | —                                                |       | —                                                   |       | 222,492                               |       | 280,770        |       |
| Former Chief Financial Officer and Chief Business  Officer                                          |       |     |       |            |       |           |       |                   |       |                       |       |                                                  |       |                                                     |       |                                  |       |           |       |
| Michael Sabolinski, Ph.D.(9)                                                                        |       | 2006     |       | 270,105         |       | 25,000         |       | —                 |       | 525,386                    |       | 62,394                                                |       | —                                                   |       | 15,168                                |       | 898,053        |       |
| Former Senior Vice President and Chief  Medical Officer                                             |       |     |       |            |       |           |       |                   |       |                       |       |                                                  |       |                                                     |       |                                  |       |           |       |

 

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(1)      The fair value amount for options has been determined using theBlack-Scholes option pricing model and applying the principles outlined inSFAS 123R. The assumptions used to calculate the fair value pursuant toSFAS 123R are discussed in our annual report on Form 10-K for thefiscal year ended December 31, 2006, which is on file with the SEC.

(2)          The amounts listed reflect cash incentiveawards made in fiscal year 2007 with respect to performance measures achievedin fiscal year 2006.

(3)          Mr. Bate was appointed as our chieffinancial officer, chief operating officer, treasurer and secretary onMarch 20, 2006. On January 19, 2007, Mr. Bate was appointed asour president and chief executive officer and, in conjunction with hisappointment, relinquished his previously held offices on that date. The amountlisted under “Bonus” reflects a sign-on bonus paid to Mr. Bate pursuant tohis March 2006 employment offer letter. The amount listed under “All OtherCompensation” represents the payment of premiums with respect to group lifeinsurance.

(4)          With respect to Ms. Kramer, the amountlisted under “All Other Compensation” includes $14,566 paid with respect tohealth and dental benefits, $449 paid with respect to premiums on group lifeinsurance, and $70,092 paid with respect to reimbursement of relocationexpenses, including payment for state and federal taxes.

(5)          The amount listed under “Bonus” reflects aretention bonus paid to Dr. Letts in March 2006. The amount listed under“All Other Compensation” includes $14,566 paid with respect to health anddental benefits and $1,132 paid with respect to premiums on group lifeinsurance.

(6)          Dr. Karabelas was appointed our interimpresident and chief executive officer on March 20, 2006 and relinquishedhis responsibilities on January 19, 2007. The amount listed under “AllOther Compensation” includes $40,000 paid with respect to cost of livingexpenses and $41,000 paid with respect to service on our board of directors.Additional information regarding compensation earned by Dr. Karabelas forhis service on our board is included under the headings “Compensation ofDirectors” and “Director Compensation Table” below. In consideration for animmediately and fully exerciseable grant of 200,000 shares of our common stockin May 2006 at an exercise price of 

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$4.12, Dr. Karabelas agreed to forego any salaryand bonus to which he otherwise would have been entitled in 2006 pursuant theterms of his March 2006 employment offer letter.

(7)          Dr. Loberg ceased to serve as ourpresident and chief executive officer on March 20, 2006. The amount listedunder “All Other Compensation” includes $15,474 paid with respect to health anddental benefits, $730 paid with respect to premiums on group life insurance,and $361,328 paid with respect to severance. Pursuant to the terms ofDr. Loberg’s June 2006 severance agreement, the terms of ourJune 17, 2003 option award to Dr. Loberg to purchase an aggregate of100,000 shares of our common stock were amended as of Dr. Loberg’sseparation date to provide that, notwithstanding the cessation ofDr. Loberg’s employment on March 20, 2006, the option vested as ofthe separation date with respect to the portion of the option to purchase25,000 shares of our common stock that would have vested on June 17, 2006.Pursuant to the terms of his option agreements, Dr. Loberg forfeited any(i) unvested and (ii) vested but unexercised options at theconclusion of the 90 day period following his cessation of employment.

(8)          Dr. Bloch was appointed as our chieffinancial officer, chief business officer, treasurer and secretary inSeptember 2004, and ceased to serve in those capacities on March 20,2006. The amount listed under “All Other Compensation” includes $761 paid withrespect to health and dental benefits, $275 paid with respect to premiums ongroup life insurance, and $221,456 paid with respect to severance. Pursuant tothe terms of his option agreements, Dr. Bloch forfeited any(i) unvested and (ii) vested but unexercised options at theconclusion of the 90 day period following his cessation of employment.

(9)          Dr. Sabolinski relinquished hisresponsibilities as our chief medical officer on March 31, 2007. Theamount listed under “Bonus” reflects a retention bonus paid to Dr. Sabolinskiin March 2006. The amount listed under “All Other Compensation” includes$14,566 paid with respect to health and dental benefits and $602 paid withrespect to premiums on group life insurance.

*Employment Agreements*

        Wehave entered into employment offer letters with our named executive officers,which are described below. In 2006, we established an executive severancebenefit plan, which specifies the benefits that designated officers willreceive in the event that their employment is terminated. The terms of theexecutive severance benefit plan specify that, as a condition to participationin the plan, executive officers must relinquish any severance benefits theywould have received pursuant to their respective employment offer letters. Alsoin 2006, we entered into agreements with our executive officers that specifythe benefits that each executive officer will receive in the event that theexecutive officer’s employment is terminated following a change in control. See“Potential Payments Upon Termination or Change in Control” below for additionalinformation regarding both the executive severance benefit plan and the changein control agreements.

*KennethM. Bate*

        InMarch 2006, we entered into an employment offer letter with Kenneth M.Bate, pursuant to which Mr. Bate became our chief financial officer, chiefoperating officer, treasurer and secretary. Pursuant to the terms of the offerletter, we agreed to pay Mr. Bate an annual base salary of $300,000,subject to adjustments thereafter as determined by our board. The offer letterspecified that Mr. Bate would be entitled to a sign-on bonus of $50,000 ifhe remained an employee on June 30, 2006. In addition, the offer letterprovided that, should our compensation committee approve an annual incentiveaward for fiscal year 2006, Mr. Bate would be eligible for a discretionaryaward of up to 50% of his annualized base salary. Pursuant to the terms of theoffer letter, our independent directors granted Mr. Bate an option topurchase 500,000 shares of our common stock pursuant to the terms of ouramended and restated 2003 stock incentive plan, which we refer to as our 2003stock incentive plan. Of this option, 180,000 shares vested in equalinstallments of 15,000 shares during each month of the first 12 months ofMr. Bate’s employment, and 320,000 shares vest in equal installments of8,889 shares during each month of the 36 months following the firstanniversary of Mr. Bate’s employment, subject to his continued employmentwith NitroMed (except in the final month, in which the installment is 8,885shares). The exercise price of the option is equal to $7.83 per share. Pursuantto the terms of the offer letter, all unvested shares of the 180,000 shareportion of the option vest and become immediately exercisable in full in theevent of a change of control occurring within the first 12 months ofemployment, and all unvested shares of the 320,000 share portion of the optionvest and become immediately exercisable in full in the event of a change ofcontrol occurring after the first 12 months of employment.

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        InJanuary 2007, we entered into a new employment offer letter withMr. Bate, pursuant to which he became our president and chief executiveofficer. The agreement specifies that Mr. Bate’s employment by us will beat-will and supersedes any and all prior or contemporaneous agreements relatingto Mr. Bate’s employment us, including without limitation the terms of theforegoing March 2006 offer letter. The terms of the offer letter providethat we will pay Mr. Bate an annual base salary of $385,000, subject toadjustments as may be determined by our board. In addition, the offer letterprovides that Mr. Bate may be eligible for a discretionary award of up to50% of his annualized base salary. Our compensation committee will determinethe annual bonus award based on both individual and corporate performance. Inaccordance with the terms of the offer letter, our independent directorsgranted Mr. Bate an option to purchase 500,000 shares of our common stockat an exercise price equal to $2.65 per share, which vests and becomesexercisable over four years in equal annual installments, subject toMr. Bate’s continued employment.

        InJanuary 2007, we also entered into a retention agreement with Mr. Bate,pursuant to which Mr. Bate will receive severance benefits in the eventthat Mr. Bate’s employment is terminated under certain circumstances inconnection with or subsequent to a change in control of our company. Theretention agreement provides that, in the event a change in control of NitroMedoccurs during the term of the agreement and Mr. Bate’s employment isterminated within 12 months of the change in control date without cause byNitroMed or for good reason by Mr. Bate, then:

·               100% of the then outstanding andunexercisable options to purchase shares of our common stock held byMr. Bate will become immediately exercisable in full (except with respectto the grant of options to purchase 500,000 shares of our common stock made toMr. Bate on March 20, 2006, which will become immediately exercisableas to a portion of the shares in the event of a change of control on or beforeMarch 20, 2007 and will become immediately exercisable in full as to theremainder of the shares in the event of a change of control afterMarch 20, 2007);

·               Mr. Bate will receive in a lump sumin cash within 30 days of the date of termination (i) his base salarythrough the date of termination, (ii) any deferred but unpaidcompensation, (iii) any accrued vacation pay, (iv) a severancepayment amount equal to 1.0 multiplied by Mr. Bate’s highest annual basesalary during the two-year period prior to the change in control date, referredto as the highest base salary, and (v) an amount equal to the then-currentannual bonus target percentage for Mr. Bate at the date of termination, asestablished by our board or compensation committee, multiplied by the highestbase salary;

·               Mr. Bate will be entitled to thecontinuation of benefits for a period of 12 months after the date oftermination; and

·               Mr. Bate will be entitled toreceive any other benefits not previously paid or provided that we are requiredto pay or provide, or of which Mr. Bate is eligible.

