posam

As filed with the Securities and Exchange Commission on June 4, 2010

Registration No. 333- 150595

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Post-effective Amendment No. 2

Form S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

OXiGENE, INC.

(Exact name of registrant as specified in its charter)


Delaware	2836	13-3679168
(State or other jurisdiction of	(Primary Standard Industrial	(IRS Employer
incorporation or organization)	Classification Code Number)	Identification No.)

701 Gateway Blvd., Suite 210
South San Francisco, California 94080
(650) 635-7000
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Peter J. Langecker, M.D., Ph.D.
Chief Executive Officer
OXiGENE, Inc.
701 Gateway Blvd., Suite 210
South San Francisco, California 94080
(650) 635-7000
(Name, address, including zip code, and telephone number, including area code, of agent for service)

With copies to:
Jonathan L. Kravetz, Esq.
Megan N. Gates, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
(617) 542-6000

Approximate date of commencement of proposed sale to the public: From time to time after this Post-effective Amendment No. 2 to the Registration Statement becomes effective.

If any of the securities being registered on this Form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box. þ

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. o

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


Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company þ
		(Do not check if a smaller reporting company)

The Registrant hereby amends this Post-effective Amendment No. 2 to the Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Post-effective Amendment No. 2 to the Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.

EXPLANATORY NOTE

The Post-effective Amendment No. 2 to the Registration Statement on Form S-1 (No. 333-150595) relating to the resale of up to 5,323,435 shares of common stock of OXiGENE, Inc. by Kingsbridge Capital Limited is being filed to incorporate the financial statements of OXiGENE for the year ended December 31, 2009 and for the three months ended March 31, 2010. All filing fees payable in connection with the filing of the Registration Statement were previously paid.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the post-effective amendment No. 2 to the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JUNE 4, 2010

PROSPECTUS

OXiGENE, INC.

5,323,435 Shares

COMMON STOCK

This prospectus relates to the resale of up to 5,323,435 shares of our common stock that we may issue to Kingsbridge Capital Limited, which we refer to as the selling stockholder or Kingsbridge, as described in the section beginning on page 20 of this prospectus. The shares of common stock to be offered under this prospectus by Kingsbridge are issuable pursuant to a common stock purchase agreement between Kingsbridge and ourselves dated February 19, 2008, as amended, and a warrant to purchase 250,000 shares of our common stock that we issued to Kingsbridge on that date.

Since May 15, 2008, we have made one draw down pursuant to the common stock purchase agreement. On May 23, 2008, we delivered notice to Kingsbridge to effect a draw down of up to $900,000. The first trading day of the eight-day pricing period for this draw down was May 27, 2008, and, in connection with this draw down, on June 2, 2008 and June 6, 2008, we issued an aggregate of 634,600 shares of our common stock to Kingsbridge at an aggregate purchase price of $900,000.

We are not selling any securities under this prospectus and will not receive any of the proceeds from the sale of shares by the selling stockholder.

The selling stockholder may sell the shares of common stock described in this prospectus in a number of different ways and at varying prices. We provide more information about how the selling stockholder may sell its shares of common stock in the section titled “Plan of Distribution” on page 21. We will not be paying any underwriting discounts or commissions in this offering. We will pay the expenses incurred in registering the shares, including legal and accounting fees.

Our common stock is listed on The NASDAQ Global Market under the symbol “OXGN.” On June 3, 2010, the last reported sale price of our common stock was $0.85 per share. The warrant that we issued to Kingsbridge is not and will not be listed for trading on The NASDAQ Global Market.

Investing in our securities involves risks. See “Risk Factors” beginning on page 11 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is , 2010.

TABLE OF CONTENTS


	Page
Prospectus Summary		4
Risk Factors		11
Special Note Regarding Forward-Looking Statements		19
Use of Proceeds		20
Selling Stockholder		20
Plan of Distribution		21
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		23
Selected Financial Data		23
Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
Business		42
Management		60
Executive Compensation		65
Security Ownership of Certain Beneficial Owners and Management		73
Limitation of Directors’ Liability and Indemnification		74
Certain Relationships and Related Transactions		75
Description of Capital Stock		76
Warrant		77
Legal Matters		77
Experts		77
Where You Can Find More Information		78
Index to Financial Statements		F-1
EX-23.1 Consent of Ernst & Young LLP.

You should rely only on the information contained or incorporated by reference into this prospectus. We have not, and the selling stockholder has not, authorized anyone to provide you with additional or different information. These securities are not being offered in any jurisdiction where the offer is not permitted. You should assume that the information in this prospectus is accurate only as of the date on the front of the document and that any information we have incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus or of any sale of our common stock. Unless the context otherwise requires, references to “we,” “our,” “us,” or the “Company” in this prospectus mean OXiGENE, Inc.

PROSPECTUS SUMMARY

The following is only a summary. We urge you to read the entire prospectus, including the more detailed consolidated financial statements, notes to the consolidated financial statements and other information included herein. Investing in our securities involves risks. Therefore, please carefully consider the information provided under the heading “Risk Factors” starting on page 11.

Our Business

We are a clinical-stage, biopharmaceutical company developing novel therapeutics to treat cancer and eye diseases. Our primary focus is the development and commercialization of product candidates referred to as vascular disrupting agents, or VDAs, that selectively disable and destroy abnormal blood vessels that provide solid tumors a means of growth and survival and also are associated with visual impairment in a number of ophthalmological diseases and conditions. To date, more than 400 subjects have been treated with ZYBRESTAT in human clinical trials, and the drug candidate has generally been observed to be well-tolerated.

ZYBRESTAT for Oncology

FALCON (Fosbretabulin Advanced Lung Combination for Oncology) trial — randomized, controlled Phase II study with ZYBRESTAT in non-small cell lung cancer

We are currently evaluating ZYBRESTAT in a 60-patient, randomized, controlled Phase II clinical trial, which we refer to as the FALCON trial, as a potential first-line treatment for non-small cell lung cancer, or NSCLC. In the FALCON trial, patients are randomized either to the treatment arm of study, in which they receive ZYBRESTAT in combination with the chemotherapeutic agents, carboplatin and paclitaxel, and the anti-angiogenic drug, bevacizumab, or to the control arm of the study, in which they receive a standard combination regimen of carboplatin, paclitaxel and bevacizumab. We believe this study, if successful, will provide support for initiating discussions with the U.S. Food and Drug Administration or FDA for a pivotal registration study with ZYBRESTAT in NSCLC and more generally, provide clinical validation supporting further evaluation of ZYBRESTAT in combination with commonly used anti-angiogenic therapeutics that act via vascular endothelial growth factor, or VEGF, pathway inhibition.

On November 17, 2009, we reported interim safety data from the FALCON study for the first 30 patients treated in this study. The data from this planned interim safety analysis indicated that the combination of ZYBRESTAT with carboplatin and paclitaxel plus bevacizumab appeared to be well-tolerated, and that there were no significant overlapping toxicities with bevacizumab. The data was presented in a poster by a principal investigator for the Phase 2 trial at the 2009 AACR-NCI-EORTC Molecular Targets and Cancer Therapeutics conference. A further analysis of the clinical activity and tolerability of this combination is expected to be presented at the 2010 annual meeting of the American Society of Clinical Oncology, or ASCO, scheduled for June 4-8, 2010 in Chicago, Illinois.

FACT (Fosbretabulin in Anaplastic Cancer of the Thyroid) trial — Phase 2/3 study with ZYBRESTAT in anaplastic thyroid cancer

In 2007, we initiated a study in which ZYBRESTAT would be evaluated in a 180-patient, Phase 2/3 study, which we refer to as the FACT trial, as a potential treatment for anaplastic thyroid cancer, or ATC, a highly aggressive and lethal malignancy for which there are currently no approved therapeutics and extremely limited treatment options. The primary endpoint for the FACT trial is overall survival. In the FACT trial, patients are randomized either to the treatment arm of the study, in which they receive ZYBRESTAT in combination with the chemotherapeutic agents carboplatin and paclitaxel, or to the control arm of the study, in which they receive only carboplatin and paclitaxel.

In February 2010, due to financial considerations, we decided to stop further enrollment in the Phase 2/3 FACT clinical trial in ATC, but will continue to treat and follow all patients who are currently enrolled. An event-driven survival analysis is anticipated in late 2010 or early 2011, and an interim analysis of the data is planned for the second half of 2010.

European Union for the treatment of advanced ATC and for the treatment of medullary, Stage IV papillary and Stage IV follicular thyroid cancers. These designations were not affected by the halted enrollment in the Phase 2/3 study.

In 2007, we completed a Special Protocol Assessment, or SPA, process with the FDA, for this Phase 2/3 study. The FDA has been informed that enrollment in this study was halted and that we expect that the SPA would no longer be applicable. Any utility of the truncated Phase 2/3 study for regulatory purposes would have to be negotiated with the FDA once study outcomes, and in particular overall survival data, are available.

Phase II trial with ZYBRESTAT in platinum-resistant ovarian cancer

On June 1, 2009, results from a Phase II trial with ZYBRESTAT in combination with the chemotherapeutic agents, carboplatin and paclitaxel, in recurrent, platinum-resistant ovarian cancer, were presented at ASCO. We believe the results of this study support further development of ZYBRESTAT in ovarian cancer, and we are considering options for undertaking further randomized, controlled studies in ovarian cancer, including a study or studies which may potentially be undertaken in collaboration with an oncology cooperative study group and support by the Cancer Therapy Evaluation Program (“CTEP”) of the National Cancer Institute.

We believe that, if successful, the ongoing ZYBRESTAT study program will establish a compelling rationale for further development of ZYBRESTAT as a treatment for:

	•		aggressive and difficult-to-treat malignancies;

	•		use in combination with chemotherapy in a variety of solid tumors, particularly those in which carboplatin and/or paclitaxel chemotherapy are commonly used; and

	•		use in combination with commonly used anti-angiogenic drugs, such as bevacizumab, that act via VEGF pathway inhibition, in various solid tumor indications.

We believe these areas for potential further development collectively represent a significant unmet medical need and thus a significant potential commercial market opportunity that includes cancers of the thyroid, ovary, kidney, liver, head and neck, breast, lung, skin, brain, colon and rectum.

In addition, based upon preclinical results first published by our collaborators in the November 2007 online issue of the journal BLOOD, as well as preclinical data presented in April 2009 at the annual meeting of the American Association of Cancer Research (AACR), we believe that ZYBRESTAT and our other VDA product candidates, particularly OXi4503, may also have utility in the treatment of hematological malignancies such as acute myeloid leukemia.

OXi4503, a unique, second generation VDA for oncology indications

We are currently pursuing development of OXi4503, a second-generation, dual-mechanism VDA, as a treatment for certain solid tumor types. OXi4503 is a molecule chemically related to ZYBRESTAT but differs from ZYBRESTAT in the sense that it possesses intrinsic anti-proliferative properties in addition to being a VDA.

Our preclinical data indicates that in addition to having potent vascular disrupting effects, OXi4503 is unique in that it can be metabolized by oxidative enzymes to an orthoquinone chemical species that has direct tumor cell killing effects. We believe this unique property may result in enhanced anti-tumor activity in certain tumor types as compared with other VDA drug candidates. Based on data from preclinical studies, we believe that OXi4503 may have enhanced activity in tumor types with relatively high levels of oxidative enzymes that can facilitate the metabolism of the active OXi4503 VDA to kill tumor cells. These tumor types include hepatocellular carcinoma, melanoma, and myeloid leukemia. In preclinical studies, OXi4503 has shown potent anti-tumor activity against solid tumors and acute myeloid leukemia models, both as a single agent and in combination with other cancer treatment modalities.

We have completed a Phase I clinical trial of OXi4503 in patients with advanced solid tumors sponsored by Cancer Research UK; and we are currently evaluating OXi4503 in an ongoing clinical Phase 1b trial sponsored by us, initiated in the first quarter of 2009 in patients with solid tumors with hepatic involvement. We intend to conduct an interim analysis of the latter trial in mid-2010, and future developments thereafter will depend on the outcome of this interim analysis. To date, OXi4503 has been observed to have a manageable side-effect profile similar to that of other agents in the VDA class, potential single-agent clinical activity, and effects on tumor blood flow and tumor metabolic activity, as determined with several imaging modalities.

In December 2009 we filed a U.S. Investigational New Drug (IND) Application for OXi4503. At the American Society of Hematology meeting in December 2009, scientific collaborators presented impressive preclinical acute myelogenous leukemia (AML) data showing that OXi4503 resulted in a high level of anti-leukemic activity as a single agent or in combination with Avastin. At that time, we highlighted the fact that results showed that OXi4503 alone and in combination with Avastin was effective in inducing an almost complete regression of leukemic cells in bone marrow. The findings of this study were published in a leading scientific journal in May 2010. Based on these data, our collaborators have approached us about a further clinical study, and we are exploring the possibility of collaborating on an investigator-sponsored Phase 1 trial in AML.

ZYBRESTAT for Ophthalmology

In addition to developing ZYBRESTAT as an intravenously administered therapy for oncology indications, we are undertaking an ophthalmology research and development program with ZYBRESTAT, the objective of which is to develop a topical formulation of ZYBRESTAT for ophthalmological diseases and conditions that are characterized by abnormal blood vessel growth within the eye that results in loss of vision. We believe that a safe, effective and convenient topically-administered anti-vascular therapeutic would have advantages over currently approved anti-vascular, ophthalmological therapeutics, which must be injected directly into patients’ eyes, in some cases on a chronic monthly basis.

In June 2009, we initiated a randomized, double-masked, placebo-controlled Phase II proof-of-mechanism trial, which we refer to as the FAVOR trial, with intravenously-administered ZYBRESTAT in patients with polypoidal choroidal vasculopathy (PCV), a form of choroidal neovascularization against which current therapies, including approved anti-angiogenic drugs, appear to provide limited benefit. The main clinical indication in this disease is a form of polyps formed in the retina of patients which are made up of vessels that have properties very similar to tumor vasculature. The effect of ZYBRESTAT on the polyps is being visualized and documented as part of the study. In parallel with the FAVOR trial, we have conducted preclinical toxicology and efficacy studies with ZYBRESTAT, administered via topical ophthalmological formulations. We have filed and plan to file in the future patent applications on this topical dosing form that, if granted, would provide exclusivity up to 2030. As part of our cost restructuring in February 2010, we reduced the sample size for this study from 40 patients to 20, which reduced cost while allowing for the same decision making capability in the first half of 2010. Further development of this program will depend on the outcome of the analysis of this data and review by experts in the field as well as by our management.

We believe the architecture of the abnormal vasculature in the retina and choroid that contributes to PCV patients’ loss of vision may be particularly susceptible to treatment with a VDA such as ZYBRESTAT. We believe that PCV represents an attractive target indication and development pathway for ZYBRESTAT. Unlike wet age-related macular degeneration, an indication for which several anti-angiogenic drugs are approved or prescribed off-label, we believe that conducting clinical studies of ZYBRESTAT in patients with ophthalmologic indications not yet approved for treatment with such anti-angiogenic drugs could potentially reduce development time and expense. The objectives of the FAVOR trial and the ongoing preclinical program are to:

	•		determine the therapeutic utility of ZYBRESTAT in PCV by measuring the effect of ZYBRESTAT on the vasculature of the polyps associated with PCV;

	•		determine blood concentrations of drug required for activity in humans and thereby estimate, with the benefit of preclinical data, an appropriate dose of topically-administered ZYBRESTAT to be evaluated in subsequent human clinical studies; and

	•		further evaluate the feasibility of and reduce the risk associated with developing a topical formulation of ZYBRESTAT for ophthalmologic indications.

To date, we have completed preclinical experiments demonstrating that ZYBRESTAT has activity in six different preclinical ophthalmology models, including a model in which ZYBRESTAT was combined with an approved anti-angiogenic drug. We have also completed multiple preclinical studies suggesting that ZYBRESTAT, when applied topically to the surface of the eye at doses that appear to be well-tolerated, penetrates to the retina and choroid in quantities that we believe should be more than sufficient for therapeutic activity. Finally, we have completed and reported results at the 2007 annual meeting of the Association for Research in Vision and Ophthalmology, or ARVO, from a Phase II study in patients with myopic macular degeneration in which all patients in the study met the primary clinical endpoint of vision stabilization at three months after study entry.

Based on results of our preclinical trials, we believe that a topically-applied formulation of ZYBRESTAT (e.g., an eye-drop or other topical formulation) is feasible and may have clinical utility in the treatment of patients with a variety of ophthalmological diseases and conditions, such as PCV, age-related macular degeneration, diabetic retinopathy and neovascular glaucoma, all of which are characterized by abnormal blood vessel growth and associated loss of vision. In addition to having potential utility for treating ocular diseases and conditions that affect tissues in the back of the eye, we believe that a topical ophthalmological formulation of ZYBRESTAT could also have utility for the treatment of other ocular diseases and conditions characterized by abnormal neovascularization that affect tissues in the front of the eye, such as the cornea and iris.

Although several anti-angiogenic therapeutics have been approved and are marketed for ophthalmological indications in which patients are experiencing active disease, the requirement that these therapeutics be injected directly into the eye on a repeated basis is a significant limitation for some patients and may result in serious side-effects. We believe that a topical formulation of ZYBRESTAT may:

	•		decrease the requirement for or possibly even replace the use of medications injected into the eye;

	•		have utility for treating patients with newly developed and/or less severe forms of neovascular ophthalmological diseases and conditions, which could potentially prevent these patients from developing active and/or severe forms of the disease that result in vision loss;

	•		have utility in patients with neovascular ophthalmological diseases and conditions that do not respond well to treatment with currently available therapeutics; and

	•		provide an attractive partnering opportunity with a company operating in the ophthalmological disease space.

Company Background

We are a Delaware corporation, incorporated in 1988 in the state of New York and reincorporated in 1992 in the state of Delaware, with our principal corporate office in the United States at 701 Gateway Boulevard, Suite 210, South San Francisco, California 94080 (telephone: (650) 635-7000, fax: (650) 635-7001). We also have an office at 300 Bear Hill Road, Waltham, Massachusetts 02451. Our Internet address is www.OXiGENE.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, are available to you free of charge through the “Investors” section of our web site as soon as reasonably practicable after such materials have been electronically filed with, or furnished to, the Securities and Exchange Commission. Information contained on our web site does not form a part of this prospectus.

Equity Financing Facility with Kingsbridge Capital

Summary of the CEFF

On February 19, 2008, we entered into a Committed Equity Financing Facility, or CEFF, with Kingsbridge, pursuant to which Kingsbridge committed to purchase, subject to certain conditions, up to $40 million of our common stock. As part of the CEFF, we entered into a common stock purchase agreement and a registration rights agreement with Kingsbridge, both dated February 19, 2008, and on that date we also issued a warrant to Kingsbridge to purchase up to 250,000 shares of our common stock at a price of $2.74 per share. This warrant is fully exercisable beginning six months after February 19, 2008 and for a period of five years thereafter, subject to certain conditions. On February 9, 2010, we entered into Amendment No. 1 to the common stock purchase agreement.

The common stock purchase agreement, as amended, entitles us to sell and obligates Kingsbridge to purchase, from time to time, until May 15, 2012, shares of our common stock for cash consideration up to an aggregate of $40 million, subject to certain conditions and restrictions. The shares of common stock that may be issued to Kingsbridge under the common stock purchase agreement and the warrant will be issued pursuant to an exemption from registration under the Securities Act of 1933, as amended, or the Securities Act. Pursuant to the registration rights agreement, we have filed a registration statement, of which this prospectus is a part, covering the possible resale by Kingsbridge of any shares that we may issue to Kingsbridge under the common stock purchase agreement or upon exercise of the warrant. Through this prospectus, Kingsbridge may offer to the public for resale shares of our common stock that we may issue to it pursuant to the common stock purchase agreement or that it may acquire upon exercise of the warrant.

Until May 15, 2012, we may, from time to time, at our discretion, and subject to certain conditions that we must satisfy, draw down funds under the CEFF by selling shares of our common stock to Kingsbridge. The purchase price of these shares will be at a discount of up to 14% from the volume weighted average of the price of our common

stock for each of the eight trading days following our election to sell shares, or “draw down,” under the CEFF. The discount on each of these eight trading days will be determined as follows:


	Percent of			(Applicable
VWAP*	VWAP			Discount)
Greater than $12.00 per share		95	%		(5	)%
Less than or equal to $12.00 per share but greater than or equal to $9.01 per share		94	%		(6	)%
Less than or equal to $9.00 per share but greater than or equal to $5.51 per share		92	%		(8	)%
Less than or equal to $5.50 per share but greater than or equal to $2.41 per share		90	%		(10	)%
Less than or equal to $2.40 per share but greater than or equal to $1.25 per share		88	%		(12	)%
Less than or equal to $1.24 per share but greater than or equal to $0.75 per share		86	%		(14	)%


*		As set forth in the common stock purchase agreement, “VWAP” means the volume weighted average price (the aggregate sales price of all trades of common stock during each trading day divided by the total number of shares of common stock traded during such trading day) of the common stock during any trading day as reported by Bloomberg, L.P. using the AQR function.

During the eight trading day pricing period for a draw down, if the VWAP for any one trading day is less than the greater of (i) 85% of the closing price of our common stock on the trading day immediately preceding the commencement of such draw down pricing period, or (ii) $0.75, such trading day shall not be used in calculating the number of shares to be issued in connection with such draw down, and the draw down amount in respect of such draw down pricing period shall be reduced by one eighth (1/8th) of the initial draw down amount specified in the draw down notice. If trading in our common stock is suspended for any reason for more than three (3) consecutive or non-consecutive hours during any trading day during a draw down pricing period, such trading day shall not be used in calculating the number of shares to be issued in connection with such draw down, and the draw down amount in respect of such draw down pricing period shall be reduced by one eighth (1/8th) of the initial draw down amount specified in the draw down notice.

The maximum number of shares of common stock that we can issue pursuant to the CEFF is the lesser of 5,708,035 shares or $40 million of our common stock. An additional 250,000 shares of common stock are issuable if Kingsbridge exercises the warrant that we issued to it in connection with the CEFF. We intend to exercise our right to draw down amounts under the CEFF, if and to the extent available, at such times as we have a need for additional capital and when we believe that sales of stock under the CEFF provide an appropriate means of raising capital. We may exercise our right to draw down shortly after the effective date of the registration statement of which this prospectus is a part.

Our ability to require Kingsbridge to purchase our common stock is subject to various limitations. We can make draw downs of up to the lesser of $10 million or either (i) 2.5% of the closing price market value of our outstanding shares of common stock at the time of the draw down or (ii) the lesser of 3.75% of the closing price market value of our outstanding shares of common stock at the time of the draw down and the alternative draw down amount calculated pursuant to the common stock purchase agreement. Unless Kingsbridge agrees otherwise, a minimum of three trading days must elapse between the expiration of any draw down pricing period and the beginning of the next draw down pricing period. Kingsbridge is not obligated to purchase shares when the VWAP is below $0.75 per share.

During the term of the CEFF, without Kingsbridge’s prior written consent, we may not issue securities that are, or may become, convertible or exchangeable into shares of common stock where the purchase, conversion or exchange price for our common stock is determined using a floating discount or other post-issuance adjustable discount to the market price of the common stock, including pursuant to an equity line or other financing that is substantially similar to the arrangement provided for in the CEFF, with certain exceptions.

Kingsbridge agreed in the common stock purchase agreement that during the term of the CEFF, neither Kingsbridge nor any of its affiliates, nor any entity managed or controlled by it, will enter into any short sale of any shares of our common stock as defined in Regulation SHO promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

Before Kingsbridge is obligated to buy any shares of our common stock pursuant to a draw down, the following conditions, none of which is in Kingsbridge’s control, must be met:

	•		Each of our representations and warranties in the common stock purchase agreement shall be true and correct in all material respects as of the date when made and as of the draw down exercise date as though made at that time, except for representations and warranties that are expressly made as of a particular date.

	•		We shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the common stock purchase agreement, the registration rights agreement and the warrant to be performed, satisfied or complied with by us.

	•		We shall have complied in all material respects with all applicable federal, state and local governmental laws, rules, regulations and ordinances in connection with the execution, delivery and performance of the common stock purchase agreement and the consummation of the transactions it contemplates.

	•		The registration statement, which includes this prospectus, shall have previously become effective and shall remain effective.

	•		We shall not have knowledge of any event that could reasonably be expected to have the effect of causing the registration statement applicable to Kingsbridge’s resale of shares of our common stock to be suspended or otherwise ineffective.

	•		Trading in our common stock shall not have been suspended by the U.S. Securities and Exchange Commission, or SEC, The NASDAQ Global Market or the Financial Industry Regulatory Authority and trading in securities generally on The NASDAQ Global Market shall not have been suspended or limited.

	•		No statute, rule, regulation, executive order, decree, writ, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority which prohibits the consummation of any of the transactions contemplated by the common stock purchase agreement.

	•		No action, suit or proceeding before any arbitrator or any governmental authority shall have been commenced, and to our knowledge no investigation by any governmental authority shall have been threatened, against us or any of our officers, directors or affiliates seeking to enjoin, prevent or change the transactions contemplated by the common stock purchase agreement.

	•		We shall have sufficient shares of common stock, calculated using the closing trade price of the common stock as of the trading day immediately preceding a draw down, registered under the registration statement to issue and sell such shares in accordance with such draw down.

	•		We shall not be in default in any material respect under the warrant issued to Kingsbridge to purchase up to 250,000 shares.

	•		Kingsbridge shall have received an opinion in the form previously agreed to.

There is no guarantee that we will be able to meet the foregoing conditions or any other conditions under the common stock purchase agreement or that we will be able to draw down any portion of the amounts available under the CEFF.

We also entered into a registration rights agreement with Kingsbridge. Pursuant to the registration rights agreement, we have filed a registration statement, which includes this prospectus, with the SEC relating to Kingsbridge’s resale of any shares of common stock purchased by Kingsbridge under the common stock purchase agreement or issued to Kingsbridge as a result of the exercise of the Kingsbridge warrant. The effectiveness of this registration statement is a condition precedent to our ability to sell common stock to Kingsbridge under the common stock purchase agreement. In the event that we fail to maintain the effectiveness of the registration statement of which this prospectus is a part (other than during a blackout period as discussed below), and such failure was within our reasonable control, we must pay to Kingsbridge certain amounts based on the change in market price of our common stock during the period of ineffectiveness of the registration statement or offer to repurchase our shares from Kingsbridge at a price based on the market price of our common stock on the trading day prior to the first day of ineffectiveness of the registration statement. We are entitled in certain circumstances, including the existence of

certain kinds of nonpublic information, to deliver a blackout notice to Kingsbridge to suspend the use of this prospectus and prohibit Kingsbridge from selling shares under this prospectus. If we deliver a blackout notice in the 15 trading days following the settlement of a draw down, then we must pay amounts to Kingsbridge, or issue Kingsbridge additional shares in lieu of payment, calculated by means of a varying percentage of an amount based on the number of shares held by Kingsbridge that were purchased pursuant to the draw down and the change in the market price of our common stock between the date the blackout notice is delivered and the date the prospectus again becomes available.

The foregoing summary of the CEFF does not purport to be complete and is qualified by reference to the common stock purchase agreement, as amended, the registration rights agreement and the warrant, copies of which have been filed as exhibits to the registration statement of which this prospectus is a part.

Use of Proceeds from Sales Under the CEFF

We plan to use the proceeds from sales of our common stock to Kingsbridge under the CEFF, and from any cash exercises of warrants to purchase our common stock by Kingsbridge, to advance the pre-clinical and clinical development of our product candidates, including ZYBRESTAT and OXi4503, and for general corporate purposes.

Effect of Issuances under the CEFF; Dilution

Issuances of our common stock under the CEFF or upon exercise of the Kingsbridge warrant will have no effect on your rights or privileges as an existing holder of our common stock, except that the economic and voting interests of each stockholder will be diluted as a result of any such issuances. What this means is that, although the number of shares of common stock that current stockholders presently own will not decrease, the shares that are held by our current stockholders will represent a smaller percentage of our total shares that will be outstanding after any issuances of shares of common stock to Kingsbridge. Also, if we elect to draw down amounts under the CEFF when our share price is decreasing, we will need to issue more shares to raise the same amount of money than we would have if our stock price had been higher. This will result in greater dilution and could cause our stock price to decrease further. An example of the effect of issuing shares when our stock price is comparatively low is set forth below.

Under the CEFF, the purchase price of the shares to be sold to Kingsbridge will be at a discount of up to 14% from the volume weighted average price of our common stock for each of the eight trading days following our election to sell shares to Kingsbridge. The table below illustrates an issuance of shares of common stock to Kingsbridge under the CEFF for a hypothetical draw down amount of $1,000,000 at an assumed volume weighted average price of $0.85, which is equal to the closing price of our common stock on The NASDAQ Global Market on June 3, 2010.

Draw Down

Price to be Paid by

Number of Shares

Amount

VWAP

% Discount

Kingsbridge

to be Issued

$1,000,000

0.85

0.73

1,369,863

By comparison, if the volume weighted average price of our stock was lower than $0.85, the number of shares that we would be required to issue in order to have the same draw down amount of $1,000,000 would be larger, as shown by the following table:

Draw Down

Price to be Paid by

Number of Shares

Amount

VWAP

% Discount

Kingsbridge

to be Issued

$1,000,000

0.75

0.65

1,538,461

Accordingly, the effect of the second example outlined above from the first example outlined above, would be additional dilution of approximately 12%, or an additional 168,598 shares issued due to the lower stock price. In effect, a lower price per share of our common stock means a higher number of shares to be issued to Kingsbridge, which equates to greater dilution of existing stockholders. The effect of this dilution may, in turn, cause the price of our common stock to decrease further, both because of the downward pressure on the stock price that would be caused by a large number of sales of our shares into the public market by Kingsbridge, and because our existing stockholders may disagree with a decision to sell shares to Kingsbridge at a time when our stock price is low, and may in response decide to sell additional numbers of shares, further decreasing our stock price.

RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully read and consider the risks and uncertainties described below together with all of the other information contained in this prospectus, including our financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in our common stock. If any of these risks actually occur, our business, prospects, financial condition, results of operations or cash flows could be materially harmed. In that event, the market price of our common stock could decline and you could lose all or part of your investment.

Risks Related to Our Business

We will be required to raise additional funds to finance our operations and remain a going concern; we may not be able to do so when necessary, and/or the terms of any financings may not be advantageous to us.

Our operations to date have consumed substantial amounts of cash. Negative cash flows from our operations are expected to continue over at least the next several years. Our cash utilization amount is highly dependent on the progress of our product development programs, particularly, the results of our preclinical and clinical studies, the cost, timing and outcomes of regulatory approval for our product candidates, the terms and conditions of our contracts with service providers for these programs, and the rate of recruitment of patients in our human clinical trials.

Our cash position has become particularly acute in light of the termination of the VaxGen merger agreement, which occurred following the failure of the VaxGen stockholders to vote in favor of the merger. Following the termination of the VaxGen transaction, on February 11, 2010, we announced a restructuring of our clinical development programs. This restructuring plan is designed to focus our resources on our highest-value clinical assets and reduce our cash utilization. This restructuring included a termination of further enrollment in our Phase 2/3 anaplastic thyroid cancer clinical trial (FACT) and a reduction in our work force of approximately 49% (20 employees). In addition, the further development of our ongoing clinical trials will depend on upcoming analysis and results of those studies and our cash resources at that time. We cannot assure you that adequate funds will be available to continue the development of our product candidates past the third quarter of 2010.

We incurred a one-time charge in connection with the reduction of our work force of approximately $510,000 in the first quarter of 2010 for severance pay and benefits to those former employees affected by the reduction. This re-alignment of priorities in clinical programs together with the reduction in force is expected to reduce the cash required to operate our business from the current level of between $7,000,000 and $8,000,000 per quarter to between $4,000,000 and $5,000,000 per quarter by the second half of 2010.

On March 11, 2010, we entered into a definitive agreement with certain institutional investors to sell 6,578,945 shares of our common stock and four separate series of warrants to purchase common stock in a private placement. The terms of the definitive agreement, including the anti-dilution and full-ratchet provisions, may make it difficult for us to raise additional capital consistent with prevailing market terms, if at all. In addition, the number of shares of common stock for which the Series D Warrants are exercisable may be more or less than the number we have registered for resale by the investors. If we are required to issue a number substantially in excess of the number we have registered for resale by the investors, it could have a material adverse effect on our stock price and our ability to complete a future financing.

We expect cash on hand, including the capital raised in March 2010, to fund our operations through the third quarter of 2010, assuming that we achieve the planned cost reductions from our February 2010 restructuring. In order to remain a going concern beyond the third quarter of 2010, we will require significant funding. Additional funds to finance the operations of the company may not be available on terms that we deem acceptable, or at all. The audit report from our independent registered public accounting firm on our financial statements for the fiscal year ended December 31, 2009, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 16, 2010, contains an explanatory paragraph regarding our ability to continue as a going concern.

Our ongoing capital requirements will depend on numerous factors, including: the progress and results of preclinical testing and clinical trials of our product candidates under development, including ZYBRESTAT and OXi4503; the progress of our research and development programs; the time and costs expended and required to

obtain any necessary or desired regulatory approvals; the resources, if any, that we devote to develop manufacturing methods and advanced technologies; our ability to enter into licensing arrangements, including any unanticipated licensing arrangements that may be necessary to enable us to continue our development and clinical trial programs; the costs and expenses of filing, prosecuting and, if necessary, enforcing our patent claims, or defending against possible claims of infringement by third-party patent or other technology rights; the cost of commercialization activities and arrangements, if any, undertaken by us; and, if and when approved, the demand for our products, which demand depends in turn on circumstances and uncertainties that cannot be fully known, understood or quantified unless and until the time of approval, including the range of indications for which any product is granted approval.

If we are unable to raise additional funds when needed, we will not be able to continue development of our product candidates or we will be required to delay, scale back or eliminate some or all of our development programs or cease operations. We may seek to raise additional funds through public or private financing, strategic partnerships or other arrangements. Any additional equity financing may be dilutive to our current stockholders and debt financing, if available, may involve restrictive covenants. If we raise funds through collaborative or licensing arrangements, we may be required to relinquish, on terms that are not favorable to us, rights to some of our technologies or product candidates that we would otherwise seek to develop or commercialize. Our failure to raise capital when needed will materially harm our business, financial condition and results of operations.

We have a history of losses, and we anticipate that we will continue to incur losses in the future.

We have experienced net losses every year since our inception and, as of March 31, 2010, had an accumulated deficit of approximately $194,958,000. We anticipate continuing to incur substantial additional losses over at least the next several years due to, among other factors, the need to expend substantial amounts on our continuing clinical trials with respect to our VDA drug candidates, technologies, and anticipated research and development activities and the general and administrative expenses associated with those activities. We have not commercially introduced any product and our potential products are in varying early stages of development and testing. Our ability to attain profitability will depend upon our ability to develop products that are effective and commercially viable, to obtain regulatory approval for the manufacture and sale of our products and to license or otherwise market our products successfully. We may never achieve profitability, and even if we do, we may not be able to sustain being profitable.

In April 2009, we initiated an internal review of matters pertaining to our quality, vendor oversight and regulatory compliance systems, practices and procedures relating to the conduct of clinical trials sponsored by us. While we believe that the actions taken by us in connection with this review have substantially improved our systems, practices and procedures, we cannot assure you that these measures will fully prevent any future quality, vendor management or regulatory compliance issues.

Because we operate with a relatively small clinical operations team while sponsoring clinical trials in numerous foreign jurisdictions, we are heavily reliant on outside vendors, including clinical research organizations, or CROs, for the training of personnel at the various sites where we are sponsoring clinical trials, periodic monitoring of clinical trial sites, and ongoing management of clinical trial operations at trial sites. Under our oversight, outside vendors are also responsible for hosting and managing our clinical trial databases, including safety databases, and for reporting safety information to the FDA and foreign regulatory authorities. In April 2009, we initiated an internal review of our systems, practices and procedures governing the areas of vendor oversight, quality, and regulatory compliance as a result of concerns raised by internal personnel that our existing systems, practices and procedures in these areas were not sufficiently robust.

Our Board of Directors established a committee of its members to manage the review process. The review primarily focused on matters relating to our ongoing FACT trial in anaplastic thyroid cancer, and included an evaluation of our systems, practices and procedures involving, among other things, the following matters:

	•		selection and oversight of vendors to our clinical trial-related services;

	•		maintenance and management of databases containing safety and other data from clinical trials, the timely reporting of any issues raised from the review of safety and other data to applicable regulatory authorities, institutional review boards and ethics committees, and data safety monitoring committees;

	•		oversight of the monitoring of clinical trial sites by outside vendors and the review of and response to periodic monitoring reports;

	•		training of clinical trial investigators and site personnel;

	•		establishing adequate standard operating procedures, or SOPs, and internal staff training in such procedures to ensure appropriate adherence to applicable quality and compliance standards; and

	•		allocation of resources to our Quality/Compliance Department.

With the assistance of an outside consulting firm, we have prepared and adopted a corrective actions/preventive actions plan, or CAPA, which is designed to remedy and avoid the recurrence of matters noted during the internal review. Pursuant to the CAPA, we are implementing a number of operational changes, particularly as they relate to vendor qualification and oversight, management of clinical trial and safety databases, review and reporting of safety data, and personnel training. In parallel with these operational changes, we recruited a new Chief Development Officer, who later became our Chief Executive Officer, to oversee our drug development programs.

While we believe that the actions we have taken in response to the internal review have collectively resulted in substantially improved quality, vendor oversight, and regulatory compliance systems, practices and procedures, we cannot assure you that matters similar or related to those that prompted the review will not recur, or that applicable regulatory authorities, institutional review boards or ethics committees would find the actions taken by it in response to the internal review to have been sufficient. If applicable regulatory authorities were to find our quality controls or other regulatory compliance systems to be insufficient, they could take a range of actions, including but not limited to placing one or more of our clinical trials on clinical hold, requiring us to redo one or more of our clinical trials, or requiring additional clinical trials prior to approval of any of our product candidates. Similarly, if institutional review boards or ethics committees associated with our clinical trial sites were to find our quality systems, practices, and procedures to be insufficient, they could take a range of actions, including suspending participation in our clinical trials at their sites. In addition, we could decide on our own to take any of these actions, if either our management or a data safety monitoring committee concluded that such steps were necessary in order to protect the safety of subjects in trials involving our product candidates, the integrity of the data generated by those trials, or otherwise.

We may fail to select or capitalize on the most scientifically, clinically or commercially promising or profitable indications or therapeutic areas for our product candidates or those that are in-licensed.

We have limited technical, managerial and financial resources to determine the indications on which we should focus the development efforts related to our product candidates. We may make incorrect determinations. The decisions to allocate our research, management and financial resources toward particular indications or therapeutic areas for our product candidates may not lead to the development of viable commercial products and may divert resources from better opportunities. Similarly, our decisions to delay or terminate drug development programs may also be incorrect and could cause us to miss valuable opportunities. In addition, from time to time, we may in-license or otherwise acquire product candidates to supplement our internal development activities. Those activities may use resources that otherwise would be devoted to our internal programs. We cannot assure you that any resources that we devote to acquired or in-licensed programs will result in any products that are superior to our internally developed products.

Our product candidates have not completed clinical trials, and may never demonstrate sufficient safety and efficacy in order to do so.

Our product candidates are in an early stage of development. In order to achieve profitable operations, we alone or in collaboration with others, must successfully develop, manufacture, introduce and market our products. The time frame necessary to achieve market success for any individual product is long and uncertain. The products currently under development by us will require significant additional research and development and extensive preclinical and clinical testing prior to application for commercial use. A number of companies in the biotechnology and pharmaceutical industries have suffered significant setbacks in clinical trials, even after showing promising results in early or later-stage studies or clinical trials. Although we have obtained some favorable results to-date in preclinical studies and clinical trials of certain of our potential products, such results may not be indicative of results that will ultimately be obtained in or throughout such clinical trials, and clinical trials may not show any of our products to be safe or capable of producing a desired result. Additionally, we may encounter problems in our clinical trials that will cause delay, suspend or terminate those clinical trials. Further, our research or product development efforts or those of our collaborative partners may not be successfully completed, any compounds currently under

development by us may not be successfully developed into drugs, any potential products may not receive regulatory approval on a timely basis, if at all, and competitors may develop and bring to market products or technologies that render our potential products obsolete. If any of these problems occur, our business would be materially and adversely affected.

We depend heavily on our executive officers, directors, and principal consultants and the loss of their services would materially harm our business.

We believe that our success depends, and will likely continue to depend, upon our ability to retain the services of our current executive officers, directors, principal consultants and others. The loss of the services of any of these individuals could have a material adverse effect on our business. In addition, we have established relationships with universities, hospitals and research institutions, which have historically provided, and continue to provide, us with access to research laboratories, clinical trials, facilities and patients. Additionally, we believe that we may, at any time and from time to time, materially depend on the services of consultants and other unaffiliated third parties. In February 2010, we affected a restructuring plan designed to focus our resources on our highest-value clinical assets and reduce our cash utilization. This restructuring included a reduction in our work force of approximately 49% (20 employees). This reduction in work force will further challenge our ability to effectively manage all aspects of our business operations.

Our industry is highly competitive, and our products may become technologically obsolete.

We are engaged in a rapidly evolving field. Competition from other pharmaceutical companies, biotechnology companies and research and academic institutions is intense and expected to increase. Many of those companies and institutions have substantially greater financial, technical and human resources than we do. Those companies and institutions also have substantially greater experience in developing products, in conducting clinical trials, in obtaining regulatory approval and in manufacturing and marketing pharmaceutical products. Our competitors may succeed in obtaining regulatory approval for their products more rapidly than we do. Competitors have developed or are in the process of developing technologies that are, or in the future may be, the basis for competitive products. We are aware of at least one other company that currently has a clinical-stage VDA for use in an oncology indication. Some of these competitive products may have an entirely different approach or means of accomplishing the desired therapeutic effect than products being developed by us. Our competitors may succeed in developing technologies and products that are more effective and/or cost competitive than those being developed by us, or that would render our technology and products less competitive or even obsolete. In addition, one or more of our competitors may achieve product commercialization or patent protection earlier than we do, which could materially adversely affect us.

We have licensed in rights to ZYBRESTAT, OXi4503 and other programs from third parties. If our license agreements terminate, we may lose the licensed rights to our product candidates, including ZYBRESTAT and OXi4503, and we may not be able to continue to develop them or, if they are approved, market or commercialize them.

We depend on license agreements with third parties for certain intellectual property rights relating to its product candidates, including patent rights. Currently, we have licensed in patent rights from Arizona State University, or ASU, and the Bristol-Myers Squibb Company for ZYBRESTAT and OXi4503 and from Baylor University for other programs. In general, our license agreements require us to make payments and satisfy performance obligations in order to keep these agreements in effect and retain its rights under them. These payment obligations can include upfront fees, maintenance fees, milestones, royalties, patent prosecution expenses, and other fees. These performance obligations typically include diligence obligations. If we fail to pay, be diligent or otherwise perform as required under our license agreements, we could lose the rights under the patents and other intellectual property rights covered by the agreements. While we are not currently aware of any dispute with any licensors under its material agreements with them, if disputes arise under any of our in-licenses, including its in-licenses from ASU and the Bristol-Myers Squibb Company, and Baylor University, we could lose our rights under these agreements. Any such disputes may or may not be resolvable on favorable terms, or at all. Whether or not any disputes of this kind are favorably resolved, our management’s time and attention and its other resources could be consumed by the need to attend to and seek to resolve these disputes and our business could be harmed by the emergence of such a dispute.

If we lose our rights under these agreements, we may not be able to conduct any further activities with the product candidate or program that the license covered. If this were to happen, we might not be able to develop our product candidates further, or following regulatory approval, if any, we might be prohibited from marketing or

commercializing them. In particular, patents previously licensed to us might after termination be used to stop us from conducting these activities.

We depend extensively on our patents and proprietary technology, and we must protect those assets in order to preserve our business.

To date, our principal product candidates have been based on certain previously known compounds. We anticipate that the products we develop in the future may include or be based on the same or other compounds owned or produced by unaffiliated parties, as well as synthetic compounds we may discover. Although we expect to seek patent protection for any compounds we discover and/or for any specific use we discover for new or previously known compounds, any or all of them may not be subject to effective patent protection. Further, the development of regimens for the administration of pharmaceuticals, which generally involve specifications for the frequency, timing and amount of dosages, has been, and we believe, may continue to be, important to our effort, although those processes, as such, may not be patentable. In addition, the issued patents may be declared invalid or our competitors may find ways to avoid the claims in the patents.

