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 September 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.)
85 Main Street, Hopkinton, Massachusetts	01748
(Address of Principal Executive Offices)	(Zip Code)

(508) 497-2360

(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

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

As of November 7, 2005 there were 16,475,924 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 September 30, 2005 and December 31, 2004	1
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2005 and 2004, and for the period from inception (October 16, 1992) to September 30, 2005	2
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2005 and 2004, and for the period from inception (October 16, 1992) to September 30, 2005	3
	Notes to Condensed Consolidated Financial Statements	4
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4	Controls and Procedures	36
Part II Other Information
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 4	Submission of Matters to a Vote of Security Holders	37
Item 6	Exhibits	38
SIGNATURES		39

Part I – Financial Information

Item 1 – Financial Statements

Boston Life Sciences, Inc.

(A Development Stage Enterprise)

Condensed Consolidated Balance Sheets

(Unaudited)

	September 30, 2005			December 31, 2004
Assets
Current assets:
Cash and cash equivalents	$	2,971,089		$	152,971
Marketable securities		9,437,508			1,490,119
Other current assets		436,638			145,153
Total current assets		12,845,235			1,788,243
Fixed assets, net		331,481			400,178
Other assets		440,621			356,292
Total assets	$	13,617,337		$	2,544,713
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	2,160,223		$	1,975,773
Accrued lease (Note 5)		107,024			—
Total current liabilities		2,267,247			1,975,773
Accrued lease, excluding current portion (Note 5)		281,583			—
Total liabilities		2,548,830			1,975,773
Commitments and contingencies (Note 8)
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 September 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; 16,423,897 and 6,892,856 shares issued and outstanding at September 30, 2005 and December 31, 2004, respectively		164,239			68,929
Additional paid-in capital		124,854,182			102,649,933
Accumulated other comprehensive loss		(11,198	)		(4,617	)
Deficit accumulated during development stage		(113,938,716	)		(105,646,844	)
Total stockholders’ equity		11,068,507			568,940
Total liabilities and stockholders’ equity	$	13,617,337		$	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 September 30,						Nine Months Ended September 30,						From Inception (October 16, 1992) to September 30, 2005
	2005			2004			2005			2004
Revenues	$	—		$	—		$	—		$	—		$	900,000
Operating expenses:
Research and development		1,678,783			1,763,194			4,411,531			5,448,467			70,198,906
General and administrative		1,897,892			611,074			3,898,556			3,350,948			33,717,826
Purchased in-process research and development		—			—			—			—			12,146,544
Total operating expenses		3,576,675			2,374,268			8,310,087			8,799,415			116,063,276
Loss from operations		(3,576,675	)		(2,374,268	)		(8,310,087	)		(8,799,415	)		(115,163,276	)
Other expenses		—			—			(2,232	)		—			(1,582,853	)
Interest expense		—			(208,868	)		(45,965	)		(626,604	)		(4,302,418	)
Investment income		26,807			32,874			66,412			125,333			7,109,831
Net loss		(3,549,868	)		(2,550,262	)		(8,291,872	)		(9,300,686	)		(113,938,716	)
Preferred stock beneficial conversion feature		—			—			—			—			(8,062,712	)
Accrual of preferred stock dividends and modification of warrants held by preferred stock holders		—			(111,431	)		(715,515	)		(371,022	)		(1,229,589	)
Net loss attributable to common stockholders	$	(3,549,868	)	$	(2,661,693	)	$	(9,007,387	)	$	(9,671,708	)	$	(123,231,017	)
Basic and diluted net loss attributable to common stockholders per share	$	(0.30	)	$	(0.39	)	$	(0.88	)	$	(1.43	)
Weighted average shares outstanding		11,987,721			6,865,951			10,220,594			6,762,802

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)

	Nine Months Ended September 30,						From Inception (October 16, 1992) to September 30, 2005
	2005			2004
Cash flows from operating activities:
Net loss	$	(8,291,872	)	$	(9,300,686	)	$	(113,938,716	)
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			300,316			1,648,675
Non-cash charges related to options, warrants and common stock		48,821			109,643			4,247,588
Amortization and depreciation		157,012			166,072			2,345,929
Changes in operating assets and liabilities:
(Increase) decrease in other current assets		(291,485	)		232,417			422,325
Increase in accounts payable and accrued expenses		439,914			260,161			1,387,558
Increase in accrued lease		388,607			—			388,607
Net cash used for operating activities		(7,505,103	)		(8,232,077	)		(87,500,990	)
Cash flows from investing activities:
Cash acquired through Merger		—			—			1,758,037
Purchases of fixed assets		(88,315	)		(6,874	)		(1,431,935	)
Increase in other assets		(84,329	)		(98,982	)		(794,256	)
Increase in restricted cash and marketable securities		—			(67,742	)		—
Purchases of marketable securities		(14,154,003	)		(6,390,227	)		(126,281,093	)
Sales and maturities of marketable securities		6,200,033			8,745,073			116,832,387
Net cash (used for) provided by investing activities		(8,126,614	)		2,181,248			(9,916,860	)
Cash flows from financing activities:
Proceeds from issuance of common stock		18,830,243			7,496			63,575,992
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		(65,421	)		(27,664	)		(5,529,945	)
Net cash provided by (used for) financing activities		18,449,835			(20,168	)		100,388,939
Net increase (decrease) in cash and cash equivalents		2,818,118			(6,070,997	)		2,971,089
Cash and cash equivalents, beginning of period		152,971			6,088,458			—
Cash and cash equivalents, end of period	$	2,971,089		$	17,461		$	2,971,089
Supplemental cash flow disclosures:
Non-cash transactions (see Note 6)

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)

September 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 September 30, 2005, the Company has experienced total net losses since inception of approximately $114,000,000. 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 September 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 September 30, 2005 and its ability to control certain costs, including those related to clinical trial programs, preclinical activities, and certain general and administrative expenses will enable the Company to meet its anticipated cash expenditures through June 2006. The Company will therefore need to raise additional capital through one or more of the following: collaboration, merger, acquisition 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 collaboration and other related fundraising efforts. There can be no assurance, however, that the Company will be successful in its collaboration or other fundraising efforts or that additional funds will be available on acceptable terms, if at all. In connection with the common stock financing completed by the Company in March 2005, the Company agreed with the purchasers in such financing (the “March 2005 Investors”) that, subject to certain exceptions, it would not issue any shares of its common stock at a per share price less than $2.50 without the prior consent of purchasers holding a majority of the shares issued in such financing. On November 1, 2005, the closing price of the Company’s common stock was $2.18. The failure to receive the requisite waiver or consent of the March 2005 Investors could have the effect of delaying or preventing the consummation of a financing by the Company. If the Company is unable to raise additional capital it may need to reduce, cease or delay one or more of its research or development programs.

There have been a number of developments in the last twelve months 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 557.3 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 and the $12,780,000 private placement in September 2005, this preemptive right was terminated. 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

4

Boston Life Sciences, Inc.

(A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements (Unaudited)

of Series E Stock upon the affirmative vote of 75% of the outstanding shares of Series E Stock. In February 2005, the requisite vote of the Holders of the Series E Stock was obtained and 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 3.7 million and 3.2 million shares of common stock were outstanding at September 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 September 30, 2005, which could generate proceeds to the Company of up to approximately $25,000,000, could potentially dilute earnings per share in the future.

3. Comprehensive Loss

The Company had total comprehensive loss of $3,563,095 and $2,539,485 for the three months ended September 30, 2005 and 2004, respectively. For the nine months ended September 30, 2005 and 2004, total comprehensive loss was $8,298,453 and $9,315,173, 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 September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
Net loss, as reported	$	(3,549,868	)	$	(2,550,262	)	$	(8,291,872	)	$	(9,300,686	)
Add: Stock-based employee compensation expense recognized		—			—			—			106,064
Deduct: Total stock-based employee compensation expense determined under fair value based methods for all awards		(389,636	)		(259,198	)		(1,303,866	)		(958,641	)
Pro forma net loss		(3,939,504	)		(2,809,460	)		(9,595,738	)		(10,153,263	)
Accrual of preferred stock dividends and modification of warrants held by preferred stock holders		—			(111,431	)		(715,515	)		(371,022	)
Pro forma net loss attributable to common stockholders	$	(3,939,504	)	$	(2,920,891	)	$	(10,311,253	)	$	(10,524,285	)
Basic and diluted loss per share:
As reported	$	(0.30	)	$	(0.39	)	$	(0.88	)	$	(1.43	)
Pro forma	$	(0.33	)	$	(0.43	)	$	(1.01	)	$	(1.56	)

5

Boston Life Sciences, Inc.

(A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements (Unaudited)

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. Relocation and Sublease

In September 2005, the Company relocated its headquarters to office space located in Hopkinton, Massachusetts. In addition, the Company amended its Lease Agreement (the “Lease Amendment”), dated as of January 28, 2002 by and between the Company and Brentwood Properties, Inc. (the “Landlord”) relating to the Company’s former principal executive offices (the “Premises”) located on the fourth and fifth floors of a building in Boston, Massachusetts (the “Lease Agreement”). Pursuant to the terms of the Lease Amendment, the Landlord consented to, among other things, the Small Army Sublease and Dell Sublease (each as defined below), each of which runs through the term of the Lease Agreement. In consideration for the Landlord’s consent, the Company agreed to increase its security deposit provided for under the Lease Agreement from $250,000 to $388,600 subject to periodic reduction pursuant to a predetermined formula.

In September 2005, the Company entered into a Sublease Agreement (the “Small Army Sublease”) with Small Army, Inc., as subtenant (“Small Army”), to sublease approximately 3,300 rentable square feet on the fourth floor of the Premises. The initial term of the Small Army Sublease is eighty months beginning on October 1, 2005. Pursuant to the terms of the Small Army Sublease, Small Army has agreed to pay: (i) $8,800 in base rent per month from March 1, 2006 through May 30, 2009 and (ii) $9,625 in base rent per month for the period from June 1, 2009 through May 30, 2012. Small Army has agreed to pay the Company a proportionate share of the Company’s additional obligations under the Lease Agreement resulting from any future increases in certain costs to operate the Premises, including insurance and real estate taxes.

In September 2005, the Company entered a Sublease Agreement (the “Dell Sublease”) with Dell Mitchell Architects, Inc., as subtenant (“Dell”), to sublease approximately 3,300 rentable square feet on the fifth floor of the Premises. The initial term of the Dell Sublease is eighty-one months beginning on September 1, 2005. Pursuant to the terms of the Dell Sublease, Dell has agreed to pay: (i) $8,800 in base rent per month from March 16, 2006 through May 30, 2009 and (ii) $9,625 in base rent per month for the period from June 1, 2009 through May 30, 2012. Dell has agreed to pay the Company a proportionate share of the Company’s additional obligations under the Lease Agreement resulting from any future increases in certain costs to operate the Premises, including insurance and real estate taxes.

As a result of the company’s relocation, an expense was recorded in accordance with SFAS 146, “Accounting for Costs Associated with Exit or Disposal Activities,” (“SFAS 146”). SFAS 146 requires that a liability be recorded for a cost associated with an exit or disposal activity at its fair value in the period in which the liability is incurred. The liability recorded for the Lease Amendment was calculated using discounted estimated cash flows described above for the Small Army Sublease and the Dell Sublease. As prescribed by SFAS 146, a credit-adjusted risk-free rate was used to discount the estimated cash flows. This rate was estimated to be 15% at September 30, 2005. The expense and accrual recorded in accordance with SFAS 146 requires the Company to make significant estimates and assumptions. These estimates and assumptions will be evaluated and adjusted as appropriate on at least a quarterly basis for changes in circumstances. It is reasonably possible that such estimates could change in the future resulting in additional adjustments, and the effect of any such adjustments could be material.

The activity related to the lease accrual at September 30, 2005, is as follows:

	Accrual, third quarter 2005		Cash Payments, net of sublease receipts third quarter 2005		Accrual at September 30, 2005
Lease Amendment	$	405,942	$	17,335	$	388,607
Short-term portion of lease accrual						107,024
Long-term portion of lease accrual					$	281,583

6

Boston Life Sciences, Inc.

(A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements (Unaudited)

During the three months ended September 30, 2005, the Company recorded approximately $332,000 in general and administrative expenses related to the net carrying costs of the Lease Amendment. During the three months ended September 30, 2005, the Company recorded approximately $5,000 of expense related to the imputed cost of the lease expense accrual included in general and administrative expenses on the accompanying condensed consolidated statements of operations.

6. 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 557.3 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 repricing. 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 and the $12,780,000 private placement in September 2005, this preemptive right was terminated. 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. In February 2005, the requisite vote of the Holders of the Series E Stock was obtained and 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 Warrant and the Monoyios Warrant. 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 Placements

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

7

Boston Life Sciences, Inc.

(A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

On September 7, 2005, the Company completed a private placement of 6,000,000 shares of its common stock raising approximately $12,780,000 in gross proceeds. The investors in the private placement included Gipson, Boucher and other affiliates of 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. The Company obtained the waiver of a requisite percentage of the March 2005 Investors to issue shares in the private placement at a per share price less than $2.50.

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 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)”) (see Note 11), 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 amount of the charge will be adjusted quarterly based upon the intrinsic value of the options then outstanding at the end of each quarter.

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 in connection with the Company’s private placement completed in March 2005.

7. 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 nine months ended September 30, 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

8

Boston Life Sciences, Inc.

(A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements (Unaudited)

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 fully vest. 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 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 September 30, 2005.

On June 10, 2004, the Company 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 preclinical 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 $22,000 and $36,000 during the three and nine months ended September 30, 2005 related to this modification of Dr. Lanser’s options.

On September 12, 2005, the Company entered into a Severance and Settlement Agreement and Release with Joseph Hernon, the Company’s former Chief Financial Officer. The agreement entitles Mr. Hernon to receive continued base salary and benefits for a period of nine months commencing on October 1, 2005. The Company recorded a charge of approximately $204,000 during the quarter ended September 30, 2005 related to this obligation. The settlement agreement also provided that Mr. Hernon’s unvested options to purchase 74,182 shares of common stock fully vested as of Mr. Hernon’s termination date, September 30, 2005. The settlement agreement further provided that Mr. Hernon’s options to purchase 133,527 shares of common stock, including the 74,182 accelerated options, be exercisable on their stated terms and conditions from his

9

Boston Life Sciences, Inc.

(A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements (Unaudited)

termination date through and including September 30, 2007. These options had an exercise price greater than the market value of the Company’s stock at that time; hence, in accordance with APB 25 and FIN 44, “Accounting for Certain Transactions Involving Stock Compensation – an Interpretation of APB Opinion No. 25,” no compensation expense was recorded in the condensed consolidated statements of operations.

8. 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 or similar application seeking product approval. Most of these contingent milestone payments are associated with technologies that are presently in early stage development. The Company is also required to pay certain fees for annual license maintenance and continuation-in-part patent applications.

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.

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.

9. FluoroPharma, Inc. Amendment

In July 2005, the Company reached an agreement with FluoroPharma, Inc. (“FluoroPharma”) to terminate a development agreement between the Company and FluoroPharma relating to FluoroPharma’s Position Emission Tomography (PET) imaging agents in exchange for 25,000 shares of FluoroPharma Series A Preferred Stock. The Company accounts for this investment under the cost method. The carrying amount of this investment was not material at September 30, 2005. In June 2005, Dr. Lanser, the Company’s former Chief Medical Officer, left the Company to become FluoroPharma’s President and CEO.

10

Boston Life Sciences, Inc.

(A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements (Unaudited)

10. Burnham Hill Partners Agreement

In October 2005, the Company entered into a consulting agreement with Burnham Hill Partners for financial advisory services through December 31, 2005 pursuant to which Burnham Hill Partners received $50,000 and 42,667 shares of unregistered common stock. Under the terms of the agreement, Burnham Hill Partners agreed to the cancellation of warrants to purchase 128,000 shares of the Company’s common stock exercisable at $7.40 per share originally issued to Burnham Hill Partners as placement agent for the Company’s Series E Stock private placement. The Company determined the exchange of the common stock for warrants will not result in a charge in 2005.

11. 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 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. 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 of 1933, as amended (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, New Drug Applications, or 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), the market size and possible advantages of our products and the future acquisition of complementary companies, products and technologies. 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 preclinical 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 biopharmaceutical company engaged in the research and clinical development of diagnostic and therapeutic products for central nervous system, or CNS, disorders. At September 30, 2005, we were considered a “development stage enterprise” as defined in Statement of Financial Accounting Standards No. 7, “Accounting and Reporting by Development Stage Enterprises.”

Our current pipeline includes diagnostic and therapeutic programs covering molecular imaging, axon regeneration, Parkinson’s Disease, or PD, and ocular indications.

As of September 30, 2005, we have experienced total net losses since inception of approximately $114,000,000. 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 September 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 September 30, 2005 and our ability to control certain costs, including those related to clinical trial programs, preclinical activities, and certain general and administrative expenses will enable us to meet our anticipated cash expenditures through June 2006. We will therefore need to raise additional capital through one or more of the following: collaboration, merger, acquisition 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 collaboration and other related fundraising efforts. There can be no assurance, however, that we will be successful in our collaboration or other fundraising efforts or that additional funds will be available on acceptable terms, if at all. In connection with our common stock financing completed by us in March 2005, we agreed with the purchasers in such financing, or the March 2005 Investors, that, subject to certain exceptions, we would not issue any shares of our common stock at a per share price less than $2.50 without the prior consent of the purchasers holding a majority of the shares issued in such financing. On November 1, 2005, the closing price of our common stock was $2.18. The failure to receive the requisite waiver or consent of the March 2005 Investors could have the effect of delaying or preventing the consummation of a financing by us. If we are unable to raise additional capital we may need to reduce, cease or delay one or more of our research or development programs.

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 program of ALTROPANE molecular imaging agent as a diagnostic for Attention Deficit Hyperactivity Disorder, or ADHD, and our preclinical programs including those in axon regeneration, PD therapeutics and ocular therapeutics 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

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working capital. If we are not able to raise additional capital, we may not have sufficient funds to complete our Phase III clinical trials of ALTROPANE as a diagnostic for PS or the Phase II program of ALTROPANE as a diagnostic for ADHD.

We continually evaluate possible acquisitions of, or investments in, businesses, technologies and products that are complementary to our business. At present, we have no proposals, arrangements or understandings with respect to the acquisition of any specific businesses, technologies or products. There can be no assurance that we will be able to identify or successfully complete any acquisitions.

The consideration paid in connection with an acquisition also affects our financial results. If we were to proceed with one or more significant acquisitions in which the consideration included cash, we could be required to use a substantial portion of our available cash to consummate any acquisition. To the extent we issue shares of stock or other rights to purchase stock, including options or other rights, existing stockholders may be diluted and earnings per share may decrease. In addition, acquisitions may result in the incurrence of debt, large one-time write-offs (such as acquired in-process research and development costs) and restructuring charges. They may also result in goodwill and other intangible assets that are subject to impairment tests, which could result in future impairment charges. To the extent that we use common stock for all or a portion of the consideration to be paid for future acquisitions, our existing stockholders may experience significant dilution.

In order to effect an acquisition, we may need additional financing. We cannot be certain that any such financing will be available on terms favorable or acceptable to us, or at all. If we raise additional funds through the issuance of equity, equity-related or debt securities, these securities may have rights, preferences or privileges senior to those of the rights of our common stockholders, who would then experience dilution.

Product Development

Molecular Imaging Program

The ALTROPANE molecular imaging agent is being developed for two indications: the differential diagnosis of 1) PS (including 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 other 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, we reached agreement with the FDA on a new SPA providing for an amended Phase III program that specifies two clinical protocols: 1) Parkinson’s or Essential Tremor–1, or POET-1, and 2) 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. The FDA agreed to allow all subjects 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 early approval of ALTROPANE by the FDA.

