8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________

FORM 8-K

________________

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): July 20, 2006

ATHEROGENICS, INC.

(Exact Name of Registrant as Specified in its Charter)

Georgia	0-31261	58-2108232
(State or other jurisdiction	(Commission	(I.R.S. Employer
of incorporation)	File Number)	Identification Number)

8995 Westside Parkway

Alpharetta, GA 30004

(Address of principal executive offices)

Registrant's telephone number, including area code (678) 336-2500

_________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On July 20, 2006, AtheroGenics, Inc. issued a press release to report the company’s financial results for the second quarter and six months ended June 30, 2006. A copy of the press release is attached to this current report on Form 8-K as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits.

The following exhibit is furnished as part of this current report on Form 8-K.

Exhibit No.		Description
99.1	-	Press Release dated July 20, 2006

____________________

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	ATHEROGENICS, INC.
Date: July 20, 2006	/s/MARK P. COLONNESE
	Mark P. Colonnese
	Executive Vice President, Commercial Operations
	and Chief Financial Officer

____________________

EXHIBIT INDEX

Exhibit No.		Description
99.1	-	Press Release dated July 20, 2006

EX-99.1

EXHIBIT 99.1

[ATHEROGENICS, INC. LOGO]

FOR IMMEDIATE RELEASE

AtheroGenics Reports Second Quarter 2006 Financial Results

ATLANTA, GA - July 20, 2006 - AtheroGenics, Inc. (Nasdaq: AGIX), a pharmaceutical company focused on the treatment of chronic inflammatory diseases, today reported financial results for the second quarter and six months ended June 30, 2006.

During the second quarter, AtheroGenics revenue totaled $6.3 million. For the six months ended June 30, 2006, revenue totaled $10.4 million. The revenue recorded in both periods is related to the Company’s collaboration agreement with AstraZeneca and reflects the amortization of the $50 million up-front license fee received in February 2006.

Research and development expense declined to $16.4 million for the second quarter of 2006, from $19.4 million for the comparable period in 2005. For the six months ended June 30, 2006, research and development expense totaled $32.7 million, compared to $35.5 million for the same period in 2005. The decrease in both periods was due to lower expenses for the Company’s ongoing AGI-1067 clinical program, as well as reduced spending on clinical supplies. This decline was partially offset by non-cash stock-based compensation expense of $1.2 million and $2.3 million for the second quarter and six month period, respectively, resulting from AtheroGenics’ adoption at the beginning of 2006 of Statement of Financial Accounting Standards No. 123(R), which requires the expensing of employee stock options. The Company anticipates that research and development expense will increase in the second half of 2006, compared to the amount spent in the first half, as it undertakes activities to close down the ARISE clinical trial.

Marketing, general and administrative expense totaled $3.2 million for the second quarter ended June 30, 2006, compared to $2.2 million for the same period in the prior year. For the six months ended June 30, 2006, marketing, general and administrative expense totaled $6.9 million, compared to $4.1 million for the same period in 2005. The increase during both periods was principally due to stock-based compensation expenses of $1.1 million and $2.0 million for the second quarter and six month period, respectively, and higher professional fees.

Interest and other income increased to $2.4 million in the second quarter ended June 30, 2006, compared to $1.7 million recorded for the quarter ended June 30, 2005. For the six months ended June 30, 2006, interest and other income increased to $4.6 million, compared to $3.1 million recorded for the six months ended June 30, 2005. The increase in both the quarterly and six month periods was a result of higher interest rates on the Company’s invested cash.

AtheroGenics recorded interest expense of $2.1 million during the second quarter ended June 30, 2006, compared to $2.3 million in the same quarter last year. Interest expense for the first six months of 2006 was $4.2 million, as compared to $4.4 million for the first half of 2005. The decrease in interest expense was primarily due to the effect of a lower debt balance during the second quarter of 2006 compared to the same period in 2005 as a result of the exchange of a portion of the Company’s 4.5 percent convertible notes for common stock in January 2006.

For the six months ended June 30, 2006, AtheroGenics recorded $3.5 million in other expense, which was attributable to non-cash costs related to the exchange of a portion of the Company’s 4.5 percent convertible notes for common stock in January 2006.

AtheroGenics reported a net loss of $13.1 million, or $0.33 per share, for the second quarter of 2006, as compared to $22.2 million, or $0.59 per share, reported for the same period in 2005. Net loss reported for the first six months of 2006 was $32.3 million, or $0.82 per share, as compared to a net loss of $40.8 million or $1.09 per share for the first half of 2005.

At June 30, 2006, cash, cash equivalents and short-term investments totaled $194 million.