Our success will depend, in part, on our ability to obtain patents, protect our trade secrets and operate without infringing on the proprietary rights of others. As of May 31, 2010, we were the exclusive licensee, sole assignee or co-assignee of twenty-nine (29) granted United States patents, twenty (20) pending United States patent applications, and granted patents and/or pending applications in several other major markets, including the European Union, Canada and Japan. The patent position of pharmaceutical and biotechnology firms like us are generally highly uncertain and involves complex legal and factual questions, resulting in both an apparent inconsistency regarding the breadth of claims allowed in United States patents and general uncertainty as to their legal interpretation and enforceability. Accordingly, patent applications assigned or exclusively licensed to us may not result in patents being issued, any issued patents assigned or exclusively licensed to us may not provide us with competitive protection or may be challenged by others, and the current or future granted patents of others may have an adverse effect on our ability to do business and achieve profitability. Moreover, since some of the basic research relating to one or more of our patent applications and/or patents were performed at various universities and/or funded by grants, one or more universities, employees of such universities and/or grantors could assert that they have certain rights in such research and any resulting products. Further, others may independently develop similar products, may duplicate our products, or may design around our patent rights. In addition, as a result of the assertion of rights by a third party or otherwise, we may be required to obtain licenses to patents or other proprietary rights of others in or outside of the United States. Any licenses required under any such patents or proprietary rights may not be made available on terms acceptable to us, if at all. If we do not obtain such licenses, we could encounter delays in product market introductions while our attempts to design around such patents or could find that the development, manufacture or sale of products requiring such licenses is foreclosed. In addition, we could incur substantial costs in defending ourselves in suits brought against us or in connection with patents to which we hold licenses or in bringing suit to protect its own patents against infringement.

We require employees, Scientific Advisory Board members, Clinical Trial Advisory Board members, and the institutions that perform our preclinical and clinical trials to enter into confidentiality agreements with us. Those agreements provide that all confidential information developed or made known to the individual during the course of the relationship with us to be kept confidential and not to be disclosed to third parties, except in specific circumstances. Any such agreement may not provide meaningful protection for our trade secrets or other confidential information in the event of unauthorized use or disclosure of such information.

If third parties on which we rely for clinical trials do not perform as contractually required or as we expect, we may not be able to obtain regulatory approval for or commercialize its product candidates.

We do not have the ability to independently conduct the clinical trials required to obtain regulatory approval for our product candidates. We depend on independent clinical investigators and, in some cases, contract research organizations and other third-party service providers to conduct the clinical trials of our product candidates and expect to continue to do so. We rely heavily on these parties for successful execution of our clinical trials, and we do not control many aspects of their activities. Nonetheless, we are responsible for confirming that each of our clinical trials are conducted in accordance with our general investigational plan and protocol. Moreover, the FDA and corresponding foreign regulatory authorities require us and our clinical investigators to comply with regulations and standards, commonly referred to as good clinical practices, for conducting and recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the trial participants are adequately protected. Our reliance on third parties that we do not control does not relieve us of these responsibilities

and requirements. Third parties may not complete activities on schedule or may not conduct our clinical trials in accordance with regulatory requirements or the respective trial plans and protocols. The failure of these third parties to carry out their obligations could delay or prevent the development, approval and commercialization of our product candidates or result in enforcement action against us.

Our products may result in product liability exposure, and it is uncertain whether our insurance coverage will be sufficient to cover all claims.

The use of our product candidates in clinical trials and for commercial applications, if any, may expose us to liability claims, in the event such product candidates cause injury or disease, or result in adverse effects. These claims could be made directly by health care institutions, contract laboratories, patients or others using such products. Although we have obtained liability insurance coverage for our ongoing clinical trials, this coverage may not be in amounts sufficient to protect us from any product liability claims or product recalls which could have a material adverse effect on our financial condition and prospects. Further, adverse product and similar liability claims could negatively impact our ability to obtain or maintain regulatory approvals for our technology and product candidates under development.

Our products are subject to extensive government regulation, which results in uncertainties and delays in the progress of our products through the clinical trial process.

Our research and development activities, preclinical testing and clinical trials, and the manufacturing and marketing of our products are subject to extensive regulation by numerous governmental authorities in the United States and other countries. Preclinical testing and clinical trials and manufacturing and marketing of our products are and will continue to be subject to the rigorous testing and approval requirements and standards of the FDA and other corresponding foreign regulatory authorities. Clinical testing and the regulatory review process generally take many years and require the expenditure of substantial resources. In addition, delays or rejections may be encountered during the period of product development, clinical testing and FDA regulatory review of each submitted application. Similar delays may also be encountered in foreign countries. Even after such time and expenditures, regulatory approval may not be obtained for any potential products developed by us, and a potential product, if approved in one country, may not be approved in other countries. Moreover, even if regulatory approval of a potential product is granted, such approval may impose significant limitations on the indicated uses for which that product may be marketed. Further, even if such regulatory approval is obtained, a marketed product, its manufacturer and its manufacturing facilities are subject to continual review and periodic inspections, and later discovery of previously unknown problems, such as undiscovered side effects, or manufacturing problems, may result in restrictions on such product, manufacturer or facility, including a possible withdrawal of the product from the market. Failure to comply with the applicable regulatory requirements can, among other things, result in fines, suspensions of regulatory approvals, product recalls, operating restrictions, injunctions and criminal prosecution.

We have no manufacturing capacity, and have relied and expect to continue to rely on third-party manufacturers to produce its product candidates.

We do not own or operate manufacturing facilities for the production of clinical or commercial quantities of its product candidates or any of the compounds that it is testing in its preclinical programs, and we lack the resources and the capabilities to do so. As a result, we currently rely, and it expects to rely in the future, on third-party manufacturers to supply its product candidates. Reliance on third-party manufacturers entails risks to which we would not be subject if our manufactured product candidates or products itself, including:

	•		reliance on the third party for manufacturing process development, regulatory compliance and quality assurance;

	•		limitations on supply availability resulting from capacity and scheduling constraints of the third party;

	•		the possible breach of the manufacturing agreement by the third party because of factors beyond our control; and

	•		the possible termination or non-renewal of the agreement by the third party, based on our own business priorities, at a time that is costly or inconvenient for us.

If we do not maintain our important manufacturing relationships, we may fail to find replacement manufacturers or develop our own manufacturing capabilities which could delay or impair its ability to obtain regulatory approval for its products and substantially increase its costs or deplete profit margins, if any. If we do find replacement

manufacturers, we may not be able to enter into agreements with them on terms and conditions favorable to it, and there could be a substantial delay before new facilities could be qualified and registered with the FDA and foreign regulatory authorities.

The FDA and foreign regulatory authorities require manufacturers to register manufacturing facilities. The FDA and corresponding foreign regulators also inspect these facilities to confirm compliance with current good manufacturing practices, or cGMPs. Contract manufacturers may face manufacturing or quality control problems causing drug substance production and shipment delays or a situation where the contractor may not be able to maintain compliance with the applicable cGMP requirements. Any failure to comply with cGMP requirements or other FDA and comparable foreign regulatory requirements could adversely affect our clinical research activities and its ability to develop its product candidates and market its products after approval.

Our current and anticipated future dependence upon others for the manufacture of our product candidates may adversely affect our future profit margins and our ability to develop our product candidates and commercialize any products that receive regulatory approval on a timely basis.

Our restated certificate of incorporation, our amended and restated by-laws, our stockholder rights agreement and Delaware law could deter a change of our management which could discourage or delay offers to acquire it.

Certain provisions of Delaware law and of our restated certificate of incorporation, as amended, and amended and restated by-laws could discourage or make it more difficult to accomplish a proxy contest or other change in our management or the acquisition of control by a holder of a substantial amount of our voting stock. It is possible that these provisions could make it more difficult to accomplish, or could deter, transactions that stockholders may otherwise consider to be in their best interests or the best interests of us. Further, the rights issued under the stockholder rights agreement would cause substantial dilution to a person or group that attempts to acquire us on terms not approved in advance by its Board of Directors.

The uncertainty associated with pharmaceutical reimbursement and related matters may adversely affect our business.

Upon the marketing approval of any one or more of our products, if at all, sales of its products will depend significantly on the extent to which reimbursement for its products and related treatments will be available from government health programs, private health insurers and other third-party payers. Third-party payers and governmental health programs are increasingly attempting to limit and/or regulate the price of medical products and services. The MMA, as well as other changes in governmental or in private third-party payers’ reimbursement policies, may reduce or eliminate any currently expected reimbursement. Decreases in third-party reimbursement for our products could reduce physician usage of the product and have a material adverse effect on our product sales, results of operations and financial condition.

On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009. This law provides funding for the federal government to compare the effectiveness of different treatments for the same illness. A plan for the research will be developed by the Department of Health and Human Services, the Agency for Healthcare Research and Quality and the National Institutes for Health, and periodic reports on the status of the research and related expenditures will be made to Congress. Although the results of the comparative effectiveness studies are not intended to mandate any policies for public or private payers, it is not clear what, if any, effect the research will have on the sales of our products if any such product or the condition that it is intended to treat is the subject of a study.

In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, collectively referred to as the PPACA, was enacted. The PPACA will, among other things, increase the number of people with insurance and change the way that government health programs pay for prescription drugs. In addition, it provides for additional effectiveness and quality measures of health procedures and products. It is too early for us to predict what the effect of the PPACA will be on our business. However, decreases in third-party reimbursement for our products or a decision by a third-party payer to not cover our potential products could have a material adverse effect on its product sales, results of operations and financial condition.

Risks Related to Our Common Stock

The price of our common stock is volatile, and is likely to continue to fluctuate due to reasons beyond our control.

The market price of our common stock has been, and likely will continue to be highly volatile. Factors, including our financial results or our competitors’ financial results, clinical trial and research development announcements and government regulatory action affecting our potential products in both the United States and foreign countries, have had, and may continue to have, a significant effect on its results of operations and on the market price of our common stock. We cannot assure you that your investment in our common stock will not fluctuate significantly. One or more of these factors could significantly harm our business and cause a decline in the price of its common stock in the public market. On March 11, 2010, we entered into a definitive agreement with certain institutional investors to sell 6,578,945 shares or our common stock and four separate series of warrants to purchase common stock in a private placement. The terms of the definitive agreement, including the anti-dilution and full-ratchet provisions, may make it difficult for us to raise additional capital consistent with prevailing market terms, if at all. Substantially all of the shares of our common stock issuable upon exercise of outstanding options have been registered for sale and may be sold from time to time hereafter. Such sales, as well as future sales of our common stock by existing stockholders, or the perception that sales could occur, could adversely affect the market price of our common stock. The price and liquidity of our common stock may also be significantly affected by trading activity and market factors related to the NASDAQ and Stockholm Stock Exchange markets, which factors and the resulting effects may differ between those markets. In order to remain in good standing with both the NASDAQ Global Market and NASDAQ OMX, we must meet the continued listing requirements of these exchanges, which include minimum stockholders’ equity, market value of listed securities or total assets and revenue and minimum bid price of our common stock, among others. There can be no assurance that we will continue to meet the ongoing listing requirements and that our common stock will remain eligible to be traded on these exchanges. Should we determine that continuing to be listed on both exchanges is not the most effective strategy for having our common stock traded and elect to be removed from such listing, there can be no assurance that such action will not have an adverse affect on the market price of our common stock.

While warrants to purchase shares of our common stock are outstanding, it may be more difficult to raise additional equity capital.

During the term that warrants to purchase shares of our common stock are outstanding, the holders of those warrants are given the opportunity to profit from a rise in the market price of our common stock. In addition, the warrants issued in our March 2010 private placement contain full ratchet anti-dilution provisions, and therefore, if we sell securities at a price below the exercise price of the warrants in effect at the time of such sale, the exercise price will be adjusted to a lower price at which our securities are sold. We may find it more difficult to raise additional equity capital while the warrants are outstanding.

Risks Related to the CEFF

Our committed equity financing facility with Kingsbridge may not be available to us. If we elect to make a draw down, we may be required to make additional “blackout” or other payments to Kingsbridge, which may result in dilution to our stockholders.

On February 19, 2008, we entered into the Committed Equity Financings Facility, or CEFF, with Kingsbridge Capital Limited, or Kingsbridge. The terms of the CEFF were amended in February 2010. The CEFF entitles us to sell and obligates Kingsbridge to purchase, from time to time until May 15, 2012, shares of our common stock for cash consideration up to an aggregate of $40 million, subject to certain conditions and restrictions. Kingsbridge will not be obligated to purchase shares under the CEFF unless certain conditions are met, which include a minimum price for our common stock; the accuracy of representations and warranties made to Kingsbridge; compliance with laws; effectiveness of the registration statement registering the shares issuable to Kingsbridge under the CEFF for resale; and the continued listing of our stock on the NASDAQ Global Market. In addition, Kingsbridge is permitted to terminate the CEFF if it determines that a material and adverse event has occurred affecting our business, operations, properties or financial condition and if such condition continues for a period of 10 days from the date Kingsbridge provides us notice of such material and adverse event. If are unable to access funds through the CEFF, or if the CEFF is terminated by Kingsbridge, we may be unable to access capital on favorable terms or at all.

We are entitled, in certain circumstances, to deliver a blackout notice to Kingsbridge to suspend the use of the registration statement registering the shares issuable to Kingsbridge under the CEFF for resale and prohibit Kingsbridge from selling shares under the prospectus. If we deliver a blackout notice in the 15 trading days following the settlement of a draw down, or if the registration statement is not effective in circumstances not permitted by the agreement, then we must make a payment to Kingsbridge, or issue Kingsbridge additional shares in lieu of this payment, calculated on the basis of the number of shares held by Kingsbridge (exclusive of shares that

Kingsbridge may hold pursuant to exercise of the Kingsbridge warrant) and the change in the market price of our common stock during the period in which the use of the registration statement is suspended. If the trading price of our common stock declines during a suspension of the registration statement, the blackout or other payment could be significant.

Should we sell shares to Kingsbridge under the CEFF, or issue shares in lieu of a blackout payment, such sale will have a dilutive effect on the holdings of our current stockholders, and may result in downward pressure on the price of our common stock. If we draw down under the CEFF, we will issue shares to Kingsbridge at a discount of up to 14% from the volume weighted average price of our common stock. If we draw down amounts under the CEFF when our share price is decreasing, we will need to issue more shares to raise the same amount than if our stock price was higher. Issuances in the face of a declining share price will have an even greater dilutive effect than if our share price was stable or increasing, and may further decrease our share price.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

The SEC encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This prospectus contains such “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be made directly in this prospectus, and they may also be made a part of this prospectus by reference to other documents filed with the SEC, which is known as “incorporation by reference.”

Words such as “may,” “anticipate,” “estimate,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements. All forward-looking statements are management’s present expectations of future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Forward-looking statements might include one or more of the following:

	•		the initiation, timing, progress and results of our preclinical and clinical trials, research and development programs;

	•		the further preclinical or clinical development and commercialization of our product candidates;

	•		the potential benefits of our product candidates over other therapies;

	•		the timing, costs and other limitations involved in obtaining regulatory approval for any product;

	•		our ability to enter into any collaboration with respect to product candidates;

	•		our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;

	•		our ability to retain the services of our current executive officers, directors and principal consultants;

	•		our estimates of future performance; and

	•		our estimates regarding anticipated operating losses, future revenue, expenses, capital requirements and our needs for additional financing.

These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlined under “Risk Factors” beginning on page 11, that may cause our or our industry’s actual results, levels of activity, performance or achievements to differ from those expressed or implied by such forward-looking statements. Before deciding to purchase our securities, you should carefully consider the risks described in the “Risk Factors” section of this prospectus supplement, in addition to the other information set forth in this prospectus supplement, the accompanying prospectus and in the documents incorporated by reference herein and therein.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as may be required by law, we do not intend to update any of the forward-looking statements for any reason after the date of this prospectus supplement to conform such statement to actual results or if new information becomes available.

All forward-looking statements attributable to us, or to persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements.

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of shares of our common stock by the selling stockholder pursuant to this prospectus. Any issuance of shares by us to Kingsbridge under the common stock purchase agreement or in connection with the exercise of the Kingsbridge warrant will be made pursuant to an exemption from the registration requirements of the Securities Act. We will use the proceeds from these sales for general corporate purposes, including capital expenditures, the advancement of our product candidates in clinical and preclinical trials, and to meet working capital needs. The amounts and timing of the expenditures will depend on numerous factors, such as the timing and progress of our clinical trials and research and development efforts, technological advances and the competitive environment for our product candidates. We expect from time to time to evaluate the acquisition of businesses, products and technologies for which a portion of the net proceeds may be used, although we currently have no definitive agreements in place with respect to any such transactions. As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to us from the sale of shares to Kingsbridge. Accordingly, we will retain broad discretion over the use of these proceeds, if any.

SELLING STOCKHOLDER

This prospectus relates to the possible resale by the selling stockholder, Kingsbridge, of shares of common stock that we may issue pursuant to the common stock purchase agreement we entered into with Kingsbridge on February 19, 2008, as amended, or upon exercise of the warrant we issued to Kingsbridge. We are filing the registration statement of which this prospectus is a part pursuant to the provisions of the registration rights agreement we entered into with Kingsbridge on February 19, 2008, in which we agreed to provide certain registration rights with respect to the sale to Kingsbridge under the common stock purchase agreement of up to the lesser of 5,708,035 shares of common stock or $40 million of common stock, and in connection with which we issued a warrant to Kingsbridge to purchase up to 250,000 shares of common stock.

The selling stockholder may from time to time offer and sell pursuant to this prospectus any or all of the shares that it acquires under the common stock purchase agreement or upon exercise of the warrant.

The following table presents information regarding Kingsbridge and the shares that it may offer and sell from time to time under this prospectus. This table is prepared based on information supplied to us by the selling stockholder, and reflects holdings as of June 1, 2010. As used in this prospectus, the term “selling stockholder” includes Kingsbridge and any donees, pledgees, transferees or other successors in interest selling shares received after the date of this prospectus from a selling stockholder as a gift, pledge or other non-sale related transfer. The number of shares in the column “Number of Shares Being Offered” represents all of the shares that the selling stockholder may offer under this prospectus. The selling stockholder may sell some, all or none of its shares. We do not know how long the selling stockholder will hold the shares before selling them, and we currently have no agreements, arrangements or understandings with the selling stockholder regarding the sale of any of the shares.

Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the SEC under the Exchange Act. The percentage of shares beneficially owned prior to the offering is based both on 69,664,000 shares of our common stock actually outstanding as of June 1, 2010 and on the assumption that all shares of common stock issuable under the common stock purchase agreement we entered into with Kingsbridge on February 19, 2008, as amended, and all shares of common stock issuable upon exercise of the warrant held by Kingsbridge are outstanding as of that date.

Shares of Common

Stock Beneficially

Owned Prior to

Number of

Owned After

Offering

Shares

Offering

Security Holder

Number

Percent

Being Offered

Number

Percent

Kingsbridge Capital Limited(1)

5,323,435

(2)

7.1

5,323,435

(2)


(1)		The address of Kingsbridge is Kingsbridge Capital Limited, Attention: Mr. Tony Hillman, P.O. Box 1075, Elizabeth House, 9 Castle Street, St Helier, Jersey, JE42QP, Channel Islands.


(2)		Consists of (a) 5,073,435 shares of common stock issuable under the common stock purchase agreement we entered into with Kingsbridge on February 19, 2008, as amended, and (b) 250,000 shares of common stock issuable upon exercise of a warrant, issued to Kingsbridge on February 19, 2008, which is currently exercisable in full. For the purposes hereof, we assume the issuance of all 5,323,435 shares under (a) and (b). Anthony Gardner-Hillman, Adam Gurney and Maria O’Donoghue have voting and investment control of the securities held by Kingsbridge. Kingsbridge does not accept third-party investments.

We have made the following draw down pursuant to the common stock purchase agreement. On May 23, 2008, we delivered notice to Kingsbridge to effect a draw down of up to $900,000. The first trading day of the eight-day pricing period for this draw down was May 27, 2008, and, in connection with this draw down, on June 2, 2008 and June 6, 2008, we issued an aggregate of 634,600 shares of our common stock to Kingsbridge at an aggregate purchase price of $900,000.

PLAN OF DISTRIBUTION

We are registering 5,323,435 shares of common stock under this prospectus on behalf of Kingsbridge. Except as described below, to our knowledge, the selling stockholder has not entered into any agreement, arrangement or understanding with any particular broker or market maker with respect to the shares of common stock offered hereby, nor, except as described below, do we know the identity of the brokers or market makers that will participate in the sale of the shares.

The selling stockholder may decide not to sell any shares. The selling stockholder may from time to time offer some or all of the shares of common stock through brokers, dealers or agents who may receive compensation in the form of discounts, concessions or commissions from the selling stockholder and/or the purchasers of the shares of common stock for whom they may act as agent. In effecting sales, broker-dealers that are engaged by the selling stockholder may arrange for other broker-dealers to participate. Kingsbridge is an “underwriter” within the meaning of the Securities Act. Any brokers, dealers or agents who participate in the distribution of the shares of common stock may also be deemed to be “underwriters,” and any profits on the sale of the shares of common stock by them and any discounts, commissions or concessions received by any such brokers, dealers or agents may be deemed to be underwriting discounts and commissions under the Securities Act. Kingsbridge has advised us that it may effect resales of our common stock through any one or more registered broker-dealers. To the extent the selling stockholder may be deemed to be an underwriter, the selling stockholder will be subject to the prospectus delivery requirements of the Securities Act and may be subject to certain statutory liabilities of, including but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Exchange Act.

The selling stockholder will act independently of us in making decisions with respect to the timing, manner and size of each sale. Such sales may be made over The NASDAQ Global Market, on the over-the-counter market, otherwise or in a combination of such methods of sale, at then prevailing market prices, at prices related to prevailing market prices or at negotiated prices. The shares of common stock may be sold according to one or more of the following methods:

	•		a block trade in which the broker or dealer so engaged will attempt to sell the shares of common stock as agent but may position and resell a portion of the block as principal to facilitate the transaction;

	•		purchases by a broker or dealer as principal and resale by such broker or dealer for its account pursuant to this prospectus;

	•		an over-the-counter distribution in accordance with NASDAQ Stock Market LLC or Financial Industry Regulatory Authority rules;

	•		ordinary brokerage transactions and transactions in which the broker solicits purchasers;

	•		privately negotiated transactions;

	•		a combination of such methods of sale; and

	•		any other method permitted pursuant to applicable law.

Any shares covered by this prospectus which qualify for sale pursuant to Rule 144 of the Securities Act may be sold under Rule 144 rather than pursuant to this prospectus. In addition, the selling stockholder may transfer the shares by other means not described in this prospectus.

Any broker-dealer participating in such transactions as agent may receive commissions from Kingsbridge (and, if they act as agent for the purchaser of such shares, from such purchaser). Broker-dealers may agree with Kingsbridge to sell a specified number of shares at a stipulated price per share, and, to the extent such a broker-dealer is unable to do so acting as agent for Kingsbridge, to purchase as principal any unsold shares at the price required to fulfill the broker-dealer commitment to Kingsbridge. Broker-dealers who acquire shares as principal may thereafter resell such shares from time to time in transactions (which may involve crosses and block transactions and which may involve sales to and through other broker-dealers, including transactions of the nature described above) on The NASDAQ Global Market, on the over-the-counter market, in privately-negotiated transactions or otherwise at market prices prevailing at the time of sale or at negotiated prices, and in connection with such resales may pay to or receive from the purchasers of such shares commissions computed as described above. To the extent required under the Securities Act, an amendment to this prospectus or a supplemental prospectus will be filed, disclosing:

	•		the name of any such broker-dealers;

	•		the number of shares involved;

	•		the price at which such shares are to be sold;

	•		the commission paid or discounts or concessions allowed to such broker-dealers, where applicable;

	•		that such broker-dealers did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, as supplemented; and

	•		other facts material to the transaction.

Underwriters and purchasers that are deemed underwriters under the Securities Act may engage in transactions that stabilize, maintain or otherwise affect the price of the securities, including the entry of stabilizing bids or syndicate covering transactions or the imposition of penalty bids. Kingsbridge and any other persons participating in the sale or distribution of the shares will be subject to the applicable provisions of the Exchange Act and the rules and regulations thereunder including, without limitation, Regulation M. These provisions may restrict certain activities of, and limit the timing of, purchases by the selling stockholder or other persons or entities. Furthermore, under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in market making and certain other activities with respect to such securities for a specified period of time prior to the commencement of such distributions, subject to special exceptions or exemptions. Regulation M may restrict the ability of any person engaged in the distribution of the securities to engage in market-making and certain other activities with respect to those securities. In addition, the anti-manipulation rules under the Exchange Act may apply to sales of the securities in the market. All of these limitations may affect the marketability of the shares and the ability of any person to engage in market-making activities with respect to the securities.

We have agreed to pay the expenses of registering the shares of common stock under the Securities Act, including registration and filing fees, printing expenses, administrative expenses and certain legal and accounting fees, as well as certain fees of counsel for the selling stockholder incurred in the preparation of the CEFF agreements and the registration statement of which this prospectus forms a part. The selling stockholder will bear all discounts, commissions or other amounts payable to underwriters, dealers or agents, as well as transfer taxes and certain other expenses associated with the sale of securities.

Under the terms of the Kingsbridge common stock purchase agreement and the registration rights agreement, we have agreed to indemnify the selling stockholder and certain other persons against certain liabilities in connection with the offering of the shares of common stock offered hereby, including liabilities arising under the Securities Act or, if such indemnity is unavailable, to contribute toward amounts required to be paid in respect of such liabilities.

At any time a particular offer of the shares of common stock is made, a revised prospectus or prospectus supplement, if required, will be distributed. Such prospectus supplement or post-effective amendment will be filed with the SEC, to reflect the disclosure of required additional information with respect to the distribution of the shares of common stock. We may suspend the sale of shares by the selling stockholder pursuant to this prospectus for certain periods of time for certain reasons, including if the prospectus is required to be supplemented or amended to include additional material information.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on The NASDAQ Global Market under the symbol “OXGN.” Our shares of common stock are also currently traded on the NASDAQ OMX Nordic in Sweden under the symbol “OXGN.” We have applied for a termination of trading of our common stock on the NASDAQ OMX Nordic in Sweden. Such termination is expected to be effective as of June 30, 2010. The following table sets forth the high and low sales price per share for our common stock on The NASDAQ Global Market for each quarterly period during the two most recent fiscal years.


	Fiscal Year 2010				Fiscal Year 2009				Fiscal Year 2008
	High		Low		High		Low		High		Low
First Quarter	$	1.38	$	1.00	$	0.89	$	0.52	$	2.55	$	1.71
Second Quarter					$	2.78	$	0.71	$	1.98	$	1.14
Third Quarter					$	2.37	$	1.31	$	1.58	$	1.05
Fourth Quarter					$	1.70	$	1.01	$	1.63	$	0.60

On June 3, 2010, the closing price of our common stock on The NASDAQ Global Market was $0.85 per share. As of May 27, 2010, there were approximately 84 stockholders of record of the approximately 69,664,000 outstanding shares of our common stock. We believe, based on the number of proxy statements and related materials distributed in connection with our 2009 Annual Meeting of Stockholders, that there are approximately 11,000 beneficial owners of our common stock.

Dividend Policy

We have not declared or paid any cash dividends on our common stock since our inception in 1988, and do not intend to pay cash dividends in the foreseeable future. We presently intend to retain future earnings, if any, to finance the growth and development of our business.

SELECTED FINANCIAL DATA

The following selected financial data for the five years ended December 31, 2009 are derived from the audited consolidated financial statements of the Company. The financial data for the three month periods ended March 31, 2010 and 2009 are derived from unaudited financial statements. The unaudited financial statements include all adjustments, consisting of normal recurring accruals, which the Company considers necessary for a fair presentation of the financial position and the results of operations for these periods. Operating results for the three months ended March 31, 2010 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2010. The data should be read in conjunction with the consolidated financial statements, related notes, and other financial information included herein.


(Amounts In thousands except per share amounts)
	Three Months Ended March 31,						Years Ended December 31,

	2010			2009			2009			2008			2007			2006			2005
STATEMENT OF OPERATIONS DATA:
License revenue	$	—			—		$	—		$	12		$	12		$	—		$	1

Operating costs and expenses:
Research and development		4,185			4,925			22,256			18,995			14,511			11,213			7,253
General and administrative		1,703			1,708			8,900			6,957			7,774			6,703			5,796
Restructuring		510			—			—			—			—			—			—


Total operating costs and expenses		6,398			6,633			31,156			25,952			22,285			17,916			13,049


Operating loss		(6,398	)		(6,633	)		(31,156	)		(25,940	)		(22,273	)		(17,916	)		(13,048	)

Change in fair value of warrants		(4,633	)		(8	)		2,166			3,335			—			—			—
Investment income		7			52			110			618			1,955			2,502			1,135
Other income (expense), net		(4	)		14			(63	)		66			(71	)		(43	)		4


Consolidated net loss	$	(11,028	)	$	(6,575	)	$	(28,943	)	$	(21,921	)	$	(20,389	)	$	(15,457	)	$	(11,909	)


Loss attributed to noncontrolling interest		—			(1,023	)		(4,215	)		(520	)		—			—			—

Net loss attributed to OXiGENE, Inc.	$	(11,028	)	$	(5,552	)	$	(24,728	)	$	(21,401	)	$	(20,389	)	$	(15,457	)	$	(11,909	)

Excess purchase price over carrying value of noncontrolling interest acquired in Symphony ViDA, Inc.	$	—		$	—		$	(10,383	)	$	—		$	—		$	—		$	—


Net loss applicable to common stock	$	(11,028	)	$	(5,552	)	$	(35,111	)	$	(21,401	)	$	(20,389	)	$	(15,457	)	$	(11,909	)


Basic and diluted net loss per share attributed to OXiGENE, Inc. common shares	$	(0.17	)	$	(0.12	)	$	(0.66	)	$	(0.70	)	$	(0.73	)	$	(0.56	)	$	(0.61	)

Weighted average number of common shares outstanding		64,441			46,008			53,414			30,653			27,931			27,626			19,664


	As of March 31,			As of December 31,
	2010			2009			2008			2007			2006			2005
BALANCE SHEET DATA:
Cash, restricted cash and equivalents and available-for-sale securities	$	14,154		$	14,072		$	18,918		$	28,438		$	45,839		$	58,855
Marketable securities held by Symphony ViDA, Inc., restricted		—			—			14,663			—			—			—
Working capital		4,362			6,356			28,320			23,880			42,083			52,667
Total assets		15,733			15,617			35,031			30,064			47,642			60,268
Total liabilities		21,508			9,818			6,292			5,207			4,222			3,734
Accumulated deficit		(194,958	)		(183,930	)		(159,202	)		(137,801	)		(117,412	)		(101,955	)
Noncontrolling Interest		—			—			9,432			—			—			—
Total stockholders’ equity	$	(5,775	)	$	5,799		$	28,739		$	24,857		$	43,420		$	56,534

The amount related to loss attributed to non controlling interest in Symphony ViDA, Inc. (“ViDA”) represents the loss for the ViDA. entity from its inception in October 2008 through the acquisition of ViDA in July 2009. The investments reported as held ViDA represented the fair value of amounts held by ViDA and were included in the acquisition.

Prior year amounts have been reclassified to conform to current year presentation to reflect an allocation of facilities related costs from General and Administrative expenses to Research and Development expenses. For the

years ended December 31, 2008, 2007, 2006 and 2005 approximately $561,000, $381,000, $397,000 and $155,000, respectively, were reclassified to Research and Development expenses.

Quarterly Financial Data for 2010, 2009 and 2008

The following is a summary of the quarterly results of operations for the years ended December 31, 2009 and 2008 and for the three months ended March 31, 2010: (Amounts in thousands, except per share amounts)


	Three Months Ended
	March 31,
	2010
License revenue	$	—
Net loss attributed to OXiGENE, Inc.		(11,028	)
Basic and diluted net loss per share attributed to OXiGENE, Inc. common shares	$	(0.17	)


	Three Months Ended
	March 31,			June 30,			September 30,			December 31,
	2009			2009			2009			2009
License revenue	$	—		$	—		$	—		$	—
Net loss attributed to OXiGENE, Inc.		(5,552	)		(5,273	)		(16,858	)		(7,428	)
Basic and diluted net loss per share attributed to OXiGENE, Inc. common shares	$	(0.12	)	$	(0.11	)	$	(0.29	)	$	(0.12	)


	March 31,			June 30,			September 30,			December 31,
	2008			2008			2008			2008
License revenue	$	—		$	—		$	12		$	—
Net loss attributed to OXiGENE, Inc.		(5,445	)		(7,048	)		(7,108	)		(1,800	)
Basic and diluted net loss per share attributed to OXiGENE, Inc. common shares	$	(0.19	)	$	(0.25	)	$	(0.25	)	$	(0.05	)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and results of operations should be read together with our financial statements and accompanying notes appearing elsewhere in this prospectus. This discussion contains forward-looking statements, based on current expectations and related to future events and our future financial performance, that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many important factors, including those set forth under “Risk Factors” and elsewhere in this prospectus.

OVERVIEW

ZYBRESTAT for Oncology

FALCON (Fosbretabulin Advanced Lung Combination for Oncology) trial — randomized, controlled Phase II study with ZYBRESTAT in non-small cell lung cancer

FACT (Fosbretabulin in Anaplastic Cancer of the Thyroid) trial — Phase 2/3 study with ZYBRESTAT in anaplastic thyroid cancer

The FDA granted Fast Track designation to ZYBRESTAT for the treatment of regionally advanced and/or metastatic ATC. ZYBRESTAT was awarded orphan drug status by the FDA and the European Commission in the European Union for the treatment of advanced ATC and for the treatment of medullary, Stage IV papillary and Stage IV follicular thyroid cancers. These designations were not affected by the halted enrollment in the Phase 2/3 study.

Phase II trial with ZYBRESTAT in platinum-resistant ovarian cancer

We believe that, if successful, the ongoing ZYBRESTAT study program will establish a compelling rationale for further development of ZYBRESTAT as a treatment for:

	•		aggressive and difficult-to-treat malignancies;

	•		use in combination with chemotherapy in a variety of solid tumors, particularly those in which carboplatin and/or paclitaxel chemotherapy are commonly used; and

	•		use in combination with commonly used anti-angiogenic drugs, such as bevacizumab, that act via VEGF pathway inhibition, in various solid tumor indications.

OXi4503, a unique, second generation VDA for oncology indications

ZYBRESTAT for Ophthalmology

	•		determine the therapeutic utility of ZYBRESTAT in PCV by measuring the effect of ZYBRESTAT on the vasculature of the polyps associated with PCV;

	•		determine blood concentrations of drug required for activity in humans and thereby estimate, with the benefit of preclinical data, an appropriate dose of topically-administered ZYBRESTAT to be evaluated in subsequent human clinical studies; and

	•		further evaluate the feasibility of and reduce the risk associated with developing a topical formulation of ZYBRESTAT for ophthalmologic indications.

directly into the eye on a repeated basis is a significant limitation for some patients and may result in serious side-effects. We believe that a topical formulation of ZYBRESTAT may:

	•		decrease the requirement for or possibly even replace the use of medications injected into the eye;

	•		have utility for treating patients with newly developed and/or less severe forms of neovascular ophthalmological diseases and conditions, which could potentially prevent these patients from developing active and/or severe forms of the disease that result in vision loss;

	•		have utility in patients with neovascular ophthalmological diseases and conditions that do not respond well to treatment with currently available therapeutics; and

	•		provide an attractive partnering opportunity with a company operating in the ophthalmological disease space.

Financial Resources

We have generated a cumulative net loss of approximately $194,958,000 for the period from our inception through March 31, 2010. We expect to incur significant additional operating losses over at least the next several years, principally as a result of our continuing clinical trials and anticipated research and development expenditures. The principal source of our working capital to date has been the proceeds of private and public equity financings and to a lesser extent the exercise of warrants and stock options. We currently have no material amount of licensing or other fee income.

As of March 31, 2010, we had approximately $14,014,000 in cash, restricted cash and cash equivalents. During our fiscal 2009, we primarily invested in obligations issued by U.S. treasury and federal agencies, obligations of commercial banks and commercial paper. In fiscal 2010, we plan to continue to employ a conservative investment strategy.

On March 11, 2010 we entered into a definitive agreement with certain institutional investors to sell 6,578,945 shares of our Common Stock and four separate series of warrants to purchase Common Stock in a private placement. Gross proceeds of the financing were approximately $7,500,000, before deducting placement agent fees and estimated offering expenses, and assuming no exercise of the warrants. Existing cash plus the addition of this capital is expected to support our operations through the third quarter of 2010, assuming that we achieve the planned cost reductions from our February 2010 restructuring.

We will require significant additional funding to remain a going concern and to fund operations until such time, if ever, we become profitable. However, there can be no assurance that adequate additional financing will be available to us on terms that we deem acceptable, if at all. Our failure to raise capital when needed will materially harm our business, financial condition and results of operations. Royalties or other revenue generated by us from commercial sales of our potential products are not expected for several years, if at all.

Including the capital raised in March 2010, our cash position has become particularly acute in light of the termination of the VaxGen merger agreement, which occurred following the failure of the VaxGen stockholders to vote in favor of the merger. Following the termination of the VaxGen transaction, on February 11, 2010, we announced a restructuring of our clinical development programs. This restructuring plan was designed to focus our resources on our highest-value clinical assets and reduce our cash utilization. This restructuring included a plan to stop further enrollment our Phase 2/3 anaplastic thyroid cancer clinical trial (FACT) and a reduction in our work force of approximately 49% (20 employees). In addition, the further development of our ongoing clinical trials will depend on upcoming analysis and results of our ongoing clinical studies and our cash resources at that time.

We incurred a one-time charge in connection with the reduction of its work force of approximately $510,000 in the first quarter of 2010 for severance pay and benefits to those former employees affected by the reduction. This re-alignment of priorities in clinical programs together with the reduction in force is expected to reduce the cash required to operate our business from the current level of between $7,000,000 and $8,000,000 per quarter to between $4,000,000 and $5,000,000 per quarter by the second half of 2010.

We expect to continue to pursue strategic alliances and consider collaborative development opportunities that may provide us with access to organizations that have capabilities and/or products that are complementary to our own, in order to continue the development of our potential product candidates. However, there can be no assurances that we will complete any strategic alliances or collaborative development agreements, and the terms of such arrangements may not be advantageous to us.

On October 1, 2008, we announced a strategic collaboration with Symphony Capital Partners, L.P. (Symphony), a private-equity firm, under which Symphony agreed to provide up to $40,000,000 in funding to support the advancement of ZYBRESTAT for oncology, ZYBRESTAT for ophthalmology and OXi4503. Under this collaboration, we entered into a series of related agreements with Symphony Capital LLC, Symphony ViDA, Inc., or ViDA, Symphony ViDA Holdings LLC, or Holdings, and related entities. Pursuant to these agreements, Holdings formed and capitalized ViDA, a Delaware corporation, in order (a) to hold certain intellectual property related to two of our product candidates, ZYBRESTAT for opthalmology and OXi4503, which were exclusively licensed to ViDA under a Novated and Restated Technology License Agreement and (b) to fund commitments of up to $25,000,000. The funding was planned to support pre-clinical and clinical development conducted by us, on behalf of ViDA, for ZYBRESTAT for ophthalmology and OXi4503.

On July 2, 2009, we entered into a series of related agreements with Holdings and ViDA pursuant to which such parties agreed to amend the terms of the purchase option, as set forth in an amended and restated purchase option agreement (the “Amended Purchase Option Agreement”). In connection with such amendment, we also entered into, with Holdings, an amended and restated registration rights agreement.

Under the Amended Purchase Option Agreement, we issued 10,000,000 newly-issued shares of our common stock in exchange for all of the equity of ViDA. We re-acquired all of the rights to the ZYBRESTAT for ophthalmology and OXi4503 programs that had been licensed to ViDA. In addition, the approximately $12,400,000 in cash and marketable securities held by ViDA was transferred to us. After exercising the purchase option, ViDA became our wholly-owned subsidiary and ceased being a variable interest entity.

We recorded the acquisition of ViDA as a capital transaction and the $10,383,000 excess of the fair market value of the common stock issued by us ($15,600,000) over the carrying value of the non-controlling interest ($5,217,000) is reflected directly in equity as a reduction to Additional paid-in capital. As a result, the non-controlling interest balance was eliminated. The reduction to Additional paid-in capital was also presented as an increase in the loss applicable to common stock within the calculation of basic and diluted earnings per share.

In February 2008, we entered into the CEFF with Kingsbridge Capital, which was subsequently amended in February 2010. Under the terms of the amended CEFF, Kingsbridge committed to purchase, subject to certain conditions, up to 5,708,035 shares of the Company’s common stock or up to an aggregate of $40,000,000 during the period which ends May 15, 2012. Under the CEFF, we are able to draw down in tranches of up to a maximum of 3.75 percent of our closing market value at the time of the draw down or the alternative draw down amount calculated pursuant to the Common Stock Purchase Agreement whichever is less, subject to certain conditions.

The purchase price of these shares is discounted between 5 to 14 percent from the volume weighted average price of our common stock for each of the eight trading days following the election to sell shares. Kingsbridge is not obligated to purchase shares at prices below $0.75 per share or at a price below 85% of the closing share price of our stock in the trading day immediately preceding the commencement of the draw down, whichever is higher. In connection with the CEFF, in 2008, we issued a warrant to Kingsbridge to purchase 250,000 shares of our common stock at a price of $2.74 per share exercisable beginning six months after February 19, 2008 for a period of five years thereafter. As of March 31, 2010, there remain a total of 5,073,435 shares available for sale under the CEFF.

The actual and planned uses of proceeds from all of the above financings include the continued development of our two lead product candidates, ZYBRESTAT and OXi4503, in oncology and ophthalmology.

We are committed to a disciplined financial strategy and as such maintain a limited employee and facilities base, with development, scientific, finance and administrative functions, which include, among other things, product development, regulatory oversight and clinical testing. Our research and development team members typically work on a number of development projects concurrently. Accordingly, we do not separately track the costs for each of these research and development projects to enable separate disclosure of these costs on a project-by-project basis. We conduct scientific activities pursuant to collaborative arrangements with universities. Regulatory and clinical testing functions are generally contracted out to third-party, specialty organizations.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial

statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those related to intangible assets. We base our estimates on historical experience and on various other factors that are believed to be appropriate under the circumstances, the results of which form the basis for making the judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Our significant accounting policies are described in detail in Note 1 to our condensed consolidated financial statements for the fiscal year ended December 31, 2009 and in Note 1 to our unaudited condensed consolidated interim financial statements for the fiscal quarter ended March 31, 2010 included in this prospectus.

Recent Accounting Pronouncements

In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162 (“SFAS 168”), which establishes the FASB Accounting Standards Codification as the source of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements. The provisions of SFAS 168 were adopted by us and the Accounting Standards Codification has been reflected within the disclosures within the consolidated financial statements. The adoption of SFAS 168 had no impact on our consolidated financial statements.

On January 1, 2009, we adopted the provisions of SFAS No. 141(R), Business Combinations (“SFAS 141(R)”), as codified in FASB ASC topic 805, Business Combinations (“ASC 805”), and will apply such provisions prospectively to business combinations that have an acquisition date on or after January 1, 2009. ASC 805 establishes principles and requirements for how an acquirer in a business combination (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree, (ii) recognizes and measures goodwill acquired in a business combination or a gain from a bargain purchase, and (iii) determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of the business combination. In addition, changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after purchase accounting is completed will be recognized in earnings rather than as an adjustment to the cost of acquisition. This accounting treatment for deferred tax asset valuation allowances and acquired income tax uncertainties is applicable to acquisitions that occurred both prior and subsequent to the adoption of ASC 805. The adoption of the provisions of ASC 805 did not affect our historical consolidated financial statements.

On May 28, 2009, the FASB issued SFAS No. 165 Subsequent Events (“SFAS 165”), as codified in FASB ASC topic 855, Subsequent Events (“ASC 855”). ASC 855 provides guidance related to the accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. ASC 855 requires us to disclose the date through which subsequent events have been evaluated, as well as whether that date is the date the financial statements were issued or the date the financial statements were available to be issued. The adoption of ASC 855 did not have a material impact on our consolidated financial statements.