In the event that, within 12 months following thechange in control date, Mr. Bate voluntarily terminates his employmentwith NitroMed, his employment is terminated by reason of his death ordisability, or we terminate his employment for cause, Mr. Bate willreceive in a lump sum within 30 days after the date of terminationMr. Bate’s base salary through that date, any deferred but unpaidcompensation, any accrued vacation pay (other than with respect to atermination for cause) and any other benefits not previously paid or providedthat we are required to pay or provide, or of which Mr. Bate is eligible.

        InJanuary 2007, we also entered into a severance agreement withMr. Bate, pursuant to which Mr. Bate is deemed a participant underour executive severance benefit plan and is eligible to receive the benefitsset forth in the plan that are afforded to employees designated at the level ofsenior vice president or higher, as specified below under the heading “PotentialPayments Upon Termination or Change in Control—Executive Severance BenefitPlan.”

11

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*JaneA. Kramer*

        InAugust 2005, we entered into an employment offer letter with Jane A.Kramer, pursuant to which Ms. Kramer became our vice president ofcorporate communications. Pursuant to the terms of the offer letter, we agreedto pay Ms. Kramer an annual base salary of $210,000, subject toadjustments thereafter as determined by our board. The offer letter specifiedthat Ms. Kramer would be entitled to a sign-on bonus of $40,000 in lieu ofan annual performance bonus for fiscal year 2005. In addition, the offer letterprovided that, should our compensation committee approve an annual bonusbeginning in fiscal year 2006, Ms. Kramer would be eligible for adiscretionary award target of 23% of her annualized base salary. The offerletter also provided that we would reimburse Ms. Kramer up to a sum of$40,000 to defray the expenses associated with relocating to Massachusetts.Pursuant to the terms of the offer letter, Ms. Kramer was granted anoption to purchase 42,000 shares of our common stock at an exercise price equalto $19.30 per share, which vests and becomes exercisable over four years inequal annual installments, subject to Ms. Kramer’s continued employment.

*L.Gordon Letts, Ph.D.*

        InNovember 1993, we entered into an employment offer letter with L. GordonLetts, Ph.D., as modified by a letter agreement dated April 5, 2006,pursuant to which Dr. Letts became our vice president of research.Pursuant to the terms of the offer letter, we agreed to pay Dr. Letts anannual base salary of $150,000. The offer letter provided that Dr. Lettswould be eligible for a discretionary award of 20% of his annual base salary.Pursuant to the terms of the offer letter, Dr. Letts was granted an optionto purchase 125,000 shares of our common stock at an exercise price to bedetermined by our board, which vested and became exercisable over four years inequal annual installments.

*Argeris N. Karabelas, Ph.D.*

        InJanuary 2007, Argeris N. Karabelas, Ph.D., relinquished hisresponsibilities as our interim president and chief executive officer. Inconnection with Dr. Karabelas’ relinquishment of his responsibilities, theindependent members of our board modified the terms of certain option grantsmade to Dr. Karabelas in March and May 2006 (described below) inorder to extend the term of exerciseability of the vested portion of theoptions from three months following the cessation of Dr. Karabelas’employment to five years following the cessation of employment.

        InMarch 2006, we entered into an employment offer letter with Dr. Karabelasin connection with his appointment as our interim president and chief executiveofficer. The terms of Dr. Karabelas’ offer letter specified thatDr. Karabelas would be paid an annual base salary of $361,000, subject toadjustments thereafter as determined by our board. In addition, the offerletter provided that, should our compensation committee approve an annual bonusfor fiscal year 2006, Dr. Karabelas would be eligible for a discretionaryaward of up to 50% of his annualized base salary. Pursuant to the terms of theoffer letter, our independent directors granted Dr. Karabelas an option topurchase 225,000 shares of our common stock pursuant to the terms of our 2003stock incentive plan. The option vested in 12 equal monthly installments beginningon the first month anniversary of the grant date, subject to Dr. Karabelas’continued employment, with an exercise price equal to $7.83 per share. Theterms of the offer letter provided that all unvested shares would vest andbecome immediately exercisable in full in the event of a change of control ofour company.

         InMay 2006, in consideration for Dr. Karabelas’ agreement to forego thesalary and bonus to which he otherwise would have been entitled pursuant to hisemployment offer letter, our independent directors granted Dr. Karabelasan option to purchase 200,000 shares of our common stock at an exercise priceequal to $4.12 per share. This option vested and became exercisable immediatelyupon grant.

*MichaelD. Loberg, Ph.D.*

        InMarch 2006, Michael D. Loberg, Ph.D. ceased to serve as our president andchief executive officer. In June 2006, we entered into a separation letteragreement with Dr. Loberg, pursuant to which Dr. Loberg receivedseverance consideration equal to his annual salary in effect on his separationdate of $361,328, less all applicable state and federal taxes, which was paidin bi-monthly increments beginning on March 31, 2006 and ending onDecember 31, 2006. The terms of Dr. Loberg’s separation agreementprovided that, in connection with our June 17, 

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2003 grant to Dr. Loberg of an option to purchasean aggregate of 100,000 shares of our common stock, the terms of the optionagreement were amended as of Dr. Loberg’s separation date to provide that,notwithstanding the cessation of Dr. Loberg’s employment on March 20,2006, the option vested as of the separation date with respect to the option topurchase 25,000 shares of our common stock that would have vested onJune 17, 2006. In addition, for a period of 12 months afterDr. Loberg’s separation date, we agreed to reimburse Dr. Loberg for,or pay on his behalf, the share of the premium costs and associatedadministrative fees for the group medical insurance coverage that we pay foractive and similarly-situated employees who receive the same type of coverage.

*LawrenceE. Bloch, M.D.*

        InMarch 2006, Lawrence E. Bloch, M.D. ceased to serve as our chief financialofficer, chief business officer, treasurer and secretary. Pursuant to the termsof his August 2004 employment offer letter, we paid Dr. Bloch hisbase salary for a period of 12 months following his separation from ourcompany on March 20, 2006.

*MichaelSabolinski, M.D.*

        MichaelSabolinski ceased to serve as our chief medical officer on March 31, 2007.In November 2002, we entered into employment offer letter withDr. Sabolinski, as modified by a letter agreement dated April 24,2006, pursuant to which he became our senior vice president, clinicaldevelopment and regulatory affairs. Pursuant to the terms of the offer letter,we agreed to pay Dr. Sabolinski an annual base salary of $225,000. Theoffer letter provided that Dr. Sabolinski would be eligible for adiscretionary award of 22.5% of his annual base salary. Pursuant to the termsof the offer letter, Dr. Sabolinski was granted an option to purchase100,000 shares of our common stock at an exercise price to be determined by ourboard, which vested and became exercisable over four years in equal annualinstallments.

**Grants of Plan-Based Awards**

        Thefollowing table sets forth certain information concerning grants of awardspursuant to plans made to our named executive officers during the fiscal yearended December 31, 2006.