Under the new SPA, we currently expect to enlist up to 30 centers in the United States for each of POET-1 and POET-2, most of which will be university-based in POET-1. Based on certain statistical and modeling assumptions, the POET-1 trial may enroll approximately 332 patients, an estimate based on equal enrollment rates of Parkinsonian tremors, or PT, and non-Parkinsonian tremors, or nPT, patients leading to 166 patients with PT and 166 patients with nPT. 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 potential approval of ALTROPANE by the FDA. We are currently in the process of assembling the necessary safety and clinical databases required as part of an NDA submission. Preparation and submission of an NDA is typically a time consuming and costly process. There can be no assurance that the trials will be successful, that we will have sufficient resources to complete and submit the NDA, that no changes in the Phase III trials could be required that could jeopardize the SPA, that we will be able to assemble the required information required for an NDA submission, or that the FDA will not request additional clinical trial data or other regulatory information before it will accept an NDA submission for ALTROPANE.

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, MDS Nordion manufactures the ALTROPANE molecular imaging agent for our 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 Good Manufacturing Practices, or GMP, manufacturing process for ALTROPANE. We hope to sign an extension with

13

MDS Nordion before December 31, 2005 but there can be no assurance that we will be able to or that the terms will be acceptable.

We are currently analyzing the imaging results and the clinical data obtained from patients enrolled to-date in our Phase IIb clinical trial using ALTROPANE molecular imaging agent for the diagnosis of ADHD to ensure that the trial design and quantitation algorithms are appropriate for this patient population. We are also collaborating with outside experts to validate and refine the algorithm used to interpret the scans to ensure consistent and reproducible results. There can be no assurance that we will proceed with our Phase IIb trial, or if continued, that it will be successfully completed.

We are developing a technetium-based molecular imaging agent for the diagnosis of PD and ADHD. Our technetium-based molecular imaging program, including the FLUORATEC™ molecular imaging agent, is in the preclinical stage of development and as such it is too early to estimate the timing of an IND filing. There can be no assurance that we will be able to complete the necessary preclinical studies in order to file an IND.

Axon Regeneration Program

Inosine is a proprietary axonal growth factor that 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 functional recovery after stroke. In September 2004, we announced that we 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. We requested clarification from the FDA, during a teleconference held in July 2005, regarding certain items referred to in their September 2004 clinical hold letter. In August 2005, we completed and submitted the results of certain studies requested by the FDA. In October 2005, the FDA informed us that we remained on clinical hold pending receipt of a complete clinical hold response. Certain of the requests from FDA require that we obtain tissue samples and related data from preclinical studies performed at contract laboratories. Assuming that we are able to obtain these necessary samples and data, we plan to complete our clinical hold response and submit it to the FDA. There is no assurance that the requested tissues and data remain available or that our response, when and if 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. Additional preclinical studies could result in additional costs and delays in our Inosine program.

Parkinson’s Disease Therapeutic Program

We are developing a Dopamine Transporter, or DAT, blocker for the treatment of PD. We have identified promising lead compounds, including O-1369. We are accelerating development in our DAT blocker program. Our DAT blocking program is in preclinical development and as such it is too early to estimate the timing of an IND filing. There can be no assurance that we will be able to complete the necessary preclinical studies in order to file an IND.

Ocular Therapeutic Program

We are conducting research on anti-angiogenesis. Troponin, our recombinant anti-angiogenic agent and previously in development for cancer indications, is now being evaluated as a development candidate for potential ocular indications in new and validated preclinical models.

MDP14, a recombinant axon regeneration factor is also being evaluated as a candidate for potential ocular indications, including re-growth of axons essential for vision after injury. Initial process development is underway to provide material for preclinical testing. There can be no assurance that resources will be available to continue and complete the development activities being conducted under the ocular therapeutic program or that the programs will result in data that supports their continued development.

Sales & Marketing and Government Regulation

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 preclinical development. Our product candidates must undergo a rigorous regulatory approval process which includes extensive preclinical 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 before we can test our product candidates in humans or make them commercially available. Preclinical 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.

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Competition

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.

Research and Development

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 $14,042,000 on a cumulative basis.

Program	3rd Quarter 2005		Year to date		Cumulative
Molecular Imaging	$	745,000	$	1,621,000	$	18,417,000
Axon Regeneration	$	124,000	$	412,000	$	9,098,000
Parkinson’s Disease Therapeutic	$	2,000	$	52,000	$	754,000
Ocular Therapeutic	$	61,000	$	208,000	$	13,660,000

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 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 September 30, 2005, we currently expect to enroll approximately 332 patients in POET-1 and our estimate to complete POET-1 was approximately $3,100,000. However, there can be no assurance that we will not need to enroll more than 332 patients or 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.

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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 estimated 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 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.

Lease Accrual

We are required to make significant judgments and assumptions when estimating the liability for our net ongoing obligations under our amended lease agreement relating to our former executive offices located in Boston, Massachusetts. In accordance with SFAS 146, we use a discounted cash-flow analysis to calculate the amount of the liability. We applied a discount rate of 15%. The discounted cash-flow analysis is based on management’s assumptions and estimates of our ongoing lease obligations, and income from sublease rentals, including estimates of sublease timing and sublease rental terms. It is possible that our estimates and assumptions will change in the future, resulting in additional adjustments to the amount of the estimated liability, and the effect of any adjustments could be material. We will review our assumptions and judgments related to the lease amendment on at least a quarterly basis, until the outcome is finalized, and make whatever modifications we believe are necessary, based on our best judgment, to reflect any changed circumstances.

Results of Operations

Three Months Ended September 30, 2005 and 2004

Our net loss was $3,549,868 during the three months ended September 30, 2005, as compared with $2,550,262 during the three months ended September 30, 2004. Our net loss attributable to common stockholders was $3,549,868 during the three months ended September 30, 2005 as compared with $2,661,693 during the three months ended September 30, 2004. Net loss attributable to common stockholders totaled $0.30 per share for the 2005 period as compared to $0.39 per share for the 2004 period. The increase in net loss in the 2005 period was primarily due to higher general and administrative expense. The lower net loss attributable to common stockholders on a per share basis in the 2005 period was primarily due to an increase in weighted average shares outstanding of approximately 5,122,000 shares, which was primarily the result of the conversion of all outstanding shares of Series E Cumulative Convertible Preferred Stock, or Series E Stock, in February 2005 and the private placements of common stock completed in March and September 2005.

Research and development expenses were $1,678,783 during the three months ended September 30, 2005, as compared with $1,763,194 during the three months ended September 30, 2004. The decrease in the 2005 period was primarily

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attributable to a reduction in preclinical costs for Inosine of approximately $828,000 associated with certain animal toxicology studies completed in 2004. This decrease was partially offset by higher clinical trial costs for POET-1 of approximately $527,000 associated with increased enrollment, higher compensation and related costs of $133,000 and employee severance costs of $69,000. 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 higher enrollment in POET-1, preparation for POET-2, the assembly and preparation of our safety and clinical databases for ALTROPANE and higher preclinical costs for our DAT blocker program. Our working capital constraints may limit our planned expenditures.

General and administrative expenses were $1,897,892 during the three months ended September 30, 2005, as compared with $611,074 during the three months ended September 30, 2004. The increase in the 2005 period was primarily related to employee severance costs of $204,000, higher compensation and recruiting expenses of approximately $354,000, costs associated with the relocation of our corporate headquarters of $95,000 and costs incurred related to our former headquarters of $337,000. We currently anticipate that our general and administrative expenses will increase over the next twelve months due to our increased headcount and costs associated with compliance with the Sarbanes-Oxley Act of 2002. This increase is anticipated to be offset by a reduction in severance and lease costs associated with our former headquarters.

Interest expense was $0 during the three months ended September 30, 2005, as compared with $208,868 during the three months ended September 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 10% Convertible Senior Secured Promissory Notes, or Notes, issued to Ingalls & Snyder Value Partners, L.P., or ISVP.

Investment income was $26,807 during the three months ended September 30, 2005, as compared with $32,874 during the three months ended September 30, 2004. The decrease was primarily due to lower average cash, cash equivalent, and marketable securities balances during the 2005 period.

There was no accrual of preferred stock dividends during the three months ended September 30, 2005, as compared with $111,431 during the three months ended September 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 September 2005. In February 2005, we entered into agreements with the holders of Series E Stock, or the Holders, 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.

Nine Months Ended September 30, 2005 and 2004

Our net loss was $8,291,872 during the nine months ended September 30, 2005, as compared with $9,300,686 during the nine months ended September 30, 2004. Net loss attributable to common stockholders, including a charge related to a modification of warrants held by Holders of Series E Stock of $715,515 in the 2005 period, was $9,007,387 during the nine months ended September 30, 2005, as compared with $9,671,708 during the nine months ended September 30, 2004. Net loss attributable to common stockholders totaled $0.88 per share for the 2005 period as compared to $1.43 per share for the 2004 period. The decrease in net loss in the 2005 period was primarily due to lower research and development and interest expenses. 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 3,458,000 shares, which was primarily the result of the conversion of all outstanding shares of Series E Stock in February 2005 and the private placements of common stock completed in March and September 2005.

Research and development expenses were $4,411,531 during the nine months ended September 30, 2005, as compared with $5,448,467 during the nine months ended September 30, 2004. The decrease in the 2005 period was primarily attributable to lower preclinical costs for Troponin of approximately $73,000 and Inosine of approximately $2,657,000 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 $1,004,000 primarily associated with increased enrollment in POET-1, higher compensation and related costs in the 2005 period of approximately $293,000 due to increased headcount and employee severance costs of approximately $320,000 in the 2005 period.

General and administrative expenses were $3,898,556 during the nine months ended September 30, 2005, as compared with $3,350,948 during the nine months ended September 30, 2004. The increase in the 2005 period was primarily related to higher compensation and recruiting costs of $661,000 related to increased headcount, employee severance costs of approximately $204,000, an increase of approximately $132,000 primarily associated with a special meeting of stockholders held in February 2005, a $65,000 increase in accounting expense primarily related to consulting on various accounting related issues, a $127,000 increase associated with the relocation of corporate headquarters and a $337,000 loss recorded as a result of the facility lease termination. The increase was partially offset by a reduction in legal and consulting expenses of

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$1,272,000 largely associated with the Settlement and Standstill Agreement with Robert Gipson, Thomas Boucher, Ingalls & Snyder, LLC and ISVP executed in June 2004. As part of the Settlement and Standstill agreement, we paid $300,000 to Ingalls & Snyder, LLC 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.

Interest expense was $45,965 during the nine months ended September 30, 2005, as compared with $626,604 during the nine months ended September 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 issued to ISVP. This decrease was partially offset by non-cash interest expense of approximately $44,000 incurred in February 2005 when we agreed to lower the exercise price of a warrant to purchase 100,000 shares of our common stock held by ISVP in return for its immediate exercise in cash.

Investment income was $66,412 during the nine months ended September 30, 2005, as compared with $125,333 during the nine months ended September 30, 2004. The decrease was primarily due to lower average cash, cash equivalent, and marketable securities balances.

Accrual of preferred stock dividends and the modification of warrants held by preferred stock holders was $715,515 during the nine months ended September 30, 2005, as compared with $371,022 during the nine months ended September 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 of Series E Stock 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 $371,022 during the 2004 period.

Liquidity and Capital Resources

Net cash used for operating activities, primarily related to our net loss, totaled $7,505,103 during the nine months ended September 30, 2005 as compared with $8,232,077 during the nine months ended September 30, 2004. Net cash used for investing activities totaled $8,126,614 during the nine months ended September 30, 2005 as compared with net cash provided by investing activities of $2,181,248 during the nine months ended September 30, 2004. The difference in investing activities principally reflects the purchase of marketable securities with the proceeds from the private placements completed in March and September 2005 described below, net of the sales of marketable securities which were subsequently used to fund operations. Net cash provided by financing activities totaled $18,449,835 during the nine months ended September 30, 2005 as compared with cash used for financing activities of $20,168 during the nine months ended September 30, 2004. The difference in financing activities principally reflects the effect of the private placements described below.

As of September 30, 2005, we had incurred total net losses since inception of approximately $114,000,000. 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 September 30, 2005, is as follows:

Date	Net Proceeds Raised		Securities Issued
September 2005	$	12.8 million	Common stock
March 2005	$	5.0 million	Common stock
December 2003	$	7.0 million	Convertible preferred stock and warrants
March 2003	$	9.9 million	Common stock

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 September 30, 2005, we had available cash, cash equivalents, and marketable securities of approximately $12,409,000 and working capital of approximately $10,578,000. The cash, cash equivalents, and marketable securities available at September 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 September 30, 2005 and our

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ability to control certain costs, including those related to clinical trial programs, preclinical activities, and certain general and administrative expenses will enable us to meet our anticipated cash expenditures through June 2006. We will therefore need to raise additional capital through one or more of the following: collaboration, merger, acquisition 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 collaboration and other related fundraising efforts. There can be no assurance, however, that we will be successful in our collaboration or other related fundraising efforts or that additional funds will be available on acceptable terms, if at all. In connection with our common stock financing completed by us in March 2005, we agreed with the March 2005 Investors that, subject to certain exceptions, we would not issue any shares of our common stock at a per share price less than $2.50 without the prior consent of purchasers holding a majority of the shares issued in such financing. On November 1, 2005, the closing price of our common stock was $2.18. The failure to receive the requisite waiver or consent of the March 2005 Investors could have the effect of delaying or preventing the consummation of a financing by us. If we are unable to raise additional capital we may need to reduce, cease or delay one or more of our research or development programs.

Contractual Obligations and Commitments

In September 2005, we amended our Lease Agreement dated as of January 28, 2002 by and between us and Brentwood Properties, Inc., or the Landlord, relating to our former principal executive offices located on the fourth and fifth floors of a building, or Premises, in Boston, Massachusetts. Pursuant to the terms of the amended lease agreement, the Landlord consented to, among other things, the Small Army Sublease and Dell Sublease (each as discussed below), each of which runs through the term of the original Lease Agreement. In consideration for the Landlord’s consent, we agreed to increase our security deposit provided for under the Lease Agreement from $250,000 to $388,600 subject to periodic reduction pursuant to a predetermined formula.

In September 2005, we entered into a Sublease Agreement, or Small Army Sublease, with Small Army, Inc., as subtenant, or Small Army, to sublease approximately 3,300 rentable square feet on the fourth floor of the Premises. The initial term of the Small Army Sublease is eighty months beginning on October 1, 2005. Pursuant to the terms of the Small Army Sublease, Small Army has agreed to pay: (i) $8,800 in base rent per month from March 1, 2006 through May 30, 2009 and (ii) $9,625 in base rent per month for the period from June 1, 2009 through May 30, 2012. Small Army has agreed to pay us a proportionate share of our additional obligations under the Lease Agreement resulting from any future increases in certain costs to operate the Premises, including insurance and real estate taxes.

In September 2005, we entered a Sublease Agreement, or Dell Sublease, with Dell Mitchell Architects, Inc., as subtenant, or Dell, to sublease approximately 3,300 rentable square feet on the fifth floor of the Premises. The initial term of the Dell Sublease is eighty-one months beginning on September 1, 2005. Pursuant to the terms of the Dell Sublease, Dell has agreed to pay: (i) $8,800 in base rent per month from March 16, 2006 through May 30, 2009 and (ii) $9,625 in base rent per month for the period from June 1, 2009 through May 30, 2012. Dell has agreed to pay us a proportionate share of our

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additional obligations under the Lease Agreement resulting from any future increases in certain costs to operate the Premises, including insurance and real estate taxes.

The activity related to the lease accrual at September 30, 2005, is as follows:

	Charge, third quarter 2005		Cash Payments, net of sublease receipts third quarter 2005		Accrual as of September 30, 2005
Lease Amendment	$	405,942	$	17,335	$	388,607
Short-term portion of lease accrual						107,024
Long-term portion of lease accrual					$	281,583

During the three months ended September 30, 2005, we recorded approximately $332,000 in general and administrative expenses related to net carrying costs of the Lease Amendment. During the three months ended September 30, 2005, we recorded approximately $5,000 of expense related to the imputed cost of the lease expense accrual included in general and administrative expenses on the accompanying condensed consolidated statements of operations.

New Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board, or FASB, issued SFAS 123(R). SFAS 123(R) revises SFAS No. 123, supersedes Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, and amends FASB No. 95, “Statement of Cash Flows.” 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, or 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, we are required to be compliant beginning January 1, 2006. We are 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. We are 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 “Accounting Changes and Error Corrections—a replacement of APB Option No. 20 and FASB Statement No. 3”, or 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. As of September 30, 2005, we had incurred cumulative net losses of approximately $114,000,000 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 preclinical 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 and debt financings.

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 September 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 September 30, 2005 and our ability to control certain costs, including those related to clinical trial programs, preclinical activities, and certain general and administrative expenses will enable us to meet our anticipated cash expenditures through June 2006. We will therefore need to raise additional capital through one or more of the following: collaboration, merger, acquisition or other transaction with

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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 collaboration and other related fundraising efforts. There can be no assurance, however, that we will be successful in our collaboration or other fundraising efforts or that additional funds will be available on acceptable terms, if at all. In connection with our common stock financing completed by us in March 2005, we agreed with the March 2005 Investors that, subject to certain exceptions, we would not issue any shares of our common stock at a per share price less than $2.50 without the prior consent of purchasers holding a majority of the shares issued in such financing. On November 1, 2005, the closing price of our common stock was $2.18. The failure to receive the requisite waiver or consent of the March 2005 Investors could have the effect of delaying or preventing the consummation of a financing by us. 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 and or debt 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. If we are unable to raise additional capital we may need to reduce, cease or delay one or more of our research or development programs.

Our ability to continue development of our programs, including our Phase III program of ALTROPANE molecular imaging agent as a diagnostic for PS, our Phase II program of as ALTROPANE molecular imaging agent as a diagnostic for ADHD, and our preclinical programs including those in axon regeneration, PD therapeutics and ocular therapeutics 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 able to raise additional capital, we may not have sufficient funds to complete our Phase III clinical trials of ALTROPANE molecular imaging agent as a diagnostic for PS or the Phase II program 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 preclinical 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

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• 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.

ACQUISITIONS PRESENT MANY RISKS, AND WE MAY NOT REALIZE THE ANTICIPATED FINANCIAL AND STRATEGIC GOALS FOR ANY SUCH TRANSACTIONS.

We may in the future acquire complementary companies, products and technologies. Such acquisitions involve a number of risks, including:

• We may find that the acquired company or assets do not further our business strategy, or that we overpaid for the company or assets, or that economic conditions change, all of which may generate a future impairment charge;

• We may have difficulty integrating the operations and personnel of the acquired business, and may have difficulty retaining the key personnel of the acquired business;

• We may have difficulty incorporating the acquired technologies;

• We may encounter technical difficulties or failures with the performance of the acquired technologies or drug products;

• We may face product liability risks associated with the sale of the acquired company’s products;

• Our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the complexity of managing diverse locations;

• We may have difficulty maintaining uniform standards, internal controls, procedures and policies across locations;

• The acquisition may result in litigation from terminated employees or third-parties; and

• We may experience significant problems or liabilities associated with product quality, technology and legal contingencies.

These factors could have a material adverse effect on our business, results of operations and financial condition or cash flows, particularly in the case of a larger acquisition or multiple acquisitions in a short period of time. From time to time, we may enter into negotiations for acquisitions that are not ultimately consummated. Such negotiations could result in significant diversion of management time, as well as out-of-pocket costs.

The consideration paid in connection with an acquisition also affects our financial results. If we were to proceed with one or more significant acquisitions in which the consideration included cash, we could be required to use a substantial portion of our available cash to consummate any acquisition. To the extent we issue shares of stock or other rights to purchase stock, including options or other rights, existing stockholders may be diluted and earnings per share may decrease. In addition, acquisitions may result in the incurrence of debt, large one-time write-offs (such as acquired in-process research and development costs) and restructuring charges. They may also result in goodwill and other intangible assets that are subject to impairment tests, which could result in future impairment charges.

