10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2005

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 0-6533

BOSTON LIFE SCIENCES, INC.

(Exact name of registrant as specified in its charter)

Delaware	87-0277826
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

20 Newbury Street, 5th Floor, Boston, Massachusetts	02116
(Address of principal executive offices)	(Zip code)

(617) 425-0200

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of August 5, 2005 there were 10,422,457 shares of Common Stock outstanding.

BOSTON LIFE SCIENCES, INC.

INDEX TO FORM 10-Q

			Page
Part I	Financial Information
	Item 1	Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004	1
		Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2005 and 2004, and for the period from inception (October 16, 1992) to June 30, 2005	2
		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2005 and 2004, and for the period from inception (October 16, 1992) to June 30, 2005	3
		Notes to Condensed Consolidated Financial Statements	4
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
	Item 3	Quantitative and Qualitative Disclosures about Market Risk	31
	Item 4	Controls and Procedures	31
Part II	Other Information
	Item 6	Exhibits	32
SIGNATURES			33

Part I – Financial Information

Item 1 – Financial Statements

Boston Life Sciences, Inc.

(A Development Stage Enterprise)

Condensed Consolidated Balance Sheets

(Unaudited)

	June 30, 2005			December 31, 2004
Assets
Current assets:
Cash and cash equivalents	$	1,211,392		$	152,971
Marketable securities		1,449,955			1,490,119
Other current assets		281,127			145,153
Total current assets		2,942,474			1,788,243
Fixed assets, net		312,206			400,178
Other assets		376,726			356,292
Total assets	$	3,631,406		$	2,544,713
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	1,784,237		$	1,975,773
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, $.01 par value; 1,000,000 shares authorized; 25,000 shares designated Convertible Series A, 500,000 shares designated Convertible Series D, and 800 shares designated Convertible Series E; none and 561.3 shares Convertible Series E issued and outstanding at June 30, 2005 and December 31, 2004 (liquidation preference of $5,868,464), respectively		—			3,501,539
Common stock, $.01 par value; 80,000,000 shares authorized; 10,422,457 and 6,892,856 shares issued and outstanding at June 30, 2005 and December 31, 2004, respectively		104,225			68,929
Additional paid-in capital		112,129,764			102,649,933
Accumulated other comprehensive income (loss)		2,029			(4,617	)
Deficit accumulated during development stage		(110,388,849	)		(105,646,844	)
Total stockholders’ equity		1,847,169			568,940
Total liabilities and stockholders’ equity	$	3,631,406		$	2,544,713

The accompanying notes are an integral part of the condensed consolidated financial statements.

1

Boston Life Sciences, Inc.

(A Development Stage Enterprise)

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,						From Inception (October 16, 1992) to June 30, 2005
	2005			2004			2005			2004
Revenues	$	—		$	—		$	—		$	—		$	900,000
Operating expenses:
Research and development		1,442,286			2,096,846			2,732,748			3,685,273			68,520,123
General and administrative		987,729			1,757,454			2,000,665			2,739,874			31,819,935
Purchased in-process research and development		—			—			—			—			12,146,544
Total operating expenses		2,430,015			3,854,300			4,733,413			6,425,147			112,486,602
Loss from operations		(2,430,015	)		(3,854,300	)		(4,733,413	)		(6,425,147	)		(111,586,602	)
Other expenses		—			—			(2,232	)		—			(1,582,853	)
Interest expense		(2,065	)		(208,868	)		(45,965	)		(417,736	)		(4,302,418	)
Investment income		34,283			35,218			39,605			92,459			7,083,024
Net loss		(2,397,797	)		(4,027,950	)		(4,742,005	)		(6,750,424	)		(110,388,849	)
Preferred stock beneficial conversion feature		—			—			—			—			(8,062,712	)
Accrual of preferred stock dividends and modification of warrants held by preferred stock holders		—			(115,308	)		(715,515	)		(259,591	)		(1,229,589	)
Net loss attributable to common stockholders	$	(2,397,797	)	$	(4,143,258	)	$	(5,457,520	)	$	(7,010,015	)	$	(119,681,150	)
Basic and diluted net loss attributable to common stockholders per share	$	(0.23	)	$	(0.61	)	$	(0.58	)	$	(1.03	)
Weighted average shares outstanding		10,411,967			6,820,876			9,337,030			6,805,412

The accompanying notes are an integral part of the condensed consolidated financial statements.

2

Boston Life Sciences, Inc.

(A Development Stage Enterprise)

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended June 30,						From Inception (October 16, 1992) to June 30, 2005
	2005			2004
Cash flows from operating activities:
Net loss	$	(4,742,005	)	$	(6,750,424	)	$	(110,388,849	)
Adjustments to reconcile net loss to net cash used for operating activities:
Purchased in-process research and development		—			—			12,146,544
Write-off of acquired technology		—			—			3,500,000
Interest expense settled through issuance of notes payable		—			—			350,500
Non-cash interest expense		43,900			200,210			1,648,675
Non-cash charges related to options, warrants and common stock		19,792			118,228			4,218,559
Amortization and depreciation		101,051			113,811			2,289,968
Changes in current assets and liabilities:
(Increase) decrease in other current assets		(135,974	)		56,581			577,836
Increase in accounts payable and accrued expenses		63,928			264,369			1,011,572
Net cash used for operating activities		(4,649,308	)		(5,997,225	)		(84,645,195	)
Cash flows from investing activities:
Cash acquired through Merger		—			—			1,758,037
Purchases of fixed assets		(13,079	)		(4,391	)		(1,356,699	)
Increase in other assets		(20,434	)		(97,944	)		(730,361	)
Decrease in restricted cash and marketable securities		—			250,698			—
Purchases of marketable securities		(3,475,155	)		(4,825,455	)		(115,602,245	)
Sales and maturities of marketable securities		3,521,965			5,698,695			114,154,319
Net cash provided by (used for) investing activities		13,297			1,021,603			(1,776,949	)
Cash flows from financing activities:
Proceeds from issuance of common stock		6,050,171			1,249			50,795,920
Proceeds from issuance of preferred stock		—			—			35,022,170
Preferred stock conversion inducement		—			—			(600,564	)
Proceeds from issuance of notes payable		—			—			6,585,000
Proceeds from issuance of convertible debentures		—			—			9,000,000
Principal payments of notes payable		—			—			(7,146,967	)
Dividend payments		(314,987	)		—			(516,747	)
Payments of financing costs		(40,752	)		(27,664	)		(5,505,276	)
Net cash provided by (used for) financing activities		5,694,432			(26,415	)		87,633,536
Net increase (decrease) in cash and cash equivalents		1,058,421			(5,002,037	)		1,211,392
Cash and cash equivalents, beginning of period		152,971			6,088,458			—
Cash and cash equivalents, end of period	$	1,211,392		$	1,086,421		$	1,211,392
Supplemental cash flow disclosures:
Non-cash transactions (see Note 5)

The accompanying notes are an integral part of the condensed consolidated financial statements.

3

Boston Life Sciences, Inc.

(A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2005

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, these financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

The interim unaudited condensed consolidated financial statements contained herein include, in management’s opinion, all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the financial position, results of operations, and cash flows for the periods presented. The results of operations for the interim period shown on this report are not necessarily indicative of results for a full year. These financial statements should be read in conjunction with the Company’s consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.

The accompanying condensed consolidated 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 in the normal course of business. The uncertainty inherent in the need to raise additional capital and the Company’s recurring losses from operations raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As of June 30, 2005, the Company has experienced total net losses since inception of approximately $110,400,000. For the foreseeable future, the Company expects to experience continuing operating losses and negative cash flows from operations as management executes its current business plan. The cash, cash equivalents, and marketable securities available at June 30, 2005 will not provide sufficient working capital to meet the Company’s anticipated expenditures for the next twelve months. The Company believes that the cash, cash equivalents, and marketable securities available at June 30, 2005 and its ability to control certain costs, including those related to clinical trial programs, pre-clinical activities, and certain general and administrative expenses will enable the Company to meet its anticipated cash expenditures into September 2005. The Company will therefore need to immediately raise additional capital through a collaboration, merger or other transaction with other pharmaceutical or biotechnology companies, or through a debt financing or equity offering to continue as a going concern. The Company is currently engaged in fundraising efforts. There can be no assurance, however, that the Company will be successful or that additional funds will be available on acceptable terms, if at all.

There have been a number of recent developments which have simplified the Company’s capital structure. In November 2004, the Company utilized funds set aside in a restricted account to repay in full the Company’s 10% Convertible Senior Secured Promissory Notes (the “Notes”). In February 2005, the Company entered into agreements with the holders (the “Holders”) of 557.30 shares of Series E Cumulative Convertible Preferred Stock (the “Series E Stock”), whereby the Holders agreed to convert their outstanding shares of Series E Stock and in return the Company agreed to pay a dividend of $564.44 per share held by the Holders and lower the exercise price of the warrants to purchase common stock held by the Holders from $7.71 to $0.05. The Holders were also given the right to invest new funds amounting to up to 33% in the next $16,900,000 raised by the Company in private placements effected by the Company pursuant to an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”). Following completion of the Company’s $5,000,000 private placement in March 2005, the amount of this preemptive right was reduced to 33% of the next $11,900,000 raised by the Company in future private placements. On February 4, 2005, the stockholders approved an amendment to the Certificate of Designations, Rights and Preferences of the Series E Stock, providing for the mandatory conversion of all outstanding shares of Series E Stock, upon the affirmative vote of 75% of the outstanding shares of Series E Stock. The Company issued 900,646 shares of common stock in connection with the conversion of the 561.3 outstanding shares of Series E Stock.

2. Net Loss Per Share

Basic and diluted net loss per share available to common stockholders has been calculated by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. All potentially dilutive common shares have been excluded from the calculation of weighted average common shares outstanding since their inclusion would be anti-dilutive.

Stock options and warrants to purchase approximately 3.1 million and 2.8 million shares of common stock were outstanding at June 30, 2005 and 2004, respectively, but were not included in the computation of diluted net loss per common share because they were anti-dilutive. The exercise of those stock options and warrants outstanding at June 30, 2005, which could generate proceeds to the Company of up to approximately $24,000,000, could potentially dilute earnings per share in the future.

4

Boston Life Sciences, Inc.

(A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements (Unaudited)

3. Comprehensive Loss

The Company had total comprehensive loss of $2,396,060 and $4,075,506 for the three months ended June 30, 2005 and 2004, respectively. For the six months ended June 30, 2005 and 2004, total comprehensive loss was $4,735,359 and $6,775,688, respectively. The difference between total comprehensive loss and net loss is due to unrealized gains and losses on marketable securities.

4. Accounting for Stock-Based Compensation

The Company has elected to follow Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) and related interpretations, in accounting for its employee stock-based compensation plans and related equity issuances, rather than the alternative fair value accounting method provided for under Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation,” (“SFAS No. 123”). Under APB 25, when the exercise price of options granted under these plans equals the market price of the underlying stock on the date of grant, provided other criteria are met, no compensation expense is recognized. All stock-based awards to non-employees are accounted for in accordance with SFAS No. 123 and Emerging Issues Task Force 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring or in Conjunction with Selling, Goods or Services.”

The following table illustrates the effect on net loss and loss per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation:

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
Net loss, as reported	$	(2,397,797	)	$	(4,027,950	)	$	(4,742,005	)	$	(6,750,424	)
Add: Stock-based employee compensation expense (benefit) recognized		(86,404	)		106,064			—			106,064
Deduct: Total stock-based employee compensation expense determined under fair value based methods for all awards		(52,930	)		(528,028	)		(914,230	)		(699,443	)
Pro forma net loss		(2,537,131	)		(4,449,914	)		(5,656,235	)		(7,343,803	)
Accrual of preferred stock dividends and modification of warrants held by preferred stock holders		—			(115,308	)		(715,515	)		(259,591	)
Pro forma net loss attributable to common stockholders	$	(2,537,131	)	$	(4,565,222	)	$	(6,371,750	)	$	(7,603,394	)
Basic and diluted loss per share
As reported	$	(0.23	)	$	(0.61	)	$	(0.58	)	$	(1.03	)
Pro forma	$	(0.24	)	$	(0.67	)	$	(0.68	)	$	(1.12	)

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: dividend yield of zero percent; expected volatility of 100%; risk-free interest rates, based on the date of grant, ranging from 2% to 6%; and expected lives ranging from three to five years.

5

Boston Life Sciences, Inc.

(A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements (Unaudited)

5. Stockholders’ Equity

Reverse Stock Split

On February 4, 2005, the Company’s stockholders authorized the Company’s Board of Directors to effect a reverse stock split of its common stock at a ratio of one-for-five. The Company has retroactively applied the reverse stock split to all the share and per share amounts for all periods presented in these financial statements. In addition, the reverse stock split resulted in a reclassification from common stock to additional paid-in capital to reflect the adjusted share amount as the par value of the Company’s common stock remained at $0.01.

Preferred Stock

In February 2005, the Company entered into agreements with the Holders of 557.30 shares of Series E Stock, whereby the Holders agreed to convert their outstanding shares of Series E Stock and in return the Company agreed to pay a dividend of $564.44 per share held by the Holders and lower the exercise price of the warrants to purchase common stock held by the Holders from $7.71 to $0.05. The Company recorded a charge of approximately $656,000, as determined under the Black-Scholes pricing model (with the following assumptions: dividend yield of zero percent; expected volatility of 100%; risk free interest rate of approximately 3% and warrant term of approximately 3 years), to net loss attributable to common stockholders during the first quarter of 2005 in connection with this re-pricing. The Holders were also given the right to invest new funds amounting to up to 33% in the next $16,900,000 raised by the Company in private placements effected by the Company pursuant to an exemption from registration under the Securities Act. Following completion of the Company’s $5,000,000 private placement in March 2005, the amount of this preemptive right was reduced to 33% of the next $11,900,000 raised by the Company in future private placements. On February 4, 2005, the Company’s stockholders approved an amendment to the Certificate of Designations, Rights and Preferences of the Series E Stock, providing for the mandatory conversion of all outstanding shares of Series E Stock, upon the affirmative vote of 75% of the outstanding shares of Series E Stock. The Company issued 900,646 shares of common stock in connection with the conversion of the 561.3 outstanding shares of Series E Stock.

Warrant Exercises

In February 2005, in consideration of the immediate exercise of warrants in cash, the Company agreed to lower the exercise price of a warrant to purchase 100,000 shares (the “ISVP Warrant”) of the Company’s common stock held by Ingalls & Snyder Value Partners, L.P. (“ISVP”) from $5.00 to $2.25 per share and to lower the exercise price of warrants to purchase 200,000 (the “Gipson Warrant”) and 164,025 (the “Monoyios Warrant”) shares of the Company’s common stock held by Robert L. Gipson (“Gipson”) and Nikolaos D. Monoyios from $10.00 to $2.25. The Company received approximately $1,044,000 in connection with the exercise of the ISVP Warrant, the Gipson Warrant and the Monoyios Warrant. The Company recorded a charge of approximately $316,000, as determined under the Black-Scholes pricing model (with the following assumptions: dividend yield of zero percent; expected volatility of 100%; risk free interest rate of approximately 3% and warrant term of approximately 2 years), to stockholders’ equity during the first quarter of 2005 in connection with the changes to the Gipson and Monoyios Warrants. The Company recorded a charge of approximately $44,000, as determined under the Black-Scholes pricing model (with the following assumptions: dividend yield of zero percent; expected volatility of 100%; risk free interest rate of approximately 3% and warrant term of approximately 3 years), to interest expense during the first quarter of 2005 in connection with the changes to the ISVP Warrant.

Private Placement

On March 9, 2005, the Company completed a private placement of 2,000,000 shares of its common stock which raised approximately $5,000,000 in gross proceeds. The investors in the private placement included Gipson, Thomas O. Boucher, Jr. (“Boucher”) and other affiliates of Ingalls & Snyder, LLC (“I&S”). In connection with the private placement, the Company agreed to file a registration statement relating to the resale of the common stock sold in the private placement upon request of the investors. All shares purchased by the investors in the private placement are subject to a minimum holding period of one year.

Cancellation and Regrant of Stock Options

On March 11, 2005, the Company’s Board of Directors approved the cancellation of options to purchase an aggregate of 483,787 shares of the Company’s common stock and the regrant of options to purchase an aggregate of 454,760 shares of the Company’s common stock. The per share exercise prices of the cancelled options ranged from $3.75 to $39.06, with a weighted average exercise price of $11.89. The aggregate number of stock options outstanding after such cancellation and regrant of options

6

Boston Life Sciences, Inc.

(A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements (Unaudited)

was reduced by approximately 6%. These cancellations and regrants were effected under the Amended and Restated Omnibus Stock Option Plan and the 1998 Omnibus Stock Option Plan, each of which expressly permitted option exchanges. Each of the regranted options contains the following terms: (i) an exercise price equal to the fair market value on the grant date which was the last sale price on March 11, 2005, or $2.31 per share; (ii) a ten-year duration; and (iii) 33% vesting on the date of grant with the remaining 67% vesting thereafter in 36 equal monthly installments. Prior to the adoption of Statement No. 123(R) “Share-Based Payments” (“SFAS 123(R)”), the Company will record a charge each quarter equal to the intrinsic value (difference between the Company’s stock price and exercise price) of the 454,760 options which are deemed to have been repriced until the earlier of (i) the exercise of these options or (ii) the expiration or cancellation of these options. The Company recorded a charge of approximately $86,000 during the first quarter of 2005 related to the repricing. The Company reversed the previously recorded charge of approximately $86,000 during the three months ended June 30, 2005 due to the decrease in the intrinsic value of the repriced options at June 30, 2005.

Rights Agreement

On March 14, 2005, the Company and Continental Stock Transfer & Trust Company amended the Rights Agreement dated as of September 11, 2001, to amend the definition of Exempt Person to include all purchasers of shares of the Company’s common stock under the common stock purchase agreement, dated as of March 9, 2005, by and among the Company and the purchasers listed therein.

6. Settlement and Standstill Agreement; Severance and Settlement Agreement and Release

On June 15, 2004, the Company entered into a settlement and standstill agreement (the “Settlement Agreement”) with Gipson, Boucher, I&S and ISVP (the “Investor Group”). Under the Settlement Agreement, the Company reconstituted its Board of Directors to consist of Marc E. Lanser, Robert Langer, John T. Preston, Gipson and Michael J. Mullen. S. David Hillson retired as Chairman of the Board and as a director and consultant of the Company.

The Investor Group agreed not to seek the removal of any of the directors prior to March 31, 2005 and entered into a mutual release of claims with the Company, Mr. Hillson and Dr. Lanser. As contemplated by the Settlement Agreement, the Company obtained a release of the security interest on its property collateralizing its Notes held by ISVP by providing an irrevocable standby letter of credit in the amount of $4,785,550 to collateralize the Notes. The Company also paid $300,000 to I&S as reimbursement for certain expenses as part of the settlement. The $300,000 payment is included in General and Administrative Expenses during the second quarter of 2004.

In May 2004, the Company also entered into a separation agreement with Mr. Hillson regarding his retirement. The separation agreement requires that Mr. Hillson continue to satisfy his obligations under the non-competition, confidentiality, invention assignment and non-solicitation provisions of his previous agreement with the Company and that he release the Company from claims related to his former employment with the Company and his position on the Board of Directors. Mr. Hillson’s separation agreement provided for a lump sum payment of $187,500, which represented the balance of consulting fees due to Mr. Hillson under his previous agreement with the Company, and a lump sum payment of $90,000 in recognition of Mr. Hillson’s contributions to the Company and loss of certain other benefits under his previous agreement with the Company. The Company recorded a charge of $277,500 in the second quarter of 2004 related to these payments. Pursuant to the terms of the separation agreement, the Company granted options to Mr. Hillson to purchase 40,000 shares of common stock at an exercise price of $5.00 per share and cancelled options previously granted to Mr. Hillson to purchase 80,000 shares of common stock at exercise prices ranging from $18.13 per share to $39.06 per share. The separation agreement further provided that all of Mr. Hillson’s remaining stock options are fully vested. FASB Interpretation No. 44, “Accounting for Certain Transactions involving Stock Compensation” requires the Company to employ variable accounting when there is both an option issuance and an option cancellation within a six month period. In addition to the 40,000 options issued in June, Mr. Hillson was awarded options in March 2004 to purchase 39,000 shares of common stock at an exercise price of $6.35 in connection with his services as a director of the Company. Of the options awarded in March 2004, 14,000 were attributed to Mr. Hillson’s previous consulting agreement, and accordingly, the Company recorded a charge of approximately $56,000 representing the fair value of these options as determined using the Black-Scholes pricing model. In addition, the Company will record a charge equal to the intrinsic value (difference between the Company’s stock price and exercise price) of the remaining 65,000 options which are deemed to have been repriced through the earlier of (i) the exercise of these options or (ii) the expiration of these options in the second quarter of 2008. The amount of the charge will be adjusted quarterly based upon the intrinsic value of the options then outstanding at the end of each quarter.