On January 1, 2009, concurrent with the adoption of ASC 805, the Company also adopted SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 ( SFAS 160), as codified in FASB ASC topic 810, Consolidation (ASC 810). ASC 810 changes the accounting and reporting for minority interests, which are recharacterized as noncontrolling interests and classified as a component of equity. The adoption of ASC 810 affected our presentation of the minority interest in Symphony Vida.

The FASB issued ASC 320, entitled “Recognition and Presentation of Other-Than-Temporary Impairments”. ASC 320 provides new guidance on the recognition and presentation of an other-than-temporary impairments (OTTI) and provides for some new disclosure requirements. We adopted ASC 320 during the quarter ended June 30, 2009. The adoption did not have a material impact on our financial statements.

The FASB issued ASC 815 entitled “Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in, a Company’s Own Stock”. The objective is to provide guidance for determining whether an equity-linked financial instrument is indexed to an entity’s own stock. The adoption of the provisions of ASC 815 did not have a material impact on our financial position and results of operations.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2010 and 2009

Revenue

We reported no licensing revenue for the three months ended March 31, 2010 and 2009. Our only current source of revenue is from the license to a third party of our formerly owned Nicoplex and Thiol nutritional and diagnostic technology. Future revenues from this license agreement are expected to be minimal. We do not expect to generate material revenue or fee income unless we enter into a major licensing arrangement.

Costs and expenses

Summary

The following table summarizes our operating expenses for the periods indicated, in thousands and as a percentage of total expenses. This table also provides the changes in our operating components and their percentages:


	Three Months ended March 31,
	2010					2009
			% of Total					% of Total
			Operating					Operating			Increase (Decrease)
	Amount		Expenses			Amount		Expenses			Amount			%
Research and development	$	4,185		65	%	$	4,925		74	%	$	(740	)		-15	%
General and administrative		1,703		27	%		1,708		26	%		(5	)		0	%
Restructuring		510		8	%		—		0	%		510			100	%


Total operating expenses	$	6,398		100	%	$	6,633		100	%	$	(235	)		-4	%

Research and development expenses

The table below summarizes the most significant components of our research and development expenses for the periods indicated, in thousands and as a percentage of total research and development expenses. The table also provides the changes in these components and their percentages:


	Three Months ended March 31,
	2010					2009
			% of Total					% of Total			Increase (Decrease)
	Amount		Expenses			Amount		Expenses			Amount			%
External services	$	2,787		66	%	$	2,964		60	%	$	(177	)		-6	%
Employee compensation and related		1,164		28	%		1,572		32	%		(408	)		-26	%
Employee stock-based compensation		35		1	%		58		1	%		(23	)		-40	%
Other		199		5	%		331		7	%		(132	)		-40	%


Total research and development	$	4,185		100	%	$	4,925		100	%	$	(740	)		-15	%

The majority of the reduction in external services costs for the three month period ended March 31, 2010 compared to the same three month period in 2009 of approximately $177,000, is due to a decrease of activity in our ZYBRESTAT for Oncology program. Reductions in expenses for our ATC and Ovarian cancer studies were offset by an increase in expenses for our NSCLC study for the comparative periods. The reduction in employee compensation and related costs of for the three month period ended March 31, 2010 compared to the same three month period in 2009 of approximately $408,000 is primarily due to a reduction in the use of temporary and contracted services personnel and lower travel costs for the comparable period as well as no new employee hiring costs in the three month period of 2010. The reduction in other expenses for the three month period ended March 31, 2010 compared to the same three month period in 2009 of approximately $132,000, is primarily due to a reduction in facilities related costs.

General and administrative expenses

The table below summarizes the most significant components of our general and administrative expenses for the periods indicated, in thousands and as a percentage of total general and administrative expenses. The table also provides the changes in these components and their percentages:


	Three Months ended Mar 31,
	2010					2009
			% of Total					% of Total			Increase (Decrease)
	Amount		Expenses			Amount		Expenses			Amount			%
Employee compensation and related	$	617		37	%	$	773		45	%	$	(156	)		-20	%
Employee stock-based compensation		57		3	%		128		7	%		(71	)		-55	%
Consulting and professional services		772		45	%		552		32	%		220			40	%
Other		257		15	%		255		16	%		2			1	%


Total general and administrative	$	1,703		100	%	$	1,708		100	%	$	(5	)		0	%

The decrease in employee compensation and related costs for the three month period ended March 31, 2010 compared to the same three-month period of 2009 of approximately $156,000 is primarily due to a reduction in the use of temporary and contract personnel and nonrecurring general and administrative charges for the ViDA entity. The increase in consulting and professional service related expenses for the three-month period ended March 31, 2010 compared to the same three-month period of 2009 of approximately $220,000 is primarily due to one time costs incurred in connection with our attempted acquisition of VaxGen, Inc.

Restructuring Plan

In February 2010, we implemented a restructuring plan. The purpose of the restructuring was to focus our resources on our highest-value clinical assets and reduce our cash utilization. In connection with this restructuring, we recognized approximately $458,000 of research and development restructuring expenses and approximately $52,000 of general and administrative restructuring expenses in the quarter ended March 31, 2010. The restructuring expenses include severance payments, health and medical benefits and related taxes, which are expected to be paid through August 2010. Key aspects of the restructuring and its effects on our current clinical trials are as follows:

	•		We will continue to advance our high-priority Phase 2 ZYBRESTAT trial in non-small cell lung cancer (FALCON study), with updated safety and efficacy results anticipated for presentation at the upcoming American Society of Clinical Oncology (ASCO) meeting in June 2010.

	•		We have stopped further enrollment in the Phase 2/3 FACT clinical trial in anaplastic thyroid cancer (ATC), but will continue to treat and follow all patients who are currently enrolled. A survival analysis is anticipated in early 2011. We expect this plan to optimize our ability to gain useful additional insight into ZYBRESTAT’s antitumor activity earlier than the previously anticipated timeline, while also reducing cash utilization in 2010 and subsequent years.

	•		The OXi4503 Phase 1b trial in patients with hepatic tumors will continue with an interim analysis expected in mid-2010.

	•		The Phase 2 FAVOR study of ZYBRESTAT in polypoidal choroidal vasculopathy (PCV), a form of macular degeneration, will continue but with a reduced number of patients and an analysis of the treatment results expected in the first half of 2010.

	•		Future development decisions concerning the OXi4503 program and the ZYBRESTAT for ophthalmology program will be made following these analyses and additional review by our management and board of directors.

	•		We reduced our workforce by 20 employees or approximately 49%.

Other Income and Expenses

The table below summarizes Other Income and Expense in our Income Statement for the three month periods ended March 31, 2010 and 2009, in thousands:


	Three Months Ended March 31,
	2010			2009
Change in fair value of warrants	$	(4,633	)	$	(8	)
Investment income		7			52
Other (expense) income, net		(4	)		14


Total	$	(4,630	)	$	58

We record unrealized (non cash) gain/(loss) as a result of the change in the estimated Fair Market Value (“FMV”) of our common stock warrants issued in connection with the offerings as discussed in the Warrants section of Note 1 to the financial statements, Summary of Significant Accounting Policies.

The table below summarizes the components of the change in fair value of warrants for the three month periods ended March 31, 2010 and 2009, in thousands.


	Three months ended March 31,
	2010			2009
Symphony Additional Investment Shares	$	—		$	(4	)
Committed Equity Financing Facility Warrants		2			(4	)
Direct Registration Warrants		225			—
Excess of value of the Private Placement Warrants at issuance over the net proceeds of the offering		(4,433	)
Private Placement Warrants		(427	)		—

Total gain (loss) on change in fair market value of derivatives	$	(4,633	)	$	(8	)

The reduction in investment income for the three-month period ended March 31, 2010 compared to the same three-month period of 2009 is due to lower average cash balances available for investment in the 2010 period.

Years ended December 31, 2009 and 2008

Revenues

We recognized approximately $12,000 in licensing revenue in the year ended December 31, 2008, in connection with the license of our nutritional and diagnostic technology. We did not recognize any license revenue in the year ended December 31, 2009. Future revenues, if any, from this license agreement are expected to continue to be minimal.

Our future revenues will depend upon our ability to establish collaborations with respect to, and generate revenues from products currently under development by us. We expect that we will not generate meaningful revenue in fiscal 2010 unless and until we enter into new collaborations providing for funding through the payment of licensing fees and up-front payments.

Costs and Expenses

The following table summarizes our operating expenses for the periods indicated, in thousands and as a percentage of total expenses:


	2009					2008
			% of Total					% of Total
			Operating					Operating			Increase (Decrease)
	Amount		Expenses			Amount		Expenses			Amount		%
Research and development	$	22,256		71	%	$	18,995		73	%	$	3,261		17	%
General and administrative		8,900		29	%		6,957		27	%		1,943		28	%

Total operating expenses	$	31,156		100	%	$	25,952		100	%	$	5,204		20	%

Research and development expenses

The table below summarizes the most significant components of our research and development expenses for the periods indicated, in thousands and as a percentage of total research and development expenses and provides the changes in these components and their percentages:


	Twelve Months Ended Dec 31,
	2009					2008					Increase
			% of Total					% of Total			(Decrease)
	Amount		Expenses			Amount		Expenses			Amount			%
External services		13,233		59	%		13,273		69	%	$	(40	)		0	%
Employee compensation and related		7,693		35	%		4,490		24	%		3,203			71	%
Stock-based compensation		185		1	%		337		2	%		(152	)		(45	)%
Facilities and related		726		3	%		561		3	%		165			29	%
Other		419		2	%		334		2	%		85			25	%

Total research and development	$	22,256		100	%	$	18,995		100	%	$	3,261			17	%

The most significant component of the increase in research and development expenses in fiscal 2009 over fiscal 2008 of $3,261,000 was for employee compensation and related expenses. In fiscal 2009, in order to support our multiple worldwide clinical studies, one of which was a registrational study, we experienced an increase in our average headcount of approximately 13 R&D employees or approximately 66%. This resulted in increases in salaries, benefits, recruitment costs and travel costs in fiscal 2009 over fiscal 2008. In addition, we incurred one-time severance expenses of approximately $690,000 primarily associated with two executives who departed the Company in fiscal 2009. The increase in R&D headcount described above also contributed to the increase in Facilities and related costs of $165,000 in fiscal 2009 over fiscal 2008. The decrease in stock based compensation of $152,000 in fiscal 2009 from fiscal 2008 was as a result of forfeitures of grants by executives and non-recurring vesting expense in 2009 of restricted stock grants.

With regards to the external services component of our research and development expenses, we experienced a decrease of approximately $1,000,000 on our ZYBRESTAT for oncology program in fiscal 2009 from fiscal 2008 as we concluded our Phase II trial for the treatment of platinum resistant ovarian cancer and a number of other smaller studies in fiscal 2009. We increased expenditures in fiscal 2009 versus fiscal 2008 by approximately $965,000 in our OXi4503 program which includes our Phase I trial of OXi4503 in solid tumors and our Phase I trial of ZYBRESTAT in combination with bevacizumab in solid tumors. We also increased expenditures in fiscal 2009 versus fiscal 2008 in our ZYBRESTAT for Ophthalmology program by approximately $1,369,000, primarily attributable to the initiation of our PCV study. The increases in expenditures on our OXi4503 and ZYBRESTAT for Ophthalmology programs were offset by a decrease in Non-clinical expenditures for those programs of approximately $800,000 in fiscal 2009 versus fiscal 2008.

General and administrative expenses

The table below summarizes the most significant components of our general and administrative expenses for the periods indicated, in thousands and as a percentage of total general and administrative expenses and provides the changes in these components and their percentages:


	2009					2008					Increase
			% of Total					% of Total			(Decrease)
	Amount		Expenses			Amount		Expenses			Amount			%
Employee compensation and related	$	3,165		35	%	$	2,604		37	%	$	561			22	%
Stock-based compensation	$	273		3	%		663		10	%	$	(390	)		(59	)%
Consulting and professional services	$	4,409		50	%		2,498		36	%	$	1,911			77	%
Facilities and related	$	294		3	%		354		5	%	$	(60	)		(17	)%
Other	$	759		9	%		838		12	%	$	(79	)		(9	)%

Total general and administrative	$	8,900		100	%	$	6,957		100	%	$	1,943			28	%

In fiscal 2009 versus fiscal 2008 general and administrative costs increased $1,943,000. The most significant component of this increase was due primarily to an increase of $1,911,000 in consulting and professional services. In fiscal 2009, we incurred one-time costs of approximately $1,341,000 in connection with our proposed merger with VaxGen. These costs included accounting, legal and printing costs incurred in preparation for the acquisition. In addition, we experienced an increase in fiscal 2009 over fiscal 2008 in legal and other advisory consulting and professional services expenses of approximately $540,000 primarily attributable to an initiative we undertook to review and improve our quality, vendor oversight and regulatory compliance, as well as advisory services in connection with the management of the Symphony ViDA.

Employee compensation and related expenses in fiscal 2009 versus fiscal 2008 increased by $561,000. This increase is primarily due to severance costs in connection with the departure of our former CEO of approximately $350,000. In addition, our average G&A headcount increased in fiscal 2009 over fiscal 2008 by approximately 1, or approximately 6%, which accounted for increases in salaries, benefits and travel costs in fiscal 2009 over fiscal 2008. The decrease in stock based compensation of $390,000 in fiscal 2009 versus fiscal 2008 is primarily a result of forfeitures of options by directors and executives who departed the company in fiscal 2009.

We expect that we will continue to incur general and administrative expenses at an appropriate level to support the ongoing development of our potential product candidates and to meet the requirements of being a public company.

Other Income and Expenses

The table below summarizes Other Income and Expense in our Income Statement for the years 2009 and 2008, in thousands.


						Increase
						(Decrease)
	2009			2008		Amount			%
Gain from change in fair value of warrants and other financial instruments	$	2,166		$	3,335	$	(1,169	)		(35	)%
Investment income		110			618		(508	)		(82	)%
Other income (expense), net		(63	)		66		(129	)		(195	)%

Total	$	2,213		$	4,019	$	(1,806	)		(45	)%

The decrease in Investment income of $508,000 for fiscal 2009 from fiscal 2008 is primarily a result of a reduction in our average month end cash balance available for investment and lower average rate of return.

We record unrealized (non cash) gain/(loss) as a result of the change in the estimated Fair Market Value (“FMV”) of our Derivative Liabilities and the common stock warrants issued in connection with the Offering discussed in Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in the Company’s Common Stock, Note 1 to the financial statements, Summary of Significant Accounting Policies.

In fiscal 2009, we recorded a gain relating to the change in fair value of outstanding warrants which were accounted for as liabilities of $2,166,000. The short-term and long-term direct registration warrants change in fair value from the date of issue of July 20, 2009 to December 31, 2009 was $1,855,000. The change in fair value of the CEFF Warrant and Additional investment warrants from December 31, 2008 to July 20, 2009, the date on which both instruments were no longer treated as liabilities, was $311,000.

In fiscal 2008, we recorded a gain of $3,335,000 relating to the change in fair value of outstanding warrants, which were accounted for as liabilities. The majority of this gain, or $3,312,000, is due to the Direct Investment Warrant issued to Symphony Capital in October 2008 and exercised by them in December 2008 following the approval by our stockholders of the issuance of our common stock underlying the warrant at a special meeting of stockholders on December 9, 2008. The gain represents the change in value between the Direct Investment Warrant issue date and December 30, 2008, the date that the Direct Investment Warrant was exercised. The remainder of the gain reflects the change during the fourth quarter in value of the CEFF Warrant issued to Kingsbridge Capital.

The Other income (expense) amounts are derived from our gain and loss on foreign currency exchange and reflect both a change in number of foreign clinical trials and the fluctuation in exchange rates.

Restructuring Plan

We announced on February 11, 2010 a restructuring plan designed to focus resources on our highest-value clinical assets and reduce our cash utilization. Key aspects of the restructuring and its effects on our current clinical trials are as follows:

	•		We will continue to advance our high-priority Phase 2 ZYBRESTAT trial in non-small cell lung cancer (FALCON study), with updated safety and efficacy results anticipated for presentation at the upcoming American Society of Clinical Oncology (ASCO) meeting in June 2010.

	•		We plan to stop further enrollment in the Phase 2/3 FACT clinical trial in anaplastic thyroid cancer (ATC), but will continue to treat and follow all patients who are currently enrolled. A survival analysis is anticipated in early 2011. We expect this plan to optimize our ability to gain useful additional insight into ZYBRESTAT’s antitumor activity earlier than the previously anticipated timeline, while also reducing cash utilization in 2010 and subsequent years.

	•		The OXi4503 Phase 1b trial in patients with hepatic tumors will continue with an interim analysis expected in mid-2010.

	•		The Phase 2 FAVOR study of ZYBRESTAT in polypoidal choroidal vasculopathy (PCV), a form of macular degeneration, will continue with an interim analysis expected in the first half of 2010.

	•		Future development decisions concerning the OXi4503 program and the ZYBRESTAT for ophthalmology program will be made following these analyses and additional review by our management and board of directors.

	•		In addition, we reduced our workforce by 20 employees or approximately 49%.

Tax Matters

At December 31, 2009, the Company had a net operating loss carry-forward of approximately $67,923,000 for U.S. income tax purposes, which will be expiring for U.S. purposes through 2028. Due to the degree of uncertainty related to the ultimate use of these loss carry-forwards, we have fully reserved this future benefit. Additionally, the future utilization of the U.S. net operating loss carry-forwards is subject to limitations under the change in stock ownership rules of the Internal Revenue Service. The valuation allowance increased by approximately $8,466,000 and approximately $9,612,000 for the years ended December 31, 2009 and 2008, respectively, due primarily to the increase in net operating loss carry-forwards.

Years ended December 31, 2008 and 2007

Revenues

We recognized approximately $12,000 in licensing revenue in each of the years ended December 31, 2008 and 2007, in connection with the license of our nutritional and diagnostic technology. Future revenues, if any, from this license agreement are expected to continue to be minimal.

Costs and Expenses

The following table summarizes our operating expenses for the periods indicated, in thousands and as a percentage of total expenses:


	2008					2007
			% of Total					% of Total			Increase
			Operating					Operating			(Decrease)
	Amount		Expenses			Amount		Expenses			Amount			%
Research and development	$	18,995		73	%	$	14,511		65	%	$	4,484			31	%
General and administrative		6,957		27	%		7,774		35	%		(817	)		(11	)%

Total operating expenses	$	25,952		100	%	$	22,285		100	%	$	3,667			16	%

Research and development expenses

The table below summarizes the most significant components of our research and development expenses for the periods indicated, in thousands and as a percentage of total research and development expenses and provides the changes in these components and their percentages:


	2008					2007
			% of Total					% of Total
			Research &					Research &
			Development					Development			Increase (Decrease)
	Amount		Expenses			Amount		Expenses			Amount		%
External services	$	13,273		69	%	$	9,552		66	%		3,721		39	%
Employee compensation and related		4,490		24	%		3,939		27	%	$	551		14	%
Stock-based compensation		337		2	%		320		2	%		17		5	%
Facilities related		561		3	%		381		3	%		180		47	%
Other		334		2	%		319		2	%		15		5	%

Total research and development	$	18,995		100	%	$	14,511		100	%	$	4,484		31	%

External services expenses are comprised of costs incurred for consultants, contractors and outside service providers that assist in the management and support of our development programs. The increase in these costs in fiscal 2008 over fiscal 2007 is primarily attributable to an increase in expenditures on our ZYBRESTAT oncology programs, namely, our Phase II/III clinical trial for the treatment of anaplastic thyroid cancer, our Phase II trial in combination with bevacizumab^® for the treatment of non small cell lung cancer, and our Phase II trial for the treatment of platinum resistant ovarian cancer, totaling approximately $4,704,000. These increases were offset by decreases in expenditures on both our Phase I trial of OXi4503 in solid tumors and our Phase I trial of ZYBRESTAT in combination with bevacizumab in solid tumors, totaling approximately $1,018,000. In addition, we experienced an increase in our pre-clinical study expenses of approximately $871,000, which was offset by a decrease in drug manufacturing expenses of approximately $753,000.

The increase in facilities related expense is due to the expansion of office space in the San Francisco area in fiscal 2008 over 2007 and an increase in the average number of employees to support the continued development of our product candidates. The increase in employee compensation and related expenses is attributable to an increase in the average number of employees, excluding contractors, in fiscal 2008 over fiscal 2007 of approximately 30%.

General and administrative expenses

The table below summarizes the most significant components of our general and administrative expenses for the periods indicated, in thousands and as a percentage of total general and administrative expenses and provides the changes in these components and their percentages:


	2008					2007
			% of Total					% of Total
			General &					General &
			Administrative					Administrative			Increase (Decrease)
	Amount		Expenses			Amount		Expenses			Amount			%
Employee compensation and related	$	2,604		37	%	$	2,574		33	%	$	30			1	%
Stock-based compensation		663		10	%		1,472		19	%		(809	)		(55	)%
Consulting and professional services		2,498		36	%		2,326		30	%		172			7	%
Facilities related		354		5	%		346		4	%		8			2	%
Other		838		12	%		1,056		14	%		(218	)		(21	)%

Total general and administrative	$	6,957		100	%	$	7,774		100	%	$	(817	)		(11	)%

Although employee compensation and related expenses in fiscal 2008 from fiscal 2007 increased by $30,000 it was due to non-recurring payments and awards made in 2007 in accordance with executive employment agreements

and the addition of a senior level executive in 2007 that were not repeated in fiscal 2008 offset by an increase in temps and contractor cost in 2008. The decrease in stock-based compensation in fiscal 2008 from fiscal 2007 is attributable to the departure of our former Chief Executive Officer in 2008 and the full vesting in fiscal 2007 of a number of options granted to our directors and officers that was not repeated in fiscal 2008. As grants of equity awards have not historically been made on a consistent basis year to year, the expense recognized for stock-based compensation is highly variable.

The increase in consulting and professional services expenses in fiscal 2008 over fiscal 2007 of $172,000 is attributable to increases in legal and contracted services and advisory costs in connection with the establishment of our committed equity financing facility and the initiation of Symphony ViDA Inc. The decrease in other expenses in fiscal 2008 from fiscal 2007 of $218,000 is consistent with the overall reduction in spending in the combined general and administrative expense categories.

Other Income and Expenses

Investment income decreased by approximately $1,337,000, or 68%, in fiscal 2008, compared to fiscal 2007, primarily due to a combination of lower average cash, cash equivalents and available-for-sale marketable securities balances during 2008 and by lower average interest rates and returns on investments.

LIQUIDITY AND CAPITAL RESOURCES

We will require significant additional funding to remain a going concern and to fund operations. To date, we have financed our operations principally through net proceeds received from private and public equity financing and through our strategic development arrangement with Symphony. We have experienced net losses and negative cash flow from operations each year since our inception, except in fiscal 2000. As of March 31, 2010, we had an accumulated deficit of approximately $194,958,000. We expect to continue to incur increased expenses, resulting in losses, over at least the next several years due to, among other factors, our continuing and planned clinical trials and anticipated research and development activities. We had cash and cash equivalents of approximately $14,014,000 at March 31, 2010.

The following table summarizes our cash flow activities for the period indicated, in thousands:


	Three Months
	Ended March 31,
	2010
Operating activities:

Net loss	$	(11,028	)
Non-cash adjustments to net loss		4,877
Changes in operating assets and liabilities		(442	)


*Net cash used in operating activities*		(6,593	)

Investing activities:
Other		14


*Net cash provided by investing activities*		14

Investing activities:
Proceeds from issuance of common stock and warrants		6,661

*Net cash provided by financing activities*		6,661
*Increase in cash and cash equivalents*		82
Cash and cash equivalents at beginning of period		13,932

Cash and cash equivalents at end of period	$	14,014

Non-cash adjustments to net loss in the three-month period ended March 31, 2010 consist primarily of a change in the fair value of warrants of $4,633,000 and stock compensation expense of $192,000 related to the issuance of options. The net change in operating assets and liabilities is primarily attributable to a decrease in accounts payable, accrued expenses and other payables of $413,000. Net cash provided by financing activities for the three-month period ended March 31, 2010 is primarily attributable to the net proceeds of our private placement of common stock and warrants completed in March 2010.

On February 11, 2010, we announced a restructuring of our clinical development programs. This restructuring plan is designed to focus our resources on our highest-value clinical assets and reduce our cash utilization. This restructuring includes a plan to stop further enrollment in our Phase 2/3 anaplastic thyroid cancer clinical trial (FACT) and a reduction in our work force of approximately 49% (20 employees). In addition, the further development of our ongoing clinical trials will depend on upcoming analysis and results of these ongoing clinical studies and our cash resources at that time.

On July 20, 2009, we raised approximately $10,000,000 in gross proceeds, before deducting placement agents’ fees and other offering expenses, in a registered direct offering relating to the sale of 6,250,000 units, each unit consisting of (i) one share of common stock, (ii) a five-year warrant to purchase 0.45 shares of common stock at an exercise price of $2.10 per share of common stock and (iii) a short-term warrant to purchase 0.45 shares of common stock at an exercise price of $1.60 per share of common stock, for a purchase price of $1.60 per unit. The short-term warrants are exercisable during a period beginning on the date of issuance until the later of (a) nine months from the date of issuance and (b) ten trading days after the earlier of (i) the public announcement of the outcome of the planned interim analysis by the Independent Data Safety Monitoring Committee of data from our Phase II/III pivotal clinical trial regarding ZYBRESTAT as a treatment for anaplastic thyroid cancer or (ii) the public announcement of the suspension, termination or abandonment of such trial for any reason. The net proceeds to us from the sale of the units, after deducting the fees of the placement agents and other offering expenses, were approximately $9,029,000.

Also in July 2009, under an Amended Purchase Option Agreement, we issued 10,000,000 newly-issued shares of our common stock in exchange for all of the equity in the Symphony ViDA. We re-acquired all of the rights to the ZYBRESTAT for ophthalmology and OXi4503 programs that had been licensed to ViDA. In addition, the approximately $12,400,000 in cash and marketable securities held by ViDA was transferred to us.

We recorded the acquisition of ViDA as a capital transaction and the $10,383,000 excess of the fair market value of the common shares issued by us ($15,600,000) over the carrying value of the noncontrolling interest ($5,217,000) is reflected directly in equity as a reduction to Additional paid-in capital. As a result, the noncontrolling interest balance was eliminated. The reduction to Additional paid-in capital was also presented as an increase in the loss applicable to common stock within the calculation of basic and diluted earnings per share.

On March 11, 2010 we completed a definitive agreement with certain institutional investors to sell shares of our Common Stock and four separate series of warrants to purchase Common Stock in a private placement. Gross proceeds of the financing were approximately $7,500,000, before deducting placement agent fees and estimated offering expenses, and assuming no exercise of the warrants.

The four separate series of warrants consist of the following:

the issuance of shares in the transaction, and shall expire on the later of three months from the effective date of the resale registration statement covering such shares and seven months from the closing date; (C) Series C Warrants to initially purchase 6,578,945 shares of common stock, and which would be exercisable upon the exercise of the Series B Warrants and on the earlier of the six month anniversary of the closing date or the date on which our stockholders approve the issuance of shares in the transaction, would expire five years after the date on which they become exercisable, and have a per share exercise price of $1.14; and (D) Series D Warrants to purchase shares of common stock. The Series D Warrants are not immediately exercisable, and the number of shares of common stock issuable upon exercise of such Series D Warrants cannot be determined as of the date of this filing. We have agreed with the investors that we will register 6,755,157 shares of common stock issuable upon exercise of the Series D Warrants. The number of shares of common stock issuable upon exercise of the Series D Warrants will be determined following two pricing periods, each of no less than seven trading days and no more than thirty trading days, as determined individually by each holder of Series D Warrants. The first of these pricing periods shall occur after the later of (x) the date we obtain the approval of our stockholders to the issuance of the shares in the transaction, and (y) the effective date of the resale registration statement covering such shares. The second of these pricing periods shall occur after the later of (x) the stockholder approval date and (y) the date on which the purchasers in the offering can freely sell their common stock pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended, without restriction, but only if the number of shares registered under the resale registration statement and available for issuance under the Series D Warrants is less than the number of such shares to which the holders of such warrants are entitled. If during the applicable pricing period, the arithmetic average of the seven lowest market prices of the common stock (as reported on the NASDAQ Stock Market) is less than the purchase price in the offering ($1.14), each holder’s Series D Warrants shall become exercisable for an additional number of shares pursuant to a formula set forth in the Purchase Agreement. If the Series D Warrants become exercisable into shares of common stock, the Series D Warrants will become immediately exercisable and will have an exercise price of $0.001 per share.

We anticipate that our existing cash and cash equivalents of $14,014,000 will enable us to maintain our currently planned operations through the third quarter of 2010, assuming that we achieve the planned cost reductions from our February 2010 restructuring.

Our cash utilization amount is highly dependent on the progress of our potential-product development programs, particularly, the results of our pre-clinical projects, the cost, timing and outcomes of regulatory approvals for our product candidates, the terms and conditions of our contracts with service providers for these programs, and the rate of recruitment of patients in our human clinical trials much of which is not within our control as well as the timing of hiring development staff to support our product development plans. The anticipated reduction in our cash utilization, resulting from our restructuring plans, is highly dependent on the timeliness and effectiveness of renegotiating our contracts with the vendors and service providers involved with the restructuring plans. We intend to aggressively pursue other forms of capital infusion including strategic alliances with organizations that have capabilities and/or products that are complementary to our own, in order to continue the development of our potential product candidates.

Our cash requirements may vary materially from those now planned for or anticipated by management due to numerous risks and uncertainties. These risks and uncertainties include, but are not limited to: the progress of and results of our pre-clinical testing and clinical trials of our VDA drug candidates under development, including ZYBRESTAT, our lead drug candidate, and OXi4503; the progress of our research and development programs; the time and costs expended and required to obtain any necessary or desired regulatory approvals; the resources, if any, that we devote to developing manufacturing methods and advanced technologies; our ability to enter into licensing arrangements, including any unanticipated licensing arrangements that may be necessary to enable us to continue our development and clinical trial programs; the costs and expenses of filing, prosecuting and, if necessary, enforcing our patent claims, or defending ourselves against possible claims of infringement by us of third party patent or other technology rights; the costs of commercialization activities and arrangements, if any, undertaken by us; and, if and when approved, the demand for our products, which demand is dependent in turn on circumstances and uncertainties that cannot be fully known, understood or quantified unless and until the time of approval, for example the range of indications for which any product is granted approval.

We will need to raise additional funds to support our operations to remain a going concern past the third quarter 2010, and such funding may not be available to us on acceptable terms, or at all. If we are unable to raise additional funds when needed, we may not be able to continue development of our product candidates or we could be required to delay, scale back or eliminate some or all of our development programs and other operations. We may seek to

raise additional funds through public or private financing, strategic partnerships or other arrangements. Any additional equity financing may be dilutive to our current stockholders and debt financing, if available, may involve restrictive covenants. If we raise funds through collaborative or licensing arrangements, we may be required to relinquish, on terms that are not favorable to us, rights to some of our technologies or product candidates that we would otherwise seek to develop or commercialize ourselves. Our failure to raise capital when needed would materially harm our business, financial condition and results of operations.

Contractual Obligations

The following table presents information regarding our contractual obligations and commercial commitments as of December 31, 2009 in thousands:


			Less Than		1-3		4-5		After 5
	Total		1 Year		Years		Years		Years
Clinical development and related committements	$	9,436	$	8,681	$	744	$	11	$	—
Operating Leases		1,999		795		1,069		135		—

Total contractual cash obligations	$	11,435	$	9,476	$	1,813	$	146		—

Payments under clinical development and related commitments are based on the completion of activities as specified in the contract. The amounts in the table above assume the successful completion, by the third-party contractor, of all of the activities contemplated in the agreements. In addition, not included in operating leases above, is sublease income which totals approximately $233,000 for fiscal 2010.

Our primary drug development programs are based on a series of natural products called Combretastatins. In August 1999, we entered into an exclusive license for the commercial development, use and sale of products or services covered by certain patent rights owned by Arizona State University. This agreement was subsequently amended in June 2002. From the inception of the agreement through December 31, 2009, we have paid a total of $2,500,000 in connection with this license. The agreement provides for additional payments in connection with the license arrangement upon the initiation of certain clinical trials or the completion of certain regulatory approvals, which payments could be accelerated upon the achievement of certain financial milestones, as defined in the agreement. The license agreement also provides for additional payments upon our election to develop certain additional compounds, as defined in the agreement. Future milestone payments under this agreement could total $200,000. We are also required to pay royalties on future net sales of products associated with these patent rights.

Quantitative and Qualitative Disclosures about Market Risk

At December 31, 2009, we did not hold any derivative financial instruments, commodity-based instruments or other long-term debt obligations. Effective March 31, 2010, we account for all of our warrants as liabilities and as of March 31, 2010 they are valued at $14,372,000. See Note 1 to our unaudited Condensed Consolidated interim Financial Statements for the quarterly period ended March 31, 2010 included herein for a complete description of warrants.

We have adopted an Investment Policy, the primary objectives of which are to preserve principal, maintain proper liquidity to meet operating needs and maximize yields while preserving principal. Although our investments are subject to credit risk, we follow procedures to limit the amount of credit exposure in any single issue, issuer or type of investment. Our investments are also subject to interest rate risk and will decrease in value if market interest rates increase. However, due to the conservative nature of our investments and relatively short duration, we believe that interest rate risk is mitigated. Our cash and cash equivalents are maintained in U.S. dollar accounts. Although we conduct a number of our trials and studies outside of the United States, we believe our exposure to foreign currency risk to be limited as the arrangements are in jurisdictions with relatively stable currencies.

BUSINESS

OVERVIEW

diseases and conditions. To date, more than 400 subjects have been treated with ZYBRESTAT in human clinical trials, and the drug candidate has generally been observed to be well-tolerated.

ZYBRESTAT for Oncology

FALCON (Fosbretabulin Advanced Lung Combination for Oncology) trial — randomized, controlled Phase II study with ZYBRESTAT in non-small cell lung cancer

FACT (Fosbretabulin in Anaplastic Cancer of the Thyroid) trial — Phase 2/3 study with ZYBRESTAT in anaplastic thyroid cancer

Phase II trial with ZYBRESTAT in platinum-resistant ovarian cancer

studies which may potentially be undertaken in collaboration with an oncology cooperative study group and support by the Cancer Therapy Evaluation Program (“CTEP”) of the National Cancer Institute.

We believe that, if successful, the ongoing ZYBRESTAT study program will establish a compelling rationale for further development of ZYBRESTAT as a treatment for:

	•		aggressive and difficult-to-treat malignancies;

	•		use in combination with chemotherapy in a variety of solid tumors, particularly those in which carboplatin and/or paclitaxel chemotherapy are commonly used; and

	•		use in combination with commonly used anti-angiogenic drugs, such as bevacizumab, that act via VEGF pathway inhibition, in various solid tumor indications.

OXi4503, a unique, second generation VDA for oncology indications

ZYBRESTAT for Ophthalmology

effective and convenient topically-administered anti-vascular therapeutic would have advantages over currently approved anti-vascular, ophthalmological therapeutics, which must be injected directly into patients’ eyes, in some cases on a chronic monthly basis.

	•		determine the therapeutic utility of ZYBRESTAT in PCV by measuring the effect of ZYBRESTAT on the vasculature of the polyps associated with PCV;

	•		determine blood concentrations of drug required for activity in humans and thereby estimate, with the benefit of preclinical data, an appropriate dose of topically-administered ZYBRESTAT to be evaluated in subsequent human clinical studies; and

	•		further evaluate the feasibility of and reduce the risk associated with developing a topical formulation of ZYBRESTAT for ophthalmologic indications.

•

decrease the requirement for or possibly even replace the use of medications injected into the eye;

	•		have utility for treating patients with newly developed and/or less severe forms of neovascular ophthalmological diseases and conditions, which could potentially prevent these patients from developing active and/or severe forms of the disease that result in vision loss;

	•		have utility in patients with neovascular ophthalmological diseases and conditions that do not respond well to treatment with currently available therapeutics; and

	•		provide an attractive partnering opportunity with a company operating in the ophthalmological disease space.

Our Development Programs and Product Candidates

The following table outlines the ongoing, recently completed and planned clinical development programs for our current product candidates:

ZYBRESTAT for Oncology


	Study Design and
Indication	Number of Subjects (n)	Regimen	Sponsor	Status
AnaplasticThyroid Cancer (ATC)	FACT Trial — Phase II/III Randomized, Controlled Pivotal Registration Study (n=180) Enrollment terminated at 78 patients in Jan 2010)	carboplatin + paclitaxel ± ZYBRESTAT	OXiGENE	Enrollment Discontinued; Patients to be treated until study termination.
1st-line Non-small Cell Lung Cancer (NSCLC)	FALCON Trial - Phase II Randomized, Controlled Study (n=60)	carboplatin + paclitaxel + bevacizumab ± ZYBRESTAT	OXiGENE	Enrolling
Platinum-resistant Ovarian Cancer	Phase II Simon Two-Stage Design Study (n=44)	ZYBRESTAT + carboplatin + paclitaxel	Cancer Research UK	Complete

OXi4503 for Oncology


	Study Design and
Indication	Number of Subjects (n)	Regimen	Sponsor	Status
Refractory Solid Tumors	Phase I Dose-Escalation Study	OXi4503	Cancer Research UK	Enrolling
Hepatic Tumors	Phase Ib Dose-Ranging Study (n=18 in Phase Ib portion)	OXi4503	OXiGENE	Enrolling
Additional Oncology Indication	PhaseIDose-Escalation Study	OXi4503	OXiGENE	Planned for 2010

ZYBRESTAT for Ophthalmology


	Study Design and
Indication	Number of Subjects (n)	Regimen	Sponsor	Status
Proof-of-mechanism Study in Polypoidal Choroidal Vasculopathy (PCV)	Phase II Randomized, Double-Masked, Placebo-controlled, Single-dose Study (n=40)	ZYBRESTAT (intravenous-route)	OXiGENE	Enrolling

Symphony Transaction

In October 2008, we announced a strategic collaboration with Symphony Capital Partners, L.P. (Symphony), a private-equity firm, under which Symphony agreed to provide up to $40 million in funding to support the advancement of ZYBRESTAT for oncology, ZYBRESTAT for ophthalmology and OXi4503. In connection with the collaboration, we granted Symphony ViDA, Inc., a newly-created drug development company, exclusive licenses to ZYBRESTAT for use in ophthalmologic indications and OXi4503. As part of this transaction, we maintained the exclusive purchase option, but not the obligation, to purchase all of the equity of Symphony ViDA (Purchase Option) at any time between October 2, 2009 and March 31, 2012 for an amount equal to two times the amount of capital actually invested by Holdings in Symphony ViDA, less certain amounts.

Under the collaboration, we entered into a series of related agreements with Symphony Capital LLC, Symphony ViDA, Symphony ViDA Holdings LLC (Holdings) and related entities, including a Purchase Option Agreement, a Research and Development Agreement, a Technology License Agreement and an Additional Funding Agreement. In addition, we entered into a series of related agreements with Holdings, including a Stock and Warrant Purchase Agreement and a Registration Rights Agreement.

Pursuant to these agreements, Holdings formed and capitalized Symphony ViDA in order (a) to hold certain intellectual property related to the programs which were exclusively licensed to Symphony ViDA under the Technology License Agreement and (b) to fund commitments of up to $25 million. The funding was intended to support preclinical and clinical development by us, on behalf of Symphony ViDA, of the programs.

We issued to Holdings, pursuant to the Stock and Warrant Purchase Agreement, an aggregate of 13,513,514 shares of our common stock and warrants at a price of $1.11 per share, which was the closing price of our common stock on the NASDAQ Global Market on September 30, 2008, the day before we entered into the Symphony transaction. In addition, pursuant to the Purchase Option Agreement, we issued to Holdings an aggregate of 3,603,604 shares of our common stock with a fair value of $4 million as consideration for the Purchase Option.

On July 2, 2009, we entered into a series of related agreements with Holdings and Symphony ViDA pursuant to which we exercised the Purchase Option under terms set forth in an amended and restated purchase option agreement (the Amended Purchase Option Agreement), and we also entered into an amended and restated registration rights agreement with Holdings.

We closed on the amended Purchase Option on July 20, 2009 and issued 10 million shares of our common stock to Holdings at the closing in exchange for all of the equity of Symphony ViDA, subject to further adjustment under the rights described in the paragraph above. In addition, upon the closing of the Purchase Option, we re-acquired all of the rights to the programs, and the approximately $12,400,000 in cash held by Symphony ViDA at the time of the closing became available for use for our general corporate purposes.

For as long as Symphony Capital LLC owns at least 10% of our common stock, it has the right to appoint two members to our Board of Directors, and has appointed Mr. Mark Kessel and Dr. Alastair Wood to serve as directors pursuant to this right. We also maintain our advisory relationships with Symphony and RRD International LLC. The Additional Funding Agreement, dated October 1, 2008, has been terminated.

Baylor University Collaboration

Under a sponsored research agreement with Baylor University, we are pursuing discovery and development of novel, small-molecule therapeutics for the treatment of cancer, including small-molecule cathepsin-L inhibitors and hypoxia-activated VDAs. Cathepsin-L is an enzyme involved in protein degradation and has been shown to be closely involved in the processes of angiogenesis and metastasis. Small molecule inhibitors may have the potential to slow tumor growth and metastasis in a manner we believe could be complementary with our VDA therapeutics. We also believe that our hypoxia-activated VDAs could serve as line-extension products to ZYBRESTAT and/or OXi4503.

Merger Agreement with VaxGen, Inc.

On February 4, 2010, we announced that at the special meeting of our stockholders held on February 3, 2010, the issuance of shares of our common stock pursuant to the merger agreement with VaxGen, Inc. previously announced by us on October 14, 2009, and all other proposals were adopted. At the special meeting of stockholders of VaxGen, however, also held on February 3, 2010, the necessary majority of the outstanding shares of VaxGen common stock did not vote in favor of adoption of the proposed merger agreement with us. As a result, the merger between us and VaxGen did not take place. As previously announced, we notified VaxGen of the termination of the merger agreement on February 12, 2010.

Company Background

We are a corporation incorporated in 1988 in the State of New York and reincorporated in 1992 in the State of Delaware, with our principal corporate office in the United States at 701 Gateway Boulevard, Suite 210, South San Francisco, California 94080 (telephone: (650) 635-7000, fax: (650) 635-7001). We also have an office at 300 Bear Hill Road, Waltham, Massachusetts 02451. Our Internet address is www.OXiGENE.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, are available to you free of charge through the “Investors” section of our website as soon as reasonably practicable after such materials have been electronically filed with, or furnished to, the Securities and Exchange Commission. Information contained on our website does not form a part of this prospectus.

VASCULAR DISRUPTING AGENTS: ANTI-VASCULAR THERAPEUTICS THAT ADDRESS A LARGE POTENTIAL MARKET OPPORTUNITY

According to Cancer Research UK, a cancer organization in the United Kingdom, nearly 90% of all cancers, more than 200 types, are solid tumors, which are dependent upon a continually developing vascular supply for their growth and survival. Similarly, in the ophthalmology field, abnormal neovascularization characterizes a variety of ophthalmological diseases and conditions, including corneal neovascularization, central retinal vein occlusion, proliferative diabetic retinopathy, retinopathy of prematurity, sickle cell retinopathy, myopic macular degeneration (MMD), age-related macular degeneration (AMD), and neovascular glaucoma.

Since 2004, multiple anti-angiogenic drugs (see table below) have been approved for a variety of cancer and ophthalmology indications, and development of approved anti-angiogenic drugs for new indications continues. Physician adoption of these first-generation anti-vascular drugs has been rapid and continues to accelerate.

We believe that our VDA drug candidates are second-generation anti-vascular drugs that differ from and are complementary and non-competitive with anti-angiogenic agents. Similar to anti-angiogenic agents, our VDA drug candidates are anti-vascular drugs that exert therapeutic effects by depriving tumors — and in the case of eye disease, ocular lesions — of blood supply. We also believe that our VDA therapeutics may be better tolerated than anti-angiogenic drugs and may potentially have utility in later-stage tumors that have become unresponsive to anti-angiogenic therapies.

In September 2006, we announced the publication of a research article in the journal Science that provided strong scientific evidence for combining VDAs with anti-angiogenic agents such as bevacizumab, a widely-used anti-angiogenic drug that acts by inhibiting VEGF, a pro-angiogenic growth factor. In this article Professor Kerbel and Dr. Shaked from Sunnybrook Cancer Centre in Canada demonstrated that the combination of ZYBRESTAT and an anti-angiogenic agent (an anti-VEGF-receptor antibody) had synergistic effects on tumors.