Risk Related to Regulation

IF OUR PRECLINICAL 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 preclinical 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. Preclinical 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 preclinical 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 preclinical data for the filing of an IND. The FDA may request additional preclinical data before allowing us to commence clinical trials. As an example, the FDA has

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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 for POET-1 and POET-2 will be the confirmation that the diagnostic accuracy of the ALTROPANE molecular imaging agent 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 preclinical 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 and GMP. Our compliance with these standards is 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

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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

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• 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.

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.

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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 capability and have elected to outsource substantially all of our research and development, preclinical 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 preclinical 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 significant collaborations 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;

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

• Beacon Bioscience in Doylestown, Pennsylvania which performs services for us including SPECT evaluations and image management; and

• INC Research in Raleigh, North Carolina which performs services for us including medical monitoring and data management.

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.

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 preclinical 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 preclinical 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;

• FLUORATEC molecular imaging agent compositions and methods of use;

• Inosine methods of use; and

• O-1369 compositions and methods of use.

Generally, each license agreement is effective until the last patent licensed relating to the technology expires or at a fixed and determined date. The patents on the ALTROPANE molecular imaging agent expire beginning in 2013. The patents

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on the FLUORATEC molecular imaging agent expire beginning in 2020. The patents on Inosine expire in 2017. The applications for patents relating to O-1369 are currently pending.

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 and annual license maintenance fee;

• Reimbursement payments for all patent related costs incurred by Harvard and its Affiliates, including fees associated with the filing of continuation-in-part patent applications;

• 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. We are also required to pay certain fees for annual license maintenance and continuation-in-part patent applications.

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.

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 preclinical 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;

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• 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.

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 preclinical 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

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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;

• 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

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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 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 preclinical 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 and MDP-14, 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

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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. We hope to sign an extension with MDS Nordion before December 31, 2005 but there can be no assurance that we will be able to or that the terms will be acceptable. The agreement provides for MDS Nordion to manufacture the ALTROPANE molecular imaging agent for our 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. 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.

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We currently outsource most of our research and development, preclinical 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;

• 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 September 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 September 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 September 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 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Private Placement

On September 7, 2005, we completed a private placement of 6,000,000 shares of our common stock raising approximately $12,780,000 in gross proceeds. The investors in the private placement included Robert L. Gipson, Thomas O. Boucher and other affiliates of Ingalls & Snyder, LLC. In connection with the private placement, we agreed to file a registration statement relating to the resale of the common stock sold in the private placement upon request of the investors.

Consulting Agreement

In October 2005, we entered into a consulting agreement with Burnham Hill Partners for financial advisory services through December 31, 2005 pursuant to which Burnham Hill Partners received 42,667 shares of unregistered common stock.

No underwriters were involved in the foregoing sales of securities. We claimed an exemption from registration under the Securities Act for the sale and issuance of securities in the transactions described in “Private Placement” and “Consulting Agreement” above by virtue of Section 4(2) of the Securities Act and Rule 506 of Regulation D. Such sales and issuances did not involve any public offering, were made without general solicitation or advertising and each purchaser was an accredited investor with access to all relevant information necessary to evaluate the investment and represented to us that the shares were being acquired for investment.

ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Our Annual Meeting of Stockholders was held on September 13, 2005.

There were present at the Annual Meeting in person or by proxy stockholders holding an aggregate of 9,080,701 shares of common stock. The results of the vote taken at the Annual Meeting with respect to the election of the director nominees were as follows:

Nominees	For	Withheld
Peter G. Savas	9,033,883 shares	46,618 shares
Robert S. Langer, Jr.	9,032,549 shares	48,152 shares
Michael J. Mullen, CPA	9,032,765 shares	47,936 shares
John T. Preston	9,033,146 shares	47,555 shares

A vote of the stockholders was taken at the Annual Meeting with respect to the proposal to approve the Company’s 2005 Stock Incentive Plan. Of the shares voted, 5,863,872 shares voted in favor of such proposal, 274,199 shares were voted against such proposal and 104,255 shares abstained from voting.

In addition, a vote of the stockholders was taken at the Annual Meeting with respect to the proposal to ratify the selection by the Audit Committee of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2005. Of the shares voted, 9,059,712 shares voted in favor of such proposal, 17,709 shares were voted against such proposal and 3,280 shares abstained from voting.

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ITEM 6: EXHIBITS

10.1	Amendment of Lease dated September 9, 2005 by and between Brentwood Properties, Inc. and Boston Life Sciences, Inc.
10.2	Sublease dated September 9, 2005 by and between Boston Life Sciences, Inc. and Small Army, Inc.
10.3	Sublease dated September 9, 2005 by and between Boston Life Sciences, Inc. and Dell Mitchell Architects, Inc.
10.4	Severance and Settlement Agreement and Release dated September 12, 2005 by and between Boston Life Sciences, Inc. and Joseph Hernon.
10.5	Common Stock Purchase Agreement dated as of August 30, 2005 between the Company and the investors listed therein.
10.6	Amendment No. 1 to Amended and Restated Registration Rights Agreement dated as of August 30, 2005 between the Company and the investors listed therein.
10.7	License Agreement between Organix Inc. and Boston Life Sciences, Inc. dated as of June 1, 2000; Amendment dated as of May 11, 2004 (relating to O-1369).
10.8	License Agreement between The President and Fellows of Harvard College and Boston Life Sciences, Inc. dated as of October 18, 1996; Amendment dated as of September 19, 2001; Amendment dated as of May 7, 2004 (relating to FLUOROTEC™).
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.
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.
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.
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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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: November 14, 2005	/s/    PETER G. SAVAS
	Peter G. Savas Chairman and Chief Executive Officer (Principal Executive Officer)
DATE: November 14, 2005	/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

AMENDMENT OF LEASE

THIS AGREEMENT, made as of the 30th day of August, 2005, by and between BRENTWOOD PROPERTIES, INC., a Delaware corporation (hereinafter referred to as “Landlord”) and BOSTON LIFE SCIENCES, INC., a Delaware corporation (hereinafter referred to as “Tenant”)

WITNESSETH THAT:

WHEREAS, by agreement dated January 28, 2002, as the same may from time to time have been amended (hereinafter referred to as the “Lease”), Landlord leased to Tenant certain premises contained in the building known and numbered as 20-24 Newbury Street, Boston, Massachusetts, all as more particularly defined and set forth in the Lease; and

WHEREAS, Tenant is proposing to sublet that portion of the premises comprising the fourth floor of the building to Small Army Inc., a Massachusetts corporation (hereinafter referred to as the “Small Army Sublease”); and

WHEREAS, Tenant is proposing to sublet that portion of the premises comprising the fifth floor of the building to Dell Mitchell Architects, Inc., a Massachusetts corporation (hereinafter referred to as the “Dell Mitchell Sublease”); and

WHEREAS, each such Sublease is subject to Landlord’s consent in accordance with the applicable provisions of the Lease (hereinafter referred to as “Landlord’s Consent”); and

WHEREAS, Landlord has been requested, as part of Landlord’s Consent, to include provisions allowing each such subtenant to remain in possession of the applicable portion of the premises upon the terms and conditions of the relevant Sublease as if Landlord were the sublandlord named therein, as a direct agreement between Landlord and the subtenant

thereunder, in the event that the Lease terminates for any reason other than pursuant to Article X thereof (hereinafter referred to as the “Non-Disturbance Provisions”); and

WHEREAS, Landlord is willing in no event to so include the Non-Disturbance Provisions unless the Lease is amended as hereinafter set forth; and

WHEREAS, Tenant is willing to so amend the Lease;

NOW THEREFORE, for good and valuable consideration by each party paid to the other, and in further consideration of the foregoing recitals and the mutual obligations set forth herein, the parties hereby agree as follows:

1. The Deposit provided for in Section 14.07 of the Lease shall be increased from $250,000 to $388,600 simultaneously with the execution and delivery of Landlord’s Consent, including the Non-Disturbance Provisions, with respect to the Small Army and Dell Mitchell Subleases. For purposes hereof, the “Differential” shall be defined as the difference, as calculated by the Landlord at the end of each calendar quarter commencing on December 31, 2005, between (a) the rent and other charges expected to become due under the Lease during the remainder of the term thereof and (b) the rent and other charges expected to become due under the Small Army Sublease and the Dell Mitchell Sublease, in each case during the remainder of the term thereof after such Sublease is in full force and effect. So long as there is no existing default of Tenant under the Lease, the Deposit shall be reduced at the end of each calendar quarter by the amount (each hereinafter referred to as a “Deposit Refund”), if any, (a) that the Differential is reduced below $521,719 (less any Deposit Refund(s) previously paid) until the Deposit has been reduced to $250,000, and thereafter (b) that the Differential is reduced below $311,400 (less any Deposit Refund(s) previously paid) until the Deposit has been reduced to

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$88,600. Landlord shall deliver the Deposit Refund due to Tenant, if any, within ten (10) days after each calendar quarter.

2. At such time as the amount of the Deposit is increased pursuant to Paragraph 1, Landlord shall have no further obligation to hold in a separate account any portion of the Deposit paid in cash and may commingle such cash with other funds of Landlord. To the extent that any interest earned on the Deposit is to be disbursed or otherwise credited to Tenant pursuant to the provisions of Section 14.07 of the Lease, such interest shall be deemed to accrue, in the case of any portion of the Deposit paid in cash as aforesaid, at the rate payable by Citizens Bank of Massachusetts or its successor on a regular business money market account.

3. As set forth in Article VIII of the Lease, Landlord may, at any time and from time to time, collect rent and other charges payable by the subtenant under the Small Army Sublease and/or the Dell Mitchell Sublease and apply the net amount collected to the rent and other charges reserved in the Lease without in any way releasing Tenant from its own obligations. Each such Sublease shall authorize Landlord to hold, and Landlord shall be entitled to so hold, any security deposit payable by the subtenant thereunder. In the event that Landlord elects to collect rent and other charges due under a particular Sublease from the subtenant thereunder, Landlord may apply all or any part of such security deposit to any such sum not paid in a timely manner. In all other respects, Tenant shall be responsible to properly account for such security deposit and Landlord shall permit the application thereof from time to time as Tenant may direct, subject to receipt of such verification as Landlord may reasonably request regarding the circumstances alleged by Tenant to justify such application.

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4. The provisions of Section 14.07 of the Lease entitling Tenant to reduce the amount of the Deposit upon satisfaction of certain conditions prescribed therein are hereby deleted and shall be of no further force or effect.

5. Tenant shall indemnify and hold Landlord harmless from and against any claim for a commission by any broker or other person in connection with this Amendment, the Small Army Sublease, the Dell Mitchell Sublease, the granting of Landlord’s Consent with respect to either such Sublease or the inclusion of the Non-Disturbance Provisions as part of such Consent (hereinafter collectively referred to as the “Transaction Documents”). Landlord warrants and represents that Landlord has dealt with no such broker other than those named in the Transaction Documents.

6. Tenant shall, forthwith upon demand, reimburse all costs and expenses (including without limitation reasonable attorneys’ fees) incurred by Landlord in connection with the Transaction Documents, provided however that the amount which Tenant is obligated to so reimburse shall not exceed $5,000 in the aggregate.

7. Unless the context requires otherwise, the terms used herein shall be defined as set forth in the Lease and construed in conformity therewith.

8. Except as herein modified, the Lease is hereby ratified and confirmed.

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IN WITNESS WHEREOF, Landlord and Tenant have caused this instrument to be executed under seal as of the day and year first above written.

BRENTWOOD PROPERTIES, INC.
By	Illegible
Its	President
title	(duly-authorized)
BOSTON LIFE SCIENCES, INC.
By	/s/    MARK PYKETT
Its	President and COO
title	(duly-authorized)

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EX-10.2

Exhibit 10.2

SUBLEASE

This SUBLEASE (the “Sublease”) is dated as of the 30th day of August, 2005 by and between BOSTON LIFE SCIENCES, INC., a Delaware corporation (“Sublandlord”), and SMALL ARMY, Inc., a Massachusetts corporation (“Subtenant”).

RECITALS

WHEREAS, pursuant to that certain Lease dated as of January 28, 2002 by and between Brentwood Properties, Inc., a Delaware corporation (“Prime Landlord”), as landlord, and Sublandlord, as tenant (the “Prime Lease”), a copy of which Prime Lease is attached hereto as Exhibit A, Sublandlord leased from Prime Landlord certain premises (the “Original Premises”) located in the building commonly known as 20-24 Newbury Street, Boston, Massachusetts (the “Building”), which Original Premises contain approximately 6,600 rentable square feet of space located on the fourth and fifth floors of the Building, as more fully described in the Prime Lease; and

WHEREAS, Subtenant desires to sublease from Sublandlord a portion of the Original Premises, comprising the fourth floor of the Building and containing 3,300 rentable square feet, more particularly shown on the floor plan attached hereto as Exhibit B (the “Subleased Premises”), and Sublandlord is willing to sublease the Subleased Premises to Subtenant on the provisions, covenants and conditions hereinafter set forth.

AGREEMENT

NOW, THEREFORE, in consideration of Ten Dollars ($10.00), the mutual covenants made herein, and other consideration, the receipt and sufficiency of which are hereby acknowledged and agreed, Sublandlord hereby subleases to Subtenant and Subtenant hereby takes and hires from Sublandlord the Subleased Premises, on the terms and conditions set forth below:

I. Defined Terms. All terms defined in the Prime Lease and used herein shall, unless otherwise defined herein, have the meanings ascribed to such terms in the Prime Lease.

II. Term. The term of this Sublease (the “Sublease Term”) shall commence on October 1, 2005 (the “Sublease Term Commencement Date”), and shall continue until May 30, 2012 or the earlier termination of the Prime Lease, unless the Sublease Term is sooner terminated in accordance with the provisions of this Sublease. If Sublandlord provides Subtenant with access to the Subleased Premises prior to the Sublease Term Commencement Date, such access will be on all of the terms and conditions set forth in this Sublease.

III. Delivery. The Subleased Premises shall be delivered to Subtenant on the Sublease Term Commencement Date, broom-clean and free of all occupants but otherwise “as-is, where-is and with all faults”, without representation or warranty, express or implied, and Subtenant hereby waives, disclaims and renounces any representation or warranty. In the event construction of any demising walls are necessary to separately demise the Subleased Premises, the same will be constructed by Subtenant at its sole cost and expense, in accordance with and subject to the provisions of this Sublease and the provisions of the Prime Lease incorporated herein. Sublandlord shall have no obligation to make any improvements in or to the Subleased Premises.

IV. Base Rent. Commencing on the Sublease Rent Commencement Date (as defined below), and on the first of each month thereafter, Subtenant shall pay to Sublandlord, in advance, monthly installments, without withholding, offset or reduction, of base rent (“Base Rent”) at the rate set forth below. The Sublease Rent Commencement Date shall be March 1, 2006; provided that if Subtenant occupies the Subleased Premises for the conduct of its business as an advertising agency prior to November 15, 2005, then the Sublease Rent Commencement Date will occur a number days before March 1, 2006 equal to the number of days before November 15, 2005 that Subtenant first occupied the Subleased Premises for the conduct of its business as an advertising agency. In other words, the Sublease Rent Commencement date will occur 105 days following the date Subtenant first occupies the Subleased Premises for the conduct of its business as an advertising agency, but in no event later than March 1, 2006 regardless of when (or whether) Subtenant occupies the Subleased Premises for the conduct of its business as an advertising agency. For the purposes of the paragraph, Subtenant shall be deemed to have commenced conducting business as an advertising agency only when Subtenant’s employees regularly and consistently utilize the Subleased Premises for business purposes. Base Rent for any partial calendar month at the beginning of the Sublease Term shall be prorated on a daily basis.

Dates	Base Rent
For the period from the Sublease Rent Commencement Date through May 30, 2009:	The annual rate of $105,600 (i.e., $8,800 per month)
For the period from June 1, 2009 through May 30, 2012:	The annual rate of $115,500 (i.e. $9,625 per month)

V. Additional Rent. Subtenant acknowledges that pursuant to Sections 3.02, 3.03, 3.04 and 3.05 of the Prime Lease, Sublandlord is obligated to pay to Prime Landlord additional rent on account of operating costs, insurance and real estate taxes, as more particularly described in such Sections. Subtenant shall pay to Sublandlord with its monthly payment of Base Rent Subtenant’s proportionate share of Sublandlord’s additional rent obligations under Sections 3.02, 3.03, 3.04 and 3.05 of the Prime Lease (but in the case of Sections 3.02 and 3.03 (and 3.05 as it applies to Sections 3.02 and 3,03), only to the extent such rental amounts exceed those due in the calendar year ending December 31, 2006, and in the case of Section 3.04 (and Section 3.05 as it applies to Section 3.04), only to the extent such rental amounts exceed those due on account of fiscal year ending June 30, 2006) Subtenant’s proportionate share as used in the preceding sentence is 50% (being the number of rentable square feet in the Subleased Premises expressed as a percentage of the number of rentable square feet in the Original Premises, referred to hereinafter as “Subtenant’s Proportionate Share”). Sublandlord shall deliver to Subtenant promptly after receipt thereof any statements of operating costs, insurance or real estate taxes delivered to Sublandlord by Prime Landlord.

VI. Use. The Subleased Premises shall be used for general office use and for no other uses.

VII. Prime Lease. Subtenant agrees that it will do nothing in, on or about the Subleased Premises which would result in the breach by Sublandlord of its undertakings and obligations under the Prime Lease. Except for the following provisions, this Sublease shall be subject to and on all of

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the terms and conditions as are contained in the Prime Lease and the provisions of the Prime Lease are hereby incorporated into this Sublease as if Sublandlord were the landlord thereunder and Subtenant the tenant thereunder:

A. The defined economic terms for “Yearly Fixed Rent,” “Monthly Payment,” “Rent Year,” “Leased Area,” “Term Commencement Date,” “Rent Commencement Date,” “Rent Year”, “Tenant’s Original Address”, “Expiration Date”, “Premises Net Rentable Floor Area” and “Security Deposit” are inapplicable;

B. Sections 3.02, 3.03, 3.04 and 3.05 of the Prime Lease (relating to additional rent) are applicable, as modified by the provisions of Paragraph V of this Sublease;

C. Article IV of the Prime Lease (relating to construction of the premises) is inapplicable;

D. Article V of the Prime Lease (relating to utilities) is applicable, as clarified by Section XIV hereof;

E. Section 14.07 of the Prime Lease (relating to security deposits) is inapplicable;

F. Section 14.12 of the Prime Lease (relating to brokerage) is inapplicable;

G. Section 14.14 of the Prime Lease (relating to extension options) is inapplicable; and

H. Where appropriate, references to “Landlord” in the Prime Lease shall be deemed to mean “Sublandlord” hereunder and references to “Tenant” in the Prime Lease shall be deemed to mean “Subtenant” hereunder, it being understood and agreed that Sublandlord will not be acting as, or assuming any of the responsibilities of, Prime Landlord, and all references in the Prime Lease to Landlord-provided services or Landlord insurance requirements, and any other references which by their nature relate to the owner or operator of the Building, rather than to a tenant of the Building subleasing space to a subtenant, shall continue to be references to Prime Landlord and not to Sublandlord.

VIII. Subtenant’s Covenants. Subtenant covenants to Sublandlord to perform all of the covenants and obligations to be performed by Sublandlord as tenant under the Prime Lease as the same relate to the Subleased Premises and to comply with this Sublease and the applicable provisions of the Prime Lease, as modified by this Sublease, in all respects (including, without limitation, complying with all applicable laws, regulations and standards). If Subtenant shall fail to make any payment or perform any act required to be made or performed by Subtenant under the Prime Lease pursuant to Subtenant’s assumption of Sublandlord’s obligations thereunder as they relate to the Subleased Premises, and such default is not cured by Subtenant by the first to occur of (i) one-half of the period specified in the Prime Lease for curing such default, or (ii) five (5) days

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prior to the expiration of such Prime Lease cure period, Sublandlord, without waiving or releasing any obligation or default hereunder, may (but shall be under no obligation to) make such payment or perform such act for the account and at the expense of Subtenant, and may take any and all such actions as Sublandlord in its sole discretion deems necessary or appropriate to accomplish such cure. If Sublandlord shall reasonably incur any expense in remedying such default, Sublandlord shall be entitled to recover such sums upon demand from Subtenant as additional rent under this Sublease.