In connection with his retirement, Mr. Hillson also made a written request under the terms of his indemnity agreement with the Company that the Company create an indemnity trust for his benefit and fund the trust in the amount of $100,000. In response to the

7

Boston Life Sciences, Inc.

(A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements (Unaudited)

request, on June 15, 2004, the Company entered into a directors and officers indemnity trust agreement with Mr. Hillson and Boston Private Bank & Trust Company, as trustee, and funded the trust with $100,000. Mr. Hillson may, from time to time, request withdrawals of funds from the trust in the event that he becomes entitled to receive indemnification payments or advances from the Company. Any amounts not disbursed from the indemnity trust will become unrestricted at such time as the Company and Mr. Hillson agree that the indemnity trust is no longer required. FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”) requires that upon issuance of a guarantee, the guarantor must recognize a liability for the fair value of the obligation it assumes under that guarantee. As required under the provisions of FIN 45, the Company has evaluated its obligations under the indemnity agreement and has determined that the fair value of this obligation is immaterial at June 30, 2005.

On June 10, 2004, the Company also entered into an employment agreement with Dr. Lanser (the “Lanser Agreement”) providing for his continued employment with the Company. The Lanser Agreement was effective for a term of one year, provided for compensation plus other benefits, and included confidentiality and non-competition provisions. On June 9, 2005, the Company entered into a Severance and Settlement Agreement and Release with Dr. Lanser (the “Lanser Settlement”). The Lanser Settlement terminated the Lanser Agreement and entitles Dr. Lanser to receive continued base salary and benefits for a period of nine months and requires that Dr. Lanser continue to satisfy his obligations under the confidentiality, invention assignment and restricted activities provisions of the Lanser Agreement. The Company recorded a charge of approximately $251,000 during the second quarter of 2005 related to this obligation. The Lanser Settlement also provided that Dr. Lanser’s unvested options to purchase 107,314 shares of common stock will continue to vest on their stated terms and conditions as long as Dr. Lanser continues to provide services as a member of the Company’s Scientific Advisory Board. On June 9, 2005, the Company entered into a two-year consulting agreement with Dr. Lanser, unless earlier terminated by the Company or Dr. Lanser (the “Consulting Agreement”). Under the terms of the Consulting Agreement, Dr. Lanser will, among other things, support the Company in certain of its pre-clinical and clinical development efforts and serve as a member of the Company’s Scientific Advisory Board. In the event that the Company terminates the Consulting Agreement without cause (as defined in the Consulting Agreement) prior to June 11, 2007, all unvested options will become fully vested. The Company recorded a charge of approximately $14,000 during the second quarter of 2005 related to this modification of Dr. Lanser’s options.

7. Commitments and Contingencies

The Company recognizes and discloses commitments when it enters into executed contractual obligations with other parties. The Company accrues contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.

License Agreements

Since inception, the Company has paid Harvard University and its affiliates under the terms of its current license agreements (the “License Agreements”) approximately $800,000 in initial licensing fees and milestone payments. The License Agreements obligate the Company to pay up to an aggregate of approximately $4,220,000 in milestone payments in the future. These future milestone payments are generally payable only upon the completion of later stage clinical trials and the filing of a New Drug Application (“NDA”) or similar application seeking product approval. Most of these contingent milestone payments are associated with technologies that are presently in early stage development. Two of the Company’s early-stage licenses with Harvard University were terminated during the three months ended June 30, 2005, resulting in lower potential future milestone payments.

Contingencies

The Company is subject to legal proceedings in the ordinary course of business. One matter involves a claim for cash and warrants to purchase shares of common stock of the Company in connection with one of the Company’s private placements. Management has responded that there is no legal or equitable basis for payment of the claim, and believes that the resolution of this matter and others will not have a material adverse effect on the condensed consolidated financial statements.

Guarantor Arrangements

As permitted under Delaware law, the Company has entered into agreements whereby the Company indemnifies its executive officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a director and officer insurance policy that limits the Company’s exposure and enables the Company to recover a portion of any future amounts paid. As a result of the Company’s insurance policy coverage, the Company believes the estimated fair value of these indemnification agreements is minimal.

8

Boston Life Sciences, Inc.

(A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements (Unaudited)

The Company enters into arrangements with certain service providers to perform research, development, and clinical services for the Company. Under the terms of these arrangements, such service providers may use the Company’s technologies in performing their services. The Company enters into standard indemnification agreements with those service providers, whereby the Company indemnifies them for any liability associated with their use of the Company’s technologies. The maximum potential amount of future payments the Company would be required to make under these indemnification agreements is unlimited; however, the Company has product liability and general liability policies that enable the Company to recover a portion of any amounts paid. As a result of the Company’s insurance policy coverage, the Company believes the estimated fair value of these indemnification agreements is minimal.

Lease Commitments

In June 2005, the Company entered into a noncancelable operating lease agreement for new office space in Hopkinton, Massachusetts to house its executive and certain research and administrative personnel. The new lease is for approximately 5,300 square feet of space resulting in annual rent expense of approximately $120,000. The lease agreement expires in June 2008 and provides for a three-year renewal option.

The Company believes that it will be able to, and intends to, sublease a substantial portion of the space available in its Boston, Massachusetts facility. The Company expects that there may be a shortfall between the remaining lease payments and any proposed sublease payments. The Company will record any charge related to this potential shortfall when, and if, it vacates this facility.

In August 2005, the Company entered into a noncancelable operating lease agreement in Woburn, Massachusetts to house certain research and administrative personnel. The new lease is for approximately 2,500 square feet of space resulting in annual rent expense of approximately $42,000. The lease agreement expires in August 2006.

8. Subsequent Events

In July 2005, Kenneth L. Rice, Jr. joined as Executive Vice President, Finance and Administration and Chief Financial Officer of the Company and Joseph Hernon resigned as Chief Financial Officer. Mr. Hernon is presently expected to continue employment with the Company until September 30, 2005. Under the terms of a proposed severance agreement, Mr. Hernon will be entitled to continued base salary and benefits for a period of nine-months commencing on his actual date of termination. The proposed severance also provides for the immediate acceleration of options to purchase 133,527 shares of the Company’s common stock held by Mr. Hernon and a two year period of exercisability for all unexercised options following the date of termination.

9. New Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS 123(R). SFAS 123(R) revises SFAS No. 123 supersedes APB 25 and amends SFAS No. 95, “Statement of Cash Flows,” (“FASB No. 95”). SFAS 123(R) requires companies to expense the fair value of employee stock options and other forms of stock-based compensation over the employees’ service period. Compensation cost is measured at the fair value of the award at the grant date and adjusted to reflect actual forfeitures and the outcome of certain conditions. The fair value of an award is not re-measured after its initial estimation on the grant date. In March 2005, the SEC issued Staff Accounting Bulletin SAB 107 (“SAB 107”). SAB 107 expresses views of the SEC regarding the interaction between SFAS 123R and certain SEC rules and regulations and provides the SEC’s views regarding the valuation of share-based payment arrangements for public companies. In December 2004, the FASB determined that the effective date of SFAS 123(R) should be the first interim or annual reporting period that begins after June 15, 2005. In April 2005, the SEC amended the effective compliance date to be the first annual reporting period beginning on or after June 15, 2005. Therefore, the Company is required to be compliant beginning January 1, 2006. The Company is evaluating if the adoption of SFAS 123(R) and SAB 107 will have a material impact on its results of operations and earnings per share. The Company is also evaluating the requirements of SFAS 123(R) and SAB 107 and has not yet determined the method of adoption or whether this adoption will result in amounts that are similar to the current pro forma disclosures under SFAS No. 123 as set forth in Note 4.

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3,” (“SFAS No. 154”). This statement changes the requirements for the accounting for and reporting of a change in accounting principle and applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. When a pronouncement includes specific transition provisions, those provisions should be followed. APB No. 20 required that most voluntary

9

Boston Life Sciences, Inc.

(A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements (Unaudited)

changes in accounting principle be recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. This statement requires retrospective application to prior period financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. The provisions of SFAS 154 are effective for fiscal years beginning after December 15, 2005. The Company does not expect this statement to have a material impact on its financial condition or results of operations.

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Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains forward-looking statements. Specifically, any statements contained herein that are not based on historical fact may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” and similar expressions are intended to identify forward-looking statements. Such statements include, without limitation, statements regarding expectations or beliefs as to future results or events, such as the expected timing and results of clinical trials, discussions with regulatory agencies, schedules of Investigational New Drug applications, or INDs, NDAs, and all other regulatory submissions, the timing of product introductions, the possible approval of products (including the ultimate approvability of the ALTROPANE^® molecular imaging agent), and the market size and possible advantages of our products. All such forward-looking statements involve substantial risks and uncertainties, and actual results may vary materially from these statements. Factors that may affect future results include: the availability and adequacy of financial resources, delays in the regulatory or development processes, results from clinical and pre-clinical trials, regulatory decisions (including the discretion of the Food and Drug Administration, or FDA, following completion of our Phase III program to require us to conduct additional clinical trials in order to achieve approvability of ALTROPANE), market acceptance of our products, the ability to obtain intellectual property protection, the outcome of discussions with potential partners and other possible risks and uncertainties that have been noted in reports filed by us with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2004, as amended. If any of these risks actually occur, our business, financial condition, results of operations or liquidity would likely suffer. We undertake no intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

General

Description of Company

We are a biotechnology company engaged in the research and development of biopharmaceutical products for the diagnosis and treatment of central nervous system, or CNS, diseases. At June 30, 2005, we are considered a “development stage enterprise” as defined in Statement of Financial Accounting Standards No. 7, “Accounting and Reporting by Development Stage Enterprises.”

As of June 30, 2005, we have experienced total net losses since inception of approximately $110,400,000. For the foreseeable future, we expect to experience continuing operating losses and negative cash flows from operations as management executes its current business plan. The cash, cash equivalents, and marketable securities available at June 30, 2005 will not provide sufficient working capital to meet our anticipated expenditures for the next twelve months. We believe that the cash, cash equivalents, and marketable securities available at June 30, 2005 and our ability to control certain costs, including those related to clinical trial programs, pre-clinical activities, and certain general and administrative expenses will enable us to meet our anticipated cash expenditures into September 2005. We will therefore need to immediately raise additional capital through a collaboration, merger or other transaction with other pharmaceutical or biotechnology companies, or through a debt financing or equity offering to continue as a going concern. We are currently engaged in fundraising efforts. There can be no assurance, however, that we will be successful or that additional funds will be available on acceptable terms, if at all.

Our ability to continue development of our programs, including our Phase III program of ALTROPANE molecular imaging agent as a diagnostic for Parkinsonian Syndromes, or PS, the Phase II trial of ALTROPANE molecular imaging agent as a diagnostic for Attention Deficit Hyperactivity Disorder, or ADHD, and our pre-clinical programs including Inosine and O-1369 may be affected by the availability of financial resources to fund each program. Financial considerations may cause us to modify planned development activities for one or more of our programs, and we may decide to suspend development of one or more programs until we are able to secure additional working capital. If we are not immediately able to raise additional capital, we will not have sufficient funds to complete our Phase III clinical program of ALTROPANE as a diagnostic for PS or the Phase II trial of ALTROPANE as a diagnostic for ADHD.

Product Development

The ALTROPANE molecular imaging agent is being developed for two indications: the differential diagnosis of 1) PS (including Parkinson’s Disease, or PD), and non-PS in patients with tremor; and 2) ADHD. We have completed an initial Phase III trial of ALTROPANE for use in differentiating PS movement disorders from non-PS movement disorders. In April 2004, we reached an agreement with the FDA under the Special Protocol Assessment, or SPA, process regarding our protocol design for a new Phase III clinical trial of ALTROPANE for the differentiation of PS tremors from tremors due to other, non-PS causes. Our Phase III clinical trial is designed to distinguish PS from non-PS in patients with tremors. In August 2005, under a new SPA, we reached agreement with FDA on an amended protocol, Parkinson’s or Essential Tremor–1, or POET-1, and a new protocol Parkinson’s or Essential Tremor–2, or POET-2. This new SPA agreement permits us to conduct two smaller Phase III trials and to reduce the statistical endpoint of the two trials from p<0.02 to p<0.05. FDA has agreed to allow all subjects currently enrolled under the terms of the old SPA to be retained for purposes of the new SPA. We believe that this revised clinical plan will provide the Company with earlier results and may increase the likelihood for first-time approval of ALTROPANE by FDA.

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Under the new SPA, we currently expect for each of POET-1 and POET-2, to enlist approximately 30 centers in the United States, most of which are university-based, and to enroll a minimum of 332 patients (166 patients with Parkinsonian tremors and 166 patients with non-Parkinsonian tremors). Enrollment for POET-1 is ongoing. The primary endpoint for POET-1 and POET-2 will be the confirmation that the diagnostic accuracy of the ALTROPANE molecular imaging agent is statistically superior to the diagnostic accuracy of the internist or general practitioner. A diagnosis of a Movement Disorder Specialist, or MDS, will be utilized as the “gold standard”. We believe that, if the endpoints are met and no significant concerns or protocol deviations occur, these Phase III trials could provide the basis for an NDA submission and the ultimate approval of ALTROPANE. However, we can provide no assurance that the trials will be successful, that FDA will not request additional clinical trial data or other regulatory information before it will accept an NDA submission for ALTROPANE.

We are currently conducting our second Phase II trial of the ALTROPANE molecular imaging agent for the diagnosis of ADHD in adults using improved enrollment criteria, a simplified scanning procedure and algorithm adjustments for scan analysis. Patient enrollment in this trial has been constrained by our limited financial resources. We do not expect to be able to accelerate enrollment in this trial until such time as we raise sufficient additional capital.

Inosine is a proprietary axonal growth factor which specifically promotes axon outgrowth in CNS cells. In July 2004, we filed an IND application with the FDA for the use of Inosine to enhance motor function recovery after stroke. In September 2004, we announced that we had received a written response to our Inosine IND filing from the FDA. In its response, the FDA placed our Phase I study on clinical hold pending the submission of additional pharmacology and toxicology data. Our response to the FDA clinical hold letter requires significant data gathering and analysis. This effort is ongoing. There is no assurance that our response, when completed, will be adequate, that we will be taken off clinical hold or that other preclinical studies will not be required by the FDA prior to initiating the Phase I trial.

Our earlier stage product candidates, O-1369 for the treatment of PD and the FLUORATEC^™ molecular imaging agent for the diagnosis of PD and ADHD, are in preclinical development. However, further development of these product candidates, depends, in part, on our ability to raise additional capital. Troponin, our anti-angiogenic agent, and MDP14, a recombinant axon regeneration factor, are being considered for potential ocular indications. We are currently exploring our strategic alternatives related to Troponin and MDP14.

To date, we have not marketed, distributed or sold any products and, with the exception of ALTROPANE, all of our technologies and early-stage product candidates are in pre-clinical development. Our product candidates must undergo a rigorous regulatory approval process which includes extensive pre-clinical and clinical testing to demonstrate safety and efficacy before any resulting product can be marketed. The FDA has stringent standards with which we must comply with before we can test our product candidates in humans or make them commercially available. Pre-clinical testing and clinical trials are lengthy and expensive and the historical rate of failure for product candidates is high. Clinical trials require sufficient patient enrollment which is a function of many factors. Delays and difficulties in completing patient enrollment can result in increased costs and longer development times. The foregoing uncertainties and risks limit our ability to estimate the timing and amount of future costs that will be required to complete the clinical development of each program. In addition, we are unable to estimate when material net cash inflows are expected to commence as a result of the successful completion of one or more of our programs. However, we do not currently expect to generate revenues from product sales for at least the next three years.

The biotechnology and pharmaceutical industries are highly competitive and are dominated by larger, more experienced and better capitalized companies. Any delays we encounter in completing our clinical trial programs may adversely impact our competitive position in the markets in which we compete. Such delays may also adversely affect our financial position and liquidity.

Following is information on the direct research and development costs incurred on our principal scientific technology programs currently under development. These amounts do not include research and development employee and related overhead costs which total approximately $13,300,000 on a cumulative basis.

Program	2nd Quarter 2005		Year to date		Cumulative
Diagnostic imaging	$	457,000	$	876,000	$	17,672,000
Anti-angiogenesis	$	87,000	$	147,000	$	13,554,000
CNS regeneration	$	149,000	$	288,000	$	8,964,000
Other	$	—	$	50,000	$	807,000

Estimating costs and time to complete development of a specific program or technology is difficult due to the uncertainties of the development process and the requirements of the FDA which could require additional clinical trials or other development and

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testing. Results of any testing could lead to a decision to change or terminate development of a technology, in which case estimated future costs could change substantially. In the event we were to enter into a licensing or other collaborative agreement with a corporate partner involving sharing or funding by such corporate partner of development costs, the estimated development costs incurred by us could be substantially less than estimated. Additionally, research and development costs are extremely difficult to estimate for early-stage technologies due to the fact that there are generally less comprehensive data available for such technologies to determine the development activities that would be required prior to the filing of an NDA. As a result, we cannot reasonably estimate the cost and the date of completion for any technology that is not at least in Phase III clinical development due to the uncertainty regarding the number of required trials, the size of such trials and the duration of development. As of June 30, 2005, our estimate to complete POET-1 was approximately $4,100,000. However, there can be no assurance that it will not cost more to complete POET-1. We are currently analyzing what additional expenditures may be required to conduct POET-2 and cannot reasonably estimate the cost of POET-2 at this time.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements which have been prepared by us in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Our estimates include those related to marketable securities, research contracts, and the fair value and classification of equity instruments. We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Marketable Securities

Our marketable securities consist exclusively of investments in United States agency bonds and corporate debt obligations. These marketable securities are adjusted to fair value on the condensed consolidated balance sheet through other comprehensive income. If a decline in the fair value of a security is considered to be other than temporary, the investment is written down to a new cost basis and the unrealized loss is removed from accumulated other comprehensive loss and recorded in the Condensed Consolidated Statement of Operations. We evaluate whether a decline in fair value is other than temporary based on factors such as the significance of the decline, the duration of time for which the decline has been in existence and our ability and intent to hold the security to maturity. To date, we have not recorded any other than temporary impairments related to our marketable securities. These marketable securities are classified as current assets because they are highly liquid and are available, as required, to meet working capital and other operating requirements.

Research Contracts

We regularly enter into contracts with third parties to perform research and development activities in connection with our scientific technologies. Costs incurred under these contracts are recognized ratably over the term of the contract or based on actual enrollment levels which we believe corresponds to the manner in which the work is performed. Clinical trial, contract services and other outside costs require that we make estimates of the costs incurred in a given accounting period and record accruals at period end as the third party service periods and billing terms do not always coincide with our period end. We base our estimates on our knowledge of the research and development programs, services performed for the period, past history for related activities and the expected duration of the third party service contract, where applicable.

Fair Value and Classification of Equity Instruments

Historically, we have issued warrants to purchase shares of our common stock in connection with our debt and equity financings. We record each of the securities issued on a relative fair value basis up to the amount of the proceeds received. We estimate the fair value of the warrants using the Black-Scholes option pricing model. The Black-Scholes model is dependent on a number of variables and estimates including: interest rates, dividend yield, volatility and the expected term of the warrants. Our estimates are based on market interest rates at the date of issuance, our past history for declaring dividends, our stock price volatility and the contractual term of the warrants. The value ascribed to the warrants in connection with debt offerings is considered a cost of capital and amortized to interest expense over the term of the debt.

We have, at certain times, issued preferred stock and notes, which were convertible into common stock at a discount from the common stock market price at the date of issuance. The discounted amount associated with such conversion rights represents an incremental yield, or “beneficial conversion feature” that is recorded when the consideration allocated to the convertible security, divided by the number of common shares into which the security converts, is below the fair value of the common stock at the date of issuance of the convertible instrument.