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| ** **                  | ** ** | ** **  | ** ** | ** **                               | ** ** | ** **                                           | ** ** | ** **         | ** ** | ** **         | ** ** | ** **          | ** ** | ** **          | ** ** | **All Other** | ** ** | **All Other**   | ** ** | ** **   | ** ** | ** **          | ** ** |
|-----------------------------|------------|-------------|------------|------------------------------------------|------------|------------------------------------------------------|------------|--------------------|------------|--------------------|------------|---------------------|------------|---------------------|------------|--------------------|------------|----------------------|------------|--------------|------------|---------------------|------------|
| ** **                  | ** ** | ** **  | ** ** | ** **                               | ** ** | ** **                                           | ** ** | ** **         | ** ** | ** **         | ** ** | ** **          | ** ** | ** **          | ** ** | **Stock**          | ** ** | **Stock**            | ** ** | **Exercise** | ** ** | **Grant Date** | ** ** |
| ** **                  | ** ** | ** **  | ** ** | **Estimated Future Payouts**   | ** ** | **Estimated Future Payouts**               | ** ** | **Awards:**        | ** ** | **Awards:**        | ** ** | **or**              | ** ** | **Fair Value** | ** ** |
| ** **                  | ** ** | ** **  | ** ** | **under Non-Equity Incentive** | ** ** | **under Equity Incentive Plan ** | ** ** | **Number of** | ** ** | **Number of** | ** ** | **Base Price** | ** ** | **of Stock**   | ** ** |
| ** **                  | ** ** | ** **  | ** ** | **Plan Awards(2)**                  | ** ** | **Awards**                                           | ** ** | **Shares of** | ** ** | **Securities**     | ** ** | **of Option**  | ** ** | **and Option** | ** ** |
| ** **                  | ** ** | **Grant**   | ** ** | **Threshold**                            | ** ** | **Target**                                           | ** ** | **Maximum**        | ** ** | **Threshold**      | ** ** | **Target**          | ** ** | **Maximum**         | ** ** | **Stock or**  | ** ** | **Underlying**       | ** ** | **Awards**   | ** ** | **Awards**          | ** ** |
| **Name**                    | ** ** | **Date(1)** | ** ** | **($)**                                  | ** ** | **($)**                                              | ** ** | **($)**            | ** ** | **($)**            | ** ** | **($)**             | ** ** | **($)**             | ** ** | **Units (#)** | ** ** | **Options (#)** | ** ** | **($)(3)**   | ** ** | **($)(4)**          | ** ** |
| ** **                  | ** ** | ** **  | ** ** | ** **                               | ** ** | ** **                                           | ** ** | ** **         | ** ** | ** **         | ** ** | ** **          | ** ** | ** **          | ** ** | ** **         | ** ** | ** **           | ** ** | ** **   | ** ** | ** **          | ** ** |
| Kenneth M. Bate             |       | —      |       | —                                   |       | 150,000                                              |       | —             |       | —             |       | —              |       | —              |       | —             |       | —               |       | —       |       | —              |       |
|                        |       | 3/20/2006   | (5)        | —                                   |       | —                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | 500,000              |       | 7.83         |       | 2,650,000           |       |
| Jane A. Kramer              |       | —      |       | —                                   |       | 74,480                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | —               |       | —       |       | —              |       |
|                        |       | 1/19/2006   |       | —                                   |       | —                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | 3,822                |       | 12.02        |       | 30,996              |       |
|                        |       | 3/30/2006   | (6)        | —                                   |       | —                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | 43,000               |       | 8.06         |       | 235,640             |       |
|                        |       | 8/16/2006   |       | —                                   |       | —                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | 40,000               |       | 2.84         |       | 72,000              |       |
|                        |       | 10/12/2006  |       | —                                   |       | —                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | 35,000               |       | 2.17         |       | 54,950              |       |
| L. Gordon Letts, Ph.D.      |       | —      |       | —                                   |       | 94,576                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | —               |       | —       |       | —              |       |
|                        |       | 1/19/2006   |       | —                                   |       | —                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | 34,400               |       | 12.02        |       | 278,984             |       |
|                        |       | 3/30/2006   | (6)        | —                                   |       | —                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | 43,000               |       | 8.06         |       | 235,640             |       |
|                        |       | 8/16/2006   |       | —                                   |       | —                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | 40,000               |       | 2.84         |       | 72,000              |       |
|                        |       | 10/12/2006  |       | —                                   |       | —                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | 35,000               |       | 2.17         |       | 54,950              |       |
| Argeris N. Karabelas, Ph.D. |       | 3/20/2006   | (7)        | —                                   |       | —                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | 225,000              |       | 7.83         |       | 1,192,500           |       |
|                        |       | 5/17/2006   | (8)        | —                                   |       | —                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | 200,000              |       | 4.12         |       | 522,000             |       |
| Michael D. Loberg, Ph.D.    |       | 1/19/2006   |       | —                                   |       | —                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | 93,600               |       | 12.02        |       | 759,096             |       |
| Lawrence E. Bloch, M.D.     |       | 1/19/2006   |       | —                                   |       | —                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | 34,400               |       | 12.02        |       | 278,984             |       |
| Michael Sabolinski, M.D.    |       | —      |       | —                                   |       | 94,537                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | —               |       | —       |       | —              |       |
|                        |       | 1/19/2006   |       | —                                   |       | —                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | 55,900               |       | 12.02        |       | 453,349             |       |
|                        |       | 3/30/2006   | (6)        | —                                   |       | —                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | 43,000               |       | 8.06         |       | 235,640             |       |
|                        |       | 8/16/2006   |       | —                                   |       | —                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | 40,000               |       | 2.84         |       | 72,000              |       |
|                        |       | 10/12/2006  |       | —                                   |       | —                                               |       | —             |       | —             |       | —              |       | —              |       | —             |       | 35,000               |       | 2.17         |       | 54,950              |       |

 

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(1)      Unlessotherwise noted in this table, all outstanding option grants were granted underthe amended and restated 2003 stock incentive plan, have a 10 year termand vest and become exercisable in equal annual installments on the first,second, third and fourth anniversaries of the date of grant, subject to suchnamed executive officer’s continued service.

(2)      Theseamounts reflect the incentive awards that would have been paid for 2006performance if such awards had been made at each named executive’s targetpercentage of annual base salary. In 2006, Mr. Bate’s target percentagewas 50% of annual base salary and the target percentage for each ofMs. Kramer, Dr. Letts and Dr. Sabolinski was 35% of annual basesalary.

(3)        The exercise prices of the option grants listed in this column reflectthe closing price of our common stock on the Nasdaq Global Market on the dateof grant.

(4)        These values reflect the grant date fair value using the Black-Scholesoption pricing model and applying the principles outlined in SFAS 123R.The assumptions used to calculate the fair value pursuant to SFAS 123R arediscussed in our annual report on Form 10-K for the fiscal year endedDecember 31, 2006, which is on file with the SEC.

(5)        180,000 shares of this option vest and become exercisable in twelveequal monthly installments beginning on the date that is one month followingthe date of grant; 320,000 shares of this option vest and become exercisable in36 equal monthly installments beginning on the first anniversary of the date ofgrant and continuing for the next 36 months.

(6)        This option vests and becomes exercisable in two equal installments onthe date that is six months following the date of grant and the firstanniversary of the date of grant.

(7)        This option vests and becomes exercisable in twelve equal monthlyinstallments beginning on the date that is one month following the date ofgrant.

(8)        This option vested and became immediately exercisable upon grant.

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**Outstanding Equity Awards at 2006Fiscal Year End**

        Thefollowing table sets forth certain information concerning outstanding equityawards held by each named executive officer as of December 31, 2006.
| ** **                  | ** ** | **OPTION AWARDS(1)** | ** ** | **STOCK AWARDS** | ** ** |
|-----------------------------|------------|---------------------------|------------|-----------------------|------------|
| ** **                  | ** ** | ** **                | ** ** | ** **            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Equity** | ** ** | ** ** | ** ** |
| ** **                  | ** ** | ** **                | ** ** | ** **            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Incentive** | ** ** | **Equity** | ** ** |
| ** **                  | ** ** | ** **                | ** ** | ** **            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Plan** | ** ** | **Incentive Plan** | ** ** |
| ** **                  | ** ** | ** **                | ** ** | ** **            | ** ** | **Equity** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Awards:** | ** ** | **Awards: Market** | ** ** |
| ** **                  | ** ** | ** **                | ** ** | ** **            | ** ** | **Incentive** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Market** | ** ** | **Number of** | ** ** | **or Payout** | ** ** |
| ** **                  | ** ** | ** **                | ** ** | ** **            | ** ** | **Plan Awards:** | ** ** | ** ** | ** ** | ** ** | ** ** | **Number of** | ** ** | **Value of** | ** ** | **Unearned** | ** ** | **Value of** | ** ** |
| ** **                  | ** ** | ** **                | ** ** | ** **            | ** ** | **Number of** | ** ** | ** ** | ** ** | ** ** | ** ** | **Shares** | ** ** | **Shares or** | ** ** | **Shares,** | ** ** | **Unearned** | ** ** |
| ** **                  | ** ** | **Number of**        | ** ** | **Number of**    | ** ** | **Securities** | ** ** | ** ** | ** ** | ** ** | ** ** | **or Units** | ** ** | **Units of** | ** ** | **Units or** | ** ** | **Shares, Units** | ** ** |
| ** **                  | ** ** | **Securities**            | ** ** | **Securities**        | ** ** | **Underlying** | ** ** | ** ** | ** ** | ** ** | ** ** | **of Stock** | ** ** | **Stock** | ** ** | **Other** | ** ** | **or Other** | ** ** |
| ** **                  | ** ** | **Underlying**            | ** ** | **Underlying**        | ** ** | **Unexercised,** | ** ** | **Option** | ** ** | ** ** | ** ** | **That** | ** ** | **That** | ** ** | **Rights** | ** ** | **Rights That** | ** ** |
| ** **                  | ** ** | **Unexercised**           | ** ** | **Unexercised**       | ** ** | **Unearned** | ** ** | **Exercise** | ** ** | **Option** | ** ** | **Have Not** | ** ** | **Have Not** | ** ** | **That Have** | ** ** | **Have Not** | ** ** |
| ** **                  | ** ** | **Options (#)**      | ** ** | **Options (#)**  | ** ** | **Options** | ** ** | **Price** | ** ** | **Expiration** | ** ** | **Vested** | ** ** | **Vested** | ** ** | **Not Vested** | ** ** | **Vested** | ** ** |
| **Name**                    | ** ** | **Exercisable**           | ** ** | **Unexercisable**     | ** ** | **(#)** | ** ** | **($)** | ** ** | **Date** | ** ** | **(#)** | ** ** | **(#)** | ** ** | **($)** | ** ** | **($)** | ** ** |
| ** **                  | ** ** | ** **                | ** ** | ** **            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Kenneth M. Bate             |       | 135,000                   |       | 365,000               |       | — |   | 7.83 |   | 3/20/2016 | (2) | — |   | — |   | — |   | — |   |
| Jane A. Kramer              |       | 10,500                    |       | 31,500                |       | — |   | 19.30 |   | 9/1/2015 |   | — |   | — |   | — |   | — |   |
|                        |       | 0                         |       | 3,822                 |       | — |   | 12.02 |   | 1/19/2016 |   | — |   | — |   | — |   | — |   |
|                        |       | 21,500                    |       | 21,500                |       | — |   | 8.06 |   | 3/30/2016 | (3) | — |   | — |   | — |   | — |   |
|                        |       | 0                         |       | 40,000                |       | — |   | 2.84 |   | 8/16/2016 |   | — |   | — |   | — |   | — |   |
|                        |       | 0                         |       | 35,000                |       | — |   | 2.17 |   | 10/12/2016 |   | — |   | — |   | — |   | — |   |
| L. Gordon Letts,  Ph.D.     |       | 3,465                     |       | 0                     |       | — |   | 1.30 |   | 6/16/2009 |   | — |   | — |   | — |   | — |   |
|                        |       | 24,660                    |       | 0                     |       | — |   | 2.00 |   | 1/30/2011 |   | — |   | — |   | — |   | — |   |
|                        |       | 65,000                    |       | 0                     |       | — |   | 2.00 |   | 3/12/2012 |   | — |   | — |   | — |   | — |   |
|                        |       | 41,250                    |       | 13,750                |       | — |   | 2.00 |   | 6/17/2013 |   | — |   | — |   | — |   | — |   |
|                        |       | 56,250                    |       | 18,750                |       | — |   | 7.98 |   | 12/1/2013 |   | — |   | — |   | — |   | — |   |
|                        |       | 12,500                    |       | 12,500                |       | — |   | 7.55 |   | 5/18/2014 |   | — |   | — |   | — |   | — |   |
|                        |       | 31,250                    |       | 31,250                |       | — |   | 10.21 |   | 7/19/2014 |   | — |   | — |   | — |   | — |   |
|                        |       | 21,250                    |       | 63,750                |       | — |   | 14.99 |   | 5/16/2015 |   | — |   | — |   | — |   | — |   |
|                        |       | 0                         |       | 34,400                |       | — |   | 12.02 |   | 1/19/2016 |   | — |   | — |   | — |   | — |   |
|                        |       | 21,500                    |       | 21,500                |       | — |   | 8.06 |   | 3/30/2016 | (3) | — |   | — |   | — |   | — |   |
|                        |       | 0                         |       | 40,000                |       | — |   | 2.84 |   | 8/16/2016 |   | — |   | — |   | — |   | — |   |
|                        |       | 0                         |       | 35,000                |       | — |   | 2.17 |   | 10/12/2016 |   | — |   | — |   | — |   | — |   |
| Argeris N. Karabelas, Ph.D. |       | 12,500                    |       | 0                     |       | — |   | 2.00 |   | 1/15/2012 |   | — |   | — |   | — |   | — |   |
|                        |       | 5,000                     |       | 0                     |       | — |   | 2.00 |   | 11/19/2012 |   | — |   | — |   | — |   | — |   |
|                        |       | 5,000                     |       | 5,000                 |       | — |   | 6.95 |   | 6/14/2014 |   | — |   | — |   | — |   | — |   |
|                        |       | 15,000                    |       | 0                     |       | — |   | 14.99 |   | 5/16/2015 | (4) | — |   | — |   | — |   | — |   |
|                        |       | 168,750                   |       | 56,250                |       | — |   | 7.83 |   | 3/20/2016 | (5) | — |   | — |   | — |   | — |   |
|                        |       | 200,000                   |       | 0                     |       | — |   | 4.12 |   | 5/17/2016 | (6) | — |   | — |   | — |   | — |   |
| Michael D.  Loberg, Ph.D    |       | —                    |       | —                |       | — |   | — |   | — |   | — |   | — |   | — |   | — |   |
| Lawrence E.  Bloch, M.D     |       | —                    |       | —                |       | — |   | — |   | — |   | — |   | — |   | — |   | — |   |
| Michael  Sabolinski, M.D    |       | 50,000                    |       | 0                     |       | — |   | 2.00 |   | 11/21/2012 |   | — |   | — |   | — |   | — |   |
|                        |       | 2,500                     |       | 1,250                 |       | — |   | 2.00 |   | 6/17/2013 |   | — |   | — |   | — |   | — |   |
|                        |       | 18,750                    |       | 6,250                 |       | — |   | 7.98 |   | 12/1/2013 |   | — |   | — |   | — |   | — |   |
|                        |       | 2,500                     |       | 2,500                 |       | — |   | 7.55 |   | 5/18/2014 |   | — |   | — |   | — |   | — |   |
|                        |       | 8,750                     |       | 26,250                |       | — |   | 14.99 |   | 5/16/2015 |   | — |   | — |   | — |   | — |   |
|                        |       | 0                         |       | 55,900                |       | — |   | 12.02 |   | 1/19/2016 |   | — |   | — |   | — |   | — |   |
|                        |       | 21,500                    |       | 21,500                |       | — |   | 8.06 |   | 3/30/2016 | (3) | — |   | — |   | — |   | — |   |
|                        |       | 0                         |       | 40,000                |       | — |   | 2.84 |   | 8/16/2016 |   | — |   | — |   | — |   | — |   |
|                        |       | 0                         |       | 35,000                |       | — |   | 2.17 |   | 10/12/2016 |   | — |   | — |   | — |   | — |   |