“The first half of this year has been very productive on several fronts,” stated Russell M. Medford, M.D., Ph.D., President and Chief Executive Officer of AtheroGenics. “In addition to successfully completing preparations for closing down the ARISE clinical trial with investigators from the U.S., the U.K., Canada and South Africa, the Company continues its engagement in working with AstraZeneca on various pre-commercialization activities related to AGI-1067.”

Webcast and Conference Call Information

AtheroGenics will be hosting a conference call and webcast today at 9:00 a.m. ET to discuss second quarter 2006 financial results and to provide a Company update. The conference call may be accessed by dialing 1-877-407-8031 (domestic) or 1-201-689-8031 (international), five minutes prior to the start time. A replay of the call will be available from 11:00 a.m. ET on July 20, 2006, until 11:59 p.m. ET on July 27, 2006. Rebroadcast numbers are 1-877-660-6853 (domestic) or 1-201-612-7415 (international), account number 286 and conference ID number 206407. For access to the conference call webcast, go to the Company’s Investor Relations Web site at http://www.atherogenics.com/investor/q2earnings.html and click on the Webcast Access link. An archived version of this webcast will be available at the same location until October 21, 2006.

About AtheroGenics

AtheroGenics is focused on the discovery, development and commercialization of novel drugs for the treatment of chronic inflammatory diseases, including heart disease (atherosclerosis), rheumatoid arthritis and asthma. The Company has two drug development programs currently in the clinic. AtheroGenics’ lead compound, AGI-1067, is being evaluated in the pivotal Phase III ARISE clinical trial as an oral therapy for the treatment of atherosclerosis, in collaboration with AstraZeneca. AGI-1096 is a novel, oral agent in Phase I that is being developed for the prevention of organ transplant rejection in collaboration with Astellas. AtheroGenics also has preclinical programs in rheumatoid arthritis and asthma utilizing its proprietary vascular protectant® technology. For more information about AtheroGenics, please visit http://www.atherogenics.com.

This press release may contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this press release that relate to events or developments that we expect or anticipate will occur in the future are deemed to be forward-looking statements, and can be identified by words such as "believes," "intends," "expects" and similar expressions. Such statements are subject to certain factors, risks and uncertainties that may cause actual results, events and performances to differ materially from those referred to in such statements. These risks include statements which address operating performance, events or developments that we expect or anticipate will occur in the future, such as projections about clinical trial results, our future results of operations or our financial condition, research, development and commercialization of our product candidates, anticipated trends in our business, and other risks that could cause actual results to

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differ materially. These and other risks are discussed in AtheroGenics' Securities and Exchange Commission filings, including, but not limited to, the risks discussed in AtheroGenics' Annual Report on Form 10-K for the fiscal year ended December 31, 2005, and our Quarterly Report on Form 10-Q for the first quarter of 2006. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.

AtheroGenics, Inc.	AtheroGenics, Inc.	Investor Relations
Mark P. Colonnese	Donna L. Glasky	Lilian Stern
Chief Financial Officer	Corporate Communications	Stern Investor Relations, Inc.
678-336-2511	678-336-2517	212-362-1200
investor@atherogenics.com	investor@atherogenics.com	lilian@sternir.com

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AtheroGenics, Inc.

Statements of Operations

(Unaudited)

	Three months ended				Six months ended
	June 30,				June 30,
	2006		2005		2006		2005
Revenues	$     6,250,000		$                —		$   10,416,667		$                  —
Operating expenses:
Research and development	16,447,180		19,380,868		32,707,802		35,535,938
Marketing, general and administrative	3,171,869		2,231,731		6,879,202		4,052,549
Total operating expenses	19,619,049		21,612,599		39,587,004		39,588,487
Operating loss	(13,369,049	)	(21,612,599	)	(29,170,337	)	(39,588,487	)
Interest and other income	2,401,424		1,677,608		4,606,658		3,125,512
Interest expense	(2,088,598	)	(2,270,388	)	(4,196,115	)	(4,373,961	)
Other expense	—		—		(3,521,236	)	—
Net loss	$ (13,056,223	)	$ (22,205,379	)	$ (32,281,030	)	$ (40,836,936	)
Net loss per share -
basic and diluted	$            (0.33	)	$            (0.59	)	$            (0.82	)	$            (1.09	)
Weighted average shares
outstanding - basic and diluted	39,423,059		37,716,509		39,313,178		37,625,069

Balance Sheet Data

(Unaudited)

	June 30,		December 31,
	2006		2005
Cash, cash equivalents and short-term investments	$ 193,817,086		$ 182,504,523
Working capital	165,328,551		173,164,668
Total assets	210,639,395		197,497,527
Long-term obligations, less current portion	286,000,000		300,053,796
Accumulated deficit	(326,955,904	)	(294,674,874	)
Total shareholders’ deficit	(124,074,171	)	(115,436,216	)

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