In December 2007, we completed a Phase Ib clinical trial to evaluate ZYBRESTAT in combination bevacizumab (an approved and widely-used anti-VEGF monoclonal antibody) in patients with advanced solid tumors. This was the first human clinical trial to pair a vascular disrupting agent and an anti-angiogenic drug in the treatment of cancer, specifically in patients who had failed previous treatments and were in advanced stages of disease. The trial was an open-label, multi-center trial designed to determine the safety and tolerability of ascending doses of ZYBRESTAT administered intravenously in combination with bevacizumab. Three dose levels of ZYBRESTAT were evaluated in combination with an approved dose of bevacizumab. In May of 2008, we reported final data from the trial showing that the two-drug combination appeared to be well-tolerated with early signs of clinical efficacy (9 of 16 patients with stable disease responses with prolonged stable disease observed in several patients) and additive effects on tumor blood-flow inhibition.

We believe that these pre-clinical and clinical research results suggest combining VDA and anti-angiogenic therapies may be a compelling strategy to maximize the therapeutic potential of VDAs and anti-angiogenic drugs in the treatment of solid tumors. We believe the potential ability to synergistically combine VDA drugs with anti-angiogenic therapeutics affords it a wide range of future development and commercialization options with its VDA drug candidates, including tumor types and treatment settings where anti-angiogenic drugs are commonly utilized, as well as those where anti-angiogenic agents are either poorly tolerated, ineffective, no longer effective, or not commonly utilized.

As illustrated in the table below, VDA and anti-angiogenic drugs act via different mechanisms to produce complementary biological and anti-vascular effects with mostly non-overlapping side effects. In pre-clinical studies, VDA plus anti-angiogenic drug combinations demonstrate robust and additive anti-tumor effects. Results from

initial human clinical studies conducted by us with combinations of ZYBRESTAT and the widely-used anti-angiogenic drug, bevacizumab, provide support and initial clinical validation for combining these agents to significantly increase clinical activity without significantly increasing side-effects.


	1^ST-Generation Anti-Vascular Drugs	2^ND-Generation Anti-Vascular Drugs
	Anti-AngiogenicDrugs (bevacizumab, ranibizumab, sorafenib, sunitinib, pegaptanib, etc.)	OXiGENE VDA Drug Candidates (ZYBRESTAT, OXi4503)

Biological Effect	Prevent formation and growth of new blood vessels throughout the body	Selectively occlude and collapse pre-existing tumor vessels

Mechanism	Continuously inhibit pro-angiogenic growth factor signaling (e.g., VEGF) Promiscuous for all angiogenesis	Intermittently and reversibly collapses the tubulin cytoskeleton vascular endothelial cells, causing vascular endothelial cells lining fragile and immature tumor vasculature to change shape, occlude and collapse tumor vessels

		Selectively disrupts the endothelial cell junctional protein, VE-cadherin, in tumor vessels and other abnormal vessels

		ZYBRESTAT half-life is approximately 4 hours

		Selective for abnormal vasculature characteristic of tumors and ocular lesions

Rapidity of Effect	Weeks	Hours

Side Effects	Vascular and non-vascular side-effects, some of which are chronic in nature, e.g., chronic hypertension, wound-healing impairment, hemorrhage/hemoptysis, gastrointestinal perforation, proteinuria/nephrotic syndrome, thromboembolic events, etc.	Transient and manageable, Typical of a “vascularly active” which are chronic in agent (e.g., transient and manageable hypertension)

		Mostly non-overlapping with anti-angiogenics

		Compare favorably with anti-angiogenics

We believe our VDA drug candidates act on tumor blood vessels via two complementary mechanisms, tubulin depolymerization and disengagement of the junctional protein VE-cadherin, so as to cause shape change of tumor

vascular endothelial cells, vessel occlusion and collapse, and the subsequent blockage of blood-flow to the tumor, which deprives it of oxygen and nutrients essential for survival.

In vitro studies have demonstrated that our VDA drug candidates act in a reversible fashion on a protein called tubulin inside newly-formed and growing endothelial cells, such as the vascular endothelial cells comprising tumor vasculature. By binding to the tubulin, ZYBRESTAT is able to collapse the structural framework that maintains the cells’ flat shape. When this occurs, the shape of the cells changes from flat to round, initiating a cascade of events resulting in physical blockage of the blood vessels. The resulting shutdown in blood-flow then deprives tumor cells of the oxygen and nutrients necessary for maintenance and growth and also prevents tumor cells from being able to excrete toxic metabolic waste products. The consequence of the blockage is extensive tumor cell death, as demonstrated in animal studies and suggested in imaging studies of human patients treated with ZYBRESTAT and OXi4503.

Pre-clinical research, published in the November 2005 issue of the Journal of Clinical Investigation, showed that ZYBRESTAT also disrupts the molecular engagement of VE-cadherin, a junctional protein important for endothelial cell survival and function. The authors of the research article conclude that this effect only occurs in endothelial cells which lack contact with smooth muscle cells, a known feature of abnormal vasculature associated with tumors and other disease processes. The disengagement of VE-cadherin leads to endothelial cell detachment, which in turn, can cause permanent physical blockage of vessels.

Pre-clinical and clinical study results indicate that ZYBRESTAT exerts anti-vascular effects rapidly, within hours of administration, and the half-life of the active form of ZYBRESTAT in humans is approximately four hours. Because the half-life of the active form of ZYBRESTAT is relatively short, the effects of ZYBRESTAT on tubulin are reversible, and ZYBRESTAT is typically administered no more frequently than once per week, the side-effects of ZYBRESTAT are typically transient in nature, limited to the period of time following administration when the active form of ZYBRESTAT is in the body in significant concentrations. This contrasts with anti-angiogenic agents, which are typically administered on a chronic basis so as to constantly maintain levels of drug in the body, exert their tumor blood-vessel growth inhibiting effects over days to weeks, and as a result can cause a variety of chronic side-effects that are not limited to the immediate period following administration.

In contrast with anti-angiogenic agents, which can cause a variety of chronic side-effects, side-effects associated with ZYBRESTAT are typically transient and manageable. The most frequent ZYBRESTAT side-effects include infusion-related side effects such as nausea, vomiting, headache and fatigue, and tumor pain, which is consistent with the drug’s mechanism-of-action. Like approved anti-angiogenic drugs, ZYBRESTAT also exhibits cardiovascular effects, which in the majority of patients are mild and transient and transient in nature. Approximately 10-20% of patients treated with ZYBRESTAT experience clinically-significant and transient hypertension that can be readily managed and prevented after initial occurrence with straightforward oral anti-hypertensive therapy. In an analysis undertaken by us, the incidence of serious cardiovascular side-effects such as angina and myocardial ischemia observed across all studies to date (including early studies in which hypertension management and prevention was not employed) was less than 3%, a frequency comparable to that reported with approved anti-angiogenic agents such as bevacizumab, sunitinib and sorafenib.

RESEARCH AND DEVELOPMENT AND COLLABORATIVE ARRANGEMENTS

Our strategy is to develop innovative therapeutics for oncology and to leverage our drug candidates and technology in the field of ophthalmology. Our principal focus, in the foreseeable future, is to advance the clinical development of our drug candidates ZYBRESTAT and OXi4503 and to identify new pre-clinical candidates that are complementary to our VDAs. To advance our strategy, we have established relationships with universities, research organizations and other institutions in these fields.

We intend to broaden these relationships, rather than expand its in-house research and development staff. In general, these programs are created, developed and controlled by our internal management. Currently, we have collaborative agreements and arrangements with a number of institutions in the United States and abroad, which we utilize to perform the day-to-day activities associated with drug development. In 2009, collaborations were ongoing with a variety of university and research institutions, including the following:



	•		Baylor University, Waco, Texas;



	•		Beth Israel Deaconess Medical Center, Boston, Massachusetts;

	•		University of Oxford, Oxford United Kingdom; and

	•		University College London, London, United Kingdom.

We have secured a technology license from Arizona State University (ASU). The ASU license is an exclusive, world-wide, royalty-bearing license with respect to the commercial rights to particular Combretastatins. Under the ASU license, we have the right to grant sublicenses. ASU is entitled to royalty and milestone payments under the license agreement. We bear the costs of preparing, filing, prosecuting and maintaining all patent applications under the ASU license. Under the license agreement, we have agreed to diligently proceed with the development, manufacture and sale of products using the licensed technology. ASU has the first responsibility of enforcing patents under the license agreement. Either party may terminate the license agreement upon material default or bankruptcy of the other party. Payments made to ASU to date have amounted to $2,500,000. The agreement is to terminate on December 31, 2014 or within two months of receipt of written notice of termination from us.

We also have a license from Baylor University. The Baylor license is an exclusive license to all novel compositions developed for the treatment of vascular disorders, inflammation, parasitic diseases and infections, fungal diseases and infections and/or cancer. We have the right to grant sublicenses under the Baylor license. The agreement with Baylor stipulates that royalties will be paid by us should sales be generated through use of Baylor’s compounds. We are not required to pay Baylor for use of Baylor’s compounds aside from this royalty arrangement. We are entitled to file, prosecute and maintain patent applications on products for which we have a license. We had made a one-time payment of $50,000 for the licensing fee that was used as a credit against research expenses generated by Baylor.

Under a sponsored research agreement with Baylor University, we are pursuing discovery and development of additional novel, small-molecule therapeutics for the treatment of cancer, including small-molecule cathepsin-L inhibitors and hypoxia-activated VDAs. Cathepsin-L is an enzyme involved in protein degradation and has been shown to be closely involved in the processes of angiogenesis and metastasis. Small molecule inhibitors may have the potential to slow tumor growth and metastasis in a manner we believe could be complementary with our VDA therapeutics. We also believe that our hypoxia-activated VDAs could serve as line-extension products to ZYBRESTAT and/or OXi4503.

REGULATORY MATTERS

Government Regulation and Product Approval

Government authorities in the United States, at the federal, state and local level, and other countries extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, marketing and export and import of products such as those we are developing. Our drugs must be approved by FDA through the new drug application, or NDA, process before they may be legally marketed in the United States.

U.S. Drug Development Process

In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FDCA, and implementing regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local, and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure to comply with the applicable United States requirements at any time during the product development process, approval process or after approval, may subject an applicant to administrative or judicial sanctions. These sanctions could include the FDA’s refusal to approve pending applications, withdrawal of an approval, a clinical hold, warning letters, product recalls, product seizures, total or partial suspension of production or distribution injunctions, fines, refusal of government contracts, restitution, disgorgement, or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on us. The process required by the FDA before a drug may be marketed in the United States generally involves the following:

	•		completion of pre-clinical laboratory tests, animal studies and formulation studies according to Good Laboratory Practices or other applicable regulations;

	•		submission to the FDA of an investigational new drug application, or IND, which must become effective before human clinical trials may begin;

	•		performance of adequate and well-controlled human clinical trials according to Good Clinical Practices to establish the safety and efficacy of the proposed drug for its intended use;

	•		submission to the FDA of an NDA;

	•		satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current good manufacturing practice, or cGMP, to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity;


	•		satisfactory completion of FDA inspections of clinical sites and GLP toxicology studies; and


	•		FDA review and approval of the NDA.

The testing and approval process requires substantial time, effort and financial resources, and we cannot be certain that any approvals for our product candidates will be granted on a timely basis, if at all.

Once a pharmaceutical candidate is identified for development it enters the pre-clinical testing stage. Pre-clinical tests include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies. An IND sponsor must submit the results of the pre-clinical tests, together with manufacturing information and analytical data, to the FDA as part of the IND. The sponsor will also include a protocol detailing, among other things, the objectives of the clinical trial, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated, if the first phase lends itself to an efficacy evaluation. Pre-clinical testing continues even after the IND is submitted. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, places the clinical trial on a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Clinical holds also may be imposed by the FDA at any time before or during studies due to safety concerns or non-compliance.

All clinical trials must be conducted under the supervision of one or more qualified investigators in accordance with Good Clinical Practice regulations. These regulations include the requirement that all research subjects provide informed consent. Further, an institutional review board, or IRB, must review and approve the plan for any clinical trial before it commences at any institution. An IRB considers, among other things, whether the risks to individuals participating in the trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the information regarding the trial and the consent form that must be provided to each trial subject or his or her legal representative and must monitor the study until completed.

Each new clinical protocol must be submitted to the IND for FDA review, and to the IRBs for approval. Protocols detail, among other things, the objectives of the study, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subject safety.

Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:

	•		Phase I: The drug is initially introduced into healthy human subjects and tested for safety, dosage tolerance, absorption, metabolism, distribution and excretion. In the case of some products for severe or life-threatening diseases, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients.

	•		Phase II: Involves studies in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage.

	•		Phase III: Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population at geographically dispersed clinical study sites. These studies are intended to establish the overall risk-benefit ratio of the product and provide, if appropriate, an adequate basis for product labeling.

During the development of a new drug, sponsors may, under certain circumstances request a special protocol assessment, or SPA, from the FDA. For example, a sponsor may request an SPA of a protocol for a clinical trial that will form the primary basis of an efficacy claim in an NDA. The request, which must be made prior to commencing the trial, must include the proposed protocol and protocol-specific questions that the sponsor would like the FDA to answer regarding the protocol design, study goals and data analysis for the proposed investigation. After receiving the request, the FDA will consider whether the submission is appropriate for an SPA. If an SPA is appropriate, the FDA will base its assessment on the questions posed by the sponsor. Comments from the FDA review team are

supposed to be sent to the sponsor within 45 calendar days of receipt of the request. The sponsor may request a meeting to discuss the comments and any remaining issues and uncertainties regarding the protocol. If the sponsor and the FDA reach agreement regarding the protocol, the agreement will be documented and made part of the administrative record. This agreement may not be changed by the sponsor or the FDA after the trial begins, except (1) with the written agreement of the sponsor and the FDA or (2) if the FDA determines that a substantial scientific issue essential to determining the safety or effectiveness of the drug was identified after the testing began.

Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA. IND Safety Reports must be submitted to the FDA, IRBs and the investigators for any adverse experience associated with the use of the drug that is both serious and unexpected and any finding from tests in animals that suggests a significant risk to human subjects. Phase I, Phase II, and Phase III testing may not be completed successfully within any specified period, if at all. The FDA or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.

Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug and finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final drug. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.

U.S. Review and Approval Processes

The results of product development, pre-clinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, proposed labeling, and other relevant information are submitted to the FDA as part of an NDA requesting approval to market the product. The submission of an NDA is subject to the payment of user fees; a waiver of such fees may be obtained under certain limited circumstances.

In addition, under the Pediatric Research Equity Act, or PREA, an NDA or supplement to an NDA must contain data to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the drug is safe and effective. The FDA may grant deferrals for submission of data or full or partial waivers. Unless otherwise required by regulation, PREA does not apply to any drug for an indication for which orphan designation has been granted.

The FDA reviews all NDAs submitted to ensure that they are sufficiently complete for substantive review before it accepts them for filing. The FDA may request additional information rather than accept an NDA for filing. In this event, the NDA must be resubmitted with the additional information. The resubmitted application also is subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review. FDA may refer the NDA to an advisory committee for review, evaluation and recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. The approval process is lengthy and difficult and the FDA may refuse to approve an NDA if the applicable regulatory criteria are not satisfied or may require additional clinical or other data and information. Even if such data and information are submitted, the FDA may ultimately decide that the NDA does not satisfy the criteria for approval. Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently than we interpret the same data. The FDA may issue a complete response letter, which may require additional clinical or other data or impose other conditions that must be met in order to secure final approval of the NDA. The FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and whether its manufacturing is cGMP-compliant to assure and preserve the product’s identity, strength, quality and purity. Before approving an NDA, the FDA will inspect the facility or facilities where the product is manufactured. The FDA will also inspect selected clinical sites that participated in the clinical studies and may inspect the testing facilities that performed the GLP toxicology studies cited in the NDA.

NDAs receive either standard or priority review. A drug representing a significant improvement in treatment, prevention or diagnosis of disease may receive priority review. In addition, products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval and may be approved on the basis of adequate and well-controlled clinical trials establishing that the drug product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit or on the basis of an effect on a clinical endpoint other than survival or irreversible morbidity. As a condition of approval, the FDA may require that a sponsor of a drug receiving accelerated approval perform adequate and well-controlled post-marketing clinical trials. Priority review and accelerated approval do not change the standards for approval, but may expedite the approval process.

If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product. In addition, the FDA may require us to conduct Phase IV testing, which involves clinical trials designed to further assess a drug’s safety and effectiveness after NDA approval, and may require testing and surveillance programs to monitor the safety of approved products which have been commercialized.

Patent Term Restoration and Marketing Exclusivity

Depending upon the timing, duration and specifics of FDA approval of the use of our drugs, some of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date. The patent term restoration period is generally one-half the time between the effective date of an IND, and the submission date of an NDA, plus the time between the submission date of an NDA and the approval of that application. Only one patent applicable to an approved drug is eligible for the extension and the extension must be applied for prior to expiration of the patent. The United States Patent and Trademark Office, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration. In the future, we intend to apply for restorations of patent term for some of our currently owned or licensed patents to add patent life beyond their current expiration date, depending on the expected length of clinical trials and other factors involved in the filing of the relevant NDA. Provisions similar to those in the U.S. for patent term restoration are available in the European Union, Japan and other countries and regions. For example, in the European Union, a Supplemental Protection Certificate may be utilized to extend patent life of a drug product for up to a maximum of five years.

Market exclusivity provisions under the FDCA also can delay the submission or the approval of certain applications. The FDCA provides a five-year period of non-patent marketing exclusivity within the United States to the first applicant to gain approval of an NDA for a new chemical entity. A drug is a new chemical entity (NCE) if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance. During the exclusivity period, the FDA may not accept for review an abbreviated new drug application, or ANDAs, or a 505(b)(2) NDA submitted by another company for another version of such drug where the applicant does not own or have a legal right of reference to all the data required for approval. However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement. The FDCA also provides three years of marketing exclusivity for an NDA, 505(b)(2) NDA or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by FDA to be essential to the approval of the application, for example, for new indications, dosages, or strengths of an existing drug. This three-year exclusivity covers only the conditions associated with the new clinical investigations and does not prohibit the FDA from approving ANDAs for drugs containing the original active agent. Five-year and three-year exclusivity will not delay the submission or approval of a full NDA; however, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the pre-clinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.

With respect to territories outside the U.S., under Article 39.3 of the World Trade Organization’s Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), member countries are obliged to protect against unfair commercial use of confidential data on NCEs submitted by companies to obtain approval for marketing new drugs from a regulatory agency.

Statutory NCE exclusivity provisions in other territories provide for marketing exclusivity as outlined in the following table:


Country / Territory		NCE Marketing Exclusivity Period
European Union		10 years, with an additional year exclusivity available in event a new indication is obtained during the initial exclusivity period

New Zealand		5 years

Japan		6-10 years

China		6 years

Pediatric exclusivity is another type of exclusivity in the United States and the European Union. In the U.S., pediatric exclusivity, if granted, provides an additional six months to an existing exclusivity or statutory delay in approval resulting from a patent certification. This six-month exclusivity, which runs from the end of other exclusivity protection or patent delay, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study. The current pediatric exclusivity provision was reauthorized on September 27, 2007.

Orphan Drug Designation

Under the Orphan Drug Act, the FDA may grant orphan drug designation to a drug intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for this type of disease or condition will be recovered from sales in the United States for that drug. Orphan drug designation must be requested before submitting an NDA. After the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.

If a product that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications to market the same drug for the same indication, except in very limited circumstances, for seven years. Orphan drug exclusivity, however, also could block the approval of one of our products for seven years if a competitor obtains approval of the same drug as defined by the FDA or if our product candidate is determined to be contained within the competitor’s product for the same indication or disease.

The FDA also administers a clinical research grants program, whereby researchers may compete for funding to conduct clinical trials to support the approval of drugs, biologics, medical devices, and medical foods for rare diseases and conditions. A product does not have to be designated as an orphan drug to be eligible for the grant program. An application for an orphan grant should propose one discrete clinical study to facilitate FDA approval of the product for a rare disease or condition. The study may address an unapproved new product or an unapproved new use for a product already on the market.

In the European Union and Japan, orphan drug exclusivity regulations provide for 10 years of marketing exclusivity for orphan drugs that are approved for the treatment of rare diseases or conditions.

ZYBRESTAT was awarded orphan drug status by the FDA and the European Commission in the European Union for the treatment of advanced ATC and for the treatment of medullary, Stage IV papillary and Stage IV follicular thyroid cancers.

Expedited Review and Approval

The FDA has various programs, including Fast Track, priority review, and accelerated approval, that are intended to expedite or simplify the process for reviewing drugs, and/or provide for approval on the basis of surrogate endpoints. Even if a drug qualifies for one or more of these programs, we cannot be sure that the FDA will not later decide that the drug no longer meets the conditions for qualification or that the time period for FDA review or approval will be shortened. Generally, drugs that may be eligible for these programs are those for serious or life-threatening conditions, those with the potential to address unmet medical needs, and those that offer meaningful benefits over existing treatments. Fast Track designation applies to the combination of the product and the specific

indication for which it is being studied. Although Fast Track and priority review do not affect the standards for approval, the FDA will attempt to facilitate early and frequent meetings with a sponsor of a Fast Track designated drug and expedite review of the application for a drug designated for priority review. Drugs that receive an accelerated approval may be approved on the basis of adequate and well-controlled clinical trials establishing that the drug product has an effect of a surrogate endpoint that is reasonably likely to predict clinical benefit or on the basis of an effect on a clinical endpoint other than survival or irreversible morbidity. As a condition of approval, the FDA may require that a sponsor of a drug receiving accelerated approval perform post-marketing clinical trials.

The FDA has granted Fast Track designation to ZYBRESTAT for the treatment of regionally advanced and/or metastatic ATC.

Post-Approval Requirements

Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product from the market. After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further FDA review and approval. Drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP and other laws. We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our products. Future FDA and state inspections may identify compliance issues at the facilities of our contract manufacturers that may disrupt production or distribution, or require substantial resources to correct.

Any drug products manufactured or distributed by us pursuant to FDA approvals are subject to continuing regulation by the FDA, including, among other things, record-keeping requirements, reporting of adverse experiences with the drug, providing the FDA with updated safety and efficacy information, drug sampling and distribution requirements, complying with certain electronic records and signature requirements, and complying with FDA promotion and advertising requirements. FDA strictly regulates labeling, advertising, promotion and other types of information on products that are placed on the market. Drugs may be promoted only for the approved indications and in accordance with the provisions of the approved label.

From time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory provisions governing the approval, manufacturing and marketing of products regulated by the FDA. For example, on September 27, 2007, the Food and Drug Administration Amendments Act of 2007 was enacted, giving the FDA enhanced post-market authority, including the authority to require postmarket studies and clinical trials, labeling changes based on new safety information, and compliance with a risk evaluation and mitigation strategy approved by the FDA. Failure to comply with any requirements under the new law may result in significant penalties. The new law also authorizes significant civil money penalties for the dissemination of false or misleading direct-to-consumer advertisements, and allows the FDA to require companies to submit direct-to-consumer television drug advertisements for FDA review prior to public dissemination. Additionally, the new law expands the clinical trial registry so that sponsors of all clinical trials, except for phase I trials, are required to submit certain clinical trial information for inclusion in the clinical trial registry data bank. In addition, to new legislation, FDA regulations and guidance are often revised or reinterpreted by the agency in ways that may significantly affect our business and our products. It is impossible to predict whether further legislative changes will be enacted, or FDA regulations, guidance or interpretations changed or what the impact of such changes, if any, may be.

Foreign Regulation

In addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of our products. Whether or not we obtain FDA approval for a product, we must obtain approval of a product by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those countries. The approval process varies from country to country and the time may be longer or shorter than that required for FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.

Under European Union regulatory systems, we may submit marketing authorization applications either under a centralized or decentralized procedure. The centralized procedure is compulsory for medicines produced by certain

biotechnological processes such as genetic engineering, new chemical entities intended for the treatment of HIV/AIDS, cancer, diabetes, neurodegenerative disorders or autoimmune diseases and other immune dysfunctions, or officially designated “orphan medicines’ and optional for those which are highly innovative. The centralized procedure provides for the grant of a single marketing authorization that is valid for all European Union member states (Member States), as well as in the EEA/EFTA states Iceland, Liechtenstein and Norway. For drugs without approval in any Member State and that do not fall within the mandatory scope of the centralized procedure, the decentralized procedure provides for simultaneous approval by one or more other, or concerned, Member States of an assessment of an application performed by one Member State, known as the reference Member State. Under this procedure, an applicant submits an application, or dossier, and related materials (draft summary of product characteristics, draft labeling and package leaflet) to the reference Member State and concerned Member States. The reference Member State prepares a draft assessment report and drafts of the related materials within 120 days after receipt of a valid application. Within 90 days of receiving the reference Member State’s assessment report, each concerned Member State must decide whether to approve the assessment report and related materials. If a Member State cannot approve the assessment report and related materials on the grounds of potential serious risk to public health, the disputed points may eventually be referred to the European Commission, whose decision is binding on all Member States.

As in the U.S., the European Union may grant orphan drug status for specific indications if the request is made before an application for marketing authorization is made. The European Union considers an orphan medicinal product to be one that affects less than five of every 10,000 people in the European Union. A company whose application for orphan drug designation in the European Union is approved is eligible to receive, among other benefits, regulatory assistance in preparing the marketing application, protocol assistance, access to the Centralized Procedure and reduced application fees. Orphan drugs in the European Union also enjoy economic and marketing benefits, including up to ten years of market exclusivity for the approved indication, unless another applicant can show that its product is safer, more effective or otherwise clinically superior to the orphan designated product. In the European Union and Japan, orphan drug exclusivity regulations provide for 10 years of marketing exclusivity for orphan drugs approved for the treatment of rare diseases or conditions.

Reimbursement

Sales of pharmaceutical products depend in significant part on the availability of third-party reimbursement. Third-party payors include government health administrative authorities, managed care providers, private health insurers and other organizations. We anticipate third-party payers will provide reimbursement for our products. However, these third-party payers are increasingly challenging the price and examining the cost-effectiveness of medical products and services. In addition, significant uncertainty exists as to the reimbursement status of newly approved healthcare products. We may need to conduct expensive pharmacoeconomic studies in order to demonstrate the cost-effectiveness of our products. Our product candidates may not be considered cost-effective. It is time consuming and expensive for us to seek reimbursement from third-party payers. Reimbursement may not be available or sufficient to allow us to sell our products on a competitive and profitable basis.

In March 2010, President Obama signed into law one or the most significant health care reform measures in decades. The PPACA will, among other things, increase the number of insured individuals, require coverage of certain products and procedures that are not currently routinely provided, support quality and cost effective analyses of medical care and treatments and change the way that reimbursement for pharmaceuticals under some governmental health programs are calculated. Many of these requirements will become effective over the next few years, although some of the requirements are already being challenged in the courts. We cannot predictr the effect that the PPACA will have on us. However, any expansion in government’s role in the U.S. healthcare industry may lower reimbursements for our product candidates, reduce medical procedure volumes and adversely affect our business. If other significant reforms are made to the healthcare system in the United States, or in other jurisdictions, those reforms may have an adverse effect on our business, financial condition and results of operations.

The passage of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or the MMA, imposes new requirements for the distribution and pricing of prescription drugs for Medicare beneficiaries, and includes a major expansion of the prescription drug benefit under Medicare Part D. Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities which will provide coverage of outpatient prescription drugs. Part D plans include both stand-alone prescription drug benefit plans and prescription drug coverage as a supplement to Medicare Advantage plans. Unlike Medicare Part A and B, Part D coverage is not standardized. Part D prescription drug plan sponsors are not required to pay for all covered Part D drugs, and each

drug plan can develop its own drug formulary that identifies which drugs it will cover and at what tier or level. However, Part D prescription drug formularies must include drugs within each therapeutic category and class of covered Part D drugs, though not necessarily all the drugs in each category or class. Any formulary used by a Part D prescription drug plan must be developed and reviewed by a pharmacy and therapeutic committee. It is not clear what effect the MMA will have on the pricing options for new drugs such as the types that we are developing. Moreover, while the MMA applies only to drug benefits for Medicare beneficiaries, private payers often follow Medicare coverage policy and payment limitations in setting their own payment rates. Any reduction in payment that results from the MMA may result in a similar reduction in payments from non-governmental payers.

We expect that there will continue to be a number of federal and state proposals to implement governmental pricing controls and limit the growth of healthcare costs, including the cost of prescription drugs. At the present time, Medicare is prohibited from negotiating directly with pharmaceutical companies for drugs.

In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing vary widely from country to country. For example, the European Union provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A Member State may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products.

PATENTS AND TRADE SECRETS

We are able to protect our technology from unauthorized use by third parties only to the extent that it is covered by valid and enforceable patents or is effectively maintained as a trade secret. Accordingly, patents or other proprietary rights are an essential element of our business. As of May 31, 2010, we were the exclusive licensee, sole assignee or co-assignee of twenty-nine (29) granted United States patents, twenty (20) pending United States patent applications, and granted patents and/or pending applications in several other major markets, including the European Union, Canada and Japan. Our policy is to file United States and foreign patent applications to protect technology, inventions and improvements to inventions that are commercially important to the development of our business. There can be no assurance that any of these patent applications will result in the grant of a patent either in the United States or elsewhere, or that any patents granted will be valid and enforceable, or will provide a competitive advantage or will afford protection against competitors with similar technologies. We also intend to rely upon trade secret rights to protect other technologies that may be used to discover and validate targets and that may be used to identify and develop novel drugs. We seek protection, in part, through confidentiality and proprietary information agreements.

We have exclusively licensed from the Arizona Board of Regents, a corporate body of the State of Arizona, acting for and on behalf of Arizona State University (ASU) certain U.S. and international intellectual property rights to develop and commercialize combretastatins and combretastatin derivatives for a range of indications. Such patents expire between 2013 and 2021. We have exclusively licensed from Bristol Myers- Squibb certain U.S. and international intellectual property rights drawn to certain amine salts of combretastatin A-4 phosphate, including the salt form currently being developed by us, and the CA4P/paclitaxel combination. The U.S. patents expire in December 2021. The license from Bristol Myers-Squibb includes extensive international protection of the licensed invention.

COMPETITION

The industry in which we are engaged is characterized by rapidly evolving technology and intense competition. Our competitors include, among others, major pharmaceutical, biopharmaceutical and biotechnology companies, many of which have financial, technical and marketing resources significantly greater than ours. In addition, many of the small companies that compete with us have also formed collaborative relationships with large, established companies to support research, development, clinical trials and commercialization of products that may be competitive with ours. Academic institutions, governmental agencies and other public and private research organizations are also conducting research activities and seeking patent protection and may commercialize products on their own or through joint ventures or other collaborations.

We are aware of a limited number of companies involved in the development of VDAs. Such companies include Novartis (in collaboration with Antisoma), Sanofi-Aventis, Myriad Pharmaceuticals, Nereus and

MediciNova, all of which have VDAs that management believes are at an earlier or similar stage of clinical development than our lead drug candidate, ZYBRESTAT.

We expect that, if any of our products gain regulatory approval for sale, they will compete primarily on the basis of product efficacy, safety, patient convenience, reliability, price and patent protection. Our competitive position will also depend on our ability to attract and retain qualified scientific and other personnel, develop effective proprietary products and implement joint ventures or other alliances with large pharmaceutical companies in order to jointly market and manufacture its products.

EMPLOYEES

We expect to continue to maintain a relatively small number of executives and other employees. We rely on outsourcing much of our research, development, pre-clinical testing and clinical trial activity, although we maintain managerial and quality control over our clinical trials. As of May 27, 2010, we had a total of 25 employees, including 23 full-time employees, of which 16 were engaged in research and development and monitoring of clinical trials.

PROPERTIES

Our corporate headquarters is located in South San Francisco, California. In November 2008, we executed a lease for 7,038 square feet (Suite 210) of office space located in South San Francisco, California. We agreed to lease an additional 5,275 square feet (Suite 270) of office space in the same building beginning in the first quarter of 2009. The lease agreement is for an estimated 52 months. In April 2009, we executed a lease for 3,891 square feet of office space located in Waltham, Massachusetts. The lease is for a period of two years commencing on June 1, 2009. Annual rent payments under the lease will be $73,929 and $77,820 in the first and second years, respectively. We continue to pay rent on our former headquarters location in Watertown, Massachusetts which we have sublet through the end of the primary lease term which expires in November 2010.

LEGAL PROCEEDINGS

The Company is not a party to any material litigation in any court, and management is not aware of any contemplated proceeding by any governmental authority against the Company.

SCIENTIFIC ADVISORY BOARD AND CLINICAL TRIAL ADVISORY BOARD

Our Clinical Trial Advisory Board assesses and evaluates our clinical trial program. The Scientific Advisory Board discusses and evaluates our research and development projects. Members of the Clinical Trial Advisory Board and the Scientific Advisory Board are independent and have no involvement with us other than serving on such boards. From time to time, however, the institutions or organizations these individuals are associated with may provide us with services.

The members of our Clinical Trial Advisory Board are:

HILARY CALVERT, MB, is the Clinical Director of the Northern Institute for Cancer Research and Professor of Medical Oncology at the University of Newcastle upon Tyne, England.

JEFFREY S. HEIER, M.D. is a Vitreoretinal Specialist at Ophthalmic Consultants of Boston, Co-Director of the Vitreoretinal Fellowship at OCB/Tufts Medical School, and President of the Center for Eye Research and Education in Boston, Massachusetts.

STANLEY KAYE, M.D., BSc, is currently Head of the Drug Development Unit and Head of the Section of Medicine at the Royal Marsden Hospital/Institute of Cancer Research, London.

HAKAN MELLSTEDT, M.D., Ph.D. (Chairman) is Professor of Oncologic Biotherapy at the Karolinska Institute and Managing Director of Cancer Center Karolinska, Karolinska Institute, Stockholm, Sweden.

LEE S. ROSEN, M.D. is the Director of Developmental Therapeutics for the Cancer Institute Medical Group, affiliated with the John Wayne Cancer Institute in Santa Monica.

GORDON RUSTIN, M.D. is the Director of Medical Oncology at Mount Vernon Hospital, which is the largest cancer center in the South of England.

JAN B. VERMORKEN, M.D., Ph.D. is a professor of Oncology and head of the Department of Medical Oncology of the University Hospital of the University of Antwerp, Belgium.

The members of our Scientific Advisory Board are:

ADRIAN L. HARRIS, M.D. is Cancer Research UK Professor of Clinical Oncology at the University of Oxford, and Director of the Cancer Research UK Molecular Oncology Laboratories at the University’s Weatherall Institute of Molecular Medicine.

ROBERT S. KERBEL, Ph.D. is a Canada Research Chair in Molecular Medicine and a Professor in the Departments of Medical Biophysics, and Laboratory Medicine & Pathobiology at the University of Toronto.

DIETMAR W. SIEMANN, Ph.D. (Chairman) is the John P. Cofrin Professor and Associate Chair for Research in Radiation Oncology at the University of Florida College of Medicine in Gainesville.

Some members of the Scientific Advisory Board and the Clinical Trial Advisory Board receive cash compensation. Others have from time to time received, and are expected to continue to receive, options to purchase shares of common stock of OXiGENE. All members are reimbursed for reasonable out-of-pocket expenses incurred in connection with serving on such boards.

MANAGEMENT

Directors and Executive Officers

The following information with respect to our directors and executive officers has been furnished to us by the directors and executive officers. The ages of the directors and executive officers are as of May 27, 2010. We currently employ Dr. Langecker as our Chief Executive Officer.

Directors


ROY HAMPTON FICKLING

Age:		44

Director Since:		2007

Principal Occupation:		Mr. Fickling has been the owner and President of Fickling & Company, Inc., a Macon, Georgia-based regional real estate development, brokerage, management and consulting firm, since October 1993.

Business Experience:		Mr. Fickling was a founding Director of Rivoli Bank & Trust, of Macon and of Beech Street, U.K., Ltd. of London, England, an international healthcare administration firm. He was a major shareholder and advisor to Beech Street Corporation, the largest private PPO network, prior to its acquisition by Concentra, Inc. in 2005. Prior to forming Fickling & Company, Mr. Fickling was employed by Charter Medical Corporation where he worked in the administration of both a medical surgical hospital and a psychiatric hospital. Mr. Fickling holds a B.A. in Business Administration from the University of Georgia.

Other Directorships:		Mr. Fickling is a member of the board of directors of Piedmont Community Bank (public), and also serves on the board of directors of several closely held investment and operating companies.

Director Qualifications:		The Board highly values Mr. Fickling’s experiences in financial, consulting, healthcare administration, and real estate matters, developed in the course of his career as a senior executive in those industries. The Board believes that these experiences and skills are invaluable characteristics that Mr. Fickling brings to his Board service, and led to the Board’s conclusion that Mr. Fickling should be a member of the Board of Directors.

TAMAR D. HOWSON

Age:		61

Director Since:		2010


Principal Occupation:		Ms. Howson is currently a Partner with JSB-Partners, a transaction advisory firm serving the life sciences industry.

Business Experience:		Ms. Howson formerly served as Executive Vice President of Corporate Development for Lexicon Pharmaceuticals. Prior to Lexicon, she served as Senior Vice President of Corporate and Business Development and was a member of the executive committee at Bristol-Myers Squibb. During her tenure there, Ms. Howson was responsible for leading the company’s efforts in external alliances, licensing and acquisitions. Earlier, Ms. Howson served as Senior Vice President and Director of Business Development at SmithKline Beecham. She also managed SR One Ltd., the $100 million venture capital fund of SmithKline Beecham. Ms. Howson has served as an independent business consultant and adviser to companies both in the United States and in Europe. She held the position of Vice President, Venture Investments at Johnston Associates, a venture capital firm, and earlier as Director of Worldwide Business Development and Licensing for Squibb Corporation. Ms. Howson received her M.B.A. in finance and international business from Columbia University. Educated as a chemical engineer, she holds a M.S. from the City College of New York and a B.S. from the Technion in Israel.

Other Directorships:		Ms. Howson currently serves on the boards of Idenix Pharmaceuticals, Inc. (Nasdaq:IDIX), a biopharmaceutical company engaged in the discovery and development of drugs for the treatment of human viral diseases, and S*Bio Pte Ltd. She also serves as a consultant to Pitango Venture Fund and is a member of the advisory board to Triana Venture Partners. She previously served on the boards of Ariad Pharmaceuticals, SkyePharma, NPS Pharma, Targacept, and HBA.

Director Qualifications:		The Board highly values Ms. Howson’s significant business development and life sciences industry expertise, developed through her career as a senior professional at several leading pharmaceutical companies. The Board believes that these characteristics uniquely qualify Ms. Howson to serve as a director of the Company and led to the Board’s conclusion that she should be a member of the Board of Directors.

MARK KESSEL

Age:		68

Director Since:		2008

Principal Occupation:		Mr. Kessel, a Managing Director of Symphony Capital LLC, co-founded Symphony in 2002 and is widely recognized as the leader in structuring product development investments for the biopharmaceutical industry.

Business Experience:		Mr. Kessel was formerly the Managing Partner of Shearman & Sterling LLP, with day-to-day operating responsibility for this large international law firm. He received a B.A. with honors in Economics from the City College of New York and a J.D. magna cum laude from Syracuse University College of Law. Mr. Kessel has written on financing for the biotech industry for Nature Reviews Drug Discovery, Nature Biotechnology and other publications, and on issues related to governance and audit committees for such publications as The Wall Street Journal, Financial Times, The Deal and Euromoney.

Other Directorships:		Mr. Kessel is a director and Chairman of Symphony Icon, Inc., and a director of Symphony Dynamo, Inc., all Symphony portfolio companies. In addition, Mr.


		Kessel is a director of the Global Alliance for TB Drug Development, Fondation Santé and the Biotechnology Industry Organization.

Director Qualifications:		The Board believes that Mr. Kessel’s leadership and expertise in matters of strategic transactions and financing for life sciences companies, coupled with his extensive executive management experience leading one of the world’s premier professional services organizations, uniquely qualify Mr. Kessel to serve as a director of the Company and led to the Board’s conclusion that Mr. Kessel should be a member of the Board of Directors.

PETER J. LANGECKER, M.D., PH.D.

Age:		59

Director Since:		2010

Principal Occupation:		Dr. Langecker joined OXiGENE as Executive Vice President and Chief Development Officer in June 2009 and was appointed Chief Executive Officer in October 2009.

Business Experience:		Dr. Langecker served as Chief Medical Officer of DURECT Corporation from May 2006 until June 2009. Prior to joining DURECT, Dr. Langecker served as Chief Medical Officer and Vice President of Clinical Affairs at Intarcia Therapeutics, Inc. from October 1999 to April 2006. Prior to that, Dr. Langecker was Vice President of Clinical Affairs at Sugen, Inc. from 1997 to 1999, Vice President, Clinical Research at Coulter Pharmaceuticals from 1995 to 1997 and Director of Clinical Research, Oncology, at Schering-Plough from 1992 to 1995. Previously, Dr. Langecker worked as a Project Physician-Central Medical Advisor, Oncology at Ciba-Geigy (now Novartis) in Basel, Switzerland. He received his M.D. degree and his doctorate in medical sciences from the Ludwig-Maximilians University in Munich.

Director Qualifications:		The Board believes that Dr. Langecker’s medical and scientific training, developed through his extensive career as a life sciences industry executive, uniquely qualify Dr. Langecker to serve as a director of the Company and led to the Board’s conclusion that Dr. Langecker should be a member of the Board of Directors.

WILLIAM D. SCHWIETERMAN, M.D.

Age:		52

Director Since:		2007

Principal Occupation:		Dr. Schwieterman has been an independent consultant to biotech and pharmaceutical companies specializing in clinical development since July 2002.

Business Experience:		Dr. Schwieterman is a board-certified internist and a rheumatologist who was formerly Chief of the Medicine Branch and Chief of the Immunology and Infectious Disease Branch in the Division of Clinical Trials at the FDA. In these capacities and others, Dr. Schwieterman spent 10 years at the FDA in the Center for Biologics overseeing a wide range of clinical development plans for a large number of different types of molecules. Dr. Schwieterman holds a B.S. and M.D. from the University of Cincinnati.

Director Qualifications:		The Board believes that Dr. Schwieterman’s medical training and his expertise with regulatory matters involving the Food and Drug Administration and the clinical trials process, are invaluable skills that Dr. Schwieterman brings to his Board service, and led to the Board’s conclusion that Dr. Schwieterman should be a member of the Board of Directors.


WILLIAM N. SHIEBLER

Age:		68

Director Since:		2002; Chairman of the Board since May 2009

Principal Occupation:		Mr. Shiebler is a principal in two family investment businesses — Tree Tops Investment LLC and Tree Tops Corporation LLC.

Business Experience:		From March 2002 to March 2007, Mr. Shiebler was the Advisory Vice Chairman and CEO of the Americas of Deutsche Asset Management, the asset arm of Deutsche Bank. Prior to joining Deutsche Bank, Mr. Shiebler was the President and CEO of Putnam Mutual Funds and prior to that he was President and COO of Dean Witter’s Intercapital Division.

Other Directorships:		Mr. Shiebler is a non-executive Chairman and a Director of Nextalk, Inc. (private), a director of Sallie Mae Bank in Murray, Utah (a subsidiary of Sallie Mae, Inc.) and an advisory board member of several corporations. Mr. Shiebler is currently a Trustee of the U.S. Ski and Snowboard Team Foundation, among other charitable and community organizations and privately held entities. Previously, Mr. Shiebler was a trustee or director of a number of other corporate and community organizations, including the Salt Lake Olympic Committee and Kean University. Mr. Shiebler was also a member of the Presidential Commission on Medicaid.

Director Qualifications:		The Board believes that Mr. Shiebler’s financial acumen, executive leadership skills, and his extensive experience developed in the course of his career as a senior executive in the financial services industry, uniquely qualify Mr. Shiebler to serve as a director of the Company and led to the Board’s conclusion that Mr. Shiebler should be a member of the Board of Directors.

ALASTAIR J.J. WOOD, M.D.

Age:		63

Director Since:		2008

Principal Occupation:		Dr. Wood, a Managing Director of Symphony Capital LLC, has worked with Symphony since its inception, initially as Chairman of Symphony’s Clinical Advisory Council, and joined the firm full-time in September 2006 as a Managing Director.