IX. Sublandlord’s Covenants. Sublandlord covenants to Subtenant to perform all of the terms and provisions required of it under the Prime Lease and to promptly pay when due all rents due and accruing to Prime Landlord, provided Subtenant timely makes all rental and additional rental payments required of Subtenant hereunder. Upon request of Subtenant and at Subtenant’s cost and expense, Sublandlord will use reasonable efforts to enforce on behalf of Subtenant Sublandlord’s rights under the Prime Lease. Nothing contained in this Sublease shall be construed as a guarantee by Sublandlord of any of the obligations, covenants, warranties, agreements or undertakings of Prime Landlord in the Prime Lease, nor as an undertaking by Sublandlord to Subtenant on the same or similar terms as are contained in the Prime Lease.

X. Indemnification. Subtenant shall indemnify Sublandlord and hold Sublandlord harmless from and against any and all claims, demands suits, judgments, liabilities, costs and expenses, including reasonable attorneys fees, arising out of or in connection with Subtenant’s use and possession of the Subleased Premises, or arising out of the failure of Subtenant, its agents, contractors or employees to perform any covenant, term or condition of this Sublease or of the Prime Lease to be performed by Subtenant hereunder. Sublandlord shall indemnify Subtenant and hold Subtenant harmless from and against any and all claims, demands, suits, judgments, liabilities, costs and expenses, including reasonable attorneys fees, arising out of the failure of Sublandlord to perform any covenant, term or condition of this Sublease or of the Prime Lease to be performed by Sublandlord hereunder.

XI. Assignment and Subletting. Subtenant shall not assign this Sublease in whole or in part or sublet the Subleased Premises in whole or in part without the prior written consent of Sublandlord, which consent will not be unreasonably withheld. No such sublease or assignment shall be effective without the consent of Prime Landlord under the Prime Lease. If, as to any sublease or assignment for which Sublandlord’s consent is necessary, Subtenant receives rent or other consideration in excess of the Base Rent and additional rent payable under this Sublease, Subtenant shall pay to Sublandlord one half of such excess, after deducting Subtenant’s reasonable legal and brokerage expenses and fit-up expenses paid for by Subtenant at the time of such subleasing or assignment. If Sublandlord and Prime Landlord consent to any such assignment or subletting, Subtenant shall remain fully and primarily liable to Sublandlord, in all respects, under the Sublease.

XII. Security Deposit. Prior to the execution hereof, Subtenant shall deliver to Prime Landlord the amount of $35,200.00 (“Subtenant’s Security Deposit”), such sum to be held by Prime Landlord as security for the performance of Subtenant’s obligations under this Sublease. Upon the occurrence of any default by Subtenant hereunder, Subtenant agrees that Sublandlord and/or Prime Landlord may apply all or any part of Subtenant’s Security Deposit, together with accrued interest, if any, to any obligation of Subtenant hereunder. If all or any portion of Subtenant’s Security Deposit is applied by Sublandlord and/or Prime Landlord against any of Subtenant’s obligations hereunder,

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Subtenant shall promptly restore Subtenant’s Security Deposit to its original amount. Interest actually earned on Subtenant’s Security Deposit shall, on an annual basis, be credited to and become part of the Subtenant’s Security Deposit.

In lieu of depositing the Subtenant’s Security Deposit in cash, Subtenant may provide Sublandlord with a letter of credit in the amount of the Subtenant’s Security Deposit. Such letter of credit shall be an evergreen, irrevocable standby letter of credit, payable on sight, at Subtenant’s sole cost and expense, and otherwise in form and substance, and issued by a bank, acceptable to Sublandlord and Prime Landlord. In the event the letter of credit is not renewed thirty days prior to the scheduled expiration thereof or in the event of a default by Subtenant under this Sublease, Sublandlord or Prime Landlord may draw the entire letter of credit, at Subtenant’s sole cost and expense, and hold and apply the proceeds thereof as a cash security deposit hereunder. If the amount of the letter of credit and cash so held by Sublandlord or Prime Landlord is ever less than the amount of the Subtenant’s Security Deposit required above, whether due to the application thereof as permitted hereunder or otherwise, Subtenant shall immediately provide an additional letter of credit or cash in the amount of such shortfall. No interest will accrue on the security deposit while held in the form of a letter of credit.

XIII. Brokers. Each of Sublandlord and Subtenant represents and warrants to the other that it has not dealt with any broker in connection with this Sublease other than Meredith & Grew, Inc. and Gregg Jordan & Associates (collectively, the “Brokers”), and each agrees to indemnify, defend and hold the other harmless from and against any breach of said representation and warranty. Sublandlord shall be responsible for any commission which may be due to the Brokers pursuant to a separate agreement between Sublandlord and such Brokers.

XIV. Utilities. Subtenant shall be responsible for all utilities (including light, plug and HVAC electricity and gas) in the Subleased Premises, to be paid by Subtenant to Sublandlord within twenty (20) days after billing therefor. Subtenant’s payment obligation hereunder shall be equal to the utility costs for the Subleased Premises if separately metered or fifty percent (50%) of the utility costs for the Original Premises if not separately metered. Notwithstanding the foregoing, to the extent any utility is separately metered to the Subleased Premises, Subtenant will purchase and receive such utility directly from the public utility or other company designated by Prime Landlord.

XV. Miscellaneous.

A. Counterparts. This instrument may be signed in counterpart originals, which, taken together, shall constitute a single original instrument.

B. Notices. Notices to Sublandlord or Subtenant required or permitted hereunder shall be sent in the manner prescribed in the Prime Lease to the address set forth below in the case of notices to Sublandlord and to the Subleased Premises, attention Mr. Michael Connell (with a copy to Michael C. Fee, Fee, Rosse & Lantz, P.C., 321 Boston Post Road, Sudbury, MA 01776) in the case of notices to Subtenant. Any time periods for the giving or receiving of notices (or the taking of actions following the giving or receiving of notices) set forth in the Prime Lease shall, as incorporated herein, be five (5) days

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longer in the case of notices from Sublandlord to Subtenant, and five (5) days shorter in the case of notices from Subtenant to Sublandlord.

Notice address for Sublandlord:

Boston Life Sciences, Inc.

85 Main Street

Hopkinton, MA 01748

Attention: Kenneth Rice

C. Consents. Without derogating from the other provisions hereof, it is acknowledged that in any instance in which Prime Landlord’s consent is required under the Prime Lease, both Prime Landlord and Sublandlord’s consent will be required hereunder.

D. Amendments. This Sublease may not be changed or terminated orally but only by an agreement in writing signed by both Sublandlord and Subtenant.

E. Estoppel Certificates. Sublandlord and Subtenant each agree to furnish within twenty (20) days after written request therefor by the other, a certificate stating (i) that this Sublease is in full force and effect and has not been amended or modified (or describing such amendment or modification, if any); (ii) the dates through which Base Rent and additional rent have been paid hereunder; and (iii) that there are no defaults under this Sublease known to the signer of the certificate (or specifying such defaults, if known).

F. No Waiver. The failure of either party to insist on strict performance of any covenant or condition hereof, or to exercise any option contained herein, shall not be construed as a waiver of such covenant, condition or option in any other instance.

G. Memorandum of Lease. Subtenant shall not record this Sublease or any memorandum or notice hereof.

H. Governing Law. This Sublease has been negotiated, executed and delivered in the Commonwealth of Massachusetts, and the parties agree that the rights and obligations of the parties under this Sublease shall be governed and construed in accordance with the laws of the Commonwealth of Massachusetts.

I. Severability. The invalidity of any of the provisions of this Sublease will not impair or affect in any manner the validity, enforceability or effect of the rest of this Sublease.

J. Entire Agreement. All understandings and agreements, oral or written, heretofore made between the parties hereto are merged in this Sublease, which alone fully and completely expresses the agreement between Sublandlord and Subtenant.

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K. Relationship Between the Parties. This Sublease does not create the relationship of principal and agent, nor does it create any partnership, joint venture, or any association or relationship between Sublandlord and Subtenant other than as and to the extent specifically provided in this Sublease, the sole relationship of Sublandlord and Subtenant being that of sublandlord and subtenant as provided in this Sublease.

L. Remedies Cumulative. Except as specifically provided herein, all rights and remedies of Sublandlord under this Sublease shall be cumulative and none shall exclude any other rights and remedies allowed by law.

M. Condition Precedent. The effectiveness of this Sublease is expressly subject to and conditional upon obtaining Prime Landlord’s written consent to this Sublease pursuant to Article VIII of the Prime Lease.

N. Furniture. Sublandlord may offer to sell to Subtenant some or all of the furniture located in the Subleased Premises prior to the date of this Sublease. Any furniture so sold shall be sold in its “as-is, where-is condition” with all faults, without representation or warranty. Any furniture not so purchased by Subtenant may be removed from the Subleased Premises by Sublandlord following the Sublease Term Commencement Date, and Subtenant shall have no rights with respect thereto; provided that any furniture which is not purchased by Subtenant and is not removed by Sublandlord by October 1, 2005 will be deemed abandoned by Sublandlord and Subtenant may remove and dispose of the same at Sublandlord’s cost and expense.

O. Signage. Subject to Landlord’s approval and the provisions of the Prime Lease, Subtenant may, at Subtenant’s cost and expense, have its name listed in the lobby directory, on the entrance to the Subleased Premises and on 50% of that portion of each side of the exterior sign for the Building currently allocated to Sublandlord.

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IN WITNESS WHEREOF, the parties have executed this Sublease as an instrument under seal as of the date first written above.

SUBLANDLORD:
BOSTON LIFE SCIENCES, INC., a Delaware
corporation
By:	/s/    MARK J. PYKETT
Name:	Mark J. Pykett
Title:	President and COO
SUBTENANT:
SMALL ARMY, INC, a Massachusetts corporation
By:	/s/    MICHAEL CONNELL
Name:	Michael Connell
Title	Creative Principal

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EXHIBIT A

PRIME LEASE

[See Attached]

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EXHIBIT B

FLOOR PLAN SHOWING

SUBLEASED PREMISES

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EX-10.3

Exhibit 10.3

SUBLEASE

This SUBLEASE (the “Sublease”) is dated as of the 30th day of August, 2005 by and between BOSTON LIFE SCIENCES, INC., a Delaware corporation (“Sublandlord”), and DELL MITCHELL ARCHITECTS, INC., a Massachusetts corporation (“Subtenant”).

RECITALS

WHEREAS, pursuant to that certain Lease dated as of January 28, 2002 by and between Brentwood Properties, Inc., a Delaware corporation (“Prime Landlord”), as landlord, and Sublandlord, as tenant (the “Prime Lease”), a copy of which Prime Lease is attached hereto as Exhibit A, Sublandlord leased from Prime Landlord certain premises (the “Original Premises”) located in the building commonly known as 20-24 Newbury Street, Boston, Massachusetts (the “Building”), which Original Premises contain approximately 6,600 rentable square feet of space located on the fourth and fifth floors of the Building, as more fully described in the Prime Lease; and

WHEREAS, Subtenant desires to sublease from Sublandlord a portion of the Original Premises, comprising the fifth floor of the Building and containing 3,300 rentable square feet, more particularly shown on the floor plan attached hereto as Exhibit B (the “Subleased Premises”), and Sublandlord is willing to sublease the Subleased Premises to Subtenant on the provisions, covenants and conditions hereinafter set forth.

AGREEMENT

NOW, THEREFORE, in consideration of Ten Dollars ($10.00), the mutual covenants made herein, and other consideration, the receipt and sufficiency of which are hereby acknowledged and agreed, Sublandlord hereby subleases to Subtenant and Subtenant hereby takes and hires from Sublandlord the Subleased Premises, on the terms and conditions set forth below:

I. Defined Terms. All terms defined in the Prime Lease and used herein shall, unless otherwise defined herein, have the meanings ascribed to such terms in the Prime Lease.

II. Term. The term of this Sublease (the “Sublease Term”) shall commence on September 1, 2005 (the “Sublease Term Commencement Date”), and shall continue until May 30, 2012 or the earlier termination of the Prime Lease, unless the Sublease Term is sooner terminated in accordance with the provisions of this Sublease. The parties understand that Subtenant may enter into an agreement with Prime Landlord whereby Prime Landlord agrees to recognize Subtenant as its tenant upon termination of this Sublease in certain circumstances. If Sublandlord provides Subtenant with access to the Subleased Premises prior to the Sublease Term Commencement Date, such access will be on all of the terms and conditions set forth in this Sublease.

III. Delivery. The Subleased Premises shall be delivered to Subtenant on the Sublease Term Commencement Date, broom-clean and free of all occupants but otherwise “as-is, where-is and with all faults”, without representation or warranty, express or implied, and Subtenant hereby waives, disclaims and renounces any representation or warranty. In the event construction of any demising walls are necessary to separately demise the Subleased Premises, the same will be constructed by Subtenant at its sole cost and expense, in accordance with and subject to the provisions of this Sublease and the provisions of the Prime Lease incorporated herein. Sublandlord

shall have no obligation to make any improvements in or to the Subleased Premises. Subtenant shall be responsible for reconfiguring the Premises to suit its specific use program, subject to the provisions of the Prime Lease and this Sublease. Sublandlord has approved the plans and specifications attached hereto as Exhibit C, but the same remain subject to Prime Landlord approval.

IV. Base Rent. Commencing on March 16, 2006, and on the first of each month thereafter, Subtenant shall pay to Sublandlord, in advance, monthly installments, without withholding, offset or reduction, of base rent (“Base Rent”) at the rate set forth below.

Dates	Base Rent
For the period from March 16, 2006 through May 30, 2009:	The annual rate of $105,600 (i.e., $8,800 per month)
For the period from June 1, 2009 through May 30, 2012:	The annual rate of $115,500 (i.e. $9,625 per month)

V. Additional Rent. Subtenant acknowledges that pursuant to Sections 3.02, 3.03, 3.04 and 3.05 of the Prime Lease, Sublandlord is obligated to pay to Prime Landlord additional rent on account of operating costs, insurance and real estate taxes, as more particularly described in such Sections. Subtenant shall pay to Sublandlord with its monthly payment of Base Rent Subtenant’s proportionate share of Sublandlord’s additional rent obligations under Sections 3.02, 3.03, 3.04 and 3.05 of the Prime Lease (but in the case of Sections 3.02 and 3.03 (and 3.05 as it applies to Sections 3.02 and 3,03), only to the extent such rental amounts exceed those due in the calendar year ending December 31, 2005, and in the case of Section 3.04 (and Section 3.05 as it applies to Section 3.04), only to the extent such rental amounts exceed those due on account of fiscal year ending June 30, 2006) Subtenant’s proportionate share as used in the preceding sentence is 50% (being the number of rentable square feet in the Subleased Premises expressed as a percentage of the number of rentable square feet in the Original Premises, referred to hereinafter as “Subtenant’s Proportionate Share”). Sublandlord shall deliver to Subtenant promptly after receipt thereof any statements of operating costs, insurance or real estate taxes delivered to Sublandlord by Prime Landlord. Sublandlord agrees, at Subtenant’s sole cost and expense, to exercise its right, pursuant to Section 3.02 of the Prime Lease, to review Landlord’s books and records with respect to any such statement if so requested by Subtenant within the time allowed under such Section 3.02 of the Prime Lease.

VI. Use. The Subleased Premises shall be used for general office use and for no other uses. To the extent permitted by the Prime Lease, and subject to the provisions of the Prime Lease and this Sublease, Subtenant shall have access to the Subleased Premises 24 hours a day, 365 days a year at all times during the Sublease Term.

VII. Prime Lease. Subtenant agrees that it will do nothing in, on or about the Subleased Premises which would result in the breach by Sublandlord of its undertakings and obligations under the Prime Lease. Except for the following provisions, this Sublease shall be subject to and on all of the terms and conditions as are contained in the Prime Lease and the provisions of the Prime Lease are hereby incorporated into this Sublease as if Sublandlord were the landlord thereunder and Subtenant the tenant thereunder:

A. The defined economic terms for “Yearly Fixed Rent,” “Monthly Payment,” “Rent Year,” “Leased Area,” “Term Commencement Date,” “Rent Commencement Date,” “Rent Year” and the like are inapplicable;

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B. Sections 3.02, 3.03, 3.04 and 3.05 of the Prime Lease (relating to additional rent) are applicable, as modified by the provisions of Paragraph V of this Sublease;

C. Article IV of the Prime Lease (relating to construction of the premises) is inapplicable;

D. Article V of the Prime Lease (relating to utilities) is applicable, as clarified by Section XIV hereof;

E. Section 14.07 of the Prime Lease (relating to security deposits) is inapplicable;

F. Section 14.12 of the Prime Lease (relating to brokerage) is inapplicable;

G. Section 14.14 of the Prime Lease (relating to extension options) is inapplicable; and

H. Where appropriate, references to “Landlord” in the Prime Lease shall be deemed to mean “Sublandlord” hereunder and references to “Tenant” in the Prime Lease shall be deemed to mean “Subtenant” hereunder, it being understood and agreed that Sublandlord will not be acting as, or assuming any of the responsibilities of, Prime Landlord, and all references in the Prime Lease to Landlord-provided services or Landlord insurance requirements, and any other references which by their nature relate to the owner or operator of the Building, rather than to a tenant of the Building subleasing space to a subtenant, shall continue to be references to Prime Landlord and not to Sublandlord.

Sublandlord covenants to Subtenant to perform all of the terms and provisions required of it under the Prime Lease and to promptly pay when due all rents, including any and all additional rents, due and accruing to Prime Landlord, provided Subtenant timely makes all rental and additional rental payments required of Subtenant hereunder. Upon request of Subtenant and at Subtenant’s cost and expense, Sublandlord will use reasonable efforts to enforce on behalf of Subtenant Sublandlord’s rights under the Prime Lease. Nothing contained in this Sublease shall be construed as a guarantee by Sublandlord of any of the obligations, covenants, warranties, agreements or undertakings of Prime Landlord in the Prime Lease, nor as an undertaking by Sublandlord to Subtenant on the same or similar terms as are contained in the Prime Lease.

VIII. Subtenant’s Covenants. Subtenant covenants to Sublandlord to perform all of the covenants and obligations to be performed by Sublandlord as tenant under the Prime Lease as the same relate to the Subleased Premises and to comply with this Sublease and the applicable provisions of the Prime Lease, as modified by this Sublease, in all respects (including, without limitation, complying with all applicable laws, regulations and standards). If Subtenant shall fail to

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make any payment or perform any act required to be made or performed by Subtenant under the Prime Lease pursuant to Subtenant’s assumption of Sublandlord’s obligations thereunder as they relate to the Subleased Premises, and such default is not cured by Subtenant by the first to occur of (i) one-half of the period specified in the Prime Lease for curing such default (which will include one-half of the “longer period as may be necessary” granted in clause (b) of Article XI of the Prime Lease, if such “longer period” is granted to Sublandlord in the particular situation), or (ii) five (5) days prior to the expiration of such Prime Lease cure period, Sublandlord, without waiving or releasing any obligation or default hereunder, may (but shall be under no obligation to) make such payment or perform such act for the account and at the expense of Subtenant, and may take any and all such actions as Sublandlord in its sole discretion deems necessary or appropriate to accomplish such cure. If Sublandlord shall reasonably incur any expense in remedying such default, Sublandlord shall be entitled to recover such sums upon demand from Subtenant as additional rent under this Sublease.