 

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(1)          Unless otherwise noted in this table, all outstanding option grants havea 10 year term and vest and become exercisable in equal annualinstallments on the first, second, third and fourth anniversaries of the dateof grant, subject to such named executive officer’s continued service.

(2)        180,000 shares of this option vest and become exercisable in twelveequal monthly installments beginning on the date that is one month followingthe date of grant; 320,000 shares of this option vest and become exercisable in36 equal monthly installments beginning on the 

15

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first anniversary of the date of grant and continuingfor the next 36 months.

(3)        This option vests and becomes exercisable in two equal installments onthe date that is six months following the date of grant and the firstanniversary of the date of grant.

(4)        This option vested and became exercisable on the first anniversary ofthe date of grant.

(5)        This option vests and becomes exercisable in twelve equal monthlyinstallments beginning on the date that is one month following the date ofgrant.

(6)    This option vested and became immediatelyexercisable upon grant.

**Option Exercises and Stock Vested inFiscal Year 2006**

        Thefollowing table sets forth certain information regarding the exercise of stockoptions during the fiscal year ended December 31, 2006 by our namedexecutive officers.
| ** **                  | ** ** | **Option Awards**                                        | ** ** | ** **                                        | ** ** | ** **                                                   | ** ** |
|-----------------------------|------------|---------------------------------------------------------------|------------|---------------------------------------------------|------------|--------------------------------------------------------------|------------|
| **Name**                    | ** ** | **Number of  Shares Acquired  on Exercise(#)** | ** ** | **Value Realized  on Exercise  ($)(1)** | ** ** | **Number of  Shares Acquired  on Vesting(#)** | ** ** | **Stock Awards  Value Realized  on Vesting($)** | ** ** |
| Kenneth M. Bate             |       | —                                                        |       | —                                            |       | —                                                       |       | — |   |
| Jane A. Kramer              |       | —                                                        |       | —                                            |       | —                                                       |       | — |   |
| L. Gordon Letts,  Ph.D.     |       | —                                                        |       | —                                            |       | —                                                       |       | — |   |
| Argeris N. Karabelas, Ph.D. |       | —                                                        |       | —                                            |       | —                                                       |       | — |   |
| Michael D.  Loberg, Ph.D.   |       | 330,000                                                       |       | 1,285,970                                         |       | —                                                       |       | — |   |
| Lawrence E.  Bloch, M.D.    |       | —                                                        |       | —                                            |       | —                                                       |       | — |   |
| Michael Sabolinski,  M.D.   |       | —                                                        |       | —                                            |       | —                                                       |       | — |   |

 

----

(1)        Value represents the difference between the exercise price per share andthe fair market value per share of our common stock on the date of exercise,multiplied by the number of shares acquired on exercise.

**Potential Payments Upon Terminationor Change in Control**

        Wehave previously entered into employment offer letters with our named executiveofficers, which are summarized under the heading “Summary CompensationTable—Employment Agreements.”

*Executive Severance Benefit Plan*

        InMarch 2006, our board, acting upon the recommendation of the compensationcommittee, approved and adopted an executive severance benefit plan for thebenefit of our officers. The plan was amended in August 2006 to increasethe benefits available to officers who have been designated at level of vicepresident by our board or by the compensation committee.

        Thebenefit plan provides severance benefits to those officers designated asparticipants under the plan by our board or the compensation committee who areterminated on or after March 30, 2006 and prior to the termination of theplan. Our board has determined that all of our senior vice presidents and vicepresidents shall be designated as participants under the plan, except asspecifically provided in the plan. An officer shall not be eligible to receivebenefits under the plan if, among other things, he or she is eligible toreceive severance pursuant to a severance provision contained in an individualoffer letter and has not agreed that the terms of the plan will supersede suchoffer letter. In that event, any severance provision contained in the officer’soffer letter would remain in effect.

  The severance benefits provided under thebenefit plan to eligible participants who are terminated without cause consistof:

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| **Key Plan  Elements**      | ** ** | **Senior Vice President and Above**                                                                                                                                                                                                                                                                                                                                                               | ** ** | **Vice President**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|-----------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                  | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                        | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|  Severance             |       | Salary continuation for a period of one year at base  rate of pay.                                                                                                                                                                                                                                                                                                                                |       | Salary continuation for a period of six months at  base rate of pay; if the executive remains unemployed throughout and at the  conclusion of the initial six month period, the executive shall receive an  additional six month period of salary continuation. However, if at any time  during such additional six month period the executive becomes reemployed with  another employer, the benefits shall terminate immediately.                                                                                                                                                                                                                                                                                                       |
|                        |       |                                                                                                                                                                                                                                                                                                                                                                                              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|  Benefit  Continuation |       | Contributions to the cost of COBRA (Consolidated  Omnibus Budget Reconciliation Act) coverage on the same basis as our  contribution to our health and dental insurance coverage immediately before  the the executive’s termination for a period of one year, provided that if  the employee secures new employment, the continued contributions shall end  when the new employment begins. |       | Contributions to the cost of COBRA (Consolidated Omnibus  Budget Reconciliation Act) coverage on same basis as our contribution to our  health and dental insurance coverage immediately before the termination for a  period of six months, provided that if the employee secures new employment,  the continued contributions shall end when the new employment begins. If the  executive remains unemployed throughout and at the conclusion of the initial  six-month period, the executive shall receive an additional six month period  of salary continuation. However, if at any time during such additional six  month period the executive becomes reemployed with another employer, the  benefits shall terminate immediately. |

 

All severance and benefits are subject to theexecutive officer signing a severance agreement that includes a release andwaiver of any claims the executive may have against our company.