Business Experience:		Prior to joining Symphony Capital LLC full-time, Dr. Wood completed more than 30 years at Vanderbilt University School of Medicine, most recently as Associate Dean of External Affairs, where he was also Attending Physician and Tenured Professor of Medicine and Pharmacology. Dr. Wood is currently Professor of Medicine (courtesy appointment) and Professor of Pharmacology (courtesy appointment) at Weill Cornell Medical School, appointments served in an unpaid capacity. Dr. Wood has written or co-authored more than 300 scientific papers and won numerous honors including election to the National Academy of Sciences’ Institute of Medicine. He was until 2006 the chairman of the FDA’s Nonprescription Drugs Advisory Committee, and recently chaired the FDA Advisory Committee on Cox-2 inhibitors. He previously served as a member of the Cardiovascular and Renal Advisory Committee of the FDA, and the FDA’s Nonprescription Drugs Advisory Committee. Dr. Wood has been a member of and chaired National Institutes of Health study sections, served on the editorial boards of four major journals, and between 1992 and 2004 was the Drug Therapy Editor of The New England Journal of Medicine. Most recently, he was named to the Board of the Critical Path Institute. He earned his medical degree at the University of St. Andrews.


Other Directorships:		Dr. Wood is a director of Symphony Evolution, Inc. and a member of the Development Committees of Symphony Dynamo, Inc., Symphony Allegro, Inc. and Symphony Icon, Inc., all Symphony portfolio companies.

Director Qualifications:		The Board believes that Dr. Wood’s medical training and expertise in drug development, combined with his prior service as a member of several advisory committees to the Food and Drug Administration, uniquely qualify Dr. Wood to serve as a director of the Company and led to the Board’s conclusion that Dr. Wood should be a member of the Board of Directors.

Executive Officers

See above for biographical information pertaining to Peter J. Langecker, our Chief Executive Officer.

David Chaplin, Ph.D., 54, has served as our Chief Scientific Officer and Head of Research and Development since July 2000. From 1999 to 2000, Dr. Chaplin served as Vice President of Oncology at Aventis Pharma in Paris. Prior to the merger of Rhone Poulenc Rorer (“RPR”) with Hoechst Marion Roussell, Dr. Chaplin was Senior Director of Oncology at RPR from 1998 to 1999. From 1992 to 1998, Dr. Chaplin headed up the Cancer Research Campaign’s (“CRC”) Tumor Microcirculation Group, based at the Gray Laboratory Cancer Research Trust, Mount Vernon Hospital, London. During this time, he was also a member of the CRC Phase I/ II clinical trials committee. Dr. Chaplin also served as Section Head of Cancer Biology at Xenova in the U.K. from 1990 to 1992, and held a senior staff appointment at the British Columbia Cancer Research Centre from 1982 to 1990.

James B. Murphy, 53, was appointed as our Vice President and Chief Financial Officer in March 2004. From 2001 until May 2003, Mr. Murphy was Vice President of Finance for Whatman Inc., of Marlborough, Massachusetts, a subsidiary of U.K.-based Whatman plc (LSE: WHM), a publicly traded manufacturer of filtration and separation products for the pharmaceutical industry. From 1994 through 2001, Mr. Murphy worked at HemaSure (NASDAQ: HMSR), a spin-off of Sepracor, Inc., serving as the company’s Senior Vice President of Finance and Administration, and later as Senior Vice President and Chief Financial Officer. From 1990 to 1994, he was Corporate Controller at Sepracor (NASDAQ: SEPR), a diversified pharmaceutical, medical device and biotechnology products company based in Marlborough, Massachusetts. Mr. Murphy holds a B.A. in economics and accounting from the College of the Holy Cross and is registered as a Certified Public Accountant.

Board Composition

Our Board of Directors currently consists of seven members, including four members who are “Non-Employee Directors” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended. Under our by-laws, the number of members of our Board of Directors is fixed from time to time by the Board of Directors, and directors serve in office until the next annual meeting of stockholders and until their successors have been elected and qualified. The Board of Directors has set the size of the Board of Directors at seven, effective as of April 2, 2010,

Director Independence

Our Board of Directors has reviewed the materiality of any relationship between us and any of our directors, either directly or indirectly. Based on this review, the board has determined that four of our seven current directors are “independent directors” as defined by The NASDAQ Stock Market LLC, or NASDAQ. Our Board has determined that the following members of the Board qualify as independent under the definition promulgated by NASDAQ: Ms. Howson and Messrs. Roy H. Fickling, William D. Schwieterman and William N. Shiebler. All members of our committees of the Board of Directors are independent directors.

Compensation Committee Interlocks and Insider Participation

Our Compensation Committee currently consists of Messrs. Roy H. Fickling (Chairman) and William N. Shiebler. Neither of these directors are or have been employed by us.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table shows the total compensation paid or accrued during the fiscal years ended December 31, 2009 and December 31, 2008 to (1) our current Chief Executive Officer, (2) our Chief Financial Officer, (3) our former Chief Executive Officer and (4) our next most highly compensated executive officer who earned more than $100,000 during the fiscal year ended December 31, 2009.


											All Other
							Stock		Option		Compensation
Name	Year		Salary ($)		Bonus ($)		Awards ($)(1)		Awards ($)(1)		($)(2)		Total ($)
David Chaplin(3)		2009	$	282,220	$	—	$	74,298	$	27,530	$	—	$	384,048
Vice President and		2008	$	334,409	$	—	$	98,327	$	45,884	$	—	$	478,620
Chief Scientific Officer
Peter Langecker(4)		2009	$	236,923	$	—	$	—	$	41,926	$	464	$	279,313
Chief Executive Officer		2008	$	—	$	—	$	—	$	—	$	—	$	—
James Murphy		2009	$	245,000	$	—	$	37,151	$	63,244	$	663	$	346,058
Vice President and Chief		2008	$	245,000	$	—	$	49,158	$	64,923	$	2,327	$	361,408
Financial Officer
John Kollins(5)		2009	$	222,767	$	—	$	—	$	38,340	$	148,340	$	409,447
Former Chief Executive		2008	$	272,085	$	—	$	—	$	84,687	$	360	$	357,132
Officer



(1)		See Note 1 to our Condensed Consolidated Financial Statements reported in our Annual Report on Form 10-K for our fiscal year ended December 31, 2009 for details as to the assumptions used to determine the fair value of each of the stock awards and option awards set forth in this table, and Note 3 describing all forfeitures during fiscal year 2009. See also our discussion of stock-based compensation in our Form 10-K under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates.”



(2)		Other Compensation in 2008 for Mr. Murphy includes the reimbursement of fees and costs associated with providing corrected wage and earnings statements for prior years related to restricted stock compensation reporting.



(3)		Dr. Chaplin’s employment agreement provides that his salary be paid in British Pounds. The salary amounts presented above represent his annual salary of £180,257 converted into U.S. dollars at the average monthly conversion rate for the year presented.



(4)		Dr. Langecker commenced employment in June 2009 as Executive Vice President and Chief Development Officer. In October 2009 he was appointed as Chief Executive Officer.



(5)		Mr. Kollins terminated his employment with OXiGENE effective October 7, 2009. His separation agreement provides for a severance payment of $350,000, payable over one year in 26 equal installments. As of December 31, 2009, $148,077 of Mr. Kollins’ severance has been paid and is included in Other Compensation for him in 2009.

Narrative Disclosure to Summary Compensation Table

Employment Agreement with David Chaplin. In July 2000, we entered into an employment agreement with Dr. Chaplin, our Chief Scientific Officer and Head of Research and Development. Effective in January 2007, Dr. Chaplin’s employment agreement was amended such that he currently receives an annual base salary of £180,257 per year (or $290,666, using January 1, 2010 exchange rates). In 2009, Dr. Chaplin’s employment agreement was further amended to (1) set the period for which Dr. Chaplin would be paid in the event of his termination of employment other than for cause of with good reason at sixteen (16) months and (2) provide for the immediate vesting of all stock options, stock appreciation rights, restricted stock and other incentive compensation granted to him in the event of a change in control. We may terminate the employment agreement on six months’ prior notice, and Dr. Chaplin may terminate the agreement on six months’ prior notice. OXiGENE may also terminate the agreement without prior notice for “cause,” as defined in the agreement. If Dr. Chaplin’s employment is terminated by OXiGENE other than for cause, or in a case of a “termination with good reason,” as defined in the agreement, Dr. Chaplin will be entitled to receive a payment of sixteen (16) months of his then-current base salary, and all stock options and other incentive compensation granted to Dr. Chaplin by OXiGENE shall, to the extent vested, remain exercisable in accordance with the 2005 Stock Plan and any related agreements. In the event of a termination other than for “cause” of Dr. Chaplin’s employment or a “termination with good reason” within one year following a

change in control of OXiGENE, as such term is defined in the agreement, Dr. Chaplin will be entitled to receive a payment of twelve months’ then-current base salary plus any salary owed to him but unpaid as of the date of termination. In addition, all of Mr. Chaplin’s unvested equity compensation outstanding on the date of termination shall vest and remain exercisable in accordance with the terms of the applicable plan and related agreements and all stock options and other incentive compensation granted to Dr. Chaplin by OXiGENE shall, to the extent vested, remain exercisable in accordance with the 2005 Stock Plan and any related agreements.

Employment Agreement with Dr. Peter J. Langecker. In June 2009, we entered into an employment agreement with Dr. Langecker with respect to his service as its Executive Vice President and Chief Development Officer. In October 2009, Dr. Langecker was appointed our Chief Executive Officer. Pursuant to his agreement, Dr. Langecker currently receives an annual base salary of $350,000 per year. In addition, Dr. Langecker may be awarded an annual bonus of up to 40% of his then-current annual base salary, at the sole discretion of OXiGENE, based on our assessment of his and OXiGENE’s performance. Pursuant to his employment agreement, on June 29, 2009, we granted to Dr. Langecker, options to purchase 250,000 shares on each date of the Company’s common stock at an exercise price of $2.32 per share. The options shall vest in equal annual installments over four years beginning one year from the date of grant.

Dr. Langecker may terminate the agreement upon written notice to us. We may also terminate the agreement without prior written notice for cause, as defined in the agreement, as long as, in certain circumstances, it gives Dr. Langecker a minimum period of 30 days to cure the act or omission constituting cause (if reasonably subject to cure), as described in the agreement. If Dr. Langecker’s employment is terminated by us for cause, or by Dr. Langecker without good reason (as defined in the agreement), we will pay to Dr. Langecker the amount of accrued obligations as of the date of such termination, consisting of accrued and unpaid salary, value of accrued vacation days, annual bonus related to the most recently completed calendar year if not already paid and amount of unreimbursed and incurred expenses. If Dr. Langecker’s employment is terminated by us other than for cause or Dr. Langecker’ disability, we will pay to Dr. Langecker the accrued obligations, as described above, an amount equal to 12 months of his then-current base salary, the annual bonus related to the most recently completed calendar year, if not already paid, and will also pay COBRA premiums, should Dr. Langecker timely elect and be eligible for COBRA coverage, for Dr. Langecker and his immediate family for 12 months (provided that OXiGENE shall have no obligation to provide such coverage if Dr. Langecker becomes eligible for medical and dental coverage with another employer).

If Dr. Langecker’ employment is terminated by us (other than for cause or Dr. Langecker’ disability) within one year following a change in control of the Company (as defined in the agreement), or by Dr. Langecker with good reason within one year following a change in control of the Company, we will pay to Dr. Langecker the accrued obligations, as described above, an amount equal to 12 months of his then-current base salary, the annual bonus related to the most recently completed calendar year, if not already paid, and will also pay COBRA premiums for a period of 12 months on the same conditions as described above. In addition, all of Dr. Langecker’ unvested equity compensation outstanding on the date of termination shall vest and remain exercisable in accordance with the terms of the applicable plan and related agreements. Dr. Langecker has also agreed not to engage in activities competitive with the Company during his employment and for a 12 month period following the termination of his employment. All payments made and benefits available to Dr. Langecker in connection with his employment agreement will comply with Internal Revenue Code Section 409A in accordance with the terms of his employment agreement.

Employment Agreement with James B. Murphy. In February 2004, we entered into an employment agreement with Mr. Murphy, our Vice President and Chief Financial Officer and amended the agreement in January 2009. Pursuant to the agreement as amended, Mr. Murphy currently receives a base salary of $245,000 per year. We may terminate the agreement on thirty days’ prior notice, and Mr. Murphy may also terminate the agreement on thirty days’ prior notice. We may also terminate the agreement prior to the end of its term for “cause” as defined in the agreement. If Mr. Murphy’s employment is terminated by OXiGENE other than for cause, or in a case of a “termination with good reason,” as defined in the agreement, Mr. Murphy will be entitled to receive a payment of twelve months’ then-current base salary and the Company will also pay COBRA premiums, should Mr. Murphy timely elect and be eligible for COBRA coverage, for Mr. Murphy and his immediate family for 12 months (provided that OXiGENE shall have no obligation to provide such coverage if Mr. Murphy becomes eligible for medical and dental coverage with another employer). In addition, all stock options and other incentive compensation granted to Mr. Murphy by OXiGENE shall, to the extent vested, remain exercisable in accordance with the 2005 Stock Plan and any related agreements.

In the event of a termination other than for “cause” of Mr. Murphy’s employment or a “termination with good reason” within one year following a change in control of OXiGENE, as such term is defined in the agreement, Mr. Murphy will be entitled to receive a payment of twelve months’ then-current base salary plus any salary owed to him but unpaid as of the date of termination and the Company will also pay COBRA premiums, should Mr. Murphy timely elect and be eligible for COBRA coverage, for Mr. Murphy and his immediate family for 12 months (provided that OXiGENE shall have no obligation to provide such coverage if Mr. Murphy becomes eligible for medical and dental coverage with another employer). In addition, all of Mr. Murphy’s unvested equity compensation outstanding on the date of termination shall vest and remain exercisable in accordance with the terms of the applicable plan and related agreements and all stock options and other incentive compensation granted to Mr. Murphy by OXiGENE shall, to the extent vested, remain exercisable in accordance with the 2005 Stock Plan and any related agreements. All payments made and benefits available to Mr. Murphy in connection with his employment agreement will comply with Internal Revenue Code Section 409A in accordance with the terms of his employment agreement.

Employment and Separation Agreements with John A. Kollins. In February 2007, we entered into an employment agreement with Mr. Kollins with respect to his service as its Senior Vice President and Chief Business Officer. In December 2008, in connection with the appointment of Mr. Kollins as our Chief Executive Officer, we amended the agreement. Pursuant to the amended agreement, Mr. Kollins received an annual base salary of $350,000 per year. In addition, Mr. Kollins was eligible to receive an annual bonus of 30% to 40% of his then-current annual base salary, at our sole discretion, based on our assessment of his and OXiGENE’s performance.

We entered into a separation agreement with Mr. Kollins on October 28, 2009. In accordance with Mr. Kollins’ employment agreement with us, dated February 28, 2007, as amended, and the separation agreement, Mr. Kollins will (i) receive a severance payment of $350,000, payable over one year in 26 equal installments, (ii) be reimbursed for premiums paid to continue group health coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, through the earlier of October 27, 2011, or the date on which Mr. Kollins becomes eligible for medical and dental coverage with another employer, and (iii) receive a one-time payment of $20,000 to cover legal fees and/or outplacement services. The separation agreement also provides for, among other things, specified ongoing obligations on Mr. Kollins’ part relating to maintenance of our confidential information.

Outstanding Equity Awards at Fiscal Year-End

The following table shows grants of stock options and grants of unvested stock awards outstanding on the last day of the fiscal year ended December 31, 2009, including both awards subject to performance conditions and non-performance-based awards, to each of the executive officers named in the Summary Compensation Table.


	Option Awards(1)								Stock Awards
	Number of		Number of								Market Value
	Securities		Securities						Number of		of Shares or
	Underlying		Underlying		Option				Shares or		Units of Stock
	Unexercised		Unexercised		Exercise		Option		Units of Stock		That Have Not
	Options		Options		Price		Expiration		That Have Not		Vested(2)
Name	Exerciseable #		Unexerciseable #		$		Date		Vested #		$
David Chaplin		45,000		—	$	5.06		7/12/2010		20,000	$	22,800
Vice President and Chief		100,000		—	$	2.24		3/15/2012
Scientific Officer		100,000		—	$	7.94		7/24/2013
		50,000		—	$	5.03		7/28/2014
		12,500		12,500	$	4.18		1/25/2017
		—		120,000	$	0.65		1/20/2019
Peter Langecker		—		250,000	$	2.32		6/29/2019		—	$	—
Chief Executive Officer
James Murphy		75,000		—	$	9.05		2/23/2014		10,000	$	11,400
Vice President and Chief		20,000		—	$	5.03		7/28/2014
Financial Officer		18,750		6,250	$	3.51		6/14/2016
		25,000		25,000	$	4.18		1/25/2017
		—		125,000	$	0.65		1/20/2019
John Kollins(3)		50,000		—	$	4.69		1/7/2010		—	$	—
Former Chief Executive Officer

(1) Option awards vest in equal annual installments over four years beginning on the first anniversary of the date of grant and the exercise price is the closing price of the Company’s common stock as quoted on the NASDAQ Global Market on the date of grant.

(2) The market value of the stock awards is determined by multiplying the number of shares times $1.14, the closing price of our common stock on the NASDAQ Global Market on December 31, 2009, the last day of our fiscal year.

(3) Mr. Kollins’ employment with us terminated effective October 7, 2009. Pursuant to Mr. Kollins’ separation agreement, he had until January 8, 2010 to exercise all vested options. Mr. Kollins did not exercise these options and such options were therefore forfeited.

Pension Benefits

We do not have any qualified or non-qualified defined benefit plans.

Nonqualified Deferred Compensation

We do not have any non-qualified defined contribution plans or other deferred compensation plans.

Potential Payments Upon Termination or Change-In-Control

We have entered into certain agreements and maintain certain plans that may require us to make certain payments and/or provide certain benefits to our named executive officers in the event of a termination of employment or a change of control of the Company. The following tables summarize the potential payments to each named executive officer assuming that one of the described termination events occurs. The tables assume that the event occurred on December 31, 2009, the last day of our fiscal year. On December 31, 2009, the last trading day of 2009, the closing price of our common stock as listed on the NASDAQ Global Market was $1.14 per share.

David Chaplin, Ph.D.


							Involuntary Not for
							Cause Termination
Executive Benefits and	Termination within			Voluntary			or Termination by
Payments	12 Months Following			Termination by			Executive with Good			For Cause
Upon Termination	Change in Control			Executive or Death			Reason			Termination
Base Salary	$	270,669		$	—		$	360,891		$	—
Annual Bonus (x% of Base Salary)		N/A			N/A			N/A			N/A
Acceleration of Vesting of Equity		100	%		0	%		0	%		0	%
Number of Stock Options and Value upon Termination		440,000			307,500			307,500			307,500
	$	501,600		$	350,550		$	350,550		$	350,550
Number of Shares of Vested Stock Received and Value upon Termination		125,000			125,000			125,000			125,000
	$	142,500		$	142,500		$	142,500		$	142,500
Relocation Reimbursement		N/A			N/A			N/A			N/A
Deferred Compensation Payout		N/A			N/A			N/A			N/A
Post-Term Health Care		N/A			N/A			N/A			N/A
Excise Tax Gross Up		N/A			N/A			N/A			N/A

The information set forth above is described in more detail in the narrative following the Summary Compensation Table.

Dr. Chaplin’s employment agreement references the definition of a “Change in Control” in our 1996 Stock Incentive Plan. For this purpose, “Change in Control” means the occurrence of either of the following events: (a) any “person” (as such term is used in Section 13(c) and 14(d) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of

the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 40% or more of the total voting power represented by the Company’s then outstanding voting securities; or (b) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors who either were directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof.

Dr. Chaplin will be entitled to certain benefits as described in the table above if his employment is terminated by the Company for reasons other than cause or by him with good reason. “Cause” shall mean any of the following:

(a) the (i) continued failure by the executive to perform substantially his duties on behalf of OXIGENE if the executive fails to remedy that breach within ten (10) days of OXiGENE’s written notice to the executive of such breach; or (ii) material breach of any other provision of Dr. Chaplin’s employment agreement by the executive, if the executive fails to remedy that breach within ten (10) days of OXiGENE’s written notice to the executive of such breach; or

(b) any act of fraud, material misrepresentation or material omission, misappropriation, dishonesty, embezzlement or similar conduct against OXiGENE or any affiliate, or conviction of executive for a felony or any crime involving moral turpitude.

“Termination with Good Reason” shall mean termination following a material breach of Dr. Chaplin’s employment agreement by the Company, which breach remains uncured ten (10) days after written notice thereof is received by the Company.

Peter J. Langecker


							Involuntary Not for
							Cause Termination
Executive Benefits and	Termination within			Voluntary			or Termination by
Payments	12 Months Following			Termination by			Executive with Good			For Cause
Upon Termination	Change in Control			Executive or Death			Reason			Termination			Disability
Base Salary	$	350,000		$	—		$	350,000		$	—		$	—
Annual Bonus (x% of Base Salary)	Executive entitled to Annual Bonus related to most recently completed calendar year if not already paid			Executive entitled to Annual Bonus related to most recently completed calendar year if not already paid			Executive entitled to Annual Bonus related to most recently completed calendar year if not already paid				N/A		Executive entitled to Annual Bonus related to most recently completed calendar year if not already paid
Acceleration of Vesting of Equity		100	%		0	%		0	%		0	%		0	%
Stock Options:
Number of Stock Options		250,000			—			—			—			—
Value upon Termination	$	285,000		$	—		$	—		$	—		$	—
Vested Stock Received:
Number of Shares		—			—			—			—			—
Value upon Termination	$	—		$	—		$	—		$	—		$	—
Relocation Reimbursement		N/A			N/A			N/A			N/A			N/A
Deferred Compensation Payout		N/A			N/A			N/A			N/A			N/A
Post-Term Health Care	Up to 12 months for Executive and family				N/A		Up to 12 months for Executive and family
	$	27,048		$	—		$	27,048		$	—		$	—
Excise Tax Gross Up		N/A			N/A			N/A			N/A			N/A

The information set forth above is described in more detail in the narrative following the Summary Compensation Table.

A “Change in Control” as defined in Dr. Langecker’s employment agreement shall mean the occurrence during the term of his employment of the following:

(i) Ownership. Any “Person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the “Beneficial Owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of OXiGENE representing 50% or more of the total voting power represented by OXiGENE’s then outstanding voting securities (excluding for this purpose any such voting securities held by OXiGENE or its affiliates or by any employee benefit plan of OXiGENE) pursuant to a transaction or a series of related transaction which the Board of Directors does not approve; or

(ii) Merger/Sale of Assets. (A) A merger or consolidation of OXiGENE whether or not approved by the Board of Directors, other than a merger or consolidation which would result in the voting securities of OXiGENE outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) at least 50% of the total voting power represented by the voting securities of OXiGENE or such surviving entity or parent of such corporation, as the case may be, outstanding immediately after such merger or consolidation; or (B) the stockholders of OXiGENE approve an agreement for the sale or disposition by OXiGENE of all or substantially all of OXiGENE’s assets; or

(iii) Change in Board Composition. A change in the composition of the Board of Directors, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directors of OXiGENE as of the date of this Agreement, or (B) are elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to OXiGENE).

Dr. Langecker will be entitled to certain benefits as described in the table above if his employment is terminated by the Company for reasons other than cause or by him with good reason. “Cause” shall mean any of the following:

(a) the Executive’s substantial failure to perform any of her duties hereunder or to follow reasonable, lawful directions of the Board or any officer to whom the Executive reports;

(b) the Executive’s willful misconduct or willful malfeasance in connection with her employment;

(c) the Executive’s conviction of, or plea of nolo contendre to, any crime constituting a felony under the laws of the United States or any state thereof, or any other crime involving moral turpitude;

(d) the Executive’s material breach of any of the provisions of this Agreement, OXiGENE’s bylaws or any other agreement with OXiGENE; or

(e) the Executive’s engaging in misconduct which has caused significant injury to OXiGENE, financial or otherwise, or to OXiGENE’s reputation; or

(f) any act, omission or circumstance constituting cause under the law governing this Agreement.

“Termination with Good Reason” shall mean:

(i) without the Executive’s express written consent, any material reduction in Executive’s title, or responsibilities compared to those prior to a Change in Control (as such term is defined in the employment agreement);

(ii) relocation of more than 60 miles;

(iii) without the Executive’s express written consent, a material reduction by OXiGENE in the Executive’s total compensation as in effect on the date hereof or as the same may be increased from time to time, provided that it shall not be deemed a material reduction if (a) the amount of Executive’s Annual Bonus is less than the amount of any previously awarded Annual Bonuses or (b) a benefit is amended and such amendment affects all eligible executive participants; or

(iv) OXiGENE breaches a material term of this Agreement and such breach has remained uncured for a minimum of thirty (30) days after Executive has notified OXiGENE of breach. To be effective, such notice must be in writing and set forth the specific alleged Good Reason for termination and the factual basis supporting the alleged Good Reason.

All payments made and benefits available to Dr. Langecker in connection with his employment agreement will comply with Internal Revenue Code Section 409A in accordance with the terms of his employment agreement.

James B. Murphy


							Involuntary Not for
							Cause Termination
Executive Benefits and	Termination within			Voluntary			or Termination by
Payments	12 Months Following			Termination by			Executive with Good			For Cause
Upon Termination	Change in Control			Executive or Death			Reason			Termination
Base Salary	$	245,000		$	—		$	245,000		$	—
Annual Bonus (x% of Base Salary)		N/A			N/A			N/A			N/A
Acceleration of Vesting of Equity		100	%		0	%		0	%		0	%
Number of Stock Options and Value upon Termination		295,000			138,750			138,750			138,750
	$	336,300		$	158,175		$	158,175		$	158,175
Number of Shares of Vested Stock Received and Value upon Termination		40,000			40,000			40,000			40,000
	$	45,600		$	45,600		$	45,600		$	45,600
Relocation Reimbursement		N/A			N/A			N/A			N/A
Deferred Compensation Payout		N/A			N/A			N/A			N/A
Post-Term Health Care	Up to 12 months for Executive and family				N/A		Up to 12 months for Executive and family				N/A
	$	21,996		$	—		$	21,996		$	—
Excise Tax Gross Up		N/A			N/A			N/A			N/A

The information set forth above is described in more detail in the narrative following the Summary Compensation Table.

Mr. Murphy’s employment agreement references the definition of a “Change in Control” in our 1996 Stock Incentive Plan. A “Change in Control” means the occurrence of either of the following: (a) any “person” (as such term is used in Section 13(c) and 14(d) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 40% or more of the total voting power represented by the Company’s then outstanding voting securities; or (b) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors who either were directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof.

Mr. Murphy will be entitled to certain benefits as described in the table above if his employment is terminated by the Company for reasons other than cause or by him with good reason. “Cause” shall mean any of the following:

(a) the (i) continued failure by the executive to perform substantially his duties on behalf of OXIGENE if the executive fails to remedy that breach within ten (10) days of OXiGENE’s written notice to the executive of such breach; or (ii) material breach of any other provision of Mr. Murphy’s employment agreement by the executive, if the executive fails to remedy that breach within ten (10) days of OXiGENE’s written notice to the executive of such breach; or

“Termination with Good Reason” shall mean termination following a material breach of Mr. Murphy’s employment agreement by the Company, which breach remains uncured thirty (30) days after written notice thereof is received by the Company.

All payments made and benefits available to Mr. Murphy in connection with his employment agreement will comply with Internal Revenue Code Section 409A in accordance with the terms of his employment agreement.

John A. Kollins

Director Compensation

The following table shows the total compensation paid or accrued during the fiscal year ended December 31, 2009 to each of our directors.


	Fees Earned or		Stock		Option		All Other
	Paid in Cash		Awards		Awards		Compensation		Total
Name	($)		($)(1)		($)		($)		($)
Joel-Tomas Citron(2)	$	33,333	$	—	$	—	$	—	$	33,333
Roy H. Fickling	$	5,625	$	63,443	$	—	$	—	$	69,068
Mark Kessel	$	—	$	34,200	$	—	$	—	$	34,200
Arthur Laffer(3)	$	7,937	$	70,193	$	—	$	—	$	78,130
William D. Schwieterman	$	6,281	$	60,194	$	—	$	—	$	66,475
William Shiebler	$	175,181	$	47,755	$	—	$	—	$	222,936
Per-Olof Söderberg(2)	$	4,625	$	10,750	$	—	$	—	$	15,375
Alastair J.J. Wood	$	—	$	34,200	$	—	$	—	$	34,200



(1)		See Note 1 to our Consolidated Financial Statements reported in our Annual Report on Form 10-K for our fiscal year ended December 31, 2009 for details as to the assumptions used to determine the fair value of each of the stock awards set forth in this table, and Note 3 describing all forfeitures during fiscal year 2009. See also our discussion of stock-based compensation under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates.”



(2)		Messrs. Citron and Söderberg did not seek reelection to the Board of Directors at the 2009 annual meeting.



(3)		Effective March 11, 2010, Mr. Laffer resigned as a member of the Company’s Board of Directors.

The following is a description of the standard compensation arrangements under which our non-employee directors are compensated for their service as directors, including as members of the various Committees of our Board.

Fees. Prior to fiscal 2003, directors received no cash compensation for serving on our Board of Directors or committees thereof. In July 2003, our directors adopted a director compensation plan. This plan was amended in October 2008. Under this plan, as amended, non-employee directors receive an annual retainer of $15,000 plus $750 for attendance at each Board meeting. In addition, each Board Committee chairman receives an annual retainer of $3,750, and each Committee member receives $500 for attendance at each Committee meeting. This amended

director compensation plan also provides that, effective January 1, 2009, each Board member may elect to receive their fees in common stock of the Company in lieu of cash upon notice of their intent to do so.

The Board of Directors adopted an amended and restated director compensation policy, effective January 1, 2010. In accordance with the policy, prior to the commencement of each calendar year, the Board of Directors establishes the number of shares of our common stock to be granted as the annual retainer for the upcoming calendar year for all outside directors. The annual retainer is paid in the form of semi-annual grants, under the OXiGENE, Inc. 2005 Stock Plan (the “Stock Plan”), of fully-vested shares of our common stock in the amount established by the Board of Directors for such calendar year. Shares of common stock to be issued to each outside director on the date of grant are automatically granted without further action by the Board of Directors or the Compensation Committee semi-annually on and as of January 2 and July 1, or the first business day thereafter. Shares granted pursuant to the policy have a purchase price equal to the par value of our common sock on the date of grant and are subject to the terms and conditions of the Stock Plan.

During an interim period beginning in May 2009 and ending on January 31, 2010, following his assumption of the duties of Chairman, Mr. Shiebler received: $40,000 in cash for the first month of service; $20,000 in cash for each month thereafter during such interim period; $1,200 per month for secretarial expenses to be incurred by him; and an option to purchase 100,000 shares of our common stock, vesting in equal amounts over four years, starting one year from the date of grant, at an exercise price of $2.23 per share. Mr. Shiebler received these amounts in connection with the services he provided as Chairman, and in recognition of the level of services he provided in that capacity. Mr. Shiebler did not receive any separate compensation under the director compensation policy in addition to these amounts. Effective February 2010, Mr. Shiebler’s cash compensation was reduced to $10,000 per month.

Equity Incentives. Under the terms of our 2005 Stock Plan, directors may be granted shares of common stock, stock-based awards and/or stock options to purchase shares of common stock. For fiscal 2009, the following awards were granted to non-employee directors.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the beneficial ownership of our common stock as of March 15, 2010, for (a) each of the executive officers named in the Summary Compensation Table on page [___] of this prospectus, (b) each of our directors and director nominees, (c) all of our current directors and executive officers as a group and (d) each stockholder known by us to own beneficially more than 5% of our common stock. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting or investment power with respect to the securities. We deem shares of common stock that may be acquired by an individual or group within 60 days of March 15, 2010 pursuant to the exercise of options or warrants to be outstanding for the purpose of computing the percentage ownership of such individual or group, but such shares are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the tables. Except as indicated in footnotes to these tables, we believe that the stockholders named in these tables have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them based on information provided to us by these stockholders. Percentage of ownership is based on 69,609,750 shares of common stock outstanding on March 15, 2010.


	Number of Shares
	Beneficially Owned
	and Nature of		Percent of
Name of Beneficial Owner	Ownership		Class
David Chaplin(1)		476,850		*
Roy Fickling(2)		152,846		*
Tamar Howson(3)		—		*
Mark Kessel(4)		27,182,118		39.0	%
John Kollins(5)		—		*
Arthur Laffer(6)		519,232		*
Peter Langecker		—		*
Jim Murphy(7)		222,500		*
William Schwieterman(8)		129,208		*
William Shiebler(9)		377,002		*
Alastair J.J. Wood		65,000		*
All current directors and executive officers as a group (9 persons) (10)		29,124,756		41.4	%


*		Less than 1%.



(1)		Includes options to purchase 343,750 shares of common stock, which are exercisable within 60 days of March 15, 2010 (May 14, 2010).


(2)		Includes 20,000 shares of unvested restricted common stock granted in 2007, which vest in equal annual installments over a four-year period, all of which are subject to transfer and forfeiture restrictions.


(3)		Ms. Howson was appointed to the Board of Directors of the Company on April 2, 2010; she did not own any of the Company’s equity securities prior to this time.



(4)		Includes 27,117,118 shares of common stock held by Symphony ViDA Holdings LLC. Mark Kessel is a Managing Member of Symphony GP LLC, which is the general partner of Symphony Capital GP, L.P., which is the general partner of Symphony Capital Partners, L.P., which is the manager of Symphony ViDA Holdings LLC.



(5)		Pursuant to Mr. Kollins’ stock option agreement, all of Mr. Kollins’ unvested options were forfeited on the effective date of his termination and his vested options, to the extent not exercised, were forfeited as of January 8, 2010.



(6)		Includes options to purchase 110,000 shares of common stock, which are exercisable within 60 days of March 15, 2010 (May 14, 2010).



(7)		Includes options to purchase 182,500 shares of common stock, which are exercisable within 60 days of March 15, 2010 (May 14, 2010).



(8)		Includes 20,000 shares of unvested restricted common stock granted in 2007, which vest in equal annual installments over a four-year period, all of which are subject to transfer and forfeiture restrictions.



(9)		Includes options to purchase 110,000 shares of common stock, which are exercisable within 60 days of March 15, 2010 (May 14, 2010).



(10)		Includes 40,000 shares of common stock subject to transfer restrictions, options to purchase 746,250 shares of common stock held by the directors and executive officers as a group and which are exercisable within 60 days of March 15, 2010 (May 14, 2010) and 40,000 shares of unvested restricted common stock, all of which were granted in 2007, which vest in equal annual installments over a four-year period, and which are subject to transfer and forfeiture restrictions.

As of March 15, 2010, the following is the only entity (other than our employees as a group) known to us to be the beneficial owner of more than 5% of our outstanding common stock.


	Number of Shares Beneficially
Name and Address of Beneficial Owner	Owned and Nature of Ownership		Percent of Class
Symphony ViDA Holdings LLC 875 Third Avenue 18^th Floor New York, NY 10022		27,182,118		39.0	%

The determination that there were no other persons, entities or groups known to us to beneficially own more than 5% of our outstanding common stock was based on a review of all statements filed with respect to us since the beginning of the past fiscal year with the Securities and Exchange Commission pursuant to Section 13(d) or 13(g) of the Exchange Act.

LIMITATION OF DIRECTORS’ LIABILITY AND INDEMNIFICATION

The Delaware General Corporation Law authorizes corporations to limit or eliminate, subject to certain conditions, the personal liability of directors to corporations and their stockholders for monetary damages for breach of their fiduciary duties. Our restated certificate of incorporation limits the liability of our directors to the fullest extent permitted by Delaware law.

We have obtained director and officer liability insurance to cover liabilities our directors and officers may occur in connection with their services to us, including matters arising under the Securities Act. Our restated certificate of incorporation and restated bylaws also provide that we will indemnify any of our directors and officers who, by reason of the fact that he or she is one of our officers or directors, is involved in a legal proceeding of any nature. We will repay certain expenses incurred by a director or officer in connection with any civil or criminal action or proceeding, specifically including actions by us or in our name (derivative suits). These indemnifiable expenses include, to the maximum extent permitted by law, attorney’s fees, judgments, civil or criminal fines, settlement amounts and other expenses customarily incurred in connection with legal proceedings. A director or officer will not receive indemnification if he or she is found not to have acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interest. In addition, we have entered into agreements to indemnify our directors and officers. These agreements, among other things, will indemnify and advance expenses to our directors and officers for certain expenses, including attorney’s fees, judgments, fines and settlement amounts incurred by any such person in any action or proceeding, including any action by us arising out of such person’s services as our director or officer, or any other company or enterprise to which the person provides services at our request.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable.

There is no pending litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification will be required or permitted. We are not aware of any threatened litigation or proceeding that may result in a claim for indemnification under the agreements described in this section.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Our Audit Committee reviews and approves in advance all related-person transactions.

Symphony Transaction

On July 2, 2009, OXiGENE, Holdings and Symphony ViDA entered into a series of related agreements pursuant to which we exercised the Purchase Option under terms set forth in an amended and restated purchase option agreement (the Amended Purchase Option Agreement), and OXiGENE and Holdings also entered into an amended and restated registration rights agreement.

We closed on the amended Purchase Option on July 20, 2009 and issued 10 million shares of its common stock to Holdings at the closing in exchange for all of the equity of Symphony ViDA, subject to further adjustment under the rights described in the paragraph above. In addition, upon the closing of the Purchase Option, we re-acquired all of the rights to the programs, and the approximately $12,400,000 in cash held by Symphony ViDA at the time of the closing became available for use for our general corporate purposes.

DESCRIPTION OF CAPITAL STOCK

The following description of our capital stock and certain provisions of our restated certificate of incorporation, as amended, and our amended and restated by-laws is a summary and is qualified in its entirety by the provisions of our restated certificate of incorporation, as amended, and our amended and restated by-laws.

Our authorized capital stock consists of 175,000,000 shares of common stock, par value of $0.01 per share, and 15,000,000 shares of preferred stock, par value of $0.01 per share.

Common Stock

We are authorized to issue 175,000,000 shares of common stock. Each stockholder of record is entitled to one vote for each outstanding share of our common stock owned by that stockholder on every matter properly submitted to the stockholders for their vote. Holders of common stock are entitled to any dividend declared by our board of directors out of funds legally available for that purpose. Holders of common stock are entitled to receive, on a pro rata basis, all our remaining assets available for distribution to stockholders in the event of our liquidation, dissolution or winding up. Holders of common stock do not have any preemptive right to become subscribers or purchasers of additional shares of any class of our capital stock.

Preferred Stock

We are authorized to issue 15,000,000 shares of preferred stock, par value $0.01 per share. As of May 27, 2010, no shares of our preferred stock were outstanding. The following summary of certain provisions of our preferred stock does not purport to be complete. You should refer to our restated certificate of incorporation, as amended, and our amended and restated by-laws, both of which are included as exhibits to the registration statement we have filed with the SEC in connection with this offering. The summary below is also qualified by provisions of applicable law.

Our board of directors may, without further action by our stockholders, from time to time, direct the issuance of shares of preferred stock in series and may, at the time of issuance, determine the rights, preferences and limitations of each series, including voting rights, dividend rights and redemption and liquidation preferences. Satisfaction of any dividend preferences of outstanding shares of preferred stock would reduce the amount of funds available for the payment of dividends on shares of our common stock. Holders of shares of preferred stock may be entitled to receive a preference payment in the event of any liquidation, dissolution or winding-up of our company before any payment is made to the holders of shares of our common stock. In some circumstances, the issuance of shares of preferred stock may render more difficult or tend to discourage a merger, tender offer or proxy contest, the assumption of control by a holder of a large block of our securities or the removal of incumbent management. Upon the affirmative vote of our board of directors, without stockholder approval, we may issue shares of preferred stock with conversion rights which could adversely affect the holders of shares of our common stock.

Listing

Our common stock is listed on The NASDAQ Global Market under the symbol “OXGN” and on the NASDAQ OMX Nordic in Sweden under the symbol “OXGN.”

Transfer Agent and Registrar

American Stock Transfer & Trust Company is the transfer agent and registrar for our common stock and preferred stock.

Delaware Law, Certain Charter and By-Law Provisions and Stockholder Rights Agreement

The provisions of Delaware law and of our restated certificate of incorporation, as amended, and amended and restated by-laws discussed below could discourage or make it more difficult to accomplish a proxy contest or other change in our management or the acquisition of control by a holder of a substantial amount of our voting stock. It is possible that these provisions could make it more difficult to accomplish, or could deter, transactions that stockholders may otherwise consider to be in their best interests or the best interests of OXiGENE.

Delaware Statutory Business Combinations Provision. In general, Section 203 prohibits a publicly-held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is, or the transaction in which the person became an interested stockholder was, approved in a prescribed manner or another prescribed exception applies. For purposes of Section 203, a “business combination” is defined broadly to include a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder, and, subject to certain exceptions, an “interested stockholder” is a person who, together with his or her affiliates and associates, owns (or within the prior three years, did own) 15% or more of the corporation’s voting stock.

Special Meetings of Stockholders. Special meetings of the stockholders may be called by the chairman of our board of directors, the president, or the entire board of directors pursuant to a resolution adopted by a majority of directors present at a meeting at which a quorum is present. The president or secretary shall also call special meetings upon the written request of not less than 10% in interest of the stockholders entitled to vote at the meeting.

Stockholder Rights Agreement. On March 24, 2005 our board of directors declared a dividend of one common stock purchase right for each outstanding share of our voting common stock, $0.01 par value per share, to stockholders of record at the close of business on April 4, 2005. Each right entitles the registered holder to purchase from us one share of common stock, at a purchase price of $50.00 in cash, subject to adjustment. The description and terms of the rights are set forth in a Stockholder Rights Agreement between us and American Stock Transfer & Trust Company, as Rights Agent.

Initially, the rights will be attached to all common stock certificates representing shares then outstanding, and no separate certificates for rights will be distributed. The rights will separate from the common stock and a “Distribution Date” will occur upon the earlier of (i) 10 days following a public announcement that a person or group of affiliated or associated persons has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares of our common stock or (ii) 10 business days following the commencement of a tender offer or exchange offer that may result in a person or group beneficially owning 15% or more of the outstanding shares of our common stock.

Until the distribution date (or earlier redemption or expiration of the rights), (i) the rights will be evidenced by the common stock certificates and will be transferred with and only with such common stock certificates, (ii) new common stock certificates issued after the record date will contain a notation incorporating the Stockholder Rights Agreement by reference, and (iii) the surrender for transfer of any certificates for common stock outstanding, even without such notation, will also constitute the transfer of the rights associated with the common stock represented by such certificate.

WARRANT

We issued a warrant to Kingsbridge to purchase up to 250,000 shares of our common stock at a price of $2.74 per share. This warrant is exercisable beginning six months after February 19, 2008 and for a period of five years thereafter. Under the terms of the warrant, the warrant may not be exercised to the extent that such exercise would cause the warrant holder to beneficially own (or be deemed to beneficially own) a number of shares of our common stock that would exceed 9.9% of our then outstanding shares of common stock following such exercise.

LEGAL MATTERS

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Boston, Massachusetts, will provide us with an opinion as to the legal matters in connection with the securities we are offering, and members of that firm, their families and trusts for their benefit own an aggregate of approximately 350 shares of our common stock.

EXPERTS

The consolidated financial statements of OXiGENE, Inc. at December 31, 2009 and 2008, and for each of the three years in the period ended December 31, 2009, appearing in this Prospectus and Registration Statement have

been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon (which contains an explanatory paragraph describing conditions that raise substantial doubt about the Company’s ability to continue as a going concern as described in Note 1 to the consolidated financial statements) appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We are a public company and file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC’s Public Reference Room at Station Place, 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference room. Our SEC filings are also available to the public at the SEC’s web site at www.sec.gov, and on our web site at www.oxigene.com. The information contained on our web site is not included or incorporated by reference into this prospectus. In addition, our common stock is listed for trading on The NASDAQ Global Market under the symbol “OXGN.” You can read and copy reports and other information concerning us at the offices of the Financial Industry Reporting Authority located at 1735 K Street, N.W., Washington, D.C. 20006.