IX. Omitted.

X. Indemnification. Subtenant shall indemnify Sublandlord and hold Sublandlord harmless from and against any and all claims, demands suits, judgments, liabilities, costs and expenses, including reasonable attorneys’ fees, arising out of or in connection with Subtenant’s use and possession of the Subleased Premises, or arising out of the failure of Subtenant, its agents, contractors or employees to perform any covenant, term or condition of this Sublease or of the Prime Lease to be performed by Subtenant hereunder, except in each case to the extent any such claim, demand, suit, judgment, liability, costs or expense arises as a result of the negligence or willful misconduct of Sublandlord. Sublandlord shall indemnify Subtenant and hold Subtenant harmless from and against any and all claims, demands, suits, judgments, liabilities, costs and expenses, including reasonable attorneys fees, arising out of the failure of Sublandlord or its agents, contractors or employees to perform any covenant, term or condition of this Sublease or of the Prime Lease to be performed by Sublandlord hereunder, except in each case to the extent any such claim, demand, suit, judgment, liability, costs or expense arises as a result of the negligence or willful misconduct of Subtenant.

XI. Assignment and Subletting. Subtenant shall not assign this Sublease in whole or in part or sublet the Subleased Premises in whole or in part, except in compliance with the provisions of the Prime Lease which are incorporate herein, as set forth above, as if Sublandlord were “Landlord” and Subtenant were “Tenant” thereunder, including the obtaining of consents required thereunder. Additionally, no such sublease or assignment shall be effective without the consent of Prime Landlord under the Prime Lease. If, as to any sublease or assignment for which Sublandlord’s consent is necessary, Subtenant receives rent or other consideration in excess of the Base Rent and additional rent payable under this Sublease, Subtenant shall pay to Sublandlord one-half of such excess, after deducting Subtenant’s reasonable legal and brokerage expenses and fit-up expenses paid for by Subtenant at the time of such subleasing or assignment. Sublandlord shall not unreasonably withhold its consent to any proposed assignment or sublease if such assignment or sublease is approved by Prime Landlord. If Sublandlord and Prime Landlord consent to any such assignment or subletting, Subtenant shall remain fully and primarily liable to Sublandlord, in all respects, under the Sublease.

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XII. Security Deposit. Upon execution hereof, Subtenant has delivered to Prime Landlord the amount of $26,400.00 (“Subtenant’s Security Deposit”), such sum to be held by Prime Landlord as security for the performance of Subtenant’s obligations under this Sublease. Upon the occurrence of any default by Subtenant hereunder beyond applicable notice and grace periods, Subtenant agrees that Sublandlord and/or Prime Landlord may apply all or any part of Subtenant’s Security Deposit, together with accrued interest, if any, to any obligation of Subtenant hereunder. If all or any portion of Subtenant’s Security Deposit is applied by Sublandlord and/or Prime Landlord against any of Subtenant’s obligations hereunder, Subtenant shall promptly restore Subtenant’s Security Deposit to its original amount. Interest actually earned on Subtenant’s Security Deposit shall, on an annual basis, be credited to and become part of the Subtenant’s Security Deposit. If Subtenant shall have complied with its obligations under the Sublease, Subtenant’s Security Deposit, or any unapplied balance thereof, shall be returned to Subtenant within thirty (30) days after the time fixed as the expiration of the Sublease Term hereof and the yield up and surrender by Subtenant of the Subleased Premises in accordance with the provisions of the Sublease. If Sublandlord assigns its interest in this Sublease, it will also assign its interest in the Subtenant’s Security Deposit, or any unapplied portion thereof, to the assignee. Upon such delivery, the Sublandlord named herein will be released of all obligations with respect to the Subtenant’s Security Deposit.

XIII. Brokers. Each of Sublandlord and Subtenant represents and warrants to the other that it has not dealt with any broker in connection with this Sublease other than GVA Thompson, Doyle, Hennessey & Stephens and Gregg Jordan & Associates (collectively, the “Brokers”), and each agrees to indemnify, defend and hold the other harmless from and against any breach of said representation and warranty. Sublandlord shall be responsible for any commission which may be due to the Brokers pursuant to a separate agreement between Sublandlord and such Brokers.

XIV. Utilities. Subtenant shall be responsible for all utilities (including light, plug and HVAC electricity and gas) in the Subleased Premises, to be paid by Subtenant to Sublandlord within ten (10) business days after Subtenant’s receipt of a bill from Sublandlord for such amount. Sublandlord will include with such bill to Subtenant copies of any bills or invoices Sublandlord received with respect to such utility payment. Subject to Subtenant’s obligation to make timely payment of Subtenant’s share of any such utility bills, and except as set forth in the last sentence of this paragraph, Sublandlord covenants and agrees that Sublandlord shall pay all utility bills to the utility provider or to Prime Landlord, as applicable, in a timely fashion so as to avoid any interruption in utility service to the Subleased Premises. Subtenant’s payment obligation hereunder shall be equal to the utility costs for the Subleased Premises if separately metered or fifty percent (50%) of the utility costs for the Original Premises if not separately metered. Notwithstanding the foregoing, to the extent any utility is separately metered to the Subleased Premises, Subtenant will purchase and receive such utility directly from the public utility or other company designated by Prime Landlord.

XV. Miscellaneous.

A. Counterparts. This instrument may be signed in counterpart originals, which, taken together, shall constitute a single original instrument.

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B. Notices. Notices to Sublandlord or Subtenant required or permitted hereunder shall be sent in the manner prescribed in the Prime Lease to the address set forth below in the case of notices to Sublandlord and to the Subleased Premises in the case of notices to Subtenant. Except with respect to notices of default and cure periods with respect to any default, which shall be governed by the provisions of Section VIII hereof, any time periods for the giving or receiving of notices (or the taking of actions following the giving or receiving of notices) set forth in the Prime Lease shall, as incorporated herein, be three (3) business days longer in the case of notices from Sublandlord to Subtenant, and three (3) business days shorter in the case of notices from Subtenant to Sublandlord.

Notice address for Sublandlord:

Boston Life Sciences, Inc.

85 Main Street

Hopkinton, MA 01748

Attention: Ken Rice

C. Consents. Without derogating from the other provisions hereof, it is acknowledged that in any instance in which Prime Landlord’s consent is required under the Prime Lease, both Prime Landlord and Sublandlord’s consent will be required hereunder.

D. Amendments. This Sublease may not be changed or terminated orally but only by an agreement in writing signed by both Sublandlord and Subtenant.

E. Signage. Subject to Landlord’s approval and the provisions of the Prime Lease, Subtenant may, at Subtenant’s cost and expense, have its name listed in the lobby directory, on the entrance to the Subleased Premises and on 50% of that portion of each side of the exterior sign for the Building currently allocated to Sublandlord.

F. Estoppel Certificates. Sublandlord and Subtenant each agree to furnish within twenty (20) days after written request therefor by the other, a certificate stating (i) that this Sublease is in full force and effect and has not been amended or modified (or describing such amendment or modification, if any); (ii) the dates through which Base Rent and additional rent have been paid hereunder; and (iii) that there are no defaults under this Sublease known to the signer of the certificate (or specifying such defaults, if known).

G. No Waiver. The failure of either party to insist on strict performance of any covenant or condition hereof, or to exercise any option contained herein, shall not be construed as a waiver of such covenant, condition or option in any other instance.

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H. Memorandum of Lease. Subtenant shall not record this Sublease or any memorandum or notice hereof.

I. Governing Law. This Sublease has been negotiated, executed and delivered in the Commonwealth of Massachusetts, and the parties agree that the rights and obligations of the parties under this Sublease shall be governed and construed in accordance with the laws of the Commonwealth of Massachusetts.

J. Severability. The invalidity of any of the provisions of this Sublease will not impair or affect in any manner the validity, enforceability or effect of the rest of this Sublease.

K. Entire Agreement. All understandings and agreements, oral or written, heretofore made between the parties hereto are merged in this Sublease, which alone fully and completely expresses the agreement between Sublandlord and Subtenant.

L. Relationship Between the Parties. This Sublease does not create the relationship of principal and agent, nor does it create any partnership, joint venture, or any association or relationship between Sublandlord and Subtenant other than as and to the extent specifically provided in this Sublease, the sole relationship of Sublandlord and Subtenant being that of sublandlord and subtenant as provided in this Sublease.

M. Remedies Cumulative. Except as specifically provided herein, all rights and remedies of Sublandlord under this Sublease shall be cumulative and none shall exclude any other rights and remedies allowed by law.

N. Condition Precedent. The effectiveness of this Sublease is expressly subject to and conditional upon obtaining Prime Landlord’s written consent to this Sublease pursuant to Article VIII of the Prime Lease.

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IN WITNESS WHEREOF, the parties have executed this Sublease as an instrument under seal as of the date first written above.

SUBLANDLORD:
BOSTON LIFE SCIENCES, INC., a Delaware
corporation
By:	/s/    MARK J. PYKETT
Name:	Mark J. Pykett
Title:	President and COO
SUBTENANT:
DELL MITCHELL ARCHITECTS, INC., a
Massachusetts corporation
By:	/s/    DELL MITCHELL
Name:
Title:	President

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EXHIBIT A

PRIME LEASE

[See Attached]

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EXHIBIT B

FLOOR PLAN SHOWING

SUBLEASED PREMISES

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EX-10.4

Exhibit 10.4

SEVERANCE AND SETTLEMENT AGREEMENT AND RELEASE

AGREEMENT made as of the 7th day of September, 2005 (the “Agreement”) by and between Boston Life Sciences, Inc., a Delaware corporation (the “Company”) and Joseph Hernon of Watertown, Mass. (the “Executive”).

The Executive has been employed by the Company since August 1996. 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 shall be September 30, 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 the following payment and benefits, less any and all applicable state and federal tax withholdings:

(A) continued payment of Base Salary in the gross amount of $20,212.50 per month for the nine month period commencing on October 1, 2005 and ending on June 30, 2006;

(B) for a period of nine (9) months from the Termination Date, the Company will pay all group medical and other insurance programs that Executive is eligible for pursuant to the federal “COBRA” law 29 U.S.C. s116 et seq. Thereafter, Executive may elect to continue receiving this coverage pursuant to the federal “COBRA” law, 29 U.S.C. § 11 for an additional nine months at Executive’s expense.

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3. 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) Effective as of the Termination Date, the parties acknowledge that options for 59,345 shares of Common Stock will have vested.

(B) Effective as of the Termination Date, the parties agree that the vesting of an additional 74,182 shall be accelerated and vested as of the Termination Date.

(C) The parties agree that the total number of stock options presently held by the executive, that number equaling 133,527, shall be exercisable as of the Termination Date and through September 30, 2007.

4. 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 (including attorneys’ fees and costs), of every kind and nature which he ever had or now has against the Released Parties arising out of

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his employment with and/or separation from the Company, including, but not limited to, 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., the Massachusetts Privacy Act, M.G.L. c. 214, §1B, and the Massachusetts Maternity Leave Act, M.G.L. c. 149, §105(d), all as amended; all common law claims including, but not limited to, actions in tort, defamation and breach of contact; 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 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

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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). In consideration of the undertakings, transactions and consideration recited in this Agreement, the Company 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 Executive’s employment with the Company.

5. 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(except as provided below), cellular phones, pagers, and Company vehicle, which is in his possession or control. The Executive further agrees to leave intact all electronic Company documents, including those which he developed or helped develop during his employment. The Company agrees to permit the Executive to keep the IBM Thinkpad Computer and flat panel screen that the Executive has been using. Any

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company files, records or documents on the Dell laptop shall be transferred to the Company’s server or other secure location prior to the Termination Date.

6. 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, disparaging or derogatory 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, disparaging or derogatory statements about the Executive to any media outlet, industry group, or financial institution, prospective employer of Executive or to any entity or person to which Executive serves as a consultant or advisor in the future.

7. 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, or (iv) 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 in an Securities and Exchange Commission (“SEC”) filing.

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8. 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.

9. 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.

10. 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.

11. 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.

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12. 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.

13. 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.

14. 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

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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.

15. 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.

16. 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.

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

By:	/s/    JOSEPH HERNON	Date:	9/7/05
By:	/s/    KEN RICE	Date:	9/12/05

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EX-10.5

Exhibit 10.5

COMMON STOCK PURCHASE AGREEMENT

This Common Stock Purchase Agreement (this “Agreement”) is dated as of August 30, 2005, by and among Boston Life Sciences, Inc., a Delaware corporation (the “Company”), and the purchasers (i) identified on Schedule I hereto and (ii) who may become a party hereto upon execution of a counterpart signature page (each a “Purchaser” and collectively the “Purchasers”); and

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act (as defined in Article I below), and Rule 506 promulgated thereunder, the Company desires to issue and sell to the Purchasers, and the Purchasers, severally and not jointly, desire to purchase from the Company in the aggregate 6,000,000 shares of the Company’s Common Stock (as defined in Article I below), as more fully described in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agrees as follows:

ARTICLE I.

DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings indicated in this Section 1.1:

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 144. With respect to a Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Purchaser will be deemed to be an Affiliate of such Purchaser.

“Amended and Restated Registration Rights Agreement” means the Amended and Restated Registration Rights Agreement, dated as of March 9, 2005, by and among the Company and the Holders (as defined therein), as amended by the Registration Rights Amendment.

“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Closing” means the closing of the purchase and sale of the Shares pursuant to Section 2.1.

“Closing Date” means the date of the Closing which shall be a date agreed upon by the Company and the Purchasers and which shall in no event occur after September 7, 2005.

“Commission” means the Securities and Exchange Commission.

“Common Stock” means the common stock of the Company, $0.01 par value per share, and any securities into which such common stock may hereafter be reclassified.

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Company Counsel” means Wilmer Cutler Pickering Hale and Dorr LLP.

“Disclosure Materials” shall have the meaning ascribed to such term in Section 3.1(g).

“Disclosure Schedules” means the Disclosure Schedules concurrently delivered herewith.

“Effective Date” means the date that the Registration Statement is first declared effective by the Commission.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“GAAP” shall have the meaning ascribed to such term in Section 3.1(g).

“Liens” means a lien, charge, security interest, encumbrance, right of first refusal or other restriction.

“Material Adverse Effect” shall have the meaning ascribed to such term in Section 3.1(a).

“Per Share Purchase Price” equals $2.13.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.6.

“Registration Rights Amendment” means Amendment No. 1 to the Amended and Restated Registration Rights Agreement dated as of March 9, 2005 by and among the Company and the Holders (as defined therein).

“Registration Statement” means a registration statement meeting the requirements set forth in the Amended and Restated Registration Rights Agreement and covering the resale by the Purchasers of the Shares.

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“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(g).

“Securities Act” means the Securities Act of 1933, as amended.

“Shares” means the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement.

“Subscription Amount” means, as to each Purchaser, the amount set forth next to such Purchaser’s name on Schedule I hereto, in United States dollars and in immediately available funds.

“Subsidiary” means any corporation, partnership, trust, limited liability company or other non-corporate business enterprise in which the Company (or another Subsidiary) holds stock or other ownership interests representing (a) more than 50% of the voting power of all outstanding stock or ownership interests of such entity or (b) the right to receive more than 50% of the net assets of such entity available for distribution to the holders of outstanding stock or ownership interests upon a liquidation or dissolution of such entity.

“Trading Day” means (i) a day on which the Common Stock is traded on a Trading Market, or (ii) if the Common Stock is not listed on a Trading Market, a day on which the Common Stock is traded on the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market.

“Transaction Documents” means this Agreement, the Registration Rights Amendment and the Joinder Agreements.

ARTICLE II.

PURCHASE AND SALE

2.1 Closing. At the Closing, the Purchasers shall purchase, severally and not jointly, and the Company shall issue and sell, in the aggregate 6,000,000 shares of Common Stock. Each Purchaser irrevocably agrees to purchase from the Company, and the Company shall issue and

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sell to each Purchaser, that number of Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price as set forth on Schedule I hereto.

2.2 Closing Deliverables.

(a) At the Closing (unless otherwise specified below), the Company shall deliver or cause to be delivered to each Purchaser the following:

(i) this Agreement duly executed by the Company;

(ii) within five Trading Days of the Closing, a certificate evidencing that number of Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price, registered in the name of such Purchaser;

(iii) a legal opinion of Company Counsel, substantially in the form attached hereto as Exhibit A, addressed to the Purchasers;

(iv) the Registration Rights Amendment duly executed by the Company, substantially in the form attached hereto as Exhibit B; and

(v) a Certificate of the Secretary of the Company attesting as to (i) the By-laws of the Company; (ii) the signatures and titles of the officers of the Company executing this Agreement or any of the other agreements to be executed and delivered by the Company at the Closing; and (iii) resolutions of the Board of Directors of the Company, authorizing and approving all matters in connection with this Agreement and the transactions contemplated hereby.

(b) At the Closing each Purchaser shall deliver or cause to be delivered to the Company the following:

(i) this Agreement duly executed by each such Purchaser;

(ii) such Purchaser’s Subscription Amount by wire transfer to the account of the Company per the written instructions of the Company; and

(iii) a Joinder Agreement (each a “Joinder Agreement” and collectively, the “Joinder Agreements”) to the Amended and Restated Registration Rights Agreement if such purchaser is not already a party to such Agreement.

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ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. Except as set forth under the corresponding section of the Disclosure Schedules or as set forth in the SEC Reports, the Company hereby makes the following representations and warranties as of the date hereof to each Purchaser:

(a) Organization and Qualification. Each of the Company and the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, by-laws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business or financial condition of the Company and the Subsidiaries, taken as a whole, or (iii) adversely impair the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”); provided, however, that in no event shall any effect that results from any change in general economic conditions or the Company’s industry generally constitute, or be considered in determining the existence of, a Material Adverse Effect.

(b) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company in connection therewith. Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

(c) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, by-laws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) result in

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a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as would not have or reasonably be expected to result in a Material Adverse Effect.

(d) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than (a) the filing with the Commission of the Registration Statement, the application(s) to each Trading Market for the listing of the Shares for trading thereon in the time and manner required thereby, and applicable blue sky filings; (b) obtaining consent from its Trading Market to consummate the transaction without prior stockholder approval; or (c) such as have already been obtained or such exemptive filings as are required to be made under applicable securities laws.

(e) Issuance of the Shares. The Shares are duly authorized and, when issued and paid for in accordance with the terms and conditions of the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens. The Company has reserved from its duly authorized capital stock, the maximum number of shares of Common Stock issuable pursuant to this Agreement.

(f) Capitalization. The capitalization of the Company is as described in the Company’s most recent periodic report filed with the Commission as updated by any current report filed with the Commission thereafter. The Company has not issued any capital stock since such filings other than pursuant to the exercise of employee stock options under the Company’s stock option plans, pursuant to the conversion or exercise of outstanding Common Stock Equivalents and pursuant to publicly disclosed equity financings. Except as set forth on the Disclosure Schedules, no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents that have not been waived. Except as a result of the purchase and sale of the Shares or as described in the SEC Reports, there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. Except as set forth on the Disclosure Schedules, the issue and sale of the Shares will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities.

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(g) SEC Reports; Financial Statements. The Company has filed all reports required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the three years preceding the date hereof (or such shorter period as the Company was required by law to file such material) (the foregoing materials, including the financial statements and footnotes thereto, exhibits thereto and incorporated by reference therein, being collectively referred to herein as the “SEC Reports” and, together with the Disclosure Schedules to this Agreement, the “Disclosure Materials”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the footnotes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal year-end audit adjustments.

(h) Material Changes. Except as set forth on the Disclosure Schedules or the SEC Reports, since June 30, 2005, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock; (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans; and (vi) the Company has not had any disagreement with its independent auditors that would require public disclosure.

(i) Compliance. Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or

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any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business, except in the case of clauses (i), (ii) and (iii) as would not have or reasonably be expected to result in a Material Adverse Effect.

(j) Certain Fees. Except as set forth on the Disclosure Schedules, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section 3.1(j) that may be due in connection with the transactions contemplated by this Agreement.

(k) Private Placement. Assuming the accuracy of the Purchasers representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Shares by the Company to the Purchasers as contemplated hereby.

(l) Investment Company. The Company is not, and is not an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

(m) Listing and Maintenance Requirements. Set forth on the Disclosure Schedules is a description of all notices received by the Company within the past twelve months from any Trading Market relating to the Company’s compliance with the listing or maintenance requirements of such Trading Market.