        Anexecutive is not eligible to receive the severance payment if he or she(i) voluntarily terminates his or her employment; (ii) retires;(iii) refuses to accept another position offered by our company of acomparable or higher base salary that is located within 50 miles of thefacility where the executive performed his or her principal duties;(iv) is terminated for cause; (v) is eligible to receive severance pursuantto a severance provision contained in an individual offer letter and has notagreed that the terms of the plan shall supersede that provision; or(vi) is terminated under circumstances governed by his or her individualwritten change-of-control agreement.

*Change in Control Agreements*

        Wehave entered into agreements with our officers that provide each officer withseverance benefits in the event that the officer’s employment is terminatedunder certain circumstances in connection with or subsequent to a change incontrol of our company.

        In theevent that a change in control of our company occurs during the term of theagreement, and the officer’s employment is terminated within 12 months ofsuch change in control date without cause or for good reason by the officer,then the officer shall receive the benefits outlined below:

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| **Key Agreement  Elements**       | ** ** | **Senior Vice President and Higher**                                                                                                                                                                                                                                                                                                                                                     | ** ** | **Vice President**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-----------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  Term                        |       | The term commences as of the effective date of the  agreement and continues through December 31, 2008; provided that commencing  on January 1, 2009 and each January 1 thereafter, the term of the agreements  will be automatically extended for additional one-year periods unless the  company gives 90 days prior written notice to the officer that the term will  not be extended. |       | The term commences as of the effective date of the  agreement and continues through December 31, 2008; provided that commencing  on January 1, 2009 and each January 1 thereafter, the term of the agreements  will be automatically extended for additional one-year periods unless the  company gives 90 days prior written notice to the officer that the term will  not be extended.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                              |       |                                                                                                                                                                                                                                                                                                                                                                                     |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|  Severance                   |       | A lump sum cash payment representing the officer’s  base salary through the date of termination, any deferred but unpaid  compensation, any accrued vacation pay and a severance payment amount equal  to 1.0 multiplied by the executive’s highest annual base salary during the  two-year period prior to the change in control date.                                        |       | A lump sum in cash within 30 days of the date  of termination representing the officer’s base salary through the date of  termination, any deferred but unpaid compensation, any accrued vacation pay  and a severance payment amount equal to 0.5 multiplied by the executive’s  highest annual base salary during the two-year period prior to the change in  control date; provided that if the officer remains unemployed throughout and  at the conclusion of the six month period immediately following the date of  termination, the company shall pay him or her in cash in advance on a monthly  basis, for up to six months following the six-month anniversary of the date  of termination, an amount equal to 1/12 of the officer’s highest annual base  salary during the two-year period prior to the change in control date. If at  any time during the additional six month period the officer becomes  reemployed with another employer in a comparable position, the salary  continuation payments shall terminate immediately. |
|                              |       |                                                                                                                                                                                                                                                                                                                                                                                     |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|  Benefit Continuation        |       | Continuation of benefits for a period of 12 months  after the date of termination (subject to offset if a subsequent employer  offers benefits on terms at least as favorable as those offered by our  company).                                                                                                                                                                         |       | Continuation of benefits for a period of 12 months  after the date of termination (subject to offset if a subsequent employer  offers benefits on terms at least as favorable as those offered by our  company).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                              |       |                                                                                                                                                                                                                                                                                                                                                                                     |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|  Equity Vesting Acceleration |       | 100% of the then outstanding and unexercisable  options to purchase shares of our common stock will become immediately  exercisable in full.                                                                                                                                                                                                                                             |       | 50% of the then outstanding and unexercisable  options to purchase shares of our common stock will become immediately  exercisable in full.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

 

Each agreement also provides that, if within12 months following the change in control date (i) the officervoluntarily terminates his employment with the company, (ii) his or heremployment is terminated by reason of the 

18

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officer’s death or disability or (iii) weterminate his or her employment for cause, (A) 100% (in the case of seniorvice presidents and higher) or 50% (in the case of vice presidents) of the thenoutstanding and unexercisable options to purchase shares of our common stockheld by the officer will become immediately exercisable in full and (B) theofficer will receive in a lump sum within 30 days after the date oftermination the officer’s base salary through the date of termination, anydeferred but unpaid compensation, any accrued vacation pay (other than withrespect to a termination for cause) and any other benefits not previously paidor provided that the company is required to pay or provide, or of which theexecutive is eligible.

        Eachagreement will expire upon the first to occur of:

·     theexpiration of the term of the agreement, if the change in control date has notoccurred during the term;

·     thetermination of the officer’s employment with our company prior to the change incontrol date;

·               the date that is 12 months afterthe change in control date, if the officer is still employed by the company onthat date; or

·               the fulfillment by the company ofcertain of its obligations under the agreement if the officer’s employment withthe company terminates within 12 months following the change in controldate.

        Eachagreement provides that our company shall require any successor to all orsubstantially all of our business or assets to assume and agree to perform theagreement to the same extent that we would be required to perform it if no suchsuccession had taken place.

        Thefollowing tables summarize quantitative disclosures for Jane A. Kramer, L.Gordon Letts, Ph.D. and Michael Sabolinski, M.D. regarding estimated paymentsand other benefits that would have been received by the named executive officerif his or her employment terminated as of the last business day of the year,December 29, 2006, under each of the circumstances set forth below.Argeris N. Karabelas, Ph.D. and Kenneth M. Bate were not deemed to beparticipants under the executive severance benefit plan in 2006, and we did notenter into a change in control agreement with either Dr. Karabelas orMr. Bate in 2006. Accordingly, Ms. Kramer and Drs. Letts andSabolinski were the only named executive officers employed by us onDecember 29, 2006 who were entitled to severance payments on that dateupon termination of employment.

19

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**Payments to Jane A. KramerAssuming a December 29, 2006 Termination**
| ** **                                                                                                                                                                                                | ** ** | ** **              | ** ** | ** **               | ** ** | ** **                                       | ** ** | ** **                                                        | ** ** | **Equity**                | ** ** | ** **        | ** ** | ** **             | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|--------------------------|------------|--------------------------------------------------|------------|-------------------------------------------------------------------|------------|---------------------------|------------|-------------------|------------|------------------------|------------|
| ** **                                                                                                                                                                                                | ** ** | ** **              | ** ** | ** **               | ** ** | ** **                                       | ** ** | ** **                                                        | ** ** | ** **                | ** ** | **Value of** | ** ** | ** **             | ** ** | ** ** | ** ** |
| ** **                                                                                                                                                                                                | ** ** | **Cash Severance** | ** ** | **Value of**        | ** ** | **Accelerated**                                  | ** ** | ** **                                                        | ** ** | ** **                | ** ** |
| ** **                                                                                                                                                                                                | ** ** | **Base Salary(1)** | ** ** | **Incentive Award** | ** ** | **Vested**                                       | ** ** | **Unvested**                                                      | ** ** | **Benefits**              | ** ** | ** **        | ** ** |
| **Circumstances of Termination**                                                                                                                                                                | ** ** | **Multiple**            | ** ** | **$**                    | ** ** | **   Multiple   ** | ** ** | **     $     ** | ** ** | ** Equity($) ** | ** ** | **Equity($)(2)**  | ** ** | **Continuation($)(3)** | ** ** | **Total($)** | ** ** |
| Termination by the  company for cause, not following a change in control                                                                                                                                  |       | —                  |       | —                   |       | —                                           |       | —                                                            |       | —                    |       | —            |       | —                 |       | — |   |
|                                                                                                                                                                                                      |       |                    |       |                     |       |                                             |       |                                                              |       |                      |       |              |       |                   |       |   |   |
|  Termination by the company without cause,  not following a change in control                                                                                                                        |       | 0.5  (up to 1.0)        |       | 212,800                  |       | —                                           |       | —                                                            |       | —                    |       | —            |       | 14,945                 |       | 227,745 |   |
|                                                                                                                                                                                                      |       |                    |       |                     |       |                                             |       |                                                              |       |                      |       |              |       |                   |       |   |   |
|  Termination by the company without cause or  by the executive officer with good reason within 12 months following a change  in control                                                              |       | 0.5 (up to 1.0)         |       | 212,800                  |       | —                                           |       | —                                                            |       | —                    |       | 4,900             |       | 14,945                 |       | 232,645 |   |
|                                                                                                                                                                                                      |       |                    |       |                     |       |                                             |       |                                                              |       |                      |       |              |       |                   |       |   |   |
|  Within 12 months following a  change in control, (i) voluntary termination by officer;  (ii) termination by reason of death or disability; or  (iii) termination by the company for cause |       | —                  |       | —                   |       | —                                           |       | —                                                            |       | —                    |       | 4,900             |       | —                 |       | 4,900 |   |

 

----

(1)           Pursuant to the terms of our executive severance benefit plan,Ms. Kramer’s salary would continue for six months following thetermination of her employment without cause. Pursuant to a change in controlagreement that we have entered into with Ms. Kramer, if Ms. Kramer’semployment were terminated without cause within 12 months following achange in control, she would receive a severance payment equal to 0.5multiplied by her highest annual base salary during the two-year period priorto the change in control date. Pursuant to the terms of both the executiveseverance plan and the change in control agreement, if Ms. Kramer remainedunemployed at the conclusion of the initial six-month period, then she wouldreceive an additional six-month period of salary continuation; provided that,if at anytime during the additional six months she became reemployed withanother employer, the benefits would terminate immediately. The amount listedunder base salary is calculated with the assumption that Ms. Kramer willreceive the full twelve months of salary continuation to which she ispotentially entitled under the executive severance benefit plan and the changein control agreement.

(2)           All unvested equity is assumed to have been accelerated as ofDecember 29, 2006. The amount shown here represents the spread of theaccelerated options assuming a fair market value of our common stock of $2.45(representing the closing price of our common stock on the Nasdaq Global Marketon December 29, 2006). Pursuant to the terms of a change in controlagreement that we entered into with Ms. Kramer, in the event of atermination of her employment within 12 months following a change incontrol, she is entitled to the immediate accelerated vesting of 50% of herthen-outstanding and unexercisable options.