This prospectus is only part of a Registration Statement on Form S-1 that we have filed with the SEC under the Securities Act, and therefore omits certain information contained in the Registration Statement. We have also filed exhibits and schedules with the Registration Statement that are excluded from this prospectus, and you should refer to the applicable exhibit or schedule for a complete description of any statement referring to any contract or other document. You may:

	•		inspect a copy of the Registration Statement, including the exhibits and schedules, without charge at the public reference room,

	•		obtain a copy from the SEC upon payment of the fees prescribed by the SEC, or

	•		obtain a copy from the SEC’s web site or our web site.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of

OXiGENE, Inc.

We have audited the accompanying consolidated balance sheets of OXiGENE, Inc. as of December 31, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2009. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of OXiGENE, Inc. at December 31, 2009 and 2008, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2009, in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming that OXiGENE, Inc. will continue as a going concern. As more fully described in Note 1, the Company has incurred recurring operating losses and will be required to raise additional capital, alternative means of financial support, or both, prior to January 1, 2011 in order to sustain operations. The ability of the Company to raise additional capital or alternative sources of financing is uncertain. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The 2009 consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

As discussed in Note 1 to the consolidated financial statements, effective January 1, 2009, the Company retrospectively adopted the presentation and disclosure requirements of Financial Accounting Standards Board Statement No. 160, “Non controlling Interests in Consolidated Financial Statement, an amendment of ARB No. 51,” which is codified in Accounting Standards Codification 810.

/s/ Ernst & Young LLP

Boston, Massachusetts

March 16, 2010

F-2

OXiGENE, Inc.

Consolidated Balance Sheets
All Amounts in thousands
except per share amounts


	As of December 31,
	2009			2008

ASSETS
Current assets:
Cash and cash equivalents	$	13,932		$	18,275
Restricted cash		140			—
Available-for-sale securities		—			643
Marketable securities held by Symphony ViDA, Inc., restricted		—			14,663
Prepaid expenses and other current assets		752			505

Total current assets		14,824			34,086
Furniture and fixtures, equipment and leasehold improvements		1,515			1,456
Accumulated depreciation		(1,332	)		(1,255	)

		183			201
License agreements, net of accumulated amortization of $1,016 and $919 at December 31, 2009 and December 31, 2008, respectively		484			581
Other assets		126			163

Total assets	$	15,617		$	35,031


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,181		$	1,744
Accrued research and development		4,753			3,416
Accrued other		1,684			606
Derivative liability short term		850			—

Total current liabilities		8,468			5,766
Derivative liability long term		1,350			466
Rent loss accrual		—			60

Total liabilities		9,818			6,292

Commitments and contingencies (Note 6)
OXiGENE, Inc. Stockholders’ equity:
Preferred Stock, $0.01 par value, 15,000 shares authorized; 0 shares issued and outstanding at December 31, 2009 and December 31, 2008		—			—
Common Stock, $0.01 par value, 150,000 shares authorized; 62,738 shares at December 31, 2009 and 46,293 shares at December 31, 2008 issued and outstanding		627			463
Additional paid-in capital		189,102			178,156
Accumulated deficit		(183,930	)		(159,202	)
Accumulated other comprehensive (loss)		—			(110	)

Total OXiGENE, Inc. stockholders’ equity		5,799			19,307
Noncontrolling interest		—			9,432

Total equity		5,799			28,739

Total liabilities and stockholders’ equity	$	15,617		$	35,031

See accompanying notes.

F-3

OXiGENE, Inc.

Consolidated Statements of Operations
(All amounts in thousands,
except per share amounts)


	Year Ended December 31,
	2009			2008			2007

License Revenue:	$	—		$	12		$	12
Operating costs and expenses(1):
Research and development	$	22,256		$	18,995		$	14,511
General and administrative		8,900			6,957			7,774

Total operating costs and expenses		31,156			25,952			22,285

Loss from operations		(31,156	)		(25,940	)		(22,273	)
Gain from change in fair value of warrants and other financial instruments		2,166			3,335			—
Investment income		110			618			1,955
Other income (expense), net		(63	)		66			(71	)

Consolidated net loss	$	(28,943	)	$	(21,921	)	$	(20,389	)

Net loss attributed to noncontrolling interest	$	(4,215	)	$	(520	)	$	—
Net loss attributed to OXiGENE, Inc.	$	(24,728	)	$	(21,401	)	$	(20,389	)

Excess purchase price over carrying value of noncontrolling interest acquired in Symphony ViDA, Inc.	$	(10,383	)	$	—		$	—

Net loss applicable to common stock	$	(35,111	)	$	(21,401	)	$	(20,389	)

Basic and diluted net loss per share attributed to OXiGENE, Inc. common shares	$	(0.66	)	$	(0.70	)	$	(0.73	)
Weighted-average number of common shares outstanding		53,414			30,653			27,931

(1) Includes share based compensation expense as follows:
Research and development	$	185		$	328		$	320
General and administrative		593			671			1,472

See accompanying notes.

F-4

OXiGENE, Inc.

Consolidated Statements of Stockholders’ Equity

(All amounts in thousands)


													Accumulated						Non
													Other			Total			Controlling
	Common						Additional						Comprehensive			OXiGENE, Inc.			Interest in
	Stock Value						Paid-In			Accumulated			Income			Stockholders’			Symphony			Total
	Shares			$			Capital			Deficit			(Loss)			Equity			ViDA Inc.			Equity

*Balance at December 31, 2006*		28,175			282			160,569			(117,412	)		(19	)		43,420			—			43,420
Unrealized gain from available-for-sale securities		—			—			—			—			34			34			—			34
Net loss		—			—			—			(20,389	)		—			(20,389	)		—			(20,389	)

Comprehensive loss																	(20,355	)					(20,355	)
Issuance of restricted stock		330			3			(3	)		—			—			—			—			—
Stock-based compensation expense		—			—			1,792			—			—			1,792			—			1,792

*Balance at December 31, 2007*		28,505		$	285		$	162,358		$	(137,801	)	$	15		$	24,857		$	—		$	24,857
Formulation of Symphony ViDA, Inc.		—			—			—			—			—			—			9,952			9,952
Unrealized loss from available-for-sale securities		—			—			—			—			(125	)		(125	)					(125	)
Net loss		—			—			—			(21,401	)					(21,401	)		(520	)		(21,921	)

Comprehensive loss		—			—			—			—			—			(21,526	)		9,432			(22,046	)
Issuance of common stock for executive incentive compensation		36			—			87			—			—			87			—			87
Issuance of common stock related to CEFF, net of costs		635			6			734			—			—			740			—			740
Stock-based compensation expense		—			—			999			—			—			999			—			999
Issuance of warrants to purchase common stock to Symphony ViDA Holdings, LLC								(8,935	)		—			—			(8,935	)		—			(8,935	)
Settlement of Symphony warrant upon exercise								5,622			—			—			5,622			—			5,622
Accounting for additional shares investment and a warrant issued to Kingsbridge as a liability								(489	)		—			—			(489	)		—			(489	)
Issuance of common stock to Symphony as direct investment, net of costs		2,232			22			1,407			—			—			1,429			—			1,429
Exercise of Symphony warrant issuance of shares of common stock		11,282			113			12,410			—			—			12,523			—			12,523
Issuance of common stock as compensation for purchase option		3,603			37			3,963			—			—			4,000			—			4,000

*Balance at December 31, 2008*		46,293			463			178,156			(159,202	)		(110	)		19,307			9,432			28,739
Unrealized gain from available-for-sale securities		—			—			—			—			110			110			—			110
Net loss		—			—			—			(24,728	)		—			(24,728	)		(4,215	)		(28,943	)

Comprehensive loss		—			—			—			—			—			(24,618	)		(4,215	)		(28,833	)
Issuance of common stock for Symphony ViDA, Inc. acquisition (including $10.4 million of excess purchase price over carrying value of non controlling interest)		10,000			100			5,030			—			—			5,130			(5,217	)		(87	)
Issuance of common stock in lieu of compensation for the BoD		295			3			318			—			—			321			—			321
The elimination of the derivative liability for the CEFF warrants as a result of the Symphony ViDA, Inc. acquisition		—			—			155			—			—			155			—			155
Issuance of common stock in direct registration net of costs and fair value of warrants issued of $4,055,000		6,250			63			4,911			—			—			4,974			—			4,974
Employee stock purchase plan		75			1			124			—			—			125			—			125
Stock based compensation expense		—			—			407			—			—			407			—			407
Forfeiture of restricted stock		(175	)		(3	)		1			—			—			(2	)		—			(2	)

*Balance at December 31, 2009*		62,738		$	627		$	189,102		$	(183,930	)	$	—		$	5,799		$	—		$	5,799

See accompanying notes

F-5

OXiGENE, Inc

Consolidated Statements of Cash Flows

(Amounts in thousands)


	Year Ended December 31,
	2009			2008			2007

Operating activities:
Net loss attributed to OXiGENE, Inc.	$	(24,728	)	$	(21,401	)	$	(20,389	)
Loss attributed to noncontrolling interests		(4,215	)		(520	)		—
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of warrants and other financial instruments		(2,166	)		(3,335	)		—
Depreciation		123			133			115
Amortization of license agreement		97			98			98
Rent loss accrual		(60	)		(163	)		(93	)
Stock-based compensation		778			1,086			1,792
Changes in operating assets and liabilities:
Restricted cash		(140	)		—			—
Prepaid expenses and other assets		(210	)		(78	)		215
Accounts payable, accrued expenses and other payables		1,852			782			1,078

Net cash used in operating activities		(28,669	)		(23,398	)		(17,184	)
Investing activities:
Purchase of available-for-sale securities		—			(4,314	)		(34,340	)
Proceeds from sale of available-for-sale securities		753			23,456			44,615
Proceeds from sale of marketable securities held by Symphony ViDA, Inc.		2,286			(14,663	)		—
Purchase of furniture, fixtures and equipment		(109	)		(113	)		(95	)
Proceeds from sale of fixed assets		4			—
Decrease (increase) in other assets		—			137			(156	)

Net cash provided by investing activities		2,934			4,503			10,024
Financing activities:
Proceeds from direct registration of common stock issuance, net of acquisition costs		9,029			—			—
Proceeds from Symphony ViDA acquisition, net of acquisition costs		12,289			—			—
Proceeds from purchase on noncontrolling interest by preferred shareholders in Symphony ViDA, Inc., net of fees		—			13,952			—
Proceeds from employee stock purchase plan		74			—			—
Proceeds from issuance of common stock, net of fees		—			14,691			—

Net cash provided by financing activities		21,392			28,643			—

(Decrease) increase in cash and cash equivalents		(4,343	)		9,748			(7,160	)
Cash and cash equivalents at beginning of period		18,275			8,527			15,687

Cash and cash equivalents at end of period	$	13,932		$	18,275		$	8,527

Non- cash Disclosures:
Stock issued as consideration for the Symphony SViDA purchase option		—			4,000			—
Accounting for additional shares investment and warrant issued to Kingsbridge as liabilities		—			489			—
FMV reclassification of Kingsbridge warrants to equity		155			—			—
Fair value of warrants and other financial instruments		4,055			5,622			—

See accompanying notes.

F-6

OXiGENE, INC.

Notes to Consolidated Financial Statements

December 31, 2009


1.	Description of Business and Significant Accounting Policies

Description of Business

OXiGENE, Inc. (the “Company”), incorporated in 1988 in the state of New York and reincorporated in 1992 in the state of Delaware, is a clinical-stage, biopharmaceutical company developing novel therapeutics to treat cancer and eye diseases. OXiGENE’s primary focus is the development and commercialization of product candidates referred to as vascular disrupting agents, or VDAs, that selectively disable and destroy abnormal blood vessels that provide solid tumors a means of growth and survival and also are associated with visual impairment in a number of ophthalmological diseases and conditions. To date, more than 400 subjects have been treated with ZYBRESTAT in human clinical trials, and the drug candidate has generally been observed to be well-tolerated. Currently, the Company does not have any products available for sale; however, it has two therapeutic product candidates in various stages of clinical and pre-clinical development, as well as a pipeline of additional product candidates currently in research and development.

OXiGENE’s primary drug development candidates, ZYBRESTAT and OXi4503, are based on a series of natural products called Combretastatins, and are VDAs. The Company is currently developing its VDA drug candidates for indications in both oncology and ophthalmology. OXiGENE’s most advanced drug candidate is ZYBRESTAT, a VDA, is being evaluated in multiple ongoing and planned clinical trials in various oncology and ophthalmic indications. The Company conducts scientific activities pursuant to collaborative arrangements with universities. Regulatory and clinical testing functions are generally contracted out to third-party, specialty organizations.

To date, OXiGENE has financed its operations principally through net proceeds received from private and public equity financing. In July 2009, OXiGENE completed the purchase of Symphony ViDA, Inc. (“ViDA”) and completed a registered direct offering of its common stock and warrants in order to raise capital. The Company’s cash, restricted cash and equivalents balance as of December 31, 2009 was $14,072,000. On October 15, 2009, OXiGENE announced the Company has entered into a definitive merger agreement to acquire VaxGen in exchange for common stock of OXiGENE. Upon closing of the transaction, VaxGen would have become a wholly-owned subsidiary of OXiGENE, and VaxGen stockholders would have become stockholders of OXiGENE. At the closing of the transaction, OXiGENE was to issue approximately 15.6 million shares of common stock in exchange for all outstanding shares of VaxGen’s common stock. The number of shares issued at closing was to be subject to adjustment if VaxGen’s net cash was greater or less than approximately $33.2 million.

At the special meeting of stockholders of OXiGENE held February 3, 2010, the issuance of shares of OXiGENE common stock pursuant to the merger agreement with VaxGen, Inc. and all other proposals were adopted including increasing the authorized number of shares of the Corporation’s Common Stock from 150,000,000 to 175,000,000. However, at the special meeting of stockholders of VaxGen, also held February 3, 2010, the necessary majority of the outstanding shares of VaxGen common stock did not vote in favor of adoption of the proposed merger agreement with OXiGENE. The proposed merger between OXiGENE and VaxGen will, therefore, not take place. OXiGENE notified VaxGen of the termination of the merger agreement on February 12, 2010.

On March 11, 2010 the Company entered into a definitive agreement with certain institutional investors to sell 6,578,945 shares of its Common Stock and, separately, a series of warrants to purchase Common Stock in a private placement. Gross proceeds of the financing were approximately $7,500,000, before deducting placement agent fees and estimated offering expenses, and assuming no exercise of the warrants. The terms of the definitive agreement, including the anti-dilution and full-ratchet provisions, may make it difficult for the company to raise additional capital consistent with prevailing market terms, if at all.

F-7

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)

Existing cash and cash equivalents, plus the addition of this capital is expected to support the Company’s operations through the third quarter of 2010, assuming that the Company achieves the planned cost reductions from its February 2010 restructuring. OXiGENE will need to access additional funds to remain a going concern beyond the third quarter of 2010. Such funding may not be available to OXiGENE on acceptable terms, or at all. If the Company is unable to access additional funds when needed, it may not be able to continue the development of its product candidates or the Company could be required to delay, scale back or eliminate some or all of its development programs and other operations. OXiGENE may seek to access additional funds through public or private financing, strategic partnerships or other arrangements. Any additional equity financing, which may not be available to the Company or may not be available on favorable terms, may be dilutive to its current stockholders and debt financing, if available, may involve restrictive covenants. If the Company accesses funds through collaborative or licensing arrangements, it may be required to relinquish, on terms that are not favorable to the Company, rights to some of its technologies or product candidates that it would otherwise seek to develop or commercialize on its own. The Company’s failure to access capital with needed is not assured and, if not achieved on a timely basis, will materially harm its business, financial condition and results of operations. This uncertainty creates doubt about the Company’s ability to continue as a going concern.

The accompanying financial statements have been prepared on a basis which assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

Initial Symphony Transaction

On October 1, 2008, OXiGENE announced a strategic collaboration with Symphony Capital Partners, L.P. a private-equity firm that agreed to provide up to $40,000,000 in funding to support the advancement of ZYBRESTAT for oncology, ZYBRESTAT for ophthalmology and OXi4503. Under this collaboration, the Company entered into a series of related agreements with Symphony Capital LLC, or Symphony, Symphony ViDA, Inc., or ViDA, Symphony ViDA Holdings LLC, or Holdings, and related entities, including the following:


	•	Purchase Option Agreement;

	•	Research and Development Agreement;

	•	Amended and Restated Research and Development Agreement;

	•	Technology License Agreement;

	•	Novated and Restated Technology License Agreement;

	•	Confidentiality Agreement; and

	•	Additional Funding Agreement.

In addition, OXiGENE entered into a series of related agreements with Holdings, including the following:


	•	Stock and Warrant Purchase Agreement;

	•	Warrant to purchase up to 11,281,877 shares of OXiGENE common stock at $1.11 per share, which was issued on October 17, 2008 and subsequently exercised in full on December 30, 2008 following shareholder approval of the Symphony Transaction; and,

	•	Registration Rights Agreement.

Pursuant to these agreements, Holdings had formed and capitalized ViDA, a Delaware corporation, in order (a) to hold certain intellectual property related to two of OXiGENE’s product candidates, ZYBRESTAT

F-8

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)

for use in ophthalmologic indications and OXi4503, referred to as the “Programs,” which were exclusively licensed to ViDA under the Novated and Restated Technology License Agreement and (b) to fund commitments of up to $25,000,000. The funding supported pre-clinical and clinical development by OXiGENE, on behalf of ViDA, for the Programs. Under certain circumstances, the Company could have been required, under the Additional Funding Agreement, to commit up to $15,000,000 to ViDA. The Company’s requirement for additional funding was to be determined by a number of factors, including among others, if at all, the determination of the need for more funding and the written recommendation of the Joint Development Committee (JDC), the approval of the Symphony ViDA Board, the probability and amount of the additional funding provided by Holdings, if any, the probability that OXiGENE may provide optional funding (“Optional Company Funding”), and the timing of meeting the potential obligations.

Pursuant to the agreements, OXiGENE continued to be primarily responsible for all pre-clinical and clinical development efforts as well as maintenance of the intellectual property portfolio for the Programs. OXiGENE and ViDA established a development committee to oversee the Programs. The Company participated in the development committee and had the right to appoint one of the five directors of ViDA. The Purchase Option Agreement provided for the exclusive right, but not the obligation, for OXiGENE to repurchase the Programs by acquiring 100% of the equity of ViDA at any time between October 2, 2009 and March 31, 2012 for an amount equal to two times the amount of capital actually invested by Symphony in ViDA, less certain amounts. If OXiGENE did not exercise its exclusive right with respect to the purchase of the Programs licensed under the agreement with ViDA, rights to the Programs at the end of the development period would have remained with ViDA. In consideration for the Purchase Option, OXiGENE issued to Holdings 3,603,604 shares of its common stock and paid approximately $1,750,000 for structuring fees and related expenses to Symphony.

Acquisition of ViDA pursuant to an Amended and Restated Purchase Option Agreement

On July 2, 2009, the Company, Holdings and ViDA entered into a series of related agreements pursuant to which such parties agreed to amend the terms of the purchase option, as set forth in an amended and restated purchase option agreement (the “Amended Purchase Option Agreement”). In connection with such amendment, OXiGENE and Holdings also entered into an amended and restated registration rights agreement (the “Amended Registration Rights Agreement” and together with the Amended and Restated Purchase Option Agreement, the “Transaction Documents”).

Under the Amended Purchase Option Agreement, OXiGENE issued 10,000,000 newly-issued shares of OXiGENE common stock in exchange for all of the equity of ViDA which included further consideration for additional securities issued in connection with the Registered Direct Offering. The Company re-acquired all of the rights to the Programs that had been licensed in 2008 to ViDA. In addition, the approximately $12,400,000 in cash and marketable securities held by ViDA was transferred to OXiGENE. After exercising the purchase option, ViDA became a wholly-owned subsidiary of OXiGENE and ceased being a Variable Interest Entity (VIE), see further discussion below.

OXiGENE recorded the acquisition of ViDA as a capital transaction and the $10,383,000 excess of the fair market value of the common shares issued by OXiGENE ($15,600,000) over the carrying value of the noncontrolling interest ($5,217,000) was reflected directly in equity as a reduction to Additional paid-in capital. As a result, the noncontrolling interest balance was eliminated. The reduction to Additional paid-in capital was also presented as an increase in the loss applicable to common stock within the calculation of basic and diluted earnings per share.

Under the Amended Purchase Option Agreement, in the event that OXiGENE issued additional securities prior to January 20, 2010, Symphony had the right to receive additional securities from OXiGENE. Symphony has already received additional consideration under the Amended Purchase Option agreement in connection with the Registered Direct Offering on July 20, 2009. Pursuant to those transactions, OXiGENE issued to

F-9

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)

Holdings 10,000,000 newly issued shares of OXiGENE common stock in exchange for all of the equity of ViDA. These 10,000,000 shares included consideration to Holdings for the additional shares issued in the Registered Direct. Holdings’ right to receive further consideration, in the event that OXiGENE issued additional securities expired on January 20, 2010. No further consideration was earned by Holdings under this right.

The two members of the Company’s Board of Directors appointed by Symphony, Mr. Mark Kessel and Dr. Alastair Wood, remain on the Board of Directors, and the Company maintains its advisory relationships with Symphony and RRD International LLC. The Additional Funding Agreement, dated October 1, 2008, has been terminated in connection with the execution of the Transaction Documents pursuant to the Termination Agreement dated July 2, 2009. The closing of the transaction occurred on July 20, 2009.

Consolidation of Variable Interest Entity (VIE)

OXiGENE consolidated the financial position and results of operations of Symphony ViDA, Inc. (“ViDA”) from October 2008, when it entered into a strategic collaboration with Symphony ViDA Holdings, LLC (“Symphony”), until July 20, 2009 when OXiGENE acquired 100% of ViDA pursuant to an Amended and Restated Purchase Option Agreement. The funding supported pre-clinical and clinical development by OXiGENE, on behalf of ViDA, for ZYBRESTAT for ophthalmology and OXi4503.

A variable interest entity (VIE) is (1) an entity that has equity that is insufficient to permit the entity to finance its activities without additional subordinated financial support, or (2) an entity that has equity investors that cannot make significant decisions about the entity’s operations or that do not absorb their proportionate share of the expected losses or do not receive the expected residual returns of the entity. A VIE should be consolidated by the party that is deemed to be the primary beneficiary, which is the party that has exposure to a majority of the potential variability in the VIE’s outcomes. The application of accounting policy to a given arrangement requires significant management judgment.

The Company consolidated the financial position and results of operations of ViDA in accordance with proper accounting guidance. OXiGENE believes ViDA was by design a VIE because OXIGENE had a purchase option to acquire its outstanding voting stock at prices that are fixed based upon the date the option is exercised. The fixed nature of the purchase option price limited Symphony’s returns, as the investor in ViDA. Further, due to the direct investment from Holdings in OXiGENE common stock, as a related party ViDA was a VIE of which OXiGENE was the primary beneficiary. After OXiGENE exercised the purchase option, ViDA became a wholly-owned subsidiary of OXiGENE and ceased being a VIE.

On January 1, 2009, the Company adopted (retrospectively for all periods presented) the new presentation requirements for noncontrolling interests as required by ASC 810.

Accounting and Reporting of Noncontrolling Interests

On January 1, 2009, the Company adopted (retrospectively for all periods presented) the new presentation requirements for noncontrolling interests required by ASC 810 Consolidations. Under ASC 810, earnings or losses attributed to the noncontrolling interests are reported as part of consolidated earnings and not as a separate component of income or expense. Accordingly, the Company reported the consolidated earnings of ViDA in its consolidated statement of operations from October 2008, when it entered into a strategic collaboration with Symphony, until July 20, 2009, when OXiGENE acquired 100% of the equity of ViDA pursuant to the Amended and Restated Purchase Option Agreement. Once becoming the Company’s wholly-owned subsidiary, the operating results of ViDA continued to be included in the Company’s consolidated statement of operations but were no longer subject to the presentation requirements applicable to noncontrolling interests.

F-10

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)

Losses incurred by ViDA and attributable to Symphony, were charged to the noncontrolling interest. At December 31, 2008, the noncontrolling interest balance was $9,432,000. Losses charged to the noncontrolling interest in fiscal 2009 of $4,215,000 left the carrying balance of $5,217,000 which was eliminated with the acquisition. See “Acquisition of ViDA pursuant to an Amended and Restated Purchase Option Agreement” above.

Committed Equity Financing Facility (“CEFF”) with Kingsbridge Capital Limited

In February 2008, OXiGENE entered into a Committed Equity Financing Facility (“CEFF”) with Kingsbridge Capital, which was subsequently amended in February 2010 to increase the commitment period, increase the draw down discount price and increase the maximum draw period.

Under the terms of the amended CEFF, Kingsbridge committed to purchase, subject to certain conditions, up to 5,708,035 shares of the Company’s common stock or up to an aggregate of $40,000,000 during the period which ends May 15, 2012. Under the CEFF, OXiGENE is able to draw down in tranches of up to a maximum of 3.75 percent of its closing market value at the time of the draw down or the alternative draw down amount calculated pursuant to the Common Stock Purchase Agreement whichever is less, subject to certain conditions. The purchase price of these shares is discounted between 5 to 14 percent from the volume weighted average price of our common stock for each of the eight trading days following the election to sell shares. Kingsbridge is not obligated to purchase shares at prices below $0.75 per share or at a price below 85% of the closing share price of OXiGENE stock in the trading day immediately preceding the commencement of the draw down, whichever is higher. In connection with the CEFF, the Company issued a warrant to Kingsbridge to purchase 250,000 shares of its common stock at a price of $2.74 per share exercisable beginning six months after February 19, 2008 for a period of five years thereafter. (See Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in the Company’s Common Stock, below.) As of December 31, 2009, there remain a total of 5,073,435 shares available for sale under the CEFF.

Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in the Company’s Common Stock

In connection with the strategic collaboration with Symphony in October 2008 discussed above, OXiGENE issued to Holdings, a warrant (the “Direct Investment Warrant”) to purchase 11,281,877 shares of its common stock at $1.11 per share, the closing price of its common stock on the NASDAQ Global Market on September 30, 2008, the day before the consummation of the Symphony transaction. The term of this warrant was ten years from the date of issuance or until October 17, 2018. This warrant was exercised on December 30, 2008 subsequent to the approval of issuance of common stock underlying the warrant by the Company’s stockholders at a special meeting of stockholders on December 9, 2008.

In addition, OXiGENE agreed that should the development committee of ViDA determine that ViDA needs additional funding and that funding is provided by Holdings, the Company would issue to Holdings shares of its common stock having a value of up to $1,000,000 (the “Additional Investment Shares”) on the date of issuance. Because the closing price of the Company’s common stock as of the additional closing date was not determinable, the number of potential shares issuable to Holdings to satisfy this $1,000,000 Additional Investment Shares obligation would not be known and there was a possibility that the number of shares necessary to settle the Additional Investment Shares obligation would be greater than the number of shares that OXiGENE had authorized.

In February 2008, the Company issued five-year warrants exercisable beginning in August 2008 to Kingsbridge Capital Limited in consideration for entering into a Committed Equity Financing Facility (“CEFF”). Through these warrants (the “CEFF Warrants”), Kingsbridge may purchase from the Company up to 250,000 shares of common stock with an exercise price of $2.74 per share. As of December 31, 2009, none of these warrants had been exercised.

F-11

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)

Due to the indeterminable number of shares required to meet the Additional Investment Shares obligation, the Company determined that OXiGENE may not have sufficient authorized shares to settle its outstanding financial instruments. The Company’s policy with regard to settling outstanding financial instruments is to settle those with the earliest maturity date first which essentially sets the order of preference for settling the awards. Accordingly, OXiGENE accounted for the Direct Investment Warrant, Additional Investment Shares and CEFF Warrant (collectively the “Derivative Instruments”) as liabilities. The Company began the treatment of these Derivative Instruments as liabilities (excluding the Direct Registration Warrants which, as discussed below, were not issued until July 2009) as of October 17, 2008, the initial funding and effective date of the Symphony transaction. Establishing the value of these Derivative Instruments is an inherently subjective process. The value of both the Direct Investment Warrant and the CEFF Warrant are determined using the Black-Scholes option model. The value of the Additional Investment Shares is determined by considering a number of factors, including among others, the probability and amount of the additional funding provided by Holdings, if any, the probability that OXiGENE would provide the additional funding amount, and the timing of meeting the potential obligation. Differences in value from one measurement date to another were recorded as other income/expense in OXiGENE’s statement of operations.

In October 2008, the Company recorded a $9,424,000 liability for the fair value of the Derivative Instruments. OXiGENE remeasured the Derivative Instruments (excluding the Direct Registration Warrants which, as discussed below, were not issued until July 2009) as of December 31, 2008 resulting in a gain of $3,335,000 as a result of the change in fair value of the Direct Investment and the Kingsbridge CEFF warrants.

As of June 30, 2009, the Additional Investment Shares had a fair value of zero as a result of the Additional Funding Agreement being terminated by the Company through the Amended and Restated Purchase Option Agreement executed on July 2, 2009. As a result of the Additional Investment Share obligation being terminated, the possibility that OXiGENE may not have sufficient authorized shares to settle its outstanding financial instruments was eliminated. In fiscal year 2009, the change in fair value of the Additional Investment shares resulted in a non-cash gain of $444,000. As of July 20, 2009, OXiGENE re-measured the fair value of the CEFF Warrants and reclassified the warrants to equity. In fiscal year 2009, the change in fair value of the CEFF Warrants resulted in a non-cash loss of $133,000.

Direct Registration Warrants

On July 20, 2009, OXiGENE raised approximately $10,000,000 in gross proceeds, before deducting placement agents’ fees and other offering expenses, in a registered direct offering (the “Offering”) relating to the sale of 6,250,000 units, each unit consisting of (i) one share of common stock, (ii) a five-year warrant (“Direct Registration Series I”) to purchase 0.45 shares of common stock at an exercise price of $2.10 per share of common stock and (iii) a short-term warrant (“Direct Registration Series II”) to purchase 0.45 shares of common stock at an exercise price of $1.60 per share of common stock, for a purchase price of $1.60 per unit (the “Units”). The short-term warrants are exercisable during a period beginning on the date of issuance until the later of (a) nine months from the date of issuance and (b) ten trading days after the earlier of (i) the public announcement of the outcome of the planned interim analysis by the Independent Data Safety Monitoring Committee of data from the Company’s Phase II/III pivotal clinical trial regarding ZYBRESTAT as a treatment for anaplastic thyroid cancer or (ii) the public announcement of the suspension, termination or abandonment of such trial for any reason.

F-12

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)

be classified as a liability as they require delivery of registered shares of common stock and thus could require net-cash settlement in certain circumstances. Accordingly, these warrants were recorded as a liability at their fair value as of the date of their issuance of $4,055,000 and are revalued at each subsequent reporting date. As of December 31, 2009 the warrants are valued at $2,200,000. The change in fair value between the issuance date and December 31, 2009 of $1,855,000 was recorded as a non-cash gain in the statement of operations.

The fair value of these warrants was determined using the Black-Scholes option valuation model applying the following assumptions:


	Direct Investment Warrant						Kingsbridge CEFF Warrant
							Date of Warrant
	Date of Warrant			Date of Warrant			Designation as a			Date of Warrant			Date of Warrant
	Issue			Exercise			Liability			Valuation			Valuation
Weighted Average Assumptions	10/17/2008			12/30/2008			10/17/2008			12/31/2008			7/20/2009

Stock Price	$	0.94		$	0.66		$	0.94		$	0.66		$	1.56
Exercise Price	$	1.11		$	1.11		$	2.74		$	2.74		$	2.74
Contractual life		10.00 years			9.75 years			4.83 years			4.67 years			4 years
Expected volatility		86	%		84	%		52	%		55	%		70	%
Risk-free interest rate		3.50	%		3.75	%		2.75	%		1.50	%		1.87	%
Fair market value (in thousands)	$	8,934		$	5,622		$	45		$	22		$	155

The fair value of the direct registration warrants was determined using the Black-Scholes option valuation model applying the following assumptions:


	As of July 20,						As of December 31,
	2009						2009
	Series I			Series II			Series I			Series II

Stock Price	$	1.56		$	1.56		$	1.14		$	1.14
Exercise Price	$	2.10		$	1.60		$	2.10		$	1.60
Contractual life		5 years			1.25 years			4.59 years			.91 years
Expected volatility		67	%		100	%		69	%		100	%
Risk-free interest rate		2.46	%		0.28	%		2.60	%		0.40	%
Fair market value (in thousands)	$	2,223		$	1,832		$	1,350		$	850

The (gain) loss from the change in fair value of warrants and other financial instruments is summarized below:


	2009			2008

Direct investment warrants	$	—		$	(3,312	)
Additional investment shares		(444	)		—
CEFF warrant		133			(23	)
Direct registration warrants		(1,855	)		—

Total (gain) on change in fair market value of warrants	$	(2,166	)	$	(3,335	)

Reclassifications

F-13

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)

For the years ended December 31, 2008 and 2007, approximately $561,000 and $381,000, respectively, were reclassified to Research and Development expenses.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

Concentration of Credit Risk

The Company has no significant off balance sheet concentrations of credit risk. Financial instruments that potentially subject the Company to concentrations of credit risk primarily consist of cash and cash equivalents. The Company holds its cash and cash equivalents at one financial institution.

Cash, Restricted Cash and Cash Equivalents

The Company considers all highly liquid financial instruments with maturities of three months or less when purchased to be cash equivalents. The Company has $140,000 that is used to secure financing through a Company credit card. This amount is separated from cash and cash equivalents on the Consolidated Balance Sheet.

Available-for-Sale Securities

In accordance with the Company’s investment policy, surplus cash may be invested primarily in commercial paper, obligations issued by the U.S. Treasury/ federal agencies or guaranteed by the U.S. government, money market instruments, repurchase agreements, bankers’ acceptances, certificates of deposit, time deposits and bank notes. In accordance with financial accounting standards, the Company separately discloses cash and cash equivalents from investments in marketable securities. The Company designates its marketable securities as available-for-sale securities. Available-for-sale securities are carried at fair value with the unrealized gains and losses, net of tax, if any, reported as accumulated other comprehensive income (loss) in stockholders’ equity. The Company reviews the status of the unrealized gains and losses of its available-for-sale marketable securities on a regular basis. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in investment income. Interest and dividends on securities classified as available-for-sale are included in investment income. Securities with maturation greater than twelve months, are classified as long-term assets. Securities in an unrealized loss position as of December 31, 2008 were deemed not to be other-than-temporarily impaired due to the Company’s positive intent and ability to hold the securities until anticipated recovery.

The Company’s investment objectives are to preserve principal, maintain a high degree of liquidity to meet operating needs and obtain competitive returns subject to prevailing market conditions. The Company assesses the market risk of its investments on an ongoing basis so as to avert risk of loss. The Company assesses the market risk of its investments by continuously monitoring the market prices of its investments and related rates of return, and continuously looking for the safest, most risk-averse investments that will yield the highest rates of return in their category.

F-14

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)

The Company did not hold any available-for-sale securities as of December 31, 2009. The following table summarizes assets that were measured at fair value as of December 31, 2008 (in thousands):


	December 31, 2008
			Gross Unrealized
	Cost		Losses			Fair Value

Corporate bonds maturing in less than one year	$	747	$	(104	)	$	643

Total available-for-sale securities	$	747	$	(104	)	$	643

In May 2009, the Company sold the Corporate bonds at maturity for gross proceeds of $750,000 and did not realize any losses.

Fair Value

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. Fair value hierarchy is now established that prioritizes valuation inputs based on the observable nature of those inputs. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of our investments and is not a measure of the investment credit quality. The hierarchy defines three levels of valuation inputs:


Level 1 inputs		Quoted prices in active markets;
Level 2 inputs		Generally include inputs with other observable qualities, such as quoted prices in active markets for similar assets or quoted prices for identical assets in inactive markets; and
Level 3 inputs		Valuations based on unobservable inputs.

As of December 31, 2009, OXiGENE did not hold any assets or liabilities subject to these standards, except the derivative liabilities and other financial instruments discussed above in “Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in the Company’s Common Stock” which are level 3 inputs. OXiGENE held $14,072,000 in cash, restricted cash and equivalents, of which $4,781,000 was in a money market fund, none of which was subject to this disclosure requirement. Effective January 1, 2009, the Company adopted the fair value standards as it relates to non-recurring fair value measurements, such as the assessment of goodwill and other long-lived assets for impairment.

Accrued Research and Development

The Company charges all research and development expenses, both internal and external costs, to operations as incurred. The Company’s research and development costs represent expenses incurred from the engagement of outside professional service organizations, product manufacturers and consultants associated with the development of the Company’s potential product candidates. The Company recognizes expenses associated with these arrangements based on the completion of activities as specified in the applicable contracts. Costs incurred under fixed-fee contracts are expensed ratably over the contract period absent any knowledge that the services will be performed other than ratably. Costs incurred under contracts with clinical trial sites and principal investigators are generally accrued on a patient-treated basis consistent with the terms outlined in the contract. In determining costs incurred on some of these programs, the Company takes into consideration a number of factors, including estimates and input provided by internal program managers. Upon termination of such contracts, the Company is normally only liable for costs incurred and committed to date. As a result, accrued research and development expenses represent the Company’s reasonably estimated contractual liability to outside service providers at any particular point in time. On the Company’s Balance Sheet “Accrued Other” of $1,684,000 as of December 31, 2009 consists of $436,000 of accounting and legal costs, $612,000 of accrued payroll and vacation and $636,000 of other accruals.

F-15

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)

Net Loss Per Share

Basic and diluted net loss per share was calculated by dividing the net loss per share attributed to OXIGENE common shares by the weighted-average number of common shares outstanding. Diluted net loss per share includes the effect of all dilutive, potentially issuable common equivalent shares as defined using the treasury stock method. All of the Company’s common stock equivalents are anti-dilutive due to the Company’s net loss position for all periods presented. Accordingly, common stock equivalents of approximately 7,814,000, 2,723,000 and 2,765,000 at December 31, 2009, 2008 and 2007, respectively, were excluded from the calculation of weighted average shares for diluted net loss per share.

During 2009, the Company recorded the excess of the purchase price over the carrying value of the noncontrolling interest in ViDA as an increase in the loss applicable to common stock (See Acquisition of ViDA pursuant to an Amended and Restated Purchase Option Agreement above).

Stockholder’s Equity Common and Preferred Shares

As of December 31, 2008, the Company had 100,000,000 shares of common stock authorized and 46,293,000 shares of common stock issued and outstanding. On May 28, 2009, at the annual meeting of stockholders, the stockholders approved an increase in the number of authorized shares of common stock to 150,000,000 and an addition of 15,000,000 authorized shares of preferred stock. In the quarter ended September 30, 2009, OXiGENE issued 10,000,000 shares in common stock to ViDA Holdings, LLC (“Holdings”) as part of the ViDA acquisition (See Acquisition of ViDA pursuant to an Amended and Restated Purchase Option Agreement above) and 6,250,000 of shares of common stock to investors is a registered direct offering (See Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in the Company’s Common Stock above). As of December 31, 2009, there were 150,000,000 shares of common stock authorized and 62,738,000 shares of common stock issued and outstanding, and 15,000,000 shares of preferred stock authorized and no shares of preferred shares issued and outstanding. At the special meeting of stockholders of OXiGENE held February 3, 2010, the issuance of shares of OXiGENE common stock pursuant to the merger agreement with VaxGen, Inc. and all other proposals were adopted including increasing the authorized number of shares of common stock to 175,000,000. Because the VanGen shareholders did not approve the merger, it will not take place.

Stock-based Compensation

The Company expenses the estimated fair value of all share-based payments issued to employees over the vesting period. The Company has a 2005 Stock Plan (“2005 Plan”), which superseded its 1996 Stock Option Plan that provides for the award of stock options, restricted stock and stock appreciation rights to employees, directors and consultants to the Company. The Company also has a 2009 Employee Stock Purchase Plan (“2009 ESPP”).

Options, Warrants, Non-Vested Stock, and 2009 ESPP

Options

On May 28, 2009, at the annual meeting of stockholders, the stockholders of the Company approved amendments to its 2005 Plan to (i) increase from 2,500,000 to 7,500,000 the number of shares of the Company’s common stock available for issuance under the 2005 Plan which number includes such number of shares of its common stock, if any, that were subject to awards under the Company’s 1996 Plan as of the date of adoption of the 2005 Plan but which became or will become unissued upon the cancellation, surrender or termination of such award; and (ii) increase from 250,000 to 750,000 the number of shares that may be granted under the Plan to any participant in any fiscal year. For options subject to graded vesting, the Company elected the straight-line method vesting over 4 years at 25% per year.

F-16

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)

The following is a summary of the Company’s stock option activity under its 1996 Plan and 2005 Plan for the year ended December 31, 2009:


						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Shares			Exercise Price		Contractual Life		Intrinsic Value
	(In thousands)					(Years)		(In thousands)

Options outstanding at December 31, 2008		2,333		$	5.01		6.15	$	—
Granted		1,454		$	1.10		—		485
Exercised		—		$	—		—		—
Forfeited and expired		(1,888	)	$	3.43		—		(356	)

Options outstanding at December 31, 2009		1,899		$	3.60		6.85	$	244

Option exercisable at December 31, 2009		827		$	6.36		3.88		3

Options vested or expected to vest at December 31, 2009		1,508		$	4.19		6.26	$	152

During 2009, 701,000 options expired. As of December 31, 2009 there was approximately $410,000 of unrecognized compensation cost related to stock option awards that is expected to be recognized as expense over a weighted average period of 2.3 years. The total fair value of stock options that vested during the year ended December 31, 2009, 2008 and 2007 was approximately $844,000, $620,000 and $921,000, respectively.

The Company is required to estimate the level of award forfeitures expected to occur and record compensation expense only for those awards that are ultimately expected to vest. This requirement applies to all awards that are not yet vested, including awards granted prior to January 1, 2006. Accordingly, OXiGENE performed a historical analysis of option awards that were forfeited prior to vesting, and ultimately recorded total stock option expense that reflected this estimated forfeiture rate. In its calculation, the Company segregated participants into two distinct groups, (1) directors and officers and (2) employees, and the estimated forfeiture rates were calculated at 25% and 50%, respectively using the Straight Line (Uniform) method. This analysis will be re-evaluated quarterly and the forfeiture rate will be adjusted as necessary.

The fair values for the stock options granted were estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions for the year ended December 31, 2009, 2008 and 2007:


Weighted Average Assumptions	2009			2008			2007

Risk-free interest rate		1.99	%		2.13	%		4.51	%
Expected life		5 years			5 years			5 years
Expected volatility		58	%		55	%		87	%
Dividend yield		0.00	%		0.00	%		0.00	%

The following stock options were granted during the years ended December 31, 2009, 2008 and 2007:


	2009		2008		2007

Options Granted (In thousands)		1,454		366		708
Weighted average fair value	$	0.59	$	0.89	$	2.40

F-17

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)

Warrants

The following is a summary of the Company’s outstanding common stock warrants as of December 31, 2009:


			Weighted
			Average
			Exercise		Warrants
	Date of Issue		Price		Issued

Warrants outstanding as of December 31, 2008		December 31, 2008	$	2.74		250,000
Direct Registration Series I		July 20, 2009	$	2.10		2,813,000
Direct Registration Series II		July 20, 2009	$	1.60		2,813,000

Warrants outstanding as of December 31, 2009		December 31, 2009	$	1.89		5,876,000

See above “Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in the Company’s Common Stock” for more detail on the accounting for warrants and other financial instruments.

Non-Vested Stock

The following table summarizes the activity for unvested stock in connection with restricted stock grants during the year ended December 31, 2009:


				Weighted Average
	Shares			Fair Value
	(In thousands)

Unvested at December 31, 2008		285		$	4.56
Granted		—		$	—
Vested		(70	)	$	4.68
Forfeited		(175	)		4.91

Unvested at December 31, 2009		40		$	4.09

The Company recorded expense of approximately $242,000, $393,000, and $835,000 related to outstanding restricted stock awards during the years ended December 31, 2009, 2008 and 2007, respectively. The 40,000 shares of unvested restricted stock at December 31, 2009 will vest in June 2010 and 2011. The restricted stock awards were valued based on the closing price of the Company’s common stock on their respective grant dates. Compensation expense is being recognized on a straight -line basis over the 4 year vesting period of the awards.

Employee Stock Purchase Plan (2009 ESPP)

In May 2009, the Company’s stockholders approved the 2009 Employee Stock Purchase Plan (the “2009 ESPP”). Under the 2009 ESPP, employees have the option to purchase shares of the Company’s common stock at 85% of the closing price on the first day of each purchase period or the last day of each purchase period (as defined in the 2009 ESPP), whichever is lower, up to specified limits. Eligible employees are given the option to purchase shares of the Company’s common stock, on a tax-favored basis, through regular payroll deductions in compliance with Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”). An aggregate of 2,000,000 shares of common stock may be issued under the 2009 ESPP, subject to adjustment each year pursuant to the terms of the 2009 ESPP. The Company recorded expense from June 1 to December 31, 2009 of $50,000 and issued 75,000 shares.