A beneficial conversion feature associated with the preferred stock is recognized as a return to the preferred shareholders and represents a non-cash charge in the determination of net loss available to common stockholders. The beneficial conversion feature is recognized in full immediately if there is no redemption date for the preferred stock, or over the period of issuance through the

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redemption date, if applicable. A beneficial conversion feature associated with debentures, notes or other debt instruments is recognized as discount to the debt and is amortized as additional interest expense ratably over the remaining term of the debt instrument.

Results of Operations

Three Months Ended June 30, 2005 and 2004

Our net loss was $2,397,797 during the three months ended June 30, 2005, as compared with $4,027,950 during the three months ended June 30, 2004. Our net loss attributable to common stockholders was $2,397,797 during the three months ended June 30, 2005 as compared with $4,143,258 during the three months ended June 30, 2004. Net loss attributable to common stockholders totaled $0.23 per share for the 2005 period as compared to $0.61 per share for the 2004 period. The decrease in net loss in the 2005 period was primarily due to lower research and development, general and administrative, and interest expense. The lower net loss attributable to common stockholders on a per share basis in the 2005 period was primarily due to a decrease in our net loss and an increase in weighted average shares outstanding of approximately 3,591,000 shares, which was primarily the result of the conversion of all outstanding shares of Series E Stock in February 2005 and the private placement of common stock completed in March 2005.

Research and development expenses were $1,442,286 during the three months ended June 30, 2005, as compared with $2,096,846 during the three months ended June 30, 2004. The decrease in the 2005 period was primarily attributable to a reduction in pre-clinical costs for Inosine of approximately $1,124,000 associated with certain animal toxicology studies completed in 2004. This decrease was partially offset by higher clinical trial costs for POET-1 of approximately $268,000 associated with increased enrollment and employee severance costs of approximately $251,000 in the 2005 period. We currently anticipate that our research and development expenses will increase over the next twelve months although there may be significant fluctuations on a quarterly basis. This expected increase is primarily related to costs associated with POET-1 although these increases may be offset, in part, by lower costs associated with our pre-clinical program for Inosine. Our working capital constraints may limit our planned expenditures.

General and administrative expenses were $987,729 during the three months ended June 30, 2005, as compared with $1,757,454 during the three months ended June 30, 2004. The decrease in the 2005 period was primarily related to reduced legal and consulting expenses associated with the Settlement Agreement. As part of the Settlement Agreement, we paid $300,000 to I&S as reimbursement for certain expenses and approximately $278,000 to our former Chairman of the Board of Directors in connection with consulting and separation agreements. In addition, we incurred higher legal fees of approximately $409,000 in the 2004 period primarily related to the Settlement Agreement. This reduction was partially offset by higher compensation and recruiting expenses of approximately $92,000 in the 2005 period. We currently anticipate that our general and administrative expenses will increase over the next twelve months due to required personnel additions and costs associated with the Sarbanes-Oxley Act of 2002.

Interest expense was $2,065 during the three months ended June 30, 2005, as compared with $208,868 during the three months ended June 30, 2004. The decrease in the 2005 period was attributable to the prepayment in November 2004 of the outstanding principal plus accrued interest on the Notes.

Investment income was $34,283 during the three months ended June 30, 2005, as compared with $35,218 during the three months ended June 30, 2004. The decrease was primarily due to lower average cash, cash equivalent, and marketable securities balances during the 2005 period offset by lower realized losses of approximately $10,000 in the 2005 period.

There was no accrual of preferred stock dividends during the three months ended June 30, 2005, as compared with $115,308 during the three months ended June 30, 2004. In December 2003, we issued 800 shares of Series E Stock with a purchase price of $10,000 per share of Series E Stock which initially yielded a cumulative dividend of 4% per annum with a potential increase to 8% in June 2005. In February 2005, we entered into agreements with the Holders of Series E Stock, whereby the holders agreed to convert their Series E Stock into common stock. The conversion resulted in an absence of preferred stock dividends in the 2005 period.

Six Months Ended June 30, 2005 and 2004

Our net loss was $4,742,005 during the six months ended June 30, 2005, as compared with $6,750,424 during the six months ended June 30, 2004. Net loss attributable to common stockholders, including a charge related to a modification of warrants held by Holders of $655,992 in the 2005 period, was $5,457,520 during the six months ended June 30, 2005 as compared with $7,010,015 during the six months ended June 30, 2004. Net loss attributable to common stockholders totaled $0.58 per share for the 2005 period as compared to $1.03 per share for the 2004 period. The decrease in net loss in the 2005 period was primarily due to lower research and development, general and administrative, and interest expense. The lower net loss attributable to common stockholders on a per share basis in the 2005 period was primarily due to the decrease in net loss and an increase in weighted average shares outstanding of approximately 2,532,000 shares, which was primarily the result of the conversion of all outstanding shares of Series E Stock in February 2005 and the private placement of common stock completed in March 2005. The increase in weighted average shares outstanding was partially offset by a charge related to the modification of warrants held by preferred stock holders recognized in the 2005 period which did not occur in the 2004 period.

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Research and development expenses were $2,732,748 during the six months ended June 30, 2005, as compared with $3,685,273 during the six months ended June 30, 2004. The decrease in the 2005 period was primarily attributable to lower pre-clinical costs for Inosine of approximately $1,829,000 associated with certain animal toxicology studies. This decrease was partially offset by higher program costs for the ALTROPANE molecular imaging agent for PD of approximately $474,000 primarily associated with increased enrollment in POET-1, higher payroll costs in the 2005 period of approximately $161,000 due to increased headcount and employee severance costs of approximately $251,000 in the 2005 period.

General and administrative expenses were $2,000,665 during the six months ended June 30, 2005, as compared with $2,739,874 during the six months ended June 30, 2004. The decrease in the 2005 period was primarily related to lower legal and consulting expenses largely associated with the Settlement Agreement. As part of the Settlement Agreement, we paid $300,000 to I&S as reimbursement for certain expenses and approximately $278,000 to our former Chairman of the Board of Directors in connection with consulting and separation agreements. In addition, we incurred higher legal fees of approximately $684,000 in the 2004 period primarily related to the Settlement Agreement. This decrease was partially offset by higher legal fees of approximately $75,000 in connection with patent and intellectual property efforts, an increase of approximately $124,000 primarily associated with a special meeting of stockholders held in February 2005, and higher compensation and recruiting costs of $196,000 related to increased headcount.

Interest expense was $45,965 during the six months ended June 30, 2005, as compared with $417,736 during the six months ended June 30, 2004. The decrease in the 2005 period was attributable to the prepayment in November 2004 of the outstanding principal plus accrued interest on the Notes. This decrease was partially offset by non-cash interest expense of approximately $44,000 incurred in February 2005 when the company agreed to lower the exercise price of the ISVP Warrant in return for its immediate exercise in cash.

Investment income was $39,605 during the six months ended June 30, 2005, as compared with $92,459 during the six months ended June 30, 2004. The decrease was primarily due to lower average cash, cash equivalent, and marketable securities balances.

Accrual of preferred stock dividends and modification of warrants held by preferred stock holders was $715,515 during the six months ended June 30, 2005, as compared with $259,591 during the six months ended June 30, 2004. In December 2003, we issued 800 shares of Series E Stock with a purchase price of $10,000 per share of Series E Stock which initially yielded a cumulative dividend of 4% per annum with a potential increase to 8% in June 2005. In February 2005, we entered into agreements with the Holders of Series E Stock, whereby the holders agreed to convert their Series E Stock into common stock. The conversion resulted in an absence of preferred stock dividends in the 2005 period. We agreed to pay a dividend of $564.44 for each share of Series E Stock held by the Holders that was converted and to lower the exercise price of the warrants held by the Holders from $7.71 to $0.05. We recorded a charge of $655,992 to net loss attributable to common stockholders under the Black-Scholes pricing model in connection with the re-pricing of the warrants. We recorded a charge of $59,523 to net loss attributable to common stockholders during the 2005 period related to the accrual of preferred stock dividends as compared with $259,591 during the 2004 period.

Liquidity and Capital Resources

Net cash used for operating activities, primarily related to our net loss, totaled $4,649,308 during the six months ended June 30, 2005 as compared with $5,997,225 during the six months ended June 30, 2004. Net cash provided by investing activities totaled $13,297 during the six months ended June 30, 2005 as compared with $1,021,603 during the six months ended June 30, 2004. The difference in investing activities principally reflects the purchase of marketable securities with the proceeds from the private placements described below, net of the sales of marketable securities which were subsequently used to fund operations. Net cash provided by financing activities totaled $5,694,432 during the six months ended June 30, 2005 as compared with cash used for financing activities of $26,415 during the six months ended June 30, 2004. The difference in financing activities principally reflects the effect of the private placements described below.

As of June 30, 2005, we had incurred total net losses since inception of approximately $110,400,000. To date, we have dedicated most of our financial resources to the research and development of our product candidates, general and administrative expenses and costs related to obtaining and protecting patents. Since inception, we have primarily satisfied our working capital requirements from the sale of our securities through private placements. These private placements have included the sale of preferred stock and common stock, as well as notes payable and convertible debentures. A summary of financings completed during the three years ended June 30, 2005, is as follows:

Date	Net Proceeds Raised		Securities Issued
March 2005	$	5.0 million	Common stock
December 2003	$	7.0 million	Convertible preferred stock and warrants
March 2003	$	9.9 million	Common stock
July 2002	$	3.9 million	Convertible 10% senior secured promissory notes and warrants

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In the future, our working capital and capital requirements will depend on numerous factors, including the progress of our research and development activities, the level of resources that we devote to the developmental, clinical, and regulatory aspects of our technologies, and the extent to which we enter into collaborative relationships with pharmaceutical and biotechnology companies.

At June 30, 2005, we had available cash, cash equivalents, and marketable securities of approximately $2,661,000 and working capital of approximately $1,158,000. The cash, cash equivalents, and marketable securities available at June 30, 2005 will not provide sufficient working capital to meet our anticipated expenditures for the next twelve months. We believe that the cash, cash equivalents, and marketable securities available at June 30, 2005 and our ability to control certain costs, including those related to clinical trial programs, pre-clinical activities, and certain general and administrative expenses will enable us to meet our anticipated cash expenditures into September 2005. We will therefore need to immediately raise additional capital through a collaboration, merger or other transaction with other pharmaceutical or biotechnology companies, or through a debt financing or equity offering in order to continue as a going concern. We are currently engaged in fundraising efforts. There can be no assurance, however, that we will be successful or that additional funds will be available on acceptable terms, if at all.

Contractual Obligations and Commitments

In June 2005, we entered into a noncancelable operating lease agreement for new office space in Hopkinton, Massachusetts to house our executive and certain research and administrative personnel. The new lease is for approximately 5,300 square feet of space resulting in annual rent expense of approximately $120,000. We believe that we will be able to, and intend to, sublease a substantial portion of the space available in our Boston, Massachusetts facility. We expect that there may be a shortfall between the remaining lease payments and any proposed sublease payments. We will record any charge related to this potential shortfall when, and if, we vacate this facility. In August 2005, we entered into a noncancelable operating lease agreement in Woburn, Massachusetts to house certain research and administrative personnel. The new lease is for approximately 2,500 square feet of space resulting in annual rent expense of approximately $42,000. The lease agreement expires in August 2006.

New Accounting Pronouncements

In December 2004, the FASB issued SFAS 123(R). SFAS 123(R) revises SFAS No. 123, supersedes APB 25, and amends FASB No. 95. SFAS 123(R) requires companies to expense the fair value of employee stock options and other forms of stock-based compensation over the employees’ service period. Compensation cost is measured at the fair value of the award at the grant date and adjusted to reflect actual forfeitures and the outcome of certain conditions. The fair value of an award is not re-measured after its initial estimation on the grant date. In March 2005, the SEC issued SAB 107. SAB 107 expresses views of the SEC regarding the interaction between SFAS 123R and certain SEC rules and regulations and provides the SEC’s views regarding the valuation of share-based payment arrangements for public companies. In December 2004, the FASB determined that the effective date of SFAS 123(R) should be the first interim or annual reporting period that begins after June 15, 2005. In April 2005, the SEC amended the effective compliance date to be the first annual reporting period beginning on or after June 15, 2005. Therefore, the Company is required to be compliant beginning January 1, 2006. The Company is evaluating if the adoption of SFAS 123(R) and SAB 107 will have a material impact on its results of operations and earnings per share. The Company is also evaluating the requirements of SFAS 123(R) and SAB 107 and has not yet determined the method of adoption or whether this adoption will result in amounts that are similar to the current pro forma disclosures under SFAS No. 123 as set forth in Note 4.

In May 2005, the FASB issued SFAS No. 154. This statement changes the requirements for the accounting for and reporting of a change in accounting principle and applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. When a pronouncement includes specific transition provisions, those provisions should be followed. APB No. 20 required that most voluntary changes in accounting principle be recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. This statement requires retrospective application to prior period financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. The provisions of SFAS 154 are effective for fiscal years beginning after December 15, 2005. We do not expect this statement to have a material impact on our financial condition or our results of operations.

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Risk Factors

We operate in a rapidly changing environment that involves a number of risks, some of which are beyond our control. The following discussion highlights some of these risks and others are discussed elsewhere herein.

Risks Related to our Financial Results and Need for Additional Financing

WE ARE A DEVELOPMENT STAGE COMPANY. WE HAVE INCURRED LOSSES FROM OUR OPERATIONS SINCE INCEPTION AND ANTICIPATE LOSSES FOR THE FORESEEABLE FUTURE. WE WILL NOT BE ABLE TO ACHIEVE PROFITABILITY UNLESS WE OBTAIN REGULATORY APPROVAL AND MARKET ACCEPTANCE OF OUR PRODUCT CANDIDATES.

Biotechnology companies that have no approved products or other sources of revenue are generally referred to as development stage companies. The majority of biotechnology companies are development stage companies. As of June 30, 2005, we had incurred cumulative net losses of approximately $110,400,000 since inception. We have never generated revenues from product sales and we do not currently expect to generate revenues from product sales for at least the next three years. If we do generate revenues and operating profits in the future, our ability to continue to do so in the long term could be affected by the introduction of competitors’ products and other market factors. We expect to incur significant operating losses for at least the next three years. The level of our operating losses may increase in the future if more of our product candidates begin human clinical trials. We will never generate revenues or achieve profitability unless we obtain regulatory approval and market acceptance of our product candidates. This will require us to be successful in a range of challenging activities, including clinical trial stages of development, obtaining regulatory approval for our product candidates, and manufacturing, marketing and selling them. We may never succeed in these activities, and may never generate revenues that are significant enough to achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.

WE WILL NEED SUBSTANTIAL ADDITIONAL FUNDING IN ORDER TO CONTINUE OUR BUSINESS AND OPERATIONS. IF WE ARE UNABLE TO SECURE SUCH FUNDING ON ACCEPTABLE TERMS, WE MAY NEED TO SIGNIFICANTLY REDUCE, DELAY OR CEASE ONE OR MORE OF OUR RESEARCH OR DEVELOPMENT PROGRAMS, OR SURRENDER RIGHTS TO SOME OR ALL OF OUR TECHNOLOGIES.

We require significant funds to conduct research and development activities, including pre-clinical studies and clinical trials of our technologies, and to commercialize our product candidates. Because the successful development of our product candidates is uncertain, we are unable to estimate the actual funds we will require to develop and commercialize them. Our funding requirements depend on many factors, including:

• The scope, rate of progress and cost of our clinical trials and other research and development activities;

• Future clinical trial results;

• The terms and timing of any collaborative, licensing and other arrangements that we may establish;

• The cost and timing of regulatory approvals and of establishing sales, marketing and distribution capabilities;

• The cost of establishing clinical and commercial supplies of our product candidates and any products that we may develop;

• The cost of obtaining and maintaining licenses to use patented technologies;

• The effect of competing technological and market developments; and

• The cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights and other patent-related costs, including litigation costs and the results of such litigation.

Until such time, if ever, as we can generate substantial revenue from product sales or through collaborative arrangements with third parties, we may need to raise additional capital. To date, we have experienced negative cash flows from operations and have funded our operations primarily from equity financings. Additional funds may not be available to us on acceptable terms or at all. If adequate funds are not readily available, we may need to significantly reduce or even cease one or more of our research or development programs. Alternatively, to secure such funds, we may be required to enter financing arrangements with others that may require us to surrender rights to some or all of our technologies or grant licenses on terms that are not favorable to us. If the results of our current or future clinical trials are not favorable, it may negatively affect our ability to raise additional funds. If we are successful in obtaining additional equity financing, the terms of such financing will have the effect of diluting the holdings and the rights of our shareholders. Estimates about how much funding will be required are based on a number of assumptions, all of which are subject to change based on the results and progress of our research and development activities.

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For the foreseeable future, we expect to experience continuing operating losses and negative cash flows from operations as management executes our current business plan. The cash, cash equivalents, and marketable securities available at June 30, 2005 will not provide sufficient working capital to meet our anticipated expenditures for the next twelve months. We believe that the cash, cash equivalents, and marketable securities available at June 30, 2005 and our ability to control certain costs, including those related to clinical trial programs, pre-clinical activities, and certain general and administrative expenses will enable us to meet our anticipated cash expenditures into September 2005. We will therefore need to immediately raise additional capital through a collaboration, merger or other transaction with other pharmaceutical or biotechnology companies, or through a debt financing or equity offering in order to continue as a going concern. We are currently engaged in fundraising efforts. There can be no assurance, however, that we will be successful or that additional funds will be available on acceptable terms, if at all.

Our ability to continue development of our programs, including POET-1 and POET-2, the Phase II trial of ALTROPANE molecular imaging agent as a diagnostic for ADHD, and our pre-clinical programs including Inosine and O-1369 may be affected by the availability of financial resources to fund each program. Financial considerations may cause us to modify planned development activities for one or more of our programs, and we may decide to suspend development of one or more programs until we are able to secure additional working capital. If we are not immediately able to raise additional capital, we will not have sufficient funds to complete POET-1, POET-2 or the Phase II trial of ALTROPANE molecular imaging agent as a diagnostic for ADHD.

Risks Related to Commercialization

OUR SUCCESS DEPENDS ON OUR ABILITY TO SUCCESSFULLY DEVELOP OUR PRODUCT CANDIDATES INTO COMMERCIAL PRODUCTS.

To date, we have not marketed, distributed or sold any products and, with the exception of the ALTROPANE molecular imaging agent, all of our technologies and early-stage product candidates are in pre-clinical development. The success of our business depends primarily upon our ability to successfully develop and commercialize our product candidates. Successful research and product development in the biotechnology industry is highly uncertain, and very few research and development projects produce a commercial product. In the biotechnology industry, it has been estimated that less than five percent of the technologies for which research and development efforts are initiated ultimately result in an approved product. If we are unable to successfully commercialize the ALTROPANE molecular imaging agent or any of our other product candidates, our business would be materially harmed.

EVEN IF WE RECEIVE APPROVAL TO MARKET OUR DRUG CANDIDATES, THE MARKET MAY NOT BE RECEPTIVE TO OUR DRUG CANDIDATES UPON THEIR COMMERCIAL INTRODUCTION, WHICH COULD PREVENT US FROM SUCCESSFULLY COMMERCIALIZING OUR PRODUCTS AND FROM BEING PROFITABLE.

Even if our drug candidates are successfully developed, our success and growth will also depend upon the acceptance of these drug candidates by physicians and third-party payors. Acceptance of our product development candidates will be a function of our products being clinically useful, being cost effective and demonstrating superior diagnostic or therapeutic effect with an acceptable side effect profile as compared to existing or future treatments. In addition, even if our products achieve market acceptance, we may not be able to maintain that market acceptance over time.

Factors that we believe will materially affect market acceptance of our drug candidates under development include:

• The timing of our receipt of any marketing approvals, the terms of any approval and the countries in which approvals are obtained;

• The safety, efficacy and ease of administration of our products;

• The competitive pricing of our products;

• The success of our education and marketing programs;

• The sales and marketing efforts of competitors; and

• The availability and amount of government and third-party payor reimbursement.

If our products do not achieve market acceptance, we will not be able to generate sufficient revenues from product sales to maintain or grow our business.