3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby, for itself and for no other Purchaser, represents and warrants as of the date hereof and as of the Closing Date to the Company as follows:

(a) Organization; Authority. Such Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations thereunder. The execution, delivery and performance by such Purchaser of the transactions contemplated by this Agreement has been duly authorized by all necessary corporate action on the part of such Purchaser. Each Transaction Document to which it is party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms.

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(b) Investment Intent. Such Purchaser understands that the Shares are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Shares as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Shares or any part thereof, has no present intention of distributing any of such Shares and has no arrangement or understanding with any other Persons regarding the distribution of such Shares (this representation and warranty not limiting such Purchaser’s right to sell the Shares pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Shares hereunder in the ordinary course of its business. Such Purchaser does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Shares.

(c) Purchaser Status. At the time such Purchaser was offered the Shares, it was, and at the date hereof it is an “accredited investor” as defined in Rule 501(a) under the Securities Act. Such Purchaser (if not already a registered broker-dealer under Section 15 of the Exchange Act) is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

(d) Experience of such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Shares and, at the present time, is able to afford a complete loss of such investment.

(e) General Solicitation. Such Purchaser is not purchasing the Shares as a result of any advertisement, article, notice or other communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

(f) Certain Fees. No brokerage or finder’s fees or commissions are or will be payable by such Purchaser to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The Company shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section 3.2(f) that may be due in connection with the transactions contemplated by this Agreement.

(g) Acquiring Person. Such Purchaser, after giving effect to the transactions contemplated hereby, will not, either individually or with a group (as defined in Section 13(d)(3) of the Exchange Act), be the beneficial owner of 20% or more of the Company’s outstanding Common Stock. For purposes of this Section 3.2(g), beneficial ownership shall be determined pursuant to a Rule 13d-3 under the Exchange Act.

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(h) Material Information. Such Purchaser acknowledges receipt of the SEC Reports. Such Purchaser acknowledges that the Company may have material non-public information with respect to, among other things, the Company’s results of operations for the quarter ended September 30, 2005 that has not yet been publicly disclosed or disclosed in the Disclosure Materials. Such Purchaser acknowledges that it has requested that the Company not disclose such information to it.

The Company acknowledges and agrees that each Purchaser does not make or has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 3.2.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1 Registration. The Company covenants to register the Shares pursuant to the terms and conditions set forth in the Amended and Restated Registration Rights Agreement.

4.2 Transfer Restrictions.

(a) The Shares may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Shares other than pursuant to an effective registration statement, to the Company, to an Affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.2(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Shares under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of a Purchaser under this Agreement and the Amended and Restated Registration Rights Agreement.

(b) The Purchasers agree to the imprinting, so long as is required by this Section 4.2(b), of a legend on any of the Shares in the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

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The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Shares to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Shares to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Shares may reasonably request in connection with a pledge or transfer of the Shares, including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders thereunder.

(c) Certificates evidencing the Shares shall not contain any legend (including the legend set forth in Section 4.2(b)), (i) while a registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities Act and such security has been sold pursuant to such Registration Statement, or (ii) following any sale of such Shares pursuant to Rule 144, or (iii) if such Shares are eligible for sale under Rule 144(k), or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the Staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Company’s transfer agent promptly after the Effective Date if required by the Company’s transfer agent to effect the removal of the legend hereunder in connection with the sale of Shares by a Purchaser. The Company agrees that following the Effective Date or at such time as such legend is no longer required under this Section 4.2(c), it will, no later than seven Trading Days following the delivery by a Purchaser to the Company or the Company’s transfer agent of: (i) a certificate representing Shares issued with a restrictive legend; and (ii) any other documentation reasonably requested by the Company, its counsel or its transfer agent, deliver or cause to be delivered to such Purchaser a certificate representing such Shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section.

4.3 Furnishing of Information. As long as any Purchaser owns Shares, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. Upon the request of any such holder of Shares, the Company shall deliver to such holder a written certification of a duly authorized officer as to whether it has complied with the preceding sentence. As long as any Purchaser owns Shares, if the Company is not required to file reports pursuant to such laws, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c) such information as is required for the Purchasers to

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sell the Shares under Rule 144. The Company further covenants that it will take such further action as any holder of Shares may reasonably request, all to the extent required from time to time to enable such Person to sell such Shares without registration under the Securities Act within the limitation of the exemptions provided by Rule 144.

4.4 Securities Laws Disclosure; Publicity. The Company shall, within four Trading Days of the Closing Date, issue a press release or file a Current Report on Form 8-K, in each case reasonably acceptable to each Purchaser disclosing the transactions contemplated hereby and make such other filings and notices in the manner and time required by the Commission. The Company and each Purchaser shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld, except if such disclosure is required by relevant securities or other laws, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (i) as required by federal securities law in connection with the Registration Statement contemplated by the Amended and Restated Registration Rights Agreement and (ii) to the extent such disclosure is required by law or Trading Market regulations.

4.5 Use of Proceeds. The Company shall use the proceeds from the sale of the Shares for working capital and general corporate purposes.

4.6 Indemnification of Purchasers. The Company will indemnify and hold the Purchasers and their directors, officers, shareholders, partners, employees and agents (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to any misrepresentation, breach or inaccuracy, or any allegation by a third party that, if true, would constitute a breach or inaccuracy, of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents. The Company will reimburse such Purchaser for its reasonable legal and other out-of-pocket expenses (including the cost of any investigation, in connection therewith) incurred in connection therewith, as such expenses are incurred.

4.7 Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Shares pursuant to this Agreement.

4.8 Listing of Common Stock. The Company hereby agrees to use commercially reasonable efforts to maintain the listing of the Common Stock on the Trading Market, and as

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soon as reasonably practicable following the Closing (but not later than the earlier of the Effective Date and the first anniversary of the Closing Date) to list the Shares on the Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will include in such application the Shares, and will take such other action as is necessary or desirable in the opinion of the Purchasers to cause the Shares to be listed on such other Trading Market as promptly as possible. The Company will take all action reasonably necessary to comply in all respects with the Company’s reporting, filing and other obligations under the by-laws or rules of the Trading Market.

ARTICLE V.

MISCELLANEOUS

5.1 Entire Agreement. The Transaction Documents, together with the exhibits, schedules and Disclosure Schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. The Disclosure Schedules are incorporated by reference herein and are included as part of the Transaction Documents.

5.2 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified on the signature pages hereto prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified on the signature pages hereto on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

5.3 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and Purchasers holding a majority of the Shares sold hereunder or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

5.4 Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

5.5 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. Any Purchaser may assign any

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or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Shares, provided such transferee is an accredited investor as defined under Rule 501(a) under the Securities Act and agrees in writing to be bound, with respect to the transferred Shares, by the provisions hereof that apply to the “Purchasers”.

5.6 Expenses. The Company shall pay, at the Closing, the professional expenses of Ingalls & Snyder, LLC, incurred in connection with the preparation of this Agreement and the other agreements contemplated hereby and the transactions contemplated hereby.

5.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

5.8 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the State of New York. Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of the any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto (including its affiliates, agents, officers, directors and employees) hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of a Transaction Document, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

5.9 Survival. The representations, warranties, agreements and covenants contained herein shall survive the Closing for a period of one year from the Closing Date.

5.10 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it

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being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.

5.11 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

5.12 Replacement of Shares. If any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Shares.

5.13 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

5.14 Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

5.15 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Document. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own legal counsel in their review and negotiation of the Transaction Documents.

(Signature Page Follows)

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IN WITNESS WHEREOF, the parties hereto have caused this Common Stock Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

BOSTON LIFE SCIENCES, INC.		Address for Notice:
		85 Main Street
By:	/s/    KENNETH L. RICE, JR.	Hopkinton, Massachusetts 01748
Name:	Kenneth L. Rice, Jr.	Attn:	Chief Executive Officer
Title:	Chief Financial Officer	Tel:	(508) 497-2360
		Fax:	(508) 497-9964

[PURCHASER SIGNATURE PAGES TO COMMON STOCK PURCHASE AGREEMENT]

Anthony Koenig

Print Entity Name

By:	/s/    ANTHONY KOENIG
Print Name:	Anthony Koenig
Print Title:

Notice Address and Facsimile Number:

c/o Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

212-269-4177

Security Delivery Instructions (if different than Notice Address)

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

Attn: Tom Boucher

[PURCHASER SIGNATURE PAGES TO COMMON STOCK PURCHASE AGREEMENT]

Robert L. Gipson

Print Entity Name

By:	/s/    ROBERT L. GIPSON
Print Name:	Robert L. Gipson
Print Title:

Notice Address and Facsimile Number:

c/o Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

212-269-4177

Security Delivery Instructions (if different than Notice Address)

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

Attn: Tom Boucher

[PURCHASER SIGNATURE PAGES TO COMMON STOCK PURCHASE AGREEMENT]

John Dougherty

Print Entity Name

By:	/s/    JOHN DOUGHERTY
Print Name:	John Dougherty
Print Title:

Notice Address and Facsimile Number:

c/o Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

212-269-4177

Security Delivery Instructions (if different than Notice Address)

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

Attn: Tom Boucher

[PURCHASER SIGNATURE PAGES TO COMMON STOCK PURCHASE AGREEMENT]

Christopher Siege

Print Entity Name

By:	/s/    CHRISTOPHER SIEGE
Print Name:	Christopher Siege
Print Title:

Notice Address and Facsimile Number:

c/o Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

212-269-4177

Security Delivery Instructions (if different than Notice Address)

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

Attn: Tom Boucher

[PURCHASER SIGNATURE PAGES TO COMMON STOCK PURCHASE AGREEMENT]

Horace S. Boone

Print Entity Name

By:	/s/    HORACE S. BOONE
Print Name:	Horace S. Boone
Print Title:

Notice Address and Facsimile Number:

c/o Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

212-269-4177

Security Delivery Instructions (if different than Notice Address)

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

Attn: Tom Boucher

[PURCHASER SIGNATURE PAGES TO COMMON STOCK PURCHASE AGREEMENT]

Thomas DiTosto

Print Entity Name

By:	/s/    THOMAS DITOSTO
Print Name:	Thomas DiTosto
Print Title:

Notice Address and Facsimile Number:

c/o Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

212-269-4177

Security Delivery Instructions (if different than Notice Address)

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

Attn: Tom Boucher

[PURCHASER SIGNATURE PAGES TO COMMON STOCK PURCHASE AGREEMENT]

Heritage Mark Foundation

Print Entity Name

By:	/s/    KENNETH J. FORTE
Print Name:	Kenneth J. Forte
Print Title:	Trustee

Notice Address and Facsimile Number:

c/o Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

212-269-4177

Security Delivery Instructions (if different than Notice Address)

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

Attn: Tom Boucher

[PURCHASER SIGNATURE PAGES TO COMMON STOCK PURCHASE AGREEMENT]

Thomas L. Gipson

Print Entity Name

By:	/s/    THOMAS L. GIPSON
Print Name:	Thomas Gipson, by Thomas O. Boucher Jr. his attorney in fact
Print Title:

Notice Address and Facsimile Number:

c/o Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

212-269-4177

Security Delivery Instructions (if different than Notice Address)

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

Attn: Tom Boucher

[PURCHASER SIGNATURE PAGES TO COMMON STOCK PURCHASE AGREEMENT]

Nikolaos D. Monoyios

Print Entity Name

By:	/s/    NIKOLAOS D. MONOYIOS
Print Name:	Nikolaos D. Monoyios
Print Title:

Notice Address and Facsimile Number:

c/o Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

212-269-4177

Security Delivery Instructions (if different than Notice Address)

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

Attn: Tom Boucher

[PURCHASER SIGNATURE PAGES TO COMMON STOCK PURCHASE AGREEMENT]

Katharine A. Ray

Print Entity Name

By:	/s/    KATHARINE A. RAY
Print Name:	Katharine A. Ray
Print Title:

Notice Address and Facsimile Number:

c/o Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

212-269-4177

Security Delivery Instructions (if different than Notice Address)

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

Attn: Tom Boucher

[PURCHASER SIGNATURE PAGES TO COMMON STOCK PURCHASE AGREEMENT]

Smithfield Fiduciary LLC

Print Entity Name

By:	/s/    ADAM J. CHILL
Print Name:	Adam J. Chill
Print Title:	Authorized Signatory

Notice Address and Facsimile Number:

c/o Heritage Capital Management, LLC

9 West 57^th Street, 27^th Floor

New York, NY 10004

Attn: Ari J. Stonch / Adam J. Chill

Fax: (212) 751-0755

Number of Shares at $2.13 72,992

Security Delivery Instructions (if different than Notice Address)

SCHEDULE I

Purchaser	Subscription Amount		Shares Purchased
Thomas Gipson	$	4,741,389	2,226,004
Robert Gipson		4,741,389	2,226,004
Heritage Mark Foundation		543,150	255,000
John J. Dougherty		106,500	50,000
Christopher Siege		63,900	30,000
Katharine A. Ray		639,000	300,000
Nikolaos D. Monoyios		585,750	275,000
Arthur D. Koenig		905,250	425,000
Horace S. Boone		244,950	115,000
Thomas DiTosto		53,250	25,000
Smithfield Fiduciary LLC		155,473	72,992
	$	12,780,000	6,000,000

EX-10.6

Exhibit 10.6

AMENDMENT NO. 1 TO

AMENDED AND RESTATED

REGISTRATION RIGHTS AGREEMENT

THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Amendment”) is made as of August 30, 2005, by and among Boston Life Sciences, Inc., a Delaware corporation (the “Company”), and the parties included on the signature pages hereto.

WITNESSETH:

WHEREAS, the Company and the Initial Holders (as defined in the Existing Registration Rights Agreement) entered into that certain Amended and Restated Registration Rights Agreement, dated as of March 9, 2005 (the “Existing Registration Rights Agreement”); and

WHEREAS, certain investors, including certain of the Initial Holders, are purchasing 6,000,000 shares of the Company’s Common Stock pursuant to the terms and conditions of the August 2005 Purchase Agreement (as defined below) and in connection therewith are entitled to receive registration rights with respect to the August 2005 Shares (as defined below), on the terms and conditions set forth in the Existing Registration Rights Agreement; and

WHEREAS, in connection with the execution of the August 2005 Purchase Agreement, the Company and the Initial Holders desire to amend the Existing Registration Rights Agreement to provide for certain rights with respect to the registration of the August 2005 Shares under the Securities Act; and

WHEREAS, pursuant to Section 12(a) of the Existing Registration Rights Agreement, such agreement could be amended, modified or supplemented or any provision therein waived upon the approval of Holders holding at least 67% of the Registrable Shares then held by the Holders (the “Requisite Approval”); and

WHEREAS, upon execution of this Amendment by the required percentage of Initial Holders, the Requisite Approval shall have been received by the Company, and pursuant to Section 12 of the Existing Registration Rights Agreement, this Amendment shall be binding upon each of the parties to the Existing Registration Rights Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein and other good and valuable consideration the mutual receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. Defined Terms. Capitalized terms used herein, but not otherwise defined, shall have the meanings ascribed to them in the Existing Registration Rights Agreement

2. Amendments.

(a) The following definitions are inserted immediately after the definition of “Affiliate” in Section 1.

“August 2005 Purchase Agreement” means the Common Stock Purchase Agreement, dated as of August 30, 2005, by and among the Company and the purchasers listed therein.

“August 2005 Shares” means all shares of Common Stock issued pursuant to the August 2005 Purchase Agreement.

(b) The following definition is hereby amended and restated in its entirety to read as follows:

“Holder” means at any time any Person then owning Registrable Shares and having the rights and obligations of a Holder and which (i) is an Initial Holder, (ii) is a purchaser of August 2005 Shares (iii) has been assigned those rights and obligations pursuant to Section 10(a) or (iv) has become a Subsequent Holder pursuant to Section 10(b) and upon execution of a joinder agreement satisfactory to the Company.

(c) The following definition is hereby amended and restated in its entirety to read as follows:

“Registrable Shares” means (i) all Shares, (ii) all August 2005 Shares, (iii) all Warrant Shares acquired upon exercise of the Warrants, (iv) any securities of the Company designated as Registrable Securities pursuant to Section 10(b) (the “Additional Securities”) and any securities of the Company issued or issuable with respect to the Shares, the August 2005 Shares, Warrant Shares or the Additional Securities by way of conversion, exchange, dividend or stock split or combination. For purposes of this Agreement, a share of Registrable Shares will cease to be Registrable Shares when (a) a registration statement covering that Registrable Share has been filed and become effective under the Securities Act and its Holder distributes it by means of that effective registration statement or (b) its Holder distributes such Registrable Share pursuant to Rule 144 or (c) such securities become freely saleable under Rule 144(k).

(d) Section 10(a) is hereby amended and restated in its entirety to read as follows:

“A Holder may not transfer the registration rights this Agreement affords the Holder to any other Person except as follows: (i) a Holder who is a natural person may transfer those rights to a member of his immediate family (including his parents) or a trust for the benefit of one or more members of his immediate family; (ii) a Holder that is a corporation may transfer its rights to its sole shareholder; (iii) a Holder that is a partnership or limited liability company may transfer those rights to its partners or members, as the case may be; (iv) a Holder may transfer those rights to any other Holder and (v) a Holder may transfer those

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rights in conjunction with a transfer of the August 2005 Purchase Agreement, the Purchase Agreement or the Warrants in accordance with the terms of the August 2005 Purchase Agreement or the Purchase Agreement; provided, that any such transfer will be permitted only if (A) such rights are transferred to the transferee thereof together with a permitted transfer of the Warrants or Warrant Shares and (B) the transferee executes a joinder to this Agreement, in a form satisfactory to the Company, in which that transferee agrees to comply with and otherwise be bound by all the terms and conditions hereof.”

3. Reference to and Effect on the Existing Registration Rights Agreement.

(a) On and after the Effective Date, each reference to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import shall mean and be a reference to the Existing Registration Rights Agreement as amended hereby. No reference to this Amendment need be made in any instrument or document at any time referring to the Existing Registration Rights Agreement, a reference to the Existing Registration Rights Agreement in any of such instrument or document to be deemed to be a reference to the Existing Registration Rights Agreement as amended hereby.

(b) Except as expressly amended by this Amendment, the provisions of the Existing Registration Rights Agreement shall remain in full force and effect.

4. Governing Law.

This Amendment shall be governed by and construed in accordance with the laws of the state of New York applicable to contracts made and to be performed wholly within that state. The parties hereto irrevocably consent to the jurisdiction of the United States federal courts and the state courts located in the state of New York in any suit or proceeding based on or arising under this Amendment and irrevocably agree that all claims in respect of such suit or proceeding may be determined in such courts. The parties hereto irrevocably waive the defense of an inconvenient forum to the maintenance of such suit or proceeding. Each purchaser waives any right it may have to a trial by jury with respect to any action or proceeding arising out of or relating to this Amendment.

5. Counterparts.

This Amendment may be executed by facsimile in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute a single instrument.

Rest of Page Intentionally Left Blank

Signature Page Follows

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IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to Amended and Restated Registration Rights Agreement of the date first above written.

BOSTON LIFE SCIENCES, INC.
By:	/s/    KENNETH L. RICE, JR.
Name:	Kenneth L. Rice, Jr.
Title:	EVP & CFO
INITIAL HOLDERS:
Arthur Koenig
/s/    THOMAS G. BOUCHER, JR.
Thomas G. Boucher, Jr.
/s/    ADAM JANOVIC
Adam Janovic
/s/    ROBERT L. GIPSON
Robert L. Gipson
/s/    JOHN DOUGHERTY
John Dougherty
/s/    CHRISTOPHER SIEGE
Christopher Siege
/s/    HORACE S. BOONE
Horace S. Boone
/s/    STEVEN M. FOOTE
Steven M. Foote
/s/    THOMAS DITOSTO
Thomas DiTosto

Heritage Mark Foundation
By:	/s/    KENNETH J. FORTE
Name:	Kenneth J. Forte
Title:	Trustee
Valerie A. Brackett
/s/    THOMAS GIPSON
Thomas Gipson
Patricia Gipson

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EX-10.7

Exhibit 10.7

Boston Life Sciences License Amendment January 2004 HU 1382

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 Organix Inc. a corporation existing under the laws of Massachusetts, having its principal offices at 240 Salem Street, Woburn, MA 01801 (hereinafter “ORGANIX”).