F-18

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)

Director Compensation Policy

In October 2008, the Board of Directors approved the amended and restated policy which established compensation to be paid to non- employee directors of the Company, to provide an inducement to obtain and retain the services of qualified persons to serve as members of the Company’s Board of Directors. Each Outside Director was to a make an annual selection indicating the desired form of compensation between cash and stock. All selected stock compensation for 2009. As a result of this plan, the Company issued 115,000 fully vested shares to its Board. In December 2009, the Board of Directors approved the amended and restated policy which approved an additional 180,000 shares as compensation in 2009. Pursuant to the plan for 2010, each of the Corporation’s non-employee Directors was granted 10,000 fully vested shared of common stock on January 2, 2010 as additional compensation for services previously rendered to the corporation, and 25,000 fully vested shares of common stock on January 2, 2010 and 25,000 fully vested shares of common stock on July 1, 2010 as compensation for services rendered in 2010. During 2009, the Company recorded expense of $321,000 for these shares.

Income Taxes

The Company accounts for income taxes based upon the provisions of ASC 740 Income Taxes. Under ASC 740, deferred taxes are recognized using the liability method whereby tax rates are applied to cumulative temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes based on when and how they are expected to affect the tax return.

License Agreements

The present value of the amount payable under the license agreement with Arizona State University (see Note 6) has been capitalized and is being amortized over the term of the agreement (approximately 15.5 years). Over the next five years, the Company expects to record amortization expense related to this license agreement of approximately $98,000 per year and the net book value at December 31, 2009 was $484,000. The Company is required to perform an impairment analysis of its long-lived assets if triggering events occur. The Company reviews for such triggering events periodically and, even though triggering events such as a going concern opinion and continuing losses occurred, the Company has determined that there is no impairment to this asset during the years ended December 31, 2009, 2008 or 2007. The license agreement provides for additional payments in connection with the license arrangement upon the initiation of certain clinical trials or the completion of certain regulatory approvals, which payments could be accelerated upon the achievement of certain financial milestones as defined in the agreement. Future milstone payments under this agreement could total $200,000. To date no clinical trials triggering payments under the agreement have been completed and no regulatory approvals have been obtained. The Company expenses these payments to research and development in the period the obligation becomes both probable and estimable.

In March 2007, the Company entered into an exclusive license agreement for the development and commercialization of products covered by certain patent rights owned by Intracel Holdings, Inc., a privately held corporation. The Company paid Intracel $150,000 in March 2007 as an up-front license fee that provides full control over the development and commercialization of licensed compounds/molecular products. The Company expensed the up-front payment to research and development expense. The agreement provides for additional payments by the Company to Intracel based on the achievement of certain clinical milestones and royalties based on the achievement of certain sales milestones. The Company has the right to sublicense all or portions of its licensed patent rights under this agreement. No payments have been received to date.

Furniture and Fixtures, Equipment and Leasehold Improvements

Furniture and fixtures, equipment and leasehold improvements are recorded at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets, which range from three to five years.

F-19

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)

Property and equipment consisted of the follow at the date indicated below:


	2009		2008
	(In thousands)

Leasehold improvements	$	449	$	425
Equipment		650		635
Furniture and fixtures		416		396

Total gross assets		1,515		1,456

Less accumulated depreciation		1,332		1,255

Total property and equipment	$	183	$	201

Patents and Patent Applications

The Company has filed applications for patents in connection with technologies being developed. The patent applications and any patents issued as a result of these applications are important to the protection of the Company’s technologies that may result from its research and development efforts. Costs associated with patent applications and maintaining patents are expensed as general and administrative expense as incurred.

Comprehensive (Loss)

ASC 220, Comprehensive Income, establishes rules for the reporting and display of comprehensive loss and its components and requires unrealized gains or losses on the Company’s available-for-sale securities and the foreign currency translation adjustments to be included in other comprehensive loss. There was no accumulated other comprehensive loss as of December 31, 2009 and other accumulated comprehensive loss consisted of an unrealized loss on available-for-sale securities of $110,000 at December 31, 2008.

A reconciliation of comprehensive loss is as follows:


	2009			2008			2007
				(In thousands)

Consolidated net loss as reported	$	(28,943	)	$	(21,921	)	$	(20,389	)
Unrealized gain (loss)		110			(125	)		34

Total comprehensive loss	$	(28,833	)	$	(22,046	)	$	(20,355	)

Less comprehensive loss attributable to noncontrolling interest		(4,215	)		(520	)		—

Comprehensive loss attributable to OXiGENE, Inc.	$	(24,618	)	$	(21,526	)	$	(20,355	)

Revenue Recognition

Currently, the Company does not have any products available for sale. The only source of potential revenue at this time is from the license to a third party of the Company’s formerly owned Nicoplex and Thiol Test technology. Revenue in connection with this license arrangement is earned based on sales of products or services utilizing this technology. Revenue is recognized under this agreement when payments are received due to the uncertainty of the timing of sales of products or services. There was no license revenue for the year ended December 31, 2009 and license revenue of $12,000 was recognized during the years ended December 31, 2008 and 2007.

Agreements

In September 2007, the Company entered into a separation agreement with Peter Harris M.D., its former Chief Medical Officer. Pursuant to the separation agreement, Dr. Harris received aggregate severance payments

F-20

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)

of approximately $163,000, made in equal installments through February 28, 2008. The Company also agreed to extend the expiration date of 25,000 vested options, which will allow the exercise of those options through June 13, 2016. As a result of this modification, the Company recognized additional stock-based compensation expense of $65,000 in September, 2007. All unvested options held by Dr. Harris were forfeited as of September 29, 2007.

In October 2008, the Board of Directors accepted the resignation of Dr. Richard Chin from his position as President and Chief Executive Officer and member of the Board of Directors. All unvested options held by Dr. Chin were forfeited as of January 22, 2009 and no further severance payments were required.

In April 2009, the Company entered into a separation agreement with Patricia Walicke, M.D., Ph.D., its former Vice President and Chief Medical Officer. Pursuant to the separation agreement, Dr. Walicke, will receive severance payments in the amount of $300,000 made in equal installments over one year. All unvested options held by Dr. Walicke were forfeited as of July 29, 2009 and no further severance payments are required.

In October 2009, the Board of Directors accepted the resignation of John A. Kollins as Chief Executive Officer and as a member of the Board of Directors. The Company entered into a separation agreement with Mr. Kollins effective as of November 5, 2009. Mr Kollins will receive his base salary of $350,000 made in equal installments for one year plus health benefits for up to 2 years, and a one time $20,000 payment. All unvested options held by Mr. Kollins were forfeited as of January 8, 2010.

Recent Accounting Pronouncements

In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162 (“SFAS 168”), which establishes the FASB Accounting Standards Codification as the source of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements. The provisions of SFAS 168 were adopted by the Company and the Accounting Standards Codification has been reflected within the disclosures within the consolidated financial statements. The adoption of SFAS 168 had no impact on the Company’s consolidated financial statements.

On January 1, 2009, the Company adopted the provisions of SFAS No. 141(R), Business Combinations (“SFAS 141(R)”), as codified in FASB ASC topic 805, Business Combinations (“ASC 805”), and will apply such provisions prospectively to business combinations that have an acquisition date on or after January 1, 2009. ASC 805 establishes principles and requirements for how an acquirer in a business combination (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree, (ii) recognizes and measures goodwill acquired in a business combination or a gain from a bargain purchase, and (iii) determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of the business combination. In addition, changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after purchase accounting is completed will be recognized in earnings rather than as an adjustment to the cost of acquisition. This accounting treatment for deferred tax asset valuation allowances and acquired income tax uncertainties is applicable to acquisitions that occur both prior and subsequent to the adoption of ASC 805. The adoption of the provisions of ASC 805 did not affect the Company’s historical consolidated financial statements.

F-21

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)

On January 1, 2009, concurrent with the adoption of ASC 805, the Company also adopted SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 ( SFAS 160), as codified in FASB ASC topic 810, Consolidation (ASC 810). ASC 810 changes the accounting and reporting for minority interests, which are recharacterized as noncontrolling interests and classified as a component of equity. The adoption of ASC 810 affected the Company’s presentation of the minority interest in Symphony Vida.

The FASB issued ASC 320, entitled “Recognition and Presentation of Other-Than-Temporary Impairments”. ASC 320 provides new guidance on the recognition and presentation of an other-than-temporary impairments (OTTI) and provides for some new disclosure requirements. The Company adopted ASC 320 during the quarter ended June 30, 2009. The adoption did not have a material impact on the Company’s financial statements.


2.	Related Party Transactions

As part of a series of related agreements with Symphony ViDA Holdings LLC, on October 1, 2008, Symphony Holdings, Inc. purchased $15,000,000 worth of shares of common stock at a price of $1.11 per share, which was equal to the closing price of the Company’s common stock on the NASDAQ Global Market on September 30, 2008, via a direct investment. (See Note 1 for complete details).


3.	Subsequent Events

On October 15, 2009, OXiGENE announced the Company has entered into a definitive merger agreement to acquire VaxGen in exchange for common stock of OXiGENE. Upon closing of the transaction, VaxGen would have become a wholly-owned subsidiary of OXiGENE, and VaxGen stockholders would have become stockholders of OXiGENE. At the closing of the transaction, OXiGENE was to issue approximately 15.6 million shares of common stock in exchange for all outstanding shares of VaxGen’s common stock. The number of shares issued at closing was to be subject to adjustment if VaxGen’s net cash was greater or less than approximately $33.2 million.

At the special meeting of stockholders of OXiGENE held February 3, 2010 the issuance of shares of OXiGENE common stock pursuant to the merger agreement with VaxGen, Inc. and all other proposals were adopted including increasing the authorized number of shares of the Corporation’s Common Stock from 150,000,000 to 175,000,000. At the special meeting of stockholders of VaxGen, however, also held February 3, 2010, the necessary majority of the outstanding shares of VaxGen common stock did not vote in favor of adoption of the proposed merger agreement with OXiGENE. The proposed merger between OXiGENE and VaxGen will, therefore, not take place. OXiGENE notified VaxGen of the termination of the merger agreement on February 12, 2010.

F-22

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)

On February 11, 2010, OXiGENE announced a restructuring plan designed to focus its resources on the Company’s highest-value clinical assets and reduce its cash utilization. As part of the restructuring, OXiGENE is reducing its workforce, effective immediately, by 20 employees or approximately 49%. OXiGENE is offering severance benefits to the terminated employees and anticipates recording a charge of approximately $600,000, primarily associated with personnel-related termination costs, which will be recognized in the first quarter of 2010. Substantially all of the charge is expected to represent cash expenditures.

In February 2008, the Company entered into a Committed Equity Financing Facility (CEFF) with Kingsbridge Capital, which was subsequently amended in February 2010. See “Committed Equity Financing Facility (“CEFF”) with Kingsbridge Capital Limited in footnote 1.

On March 11, 2010 the Company entered into a definitive agreement with certain institutional investors to sell shares of its Common Stock and, separately, a series of warrants to purchase Common Stock in a private placement. Gross proceeds of the financing were approximately $7,500,000, before deducting placement agent fees and estimated offering expenses, and assuming no exercise of the warrants.

The agreement includes the sale of 6,578,945 shares of Common Stock and warrants as follows: (1) Series A Warrants to purchase 6,578,945 shares of Common Stock, which are exercisable immediately after issuance, have a 5-year term and a per share exercise price of $1.52; and (2) Short-Term Series B Warrants to purchase 6,578,945 shares of Common Stock, which will be exercisable at a per share exercise price of $1.14 on the earlier of the six month anniversary of the closing date or the date on which the Company’s stockholders approve the transaction, and shall expire on the later of three months from the effective date of the registration statement to be filed to register the resale by investors of the shares issued in this transaction and seven months from the closing date. The investors will also have the right to receive a Series C Warrant for every Series B Warrant that they exercise, which would be exercisable on the earlier of the six month anniversary of the closing date or the date on which the Company’s stockholders approve the transaction, would expire five years after the date on which they become exercisable, and have a per share exercise price of $1.14. The warrants have exercise prices that are subject to adjustment under certain circumstances and contain anti-dilution provisions. In addition, the Company will be required to issue additional shares of Common Stock to the investors in the event that the price per share of the Common Stock is less than the price paid in this offering during a specified period following the later of the date on which the shareholders approve the transaction and the earlier of the date on which the investors’ securities have been registered for resale or are able to be sold without restriction under Rule 144 under the Securities Act of 1933, as amended.


4.	Stockholders’ Equity

In February 2008, the Company entered into a Committed Equity Financing Facility (“CEFF”) with Kingsbridge Capital Limited, pursuant to which Kingsbridge committed to purchase, subject to certain conditions, up to $40,000,000 of the Company’s common stock over a three-year period. As part of the CEFF, the Company entered into a Common stock purchase agreement and registration rights agreement with Kingsbridge, and issued a warrant to Kingsbridge to purchase up to 250,000 shares of OXiGENE’s common stock at an exercise price of $2.74 per share, which represents a 25% premium over the average of the closing prices of OXiGENE’s common stock during the 5 trading days preceding the signing of the Common Stock Purchase Agreement. The Warrant is fully exercisable beginning six months after February 19, 2008 and for a period of five years thereafter, subject to certain conditions. During the second quarter of 2008, the Company issued to Kingsbridge 635,000 shares of its common stock under the CEFF, for gross proceeds estimated at $894,000.

As part of a series of related agreements with Symphony Capital LLC, or “Symphony”, Symphony ViDA, Inc., or “ViDA”, Symphony ViDA Holdings LLC, or “Holdings” and related entities, Holdings purchased 13,513,514 shares of common stock at a price of $1.11 per share, which was equal to the closing price of the

F-23

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)

Company’s common stock on the NASDAQ Global Market on September 30, 2008, via a direct investment of $15,000,000.

The original Purchase Option Agreement with Symphony provided for the exclusive right, but not the obligation, for the Company to repurchase both the ophthalmology and OXi4503 programs by acquiring 100% of the equity of ViDA at any time between October 2, 2009 and March 31, 2012. In consideration for the Purchase Option, the Company issued to Holdings 3,603,604 shares of its common stock with a value of $4,000,000 and paid approximately $1,750,000 for structuring fees and related expenses to Symphony Capital.

Under the Amended Purchase Option Agreement, OXiGENE issued 10,000,000 newly-issued shares of OXiGENE common stock in exchange for all of the equity of ViDA held by Holdings. The Company re-acquired all of the rights to the ZYBRESTAT for ophthalmology and OXi4503 programs that had been licensed to ViDA. In addition, the approximately $12,400,000 in cash and marketable securities held by ViDA was transferred to OXiGENE. After exercising the purchase option, ViDA became a wholly-owned subsidiary of OXiGENE and ceased being a VIE.

OXiGENE recorded the acquisition of ViDA as a capital transaction and the $10,383,000 excess of the fair market value of the common shares issued by OXiGENE ($15,600,000) over the carrying value of the noncontrolling interest ($5,217,000) is reflected directly in equity as a reduction to Additional paid-in capital. As a result, the noncontrolling interest balance was eliminated. The reduction to Additional paid-in capital was also presented as an increase in the loss applicable to common stock within the calculation of basic and diluted earnings per share.

On July 20, 2009, OXiGENE raised approximately $10,000,000 in gross proceeds, before deducting placement agents’ fees and other offering expenses, in a registered direct offering (the “Offering”) relating to the sale of 6,250,000 units, each unit consisting of (i) one share of common stock, (ii) a five-year warrant to purchase 0.45 shares of common stock at an exercise price of $2.10 per share of common stock and (iii) a short-term warrant to purchase 0.45 shares of common stock at an exercise price of $1.60 per share of common stock, for a purchase price of $1.60 per unit (the “Units”). The short-term warrants are exercisable during a period beginning on the date of issuance until the later of (a) nine months from the date of issuance and (b) ten trading days after the earlier of (i) the public announcement of the outcome of the planned interim analysis by the Independent Data Safety Monitoring Committee of data from the Company’s Phase II/III pivotal clinical trial regarding ZYBRESTAT as a treatment for anaplastic thyroid cancer or (ii) the public announcement of the suspension, termination or abandonment of such trial for any reason.

The Units were offered and sold pursuant to (i) a prospectus dated December 1, 2008 and (ii) a prospectus supplement dated July 15, 2009, pursuant to and forming a part of the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-155371). The net proceeds to the Company from the sale of the Units, after deducting the fees of the placement agents and other offering expenses, were approximately $9,029,000. Of this amount, approximately $4,055,000 of the proceeds was associated with the fair value of the warrants issued as part of the transaction and was recorded as a liability instrument.

Common Stock Reserved for Issuance

As of December 31, 2009, the Company has reserved approximately 6,072,000 shares of its common stock for issuance in connection with stock options and 5,876,000 shares in connection with warrants.

F-24

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)


5.	Income Taxes

At December 31, 2009, the Company had net operating loss carry-forwards of approximately $180,940,000 for U.S. income tax purposes, which will begin to expire in 2021 and state operating loss carry-forwards of $87,390,000 in Massachusetts that begin expiring in 2009 and $23,018,000 in California that begins to expire in 2028. The Company also had tax credits of $2,936,000 related to federal and state research and development activities which begins to expire in 2021. The Company recorded a capital loss carryover of approximately $4,000,000 that generated a deferred tax asset of $1,592,000.

The future utilization of the net operating loss carry-forwards and credit carryforwards may be subject to an annual limitation due to ownership changes that could have occurred in the past or that may occur in the future under the provisions of IRC Section 382 or 383. Realization of the deferred tax assets is uncertain due to the historical losses of the Company and therefore a full valuation allowance has been established.

Components of the Company’s deferred tax assets (liabilities) at December 31, 2009 and 2008 are as follows: (Amounts in thousands)


	2009			2008

Deferred Tax Assets (DTA)
Net operating loss carry-forwards	$	67,923		$	62,152
Stock-based awards		1,205			1,050
Research & development credits		2,183			1,437
Capital loss carryforward		1,592			—
Other		445			243

Deferred tax asset		73,348			64,882
Valuation allowance		(73,348	)		(64,882	)

Net deferred tax asset	$	—		$	—

The valuation allowance increased by approximately $8,466,000 and approximately $9,612,000 for the years ended December 31, 2009 and 2008, respectively, due primarily to the increase in net operating loss carry-forwards. A valuation allowance is required to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. After consideration of the available evidence, both positive and negative, the Company has determined that a full valuation allowance at December 31, 2009, is necessary to reduce the deferred tax assets to the amount that will more likely be realized. The Company also provided a valuation allowance for the full amount of its net deferred tax asset for the year ended December 31, 2008, because realization of any future tax benefit was not considered more likely than not to happen.

The Company’s effective tax rate for the years ended December 31, 2009 and 2008 is 0% percent. This differs from the statutory rate of 34% primarily due to the Company’s reporting of the valuation allowance and the recognition of additional federal and state research and development tax credits.

F-25

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)

We account for uncertain tax positions following the provisions of ASC 740. ASC 740 clarifies the accounting for income taxes, by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. ASC 740 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. The provisions of FIN 48 (as codified ASC 740), were adopted by the Company on January 1, 2007. The implementation of ASC 740 did not have a material impact on the Company’s financial position, cash flows or results of operations. At December 31, 2009 and 2008, the Company had no unrecognized tax benefits.

Tax years still subject to examination for the Federal return and the state of Massachusetts and California returns include all prior years due to the existence of net operating loss carryforwards.


6.	Commitments and Contingencies

Leases

In September 2003, the Company executed a lease for approximately 4,000 square feet at its Waltham, Massachusetts headquarters. In May 2005, the Company executed a lease for an additional 6,000 square feet and in June 2006, the Company executed a lease for an additional 3,000 square feet of office space at its Waltham, Massachusetts location. In October 2008, the Company exited, without cost, 2,000 square feet in Waltham, Massachusetts. The lease term for the remaining 11,000 square feet of space in Waltham expired in May 2009.

The Company did not renew the term of this lease and moved into a smaller facility leasing 3,900 square feet in Waltham beginning in June 2009. The Company continues to lease space at its former headquarters in Watertown Massachusetts and executed a sublease for the space for a period of time that coincides with the term of this lease. Both the lease and sublease expire at the end of November 2010.

In September 2005, the Company executed a lease for approximately 600 square feet of office space in the Oxford Science Park, Oxford, United Kingdom on a month to month basis. The Oxford facility primarily houses research and development personnel.

In November 2008, the Company executed a lease for 7,038 square feet (Suite 210) of office space located in South San Francisco, California. The Company agreed to lease an additional 5,275 square feet (Suite 270) of office space in the same building beginning in the first quarter of 2009. The lease agreement is for an estimated 52 months.

The following table summarizes the rent expense by location for 2009, 2008 and 2007 (Amounts in thousands)


	2009		2008		2007

Massachusetts	$	170	$	480	$	370
California	$	442		311		48
Oxford, UK	$	50		46		60

Total rent	$	662	$	837	$	478

F-26

OXiGENE, INC.

Notes to Consolidated Financial Statements — (Continued)

The minimum annual rent commitments for the above leases are as follows: (Amounts in thousands)


	Gross		Receipts From			Net
	Commitments		Sublease			Comittments

2010	$	795	$	(233	)	$	562
2011	$	543	$	—		$	543
2012	$	526	$	—		$	526
2013	$	135	$	—		$	135
Thereafter	$	—	$	—		$	—

	$	1,999	$	(233	)	$	1,766

Litigation

Beginning on October 23, 2009, several putative stockholder class action lawsuits were filed against VaxGen, members of the VaxGen board of directors, OXiGENE and OXiGENE Merger Sub, Inc. in the Superior Court of California, County of San Mateo. The actions, first served on VaxGen on November 4, 2009, styled Jensen v. Panek et al., William Ming v. VaxGen, Inc. et al. and Lisa Hawes v. VaxGen, Inc. et al., allege, among other things, that the members of the VaxGen board of directors violated their fiduciary duties by failing to maximize value for VaxGen’s stockholders when negotiating and entering into the merger agreement between OXiGENE and VaxGen. The lawsuits were consolidated into one class action suit on January 13, 2010. The complaints also allege that OXiGENE and VaxGen aided and abetted those purported breaches. In light of the termination of the merger agreement, OXiGENE expects this lawsuit to be dismissed in due course.


7.	Retirement Savings Plan

The Company sponsors a savings plan available to all domestic employees, which qualifies under Section 401(k) of the Internal Revenue Code. Employees may contribute to the plan from 1% to 20% of their pre-tax salary subject to statutory limitations. Annually the Board of Directors determines the amount of the Company match. In 2009 and 2008, the Company match was $0 and $92,000, respectively.


8.	Quarterly Results of Operations (Unaudited)

The following is a summary of the quarterly results of operations for the years ended December 31, 2009 and 2008: (Amounts in thousands)


	Three Months Ended
	March 31,			June 30,			September 30,			December 31,
	2009			2009			2009			2009

License revenue	$	—		$	—		$	—		$	—
Net loss attributed to OXiGENE, Inc.		(5,552	)		(5,273	)		(16,858	)		(7,428	)
Basic and diluted net loss per share attributed to OXiGENE, Inc. common shares	$	(0.12	)	$	(0.11	)	$	(0.29	)	$	(0.12	)


	March 31,			June 30,			September 30			December 31,
	2008			2008			2008			2008

License revenue	$	—		$	—		$	12		$	—
Net loss attributed to OXiGENE, Inc.		(5,445	)		(7,048	)		(7,108	)		(1,800	)
Basic and diluted net loss per share attributed to OXiGENE, Inc. common shares	$	(0.19	)	$	(0.25	)	$	(0.25	)	$	(0.05	)

F-27

OXiGENE, Inc.

Condensed Consolidated Balance Sheets
(All amounts in thousands, except per share data)
(Unaudited)


	March 31, 2010			December 31, 2009

ASSETS
Current assets:
Cash and cash equivalents	$	14,014		$	13,932
Restricted Cash		140			140
Prepaid expenses		767			752
Other assets		85			—

Total current assets		15,006			14,824

Furniture and fixtures, equipment and leasehold improvements		1,515			1,515
Accumulated depreciation		(1,360	)		(1,332	)

		155			183

License agreements, net of accumulated amortization of $1,040 and $1,016 at March 31, 2010 and December 31, 2009, respectively		460			484
Other assets		112			126

Total assets	$	15,733		$	15,617


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,830		$	1,181
Accrued research and development		3,726			4,753
Accrued other		1,580			1,684
Derivative liability short term		3,508			850


Total current liabilities		10,644			8,468

Derivative liability long term		10,864			1,350


Total liabilities		21,508			9,818


Commitments and contingencies (Note 5)
OXiGENE, Inc. Stockholders’ equity:

Preferred Stock, $.01 par value, 15,000 shares authorized; 0 shares issued and outstanding at March 31, 2010 and December 31, 2009		—			—

Common stock, $.01 par value, 175,000 shares authorized and 69,534 shares issued and outstanding at March 31, 2010; 150,000 shares authorized and 62,738 shares issued and outstanding at December 31, 2009		695			627
Additional paid-in capital		188,488			189,102
Accumulated deficit		(194,958	)		(183,930	)


Total stockholders’ equity		(5,775	)		5,799

Total liabilities and stockholders’ equity	$	15,733		$	15,617

See accompanying notes.

F-28

OXiGENE, Inc.

Condensed Consolidated Statements of Cash Flows
(All amounts in thousands)
(Unaudited)


	Three Months Ended March 31,
	2010			2009
Operating activities:
Consolidated net loss	$	(11,028	)	$	(6,575	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of warrants		4,633			8
Depreciation		28			33
Amortization of license agreement		24			24
Rent loss accrual		—			(11	)
Stock-based compensation		192			186
Changes in operating assets and liabilities:

Prepaid expenses and other current assets		(29	)		(330	)
Accounts payable, accrued expenses and other payables		(413	)		(259	)


Net cash used in operating activities		(6,593	)		(6,924	)
Investing activities:
Purchase of available-for-sale securities		—			(1	)
Proceeds from sale of marketable securities held by Symphony ViDA, Inc		—			886
Purchase of furniture, fixtures and equipment		—			(17	)
Decrease in other assets		14			—


Net cash provided by investing activities		14			868
Financing activities:
Proceeds from private issuance of common stock, net of acquisition costs		6,655			—
Proceeds from exercise of employee stock options		6			—


Net cash provided by financing activities		6,661			—


Increase (decrease) in cash and cash equivalents		82			(6,056	)

Cash and cash equivalents at beginning of period		13,932			18,275


Cash and cash equivalents at end of period	$	14,014		$	12,219


Non- cash Disclosures:
Fair market value reclassication of Kingsbridge warrants to liability	$	103
Fair market value of private placement warrants at issuance	$	11,868

See accompanying notes.

F-30

OXiGENE, Inc.

Notes to Condensed Consolidated Financial Statements
March 31, 2010
(Unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They have been prepared on a basis which assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The financial statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, however, all adjustments (consisting primarily of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010.

The balance sheet at December 31, 2009 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and footnotes thereto included in the Annual Report on Form 10-K for OXiGENE, Inc. (the “Company”) for the year ended December 31, 2009, which can be found at www.oxigene.com.

On March 11, 2010 the Company completed a definitive agreement with certain institutional investors to sell 6,578,945 shares of its common stock and four separate series of warrants to purchase Common Stock in a private placement. Gross proceeds of the financing were approximately $7,500,000, before deducting placement agent fees and estimated offering expenses, and assuming no exercise of the warrants.

The Company expects its existing cash and cash equivalents to support the Company’s operations through the third quarter of 2010, assuming that OXiGENE achieves the planned cost reductions from its February 2010 restructuring. OXiGENE will need to access additional funds to remain a going concern beyond the third quarter of 2010. Such funding may not be available to OXiGENE on acceptable terms, or at all. If the Company is unable to access additional funds when needed, it may not be able to continue the development of its product candidates or the Company could be required to delay, scale back or eliminate some or all of its development programs and other operations. OXiGENE may seek to access additional funds through public or private financing, strategic partnerships or other arrangements. Any additional equity financing, which may not be available to the Company or may not be available on favorable terms, may be dilutive to its current stockholders and debt financing, if available, may involve restrictive covenants. If the Company accesses funds through collaborative or licensing arrangements, it may be required to relinquish rights to some of its technologies or product candidates that it would otherwise seek to develop or commercialize on its own, on terms that are not favorable to the Company. The Company’s ability to access capital when needed is not assured and, if not achieved on a timely basis, will materially harm its business, financial condition and results of operations. This uncertainty creates doubt about the Company’s ability to continue as a going concern.

Available-for-Sale Securities

In accordance with the Company’s investment policy, surplus cash may be invested primarily in commercial paper, obligations issued by the U.S. Treasury or federal agencies or guaranteed by the U.S. government, money market instruments, repurchase agreements, bankers’ acceptances, certificates of deposit, time deposits and bank notes. In accordance with financial accounting standards, the Company separately discloses cash and cash equivalents from investments in marketable securities. The Company designates its marketable securities as available-for-sale securities. Available-for-sale securities are carried at fair value with the unrealized gains and losses, net of tax, if any, reported as accumulated other comprehensive income (loss) in stockholders’ equity. The Company reviews the status of the unrealized gains and losses of its available-for-sale marketable securities on a regular basis. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in investment income. Interest and dividends on securities classified as available-for-sale are included in investment income. Securities with maturities greater than twelve months are recorded as long-lived assets. Securities in an unrealized loss position are deemed not to be other-than-temporarily impaired due to the Company’s positive intent and ability to hold the securities until anticipated recovery.

F-31

The Company did not hold any available-for-sale securities as of March 31, 2010 or December 31, 2009.

Fair Value

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The fair value hierarchy prioritizes valuation inputs based on the observable nature of those inputs. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of our investments and is not a measure of the investment credit quality. The hierarchy defines three levels of valuation inputs:


Level 1 inputs		Quoted prices in active markets;

Level 2 inputs		Generally include inputs with other observable qualities, such as quoted prices in active markets for similar assets or quoted prices for identical assets in inactive markets; and

Level 3 inputs		Valuations based on unobservable inputs.

As of March 31, 2010 and December 31, 2009, OXiGENE did not hold any assets or liabilities subject to these standards, except the derivative liabilities and other financial instruments discussed below in “Warrants” which are valued using level 3 inputs. As of March 31, 2010, OXiGENE held $14,014,000 in cash and cash equivalents, of which $4,781,000 was in a money market fund, none of which was subject to this disclosure requirement. The Company has adopted the fair value standards as it relates to the non-recurring fair value measurements, such as the assessment of goodwill and other long-lived assets for impairment.

Accrued Research and Development

Net Loss Per Share

Basic and diluted net loss per share was calculated by dividing the net loss per share attributed to OXIGENE shares of common stock by the weighted-average number of common shares outstanding. Diluted net loss per share includes the effect of all dilutive, potentially issuable common equivalent shares as defined using the treasury stock method. All of the Company’s common stock equivalents are anti-dilutive due to the Company’s net loss position for all periods presented. Accordingly, common stock equivalents of approximately 27,328,000 and 3,508,000 at March 31, 2010 and March 31, 2009, respectively, were excluded from the calculation of weighted average shares for diluted net loss per share.

Stockholders’ Equity Common and Preferred Shares

As of December 31, 2009, the Company had 150,000,000 shares of common stock authorized. At the special meeting of stockholders of OXiGENE held February 3, 2010, the stockholders approved an increase in the number of authorized shares of common stock to 175,000,000. As of March 31, 2010 the Company had 69,534,000 shares of common stock issued and outstanding. On March 11, 2010 the Company completed a private placement of common stock with certain institutional investors to sell 6,578,945 shares of OXiGENE Common Stock and four separate series of warrants to purchase Common

F-32

Stock. Gross proceeds of the financing were approximately $7,500,000, before deducting placement agent fees and estimated offering expenses, and assuming no exercise of the warrants. The approximately $4,433,000 excess of the fair value of the liability recorded for these warrants over the proceeds received was recorded as a charge to earnings and is included in “Change if fair value of warrants” within the Statement of Operations.

Stock-based Compensation

The Company expenses the estimated fair value of all share-based payments issued to employees over the vesting period. The Company has a 2005 Stock Plan (“2005 Plan”), which superseded its 1996 Stock Option Plan (the “1996 Plan”) that provides for the award of stock options, restricted stock and stock appreciation rights to employees, directors and consultants to the Company. The Company also has a 2009 Employee Stock Purchase Plan (“2009 ESPP”).

Options, Warrants, Non-Vested Stock, and 2009 ESPP

Options

The Company’s 2005 Stock plan provides for the award of options, restricted stock and stock appreciation rights to acquire up to 7,500,000 shares of the Company’s common stock. This number includes shares of its common stock, if any, that were subject to awards under the Company’s 1996 Plan as of the date of adoption of the 2005 Plan but which became or will become unissued upon the cancellation, surrender or termination of such award. Currently, the 2005 Stock Plan allows for awards of up to 750,000 shares that may be granted to any participant in any fiscal year. For options subject to graded vesting, the Company elected the straight-line method of expensing these awards over 4 years at 25% per year.

The following is a summary of the Company’s stock option activity under its 1996 Plan and 2005 Plan for the period ended March 31, 2010:


						Weighted Average
				Weighted Average		Remaining		Aggregate
	Shares			Exercise Price		Contractual Life		Intrinsic Value
	(In thousands)					(Years)		(In thousands)
Options outstanding at December 31, 2009		1,899		$	3.60		6.85	$	244
Granted		8		$	1.14		—		1
Exercised		(7	)	$	0.72		—		(4	)
Forfeited and expired		(225	)	$	1.80		—		(64	)


Options outstanding at March 31, 2010		1,675		$	3.84		6.40	$	229


Option exercisable at March 31, 2010		899		$	5.74		4.20		65


Options vested or expected to vest at March 31, 2010		1,426		$	4.24		5.96	$	174

During the three months ended March 31, 2010, 54,000 options expired. As of March 31, 2010 there was approximately $206,000 of unrecognized compensation cost related to stock option awards that is expected to be recognized as expense over a weighted average period of 2.41 years. The total fair value of stock options that vested during the three months ended March 31, 2010 and 2009 was approximately $96,000 and $64,000, respectively.

The Company is required to estimate the level of award forfeitures expected to occur and record compensation expense only for those awards that are ultimately expected to vest. This requirement applies to all awards that are not yet vested, including awards granted prior to January 1, 2006. Accordingly, OXiGENE performed a historical analysis of option awards that were forfeited prior to vesting, and ultimately recorded total stock option expense that reflected this estimated forfeiture rate. In the Company’s calculation, it segregated participants into two distinct groups, (1) directors and officers and (2) employees, and OXiGENE’s estimated forfeiture rates were calculated at 25% and 50%, respectively using the Straight Line method. This analysis will be re-evaluated quarterly and the forfeiture rate will be adjusted as necessary.

F-33


	Three months ended March 31,
	2010			2009

Weighted Average Assumptions
Risk-free interest rate		2.56	%		1.75	%
Expected life	5 years			5 years
Expected volatility		68	%		55	%
Dividend yield		0.00	%		0.00	%

The following stock options were granted during the three months ended March 31, 2010 and 2009:


	Three months ended March 31,
	2010		2009

Options Granted (In thousands)		8		970

Weighted average fair value	$	0.66	$	0.65

Warrants

The Company evaluates all derivative financial instruments issued in connection with its equity offerings when determining the proper accounting treatment for such instruments in the Company’s financial statements. The Company considers a number of generally accepted accounting principles to determine such treatment. The Company performs a number of steps to evaluate the features of the instrument against the guidance provided in the accounting pronouncements in order to determine the appropriate accounting treatment. The Company’s policy with regard to settling outstanding financial instruments is to settle those with the earliest maturity date first which essentially sets the order of preference for settling the awards.

The following is a summary of the Company’s outstanding common stock warrants as of March 31, 2010:


				Number of Warrants outstanding as of:
		Weighted Average		(in thousands)
Warrants Issued in Connection with:	Date of Issue	Exercise Price		March 31, 2010		December 31, 2009

Committed Equity Financing Facility	February 19, 2008	$	2.74		250		250

Direct Registration Series I Warrants	July 20, 2009	$	2.10		2,813		2,813

Direct Registration Series II Warrants	July 20, 2009	$	1.60		2,813		2,813

Private Placement Series A Warrants	March 11, 2010	$	1.52		6,579		—

Private Placement Series B Warrants	March 11, 2010	$	1.14		6,579		—

Private Placement Series C Warrants	March 11, 2010	$	1.14		6,579		—


Total Warrants outstanding					25,613		5,876

F-34

The Private Placement Series D Warrants, discussed below, are excluded from the table above because the number of warrants is currently not determinable.

Private Issuance of Public Equity “PIPE” Warrants

On March 11, 2010 the Company completed a definitive agreement with certain institutional investors to sell shares of its Common Stock and four separate series of warrants to purchase Common Stock in a private placement. Gross proceeds of the financing were approximately $7,500,000, before deducting placement agent fees and estimated offering expenses, and assuming no exercise of the warrants.

The four separate series of warrants consist of the following:

(A) Series A Warrants to initially purchase 6,578,945 shares of common stock, which are exercisable immediately after issuance, have a 5-year term and a per share exercise price of $1.52; (B) Series B Warrants to initially purchase 6,578,945 shares of common stock, which will be exercisable at a per share exercise price of $1.14, on the earlier of the six month anniversary of the closing date or the date on which the Company’s stockholders approve the issuance of shares in the transaction, and shall expire on the later of three months from the effective date of the resale registration statement covering such shares and seven months from the closing date; (C) Series C Warrants to initially purchase 6,578,945 shares of common stock, and which would be exercisable upon the exercise of the Series B Warrants and on the earlier of the six month anniversary of the closing date or the date on which the Company’s stockholders approve the issuance of shares in the transaction, would expire five years after the date on which they become exercisable, and have a per share exercise price of $1.14; and (D) Series D Warrants to purchase shares of common stock. The Series D Warrants are not immediately exercisable, and the number of shares of common stock issuable upon exercise of such Series D Warrants cannot be determined as of the date of this filing. The Company has agreed with the investors that we will register 6,755,157 shares of common stock issuable upon exercise of the Series D Warrants. The number of shares of common stock issuable upon exercise of the Series D Warrants will be determined following two pricing periods, each of no less than seven trading days and no more than thirty trading days, as determined individually by each holder of Series D Warrants. The first of these pricing periods shall occur after the later of (x) the date the Company obtains the approval of its stockholders to the issuance of the shares in the transaction, and (y) the effective date of the resale registration statement covering such shares. The second of these pricing periods shall occur after the later of (x) the stockholder approval date and (y) the date on which the purchasers in the offering can freely sell their common stock pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended, without restriction, but only if the number of shares registered under the resale registration statement and available for issuance under the Series D Warrants is less than the number of such shares to which the holders of such warrants are entitled. If during the applicable pricing period, the arithmetic average of the seven lowest market prices of the common stock (as reported on the NASDAQ Stock Market) is less than the purchase price in the offering ($1.14), each holder’s Series D Warrants shall become exercisable for an additional number of shares pursuant to a formula set forth in the Purchase Agreement. If the Series D Warrants become exercisable into shares of common stock, the Series D Warrants will become immediately exercisable and will have an exercise price of $0.001 per share.

The Company determined that in accordance with ASC 480, the Series A, B, and C warrants qualify for treatment as liabilities due to provisions of the related warrant agreements that call for the number of warrants and their exercise price to be adjusted in the event that the Company issues additional shares of common stock, options or convertible instruments at a price that is less than the initial exercise price of the warrants. The Company also determined that, in accordance with ASC 815, the Series D Warrants meet the definition of a derivative. The issuance date fair market value of the Series A, B, C and D warrants was recorded as a liability. The approximately $4,433,000 excess of the fair value of the liability recorded for these warrants over the proceeds received was recorded as a charge to earnings and is included in “Change in fair value of warrants” within the Statement of Operations. Changes in the fair market value from the date of issuance to the reporting date will be recorded as a gain or loss in the statement of operations. The Company established the fair value of the Series A, B and C warrants using the Black-Scholes option valuation model and the fair value of the Series D warrants using the Binomial option valuation model applying the following assumptions:

F-35

Warrant Valuation on Date of Issuance
March 11, 2010


													Total Fair
	Series A			Series B			Series C			Series D			Market Value

Stock Price	$	1.24		$	1.24		$	1.24		$	1.24
Exercise Price	$	1.52		$	1.14		$	1.14		$	—
Contractual life	5.0 years			0.6 years			5.3 years			0.3 years
Expected volatility		67	%		60	%		67	%		62	%
Risk-free interest rate		2.43	%		0.22	%		2.43	%		0.22	%

Fair market value (in thousands)	$	4,331		$	1,774		$	4,930		$	833		$	11,868

Warrant Valuation as of
March 31, 2010


													Total Fair
	Series A			Series B			Series C			Series D			Market Value

Stock Price	$	1.23		$	1.23		$	1.23		$	1.23
Exercise Price	$	1.52		$	1.14		$	1.14		$	—
Contractual life	5.0 years			0.5 years			5.2 years			0.5 years
Expected volatility		68	%		68	%		68	%		68	%
Risk-free interest rate		2.55	%		0.24	%		2.55	%		0.24	%

Fair market value (in thousands)	$	4,312		$	1,855		$	4,925		$	1,204		$	12,296

Committed Equity Financing Facility (“CEFF”) with Kingsbridge Capital Limited

Under the terms of the amended CEFF, Kingsbridge committed to purchase, subject to certain conditions, up to 5,708,035 shares of the Company’s common stock or up to an aggregate of $40,000,000 during the period which ends May 15, 2012. Under the CEFF, OXiGENE is able to draw down in tranches of the lesser of (i) $10,000,000 or (ii) a maximum of 3.75 percent of its closing market value at the time of the draw down or the alternative draw down amount calculated pursuant to the common stock purchase agreement, whichever is less, subject to certain conditions. The purchase price of these shares is discounted between 5 and 14 percent from the volume weighted average price of our common stock for each of the eight trading days following the election to sell shares. Kingsbridge is not obligated to purchase shares at prices below $0.75 per share or at a price below 85% of the closing share price of OXiGENE stock in the trading day immediately preceding the commencement of the draw down, whichever is higher. In connection with the CEFF, the Company issued a warrant to Kingsbridge to purchase 250,000 shares of its common stock at a price of $2.74 per share exercisable beginning six months after February 19, 2008 and for a period of five years thereafter. As of March 31, 2010, there remain a total of 5,073,435 shares available for sale under the CEFF.

Due to the indeterminate share nature of the Series D Warrants issued in connection with the Company’s private placement on March 11, 2010, OXiGENE has concluded that the CEFF warrants should be recorded as a liability effective with the private placement issuance. The fair value of the warrants on this date was reclassified from equity to derivative liabilities. Changes in the fair market value from the date of the private placement issuance to the reporting date will be recorded as a gain or loss in the statement of operations. The Company established the fair value of the CEFF warrants using the Black-Scholes option valuation model as reflected in the table below:

F-36


	Warrant Valuation
	on Date of
	Designation as a
	Liability			Warrant Valuation as of
	March 11, 2010			March 31, 2010

Stock Price	$	1.24		$	1.23
Exercise Price	$	2.74		$	2.74
Contractual life	3.44 years			3.39 years
Expected volatility		75	%		75	%
Risk-free interest rate		1.50	%		1.60	%

Fair market value (in thousands)	$	103		$	101

Direct Registration Warrants

The Units were offered and sold pursuant to (i) a prospectus dated December 1, 2008 and (ii) a prospectus supplement dated July 15, 2009, pursuant to and forming a part of the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-155371). The net proceeds to the Company from the sale of the Units, after deducting the fees of the placement agents and other offering expenses, were approximately $9,029,000. OXiGENE determined that the Direct Registration Series I and II warrants should be classified as a liability as they require delivery of registered shares of common stock and thus could require net-cash settlement in certain circumstances. Accordingly, these warrants were recorded as a liability at their fair value as of the date of their issuance and are revalued at each subsequent reporting date.