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Risk Related to Regulation

IF OUR PRE-CLINICAL TESTING AND CLINICAL TRIALS ARE NOT SUCCESSFUL, WE WILL NOT OBTAIN REGULATORY APPROVAL FOR COMMERCIAL SALE OF OUR PRODUCT CANDIDATES.

We will be required to demonstrate, through pre-clinical testing and clinical trials, that our product candidates are safe and effective before we can obtain regulatory approval for the commercial sale of our product candidates. Pre-clinical testing and clinical trials are lengthy and expensive and the historical rate of failure for product candidates is high. Product candidates that appear promising in the early phases of development, such as in pre-clinical study or in early human clinical trials, may fail to demonstrate safety and efficacy in clinical trials.

Except for the ALTROPANE molecular imaging agent, we have not yet received IND approval from the FDA for our other product candidates which will be required before we can begin clinical trials in the United States. We may not submit INDs for our product candidates if we are unable to accumulate the necessary pre-clinical data for the filing of an IND. The FDA may request additional pre-clinical data before allowing us to commence clinical trials. As an example, the FDA has requested additional information before it will consider approving our IND filing for one of our product candidates, Inosine. The FDA or other applicable regulatory authorities may suspend clinical trials of a drug candidate at any time if we or they believe the subjects or patients participating in such trials are being exposed to unacceptable health risks or for other reasons. Adverse side effects of a drug candidate on subjects or patients in a clinical trial could result in the FDA or foreign regulatory authorities refusing to approve a particular drug candidate for any or all indications of use.

We are currently enrolling patients in POET-1 and have a written agreement with the FDA relating to the design and analysis of the study protocol for this Phase III trial. The primary endpoint of POET-1 and POET-2 will be confirmation of the hypothesis that the diagnostic accuracy of ALTROPANE is significantly superior to the diagnostic accuracy of the internist or general practitioner, when compared against the “gold standard” of diagnosis by an MDS. We will need to complete the studies and obtain successful results prior to the filing of an NDA for ALTROPANE. Even if successfully completed, there is no assurance that these Phase III clinical trials will be sufficient to achieve the approvability of ALTROPANE molecular imaging agent.

Clinical trials require sufficient patient enrollment which is a function of many factors, including the size of the potential patient population, the nature of the protocol, the availability of existing treatments for the indicated disease and the eligibility criteria for enrolling in the clinical trial. Delays or difficulties in completing patient enrollment can result in increased costs and longer development times.

We cannot predict whether we will encounter problems with any of our completed, ongoing or planned clinical trials that will cause us or regulatory authorities to delay or suspend those trials, or delay the analysis of data from our completed or ongoing clinical trials. Any of the following could delay the initiation or the completion of our ongoing and planned clinical trials:

• Ongoing discussions with the FDA or comparable foreign authorities regarding the scope or design of our clinical trials;

• Delays in enrolling patients and volunteers into clinical trials;

• Lower than anticipated retention rate of patients and volunteers in clinical trials;

• Negative or inconclusive results of clinical trials or adverse medical events during a clinical trial could cause a clinical trial to be repeated or a program to be terminated, even if other studies or trials related to the program are successful;

• Insufficient supply or deficient quality of drug candidate materials or other materials necessary for the conduct of our clinical trials;

• Serious and unexpected drug-related side-effects experienced by participants in our clinical trials; or

• The placement of a clinical trial on hold.

OUR PRODUCT CANDIDATES ARE SUBJECT TO RIGOROUS REGULATORY REVIEW AND, EVEN IF APPROVED, REMAIN SUBJECT TO EXTENSIVE REGULATION.

Our technologies and product candidates must undergo a rigorous regulatory approval process which includes extensive pre-clinical and clinical testing to demonstrate safety and efficacy before any resulting product can be marketed. Our research and development activities are regulated by a number of government authorities in the United States and other countries, including the FDA pursuant to the Federal Food, Drug, and Cosmetic Act. The clinical trial and regulatory approval process usually requires many years and substantial cost. To date, neither the FDA nor any of its international equivalents has approved any of our product candidates for marketing.

The FDA regulates pharmaceutical products in the United States, including their testing, manufacturing and marketing. Data obtained from testing is subject to varying interpretations which can delay, limit or prevent FDA approval. The FDA has stringent laboratory and manufacturing standards which must be complied with before we can test our product candidates in people or make them commercially available. Examples of these standards include Good Laboratory Practices, or GLP, and Good Manufacturing

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Practices, or GMP. Our compliance with these standards are subject to initial certification by independent inspectors and continuing audits thereafter. Obtaining FDA approval to sell our product candidates is time-consuming and expensive. The FDA usually takes at least 12 to 18 months to review an NDA which must be submitted before the FDA will consider granting approval to sell a product. If the FDA requests additional information, it may take even longer for them to make a decision especially if the additional information that they request requires us to complete additional studies. We may encounter similar delays in foreign countries. After reviewing any NDA we submit, the FDA or its foreign equivalents may decide not to approve our products. Failure to obtain regulatory approval for a product candidate will prevent us from commercializing our product candidates.

Other risks associated with the regulatory approval process include:

• Regulatory approvals may impose significant limitations on the uses for which any approved products may be marketed;

• Any marketed product and its manufacturer are subject to periodic reviews and audits, and any discovery of previously unrecognized problems with a product or manufacturer could result in suspension or limitation of approvals;

• Changes in existing regulatory requirements, or the enactment of additional regulations or statutes, could prevent or affect the timing of our ability to achieve regulatory compliance. Federal and state laws, regulations and policies may be changed with possible retroactive effect, and how these rules actually operate can depend heavily on administrative policies and interpretation over which we have no control, and we may possess inadequate experience to assess their full impact upon our business; and

• The approval may impose significant restrictions on the indicated uses, conditions for use, labeling, advertising, promotion, marketing and/or production of such product, and may impose ongoing requirements for post-approval studies, including additional research and development and clinical trials.

OUR PRODUCTS COULD BE SUBJECT TO RESTRICTIONS OR WITHDRAWAL FROM THE MARKET AND WE MAY BE SUBJECT TO PENALTIES IF WE FAIL TO COMPLY WITH REGULATORY REQUIREMENTS, OR IF WE EXPERIENCE UNANTICIPATED PROBLEMS WITH OUR PRODUCTS, WHEN AND IF ANY OF THEM ARE APPROVED.

Any product for which we obtain marketing approval, along with the manufacturing processes, post-approval clinical data, labeling, advertising and promotional activities for such product, will be subject to continual requirements of and review by the FDA and other regulatory bodies. These requirements include submissions of safety and other post-marketing information and reports, registration requirements, quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of samples to physicians and recordkeeping. The manufacturer and the manufacturing facilities we use to make any of our product candidates will also be subject to periodic review and inspection by the FDA. The subsequent discovery of previously unknown problems with a product, manufacturer or facility may result in restrictions on the product or manufacturer or facility, including withdrawal of the product from the market. Even if regulatory approval of a product is granted, the approval may be subject to limitations on the indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product. Later discovery of previously unknown problems with our products, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in:

• Restrictions on such products, manufacturers or manufacturing processes;

• Warning letters;

• Withdrawal of the products from the market;

• Refusal to approve pending applications or supplements to approved applications that we submit;

• Voluntary or mandatory recall;

• Fines;

• Suspension or withdrawal of regulatory approvals;

• Refusal to permit the import or export of our products;

• Product seizure; and

• Injunctions or the imposition of civil or criminal penalties.

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FAILURE TO OBTAIN REGULATORY APPROVAL IN FOREIGN JURISDICTIONS WOULD PREVENT US FROM MARKETING OUR PRODUCTS ABROAD.

Although we have not initiated any marketing efforts in foreign jurisdictions, we intend in the future to market our products outside the United States. In order to market our products in the European Union and many other foreign jurisdictions, we must obtain separate regulatory approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval abroad may differ from that required to obtain FDA approval. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval and we may not obtain foreign regulatory approvals on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries or approval by the FDA. We may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize our products in any market outside the United States. The failure to obtain these approvals could materially adversely affect our business, financial condition and results of operations.

FOREIGN GOVERNMENTS TEND TO IMPOSE STRICT PRICE CONTROLS WHICH MAY ADVERSELY AFFECT OUR REVENUES, IF ANY.

The pricing of prescription pharmaceuticals is subject to governmental control in some foreign countries. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available therapies. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be adversely affected.

Risks Related to our Intellectual Property

IF WE ARE UNABLE TO SECURE ADEQUATE PATENT PROTECTION FOR OUR TECHNOLOGIES, THEN WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY AS A BIOTECHNOLOGY COMPANY.

At the present time, we do not have patent protection for all uses of our technologies. There is significant competition in the field of CNS diseases, our primary scientific area of research and development. Our competitors may seek patent protection for their technologies, and such patent applications or rights might conflict with the patent protection that we are seeking for our technologies. If we do not obtain patent protection for our technologies, or if others obtain patent rights that block our ability to develop and market our technologies, our business prospects may be significantly and negatively affected. Further, even if patents can be obtained, these patents may not provide us with any competitive advantage if our competitors have stronger patent positions or if their product candidates work better in clinical trials than our product candidates. Our patents may also be challenged, narrowed, invalidated or circumvented, which could limit our ability to stop competitors from marketing similar products or limit the length of term of patent protection we may have for our products.

Our patent strategy is to obtain broad patent protection, in the United States and in major developed countries, for our technologies and their related medical indications. Risks associated with protecting our patent and proprietary rights include the following:

• Our ability to protect our technologies could be delayed or negatively affected if the United States Patent and Trademark Office, the USPTO, requires additional experimental evidence that our technologies work;

• Our competitors may develop similar technologies or products, or duplicate any technology developed by us;

• Our competitors may develop products which are similar to ours but which do not infringe our patents or products;

• Our competitors may successfully challenge one or more of our patents in an interference or litigation proceeding;

• Our patents may infringe the patents or rights of other parties who may decide not to grant a license to us. We may have to change our products or processes, pay licensing fees or stop certain activities because of the patent rights of third parties which could cause additional unexpected costs and delays;

• Patent law in the fields of healthcare and biotechnology is still evolving and future changes in such laws might conflict with our existing and future patent rights, or the rights of others;

• Our collaborators, employees and consultants may breach the confidentiality agreements that we enter into to protect our trade secrets and propriety know-how. We may not have adequate remedies for such breach; and

• There may be disputes as to the ownership of technological information developed by consultants, scientific advisors or other third parties which may not be resolved in our favor.

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WE IN-LICENSE A SIGNIFICANT PORTION OF OUR INTELLECTUAL PROPERTY AND IF WE FAIL TO COMPLY WITH OUR OBLIGATIONS UNDER ANY OF THE RELATED AGREEMENTS, WE COULD LOSE LICENSE RIGHTS THAT ARE NECESSARY TO DEVELOP OUR PRODUCT CANDIDATES.

We are a party to and rely on a number of in-license agreements with third parties, such as those with Harvard and its Affiliates, that give us rights to intellectual property that is necessary for our business. In addition, we expect to enter into additional licenses in the future. Our current in-license arrangements impose various development, royalty and other obligations on us. If we breach these obligations and fail to cure such breach in a timely manner, these exclusive licenses could be converted to non-exclusive licenses or the agreements could be terminated, which would result in our being unable to develop, manufacture and sell products that are covered by the licensed technology.

IF WE BECOME INVOLVED IN PATENT LITIGATION OR OTHER PROCEEDINGS RELATED TO A DETERMINATION OF RIGHTS, WE COULD INCUR SUBSTANTIAL COSTS AND EXPENSES, SUBSTANTIAL LIABILITY FOR DAMAGES OR BE REQUIRED TO STOP OUR PRODUCT DEVELOPMENT AND COMMERCIALIZATION EFFORTS.

A third party may sue us for infringing its patent rights. Likewise, we may need to resort to litigation to enforce a patent issued or licensed to us or to determine the scope and validity of third-party proprietary rights. In addition, a third party may claim that we have improperly obtained or used its confidential or proprietary information. There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical and biotechnology industries. In addition to infringement claims against us, we may become a party to other patent litigation and other proceedings, including interference proceedings declared against us by the USPTO, regarding intellectual property rights with respect to our products and technology. The cost to us of any litigation or other proceeding relating to intellectual property rights, even if resolved in our favor, could be substantial, and the litigation would divert our management’s efforts. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. Uncertainties resulting from the initiation and continuation of any litigation could limit our ability to continue our operations.

If any parties successfully claim that our creation or use of proprietary technologies infringes upon their intellectual property rights, we might be forced to pay damages, potentially including treble damages, if we are found to have willfully infringed on such parties’ patent rights. In addition to any damages we might have to pay, a court could require us to stop the infringing activity or obtain a license. Any license required under any patent may not be made available on commercially acceptable terms, if at all. In addition, such licenses are likely to be non-exclusive and, therefore, our competitors may have access to the same technology licensed to us. If we fail to obtain a required license and are unable to design around a patent, we may be unable to effectively market some of our technology and products, which could limit our ability to generate revenues or achieve profitability and possibly prevent us from generating revenue sufficient to sustain our operations. We might be required to redesign the formulation of a product candidate so that it does not infringe, which may not be possible or could require substantial funds and time. Ultimately, we could be prevented from commercializing a product or be forced to cease some aspect of our business operations if we are unable to enter into license agreements that are acceptable to us. Moreover, we expect that a number of our collaborations will provide that royalties payable to us for licenses to our intellectual property may be offset by amounts paid by our collaborators to third parties who have competing or superior intellectual property positions in the relevant fields, which could result in significant reductions in our revenues from products developed through collaborations.

CONFIDENTIALITY AGREEMENTS WITH EMPLOYEES AND OTHERS MAY NOT ADEQUATELY PREVENT DISCLOSURE OF TRADE SECRETS AND OTHER PROPRIETARY INFORMATION.

In order to protect our proprietary technology and processes, we rely in part on confidentiality agreements with our collaborators, employees, consultants, outside scientific collaborators and sponsored researchers, and other advisors. These agreements may be breached, may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover trade secrets and proprietary information, and in such cases we could not assert any trade secret rights against such party. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

Risks Related to our Dependence on Third Parties

IF ANY COLLABORATOR TERMINATES OR FAILS TO PERFORM ITS OR THEIR OBLIGATIONS UNDER AGREEMENTS WITH US, THE DEVELOPMENT AND COMMERCIALIZATION OF OUR PRODUCT CANDIDATES COULD BE DELAYED OR TERMINATED.

We are dependent on expert advisors and our collaborations with research and development service providers. Our business could be adversely affected if any collaborator terminates its collaboration agreement with us or fails to perform its obligations under that agreement. Most biotechnology and pharmaceutical companies have established internal research and development programs, including their own facilities and employees which are under their direct control. By contrast, we have limited internal research

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capability and have elected to outsource substantially all of our research and development, pre-clinical and clinical activities. As a result, we are dependent upon our network of expert advisors and our collaborations with other research and development service providers for the development of our technologies and product candidates. These expert advisors are not our employees but provide us with important information and knowledge that may enhance our product development strategies and plans. Our collaborations with research and development service providers are important for the testing and evaluation of our technologies, in both the pre-clinical and clinical stages.

Many of our expert advisors are employed by, or have their own collaborative relationship with Harvard University and its affiliated hospitals, or Harvard and its Affiliates. A summary of the key scientific, research and development professionals with whom we work, and a composite of their professional background and affiliations is as follows:

• Larry I. Benowitz, Ph.D., Director, Laboratories for Neuroscience Research in Neurosurgery, Children’s Hospital, Boston; Associate Professor of Neuroscience, Department of Surgery, Harvard Medical School.

• Joseph R. Bianchine, M.D., Ph.D., F.A.C.P., F.A.C.C.P., Scientific Advisory Board Member, Boston Life Sciences, Inc.; Senior Scientific Advisor, Schwarz Pharma AG.

• Alan J. Fischman, M.D., Ph.D., Director, Department of Nuclear Medicine, Massachusetts General Hospital; Professor of Radiology, Harvard Medical School.

• Robert S. Langer, Jr. Sc.D., Institute Professor of Chemical and Biomedical Engineering, Massachusetts Institute of Technology.

• Marc E. Lanser, M.D., Scientific Advisory Board Member, Boston Life Sciences, Inc.; President and CEO FluoroPharma.

• Robert Licho, M.D., Chief, Division of Nuclear Medicine, UMass Memorial Medical Center; Associate Professor, University of Massachusetts Medical School.

• Peter Meltzer, Ph.D., President, Organix, Inc., Woburn, MA.

Dr. Benowitz, Dr. Bianchine, Dr. Lanser and Dr. Licho provide scientific consultative services resulting in total payments of approximately $200,000 per year. Dr. Benowitz provides scientific consultative services primarily related to the research and development of Inosine and MDP14. Dr. Licho provides scientific consultative services primarily related to the research and development of ALTROPANE molecular imaging agent. Dr. Bianchine and Dr. Lanser provide scientific consultative services as members of our Scientific Advisory Board.

We do not have a formal agreement with Dr. Meltzer individually but do enter into research and development contracts from time to time with Organix, Inc., of which Dr. Meltzer is president.

Our collaborations with Harvard and its Affiliates and other institutions include:

• Children’s Hospital in Boston, Massachusetts where certain of our collaborating scientists perform their research efforts;

• Organix in Woburn, Massachusetts which manufactures our compounds for the treatment of PD and provides non-radioactive ALTROPANE for FDA mandated studies;

• Harvard Medical School in Boston, Massachusetts where certain of our collaborating scientists perform their research efforts;

• MDS Nordion in Vancouver, British Colombia which manufactures the ALTROPANE molecular imaging agent;

• Chemic Laboratories in Canton, Massachusetts which provides ALTROPANE raw material and performs certain analytic services for our pre-clinical programs;

• Bio-Concept in Derry, New Hampshire which performs certain analytic and packaging services for us; and

• Charles River Laboratories in Worcester, Massachusetts which conducts pre-clinical toxicology and efficacy studies for us.

We generally have a number of collaborations with research and development service providers ongoing at any point in time. These agreements generally cover a specific project or study, are usually for a duration between one month to one year, and expire upon completion of the project. Under these agreements, we are usually required to make an initial payment upon execution of the agreement with the remaining payments based upon the completion of certain specified milestones such as completion of a study or delivery of a report.

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We cannot control the amount and timing of resources our advisors and collaborators devote to our programs or technologies. Our advisors and collaborators may have employment commitments to, or consulting or advisory contracts with, other entities that may limit their availability to us. If any of our advisors or collaborators were to breach or terminate their agreement with us or otherwise fail to conduct their activities successfully and in a timely manner, the pre-clinical or clinical development or commercialization of our technologies and product candidates or our research programs could be delayed or terminated. Any such delay or termination could have a material adverse effect on our business, financial condition or results of operations.

Disputes may arise in the future with respect to the ownership of rights to any technology developed with our advisors or collaborators. These and other possible disagreements could lead to delays in the collaborative research, development or commercialization of our technologies, or could require or result in litigation to resolve. Any such event could have a material adverse effect on our business, financial condition or results of operations.

Our advisors and collaborators sign agreements that provide for confidentiality of our proprietary information. Nonetheless, they may not maintain the confidentiality of our technology and other confidential information in connection with every advisory or collaboration arrangement, and any unauthorized dissemination of our confidential information could have a material adverse effect on our business, financial condition or results of operations.

IF WE ARE UNABLE TO MAINTAIN OUR KEY WORKING RELATIONSHIPS WITH HARVARD AND ITS AFFILIATES, WE MAY NOT BE SUCCESSFUL SINCE SUBSTANTIALLY ALL OF OUR CURRENT TECHNOLOGIES WERE LICENSED FROM, AND MOST OF OUR RESEARCH AND DEVELOPMENT ACTIVITIES WERE PERFORMED BY, HARVARD AND ITS AFFILIATES.

Historically, we have been heavily dependent on our relationship with Harvard and its Affiliates because substantially all of our technologies were licensed from, and most of our research and development activities were performed by, Harvard and its Affiliates. Now that a portion of our early-stage research at Harvard and its Affiliates has yielded an identified product in each area of research, we have begun and expect to continue to conduct much of our later stage development work and all of our formal pre-clinical and clinical programs outside of Harvard and its Affiliates. Nevertheless, the originating scientists still play important advisory roles. Each of our collaborative research agreements is managed by a sponsoring scientist and/or researcher who has his or her own independent affiliation with Harvard and its Affiliates.