(3)           Pursuant to the terms of our executive severance benefit plan and achange in control agreement that we entered into with Ms. Kramer, benefitsare continued for so long as the executive is entitled to receive salary underthe plan or the agreement, as the case may be. The benefit costs include theemployer cost of health and dental insurance, less the executive’s contributionamount.

20

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**Payments to L. Gordon Letts, Ph.D.Assuming a December 29, 2006 Termination**
| ** **                                                                                                                                                                                          | ** ** | ** **              | ** ** | ** **               | ** ** | ** **                                       | ** ** | ** **                                                        | ** ** | **Equity**       | ** ** | ** **        | ** ** | ** **             | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|--------------------------|------------|--------------------------------------------------|------------|-------------------------------------------------------------------|------------|------------------|------------|-------------------|------------|------------------------|------------|
| ** **                                                                                                                                                                                          | ** ** | ** **              | ** ** | ** **               | ** ** | ** **                                       | ** ** | ** **                                                        | ** ** | ** **       | ** ** | **Value of** | ** ** | ** **             | ** ** | ** ** | ** ** |
| ** **                                                                                                                                                                                          | ** ** | **Cash Severance** | ** ** | **Value of**        | ** ** | **Accelerated**                                  | ** ** | ** **                                                        | ** ** | ** **       | ** ** |
| ** **                                                                                                                                                                                          | ** ** | **Base Salary(1)** | ** ** | **Incentive Award** | ** ** | **Vested**                                       | ** ** | **Unvested**                                                      | ** ** | **Benefits**     | ** ** | ** **        | ** ** |
| **Circumstances of Termination**                                                                                                                                                          | ** ** | **Multiple**            | ** ** | **$**                    | ** ** | **   Multiple   ** | ** ** | **     $     ** | ** ** | **Equity($)(2)** | ** ** | **Equity($)(3)**  | ** ** | **Continuation($)(4)** | ** ** | **Total($)** | ** ** |
| Termination by  the company for cause, not following a change in control                                                                                                                            |       | —                  |       | —                   |       | —                                           |       | —                                                            |       | 62,894           |       | —            |       | —                 |       | 62,894 |   |
|                                                                                                                                                                                                |       |                    |       |                     |       |                                             |       |                                                              |       |             |       |              |       |                   |       |   |   |
| Termination by  the company without cause, not following a change in control                                                                                                                        |       | 1.0                     |       | 270,218                  |       | —                                           |       | —                                                            |       | 62,894           |       | —            |       | 14,945                 |       | 348,057 |   |
|                                                                                                                                                                                                |       |                    |       |                     |       |                                             |       |                                                              |       |             |       |              |       |                   |       |   |   |
| Termination by  the company without cause or by the executive officer with good reason within  12 months following a change in control                                                              |       | 1.0                     |       | 270,218                  |       | —                                           |       | —                                                            |       | 62,894           |       | 60,319            |       | 14,945                 |       | 408,376 |   |
|                                                                                                                                                                                                |       |                    |       |                     |       |                                             |       |                                                              |       |             |       |              |       |                   |       |   |   |
| Within 12 months  following a change in control, (i) voluntary termination by officer;  (ii) termination by reason of death or disability; or  (iii) termination by the company for cause |       | —                  |       | —                   |       | —                                           |       | —                                                            |       | 62,894           |       | 60,319            |       | —                 |       | 123,213 |   |

 

----

(1)           Pursuant to the terms of our executive severance benefit plan,Dr. Letts’ salary would continue for twelve months following thetermination of his employment without cause. Pursuant to a change in controlagreement that we have entered into with Dr. Letts, if Dr. Letts’employment were terminated without cause within 12 months following achange in control, he would receive a severance payment equal to 1.0 multipliedby his highest annual base salary during the two-year period prior to thechange in control date.

(2)           This amount represents the difference between the exercise price of thevested option and the closing price of our common stock on the Nasdaq GlobalMarket on December 29, 2006 ($2.45).

(3)           All unvested equity is assumed to have been accelerated as ofDecember 29, 2006. The amount shown here represents the spread of theaccelerated options assuming a fair market value of our common stock of $2.45(representing the closing price of our common stock on the Nasdaq Global Marketon December 29, 2006). Pursuant to the terms of a change in controlagreement we entered into with Dr. Letts, in the event of a termination ofhis employment within 12 months following a change in control, he isentitled to the immediate accelerated vesting of 100% of his then-outstandingand unexercisable options.

(4)           Pursuant to the terms of our executive severance benefit plan and achange in control agreement that we entered into with Dr. Letts, benefitsare continued for so long as the executive is entitled to receive salary underthe plan or the agreement, as the case may be. The benefit costs include theemployer cost of health and dental insurance, less the executive’s contributionamount.

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**Payments to Michael Sabolinski, M.D.Assuming a December 29, 2006 Termination**
| ** **                                                                                                                                                                                         | ** ** | ** **              | ** ** | ** **               | ** ** | ** **                                       | ** ** | ** **                                                        | ** ** | **Equity**       | ** ** | ** **        | ** ** | ** **             | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|--------------------------|------------|--------------------------------------------------|------------|-------------------------------------------------------------------|------------|------------------|------------|-------------------|------------|------------------------|------------|
| ** **                                                                                                                                                                                         | ** ** | ** **              | ** ** | ** **               | ** ** | ** **                                       | ** ** | ** **                                                        | ** ** | ** **       | ** ** | **Value of** | ** ** | ** **             | ** ** | ** ** | ** ** |
| ** **                                                                                                                                                                                         | ** ** | **Cash Severance** | ** ** | **Value of**        | ** ** | **Accelerated**                                  | ** ** | ** **                                                        | ** ** | ** **       | ** ** |
| ** **                                                                                                                                                                                         | ** ** | **Base Salary(1)** | ** ** | **Incentive Award** | ** ** | **Vested**                                       | ** ** | **Unvested**                                                      | ** ** | **Benefits**     | ** ** | ** **        | ** ** |
| **Circumstances of Termination**                                                                                                                                                         | ** ** | **Multiple**            | ** ** | **$**                    | ** ** | **   Multiple   ** | ** ** | **     $     ** | ** ** | **Equity($)(2)** | ** ** | **Equity($)(3)**  | ** ** | **Continuation($)(4)** | ** ** | **Total($)** | ** ** |
| Termination by the company for cause, not following a change in  control                                                                                                                           |       | —                  |       | —                   |       | —                                           |       | —                                                            |       | 23,625           |       | —            |       | —                 |       | 23,625 |   |
|                                                                                                                                                                                               |       |                    |       |                     |       |                                             |       |                                                              |       |             |       |              |       |                   |       |   |   |
| Termination by the company without cause, not following a change in  control                                                                                                                       |       | 1.0                     |       | 270,105                  |       | —                                           |       | —                                                            |       | 23,625           |       | —            |       | 14,945                 |       | 308,675 |   |
|                                                                                                                                                                                               |       |                    |       |                     |       |                                             |       |                                                              |       |             |       |              |       |                   |       |   |   |
| Termination by the company without cause or by the executive officer  with good reason within 12 months following a change in control                                                              |       | 1.0                     |       | 270,105                  |       | —                                           |       | —                                                            |       | 23,625           |       | 32,863            |       | 14,945                 |       | 341,538 |   |
|                                                                                                                                                                                               |       |                    |       |                     |       |                                             |       |                                                              |       |             |       |              |       |                   |       |   |   |
| Within 12 months following a change in control, (i) voluntary  termination by officer; (ii) termination by reason of death or  disability; or (iii) termination by the company for cause |       | —                  |       | —                   |       | —                                           |       | —                                                            |       | 23,625           |       | 32,863            |       | —                 |       | 56,488 |   |

 

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(1)           Pursuant to the terms of our executive severance benefit plan,Dr. Sabolinski’s salary would continue for twelve months following thetermination of his employment without cause. Pursuant to a change in controlagreement that we have entered into with Dr. Sabolinski, if Dr. Sabolinski’semployment were terminated without cause within 12 months following achange in control, he would receive a severance payment equal to 1.0 multipliedby his highest annual base salary during the two-year period prior to thechange in control date.

(2)           This amount represents the difference between the exercise price of thevested option and the closing price of our common stock on the Nasdaq GlobalMarket on December 29, 2006 ($2.45).

(3)           All unvested equity is assumed to have been accelerated as of December 29,2006. The amount shown here represents the spread of the accelerated optionsassuming a fair market value of our common stock of $2.45 (representing theclosing price of our common stock on the Nasdaq Global Market onDecember 29, 2006). Pursuant to the terms of a change in control agreementwe entered into with Dr. Sabolinski, in the event of a termination of hisemployment within 12 months following a change in control, he is entitledto the immediate accelerated vesting of 100% of his then-outstanding andunexercisable options.

(4)           Pursuant to the terms of our executive severance benefit plan and achange in control agreement that we entered into with Dr. Sabolinski,benefits are continued for so long as the executive is entitled to receive salaryunder the plan or the agreement, as the case may be. The benefit costs includethe employer cost of health and dental insurance, less the executive’scontribution amount.

**Compensation of Directors**

        Wecompensate our directors for service on our board of directors in the amount of$6,000 per quarter. The chairman of our board of directors is compensated anadditional $10,000 per year. In addition, members of the audit committeereceive $2,000 per committee meeting, and members of the compensation committeeand nominating and corporate governance committee receive $1,000 per committeemeeting. The chairman of the audit committee receives an additional $7,500 peryear. The chairman of the compensation committee and the chairman of thenominating and corporate governance committee each receive an additional $5,000per year. Directors are reimbursed for reasonable travel and other expensesincurred in connection with attending meetings of our board of directors andits committees.