WITNESSETH:

WHEREAS, a License Agreement (the “License Agreement”) was entered into by and between LICENSEE, ORGANIX 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 1.2, (“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 1.2 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 ORGANIX shall own (jointly with Harvard 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 ORGANIX 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. ORGANIX shall consult LICENSEE on each step of the prosecution process regarding exclusively licensed PATENT RIGHTS and ORGANIX shall incorporate LICENSEE’S comments where reasonably practicable, but final decision making authority shall vest in ORGANIX.

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7.2 Upon execution of this Agreement, LICENSEE shall reimburse ORGANIX for past and presently payable patent costs for the preparation, filing, prosecution and maintenance of PATENT RIGHTS. ORGANIX 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 ORGANIX before ORGANIX pays the invoiced billings, or directly with ORGANIX’s patent counsel, as ORGANIX directs. As directed by ORGANIX, LICENSEE shall either pay invoiced billings related to PATENT RIGHTS directly to ORGANIX’s patent counsel or shall reimburse to ORGANIX the amount of all fees and costs related to PATENT RIGHTS that ORGANIX has paid. LICENSEE shall pay to ORGANIX, or to ORGANIX’s patent counsel if so directed by ORGANIX, 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 ORGANIX shall license PATENT RIGHTS outside the FIELD to a third party, ORGANIX will pay to LICENSEE a sum equal to the pro-rata share of past COSTS for PATENT RIGHTS which are now nonexclusive. ORGANIX 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 ORGANIX, Harvard 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 ORGANIX or of Harvard to execute such papers and instruments so as to enable ORGANIX to apply for, to prosecute and to maintain patent applications and patents in ORGANIX’s and other applicable assignees’ names in any country. ORGANIX 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 ORGANIX choose alternate patent counsel, and after having made reasonable attempts to rectify the situation resulting in said good and sufficient cause, ORGANIX 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.

7.4 LICENSEE may elect to surrender its PATENT RIGHTS in any country upon one-hundred-twenty (120) days written notice to ORGANIX. Such notice shall not relieve LICENSEE from responsibility to reimburse ORGANIX 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 ORGANIX elects not to pursue, maintain or retain a particular PATENT RIGHT licensed to LICENSEE hereunder, ORGANIX 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, ORGANIX shall provide to

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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;

INFRINGEMENT

8.1 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 ORGANIX and Harvard and to potential effects on the public interest in making its decision whether or not to sue.

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

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

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

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

8.4 Recoveries or reimbursements from actions commenced pursuant to this Article shall first be applied to reimburse LICENSEE, ORGANIX and Harvard for litigation costs. Any remaining recoveries or reimbursements shall be shared equally b LICENSEE, ORGANIX and Harvard.

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

8.6 Without limiting the generality of paragraph 11.5, ORGANIX 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 ORGANIX and/or Harvard is or becomes aware. If, by the end of such sixty (60)-day period, LICENSEE has not commenced such an action, ORGANIX and/or Harvard may prosecute such an infringement at its own expense,

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controlling such action and retaining all recoveries therefrom. With respect to any such infringement action prosecuted by ORGANIX and/or Harvard in good faith, LICENSEE shall pay over to ORGANIX and/or Harvard 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 ORGANIX and/or Harvard’s unreimbursed litigation expenses (including, but not limited to, reasonable attorneys’ fees).

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

ORGANIX Inc.		BOSTON LIFE SCIENCES, INC.
/s/    PETER C. MELTZER	4/30/04	/s/    MARC LANSER		5/11/04
Peter C. Meltzer, PhD		Name:	M Lanser
President,		Title:	President
240 Salem Street
Woburn, MA 01801

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LICENSE AGREEMENT

BETWEEN

BOSTON LIFE SCIENCES INC.

AND

ORGANIX, INC

EFFECTIVE DATE is July 1, 2000

Re: Patent Application #’s USP 5,948,933

Date of Patent: September 7, 1999

“Tropane Analogs and Methods for Inhibition of Monoamine Transport”

[Harvard Case # 1382]

In consideration of the mutual promises and covenants set forth below, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

As used in this Agreement, the following terms shall have the following meanings:

1.1 AFFILIATE: any company, corporation, or business in which LICENSEE owns or controls at least fifty percent (50%) of the voting stock or other ownership. Unless otherwise specified, the term LICENSEE includes AFFILIATES.

1.2 FIELD: Therapeutics and Diagnostics for the following indications: Attention Deficit Hyperactivity Disorder, Parkinson’s disease and Depression. The FIELD specifically excludes Addiction Disorders.

1.3 HARVARD: President and Fellows of Harvard College, a nonprofit Massachusetts educational corporation having offices at the Office of Technology Licensing, Harvard Medical School, Building A – Room 414, 25 Shattuck Street, Boston, Massachusetts 02115.

1.4 ORGANIX: Organix Inc., A Massachusetts corporation having offices at 240 Salem Street, Woburn, MA 01801.

1.5 LICENSED PROCESSES: the processes covered by or utilizing PATENT RIGHTS.

1.6 LICENSED PRODUCTS: products covered by PATENT RIGHTS or products made or services provided in accordance with or by means of LICENSED PROCESSES.

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1.7 LICENSEE: Boston Life Sciences Inc., a corporation organized under the laws of Massachusetts having its principal offices at 137 Newbury St., 8^th Floor, Boston, MA 02116.

1.8 NET SALES: the amount billed, invoiced, or received (whichever occurs first) for sales, leases, or other transfers of LICENSED PRODUCTS, less:

(a) customary trade, quantity or cash discounts and non-affiliated brokers’ or agents’ commissions actually allowed and taken;

(b) amounts repaid or credited by reason of rejection or return; and

(c) to the extent separately stated on purchase orders, invoices, or other documents of sale, taxes levied on and/or other governmental charges made as to production, sale, transportation, delivery or use and paid by or on behalf of LICENSEE or sublicensees;

(d) reasonable charges for delivery or transportation provided by third parties, if separately stated.

NET SALES also includes the fair market value of any non-cash consideration received by LICENSEE or sublicensees for the sale, lease, or transfer of LICENSED PRODUCTS.

1.9 NON-COMMERCIAL RESEARCH PURPOSES: use of PATENT RIGHTS for academic research or other not-for-profit scholarly purposes which are undertaken at a non-profit or governmental institution or at ORGANIX that does not use the PATENT RIGHTS in the production or manufacture of products for sale or the performance of services for a fee.

1.10 NON-COMMERCIAL CLINICAL PURPOSES: use of PATENT RIGHTS for any purpose related to patient care at HARVARD, or any not-for-profit hospital affiliated with HARVARD that does not use the PATENT RIGHTS in the production or manufacture of products for sale.

1.11 NON-ROYALTY SUBLICENSE INCOME: Sublicense issue fees, sublicense maintenance fees, sublicense milestone payments, and similar non-royalty payments made by sublicensees to LICENSEE on account of sublicenses pursuant to this Agreement.

1.12 PATENT RIGHTS: United States Patent (USP) Serial No. 5,948,933, the inventions described and claimed therein, and any divisions, continuations, continuations-in-part to the extent the claims are directed to subject matter specifically described in USP 5,948,933 and are dominated by the claims of the existing PATENT RIGHTS, patents issuing thereon or reissues thereof, and any and all foreign patents and patent applications corresponding thereto, all to the extent owned or controlled by ORGANIX.

1.13 TERRITORY: Worldwide

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1.14 The terms “Public Law 96-517” and “Public Law 98-620” include all amendments to those statutes.

1.15 The terms “sold” and “sell” include, without limitation, leases and other transfers and similar transactions.

ARTICLE II

REPRESENTATIONS

2.1 ORGANIX is owner by assignment from Drs. Peter Meltzer; Paul Blundell and Zhengming Chen and HARVARD is owner by assignment from Dr. Bertha Madras of their entire right, title and interest in United States Patent 5,948,933 and the foreign patent applications corresponding thereto, and in the inventions described and claimed therein.

2.2 In an Invention and License Administration Agreement effective August 1 1997, HARVARD has appointed ORGANIX their sole and exclusive agent to license United States Patent 5,948,933 on their behalf. ORGANIX therefore has the authority to issue licenses under PATENT RIGHTS.

2.3 HARVARD is committed to the policy that ideas or creative works produced at HARVARD should be used for the greatest possible public benefit, and believes that every responsible incentive should be provided for the prompt introduction of such ideas into public use, all in a matter consistent with the public interest.

2.4 LICENSEE is prepared and intends to diligently develop the invention and to bring products to market which are subject to this Agreement. Thereafter, until the expiration of this Agreement, LICENSEE shall endeavor to keep LICENSED PRODUCTS available to the public.

2.5 LICENSEE is desirous of obtaining an exclusive license in the TERRITORY in order to practice the above-referenced invention covered by PATENT RIGHTS in the United States and in certain foreign countries, and to manufacture, use and sell in the commercial market the products made in accordance therewith, and ORGANIX is desirous of granting such a license to LICENSEE in accordance with the terms of this Agreement.

ARTICLE III

GRANT OF RIGHTS

3.1 ORGANIX hereby grants to LICENSEE and LICENSEE accepts, subject to the terms and conditions hereof, in the TERRITORY and in the FIELD:

(a) an exclusive commercial license under PATENT RIGHTS to make and have made, to use and have used, to sell and have sold, to import and have imported, the LICENSED PRODUCTS, and to practice the LICENSED PROCESSES, for the life of the PATENT RIGHTS. Such licenses shall include the right to grant

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sublicenses, subject to ORGANIX approval, which approval shall not be unreasonably withheld. In order to provide LICENSEE with commercial exclusivity for so long as the license under PATENT RIGHTS remains exclusive, ORGANIX agrees that it will not grant licenses under PATENT RIGHTS to others except as required by obligations in paragraph 3.2(a) or as permitted in paragraph 3.2(b).

3.2 The granting and exercise of this license is subject to the following conditions:

(a) HARVARD’s “Statement of Policy in Regard to Inventions, Patents and Copyrights,” dated August 10, 1998, Public Law 96-517, Public Law 98-620, and HARVARD’s obligations under agreements with other sponsors of research. Any right granted in this Agreement greater than that permitted under Public Law 96-517, or Public Law 98-620, shall be subject to modification as may be required to conform to the provisions of those statutes.

(b) ORGANIX and HARVARD reserve the right to

(i) make and use, and grant to others non-exclusive licenses to make and use for NON-COMMERCIAL RESEARCH PURPOSES the subject matter described and claimed in PATENT RIGHTS; and

(ii) to use the subject matter described and claimed in PATENT RIGHTS for NON-COMMERCIAL CLINICAL PURPOSES.

(c) At any time after two (2) years from the Effective Date of this Agreement, ORGANIX at its sole discretion may terminate or render this license non-exclusive if LICENSEE does not demonstrate that LICENSEE has screened the compounds licensed under PATENT RIGHTS, identified and selected at least three (3) lead compounds for preclinical studies, and initiated preclinical animal studies with two of these lead compounds for at least two indications named in the FIELD.

(d) At any time after four (4) years from the Effective Date of this Agreement, ORGANIX at its sole discretion may terminate or render this license non-exclusive if LICENSEE does not enter into human clinical trials for one of the indications named in the FIELD, under a protocol suitable to the U.S. FDA, for a compound covered under PATENT RIGHTS.

(e) At any time after six (6) years from the Effective Date of this Agreement, ORGANIX at its sole discretion may terminate, or render this license non-exclusive if LICENSEE does not enter into human clinical trials, under a protocol suitable to the U.S. FDA, for a second indication in the FIELD, for a compound covered under PATENT RIGHTS.

(f) At any time after ten (10) years from the Effective Date of this Agreement, ORGANIX at its sole discretion may terminate or render this license non-exclusive if LICENSEE or SUBLICENSES does not commence commercial sales

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of LICENSED PRODUCTS under this Agreement, and thereafter makes LICENSED PRODUCTS reasonably available to the public.

(g) In all sublicenses granted by LICENSEE hereunder, LICENSEE shall include a requirement that the sublicensee use its best efforts to bring the subject matter of the sublicense into commercial use as quickly as is reasonably possible. LICENSEE shall also include a requirement that the sublicensee meet performance milestones pursuant to this Agreement. LICENSEE shall further provide in such sublicenses that such sublicenses are subject and subordinate to the terms and conditions of this Agreement, except: (i) that the sublicensee may not further sublicense; and (ii) that the rate of royalty on NET SALES paid by the sublicensee to the LICENSEE is not subject to the Agreement. Copies of all sublicense agreements shall be provided promptly to ORGANIX.

(h) If LICENSEE is unable or unwilling to grant sublicenses, either as suggested by ORGANIX or by a potential sublicensee or otherwise, then ORGANIX may directly license such potential sublicensee unless, in ORGANIX’ reasonable judgment, such license would be contrary to sound and reasonable business practice and the granting of such license would not materially increase the availability to the public of LICENSED PRODUCTS

(i) A license in any other territory or field of use in addition to the TERRITORY and/or FIELD shall be subject of a separate agreement and shall require LICENSEE’s submission of evidence, satisfactory to ORGANIX, demonstrating LICENSEE’s willingness and ability to develop and commercialize in such other territory and/or field of use the kinds of products or processes likely to be encompassed in such other territory and/or field.

3.3 During the period of exclusivity of this license in the United States, LICENSEE shall cause any LICENSED PRODUCT produced for sale in the United States to be manufactured substantially in the United States.

3.4 All rights reserved to the United States Government and others under Public Law 96-517, and Public Law 98-620, shall remain and shall in no way be affected by this Agreement.

ARTICLE IV

ROYALTIES

4.1 LICENSEE shall pay to ORGANIX a non-refundable License Fee in the sum of One Hundred Thousand Dollars ($100,000) upon execution of this Agreement.

4.2

(a) LICENSEE shall pay to ORGANIX during the term of this Agreement a royalty of four percent (4%) of NET SALES by LICENSEE, AFFILIATES or SUBLICENSEES.

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(b) LICENSEE shall pay to ORGANIX during the term of this Agreement twenty percent (20%) of all non royalty sublicense income.

(c) For sales between LICENSEE and its AFFILIATES or sublicensees for resale, LICENSEE shall pay to ORGANIX the royalty on the NET SALES of the AFFILIATE or sublicensee.

4.3.1 LICENSEE shall pay to ORGANIX the following amounts in license milestone payments for each LICENSED PRODUCT:

(a) Upon filing the first IND application:

Two hundred thousand dollars ($200,000)

(b) Upon filing of each subsequent IND:

One hundred thousand dollars ($100,000)

(for each new indication or chemical entity)

(c) Upon completion of a Phase II study or upon Phase II/III clinical trial filing:

Two hundred and fifty thousand dollars ($250,000)

(for each new indication or chemical entity)

(d) Upon each NDA Filing:

Five hundred thousand dollars ($ 500,000) – per filing

4.3.2 No later than January 1 of each calendar year after the effective date of this Agreement, LICENSEE shall pay to ORGANIX the following non-refundable license maintenance royalty and/or advance on royalties. Such payments may be credited against running royalties due for that calendar year and Royalty Reports shall reflect such a credit.

January 1, 2001	$ 15,000
Each year thereafter	$ 20,000

4.3.3 LICENSEE shall pay a fee of $10,000 for each continuation-in-part application (CIP) added under PATENT RIGHTS. LICENSEE shall have 60 days following notice from ORGANIX of the filing of such CIP to notify Organix to include such CIP under the Agreement and pay such fee.

ARTICLE V

REPORTING

5.1 No later than sixty (60) days after June 30 of each calendar year, LICENSEE shall provide to ORGANIX a written annual Progress Report describing progress on research and development, regulatory approvals, manufacturing, sublicensing, marketing and sales

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during the most recent twelve (12) month period ending June 30 and plans for the forthcoming year. If multiple technologies are covered by the license granted hereunder, the Progress Report shall provide the information set forth above for each technology. If progress differs from that anticipated in the plan required under Paragraph 5.1, LICENSEE shall explain the reasons for the difference and propose a modified research and development plan.

5.2 LICENSEE shall report to ORGANIX the date of first sale of LICENSED PRODUCTS (or results of LICENSED PROCESSES) in each country within thirty (30) days of occurrence.

5.3

(a) LICENSEE shall submit to ORGANIX within sixty (60) days after each’ calendar half year ending June 30 and December 31, a Royalty Report setting forth for such half year at least the following information:

(i) the number of LICENSED PRODUCTS sold by LICENSEE, its AFFILIATES and sublicensees in each country;

(ii) total billings for such LICENSED PRODUCTS;

(iii) an accounting for all LICENSED PROCESSES used or sold;

(iv) deductions applicable to determine the NET SALES thereof,

(v) the amount of NON-ROYALTY SUBLICENSE INCOME received by LICENSEE; and

(vi) the amount of royalty due thereon, or, if no royalties are due to ORGANIX for any reporting period, the statement that no royalties are due.

Such report shall be certified as correct by an officer of LICENSEE and shall include a detailed listing of all deductions from royalties.

(b) LICENSEE shall pay to ORGANIX with each such Royalty Report the amount of royalty due with respect to such half year. If multiple technologies are covered by the license granted hereunder, LICENSEE shall specify which PATENT RIGHTS are utilized for each LICENSED PRODUCT and LICENSED PROCESS included in the Royalty Report.

(c) All payments due hereunder shall be deemed received when funds are credited to ORGANIX bank account and shall be payable by check or wire transfer in United States dollars. Conversion of foreign currency to U.S. dollars shall be made at the conversion rate existing in the United States (as reported in the New York Times or the Wall Street Journal) on the last working day of each royalty period. No

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transfer, exchange, collection or other charges shall be deducted from such payments.

(d) All such reports shall be maintained in confidence by ORGANIX except as required by law; however, ORGANIX may include in its usual reports annual amounts of royalties paid, and ORGANIX may provide such reports to HARVARD and HARVARD may include in its annual report the annual amount of royalties received.

(e) Late payments shall be subject to a charge of one and one half percent (1 1/12%) per month, or $250, whichever is greater.

ARTICLE VI

RECORD KEEPING

6.1 LICENSEE shall keep, and shall require its AFFILIATES and sublicensees to keep, accurate records (together with supporting documentation) of LICENSED PRODUCTS made, used or sold under this Agreement, appropriate to determine the amount of royalties due to ORGANIX hereunder. Such records shall be retained for at least three (3) years following the end of the reporting period to which they relate. They shall be available during normal business hours for examination by an accountant selected by ORGANIX, for the sole purpose of verifying reports and payments hereunder. In conducting examinations pursuant to this paragraph, ORGANIX’ accountant shall have access to all records which ORGANIX reasonably believes to be relevant to the calculation of royalties under Article IV.

6.2 ORGANIX’ accountant shall not disclose to ORGANIX any information other than information relating to the accuracy of reports and payments made hereunder.

6.3 Such examination by ORGANIX’ accountant shall be at ORGANIX’ expense, except that if such examination shows an underreporting or underpayment in excess of five percent (5%) for any twelve (12) month period, then LICENSEE shall pay the cost of such examination as well as any additional sum that would have been payable to ORGANIX had the LICENSEE reported correctly, plus interest on said sum at the rate of one and one half per cent (1 1/2%) per month.

ARTICLE VII

DOMESTIC AND FOREIGN PATENT FILING AND MAINTENANCE

7.1 Upon execution of this Agreement, LICENSEE shall reimburse ORGANIX for all reasonable expenses ORGANIX has incurred for the preparation, filing, prosecution and maintenance of PATENT RIGHTS. Thereafter, LICENSEE shall reimburse ORGANIX for all such future expenses upon receipt of invoices from ORGANIX. Late payment of these invoices shall be subject to interest charges of one and one-half percent (1 1/2%) per month. ORGANIX shall, together with LICENSEE, be responsible for the preparation, filing, prosecution and maintenance of any and all patent applications and

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patents included in PATENT RIGHTS. ORGANIX shall consult with LICENSEE as to the preparation, filing, prosecution and maintenance of such patent applications and patents and shall furnish to LICENSEE copies of documents relevant to any such preparation, filing, prosecution or maintenance, but following such consultation, ORGANIX shall make the final decision regarding patent applications and patents.