Under the terms of our license agreements with Harvard and its Affiliates, we acquired the exclusive, worldwide license to make, use, and sell the technology covered by each respective license agreement. Among other things, the technologies licensed under these agreements include:

• ALTROPANE molecular imaging agent compositions and methods of use; and

• Inosine compositions and methods of use.

Generally, each license agreement is effective until the patent relating to the technology expires. The patents on the ALTROPANE molecular imaging agent expire beginning in 2013. The patents on Inosine expire in 2017.

We are required to make certain licensing and related payments to Harvard and its Affiliates which generally include:

• An initial licensing fee payment upon the execution of the agreement;

• Reimbursement payments for all patent related costs incurred by Harvard and its Affiliates;

• Milestone payments as licensed technology progresses through each stage of development (filing of IND, completion of one or more clinical stages and submission and approval of an NDA); and

• Royalty payments on the sales of any products based on the licensed technology.

Since inception, we have paid Harvard and its Affiliates under the terms of our current License Agreements approximately $800,000 in initial licensing fees and milestone payments. The License Agreements obligate us to pay up to an aggregate of $4,220,000 in milestone payments in the future. These future milestone payments are generally payable only upon the completion of later stage clinical trials and the filing of an NDA or similar application seeking product approval. Most of these contingent milestone payments are associated with technologies that are presently in early stage development. Two of our early-stage licenses with Harvard University were terminated during the three months ended June 30, 2005, resulting in lower potential future milestone payments.

We have entered into a small number of sponsored research agreements with Harvard and its Affiliates. Under these agreements, we provide funding so that the sponsoring scientists can continue their research efforts. These payments are generally made in equal quarterly installments over the term of the agreements which are usually for one year.

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Universities and other not-for-profit research institutions are becoming increasingly aware of the commercial value of their findings and are becoming more active in seeking patent protection and licensing arrangements to collect royalties for the use of technology that they have developed. While this increased awareness will not impact our rights to previously licensed technologies, it may make it more costly and difficult for us to obtain the licensing rights to new scientific discoveries at Harvard and its Affiliates.

IF WE ARE UNABLE TO ESTABLISH, MAINTAIN AND RELY ON NEW COLLABORATIVE RELATIONSHIPS, THEN WE MAY NOT BE ABLE TO SUCCESSFULLY DEVELOP AND COMMERCIALIZE OUR TECHNOLOGIES.

To date, our operations have primarily focused on the pre-clinical development of most of our technologies, as well as conducting clinical trials for certain of our technologies. We currently expect that the continued development of our technologies will result in the initiation of additional clinical trials. We expect that these developments will require us to establish, maintain and rely on new collaborative relationships in order to successfully develop and commercialize our technologies. We face significant competition in seeking appropriate collaborators. Collaboration arrangements are complex to negotiate and time consuming to document. We may not be successful in our efforts to establish additional collaborations or other alternative arrangements, and the terms of any such collaboration or alternative arrangement may not be favorable to us. There is no certainty that:

• We will be able to enter into such collaborations on economically feasible and otherwise acceptable terms and conditions;

• That such collaborations will not require us to undertake substantial additional obligations or require us to devote additional resources beyond those we have identified at present;

• That any of our collaborators will not breach or terminate their agreements with us or otherwise fail to conduct their activities on time, thereby delaying the development or commercialization of the technology for which the parties are collaborating; and

• The parties will not dispute the ownership rights to any technologies developed under such collaborations.

IF ONE OF OUR COLLABORATORS WERE TO CHANGE ITS STRATEGY OR THE FOCUS OF ITS DEVELOPMENT AND COMMERCIALIZATION EFFORTS WITH RESPECT TO OUR RELATIONSHIP, THE SUCCESS OF OUR PRODUCT CANDIDATES AND OUR OPERATIONS COULD BE ADVERSELY AFFECTED.

There are a number of factors external to us that may change our collaborators’ strategy or focus with respect to our relationship with them, including:

• The amount and timing of resources that our collaborators may devote to the product candidates;

• Our collaborators may experience financial difficulties;

• We may be required to relinquish important rights such as marketing and distribution rights;

• Should a collaborator fail to develop or commercialize one of our product candidates, we may not receive any future milestone payments and will not receive any royalties for the product candidate;

• Business combinations or significant changes in a collaborator’s business strategy may also adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement;

• A collaborator may not devote sufficient time and resources to any collaboration with us, which could prevent us from realizing the potential commercial benefits of that collaboration;

• A collaborator may terminate their collaborations with us, which could make it difficult for us to attract new collaborators or adversely affect how we are perceived in the business and financial communities; and

• A collaborator could move forward with a competing product candidate developed either independently or in collaboration with others, including our competitors.

If any of these occur, the development and commercialization of one or more drug candidates could be delayed, curtailed or terminated because we may not have sufficient financial resources or capabilities to continue such development and commercialization on our own.

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Risks Related to Competition

WE ARE ENGAGED IN HIGHLY COMPETITIVE INDUSTRIES DOMINATED BY LARGER, MORE EXPERIENCED AND BETTER CAPITALIZED COMPANIES.

The biotechnology and pharmaceutical industries are highly competitive, rapidly changing, and are dominated by larger, more experienced and better capitalized companies. Such greater experience and financial strength may enable them to bring their products to market sooner than us, thereby gaining the competitive advantage of being the first to market. Research on the causes of, and possible treatments for, diseases for which we are trying to develop therapeutic or diagnostic products are developing rapidly and there is a potential for extensive technological innovation in relatively short periods of time. Factors affecting our ability to successfully manage the technological changes occurring in the biotechnology and pharmaceutical industries, as well as our ability to successfully compete, include:

• Many of our potential competitors in the field of CNS research have significantly greater experience than we do in completing pre-clinical and clinical testing of new pharmaceutical products, the manufacturing and commercialization process, and obtaining FDA and other regulatory approvals of products;

• Many of our potential competitors have products that have been approved or are in late stages of development;

• Many of our potential competitors may develop products or other novel technologies that are more effective, safer or less costly than any that we are developing;

• Many of our potential competitors have collaborative arrangements in our target markets with leading companies and research institutions;

• The timing and scope of regulatory approvals for these products;

• The availability and amount of third-party reimbursement;

• The strength of our patent position;

• Many of our potential competitors are in a stronger financial position than us, and are thus better able to finance the significant cost of developing, manufacturing and selling new products; and

• Companies with established positions and prior experience in the pharmaceutical industry may be better able to develop and market products for the treatment of those diseases for which we are trying to develop products.

To our knowledge, there is only one company, GE Healthcare (formerly Nycomed/Amersham), that has marketed a diagnostic imaging agent for PD. To date, GE Healthcare has obtained marketing approval only in Europe, and to the best of our knowledge, is not presently seeking approval in the United States. However, GE Healthcare has significantly greater infrastructure and financial resources than us, and their decision to seek approval in the United States could significantly adversely affect our competitive position. Their established market presence, and greater financial strength in the European market will make it difficult for us to successfully market ALTROPANE in Europe.

IF WE ARE UNABLE TO COMPETE EFFECTIVELY, OUR PRODUCT CANDIDATES MAY BE RENDERED NONCOMPETITIVE OR OBSOLETE.

Our competitors may develop or commercialize more effective, safer or more affordable products, or obtain more effective patent protection, than we are able to. Accordingly, our competitors may commercialize products more rapidly or effectively than we are able to, which would adversely affect our competitive position, the likelihood that our product candidates will achieve initial market acceptance, and our ability to generate meaningful revenues from our product candidates. Even if our product candidates achieve initial market acceptance, competitive products may render our products obsolete, noncompetitive or uneconomical. If our product candidates are rendered obsolete, we may not be able to recover the expenses of developing and commercializing those product candidates.

IF WE ARE UNABLE TO OBTAIN ADEQUATE INSURANCE COVERAGE AND REIMBURSEMENT LEVELS FOR ANY OF OUR PRODUCTS WHICH ARE APPROVED AND ENTER THE MARKET, THEN THEY MAY NOT BE ACCEPTED BY PHYSICIANS AND PATIENTS.

Substantially all biotechnology products are distributed to patients by physicians and hospitals, and in most cases, such patients rely on insurance coverage and reimbursement to pay for some or all of the cost of the product. In recent years, the continuing efforts of government and third party payors to contain or reduce health care costs have limited, and in certain cases prevented, physicians and patients from receiving insurance coverage and reimbursement for medical products, especially newer technologies. Our ability to generate adequate revenues and operating profits could be adversely affected if such limitations or restrictions are placed on the sale of our products. Specific risks associated with medical insurance coverage and reimbursement include:

• Significant uncertainty exists as to the reimbursement status of newly approved health care products, and third-party payors are increasingly challenging the prices charged for medical products and services;

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• Adequate insurance coverage may not be available to allow us to charge prices for products which are adequate for us to realize an appropriate return on our development costs. If adequate coverage and reimbursement are not provided for use of our products, the market acceptance of these products will be negatively affected;

• Health maintenance organizations and other managed care companies may seek to negotiate substantial volume discounts for the sale of our products to their members thereby reducing our profit margins; and

• In recent years, other bills proposing comprehensive health care reform have been introduced in Congress that would potentially limit pharmaceutical prices and establish mandatory or voluntary refunds. It is uncertain if any legislative proposals will be adopted and how federal, state or private payors for health care goods and services will respond to any health care reforms.

IF THIRD-PARTY PAYORS DO NOT ADEQUATELY REIMBURSE CUSTOMERS FOR ANY OF OUR PRODUCT CANDIDATES THAT ARE APPROVED FOR MARKETING, THEY MIGHT NOT BE PURCHASED OR USED, AND OUR REVENUES AND PROFITS WILL NOT DEVELOP OR INCREASE.

We believe that the efforts of governments and third-party payors to contain or reduce the cost of healthcare will continue to affect the business and financial condition of pharmaceutical and biopharmaceutical companies such as us.

Obtaining reimbursement approval for a product from each governmental or other third-party payor is a time-consuming and costly process that could require us to provide supporting scientific, clinical and cost- effectiveness data for the use of our products to each payor. If we succeed in bringing any of our product candidates to market and third-party payors determine that the product is eligible for coverage, the third-party payors may establish and maintain price levels insufficient for us to realize a sufficient return on our investment in product development. Moreover, eligibility for coverage does not imply that any product will be reimbursed in all cases.

The Centers for Medicare and Medicaid Services, or CMS, the agency within the Department of Health and Human Services that administers Medicare and that is responsible for setting Medicare reimbursement payment rates and coverage policies for any product candidates that we commercialize, has authority to decline to cover particular drugs if it determines that they are not “reasonable and necessary” for Medicare beneficiaries or to cover them at lower rates to reflect budgetary constraints or to match previously approved reimbursement rates for products that CMS considers to be therapeutically comparable. Third-party payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates, and both Medicare and other third-party payors may have sufficient market power to demand significant price reductions.

As a result of the trend towards managed healthcare in the United States, as well as legislative proposals to constrain the growth of federal healthcare program expenditures, third-party payors are increasingly attempting to contain healthcare costs by demanding price discounts or rebates and limiting both coverage and the level of reimbursement of new drug products. Consequently, significant uncertainty exists as to the reimbursement status of newly approved healthcare products.

THE RECENT MEDICARE PRESCRIPTION DRUG COVERAGE LEGISLATION AND FUTURE LEGISLATIVE OR REGULATORY REFORM OF THE HEALTH CARE SYSTEM MAY AFFECT OUR ABILITY TO SELL OUR PRODUCT CANDIDATES PROFITABLY.

A number of legislative and regulatory proposals to change the healthcare system in the United States and other major healthcare markets have been proposed in recent years. In addition, ongoing initiatives in the United States have exerted and will continue to exert pressure on drug pricing. In some foreign countries, particularly countries of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control. Significant changes in the healthcare system in the United States or elsewhere, including changes resulting from the implementation of the Medicare prescription drug coverage legislation and adverse trends in third-party reimbursement programs, could limit our ability to raise capital and successfully commercialize our product candidates.

In particular, the Medicare Prescription Drug Improvement and Modernization Act of 2003, which President Bush signed into law in December 2003, established a new Medicare prescription drug benefit. The prescription drug program and future amendments or regulatory interpretations of the legislation could have the effect of reducing the prices that we are able to charge for any products we develop and sell through Medicare. This prescription drug legislation and related amendments or regulations could also cause third-party payors other than the federal government, including the states under the Medicaid program, to discontinue coverage for any products we develop or to lower reimbursement amounts that they pay. The legislation changed the methodology used to calculate reimbursement for drugs that are administered in physicians’ offices in a manner intended to reduce the amount that is subject to reimbursement. In addition, beginning in January 2006, the legislation directs the Secretary of Health and Human Services to contract with procurement organizations to purchase physician-administered drugs from the manufacturers and provides physicians with the option to obtain drugs through these organizations as an alternative to purchasing from the manufacturers, which some physicians may

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find advantageous. Because we have not received marketing approval or established a price for any product, it is difficult to predict how this new legislation will affect us, but the legislation generally is expected to constrain or reduce reimbursement for certain types of drugs.

Further federal, state and foreign healthcare proposals and reforms are likely. While we cannot predict the legislative or regulatory proposals that will be adopted or what effect those proposals may have on our business, including the future reimbursement status of any of our product candidates, the announcement or adoption of such proposals could have an adverse effect on potential revenues from product candidates that we may successfully develop.

WE HAVE LIMITED MANUFACTURING CAPACITY AND MARKETING INFRASTRUCTURE AND EXPECT TO BE HEAVILY DEPENDENT UPON THIRD PARTIES TO MANUFACTURE AND MARKET APPROVED PRODUCTS.

We currently have limited manufacturing facilities for either clinical trial or commercial quantities of any of our product candidates and currently have no plans to obtain additional facilities. To date, we have obtained the limited quantities of drug product required for pre-clinical and clinical trials from contract manufacturing companies. We intend to continue using contract manufacturing arrangements with experienced firms for the supply of material for both clinical trials and any eventual commercial sale, with the exception of Troponin, which we presently plan to produce in our facility in Baltimore, Maryland.

We will depend upon third parties to produce and deliver products in accordance with all FDA and other governmental regulations. We may not be able to contract with manufacturers who can fulfill our requirements for quality, quantity and timeliness, or be able to find substitute manufacturers, if necessary. The failure by any third party to perform their obligations in a timely fashion and in accordance with the applicable regulations may delay clinical trials, the commercialization of products, and the ability to supply product for sale. In addition, any change in manufacturers could be costly because the commercial terms of any new arrangement could be less favorable and because the expenses relating to the transfer of necessary technology and processes could be significant.

With respect to our most advanced product candidate, ALTROPANE molecular imaging agent, we have entered into an agreement with, and are highly dependent upon, MDS Nordion. Under the terms of the agreement, which currently expires on December 31, 2005, we paid MDS Nordion a one-time fee of $300,000 in connection with its commitment to designate certain of its facilities exclusively for the production of the ALTROPANE molecular imaging agent. We also paid MDS Nordion approximately $900,000 to establish a GMP certified manufacturing process for the production of ALTROPANE. Finally, we agreed to minimum monthly purchases of ALTROPANE through December 31, 2005. The agreement provides for MDS Nordion to manufacture the ALTROPANE molecular imaging agent for our future clinical trials. The agreement also provides that MDS Nordion will compile and prepare the information regarding manufacturing that will be a required component of any NDA we file for ALTROPANE in the future. We do not presently have arrangements with any other suppliers in the event that Nordion is unable to manufacture ALTROPANE for us. We could encounter a significant delay before another supplier could manufacture ALTROPANE for us due to the time required to establish a GMP manufacturing process for ALTROPANE.

We currently have a limited marketing infrastructure. In order to earn a profit on any future product, we will be required to invest in the necessary sales and marketing infrastructure or enter into collaborations with third parties with respect to executing sales and marketing activities. We may encounter difficulty in negotiating sales and marketing collaborations with third parties on favorable terms for us. Most of the companies who can provide such services are financially stronger and more experienced in selling pharmaceutical products than we are. As a result, they may be in a position to negotiate an arrangement that is more favorable to them. We could experience significant delays in marketing any of our products if we are required to internally develop a sales and marketing organization or establish collaborations with a partner. There are risks involved with establishing our own sales and marketing capabilities. We have no experience in performing such activities and could incur significant costs in developing such a capability.

USE OF THIRD PARTY MANUFACTURERS MAY INCREASE THE RISK THAT WE WILL NOT HAVE ADEQUATE SUPPLIES OF OUR PRODUCT CANDIDATES.

Reliance on third party manufacturers entails risks to which we would not be subject if we manufactured product candidates or products ourselves, including:

• Reliance on the third party for regulatory compliance and quality assurance;

• The possible breach of the manufacturing agreement by the third party; and

• The possible termination or nonrenewal of the agreement by the third party, based on its own business priorities, at a time that is costly or inconvenient for us.

If we are not able to obtain adequate supplies of our product candidates and any approved products, it will be more difficult for us to develop our product candidates and compete effectively. Our product candidates and any products that we successfully develop may compete with product candidates and products of third parties for access to manufacturing facilities.

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Our contract manufacturers are subject to ongoing, periodic, unannounced inspection by the FDA and corresponding state and foreign agencies or their designees to ensure strict compliance with GMP regulations and other governmental regulations and corresponding foreign standards. We cannot be certain that our present or future manufacturers will be able to comply with GMP regulations and other FDA regulatory requirements or similar regulatory requirements outside the United States. We do not control compliance by our contract manufacturers with these regulations and standards. Failure of our third party manufacturers or us to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, failure of regulatory authorities to grant marketing approval of our product candidates, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates and products.

Risks Related to Employees and Growth

IF WE ARE UNABLE TO RETAIN OUR KEY PERSONNEL AND/OR RECRUIT ADDITIONAL KEY PERSONNEL IN THE FUTURE, THEN WE MAY NOT BE ABLE TO OPERATE EFFECTIVELY.

Our success depends significantly upon our ability to attract, retain and motivate highly qualified scientific and management personnel who are able to formulate, implement and maintain the operations of a biotechnology company such as ours. We consider retaining Peter Savas, our Chairman and Chief Executive Officer, Mark Pykett, our President and Chief Operating Officer and Kenneth L. Rice, Jr., our Executive Vice President Finance and Administration and Chief Financial Officer to be key to our efforts to develop and commercialize our product candidates. The loss of the service of any of these key executives may significantly delay or prevent the achievement of product development and other business objectives. We do not have employment agreements with any of these key executives, although we expect to enter into employment and non-compete agreements with Messrs. Savas, Pykett and Rice. We do not presently carry key person life insurance on any of our scientific or management personnel.

We currently outsource most of our research and development, pre-clinical and clinical activities. If we decide to increase our internal research and development capabilities for any of our technologies, we may need to hire additional key management and scientific personnel to assist the limited number of employees that we currently employ. There is significant competition for such personnel from other companies, research and academic institutions, government entities and other organizations. If we fail to attract such personnel, it could have a significant negative effect on our ability to develop our technologies.

Risks Related to our Stock

OUR STOCK PRICE MAY CONTINUE TO BE VOLATILE AND CAN BE AFFECTED BY FACTORS UNRELATED TO OUR BUSINESS AND OPERATING PERFORMANCE.

The market price of our common stock may fluctuate significantly in response to factors that are beyond our control. The stock market in general periodically experiences significant price and volume fluctuations. The market prices of securities of pharmaceutical and biotechnology companies have been volatile, and have experienced fluctuations that often have been unrelated or disproportionate to the operating performance of these companies. These broad market fluctuations could result in significant fluctuations in the price of our common stock, which could cause a decline in the value of your investment. The market price of our common stock may be influenced by many factors, including:

• Announcements of technological innovations or new commercial products by our competitors or us;

• Announcements in the scientific and research community;

• Developments concerning proprietary rights, including patents;

• Delay or failure in initiating, conducting, completing or analyzing clinical trials or problems relating to the design, conduct or results of these trials;

• Announcement of FDA approval or non-approval of our product candidates or delays in the FDA review process;

• Developments concerning our collaborations;

• Publicity regarding actual or potential medical results relating to products under development by our competitors or us;

• Failure of any of our product candidates to achieve commercial success;

• Our ability to manufacture products to commercial standards;

• Conditions and publicity regarding the life sciences industry generally;

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• Regulatory developments in the United States and foreign countries;

• Changes in the structure of health care payment systems;

• Period-to-period fluctuations in our financial results or those of companies that are perceived to be similar to us;

• Departure of our key personnel;

• Future sales of our common stock;

• Investors’ perceptions of us, our products, the economy and general market conditions;

• Differences in actual financial results versus financial estimates by securities analysts and changes in those estimates; and

• Litigation.