        Directorsare also eligible to participate in our 2003 stock incentive plan. Our board ofdirectors has established a program under which each non-employee director iseligible to receive an option to purchase 20,000 shares of our common stockupon his appointment to our board and also is eligible to receive an annualgrant of an option to purchase 15,000 shares of our common stock at each year’sannual meeting at which he serves as a director. Options granted upon adirector’s initial election to our board of directors vest in four equal annualinstallments beginning on 

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the firstanniversary of the grant date. Options granted upon a director’s reelection atour annual meeting of stockholders vest in full on the first anniversary of thedate of grant. Currently, each option terminates on the earlier of ten yearsfrom the date of grant or 90 days after the optionee ceases to serve as adirector, except in the case of death or disability, in which event the optionterminates one year from the date of the director’s death or disability. Theexercise price of these options equals the fair market value of our commonstock on the date of grant. On May 17, 2006, the date of our 2006 annualmeeting of stockholders, we granted each of Mr. Cohen, Dr. Douglas,Dr. Horovitz, Mr. Leschly, Mr. Littlechild, Dr. Loscalzoand Mr. Scoon, our non-employee directors at that time, options topurchase 15,000 shares of our common stock at an exercise price of $4.12 pershare. Also on May 17, 2006, in recognition of his initial election to ourboard of directors, we granted Mr. Sobecki an option to purchase 20,000shares of our common stock at an exercise price of $4.12 per share.

        Thefollowing table summarizes all compensation paid to or earned by our directorsfor fulfillment of their duties as directors in fiscal year 2006.

**DirectorCompensation Table**
| **Name**                          | ** ** | **Fees  Earned or  Paid in  Cash($)** | ** ** | **Stock  Awards($)** | ** ** | **Option  Awards($)(1)** | ** ** | **Non-Equity  Incentive  Plan  Compensation($)** | ** ** | **Change in Pension  Value and  Nonqualified  Deferred  Compensation  Earnings($)** | ** ** | **All Other  Compensation($)** | ** ** | **Total($)** | ** ** |
|-----------------------------------|------------|-------------------------------------------------|------------|----------------------|------------|--------------------------|------------|--------------------------------------------------|------------|----------------------------------------------------------------------------------------------------|------------|-------------------------------------|------------|--------------|------------|
|                              |       |                                            |       |                 |       |                     |       |                                             |       |                                                                                               |       |                                |       |         |       |
| Argeris N.  Karabelas, Ph.D.(2)   |       | 41,000                                          |       | —               |       | 1,528,124                |       | —                                           |       | —                                                                                             |       | —                              |       | 1,569,124    |       |
| Michael D.  Loberg, Ph.D.(3)      |       | —                                          |       | —               |       | —                   |       | —                                           |       | —                                                                                             |       | —                              |       | —       |       |
| Robert S.  Cohen(4)               |       | 45,000                                          |       | —               |       | 87,178                   |       | —                                           |       | —                                                                                             |       | —                              |       | 132,178      |       |
| Frank L. Douglas,  M.D., Ph.D.(5) |       | 25,000                                          |       | —               |       | 32,244                   |       | —                                           |       | —                                                                                             |       | —                              |       | 57,244       |       |
| Zola Horovitz,  Ph.D.(6)          |       | 36,000                                          |       | —               |       | 97,778                   |       | —                                           |       | —                                                                                             |       | —                              |       | 133,778      |       |
| Mark Leschly(7)                   |       | 41,000                                          |       | —               |       | 97,778                   |       | —                                           |       | —                                                                                             |       | —                              |       | 138,778      |       |
| John W.  Littlechild(8)           |       | 30,000                                          |       | —               |       | 97,778                   |       | —                                           |       | —                                                                                             |       | —                              |       | 127,778      |       |
| Joseph Loscalzo,  M.D., Ph.D.(9)  |       | 30,000                                          |       | —               |       | (115,338                 | )          | —                                           |       | —                                                                                             |       | 27,500                              |       | (57,838      | )          |
| Davey S.  Scoon(10)               |       | 45,500                                          |       | —               |       | 119,893                  |       | —                                           |       | —                                                                                             |       | —                              |       | 165,393      |       |
| Christopher J.  Sobecki(11)       |       | 12,000                                          |       | —               |       | 8,776                    |       | —                                           |       | —                                                                                             |       | —                              |       | 20,776       |       |

 

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(1)           These values reflect grant date fair value using the Black-Scholesoption pricing model and applying the principles outlined in SFAS 123R.For stock options granted to non-employees, we recognize compensation expensein accordance with the requirements of Emerging Issues Task ForceNo. 96-18, or EITF 96-18. The provisions of EITF 96-18 that are related tonon-employee stock options utilize the Black-Scholes option pricing model todetermine the fair value of these stock options at each reporting date. Two ofour directors, Drs. Douglas and Loscalzo, have previously received options inconnection with their service on our then-current Scientific Advisory Board forwhich we apply the provisions of EITF 96-18. The assumptions used to calculatethe fair value pursuant to SFAS 123R and EITF 96-18 are discussed in ourannual report on Form 10-K for the fiscal year ended December 31,2006, which is on file with the SEC.

(2)           In addition to cash compensation earned and paid in fiscal year 2006,the amount listed under “Fees Earned or Paid in Cash” with respect toDr. Karabelas include $3,000 earned in 2005 but paid in 2006. The amountlisted under “Option Awards” includes the grant fair value date of optionsDr. Karabelas received pursuant to his appointment as our interim chiefexecutive officer and his agreement to forego any salary or bonus payments towhich he would otherwise have been entitled pursuant to the terms of hisemployment offer letter. Additional information regarding compensation earnedby Dr. Karabelas in his capacity as our interim president and chief executiveofficer from March 2006 to January 2007 is included under the heading“—Summary Compensation Table” above.

(3)           In connection with his separation from our company in March 2006,Dr. Loberg resigned as a director. Additional information regardingcompensation earned by Dr. Loberg in his capacity as our president andchief executive officer until his March 2006 separation is included underthe heading “—Summary Compensation Table” above.

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(4)           In addition to cash compensation earned and paid in fiscal year 2006,the amount listed under “Fees Earned or Paid in Cash” with respect toMr. Cohen includes $3,000 earned in 2005 but paid in 2006 and $5,000earned in 2006 but paid in 2007.

(5)           The amount listed under “Fees Earned or Paid in Cash” with respect toDr. Douglas represents cash compensation earned and paid in fiscal year2006. The amount listed under “Option Awards” with respect to Dr. Douglasincludes a reversal of stock-based compensation expense for the year endedDecember 31, 2006 that NitroMed recognized with respect to optionsDr. Douglas previously received in connection with his service on ourthen-current Scientific Advisory Board.

(6)           In addition to cash compensation earned andpaid in fiscal year 2006, the amount listed under “Fees Earned or Paid in Cash”with respect to Dr. Horovitz includes $5,000 earned in 2006 but paid in2007.

(7)           In addition to cash compensation earned andpaid in fiscal year 2006, the amount listed under “Fees Earned or Paid in Cash”with respect to Mr. Leschly includes $3,000 earned in 2005 but paid in2006 and $2,000 earned in 2006 but paid in 2007.

(8)           In addition to cash compensation earned andpaid in fiscal year 2006, the amount listed under “Fees Earned or Paid in Cash”with respect to Mr. Littlechild includes $1,000 earned in 2006 but paid in2007. Mr. Littlechild has returned payment with respect to $18,000 of theamount listed under “Fees Earned or Paid in Cash” that was earned in fiscalyear 2006.

(9)           The amount listed under “Fees Earned or Paidin Cash” with respect to Dr. Loscalzo represents cash compensation earnedand paid in fiscal year 2006. The amount listed under “Option Awards” withrespect to Dr. Loscalzo includes a reversal of stock-based compensationexpense for the year ended December 31, 2006 that NitroMed recognized withrespect to options Dr. Loscalzo previously received in connection with hisservice on our then-current Scientific Advisory Board. The amount listed under “AllOther Compensation” with respect to Dr. Loscalzo represents payments madeto Dr. Loscalzo in 2006 for services rendered in 2005 for(i) consulting and (ii) participation on our then-active scientificadvisory board.

(10)     In addition to cash compensation earned and paid in fiscal year 2006,the amount listed under “Fees Earned or Paid in Cash” with respect toMr. Scoon includes $5,000 earned in 2006 but paid in 2007.

(11)     The amount listed under “Fees Earned or Paid in Cash” with respect toMr. Sobecki represents cash compensation earned and paid in fiscal year2006.

**PART IV**

**Item 15.  Exhibits, Financial Statement Schedules.**

(a)       Consolidated FinancialStatements.

For alist of the consolidated financial information included herein, see Index tothe Consolidated Financial Statements on page F-1 of this Annual Report on Form10-K.

(b)      List of Exhibits.

Theexhibits listed in the Exhibit Index immediately preceding the exhibits arefiled as part of this Annual Report on Form 10-K.

(c)       Financial StatementSchedules.

Allschedules have been omitted because the information required to be set forththerein is not applicable or is shown in the accompanying ConsolidatedFinancial Statements or notes thereto.

