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):  November 7, 2006

LIPID SCIENCES, INC.

(Exact name of registrant as specified in its charter)

Delaware	0-497	43-0433090
(State or other jurisdiction of	(Commission File Number)	(I.R.S Employer Identification No.)
incorporation)
7068 Koll Center Parkway, Suite 401, Pleasanton, California		94566
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:  (925) 249-4000

(Former name or former address, if changed since last report.)  N/A

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):

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

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

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

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

Item 1.01 Entry into a Material Definitive Agreement.

On November 7, 2006, Lipid Sciences, Inc. (the “Company”) entered into a Collaborative Research & License Agreement with Elanco Animal Health, a division of Eli Lilly and Company (“Elanco”), to develop one or more immunological products for animal health applications beginning with a vaccine directed against certain lipid-enveloped organisms.

Under the agreement, the Company granted to Elanco a worldwide exclusive license to research, develop, manufacture, and sell certain immunological products for animal health, which will be developed using the Company’s delipidation immunological technology.  In exchange for the license, subject to completion of Elanco’s due diligence and sales of products meeting various thresholds, the Company may receive a technology access fee, milestone payments and royalties.  Elanco will also pay for all the associated research and development expenses for each targeted product.

A copy of the press release issued by the Company disclosing the entering into the Collaborative Research & License Agreement is attached hereto as Exhibit 99.1 and incorporated by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit 99.1 Press release entitled “Lipid Sciences, Inc. Enters Into Collaborative Research and License Agreement with Elanco Animal Health Division of Eli Lilly and Company for Development of Animal Health Products.”

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SIGNATURE

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.

	Lipid Sciences, Inc.
Date: November 8, 2006	By:	/s/ Sandra Gardiner
		Sandra Gardiner
		Chief Financial Officer

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EXHIBIT INDEX

Exhibit	Description
Exhibit 99.1	Press release entitled “Lipid Sciences, Inc. Enters Into Collaborative Research and License Agreement with Elanco Animal Health Division of Eli Lilly and Company for Development of Animal Health Products.”

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EX-99.1

Exhibit 99.1

FOR FURTHER INFORMATION CONTACT:

Deborah S. Lorenz

Vice President, Investor Relations and

Corporate Communications

Lipid Sciences, Inc.

925-249-4031

dlorenz@lipidsciences.com

FOR IMMEDIATE RELEASE:

November 8, 2006

LIPID SCIENCES, INC. ENTERS INTO COLLABORATIVE RESEARCH AND LICENSE AGREEMENT WITH ELANCO ANIMAL HEALTH DIVISION OF ELI LILLY AND COMPANY FOR DEVELOPMENT OF ANIMAL HEALTH PRODUCTS

Collaboration to Focus On Immunological Products Directed Against Lipid-Enveloped Organisms

PLEASANTON, Calif., November 8, 2006 – Lipid Sciences, Inc. (Nasdaq:LIPD) today announced that the Company had entered into a collaborative research and license agreement with Elanco Animal Health (Elanco), a division of Eli Lilly and Company (NYSE: LLY), to research, develop, manufacture, and sell one or more immunological products for animal health applications beginning with a vaccine directed against specific lipid-enveloped organisms.

Pursuant to the terms of the agreement, Elanco will pay for all the associated research and development expenses for each targeted product.  In addition, Lipid Sciences may receive a series of payments including:  a technology access fee, milestone payments, and royalties from product sales.

Dr. S. Lewis Meyer, Lipid Sciences, Inc. President and Chief Executive Officer, commented, “This collaborative research and license agreement with Elanco provides an opportunity to extend our viral immunotherapy platform beyond human disease into the area of animal health—an environment where the specific regulatory approval cycle is rapid.  Through our proprietary, viral delipidation technology, we expect to demonstrate our ability to develop a vaccine that works better than products currently on the market.  The resulting products will have the potential to satisfy a significant unmet commercial market need and create a synergistic business opportunity for Lipid Sciences.”

Lipid Sciences, Inc. is a development-stage biotechnology company engaged in the research and development of products and processes intended to treat major medical indications, in which lipids, or fat components, play a key role.  The Company’s HDL Therapy platform (HDL Selective Delipidation and HDL mimetic peptides) is aimed at developing treatments for the reversal of atherosclerosis, a systemic disease of the blood vessels caused by the build-up of cholesterol-filled plaques in the vascular system and, most critically, in the coronary arteries. Regression of such plaques may have a major impact on reducing the risk of acute coronary events.  The Company’s Viral Immunotherapy platform is focused on the removal of the lipid coatings from lipid-enveloped viruses and other lipid-containing infectious agents by application of Lipid Sciences’ proprietary delipidation technology.  The Company believes that removing the virus’ protective lipid coating enhances the processing and presentation of viral proteins to stimulate

the body’s immune system to effectively fight the disease. Conditions that could potentially be impacted by this technology include HIV, Hepatitis B and Hepatitis C, West Nile, SARS, and a broad range of animal health applications.

Forward-Looking Statements:  This release contains forward-looking statements concerning plans, objectives, goals, strategies, study results, anticipations, expectations, future events or performance as well as all other statements that are not statements of historical fact.  The forward-looking statements contained in this release reflect our current beliefs and expectations on the date of this release.  Actual results, performance or outcomes may differ materially from what is expressed in the forward-looking statements.  Readers are referred to the documents filed by us with the SEC, specifically the most recent reports on Form 10-K and Form 10-Q which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements.  In addition to those risk factors, other factors that could cause actual results to differ materially include the following:  Our inability to obtain adequate funds; the significant losses we have incurred to date, and our expectation that we will incur substantial losses in the future; the failure of our technology to prove safe or effective; our inability to obtain regulatory approval for our technology, which is only in the clinical development stage; delay or failure to complete clinical studies; our dependence on our license agreement with Aruba International B.V.; our reliance on collaborations with strategic partners and consultants; competition in our industry, including the development of new products by others that may provide alternative or better therapies; failure to secure and enforce our intellectual property rights; risks associated with use of biological and hazardous materials; acceptance of our potential products by healthcare providers and patients; our exposure to product liability claims; and our dependence on key personnel.

This release should be read in conjunction with the consolidated financial statements and notes thereto included in our most recent reports on Form 10-K and Form 10-Q.  Copies are available through the SEC’s Electronic Data Gathering Analysis and Retrieval system (EDGAR) at www.sec.gov.  Lipid Sciences assumes no obligation to update the forward-looking statements included in this document.

Press releases for Lipid Sciences, Inc. are available on our website: www.lipidsciences.com.  If you would like to receive our press releases via email, please contact: info@lipidsciences.com.