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Item 3 – Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes in the market risks reported in our Annual Report on Form 10-K for the year ended December 31, 2004, as amended. We generally maintain a portfolio of cash equivalents, and short-term and long-term marketable securities in a variety of securities which can include commercial paper, certificates of deposit, money market funds and government and non-government debt securities. The fair value of these available-for-sale securities are subject to changes in market interest rates and may fall in value if market interest rates increase. Our investment portfolio includes only marketable securities with active secondary or resale markets to help insure liquidity. We have implemented policies regarding the amount and credit ratings of investments. Due to the conservative nature of these policies, we do not believe we have material exposure due to market risk. We may not have the ability to hold our fixed income investments until maturity, and therefore our future operating results or cash flows could be affected if we are required to sell investments during a period in which increases in market interest rates have adversely affected the value of our securities portfolio.

Item 4 – Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2005. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of June 30, 2005, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended June 30, 2005 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 6: EXHIBITS

(a) Exhibits.

10.1	Severance and Settlement Agreement and Release dated June 9, 2005, by and between the Company and Marc E. Lanser M.D. (1)
10.2	Consulting Agreement, dated as of June 9, 2005, by and between the Company and Marc E. Lanser (1)
10.3	Lease, dated as of June 9, 2005, by and between the Company and Straly Corporation (relating to Hopkinton, Massachusetts lease) (1)
10.4	Amendment, dated May 11, 2004, to License Agreement between The President and Fellows of Harvard College and the Company dated March 15, 2000 (1)
10.5	Amendment, dated May 18, 2004, to License Agreement between Children’s Medical Center Corporation and the Company dated December 15, 1998 (1)
10.6	Amendment, dated May 7, 2004, to License Agreement between The President and Fellows of Harvard College and the Company dated December 10, 2003 (1)
31.1	Certification of the Chairman and Chief Executive Officer pursuant to Section 1350 of Title 18, United States Code, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (1)
31.2	Certification of the Chief Financial Officer pursuant to Section 1350 of Title 18, United States Code, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (1)
32.1	Certification of the Chairman and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (1)
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (1)

(1) Filed herewith.

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SIGNATURES

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

	BOSTON LIFE SCIENCES, INC
	(Registrant)
DATE: August 15, 2005	/s/ PETER G. SAVAS
	Peter G. Savas Chairman and Chief Executive Officer (Principal Executive Officer)
	/s/ KENNETH L. RICE, JR.
	Kenneth L. Rice, Jr. Executive Vice President Finance and Administration And Chief Financial Officer (Principal Financial and Accounting Officer)

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EX-10.1

Exhibit 10.1

SEVERANCE AND SETTLEMENT AGREEMENT AND RELEASE

AGREEMENT made as of the 9th day of June, 2005 (the “Agreement”) by and between Boston Life Sciences, Inc., a Delaware corporation (the “Company”) and Marc E. Lanser, M.D. of Fayston, Vermont (the “Executive”).

BACKGROUND

A. The Company and Executive are parties to an Employment Agreement dated June 10, 2004 (the “Employment Agreement”);

B. On May 5, 2005, Executive provided to the Company a letter of termination under the terms of Executive’s existing Employment Agreement;

C. Effective as of May 10, 2005, the Company notified the Executive in writing that its obligations under the Employment Agreement would be fulfilled and that the Employment Agreement would not be renewed;

D. The Executive hereby specifically acknowledges and agrees that the provisions of Sections 7, 8 and 9 of the Employment Agreement (as those provisions relate to the work performed by Executive under the terms of the Employment Agreement but not as to the work to be performed by Executive under the SAB Agreement, as such term is defined below) will survive termination of said Employment Agreement and remain binding on the Executive in accordance with the terms of such sections;

E. The Company and Executive wish to resolve amicably the Executive’s separation from the Company;

In consideration of the promises and conditions set forth herein, the sufficiency of which is hereby acknowledged, the Company and the Executive agree as follows:

1. Termination Date. The Executive’s effective date of termination from the Company is June 11, 2005 (the “Termination Date”).

2. Consideration. In consideration for the execution of this Agreement, and provided this Agreement becomes binding on the Executive, the Company agrees to provide Executive (or in the event of Executive’s death, Executive’s estate) the following payment and benefits, less any and all applicable state and federal tax withholdings:

(A) continued payment of Base Salary (as defined in the Employment Agreement) in the gross amount of $25,666.67 per month for the nine month period commencing on the Termination Date and ending on March 10, 2006;

(B) for a period of nine (9) months from the Termination Date, the same or equivalent medical, dental, life and disability insurance coverage that Executive had in force on the Termination Date, at the Company’s expense. Thereafter, Executive may elect to continue receiving group medical insurance pursuant to the federal “COBRA^” law, 29 U.S.C. § 1161 et seq.; and

Except for the payments provided for in the SAB Agreement referenced below and the vesting of options described in Paragraph 4 below, the foregoing provisions shall constitute the only payments and benefits payable by the Company to the Executive hereunder.

3. Scientific Advisory Board Consulting Agreement. As further consideration for execution of this Agreement and provided this Agreement becomes binding on the Executive, the parties agree to execute the SAB consulting agreement (the “SAB Agreement”) attached hereto as Exhibit A in substantially the same form as attached.

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4. Stock Options. Provided this Agreement becomes binding on the Executive, the parties agree as follows with respect to the stock options previously granted to the Executive (the “Executive Options”):

(A) Options to purchase 85,291 shares of common stock will be vested as of the Termination Date.

(B) Options (issued in March 2005) to purchase 107,314 shares of common stock that were not vested as of the Termination Date will continue to vest on their stated terms and conditions as long as the Executive continues to perform services under the Agreement.

(C) In the event that the SAB Agreement is terminated “without cause” (as defined in the SAB Agreement) by the Company prior to June 11, 2007, immediately upon such termination, all unvested options will vest automatically and will become fully exercisable.

(D) At such time as the SAB Agreement terminates or expires, the Executive shall be subject to the vesting and exercise provisions of the respective Stock Option Plan (each a “Plan”) under which each option was issued, unless the Company terminates the SAB Agreement without cause, in which event the options will become fully vested as described above. Each Plan provides for extended vesting and exercise rights upon termination subject to certain terms and conditions as described in each Plan. The parties agree that the termination date for purposes of determining extended vesting and exercise rights shall be the date on which the Executive ceases to perform services under the SAB Agreement

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on account of the termination or expiration of that agreement. The Company confirms that when the SAB Agreement expires or terminates_, notwithstanding any amendment to any Stock Option Plan after the date hereof, any options held by the Executive that were exercisable on the date of such expiration or termination may be exercised by the Executive for the later of: (i) a period of one year following the date of such expiration or termination, or (ii) a period of one year from the date any option vests in the twelve month period following such expiration or termination, and (B) any options held by the Executive that were not exercisable on the date of such expiration or termination will continue to vest in accordance with their original vesting schedule for a period of 12 months following the date of expiration or termination, and any options that vest during such 12-month period may be exercised by the Executive for a period of one year following the date of such vesting.

5. Release. In consideration of the payment of the consideration described above and the Company’s release of claims against Executive set forth below, which Executive acknowledges that he would not otherwise be entitled to receive, Executive hereby fully, forever, irrevocably and unconditionally releases, remises and discharges the Company, its officers, directors, stockholders, corporate affiliates, subsidiaries, parent companies, agents and employees (each in their individual and corporate capacities) (hereinafter, the “Released Parties”) from any and all claims, charges, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts, reckonings, covenants, contracts, agreements, promises, doings, omissions, damages, executions, obligations, liabilities, and expenses

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(including attorneys’ fees and costs), of every kind and nature which he ever had or now has against the Released Parties arising out of his employment with and/or separation from the Company, including, but not limited to, all claims pursuant to the Employment Agreement, all employment discrimination claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000e et seq., the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq., the Americans With Disabilities Act of 1990, 42 U.S.C, §12101 et seq., the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq., the Rehabilitation Act of 1973, 29 U.S.C. § 701 et seq., and the Massachusetts Fair Employment Practices Act, M.G.L. c.151B, §1 et seq., all as amended; all claims arising out of the Fair Credit Reporting Act, 15 U.S.C. §1681 et seq., the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §1001 et seq., the Massachusetts Civil Rights Act, M.G.L. c.12 §§11H and 11I, the Massachusetts Equal Rights Act, M.G.L. c.93, §102 and M.G.L. c.214, §1C, the Massachusetts Labor and Industries Act, M.G.L. c.149, §1 et seq., and the Massachusetts Privacy Act, M.G.L. c.214, §1B, all as amended; all common law claims including, but not limited to, actions in tort, defamation and breach of contract; and any claim or damage arising out of his employment with or separation from the Company (including any claim for retaliation) under any common law theory or any federal, state or local statute or ordinance not expressly referenced above-except in no event is the Executive releasing the Released Parties (including the Company) from any obligation under this Agreement, under the SAB Agreement, under any indemnification agreement between the Executive and the Company, or from any other obligation of the Company to indemnify the Executive under the Company’s certificate of incorporation, bylaws, or other organizational documents. Nothing in this Agreement prevents Executive from filing, cooperating with, or participating in any proceeding before the EEOC or a state Fair Employment Practices Agency (except that Executive acknowledges that he may not be able to recover any monetary benefits in connection with any such claim, charge or proceeding).

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In consideration of the undertakings, transactions and consideration recited in this Agreement, the Company on behalf of itself and the other Released Parties hereby unconditionally and irrevocably remises, releases and forever discharges Executive of and from any and all suits, claims, demands, interest, costs (including attorney fees and costs actually incurred), expenses, actions and causes of action, rights, liabilities, obligations, promises, agreements, controversies, losses and debts, of any nature whatsoever, which the Company or any other Released Party now has, or at any time heretofore ever had, or could have had, whether known or unknown, suspected or unsuspected, arising out of, or in connection with, Executive’s employment with the Company, except for the obligations of Executive pursuant to Sections 7, 8, 9 and 10 of the Employment Agreement (but only as those obligations relate to the work performed by Executive under the terms of the Employment Agreement), which obligations shall survive termination of the Employment Agreement in accordance with the terms of the Employment Agreement.

6. Return of Company Property. The Executive agrees to return on his Termination Date all Company property including, but not limited to, keys, files, records (and copies thereof), computer hardware and software, cellular phones, pagers, and Company vehicle, which is in his possession or control, unless Executive reasonably needs such property in connection with the services to be performed under the SAB Agreement. The Executive further agrees to leave intact all electronic Company documents, including those which he developed or helped develop during his employment, except for those documents in which Executive is working on in connection with the services to be performed under the SAB Agreement.

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7. Non-disparagement. The Executive understands and agrees that as a condition for payment to him of the consideration described herein, he will not make any false, and disparaging statements to any media outlet, industry group, financial institution or current or former employee, consultant, client or customer of the Company regarding the Company or any of its directors, officers, employees, agents or representatives or about the Company’s business affairs and financial condition. The Company agrees that it will instruct its officers and its Board of Directors not to, and the Company will not, make any false and disparaging statements about the Executive to any media outlet, industry group, financial institution, academic institution, present or prospective employer of Executive or to any entity or person to which Executive serves as a consultant or advisor.

8. Confidentiality. To the extent permitted by law, the Executive understands and agrees that as a condition for payment to him of the consideration herein described, the terms and contents of this Agreement, and the contents of the negotiations and discussions resulting in this Agreement, shall be maintained as confidential by the Executive, his agents and representatives and none of the above shall be disclosed except (i) to the extent required by federal or state law_, (ii) to the Executive’s tax and legal advisors, (iii) to members of the Executive’s immediate family (iv) or as otherwise agreed to in writing by the Company. This Section shall become null and void, and the Executive shall have no further obligations under this Section, in the event that the Company files this Agreement in an unredacted fashion with any of its Securities and Exchange Commission (“SEC”) filings.

9. Nature of Agreement. The Executive understands and agrees that this Agreement is a severance and settlement agreement and does not constitute an admission of liability or wrongdoing on the part of the Company. The Company understands and agrees that this Agreement is a severance and settlement agreement and does not constitute an admission of liability or wrongdoing on the part of the Executive.

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10. Amendment. This Agreement shall be binding upon the parties and may not be abandoned, supplemented, changed or modified in any manner, orally or otherwise, except by an instrument in writing of concurrent or subsequent date signed by a duly authorized representative of the parties hereto. This Agreement is binding upon and shall inure to the benefit of the parties and their respective agents, assigns, heirs, executors, successors and administrators.

11. Waiver of Rights. No delay or omission by any party in exercising any rights under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by a party on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion.

12. Validity. Should any provision of this Agreement be declared or be determined by any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts, terms, or provisions shall not be affected thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of this Agreement.

13. Applicable Law. This Agreement shall be governed by the laws of the Commonwealth of Massachusetts, without regard to conflict of laws provisions. Each party hereby irrevocably submits to the jurisdiction of the courts of the Commonwealth of Massachusetts, or if appropriate, a federal court located in Massachusetts (which courts, for purposes of this Agreement, are the only courts of competent jurisdiction), over any suit, action or other proceeding arising out of, under, or in connection with this Agreement or its subject matter.

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14. Acknowledgments. The Executive acknowledges that he has been given twenty-one (21) days to consider this Agreement and that the Company advised him to consult with an attorney of his own choosing prior to signing this Agreement. Further, the Executive acknowledges he may revoke this Agreement for a period of seven (7) days after the execution of this Agreement by notifying Peter G. Savas (with a copy to Steven D. Singer, Company Counsel) in writing, and the Agreement shall not be effective or enforceable until the expiration of this seven (7) day revocation period.

15. Voluntary Assent. The Executive affirms that no other promises or agreements of any kind have been made to or with him by any person or entity whatsoever to cause him to sign this Agreement, and that he fully understands the meaning and intent of this Agreement. The Executive states and represents that he has had an opportunity to fully discuss and review the terms of this Agreement with an attorney. The Executive further states and represents that he has carefully read this Agreement, understands the contents herein, freely and voluntarily assents to all of the terms and conditions hereof, and signs his name of his own free act.

16. Entire Agreement. This Agreement contains and constitutes the entire understanding and agreement between the parties hereto with respect to the severance and settlement and supercedes all previous oral and written negotiations, agreements, commitments, and writings in connection therewith.

17. Counterparts. This Agreement may be executed in two (2) signature counterparts, each of which shall constitute an original, but all of which taken together shall constitute but one and the same instrument.

[signature page follows]

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IN WITNESS WHEREOF, all parties have set their hand and seal to this Agreement as of the date written above.

By:	/s/ Mark Pykett	Date: June 9, 2005
By:	/s/ Marc E. Lanser	Date: June 9, 2005

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EX-10.2

Exhibit 10.2

CONSULTING AGREEMENT

This consulting agreement (this “Agreement”) is made effective for all purposes and in all respects as of the date last signed, by and between Boston Life Sciences, Inc., a Delaware BLSI with its principal offices located at 20 Newbury Street, 5^th Floor, Boston MA 02116 (hereinafter “BLSI”), and Marc E. Lanser, M.D. of Fayston, Vermont (hereinafter referred to as “Consultant”).

WHEREAS, BLSI desires to engage Consultant to perform certain duties as shall be assigned to Consultant by BLSI from time to time;

WHEREAS, Consultant desires to be so engaged by BLSI;

WHEREAS, BLSI and Consultant desire to set forth in writing the terms and conditions of their agreements and understandings.

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises herein contained, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending legally to be bound, hereby agree as follows:

1. Duties of Consultant. Consultant shall perform such duties as shall be assigned to Consultant by BLSI, including, but not limited to acting as a member of BLSI’s Scientific Advisory Board. Consultant further agrees to be available at mutually agreeable times during the term of this agreement. Consultant agrees to perform this work in a prompt, efficient and professional manner. Monthly hours worked and location of work shall be as mutually discussed and agreed upon by Consultant and Mark Pykett of BLSI. Nothing contained herein shall require BLSI to engage Consultant for a minimum number of hours or be deemed to be a guarantee to Consultant of a minimum number of hours of engagement by BLSI. The duties are further outlined in Schedule A.

2. Term of Engagement. The term of Consultant’s engagement hereunder (the “Term”) shall commence as of June 11, 2005 and shall continue until June 11, 2007 or until either BLSI or Consultant shall provide written notice to the other of its desire to terminate such engagement. Any termination of this Agreement by the Company will be deemed to be “without cause” for the purposes of the Severance and Settlement Agreement and Release between the Consultant and the Company unless (1) the Company has grounds for a termination “with cause” and (2) the Company in its termination notice states that it is terminating for cause. The Company will have grounds to terminate this Agreement for “cause” only if (i) Consultant is convicted of a felony or another crime of fraud or moral turpitude or (ii) Consultant materially breaches any material term of this Agreement (other than a breach resulting from Consultant’s disability) and such breach remains uncured for 14 days after written notice from the Company specifying in reasonable detail the nature of such breach. The Term may be extended upon written agreement by the parties. Notwithstanding the foregoing, the termination of this Agreement for any reason shall not terminate or in any way affect Consultant’s covenants and obligations set forth in Sections 5 and 10 hereof.

3. Compensation. Subject to compliance by Consultant with this Agreement, BLSI shall pay Consultant a retainer of $1,500 per month for up to 1 calendar day (at no more than eight hours per day) per month of Consultant’s time. In the event that BLSI requests time from Consultant in excess of 1 calendar day per month, BLSI will pay Consultant at the rate of $1,500 per calendar day (for up to eight hours) for such time. During the Term, BLSI shall not be obligated, except as provided in the Severance and Settlement Agreement between the Consultant and Company, to pay for, or keep in effect, any hospitalization, health, life or other insurance for the benefit of Consultant, to pay any employment or similar taxes, to make any tax withholdings or to provide any benefits that BLSI provides to its employees.

4. Expenses Incurred. During the Term, BLSI shall pay or promptly reimburse Consultant for all reasonable travel, long-distance telephone and other business expenses paid or incurred by Consultant in connection with the performance of Consultant duties hereunder (which expenses must be pre-approved by BLSI or must be referenced on Schedule A with respect to particular services or tasks to be performed), upon presentation of expense statements, vouchers or other evidence of expenses providing the detail required by BLSI.

5. Treatment of Information.

A. Consultant acknowledges that he shall or may be making use of, viewing and adding to confidential information of a special and unique nature and value relating to such matters as BLSI’s trade secrets, systems, designs, methods, computer software programs, documentation, manuals, white papers, other confidential reports and communications and lists of and information relating to suppliers, customers and prospects (“Confidential Information”). Consultant further acknowledges that any information and materials received by BLSI from third parties in confidence shall be included in the definition of Confidential Information. Consultant agrees that he shall not directly or indirectly disclose, divulge, reveal, report, publish, transfer or use, for any purpose whatsoever, any Confidential Information to any third party without the express authorization by BLSI. Consultant agrees not to make any copies of the Confidential Information (except when appropriate for the furtherance of this Agreement or duly and specifically authorized to do so). As any breach by Consultant of his covenants and agreements in this section may cause irreparable injury to BLSI that cannot be redressed by the payment of monies, BLSI shall be entitled to enjoin any such threatened or continuing violation. Consultant acknowledges that BLSI holds all right, title, and interest in and to all tangible and intangible incidents of the Confidential Information, including, without limitation, all trade secrets, copyrights, patent rights and derivative works pertaining thereto, except as provided otherwise in Section 6 below, and that this Agreement conveys to Consultant only a limited right to use the Confidential Information in the course of performing this Agreement. Such right is fully revocable in accordance with the provisions of this Agreement. Consultant further agrees that, except for such right of use, it shall not assert any right, title, or interest in or to the Confidential Information and shall hold all Confidential Information in strict confidence.