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**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) ofthe Securities Exchange Act of 1934, the registrant has duly caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.
|                     | NitroMed, Inc. |
|---------------------|----------------|
| Date: May 22,  2007 |           |
|                |           |
|                | By:            | /s/ Kenneth M. Bate |   |
|                |           | Kenneth M. Bate |
|                |           | President and  Chief Executive Officer |

 

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**EXHIBITINDEX**
| Exhibit No | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                             |
|-----------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |       |                                                                                                                                                                                                                                                                                                                                                        |
| 3.1             |       | Restated Certificate of Incorporation of the Company  (Incorporated by reference to the exhibits to the Company’s Registration  Statement on Form S-1 (File No. 333-108104))                                                                                                                                                                 |
| 3.2             |       | Amended and Restated Bylaws of the Company  (Incorporated by reference to the exhibits to the Company’s Registration  Statement on Form S-1 (File No. 333-108104))                                                                                                                                                                           |
| 10.1            |       | Restated 1993 Equity Incentive Plan (Incorporated by  reference to the exhibits to the Company’s Registration Statement on  Form S-1 (File No. 333-108104))                                                                                                                                                                                  |
| *10.2           |       | Amended and Restated 2003 Stock Incentive Plan, as  amended                                                                                                                                                                                                                                                                                                 |
| 10.3            |       | Form of Incentive Stock Option Agreement  Granted Under Amended and Restated 2003 Stock Incentive Plan (Incorporated by  reference to the exhibits to the Company’s Annual Report on Form 10-K  for the year ended December 31, 2004 (File No. 000-50439))                                                                         |
| 10.4            |       | Form of Nonstatutory Stock Option Agreement  Granted Under Amended and Restated 2003 Stock Incentive Plan (Incorporated by  reference to the exhibits to the Company’s Annual Report on Form 10-K  for the year ended December 31, 2004 (File No. 000-50439))                                                                      |
| *10.5           |       | 2003 Employee Stock Purchase Plan, as amended                                                                                                                                                                                                                                                                                                               |
| 10.6†      |       | Development and License Agreement between the  Company and Boston Scientific Corporation dated November 20, 2001  (Incorporated by reference to the exhibits to the Company’s Registration  Statement on Form S-1 (File No. 333-108104))                                                                                                |
| 10.7†      |       | Research and License Agreement between the Company  and Brigham and Women’s Hospital, Inc. dated August 1, 1992, as  amended November 22, 1996 (Incorporated by reference to the exhibits to  the Company’s Registration Statement on Form S-1 (File  No. 333-108104))                                                   |
| 10.8†      |       | Collaboration and License Agreement between the  Company and Professor Jay N. Cohn dated January 22, 1999, as amended  January 29, 2001 and March 15, 2002 (Incorporated by reference to  the exhibits to the Company’s Registration Statement on Form S-1 (File  No. 333-108104))                                            |
| 10.9            |       | Amendment No. 1 to Collaboration and License  Agreement between the Company and Professor Jay N. Cohn dated August 10,  2000 2004 (Incorporated by reference to the exhibits to the Company’s Annual  Report on Form 10-K for the year ended December 31, 2004 (File  No. 000-50439))                                         |
| 10.10†     |       | Research and License Agreement between the Company  and Trustees of Boston University dated June 1, 1993, as amended  January 1, 1999 (Incorporated by reference to the exhibits to the  Company’s Registration Statement on Form S-1 (File No. 333-108104))                                                                       |
| 10.11†     |       | Agreement between the Company and FoxKiser dated  April 26, 2001 (Incorporated by reference to the exhibits to the  Company’s Registration Statement on Form S-1 (File No. 333-108104))                                                                                                                                                 |
| 10.12†     |       | Agreement between the Company and John D. Folts  dated March 13, 1995, as amended, November 22, 1996 and December 2,  1998 (Incorporated by reference to the exhibits to the Company’s Registration  Statement on Form S-1 (File No. 333-108104))                                                                             |
| 10.13           |       | Letter Agreement between the Company and L. Gordon  Letts dated November 4, 1993 (Incorporated by reference to the exhibits  to the Company’s Registration Statement on Form S-1 (File  No. 333-108104))                                                                                                                                |
|  10.14     |       | Fourth Amended and Restated Stockholders’ Agreement  among the Company and the stockholders named therein dated May 22, 2001,  as amended November 20, 2001, May 12, 2003 and July 31, 2003  (Incorporated by reference to the exhibits to the Company’s Registration  Statement on Form S-1 (File No. 333-108104)) |
| 10.15           |       | Form of Warrant to purchase shares of the  Company’s Common Stock, together with a schedule of warrant holders  (Incorporated by reference to the exhibits to the Company’s Registration  Statement on Form S-1 (File No. 333-108104))                                                                                             |
| 10.16           |       | Letter Agreement between the Company, Boston  University School of Medicine and Martin Feelisch, Ph.D. dated May 5,  2003 (Incorporated by reference to the exhibits to the Company’s Annual  Report on Form 10-K for the year ended December 31, 2003 (File  No. 000-50439))                                                      |

 

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| 10.17        |   | Consulting Agreement between the Company and Joseph  Loscalzo, M.D., Ph.D. dated October 27, 2003, as amended on  April 1, 2004 (Incorporated by reference to the exhibits to the  Company’s Annual Report on Form 10-K for the year ended  December 31, 2004 (File No. 000-50439))                     |
|--------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.18        |   | Letter Agreement between the Company and Merck  Frosst Canada & Co. dated November 8, 2004 (Incorporated by  reference to the exhibits to the Company’s Current Report on Form 8-K  filed on November 8, 2004 (File No. 000-50439))                                                                 |
| 10.19        |   | Letter Agreement between the Company and James G.  Ham, III dated September 3, 2004 (Incorporated by reference to the  exhibits to the Company’s Annual Report on Form 10-K for the year ended  December 31, 2004 (File No. 000-50439))                                                                 |
| 10.20 † |   | Supply Agreement between the Company and Schwarz  Pharma Manufacturing, Inc. dated as of February 16, 2005  (Incorporated by reference to the exhibits to the Company’s Annual Report on  Form 10-K for the year ended December 31, 2004 (File  No. 000-50439))                                         |
| 10.21        |   | Letter Agreement between the Company and Michael D.  Loberg, Ph.D., dated as of June 16, 2006 (Incorporated by reference to  the exhibits to the Company’s Current Report on Form 8-K filed on  June 22, 2006 (File No. 000-50439))                                                                          |
| 10.22        |   | Executive Severance Benefit Plan (Incorporated by  reference to the exhibits to the Company’s Quarterly Report on Form 10-Q  for the quarter ended June 30, 2006 (File No. 000-50439))                                                                                                                            |
| 10.23        |   | Amendment No. 1 to Executive Severance Benefit  Plan (Incorporated by reference to the exhibits to the Company’s Current  Report on Form 8-K filed on August 22, 2006 (File No. 000-50439))                                                                                                                  |
| 10.24        |   | Form of Agreement entered into by and between  the Company and certain of its executive officers, together with a schedule  of such officers (Incorporated by reference to the exhibits to the Company’s  Quarterly Report on Form 10-Q for the quarter ended March 31, 2006  (File No. 000-50439))          |
| 10.25        |   | Form of Amendment No. 1 to Agreement  entered into by and between the Company and certain of its executive  officers, together with a schedule of such officers (Incorporated by  reference to the exhibits to the Company’s Current Report on Form 8-K  filed on August 22, 2006 (File No. 000-50439)) |
| 10.26        |   | Employment Offer Letter between the Company and  Kenneth M. Bate, dated as of January 19, 2007 (Incorporated by reference  to the exhibits to the Company’s Current Report on Form 8-K filed on  January 25, 2007 (File No. 000-50439))                                                                      |
|  10.27  |   | Retention Agreement between the Company and Kenneth  M. Bate, dated as of January 23, 2007 (Incorporated by reference to the  exhibits to the Company’s Current Report on Form 8-K filed on  January 25, 2007 (File No. 000-50439))                                                                          |
| 10.28        |   | Severance Agreement between the Company and Kenneth  M. Bate, dated as of January 23, 2007 (Incorporated by reference to the  exhibits to the Company’s Current Report on Form 8-K filed on  January 25, 2007 (File No. 000-50439))                                                                          |
| *10.29       |   | Employment Offer Letter between the Company and  Gerald Bruce, dated as of January 10, 2006, as amended on April 24,  2006                                                                                                                                                                                                  |
| *10.30† |   | License Agreement between the Company and Elan  Pharma International Limited, dated as of February 9, 2007                                                                                                                                                                                                                       |
| *10.31       |   | Lease between the Company and The Realty Associates  Fund VI, L.P., dated as of February 23, 2007                                                                                                                                                                                                                                |
| 10.32        |   | Lease between the Company and PM Atlantic Lexington,  LLC dated January 30, 2004 (Incorporated by reference to the exhibits to  the Company’s Annual Report on Form 10-K for the year ended  December 31, 2003 (File No. 000-50439))                                                                         |
| 14.1         |   | Code of Business Conduct and Ethics (Incorporated by  reference to the exhibits to the Company’s Annual Report on Form 10-K  for the year ended December 31, 2003 (File No. 000-50439))                                                                                                                           |
| *21.1        |   | Subsidiaries of the Company                                                                                                                                                                                                                                                                                                           |
| *23.1        |   | Consent of Ernst & Young LLP, Independent  Registered Public Accounting Firm                                                                                                                                                                                                                                                 |
| 31.1         |   | Certification of the Chief Executive Officer  pursuant to Rule 13a-14(a) and 15d-14 of the Securities Exchange  Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley  Act of 2002                                                                                                                     |
| 31.2         |   | Certification of the Chief Financial Officer  pursuant to Rule 13a-14(a) and 15d-14 of the Securities Exchange  Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley  Act of 2002                                                                                                                     |
| 32.1         |   | Certification of the Chief Executive Officer  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                     |

 

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

 

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†           Confidentialtreatment requested as to certain portions, which portions have been filedseparately with the Securities and Exchange Commission

*                    Filed with theRegistrant’s Original Form 10-K.

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