The fair value of the direct registration warrants was determined using the Black-Scholes option valuation model applying the following assumptions:

F-37

Warrant Valuation as of
December 31, 2009


							Total Fair
	Series I			Series II			Market Value

Stock Price	$	1.14		$	1.14
Exercise Price	$	2.10		$	1.60
Contractual life	4.59 years			.91 years
Expected volatility		69	%		100	%
Risk-free interest rate		2.60	%		0.40	%

Fair market value (in thousands)	$	1,350		$	850		$	2,200

Warrant Valuation as of
March 31, 2010


							Total Fair
	Series I			Series II			Market Value

Stock Price	$	1.23		$	1.23
Exercise Price	$	2.10		$	1.60
Contractual life	4.30 years			.67 years
Expected volatility		72	%		68	%
Risk-free interest rate		2.30	%		0.32	%

Fair market value (in thousands)	$	1,526		$	449		$	1,975

The table below summarizes the value (in thousands) of the above described derivative instruments recorded on the Company’s balance sheet as of the respective dates:


	As of March 31, 2010				As of December 31, 2009
Warrants Issued in Connection with:	Current		Long-term		Current		Long-term

Committed Equity Financing Facility			$	101			$	—

Direct Registration Series I Warrants				1,526				1,350

Direct Registration Series II Warrants		449				850

Private Placement Series A Warrants				4,312				—

Private Placement Series B Warrants		1,855				—

Private Placement Series C Warrants				4,925				—

Private Placement Series D Warrants		1,204				—

Total derivative liability	$	3,508	$	10,864	$	850	$	1,350

F-38

The (loss) gain from the change in fair value of warrants and other financial instruments (in thousands) is summarized below:


	Three months ended March 31,
	2010			2009

Symphony Additional Investment Shares	$	—		$	(4	)
Committed Equity Financing Facility Warrants		2			(4	)
Direct Registration Warrants		225			—
Excess of value of the Private Placement Warrants at issuance over the net proceeds of the offering		(4,433	)
Private Placement Warrants		(427	)		—

Total gain (loss) on change in fair market value of derivatives	$	(4,633	)	$	(8	)

In July 2009, the Company executed an Amended and Restated Purchase Option Agreement with Symphony Capital. In connection with this amendment, the Additional Funding Agreement with Symphony was terminated and as such the liability associated with the potential issuance of shares in connection with the Additional Funding Agreement was eliminated.

Non-Vested Restricted Stock

As of March 31, 2010, the Company had 40,000 shares of non-vested restricted common stock outstanding, issued at a grant price of $4.09.

The Company recorded expense of approximately $10,000 and $91,000 related to outstanding restricted stock awards during the three months ended March 31, 2010 and 2009, respectively. The 40,000 shares of unvested restricted common stock at March 31, 2010 will vest in June 2010 and 2011. The restricted stock awards were valued based on the closing price of the Company’s common stock on their respective grant dates. Compensation expense is being recognized on a straight -line basis over the 4 year vesting period of the awards.

Employee Stock Purchase Plan (2009 ESPP)

In May 2009, the Company’s stockholders approved the 2009 Employee Stock Purchase Plan (the “2009 ESPP”). Under the 2009 ESPP, employees have the option to purchase shares of the Company’s common stock at 85% of the closing price on the first day of each purchase period or the last day of each purchase period (as defined in the 2009 ESPP), whichever is lower, up to specified limits. Eligible employees are given the option to purchase shares of the Company’s common stock, on a tax-favored basis, through regular payroll deductions in compliance with Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”). An aggregate of 2,000,000 shares of common stock may be issued under the 2009 ESPP, subject to adjustment each year pursuant to the terms of the 2009 ESPP. The Company recorded expense for the three months ended March 31, 2010 of $2,000. Pursuant to the 2009 ESPP plan provisions, each year beginning in 2010 there will be an annual increase in the number of shares available for issuance under the ESPP on the first day of the new year in an amount equal to the lesser of 500,000 shares or 5% of the shares of Common Stock outstanding on the last day of the preceding fiscal year.

Director Compensation Policy

In December 2009, the Board of Directors approved the amended and restated policy which established compensation to be paid to non- employee directors of the Company, to provide an inducement to obtain and retain the services of qualified persons to serve as members of the Company’s Board of Directors. As a result of this plan, the Company issued 180,000 shares as compensation in 2009 to each member of the Board. Pursuant to the amended plan effective January 1, 2010, each of the Company’s non-employee Directors was granted 10,000 fully vested shares of common stock on January 2, 2010 as additional compensation for services previously rendered to the Company, and 25,000 fully vested shares of common stock on January 2, 2010 and 25,000 fully vested shares of common stock will be issued on July 1, 2010 as compensation for services rendered in 2010. During the three months ended March 31, 2010, the Company recorded expense of $100,000 for these shares.

F-39

Comprehensive Income (Loss)

The Company’s only item of other comprehensive income (loss) relates to unrealized gains and losses on available for sale securities and is presented separately on the balance sheet, as required.

A reconciliation of comprehensive loss is as follows:


	Three months ended March 31,
	(in thousands)
	2010			2009
Consolidated net loss as reported	$	(11,028	)	$	(6,575	)
Unrealized gains		—			57

Total comprehensive loss		(11,028	)		(6,518	)

Less comprehensive loss attributable to noncontrolling interest		—			(1,023	)

Comprehensive loss attributable to OXiGENE, Inc.	$	(11,028	)	$	(5,495	)

Consolidation of Variable Interest Entity (VIE)

OXiGENE consolidated the financial position and results of operations of Symphony ViDA, Inc. (“ViDA”) from October 2008, when it entered into a strategic collaboration with Symphony ViDA Holdings, LLC (“Holdings”), until July 20, 2009 when OXiGENE acquired 100% of ViDA pursuant to an Amended and Restated Purchase Option Agreement. The funding supported pre-clinical and clinical development by OXiGENE, on behalf of ViDA, for ZYBRESTAT for ophthalmology and OXi4503.

The Company consolidated the financial position and results of operations of ViDA in accordance with proper accounting guidance. OXiGENE believes ViDA was by design a VIE because OXIGENE had a purchase option to acquire its outstanding voting stock at prices that were fixed based upon the date the option is exercised. The fixed nature of the purchase option price limited Symphony’s returns, as the investor in ViDA. Further, due to the direct investment from Holdings in OXiGENE common stock, as a related party ViDA was a VIE of which OXiGENE was the primary beneficiary. After OXiGENE exercised the purchase option, ViDA became a wholly-owned subsidiary of OXiGENE and ceased being a VIE.

Accounting and Reporting of Noncontrolling Interests

Losses incurred by ViDA and attributable to Symphony, were charged to the noncontrolling interest. The noncontrolling interest was eliminated in the third quarter 2009 with the acquisition of ViDA.

F-40

Income Taxes

Furniture and Fixtures, Equipment and Leasehold Improvements

Property and equipment consisted of the following at the dates indicated below:


	March 31, 2010			December 31, 2009
	(in thousands)
Leasehold improvements	$	449		$	449
Equipment		650			650
Furniture and fixtures		416			416

Total gross assets		1,515			1,515
Less accumulated depreciation		(1,360	)		(1,332	)

Total property and equipment	$	155		$	183

Patents and Patent Applications

The Company has filed applications for patents in connection with technologies that it is developing. The patent applications and any patents issued as a result of these applications are important to the protection of the Company’s technologies that may result from its research and development efforts. Costs associated with patent applications and maintaining patents are expensed as general and administrative expense as incurred.

Restructuring

In February 2010, the Company implemented a restructuring plan in which it terminated 20 full-time employees, or approximately 49% of its work force. The purpose of the restructuring was to focus the Company’s resources on its highest-value clinical assets and reduce its cash utilization. In connection with this restructuring, the Company recognized approximately $458,000 of research and development restructuring expenses and approximately $52,000 of general and administrative restructuring expenses in the quarter ended March 31, 2010. The restructuring expenses include severance payments, health and medical benefits and related taxes, which are expected to be paid through August 2010.

The following table sets forth the components of the Company’s restructuring for the three-month period ended March 31, 2010 (in thousands):

F-41


			Amounts Paid Through			Amounts Accrued as of
	Original Charges		March 31, 2010			March 31, 2010
General and Administrative Employee severance and related costs	$	52	$	(13	)	$	39
Research and Development Employee severance and related costs		458		(235	)		223

Total restructuring	$	510	$	(248	)	$	262

Reclassifications

Prior year amounts have been reclassified to conform to the current year presentation to reflect an allocation of facilities related costs from General and Administrative expenses to Research and Development expenses.

2. License agreements

In August 1999, the Company entered into an exclusive license agreement for the commercial development, use and sale of products or services covered by certain patent rights owned by Arizona State University. From the inception of the agreement through March 31, 2010, the Company has paid a total of $2,500,000 in connection with this license. The Company capitalized the net present value of the total amount paid under the initial terms of the license, or $1,500,000, and is amortizing this amount over the patent life or 15.5 years.

Over the next five years, the Company expects to record amortization expense related to this license agreement of approximately $98,000 per year and the net book value at March 31, 2010, was $460,000. The Company performs an impairment analysis of its long-lived assets if triggering events occur. The Company conducts reviews for such triggering events periodically and, even though triggering events such as a going concern opinion and continuing losses occurred, the Company has determined that there is no impairment to this asset. The license agreement provides for additional payments from the Company in connection with the license arrangement upon the initiation of certain clinical trials or the completion of certain regulatory approvals, which payments could be accelerated upon the achievement of certain financial milestones as defined in the agreement. To date, no clinical trials triggering payments under the agreement have been completed and no regulatory approvals have been obtained. The Company expenses these payments to research and development in the period the obligation becomes both probable and estimable.

3. Agreements

In February 2008, OXiGENE entered into a Committed Equity Financing Facility (“CEFF”) with Kingsbridge Capital Limited (“Kingsbridge”), which was subsequently amended in February 2010 to increase the commitment period, increase the draw down discount price and increase the maximum draw period. Under the terms of the amended CEFF, Kingsbridge committed to purchase, subject to certain conditions, up to 5,708,035 shares of the Company’s common stock or up to an aggregate of $40,000,000 during the period that ends May 15, 2012. For more details see Committed Equity Financing Facility (“CEFF”) with Kingsbridge Capital Limited above.

As part of the CEFF, the Company entered into a Registration Rights Agreement dated February 19, 2008. Pursuant to the agreement, the Company has filed a Registration Statement on Form S-1 (File No. 333-150595) with respect to the resale of the shares of common stock issuable under the CEFF and the warrant The Registration Rights Agreement provides for payments by the Company to Kingsbridge in the event of (1) failure to maintain effectiveness of Registration Statement in certain circumstances, and (2) deferral or suspension of registration during black-out periods, subject to certain exceptions. This Registration Statement is not currently usable by the Company pending an update of the filing by the Company to include financial statements for the fiscal year ended December 31, 2009.

In April 2009, the Company entered into a separation agreement with Patricia Walicke, M.D., Ph.D., its former Vice President and Chief Medical Officer. Pursuant to the separation agreement, Dr. Walicke will receive severance payments in the amount of $300,000 made in equal installments over one year. All unvested options held by Dr. Walicke were forfeited as of July 29, 2009 and no further severance payments are required.

F-42

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth the Company’s estimates of the expenses in connection with the issuance and distribution of the securities being registered, other than underwriting discounts and commissions.


Item	Amount
SEC registration fee	$	400
Legal fees and expenses		30,000
Accounting fees and expenses		10,000
Printing fees		3,000
Miscellaneous fees and expenses		600

Total	$	44,000

Item 14. Indemnification of Directors and Officers

Subsection (a) of Section 145 of the General Corporation Law of Delaware (the “DGCL”) empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

Subsection (b) of Section 145 of the DGCL empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification may be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

Section 145 of the DGCL further provides that to the extent a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in the defense of any action, suit or proceeding referred to in subsections (a) and (b) or in the defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith; that indemnification or advancement of expenses provided for by Section 145 shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and empowers the corporation to purchase and maintain insurance on behalf of a director, officer, employee or agent of the corporation against any liability asserted against him or incurred by him in any such capacity or arising out of his status as such whether or not the corporation would have the power to indemnify him against such liabilities under Section 145.

Reference is also made to Section 102(b)(7) of the DGCL, which enables a corporation in its certificate of incorporation to eliminate or limit the personal liability of a director for monetary damages for violations of a director’s fiduciary duty, except for liability (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL (providing for liability of directors for unlawful payment of dividends or unlawful stock purchases or redemptions) or (iv) for any transaction from which the director derived an improper personal benefit.

II-1

Article Ninth of our restated certificate of incorporation, as amended, provides that, to the fullest extent permitted by the DGCL, a director shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit.

Article IX, Section 3 of our amended and restated by-laws provides that we shall, to the fullest extent permitted by the DGCL, indemnify our directors and may, if authorized by our board of directors, indemnify our officers, employees and agents and any and all persons whom we shall have power to indemnify against any and all expenses, liabilities or other matters.

We have entered into agreements to indemnify our directors and officers. These agreements, among other things, will indemnify and advance expenses to our directors and officers for certain expenses, including attorney’s fees, judgments, fines and settlement amounts incurred by any such person in any action or proceeding, including any action by us arising out of such person’s services as our director or officer, or any other company or enterprise to which the person provides services at our request.

Item 15. Recent Sales of Unregistered Securities

Symphony Transaction

We issued to Holdings, pursuant to the Stock and Warrant Purchase Agreement, an aggregate of 13,513,514 shares of our common stock and warrants at a price of $1.11 per share, which was the closing price of our common stock on The NASDAQ Global Market on September 30, 2008, the day before we entered into the Symphony transaction. In addition, pursuant to the Purchase Option Agreement, we issued to Holdings an aggregate of 3,603,604 shares of our common stock with a fair value of $4 million as consideration for the Purchase Option.

On July 2, 2009, we, Holdings and Symphony ViDA entered into a series of related agreements pursuant to which we exercised the Purchase Option under terms set forth in an amended and restated purchase option agreement (the Amended Purchase Option Agreement), and we and Holdings also entered into an amended and restated registration rights agreement.

Under the Amended Purchase Option Agreement, in the event that we issued additional securities prior to January 2, 2010 at a price lower than $2.08 per share, Symphony Capital LLC had the right to receive additional securities in an amount reflecting the difference in value of the securities at the time of such subsequent issuance and $2.08 per share. This right was subject to the limitation that no more than 10 million shares of common stock would be issued under the Amended Purchase Option Agreement, provided that if Symphony Capital would otherwise be entitled to receive more than such number of shares, Symphony Capital could request such combination of shares of common stock and any other securities of ours as would, in Symphony’s sole determination, provide value to Symphony Capital not in excess of the purchase price for the Purchase Option, or approximately $12,500,000.

II-2

We closed on the amended Purchase Option on July 20, 2009 and issued 10 million shares of our common stock to Holdings at the closing in exchange for all of the equity of Symphony ViDA. In addition, upon the closing of the Purchase Option, we re-acquired all of the rights to the programs, and the approximately $12,500,000 in cash held by Symphony ViDA at the time of the closing became available for use for our general corporate purposes. We have agreed to provide certain registration rights under the Securities Act with respect to these shares issued to Holdings. We have filed a Registration Statement on Form S-3 covering the securities issued to Holdings with the SEC. The Registration Statement was declared effective on August 13, 2009.

Private Placement

On March 11, 2010, we completed a definitive agreement with certain institutional investors to sell shares of our common stock and four separate series of warrants to purchase common stock in a private placement. Gross proceeds of the financing were approximately $7,500,000, before deducting placement agent fees and estimated offering expenses, and assuming no exercise of the warrants.

The four separate series of warrants consist of the following:

(A) Series A Warrants to initially purchase 6,578,945 shares of common stock, which are exercisable immediately after issuance, have a 5-year term and a per share exercise price of $1.52; (B) Series B Warrants to initially purchase 6,578,945 shares of common stock, which will be exercisable at a per share exercise price of $1.14, on the earlier of the six month anniversary of the closing date or the date on which our stockholders approve the issuance of shares in the transaction, and shall expire on the later of three months from the effective date of the resale registration statement covering such shares and seven months from the closing date; (C) Series C Warrants to initially purchase 6,578,945 shares of common stock, and which would be exercisable upon the exercise of the Series B Warrants and on the earlier of the six month anniversary of the closing date or the date on which our stockholders approve the issuance of shares in the transaction, would expire five years after the date on which they become exercisable, and have a per share exercise price of $1.14; and (D) Series D Warrants to purchase shares of common stock. The Series D Warrants are not immediately exercisable, and the number of shares of common stock issuable upon exercise of such Series D Warrants cannot be determined as of the date of this filing. We have agreed with the investors that we will register 6,755,157 shares of common stock issuable upon exercise of the Series D Warrants. The number of shares of common stock issuable upon exercise of the Series D Warrants will be determined following two pricing periods, each of no less than seven trading days and no more than thirty trading days, as determined individually by each holder of Series D Warrants. The first of these pricing periods shall occur after the later of (x) the date we obtain the approval of our stockholders to the issuance of the shares in the transaction, and (y) the effective date of the resale registration statement covering such shares. The second of these pricing periods shall occur after the later of (x) the stockholder approval date and (y) the date on which the purchasers in the offering can freely sell their common stock pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended, without restriction, but only if the number of shares registered under the resale registration statement and available for issuance under the Series D Warrants is less than the number of such shares to which the holders of such warrants are entitled. If during the applicable pricing period, the arithmetic average of the seven lowest market prices of the common stock (as reported on the NASDAQ Stock Market) is less than the purchase price in the offering ($1.14), each holder’s Series D Warrants shall become exercisable for an additional number of shares pursuant to a formula set forth in the Purchase Agreement. If the Series D Warrants become exercisable into shares of common stock, the Series D Warrants will become immediately exercisable and will have an exercise price of $0.001 per share.

Item 16. Exhibits and Financial Statement Schedules

Exhibits


Exhibit
Number		Description

	2.1	Agreement and Plan of Merger by and among OXiGENE, Inc., OXiGENE Merger Sub, Inc., VaxGen, Inc. and James P. Panek, as representative of VaxGen stockholders, dated as of October 14, 2009. £(1)

	3.1	Restated Certificate of Incorporation of the Registrant.*

	3.2	Amended and Restated By-Laws of the Registrant.%%%

	3.3	Certificates of Amendment of Certificate of Incorporation, dated June 21, 1995 and November 15, 1996.**

II-3


Exhibit
Number		Description

	3.4	Certificate of Amendment of Restated Certificate of Incorporation, dated July 14, 2005. !

	3.5	Certificate of Amendment of Restated Certificate of Incorporation, dated June 2, 2009. €€€

	3.6	Certificate of Amendment of Restated Certificate of Incorporation, dated February 8, 2010. X

	4.1	Specimen Common Stock Certificate.*

	4.2	Warrant for the purchase of shares of common stock, dated February 19, 2008, issued by the Registrant to Kingsbridge Capital Limited.ˆˆˆˆ

	4.3	Registration Rights Agreement, dated February 19, 2008, by and between the Registrant and Kingsbridge Capital Limited.ˆˆˆˆ

	4.4	Form of Direct Investment Warrant, dated as of October 17, 2008. §

	4.5	Registration Rights Agreement by and between the Company and Symphony ViDA Holdings LLC, dated as of October 1, 2008. §

	4.6	Amended and Restated Registration Rights Agreement by and between the Company and Symphony ViDA Holdings LLC, dated as of July 2, 2009. €

	4.7	Form of Five-year Warrant, dated as of July 15, 2009. €€

	4.8	Form of Short-term Warrant, dated as of July 15, 2009. €€

	4.9	Registration Rights Agreement, dated as of March 10, 2010, by and among the Company and the Buyers named therein. ££££

	4.10	Form of Series A Warrant, dated March 10, 2010. ££££

	4.11	Form of Series B Warrant, dated March 10, 2010. ££££

	4.12	Form of Series C Warrant, dated March 10, 2010. ££££

	4.13	Form of Series D Warrant, dated March 10, 2010. ££££

	4.14	Amendment No. 3 to Stockholder Rights Agreement, dated as of March 10, 2010, by and between the Company and American Stock Transfer and Trust Company. ££££

	4.15	Form of Exchanged Series D Warrant, dated March 26, 2010. £££££

	10.1	OXiGENE 1996 Stock Incentive Plan, as amended.+@

	10.2	Technology Development Agreement, dated as of May 27, 1997, between the Registrant and the Arizona Board of Regents, acting for and on behalf of Arizona State University.***

	10.3	Office Lease, dated February 28, 2000, between the Registrant and Charles River Business Center Associates, L.L.C. ###

	10.4	Research Collaboration and License Agreement, dated as of December 15, 1999, between OXiGENE Europe AB and Bristol-Myers Squibb Company.++

	10.5	Independent Contractor Agreement For Consulting Services, dated as of April 1, 2001, between Registrant and David Chaplin Consultants, Ltd. #@

	10.6	Employment Agreement, dated as of April 1, 2001, between the Registrant and Dr. David Chaplin. #@

	10.7	Restricted Stock Agreement for Employees, dated as of January 2, 2002, between the Registrant and Dr. David Chaplin. #@

	10.8	Form of Compensation Award Stock Agreement for Non-Employee Directors, dated as of January 2, 2002. #@

	10.9	Amendment and Confirmation of License Agreement No. 206-01.LIC, dated as of June 10, 2002, between the Registrant and the Arizona Board of Regents, acting for and on behalf of Arizona State University. #

	10.10	License Agreement No. 206-01.LIC by and between the Arizona Board of Regents, acting on behalf of and for Arizona State University, and OXiGENE Europe AB, dated August 2, 1999. &

	10.11	Research and License Agreement between the Company and Baylor University, dated June 1, 1999. &

	10.12	Agreement to Amend Research and License Agreement between the Company and Baylor University, dated April 23, 2002. &

	10.13	“Addendum” to Research and License Agreement between the Company and Baylor University, dated April 14, 2003. &

	10.14	Employment Agreement, dated as of February 23, 2004, between the Registrant and James B. Murphy.%@

	10.15	Lease by and between The Realty Associates Fund III and the Registrant, dated as of August 8, 2003.%%

	10.16	Sublease by and between Schwartz Communications, Inc. and the Registrant, dated as of March 16, 2004.%%

	10.17	Stockholder Rights Agreement. !!

	10.18	OXiGENE 2005 Stock Plan. !!!@

	10.19	Form of Incentive Stock Option Agreement under OXiGENE 2005 Stock Plan. $@

	10.20	Form of Non-Qualified Stock Option Agreement under OXiGENE 2005 Stock Plan. $@

	10.21	Form of Restricted Stock Agreement under OXiGENE 2005 Stock Plan. $@

	10.22	Lease Modification Agreement No. 1 by and between The Realty Associates Fund III and the Registrant, dated as of May 25, 2005. !!!!

II-4


Exhibit
Number		Description

	10.23	Second Amendment to Lease by and between BP Prospect Place LLC and the Registrant, dated as of March 28, 2006. $$

	10.24	Amendment No. 1 to Employment Agreement, dated as of January 1, 2007, between the Registrant and David Chaplin.%%%%@

	10.25	Common Stock Purchase Agreement, dated February 19, 2008, by and between the registrant and Kingsbridge Capital Limited.ˆˆˆˆ

	10.26	Technology License Agreement by and between the Company and Symphony ViDA Holdings LLC, dated as of October 1, 2008. §+++

	10.27	Novated and Restated Technology License Agreement by and among the Company, Symphony ViDA, Inc. and Symphony ViDA Holdings LLC, dated as of October 1, 2008. §+++

	10.28	Stock and Warrant Purchase Agreement by and between the Company and Symphony ViDA Holdings LLC, dated as of October 1, 2008. §+++

	10.29	Purchase Option Agreement by and among the Company, Symphony ViDA, Inc. and Symphony ViDA Holdings LLC, dated as of October 1, 2008. §

	10.30	Additional Funding Agreement by and among the Company, Symphony ViDA, Inc., Symphony ViDA Investors LLC and Symphony ViDA Holdings LLC, dated as of October 1, 2008. §

	10.31	Amendment No. 1 to the Stockholder Rights Agreement by and between the Company and American Stock Transfer & Trust Company, dated as of October 1, 2008. §

	10.32	Form of Indemnification Agreement between the Company and its Directors. §§@

	10.33	OXiGENE, Inc. Amended and Restated Director Compensation Policy, effective January 1, 2010. X@

	10.34	Separation Agreement between the Company and Dr. Chin, dated as of October 22, 2008.§§@

	10.35	Amendment No. 3 to Employment Agreement by and among the Company and Mr. Citron, dated as of October 22, 2008. §§@

	10.36	Amendment No. 1 to Employment Agreement by and between the Company and Mr. Kollins, dated as of December 16, 2008. §§§@

	10.37	409A Amendment to Employment Agreement by and between the Company and Dr. Chaplin, dated as of December 30, 2008. §§§§@

	10.38	409A Amendment to Employment Agreement by and between the Company and Mr. Kollins, dated as of December 27, 2008. §§§§@

	10.39	409A Amendment to Employment Agreement by and between the Company and Mr. Murphy, dated as of December 30, 2008. §§§§@

	10.40	409A Amendment to Employment Agreement by and between the Company and Dr. Walicke, dated as of December 31, 2008. §§§§@

	10.41	Amendment No. 2 to Employment Agreement by and between the Company and Dr. Chaplin, dated as of January 20, 2009. §§§§@

	10.42	Amendment No. 2 to Employment Agreement by and between the Company and Mr. Murphy, dated as of January 20, 2009. §§§§@

	10.43	Research and Development Agreement by and between the Company and Symphony ViDA Holdings LLC, dated as of October 1, 2008. §§§§+++

	10.44	Amended and Restated Research and Development Agreement by and among the Company, Symphony ViDA Holdings LLC and Symphony ViDA, Inc., dated as of October 1, 2008. §§§§+++

	10.45	Lease between Broadway 701 Gateway Fee LLC, A Delaware Limited Liability Company, as Landlord, and the Company, as Tenant, dated October 10, 2008. §§§§

	10.46	Office Lease Agreement, dated April 21, 2009, between the Registrant and King Waltham LLC. §§§§§

	10.47	Separation Agreement between OXiGENE and Dr. Walicke dated as of June 10, 2009. $$$$@

	10.48	Employment Agreement by and between the Company and Dr. Langecker, dated as of June 10, 2009. $$$$$@

	10.49	Amended and Restated Purchase Option Agreement by and among the Company, Symphony ViDA, Inc. and Symphony ViDA Holdings LLC, dated as of July 2, 2009. €

	10.50	Termination Agreement by and among the Company, Symphony ViDA Holdings LLC, Symphony ViDA Investors LLC and Symphony ViDA, Inc., dated as of July 2, 2009. €

	10.51	Form of Voting Agreement by and among OXiGENE, Inc., VaxGen, Inc. and certain VaxGen stockholders, dated as of October 14, 2009. £

	10.52	Form of Voting Agreement by and among VaxGen, Inc., OXiGENE, Inc., and certain OXiGENE stockholders, dated as of October 14, 2009. £

	10.53	Amendment No. 2 to Stockholder Rights Agreement by and between OXiGENE, Inc. and American Stock Transfer & Trust Company, LLC, dated as of October 14, 2009. £

II-5


Exhibit
Number		Description

	10.54	Separation Agreement between OXiGENE, Inc. and John A. Kollins, dated as of October 28, 2009. ££@

	10.55	Amendment No. 1 to Common Stock Purchase Agreement by and between OXiGENE, Inc. and Kingsbridge Capital Limited, dated as of February 9, 2010. £££

	10.56	Securities Purchase Agreement, dated as of March 10, 2010, by and among the Company and the Buyers named therein. ££££

	10.57	Voting Agreement, dated as of March 10, 2010, by and between the Company and Symphony ViDA Holdings LLC. ££££

	10.58	Form of Amendment and Exchange Agreement, dated as of March 25, 2010, by and among the Company and the Investors named therein. £££££

	14.1	Code of Conduct. ####

	23.1	Consent of Ernst & Young LLP.

	23.2	Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (see Exhibit 5.1 to the Registration Statement on Form S-1 No. 333-150595).

	24.1	Power of Attorney (see signature page).


*		Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (file no. 33-64968) and any amendments thereto.

**		Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1996.

***		Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997.

****		Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999.

#		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002.

##		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2002.

###		Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000.

####		Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002.

+		Incorporated by reference to the Registrant’s Registration Statement on Form S-8 (file no. 333-92747) and any amendments thereto.

++		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on December 28, 1999.

&		Incorporated by reference to Amendment No. 3 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002.

%		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2004.

%%		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2004.

!		Incorporated by reference to the Registrant’s Registration Statement on Form S-8 (file no. 333-126636) and any amendments thereto.

!!		Incorporated by reference to the Registrant’s Registration Statement on Form 8-A, dated March 30, 2005 and any amendments thereto.

!!!		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on July 11, 2005.

!!!!		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2005.

II-6


$		Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005.

$$		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2006.

%%%		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on December 20, 2007.

%%%%		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007.

ˆˆˆˆ		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on February 21, 2008.

§		Incorporated by reference to the Registrant’s Amendment No. 1 to its Current Report on Form 8-K/A, filed on October 10, 2008.

§§		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on October 24, 2008.

§§§		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on December 22, 2008.

§§§§		Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

§§§§§		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009.

$$$$		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on June 12, 2009.

$$$$$		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on June 17, 2009.

€		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on July 7, 2009.

€€		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on July 15, 2009.

€€€		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009.

£		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on October 16, 2009.

££		Incorporated by reference to the Registrant’s Amendment to its Current Report on Form 8-K/A, filed on November 2, 2009.

£££		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on February 12, 2010.

££££		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on March 11, 2010.

£££££		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on March 26, 2010.

X		Incorporated by reference to the Registrant’s Amendment No. 1 to its Annual Report on Form 10-K, filed on April 29, 2010.

+++		Confidential treatment requested as to certain portions of the document, which portions have been

		omitted and filed separately with the Securities and Exchange Commission.
@		Management contract or compensatory plan or arrangement.

(1)		Pursuant to Item 601(b)(2) of Regulation S-K, certain schedules and/or exhibits have been omitted from the Agreement and Plan of Merger. OXiGENE will furnish copies of any such schedules or exhibits to the Securities and Exchange Commission upon request.

Financial Statement Schedules

Financial Statement Schedules are omitted because the information is included in our financial statements or notes to those financial statements.

II-7

Item 17. Undertakings

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424 (b) (§ 230.424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

(i) If the registrant is relying on Rule 430B (§ 230.430B of this chapter):

(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) (§ 230.424(b)(3) of this chapter) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) (§ 230.424(b)(2), (b)(5), or (b)(7) of this chapter) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) (§ 230.415(a)(1)(i), (vii), or (x) of this chapter) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

(ii) If the registrant is subject to Rule 430C (§ 230.430C of this chapter), each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A (§ 230.430A of this chapter), shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration

II-8

statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (§ 230.424 of this chapter);

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-9

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in South San Francisco, California on the 4^th day of June 2010.


	OXiGENE, Inc.
	By:	/s/ Peter J. Langecker
		Peter J. Langecker, M.D., Ph.D. Chief Executive Officer

POWER OF ATTORNEY

The registrant and each person whose signature appears below constitutes and appoints Peter J. Langecker and James B. Murphy, and each of them singly (with full power to each of them to act alone), our true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution in each of them for him and in his name, place and stead, and in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement (or any other registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933), and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as full to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.


Signature	Title	Date
/s/ Peter J. Langecker	Chief Executive Officer and Director	June 4, 2010

Peter J. Langecker	(Principal executive officer)

/s/ James B. Murphy	Vice President and Chief Financial Officer	June 4, 2010

James B. Murphy	(Principal financial officer and principal accounting officer)

*	Chairman of the Board of Directors	June 4, 2010

William N. Shiebler

*	Director	June 4, 2010

Roy H. Fickling

/s/ Tamar D. Howson	Director	June 4, 2010

Tamar D. Howson

*	Director	June 4, 2010

Mark Kessel

*	Director	June 4, 2010

William D. Schwieterman

*	Director	June 4, 2010

Alastair J.J. Wood


*		Signed by Power of Attorney

/s/ James B. Murphy
James B. Murphy
Vice President and Chief Financial Officer

EXHIBIT INDEX


Exhibit
Number		Description
2.1		Agreement and Plan of Merger by and among OXiGENE, Inc., OXiGENE Merger Sub, Inc., VaxGen, Inc. and James P. Panek, as representative of VaxGen stockholders, dated as of October 14, 2009. £(1)

3.1		Restated Certificate of Incorporation of the Registrant.*

3.2		Amended and Restated By-Laws of the Registrant.%%%

3.3		Certificates of Amendment of Certificate of Incorporation, dated June 21, 1995 and November 15, 1996.**

3.4		Certificate of Amendment of Restated Certificate of Incorporation, dated July 14, 2005. !

3.5		Certificate of Amendment of Restated Certificate of Incorporation, dated June 2, 2009. €€€

3.6		Certificate of Amendment of Restated Certificate of Incorporation, dated February 8, 2010. X

4.1		Specimen Common Stock Certificate.*

4.2		Warrant for the purchase of shares of common stock, dated February 19, 2008, issued by the Registrant to Kingsbridge Capital Limited.ˆˆˆˆ

4.3		Registration Rights Agreement, dated February 19, 2008, by and between the Registrant and Kingsbridge Capital Limited.ˆˆˆˆ

4.4		Form of Direct Investment Warrant, dated as of October 17, 2008. §

4.5		Registration Rights Agreement by and between the Company and Symphony ViDA Holdings LLC, dated as of October 1, 2008. §

4.6		Amended and Restated Registration Rights Agreement by and between the Company and Symphony ViDA Holdings LLC, dated as of July 2, 2009. €

4.7		Form of Five-year Warrant, dated as of July 15, 2009. €€

4.8		Form of Short-term Warrant, dated as of July 15, 2009. €€

4.9		Registration Rights Agreement, dated as of March 10, 2010, by and among the Company and the Buyers named therein. ££££

4.10		Form of Series A Warrant, dated March 10, 2010. ££££

4.11		Form of Series B Warrant, dated March 10, 2010. ££££

4.12		Form of Series C Warrant, dated March 10, 2010. ££££

4.13		Form of Series D Warrant, dated March 10, 2010. ££££

4.14		Amendment No. 3 to Stockholder Rights Agreement, dated as of March 10, 2010, by and between the Company and American Stock Transfer and Trust Company. ££££

4.15		Form of Exchanged Series D Warrant, dated March 26, 2010. £££££

10.1		OXiGENE 1996 Stock Incentive Plan, as amended.+@

10.2		Technology Development Agreement, dated as of May 27, 1997, between the Registrant and the Arizona Board of Regents, acting for and on behalf of Arizona State University.***

10.3		Office Lease, dated February 28, 2000, between the Registrant and Charles River Business Center Associates, L.L.C. ###

10.4		Research Collaboration and License Agreement, dated as of December 15, 1999, between OXiGENE Europe AB and Bristol-Myers Squibb Company.++

10.5		Independent Contractor Agreement For Consulting Services, dated as of April 1, 2001, between Registrant and David Chaplin Consultants, Ltd. #@

10.6		Employment Agreement, dated as of April 1, 2001, between the Registrant and Dr. David Chaplin. #@

10.7		Restricted Stock Agreement for Employees, dated as of January 2, 2002, between the Registrant and Dr. David Chaplin. #@

10.8		Form of Compensation Award Stock Agreement for Non-Employee Directors, dated as of January 2, 2002. #@

10.9		Amendment and Confirmation of License Agreement No. 206-01.LIC, dated as of June 10, 2002, between the Registrant and the Arizona Board of Regents, acting for and on behalf of Arizona State University. #

10.10		License Agreement No. 206-01.LIC by and between the Arizona Board of Regents, acting on behalf of and for Arizona State University, and OXiGENE Europe AB, dated August 2, 1999. &

10.11		Research and License Agreement between the Company and Baylor University, dated June 1, 1999. &

10.12		Agreement to Amend Research and License Agreement between the Company and Baylor University, dated April 23, 2002. &
10.13		“Addendum” to Research and License Agreement between the Company and Baylor University, dated April 14, 2003. &


Exhibit
Number		Description
10.14		Employment Agreement, dated as of February 23, 2004, between the Registrant and James B. Murphy.%@

10.15		Lease by and between The Realty Associates Fund III and the Registrant, dated as of August 8, 2003.%%

10.16		Sublease by and between Schwartz Communications, Inc. and the Registrant, dated as of March 16, 2004.%%

10.17		Stockholder Rights Agreement. !!

10.18		OXiGENE 2005 Stock Plan. !!!@

10.19		Form of Incentive Stock Option Agreement under OXiGENE 2005 Stock Plan. $@

10.20		Form of Non-Qualified Stock Option Agreement under OXiGENE 2005 Stock Plan. $@

10.21		Form of Restricted Stock Agreement under OXiGENE 2005 Stock Plan. $@

10.22		Lease Modification Agreement No. 1 by and between The Realty Associates Fund III and the Registrant, dated as of May 25, 2005. !!!!

10.23		Second Amendment to Lease by and between BP Prospect Place LLC and the Registrant, dated as of March 28, 2006. $$

10.24		Amendment No. 1 to Employment Agreement, dated as of January 1, 2007, between the Registrant and David Chaplin.%%%%@

10.25		Common Stock Purchase Agreement, dated February 19, 2008, by and between the registrant and Kingsbridge Capital Limited.ˆˆˆˆ

10.26		Technology License Agreement by and between the Company and Symphony ViDA Holdings LLC, dated as of October 1, 2008. §+++

10.27		Novated and Restated Technology License Agreement by and among the Company, Symphony ViDA, Inc. and Symphony ViDA Holdings LLC, dated as of October 1, 2008. §+++

10.28		Stock and Warrant Purchase Agreement by and between the Company and Symphony ViDA Holdings LLC, dated as of October 1, 2008. §+++

10.29		Purchase Option Agreement by and among the Company, Symphony ViDA, Inc. and Symphony ViDA Holdings LLC, dated as of October 1, 2008. §

10.30		Additional Funding Agreement by and among the Company, Symphony ViDA, Inc., Symphony ViDA Investors LLC and Symphony ViDA Holdings LLC, dated as of October 1, 2008. §

10.31		Amendment No. 1 to the Stockholder Rights Agreement by and between the Company and American Stock Transfer & Trust Company, dated as of October 1, 2008. §

10.32		Form of Indemnification Agreement between the Company and its Directors. §§@

10.33		OXiGENE, Inc. Amended and Restated Director Compensation Policy, effective January 1, 2010. X@

10.34		Separation Agreement between the Company and Dr. Chin, dated as of October 22, 2008.§§@

10.35		Amendment No. 3 to Employment Agreement by and among the Company and Mr. Citron, dated as of October 22, 2008. §§@

10.36		Amendment No. 1 to Employment Agreement by and between the Company and Mr. Kollins, dated as of December 16, 2008. §§§@

10.37		409A Amendment to Employment Agreement by and between the Company and Dr. Chaplin, dated as of December 30, 2008. §§§§@

10.38		409A Amendment to Employment Agreement by and between the Company and Mr. Kollins, dated as of December 27, 2008. §§§§@

10.39		409A Amendment to Employment Agreement by and between the Company and Mr. Murphy, dated as of December 30, 2008. §§§§@

10.40		409A Amendment to Employment Agreement by and between the Company and Dr. Walicke, dated as of December 31, 2008. §§§§@

10.41		Amendment No. 2 to Employment Agreement by and between the Company and Dr. Chaplin, dated as of January 20, 2009. §§§§@

10.42		Amendment No. 2 to Employment Agreement by and between the Company and Mr. Murphy, dated as of January 20, 2009. §§§§@

10.43		Research and Development Agreement by and between the Company and Symphony ViDA Holdings LLC, dated as of October 1, 2008. §§§§+++

10.44		Amended and Restated Research and Development Agreement by and among the Company, Symphony ViDA Holdings LLC and Symphony ViDA, Inc., dated as of October 1, 2008. §§§§+++

10.45		Lease between Broadway 701 Gateway Fee LLC, A Delaware Limited Liability Company, as Landlord, and the Company, as Tenant, dated October 10, 2008. §§§§

10.46		Office Lease Agreement, dated April 21, 2009, between the Registrant and King Waltham LLC. §§§§§

10.47		Separation Agreement between OXiGENE and Dr. Walicke dated as of June 10, 2009. $$$$@

10.48		Employment Agreement by and between the Company and Dr. Langecker, dated as of June 10, 2009. $$$$$@


Exhibit
Number		Description
10.49		Amended and Restated Purchase Option Agreement by and among the Company, Symphony ViDA, Inc. and Symphony ViDA Holdings LLC, dated as of July 2, 2009. €

10.50		Termination Agreement by and among the Company, Symphony ViDA Holdings LLC, Symphony ViDA Investors LLC and Symphony ViDA, Inc., dated as of July 2, 2009. €

10.51		Form of Voting Agreement by and among OXiGENE, Inc., VaxGen, Inc. and certain VaxGen stockholders, dated as of October 14, 2009. £

10.52		Form of Voting Agreement by and among VaxGen, Inc., OXiGENE, Inc., and certain OXiGENE stockholders, dated as of October 14, 2009. £

10.53		Amendment No. 2 to Stockholder Rights Agreement by and between OXiGENE, Inc. and American Stock Transfer & Trust Company, LLC, dated as of October 14, 2009. £

10.54		Separation Agreement between OXiGENE, Inc. and John A. Kollins, dated as of October 28, 2009. ££@

10.55		Amendment No. 1 to Common Stock Purchase Agreement by and between OXiGENE, Inc. and Kingsbridge Capital Limited, dated as of February 9, 2010. £££

10.56		Securities Purchase Agreement, dated as of March 10, 2010, by and among the Company and the Buyers named therein. ££££

10.57		Voting Agreement, dated as of March 10, 2010, by and between the Company and Symphony ViDA Holdings LLC. ££££

10.58		Form of Amendment and Exchange Agreement, dated as of March 25, 2010, by and among the Company and the Investors named therein. £££££

14.1		Code of Conduct. ####

23.1		Consent of Ernst & Young LLP.

23.2		Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (see Exhibit 5.1 to the Registration Statement on Form S-1 No. 333-150595).

24.1		Power of Attorney (see signature page).


*		Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (file no. 33-64968) and any amendments thereto.

**		Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1996.

***		Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997.

****		Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999.

#		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002.

##		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2002.

###		Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000.

####		Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002.

+		Incorporated by reference to the Registrant’s Registration Statement on Form S-8 (file no. 333-92747) and any amendments thereto.

++		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on December 28, 1999.

&		Incorporated by reference to Amendment No. 3 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002.

%		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2004.


%%		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2004.

!		Incorporated by reference to the Registrant’s Registration Statement on Form S-8 (file no. 333-126636) and any amendments thereto.

!!		Incorporated by reference to the Registrant’s Registration Statement on Form 8-A, dated March 30, 2005 and any amendments thereto.

!!!		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on July 11, 2005.

!!!!		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2005.

$		Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005.

$$		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2006.

%%%		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on December 20, 2007.

%%%%		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007.

ˆˆˆˆ		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on February 21, 2008.

§		Incorporated by reference to the Registrant’s Amendment No. 1 to its Current Report on Form 8-K/A, filed on October 10, 2008.

§§		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on October 24, 2008.

§§§		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on December 22, 2008.

§§§§		Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

§§§§§		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009.

$$$$		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on June 12, 2009.

$$$$$		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on June 17, 2009.

€		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on July 7, 2009.

€€		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on July 15, 2009.

€€€		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009.

£		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on October 16, 2009.

££		Incorporated by reference to the Registrant’s Amendment to its Current Report on Form 8-K/A, filed on November 2, 2009.

£££		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on February 12, 2010.

££££		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on March 11, 2010.

£££££		Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on March 26, 2010.

X		Incorporated by reference to the Registrant’s Amendment No. 1 to its Annual Report on Form 10-K, filed on April 29, 2010.

+++		Confidential treatment requested as to certain portions of the document, which portions have been omitted and filed separately with the Securities and Exchange Commission.


Report of Independent Registered Public Accounting Firm			F-2
Balance Sheets as of December 31, 2008 and 2009			F-3
Statements of Operations for the Years Ended December 31, 2007, 2008 and 2009			F-4
Statements of Stockholders’ Equity for the Years Ended December 31, 2007, 2008 and 2009			F-5
Statements of Cash Flows for the Years Ended December 31, 2007, 2008 and 2009			F-6
Notes to Financial Statements			F-7
Balance Sheets as of March 31, 2010 and December 31, 2009			F-28
Statements of Operations for the Three Months Ended March 31, 2010 and March 31, 2009			F-29
Statements of Cash Flows for the Three Months Ended March 31, 2010 and March 31, 2009			F-30
Notes to Financial Statements			F-31