B. Confidential Information shall not include information which is or becomes publicly available without breach of (i) this Agreement, (ii) any other agreement or instrument to which BLSI is a party or a beneficiary or (iii) any duty owed to BLSI by

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Consultant or any third party; provided, however, that Consultant hereby acknowledges and agrees that if Consultant shall seek to disclose, divulge, reveal, report, publish, transfer or use any Confidential Information to any third party, Consultant shall bear the burden of proving that any such information shall have become publicly available without any such breach. Disclosure of Confidential Information shall not be prohibited if such disclosure is directly pursuant to a valid and existing order of a court or other governmental body or agency; provided, however, that (i) Consultant shall first have given prompt notice to BLSI of any such possible or prospective order (or proceeding pursuant to which any such order may result) and (ii) BLSI shall have been afforded a reasonable opportunity to prevent or limit any such disclosure. Consultant agrees to return all Confidential Information, and all documentary, machine-readable or other elements or evidence of such Confidential Information and any copies thereof, in Consultant possession or under Consultant control at the request of BLSI or, in the absence of such a request, upon the termination of this Agreement.

C. Ownership of Information. Any findings, reports, inventions, writings, disclosures, discoveries, computer code, developments and improvements written, invented, made or conceived by Consultant in the course of or arising out of work performed under this Agreement are hereinafter referred to as “Work Product”, and shall be a work made for hire by Consultant for BLSI and shall be the property of BLSI.

D. Disclosure of Work Product; Confidentiality. Consultant agrees to disclose all Work Product to BLSI and agrees, at BLSI’s expense, to execute any instruments and to do all other things reasonably requested by BLSI (both during and after Consultant’s engagement by BLSI) in order to vest more fully in BLSI all ownership rights in Work Product. Consultant shall have written confidentiality and assignment of intellectual property rights agreements in place with any of his employees, agents, contractors or consultants who do any work related to this Agreement so as to make this Agreement enforceable against such employees, agents, contractors or consultants.

6. Non-competition. Until the termination of this Agreement, Consultant agrees that he will not perform similar services for companies or individuals that presently compete or plan to compete directly with BLSI.

7. No Prior Agreements. Consultant represents that his performance under this Agreement does not and shall not breach any fiduciary or other duty or any covenant, agreement or understanding (including, without limitation, any agreement relating to any proprietary information, knowledge or data acquired by Consultant in confidence, trust or otherwise prior to Consultant’s engagement by BLSI) to which Consultant is a party or by the terms of which Consultant may be bound (excluding any agreement between the Consultant and the Company). Consultant covenants and agrees that he shall not disclose to BLSI, or induce BLSI to use, any such proprietary information, knowledge or data belonging to any previous or concurrent employer or client or others.

8. Independent Contractor. Consultant shall at all times be an independent contractor hereunder, and not a co-venturer, agent, employee or representative of BLSI, and no act, action or omission to act of Consultant shall in any way be binding upon or obligate BLSI. No change

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in Consultant’s duties as a consultant of BLSI shall result in, or be deemed to be, a modification of the terms of this Agreement. Consultant shall not be treated as an employee for Federal tax purposes. Consultant hereby represents and warrants to BLSI that he is an independent contractor for Federal, state and local tax purposes. Further, Consultant hereby covenants and agrees to pay any and all Federal, state and local taxes required by law to be paid by an independent contractor, including, without limitation, any taxes imposed by the Self Employment Contribution Act.

9. Governing Law and Venue. In view of the fact that the principal office of BLSI is located in Massachusetts, the construction and interpretation of this Agreement shall at all times and in all respects be governed by the substantive laws of Massachusetts, without regard to its rules regarding conflicts of law. Any legal action taken by either party shall take place in the State of Massachusetts. In the event of any legal action or claim concerning the terms of this Agreement or the performance of any party under the terms of this agreement, all reasonable legal fees, costs and expenses of the prevailing party relating to such legal action or claim shall promptly be paid by the other party.

10. Notices. Any notice required to be given hereunder shall be sufficient if in writing, and received by courier service (with proof of service) or certified or registered mail (return receipt requested, first-class postage prepaid), in the case of Consultant, to Consultant address as shown on BLSI’s records, and, in the case of BLSI, to its principal office.

11. General. This Agreement along with the Severance and Settlement Agreement between the Consultant and Company contains the entire agreement and understanding by and between parties with respect to the subject matter hereof, and no representations, promises, agreements or understandings, written or oral, not herein contained shall be of any force or effect. No change or modification hereof shall be valid or binding unless the same is in writing and signed by the party intended to be bound. This Agreement shall be binding upon, and shall inure to the benefit of, BLSI and Consultant, and their respective successors. However, Consultant may not assign this agreement or any duties hereunder without the express written authorization of BLSI. The provisions of this Agreement shall be deemed severable, and the invalidity or unenforceability of any one or more of the provisions hereof shall not affect the validity and enforceability of the other provisions hereof. The headings and other captions in this Agreement are for convenience and reference only and shall not be used in interpreting, construing or enforcing any of the provisions of this Agreement. Neither party shall be liable for the failure to perform its obligations under this Agreement due to events beyond such party’s reasonable control including, but not limited to, strikes, riots, wars, fire, acts of God or acts in compliance with any applicable law, regulation or order (whether valid or invalid) of any court or governmental body. No waiver of any provision of this Agreement shall be valid unless the same is in writing and signed by the party against whom such waiver is sought to be enforced; moreover, no valid waiver of any provision of this Agreement at any time shall be deemed a waiver of any other provision of this Agreement at such time or shall be deemed a valid waiver of such provision at any other time.

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IN WITNESS WHEREOF, BLSI and Marc E. Lanser, M.D. have duly executed this Agreement intending to be bound thereby.

Signed for and on behalf of BOSTON LIFE SCIENCES, INC.:

Signature:	/s/ Mark Pykett	Date: June 9, 2005
	Mark Pykett
	President & Chief Operating Officer

Signed for and on behalf of Marc E. Lanser, M.D.

Signature: /s/ Marc E. Lanser Date: June 9, 2005

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SCHEDULE A

The following summarizes the key duties of Consultant under this Agreement:

1. Provide on-going support to the clinical development efforts, including liaising with clinical sites, presently underway on Altropane and Inosine.

2. Support the pre-clinical development efforts for BLSI’s products, particularly O-1369 and Fluoratec, during the Term.

3. As needed, provide technical support to BLSI in its efforts to form strategic alliances for its product candidates and other assets of strategic or non-strategic significance.

4. Participate in due diligence efforts.

5. Assist with management of the Company’s licenses and intellectual property.

6. Help coordinate the Company’s collaborations and sponsored research agreements.

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EX-10.3

Exhibit 10.3

LEASE

File: BLS

1. PARTIES

Joseph A. Strazzulla, President, Straly Corporation, 35 Main Street, P.O. Box 5220, Wayland, MA 01778, LESSOR, which expression shall include all heirs, successors and assigns where context so admits, does hereby lease to: Boston Life Sciences, Inc.

LESSEE, which expression shall include all successors, executors, administrators and assigns where context so admits and the LESSEE hereby leases the following described premises: office spaces of approximately 5,250 Sq. Ft. on the first, second and fourth floors of 85 Main Street, Hopkinton, MA 01748.

2. PREMISES together with the right to use in common, with others entitled thereto, the hallways, and stairways necessary for access to said leased premises, the lavatories nearest thereto.

3. TERM

The term of this lease shall be for Three (3) Years, commencing on July 1, 2005 and ending on June 30, 2008, with the option to renew this lease for an additional Three (3) Years, at new terms and rent, as long as written notice to extend is given to the LESSOR at least 120 days prior to the expiration date of this lease.

4. RENT

The LESSEE shall pay to the LESSOR rent at the rate of 114,000.00 dollars per year, payable in advance in monthly installments of $9,500.00 for the first year, 121,200.00 dollars per year for the second year and 126,000.00 dollars per year for the third year, with the last months rent being paid in advance.

5. SECURITY DEPOSIT

Upon the execution of this lease, the LESSEE shall pay to the LESSOR the amount of 10,500.00 dollars, which shall be held as a security deposit for the LESSEE’S performance as herein provided and refunded to the LESSEE within thirty (30) days, at the end of this lease, subject to the LESSEE’S satisfactory compliance with the conditions hereof.

6. RENT ADJUSTMENT

The LESSEE shall pay to the LESSOR as additional rent Zero (0) percent of any operating expenses, defined for the purpose of the agreement as Insurance and Common Area Maintenance, and Zero (0) percent of the Real Estate Taxes levied against the land and building, of which the leased premises are a part. The LESSEE shall make payment within thirty (30) days of written notice from the LESSOR that such operating expenses, or taxes are payable by the LESSEE.

7. UTILITIES

The LESSOR shall provide and the LESSEE shall pay for LESSEE’S water and sewer charges, electricity, heat and air conditioning, for the office spaces on the second floor, with the cost of said utilities on the first and fourth floors paid for by the LESSOR, all subject to interruption due to any accident, to the making of repairs, alterations or improvements, to labor difficulties, to trouble in obtaining fuel, electricity, service or supplies, from the sources from which they are usually obtained for said building, or to any cause beyond the LESSOR’S control.

8. USE OF THE PREMISES

The premises shall be used for general office use only.

9. COMPLIANCE WITH LAWS

The LESSEE acknowledges that no trade or occupation shall be conducted in the leased premises or use made thereof, which will be unlawful, improper, noisy or offensive, or contrary to any law or any municipal by-law or ordinance in force in the city or town in which the premises are situated.

10. FIRE INSURANCE

The LESSEE shall not permit any use of the leased premises which will make voidable any insurance on the property of which the leased premises are a part, or on the contents of said property or which shall be contrary to any law or regulation from time to time established by the New England Fire Insurance Rating Association, or any similar body succeeding to its powers. The LESSEE shall, on demand, reimburse the LESSOR and all other tenants, all extra insurance premiums caused by the LESSEE’S use of the premises.

11. MAINTENANCE OF PREMISES

The LESSEE agrees to maintain the leased premises in the same condition as they are at the commencement of the term or as they may be put in during the term of this lease, reasonable wear and tear, damage by fire and other casualty only excepted, and whenever necessary, to replace plate glass and other glass therein, acknowledging that the leased premises are in good order and the glass whole. The LESSEE shall not permit the leased premises to be overloaded, damaged, stripped, or defaced, nor suffer any waste. LESSEE shall obtain written consent of LESSOR before erecting any sign on the premises.

12. ALTERATIONS AND ADDITIONS

The LESSEE shall not make structural alterations or additions to the leased premises, but may make non-structural alterations provided the LESSOR consents thereto in writing, which consent shall not be unreasonably withheld or delayed. All such allowed alterations shall be at LESSEE’S expense and shall be in quality at least equal to the present construction. LESSEE

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shall not permit any mechanics’ liens, or similar liens, to remain upon the leased premises for labor and material furnished to LESSEE in connection with work or any character performed or claimed to have been performed at the direction of LESSEE and shall cause any such lien to be released of record forthwith without cost to LESSOR. Any alterations or improvements made by the LESSEE shall become the property of the LESSOR at the termination of occupancy as provided herein.

13. ASSIGNMENT AND SUBLEASING

The LESSEE shall not assign or sublet the whole or any part of the leased premises without LESSOR’S prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Notwithstanding such consent, LESSEE shall remain liable to LESSOR for the payment of all rent and for the full performance of the covenants and conditions of this lease.

14. SUBORDINATION

This lease shall be subject and subordinate to any and all mortgages, deeds of trust and other instruments in the nature of a mortgage, now or at any time thereafter, a lien or liens on the property of which the leased premises are a part and the LESSEE shall, when requested, promptly execute and deliver such written instruments as shall be necessary to show the subordination of this lease to said mortgages, deeds of trust, or other such instruments in the nature of a mortgage.

15. LESSOR’S ACCESS

The LESSOR or agents of the LESSOR may, at reasonable times and upon reasonable advanced notice, enter to view the leased premises and may remove placards and signs not approved and affixed as herein provided, and make repairs and alterations as LESSOR should elect to do and may show the leased premises to others, and at any time within three (3) months before the expiration of the term, may affix to any suitable part of the leased premises a notice for letting or selling the leased premises or property of which the leased premises are a part and keep the same affixed without hindrance or molestation.

16. INDEMNIFICATION AND LIABILITY

The LESSEE shall save the LESSOR harmless from all loss and damage occasioned by the use or escape of water or by the bursting of pipes, as well as from any claim or damage resulting from neglect in not removing snow and ice from the roof of the building or from the sidewalks bordering upon the premises so leased, or by any nuisance made or suffered on the leased premises, unless such loss is caused by the neglect of the LESSOR. The removal of snow and ice from the sidewalks bordering upon the leased premises shall be the LESSOR’S responsibility.

17. LESSEE’S LIABILITY INSURANCE

The LESSEE shall maintain with respect to the leased premises and the property of which the leased premises are a part, comprehensive public liability insurance in the amount of 500,000.00 dollars, with property damage insurance in limits of 80,000.00 dollars, in responsible companies

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qualified to do business in Massachusetts and in good standing therein, insuring the LESSOR as well as the LESSEE against injury to persons or damage to property as provided. The LESSEE shall deposit with the LESSOR certificates for such insurance at or prior to the commencement of the term, and thereafter within thirty (30) days prior to the expiration of any such policies. All such insurance certificates shall provide that such policies shall not be canceled without at least ten (10) days prior written notice to each assured named therein. LESSOR agrees to maintain during the term of this lease, comprehensive public liability insurance in the amount of 1,000,000.00 dollars and property damage insurance in limits of 100,000.00 dollars.

LESSOR and LESSEE mutually waive their respective rights of recovery against each other for any loss of, or damage to, either parties property, to the extent that such loss or damage is insured by an insurance policy required to be in effect at the time of such loss or damage. Each party shall obtain any special endorsements, if required by its insurer, whereby the insurer waives its right of subrogation against the other party. The preceding two sentences shall not apply in those cases where waiver of subrogation would cause either parties’ insurance to be voided or otherwise made uncollectible.

18. FIRE CASUALTY AND EMINENT DOMAIN

Should a substantial portion of the leased premises, or of the property of which they are a part, be substantially damaged by fire or other casualty, or be taken by eminent domain, the LESSOR may elect to terminate this lease. When such fire, casualty, or taking renders the leased premises substantially unsuitable for their intended use, a just and proportionate abatement of rent shall be made, and the LESSEE may elect to terminate this lease if:

(a) The LESSOR fails to give written notice within thirty (30) days of intention to restore the leased premises or

(b) The LESSOR fails to restore the leased premises to a condition substantially suitable for their intended use within ninety (90) days of said fire, casualty, or taking.

The LESSOR reserves, and the LESSEE grants to the LESSOR, all rights which the LESSEE may have for damages or injury to the leased premises for any taking by eminent domain, except for damage to the LESSEE’S fixtures, property, or equipment.

19. DEFAULT

In the event that:

(a) The LESSEE shall default in the payment of any installment of rent or other sum herein specified and such default shall continue for ten (10) days after written notice thereof; or

(b) The LESSEE shall default in the observance or performance of any other of the LESSEE’S covenants, agreements, or obligations thereunder and such default shall not be corrected within thirty (30) days after written notice thereof; or

(c) The LESSEE shall be declared bankrupt or insolvent according to law, or, if any assignment shall be made of LESSEE’S property for the benefit of creditors, then the LESSOR shall have

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the right thereafter, while such default continues, to re-enter and take complete possession of the leased premises, to declare the term of this lease ended, and remove the LESSEE’S effects, without prejudice to any remedies which might be otherwise used for arrears of rent or other default. The LESSEE shall indemnify the LESSOR against all loss of rent and other payments which the LESSOR may incur by reason of such termination during the residue of the term, provided however the LESSOR shall be required to take reasonable steps to mitigate its loss.

If the LESSEE shall default, after reasonable notice thereof, in the observance or performance of any conditions or covenants on LESSEE’S part to be observed or performed under or by virtue of any of the provisions in any article of this lease, the LESSOR, without thereby waiving such default, may remedy such default for the account and at the expense of the LESSEE. If the LESSOR makes any expenditures or incurs any obligations for the payment of money in connection therewith, including but not limited to, reasonable attorney’s fees in instituting, prosecuting or defending any action or proceeding, such sums paid or obligations incurred, with interest at the rate of ten (10) percent per annum and costs, shall be paid to the LESSOR by the LESSEE as additional rent.

20. NOTICE

Any notice from the LESSOR to the LESSEE relating to the leased premises or the occupancy thereof, shall be deemed duly served, if left at the leased premises addressed to the LESSEE, or, if mailed to the leased premises, registered or certified mail, return receipt requested, postage prepaid, addressed to the LESSEE. Any notice from the LESSEE to the LESSOR relating to the leased premises or to the occupancy thereof, shall be deemed duly served if mailed to the LESSOR by registered or certified mail, return receipt requested, postage prepaid, addressed to the LESSOR at such address as the LESSOR may from time to time advise in writing. All rent and notices shall be paid and sent to the LESSOR at: Post Office Box 5220, Wayland, MA 01778.

21. SURRENDER

The LESSEE shall at the expiration or other termination of this lease remove all LESSEE’S goods and effects from the leased premises, (including, without hereby limiting the generality of the foregoing, all signs and lettering affixed or painted by the LESSEE, either inside or outside the leased premises). LESSEE shall deliver to the LESSOR the leased premises and all keys, locks thereto, and other fixtures connected therewith and all alterations and additions made to or upon the leased premises, in the same condition as they were at the commencement of the term, or as they were put in during the term hereof, reasonable wear and tear and damage by fire or other casualty the only exception.

In the event of the LESSEE’S failure to remove any of the LESSEE’S property from the premises, LESSOR is hereby authorized, without liability to LESSEE for loss or damage thereto, and at the sole risk of LESSEE, to remove and store any of the property at LESSEE’S expense, or to retain same under LESSOR’S control or to sell at public or private sale, with notice, any or all of the property not so removed and to apply the net proceeds of such sale to the payment of any sum due thereunder, or with notice to destroy such property.

22. OTHER PROVISION     N/A

- 5 -

23. PARKING

LESSEE and all their employees are required to park their automobiles in an assigned tenant parking area, if so directed by the LESSOR.

24. NO SMOKING OR PETS

It is understood and agreed that no smoking and no pets or animals, will be allowed within the leased premises or within any building of which the leased premises are a part.

IN WITNESS WHEREOF, the LESSOR and LESSEE have hereunto set their hands and common seals this 9th day of June, in the year 2005.

/s/ Joseph A. Strazzulla	/s/ Peter G. Savas
LESSOR	LESSEE

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EX-10.4

Exhibit 10.4

Boston Life Sciences License Amendment January 2004 HU 1615

This Amendment to the License Agreement (this “Amendment”) effective the last day signed below of 2004, is entered into by and between Boston Life Sciences, Inc, a corporation organized and existing under the laws of Massachusetts having its principal offices at 20 Newbury St., 8th Floor, Boston, MA 02116, (hereinafter, “LICENSEE”) and The President and Fellows of Harvard College, a charitable corporation of Massachusetts, having an office at Office of Technology Licensing and Industry Sponsored Research, Harvard Medical School, Gordon Hall of Medicine, Room 414, 25 Shattuck Street, Boston, MA 02115 (hereinafter “HARVARD”).

W I T N E S S E T H:

WHEREAS, a License Agreement (the “License Agreement”) was entered into by and between LICENSEE, HARVARD with an effective date of March 15, 2000;

WHEREAS, LICENSEE desires to more fully focus its research and development efforts on two diseases;

WHEREAS, the parties hereto have determined that it is in their respective best interests to amend Article 1 (“DEFINITIONS”) of the License Agreement to amend the definition of paragraph 1.3, (“FIELD”), and to amend Article VII (“FOREIGN AND DOMESTIC PATENT FILING AND MAINTENANCE”) and Article VIII (“INFRINGEMENT”) of the License Agreement to more clearly delineate the rights and responsibilities of the parties hereto;

NOW, THEREFORE, the parties hereto agree as follows:

1. Amendment to the License Agreement.

(a) Paragraph 1.3 is hereby amended to read:

“FIELD shall mean the diagnosis and/or treatment of (i) Attention Deficit Hyperactivity Disorder and (ii) Parkinson’s Disease

(b) Article VII is hereby amended to read:

PATENT FILING, PROSECUTION AND MAINTENANCE

7.1 HARVARD shall own (jointly with Organix or other assignees as applicable), file, prosecute and maintain all U.S. and foreign patent applications and patents included within the PATENT RIGHTS. LICENSEE shall be included in all prosecution-related correspondence with outside patent counsel, shall cooperate with HARVARD in the prosecution, filing and maintenance of the PATENT RIGHTS, and shall be promptly copied on all documents received from or sent to all patent offices involved in examination, interference proceedings, oppositions and other matters related to the

Page 1

PATENT RIGHTS. HARVARD shall consult LICENSEE on each step of the prosecution process regarding exclusively licensed PATENT RIGHTS and HARVARD shall incorporate LICENSEE’s comments where reasonably practicable, but final decision making authority shall vest in HARVARD.

7.2 Upon execution of this Agreement, LICENSEE shall reimburse HARVARD for past and presently payable patent costs for the preparation, filing, prosecution and maintenance of PATENT RIGHTS. HARVARD shall provide to LICENSEE an itemized invoice of all fees and costs associated with U.S. and foreign patent prosecution, U.S. and foreign patent annuities, and all costs associated with any patent interference proceedings related to the PATENT RIGHTS (“COSTS”) whether such fees and/or costs were incurred before or after the date of this Agreement. LICENSEE shall have the opportunity to review said invoices, and shall have the opportunity to discuss questionable billings incurred after the EFFECTIVE DATE either with HARVARD before HARVARD pays the invoiced billings, or directly with HARVARD’s patent counsel, as HARVARD directs. As directed by HARVARD, LICENSEE shall either pay invoiced billings related to PATENT RIGHTS directly to HARVARD’s patent counsel or shall reimburse to HARVARD the amount of all fees and costs related to PATENT RIGHTS that HARVARD has paid. LICENSEE shall pay to HARVARD, or to HARVARD’s patent counsel if so directed by HARVARD, all amounts due under each invoice under this paragraph within thirty (30) days of the date of receipt of said invoice. Late payment of these invoices shall be subject to interest charges of one and one-half percent (1 1/2%) per month. If HARVARD shall license PATENT RIGHTS outside the FIELD to a third party, HARVARD will pay to LICENSEE a sum equal to the pro rata share of past COSTS for PATENT RIGHTS which are now nonexclusive. HARVARD will also invoice present or future COSTS related to nonexclusive patent rights on a pro rata basis. All pro rata calculations will be made using the number of distinct companies granted a license(s) and no other bases.

7.3 HARVARD, Organix and LICENSEE shall cooperate fully in the preparation, filing, prosecution and maintenance of PATENT RIGHTS exclusive to LICENSEE and of all patents and patent applications exclusively licensed to LICENSEE hereunder, executing all papers and instruments or requiring members of HARVARD or of Organix to execute such papers and instruments so as to enable HARVARD to apply for, to prosecute and to maintain patent applications and patents in HARVARD’s and other applicable assignees’ names in any country. HARVARD and LICENSEE shall each provide to the other prompt notice as to all matters which come to its attention and which may affect the preparation, filing, prosecution or maintenance of any such patent applications or patents. After LICENSEE has shown good and sufficient cause to justify a request that HARVARD choose alternate patent counsel, and after having made reasonable attempts to rectify the situation resulting in said good and sufficient cause, HARVARD will not unreasonably withhold consent that alternate patent counsel be chosen. In such event, LICENSEE agrees to bear all costs associated with transfer to alternate patent counsel.

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7.4 LICENSEE may elect to surrender its PATENT RIGHTS in any country upon one-hundred-twenty (120) days written notice to HARVARD. Such notice shall not relieve LICENSEE from responsibility to reimburse HARVARD for patent-related expenses incurred prior to the expiration of the one-hundred-twenty (120)-day notice period (or such longer period specified in LICENSEE’s notice).

7.5 In the event HARVARD elects not to pursue, maintain or retain a particular PATENT RIGHT licensed to LICENSEE hereunder, HARVARD shall so notify LICENSEE in sufficient time for LICENSEE to assume the filing, prosecution and/or maintenance of such application or patent at LICENSEE’s expense. In such event, HARVARD shall provide to LICENSEE any authorization necessary to permit LICENSEE to pursue and/or maintain such PATENT RIGHT. LICENSEE shall have no further royalty obligations under this Agreement with respect to any such PATENT RIGHT.

(c) Article VIII is hereby amended to read:

8.7 If a declaratory judgment action is brought naming LICENSEE as a defendant and alleging invalidity of any of the PATENT RIGHTS, HARVARD may elect to take over the sole defense of the action at its own expense. LICENSEE shall cooperate fully with HARVARD and Organix in connection with any such action.

2. Definitions. Capitalized terms used in this Amendment that are not otherwise defined herein shall have the meanings set forth in the License Agreement.

3. General. Except as expressly set forth above, the License Agreement as previously amended remains in full force and effect, without change or modification.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first set forth above.

For:
HARVARD	BOSTON LIFE SCIENCES, INC.
/s/ O. Prem Das		/s/ Marc Lanser
O. Prem Das, Director	Name:	Marc Lanser MD
Office of Technology Licensing and Industry Sponsored Research	Title:	President
Harvard Medical School
5-4-04

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EX-10.5

Exhibit 10.5

AMENDMENT TO LICENSE AGREEMENT

(Agreement number 2639; CMCC 600)

WHEREAS, CHILDREN’S MEDICAL CENTER CORPORATION (“CMCC”), a corporation organized and existing under the laws of the Commonwealth of Massachusetts and having its principal place of business at 300 Longwood Avenue, Boston, MA 02115, and BOSTON LIFE SCIENCES INC. (“Company”), a corporation organized and existing under the laws of Delaware, and having its principal place of business at 20 Newbury Street, Boston, Massachusetts 02116, entered into a License Agreement effective as of December 15, 1998 (hereinafter “the Inosine License Agreement”), in which CMCC granted certain license rights to Company under patent rights relating to “Methods for Modulating the Axonal Outgrowth of Central Nervous System Neurons”, CMCC Case 600, by Dr. Larry Benowitz; and

WHEREAS, the Inosine License Agreement contemplates the use of Inosine to stimulate the axonal outgrowth of central nervous system neurons;

WHEREAS, Dr. Larry Benowitz, subsequent to the date of that License Agreement, has discovered methods of stimulating axon regeneration using a combination therapy wherein agents that inhibit the Nogo Receptor activity are combined with agents that activate the growth pathway of neurons, including Inosine (the “Dual Treatment Method”), CMCC number 1154;

WHEREAS, CMCC has filed a patent application on the Dual Treatment Method above and is in the process of licensing such patent rights to Company under a separate agreement (the “Dual Treatment License Agreement”);

WHEREAS, the Inosine License Agreement includes a provision which allows LICENSEE to deduct from the royalty due to CMCC a certain amount of royalties in the account of third party patents which could be necessary to produce or sell Licensed Products and Licensed Processes;

WHEREAS, Children’s and Company have agreed that no royalty reduction provision will apply to the royalties received from the sale of Licensed Product and Licensed Process in the Dual Treatment License Agreement;

WHEREAS, Children’s and Company agree that the existing royalty provision in the Inosine License Agreement can be used for royalty reduction when intellectual property from third parties is necessary to produce or sell Licensed Product or Licensed Process when License Product or Licensed Process refers to Inosine alone, but not to Inosine as part of the Dual Treatment Method;

NOW, THEREFORE, the parties do hereby agree as follows:

1. To add the following clause to the end of Article I (“DEFINITIONS”) in the Inosine License Agreement:

1

K. “Dual Treatment Patent Rights”: Patents and patent applications which claim priority of the provisional patent application number 60/529,833 filed on 12/16/03, inventor Larry Benowitz, entitled “Method for Axon Regeneration in Mature CNS”

2. To amend Section (C) of Article IV (“ROYALTIES AND OTHER PAYMENTS”) of the Inosine License Agreement, by adding a sentence at the end of the existing paragraph, so that the amended paragraph reads:

C. To the extent that LICENSEE obtains subsequent to the date of this Agreement licenses to third party patents or other intellectual property that are necessary to produce or sell Licensed Products or Licensed Processes, LICENSEE may deduct from the royalty due to CMCC fifty percent (50%) of the royalties due on such third party patents or intellectual property up to an amount equal to fifty percent (50%) of royalties hereunder. This provision shall not apply to royalties received from the Net Sale of Licensed Product or Licensed Processes which involve Dual Treatment Patent Rights.

3. All other terms and conditions of the License Agreement remain unmodified and in effect.

4. This Agreement represents the entire understanding of the parties with respect to the subject matter thereof, and supersedes any representations, negotiations, discussions and agreements related thereto, oral or written.

5. This Amendment shall take effect on the date of execution by the last of the parties to sign.

CHILDREN’S MEDICAL CENTER CORPORATION
/s/ Donald P. Lombardi		5/12/04
By:	Donald P. Lombardi	Date
	Chief Intellectual Property Officer
BOSTON LIFE SCIENCES, INC.
/s/ Marc Lanser		5/18/04
By:	Marc Lanser	Date
	President and COO

2

EX-10.6

Exhibit 10.6

Boston Life Science Licenses Amendment January 2004 HU 919

This Amendment to the License Agreement (this “Amendment”) effective the last day signed below of 2004, is entered into by and between Boston Life Sciences, Inc, a corporation organized and existing under the laws of Massachusetts having its principal offices at 20 Newbury St., 8^th Floor, Boston, MA 02116, (hereinafter, “LICENSEE”) and The President and Fellows of Harvard College, a charitable corporation of Massachusetts, having an office at Office of Technology Licensing and Industry Sponsored Research, Harvard Medical School, Gordon Hall of Medicine, Room 414, 25 Shattuck Street, Boston, MA 02115 (hereinafter “HARVARD”).

W I T N E S S E T H:

WHEREAS, a License Agreement (the “License Agreement”) was entered into by and among Neurobiologics, Inc. and HARVARD with an effective date of December 10, 1993;

WHEREAS, LICENSEE desires to more fully focus its research and development efforts on two diseases;

WHEREAS, LICENSEE is a successor organization to Neurobiologics, Inc.

WHEREAS, the parties hereto have determined that it is in their respective best interests to amend Article 1 (“DEFINITIONS”) of the License Agreement to add a definition of FIELD, to amend Paragraph 2.1 to include a limitation of the grant to the FIELD, and to amend Article VI (“DOMESTIC AND FOREIGN PATENT FILING AND MAINTENANCE”) and Article VII (“INFRINGEMENT”) of the License Agreement to more clearly delineate the rights and responsibilities of the parties hereto;

NOW, THEREFORE, the parties hereto agree as follows:

1. Amendment to the License Agreement.

(a) Paragraph 1.9 is hereby added:

“FIELD shall mean the diagnosis and/or treatment of (i) Attention Deficit Hyperactivity Disorder and (ii) Parkinson’s Disease.

(b) Paragraph 2.1 is hereby amended to read:

“HARVARD hereby grants to LICENSEE and LICENSEE accepts, subject to the terms and conditions hereof, a worldwide exclusive license, under PATENT RIGHTS, to make and have made, to use and have used, to sell and have sold the LICENSED PRODUCTS, and to practice the LICENSED PROCESSES, for the life of the patent, solely within the FIELD. Such license shall include the right to grant sublicenses, and LICENSEE agrees to give HARVARD thirty (30) days written notice of the identity of

Page 1

sublicensee prior to executing any sublicense agreement, with respect to the PATENT RIGHTS. In order to provide LICENSEE with a period of exclusivity, HARVARD agrees it will not grant licenses to others except as required in paragraph 2.2(a) or as permitted in paragraph 2.2(b). LICENSEE agrees during the period of exclusivity of this license in the United States that any LICENSED PRODUCT produced for sale in the United States will be manufactured substantially in the United States.”

(c) Article VI is hereby amended to read:

PATENT FILING, PROSECUTION AND MAINTENANCE

6.1 HARVARD shall own (jointly with Organix or other assignees as applicable), file, prosecute and maintain all U.S. and foreign patent applications and patents included within the PATENT RIGHTS. LICENSEE shall be included in all prosecution-related correspondence with outside patent counsel, shall cooperate with HARVARD in the prosecution, filing and maintenance of the PATENT RIGHTS, and shall be promptly copied on all documents received from or sent to all patent offices involved in examination, interference proceedings, oppositions and other matters related to the PATENT RIGHTS. HARVARD shall consult LICENSEE on each step of the prosecution process regarding exclusivity licensed PATENT RIGHTS and HARVARD shall incorporate LICENSEE’s comments where reasonably practicable, but final decision making authority shall vest in HARVARD.

6.2 Upon execution of this Agreement, LICENSEE shall reimburse HARVARD for past and presently payable patent costs for the preparation, filing, prosecution and maintenance of PATENT RIGHTS. HARVARD shall provide to LICENSEE an itemized invoice of all fees and costs associated with U.S. and foreign patent prosecution, U.S. and foreign patent annuities, and all costs associated with any patent interference proceedings related to the PATENT RIGHTS (“COSTS”) whether such fees and/or costs were incurred before or after the date of this Agreement. LICENSEE shall have the opportunity to review said invoices, and shall have the opportunity to discuss questionable billings incurred after the EFFECTIVE DATE either with HARVARD before HARVARD pays the invoiced billings, or directly with HARVARD’s patent counsel, as HARVARD directs. As directed by HARVARD, LICENSEE shall either pay invoiced billings related to PATENT RIGHTS directly to HARVARD’s patent counsel or shall reimburse to HARVARD the amount of all fees and costs related to PATENT RIGHTS that HARVARD has paid. LICENSEE shall pay to HARVARD, or to HARVARD’s patent counsel if so directed by HARVARD, all amounts due under each invoice under this paragraph within thirty (30) days of the date of receipt of said invoice. Late payment of these invoices shall be subject to interest charges of one and one-half (1 ¹/2%) per month. If HARVARD shall license PATENT RIGHTS outside the FIELD to a third party, HARVARD will pay to LICENSEE a sum equal to the pro-rata share of past COSTS for PATENT RIGHTS which are now nonexclusive. HARVARD will also invoice present or future COSTS related to nonexclusive patent rights on a pro rata basis. All pro rata calculations will be made using the number of distinct companies granted a license(s) and no other bases.

Page 2

6.3 HARVARD, Organix and LICENSEE shall cooperate fully in the preparation, filing, prosecution and maintenance of PATENT RIGHTS exclusive to LICENSEE and of all patents and patent applications exclusively licensed to LICENSEE hereunder, executing all papers and instruments or requiring members of HARVARD or of Organix to execute such papers and instruments so as to enable HARVARD to apply for, to prosecute and to maintain patent applications and patents in HARVARD’s and other applicable assignees’ names in any country. HARVARD and LICENSEE shall each provide to the other prompt notice as to all matters which come to its attention and which may affect the preparation, filing, prosecution or maintenance of any such patent applications or patents. After LICENSEE has shown good and sufficient cause to justify a request that HARVARD choose alternate patent counsel, and after having made reasonable attempts to rectify the situation resulting in said good and sufficient cause, HARVARD will not unreasonably withhold consent that alternate patent counsel be chosen. In such event, LICENSEE agrees to bear all costs associated with transfer to alternate patent counsel.

6.4 LICENSEE may elect to surrender its PATENT RIGHTS in any country upon one-hundred-twenty (120) days written notice to HARVARD. Such notices shall not relieve LICENSEE from responsibility to reimburse HARVARD for patent-related expenses incurred prior to the expiration of the one-hundred-twenty (120)-day notice period (or such longer period specified in LICENSEE’s notice).

6.5 In the event HARVARD elects not to pursue, maintain or retain a particular PATENT RIGHT licensed to LICENSEE hereunder, HARVARD shall so notify LICENSEE in sufficient time for LICENSEE to assume the filing, prosecution and/or maintenance of such application or patent at LICENSEE’s expense. In such event, HARVARD shall provide to LICENSEE any authorization necessary to permit LICENSEE to pursue and/or maintain such PATENT RIGHT. LICENSEE shall have no further royalty obligations under this Agreement with respect to any such PATENT RIGHT.

(d) Article VII is hereby amended to read:

INFRINGEMENT

7.1 With respect to any PATENT RIGHTS that are exclusively licensed to LICENSEE pursuant to this Agreement, LICENSEE shall have the right to prosecute in its own name and at its own expense any infringement of such patent, so long as such license is exclusive at the time of the commencement of such action. Each party agrees to notify the other parties promptly of each infringement of such patents of which that party is or becomes aware. Before LICENSEE commences an action with respect to any infringement of such patents, LICENSEE shall give careful consideration to the views of HARVARD and Organix and to potential effects on the public interest in making its decision whether or not to sue.

Page 3

7.2 (a) If LICENSEE elects to commence an action as described above, HARVARD and Organix may, to the extent permitted by law, elect to join as a party in that action. Regardless of whether HARVARD or Organix elects to join as a party, HARVARD and Organix shall cooperate fully with LICENSEE in connection with any such action.

(b) If HARVARD or Organix elects to join as a party pursuant to subparagraph (a), HARVARD and/or Organix shall jointly control the action with LICENSEE.

(c) LICENSEE shall reimburse HARVARD and/or Organix for any costs HARVARD and/or Organix incurs, including reasonable attorneys’ fees, as part of an action brought by LICENSEE, irrespective of whether HARVARD and/or Organix becomes a co-plaintiff.

7.3 No settlement, consent judgment or other voluntary final disposition of the suit may be entered into without the prior written consent of HARVARD and Organix, which consent shall not be unreasonably withheld.

7.4 Recoveries or reimbursements from actions commenced pursuant to this Article shall first be applied to reimburse LICENSEE, HARVARD and Organix for litigation costs. Any remaining recoveries or reimbursements shall be shared equally by LICENSEE, HARVARD and Organix.

7.5 If LICENSEE elects not to exercise its right to prosecute an infringement of the PATENT RIGHTS pursuant to this Article, HARVARD and/or Organix may do so at its own expense, controlling such action and retaining all recoveries therefrom. LICENSEE shall cooperate fully with HARVARD and/or Organix in connection with any such action.

7.6 Without limiting the generality of paragraph 11.5, HARVARD may, at its election and by notice to LICENSEE, establish a time limit of sixty (60) days for LICENSEE to decide whether to prosecute any infringement of which HARVARD and/or Organix is or becomes aware. If, by the end of such sixty (60)-day period, LICENSEE has not commenced such an action, HARVARD and/or Organix may prosecute such an infringement at its own expense, controlling such action and retaining all recoveries therefrom. With respect to any such infringement action prosecuted by HARVARD and/or Organix in good faith, LICENSEE shall pay over to HARVARD and/or Organix any payments (whether or not designated as “ROYALTIES”) made by the alleged infringer to LICENSEE under any existing or future SUBLICENSE authorizing LICENSED PRODUCTS, up to the amount of HARVARD and/or Organix’s unreimbursed litigation expenses (including, but not limited to, reasonable attorneys’ fees).

Page 4

7.7 If a declaratory judgment action is brought naming LICENSEE as a defendant and alleging invalidity of any of the PATENT RIGHTS, HARVARD may elect to take over the sole defense of the action at its own expense. LICENSEE shall cooperate fully with HARVARD and Organix in connection with any such action.

2. Definitions. Capitalized terms used in this Amendment that are not otherwise defined herein shall have the meanings set forth in the License Agreement.

3. General. Except as expressly set forth above, the License Agreement as previously amended remains in full force and effect, without change or modification.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first set forth above.

For:
HARVARD	BOSTON LIFE SCIENCES, INC.
/s/ O. Prem Das	/s/ Marc Lanser
O. Prem Das, Director	Marc Lanser
Office of Technology Licensing and Industry Sponsored Research	President
Harvard Medical School
Date: 5-6-04	Date: 5-7-04

Page 5

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Peter G. Savas, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Boston Life Sciences, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) [Not Applicable];

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

DATE: August 15, 2005	/s/ PETER G. SAVAS
	Peter G. Savas Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Kenneth L. Rice, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Boston Life Sciences, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) [Not Applicable];

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

DATE: August 15, 2005	/s/ KENNETH L. RICE, JR.
	Kenneth L. Rice, Jr. Executive Vice President Finance and Administration and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Boston Life Sciences, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2005 as filed with the Securities and Exchange Commission (the “Report”), I, Peter G. Savas, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ PETER G. SAVAS

Peter G. Savas

Chairman and Chief Executive Officer

Date: August 15, 2005

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Boston Life Sciences, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2005 as filed with the Securities and Exchange Commission (the “Report”), I, Kenneth L. Rice, Jr., Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ KENNETH L. RICE, JR.

Kenneth L. Rice, Jr.

Executive Vice President Finance and Administration and

Chief Financial Officer

Date: August 15, 2005