7.2 ORGANIX and LICENSEE shall cooperate fully in the preparation, filing, prosecution and maintenance of PATENT RIGHTS and of all patents and patent applications licensed to LICENSEE hereunder, executing all papers and instruments or requiring members of ORGANIX to execute such papers and instruments so as to enable ORGANIX to apply for, to prosecute and to maintain patent applications and patents in ORGANIX’ name in any country. Each party shall 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.

7.3 LICENSEE may elect to surrender its PATENT RIGHTS in any country upon sixty (60) days written notice to ORGANIX. Such notice shall not relieve LICENSEE from responsibility to reimburse ORGANIX for patent-related expenses incurred prior to the expiration of the (60)-day notice period (or such longer period specified in LICENSEE’S notice).

ARTICLE VIII

INFRINGEMENT

8.1 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. ORGANIX agrees to notify LICENSEE promptly of each infringement of such patents of which ORGANIX 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 ORGANIX and to potential effects on the public interest in making its decision whether or not to sue.

8.2

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

(b) If ORGANIX elects to join as a party pursuant to subparagraph (a), ORGANIX shall jointly control the action with LICENSEE.

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

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8.3 If LICENSEE elects to commence an action as described above, LICENSEE may deduct from its royalty payments to ORGANIX with respect to the patent(s) subject to suit an amount not exceeding fifty percent (50%) of LICENSEE’s expenses and costs of such action, including reasonable attorneys’ fees; provided, however, that such reduction shall not exceed fifty percent (50%) of the total royalty due to ORGANIX with respect to the patent(s) subject to suit for each calendar year. If such fifty percent (50%) of LICENSEE’s expenses and costs exceeds the amount of royalties deducted by LICENSEE for any calendar year, LICENSEE may to that extent reduce the royalties due to ORGANIX from LICENSEE in succeeding calendar years, but never by more than fifty percent (50%) of the total royalty due in any one year with respect to the patent(s) subject to suit.

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

8.5 Recoveries or reimbursements from actions commenced pursuant to this Article shall first be applied to reimburse LICENSEE and ORGANIX for litigation costs not paid from royalties and then to reimburse LICENSEE for royalties deducted by LICENSEE pursuant to paragraph 8.3. LICENSEE and ORGANIX shall share any remaining recoveries or reimbursements equally.

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

8.7 Without limiting the generality of paragraph 8.6, ORGANIX 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 ORGANIX is or becomes aware. If by the end of such sixty (60)-day period, LICENSEE has not commenced such an action, 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 ORGANIX in good faith, LICENSEE shall pay over to 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 ORGANIX unreimbursed litigation expenses (including, but not limited to, reasonable attorneys’ fees).

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

8.9 If neither ORGANIX, nor LICENSEE, elect to prosecute any infringement of which they are aware, they are to inform HARVARD of such election in a timely manner, and HARVARD may do so at its own expense, controlling such action and retaining all

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recoveries therefrom. ORGANIX and LICENSEE shall cooperate fully with HARVARD in connection with any such action.

ARTICLE IX

TERMINATION OF AGREEMENT

9.1 This Agreement, unless terminated as provided herein, shall remain in effect until the last patent or patent application in PATENT RIGHTS has expired or been abandoned.

9.2 ORGANIX may terminate this Agreement as follows:

(a) If LICENSEE does not make a payment due hereunder and fails to cure such non-payment (including the payment of interest in accordance with paragraph 5.4(e)) within forty-five (45) days after the date of notice in writing of such non-payment by ORGANIX.

(b) If LICENSEE defaults in its obligations under paragraph 10.4(c) and (d) to procure and maintain insurance.

(c) If, at any time after three years from the date of this Agreement, ORGANIX determines that the Agreement should be terminated pursuant to paragraph 3.2(d).

(d) If LICENSEE shall become insolvent, shall make an assignment for the benefit of creditors, or shall have a petition in bankruptcy filed for or against it. Such termination shall be effective immediately upon ORGANIX giving written to LICENSEE.

(e) If an examination by ORGANIX accountant pursuant to Article VI shows an underreporting or underpayment by LICENSEE in excess of 20% for any twelve (12) month period.

(f) If LICENSEE is convicted of a felony relating to the manufacture, use, or sale of LICENSED PRODUCTS.

(g) Except as provided in subparagraphs (a), (b), (c), (d), (e) and (f) above, if LICENSEE defaults in the performance of any obligations under this Agreement and the default has not been remedied within ninety (90) days after the date of notice in writing of such default by ORGANIX.

9.3 LICENSEE shall provide, in all sublicenses granted by it under this Agreement, that LICENSEE’s interest in such sublicenses shall at ORGANIX option terminate or be assigned to ORGANIX upon termination of this Agreement.

9.4 LICENSEE may terminate this Agreement by giving ninety (90) days advance written notice of termination to ORGANIX. Upon termination, LICENSEE shall submit a final Royalty Report to HARVARD and any royalty payments and unreimbursed patent expenses invoiced by ORGANIX shall become immediately payable.

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9.5 Paragraphs 6.1, 6.2, 6.3, 7.1, 8.5, 9.4, 9.6, 10.2, 10.4, 10.5, 10.8 and 10.9 of this Agreement shall survive termination.

ARTICLE X

GENERAL

10.1 Neither ORGANIX nor HARVARD warrant the validity of the PATENT RIGHTS licensed hereunder and make no representations whatsoever with regard to the scope of the licensed PATENT RIGHTS or that such PATENT RIGHTS may be exploited by LICENSEE, an AFFILIATE, or sublicensee without infringing other patents.

10.2 ORGANIX AND HARVARD EXPRESSLY DISCLAIM ANY AND ALL IMPLIED OR EXPRESS WARRANTIES AND MAKE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE PATENT RIGHTS, OR INFORMATION SUPPLIED BY ORGANIX or HARVARD, LICENSED PROCESSES OR LICENSED PRODUCTS CONTEMPLATED BY THIS AGREEMENT.

10.3

(a) LICENSEE shall indemnify, defend and hold harmless ORGANIX, HARVARD and their current or former directors, governing board members, trustees, officers, faculty, medical and professional staff, employees, students, and agents and their respective successors, heirs and assigns (collectively, the “Indemnitees”), against any liability, damage, loss or expenses (including reasonable attorneys’ fees and expenses of litigation) incurred by or imposed upon the Indemnitees or any of them in connection with any claims, suits, actions, demands or judgments arising out of any theory of product liability (including, but not limited to, actions in the form of tort, warranty, or strict liability) concerning any product, process or service made, used or sold pursuant to any right or license granted under this Agreement.

(b) LICENSEE shall, at its own expense, provide attorneys reasonably acceptable -to ORGANIX to defend against any actions brought or filed against any Indemnitee hereunder with respect to the subject of indemnity contained herein, whether or not such actions are rightfully brought.

(c) Beginning at the time any such product, process or service is being commercially distributed or sold (other than for the purpose of obtaining regulatory approvals) by LICENSEE or by a sublicensee, AFFILIATE or agent of LICENSEE, LICENSEE shall, at its sole cost and expense, procure and maintain commercial general liability insurance in amounts not less than $2,000,000 per incident and $2,000,000 annual aggregate and naming the Indemnitees as additional insureds. During clinical trials of any such product, process or service, LICENSEE shall, at its sole cost and expense, procure and maintain commercial general liability insurance in such equal or lesser amount as ORGANIX shall require, naming the

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Indemnitees as additional insureds. Such commercial general liability insurance shall provide (i) product liability coverage and (ii) broad form contractual liability coverage for LICENSEE’s indemnification under this Agreement.

(d) LICENSEE shall provide ORGANIX with written evidence of such insurance upon request of ORGANIX. LICENSEE shall provide ORGANIX with written notice at least fifteen (15) days prior to the cancellation, non-renewal or material change in such insurance; if LICENSEE does not obtain replacement insurance providing comparable coverage within such fifteen (15) day period, ORGANIX shall have the right to terminate this Agreement effective at the end of such fifteen (15) day period without notice or any additional waiting periods.

(e) LICENSEE shall maintain such commercial general liability insurance beyond the expiration or termination of this Agreement during (i) the period that any product, process, or service, relating to, or developed pursuant to, this Agreement is being commercially distributed or sold by LICENSEE or by a sublicensee, AFFILIATE or agent of LICENSEE and (ii) a reasonable period after the period referred to in (e)(i) above which in no event shall be less than fifteen (15) years.

10.4 LICENSEE shall not use ORGANIX’ or HARVARD’s name or insignia, or any adaptation of them, or the name of any of ORGANIX’ or HARVARD’s inventors or other investigators in any advertising, promotional or sales literature without the prior written approval of ORGANIX and HARVARD.

10.5 Without the prior written approval of ORGANIX in each instance, neither this Agreement nor the rights granted hereunder shall be transferred or assigned in whole or in part by LICENSEE to any person whether voluntarily or involuntarily, by operation of law or otherwise. This Agreement shall be binding upon the respective successors, legal representatives and assignees of ORGANIX and LICENSEE.

10.6 The interpretation and application of the provisions of this Agreement shall be governed by the laws of the Commonwealth of Massachusetts.

10.7 LICENSEE shall comply with all applicable laws and regulations. In particular, it is understood and acknowledged that the transfer of certain commodities and technical data is subject to United States laws and regulations controlling the export of such commodities and technical data, including all Export Administration Regulations of the United States Department of Commerce. These laws and regulations among other things, prohibit or require a license for the export of certain types of technical data to certain specified countries. LICENSEE hereby agrees and gives written assurance that it will comply with all United States laws and regulations controlling the export of commodities and technical data, that it will be solely responsible for any violation of such by LICENSEE or its AFFILIATES or sublicensees, and that it will defend and hold ORGANIX and HARVARD harmless in the event of any legal action of any nature occasioned by such violation.

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10.8 LICENSEE agrees (i) to obtain all regulatory approvals required for the manufacture and sale of LICENSED PRODUCTS and LICENSED PROCESSES and (ii) to utilize appropriate patent marking on such LICENSED PRODUCTS. LICENSEE also agrees to register or record this Agreement as is required by law or regulation in any country where the license is in effect.

10.9 Any notices to be given hereunder shall be sufficient if signed by the party (or party’s attorney) giving same and either (a) delivered in person, or (b) mailed certified mail return receipt requested, or (c) faxed to other party if the sender has evidence of successful transmission and if the sender promptly sends the original by ordinary mail, in any event to the following addresses:

If to LICENSEE:

Boston Life Sciences Inc.

137 Newbury Street, 8th floor

Boston, MA 02116

Fax No.: (617) 425-0996

If to ORGANIX to:

Organix Inc.

240 Salem Street,

Woburn, MA 01801

Fax No: (781) 932-4142

By such notice either party may change their address for future notices.

Notices delivered in person shall be deemed given on the date delivered. Notices sent by fax shall be deemed given on the date faxed. Notices mailed shall be deemed given on the date postmarked on the envelope.

10.11  Should a court of competent jurisdiction later hold any provision of this Agreement to be invalid, illegal, or unenforceable, and such holding is not reversed on appeal, it shall be considered severed from this Agreement. All other provisions, rights and obligations shall continue without regard to the severed provision, provided that the remaining provisions of this Agreement are in accordance with the intention of the parties.

10.12  In the event of any controversy or claim arising out of or relating to any provision of this Agreement or the breach thereof, the parties shall try to settle such conflict amicably between themselves. Subject to the limitation stated in the final sentence of this section, any such conflict which the parties are unable to resolve promptly shall be settled through arbitration conducted in accordance with the rules of the American Arbitration Association. The demand for arbitration shall be filed within a reasonable time after the controversy or claim has arisen, and in no event after the date upon which institution of legal proceedings based on such controversy or claim would be barred by the applicable statute of limitation. Such arbitration shall be held in Boston, Massachusetts. The award through arbitration shall be final and binding. Either party may enter any such award in a

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court having jurisdiction or may make application to such court for judicial acceptance of the award and an order of enforcement, as the case may be. Notwithstanding the foregoing, either party may, without recourse to arbitration, assert against the other party a third-party claim or cross-claim in any action brought by a third party, to which the subject matter of this Agreement may be relevant.

10.13  This Agreement constitutes the entire understanding between the parties and neither party shall be obligated by any condition or representation other than those expressly stated herein or as may be subsequently agreed to by the parties hereto in writing.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives.

ORGANIX INC.		LICENSEE
Signed:		Signed:
	/s/    PETER C. MELTZER		/s/    MARC E. LANSER
Name:	Peter C. Meltzer, Ph.D., President	Name:	Marc E. Lanser, Exec VP
Date:	5/30/00	Date:	6/1/00

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EX-10.8

Exhibit 10.8

Boston Life Sciences License Amendment January 2004 HU 1194

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 0211 (hereinafter “HARVARD”).

WITNESSETH:

WHEREAS, a License Agreement (the “License Agreement”) was entered into by and between LICENSEE and HARVARD with an effective date of October 15, 1996;

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

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.

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

2

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:

INFRINGEMENT

8.1 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.

8.2 (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.

8.3 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.

8.4 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.

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8.5 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.

8.6 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).

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:	M Lanser
Office of Technology Licensing and Industry Sponsored Research	Title:	MD
Harvard Medical School
5/4/04	5/7/04

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AMENDMENT TO LICENSE AGREEMENT

BETWEEN

The President and Fellow of Harvard College

and

Boston Life Sciences, Inc.,

effective as of October 15, 1996.

Re: Harvard Case No: 1194-95

(the “License”)

Article 2.2, the definition of “Patents,” shall be amended to read as follows:

“Patent(s)” means the U.S. Patent Application Serial No. 08/552,584 filed November 3, 1995 entitled “Dopamine Transporter Imaging Agents,” the U.S. Patent Application Serial No. 60/133,761 filed May 12, 1999 entitled “Dopamine Transporter Imaging Agents” and U.S. Patent Application Serial No. 09/568,106, filed May 10, 2000, entitled “Dopamine Transporter Imaging Agents,” and any foreign (Non-U.S.) counterparts including continuations, divisions or extensions and all patents which issue therefrom in any country. It also includes continuations-in-part for which Inventors are legally listed among the inventive entity and any foreign (Non-U.S.) counterparts including continuations, divisions or extensions and all patents which issue therefrom in any country.

All other terms and conditions of the License shall remain unchanged.

This amendment shall become effective on August 22, 2001.

BOSTON LIFE SCIENCES, INC.		PRESIDENT AND FELLOWS OF
		HARVARD COLLEGE
/s/    LESLIE M. LEVINE		/s/    SUSANNE E. CHURCHILL
Name:	Leslie M. Levine, V.M.D., Ph.D., J.D.	Susanne E. Churchill
Position:	Sr. Vice President, Intellectual Property	Director, Office of Technology Licensing
Date:	August 22, 2001	Date:	9/19/01

LICENSE AGREEMENT

BETWEEN

PRESIDENT AND FELLOWS OF HARVARD COLLEGE

AND

Boston Life Sciences, Inc.

Effective as of October 15, 1996

Re: Harvard Case No: 1194-95

In consideration of the mutual promises and covenants set forth below, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

As used in this Agreement, the following terms shall have the following meanings:

1.1 AFFILIATE: any company, corporation, or business in which LICENSEE owns or controls at least fifty percent (50%) of the voting stock or other ownership. Unless otherwise specified, the term LICENSEE includes AFFILIATES.

1.2 BIOLOGICAL MATERIALS: the materials supplied by HARVARD (identified in Appendix B) together with any progeny, mutants, or derivatives thereof supplied by HARVARD or created by LICENSEE.

1.3 FIELD: All field s of use.

1.4 HARVARD: President and Fellows of Harvard College, a nonprofit Massachusetts educational corporation having offices at the Office for Technology and Trademark Licensing, 124 Mt. Auburn Street, Suite 410-South, Cambridge, Massachusetts 02138.

1.5 LICENSED PROCESSES: the processes covered by PATENT RIGHTS or processes utilizing BIOLOGICAL MATERIALS or some portion thereof.

1.6 LICENSED PRODUCTS: products covered by PATENT RIGHTS or products made or services provided in accordance with or by means of LICENSED PROCESSES or products made or services provided utilizing BIOLOGICAL MATERIALS or incorporating some portion of BIOLOGICAL MATERIALS.

1.7 LICENSEE: Boston Life Sciences, Inc. a corporation organized under the laws of Massachusetts having its principal offices at Reservoir Place, 1601 Trapelo Road, Waltham, MA 02154.

1.8 NET SALES: the amount billed, invoiced, or received (whichever occurs first) for sales, leases, or other transfers of LICENSED PRODUCTS, less:

(a) customary trade, quantity or cash discounts and non-affiliated brokers’ or agents’ commissions actually allowed and taken;

(b) amounts repaid or credited by reason of rejection or return; and

(c) to the extent separately stated on purchase orders, invoices, or other documents of sale, taxes levied on and/or other governmental charges made as to production, sale, transportation, delivery or use and paid by or on behalf of LICENSEE or sublicensees.

(d) reasonable charges for delivery or transportation provided by third parties, if separately stated.

NET SALES also includes the fair market value of any non-cash consideration received by LICENSEE or sublicensees for the sale, lease, or transfer of LICENSED PRODUCTS.

1.9 NON-COMMERCIAL RESEARCH PURPOSES: use of PATENT RIGHTS and/or BIOLOGICAL MATERIALS for academic research or other not-for-profit scholarly purposes which are undertaken at a non-profit or governmental institution that does not use the PATENT RIGHTS and/or BIOLOGICAL MATERIALS in the production or manufacture of products for sale or the performance of services for a fee.

1.10 NON-ROYALTY SUBLICENSE INCOME: Sublicense issue fees, sublicense maintenance fees, sublicense milestone payments, and similar non-royalty payments made by sublicensees to LICENSEE on account of sublicenses pursuant to this Agreement.

1.11 PATENT RIGHTS: United States patent application Serial No. 08/552,584 filed November third (3) 1995, the inventions described and claimed therein, and any divisions, continuations, continuations-in-part to the extent the claims are directed to subject matter specifically described in USSN 08/552,584 and are dominated by the claims of the existing PATENT RIGHTS, patents issuing thereon or reissues thereof, and any and all foreign patents and patent applications corresponding thereto, all to the extent owned or controlled by HARVARD.

1.12 TERRITORY: Worldwide.

1.13 The terms “Public Law 96-517” and “Public Law 98-620” include all amendments to those statutes.

1.14 The terms “sold” and “sell” include, without limitation, leases and other transfers and similar transactions.

- 2 -

ARTICLE II

REPRESENTATIONS

2.1 HARVARD is owner by assignment from Dr. Bertha Madras, Dr. Alun Jones and Dr. Ashfaq Mahmood; MIT is owner by assignment from Dr. Alan Davison; and Organix Inc. is owner by assignment from Dr. Peter Meltzer and Dr. Paul Blundell, of their entire right, title and interest in United States Patent Application Serial No. 08/552,584 filed November third (3) 1995 entitled “Dopamine Transporter Imaging Agent” (H.U. Case # 1194-95), in the foreign patent applications corresponding thereto, and in the inventions described and claimed therein.

2.2 HARVARD has the authority to issue licenses under PATENT RIGHTS.

2.3 HARVARD is committed to the policy that ideas or creative works produced at HARVARD should be used for the greatest possible public benefit, and believes that every reasonable incentive should be provided for the prompt introduction of such ideas into public use, all in a manner consistent with the public interest.

2.4 LICENSEE is prepared and intends to diligently develop the invention and to bring products to market which are subject to this Agreement.

2.5 LICENSEE is desirous of obtaining an exclusive license in the TERRITORY in order to practice the above-referenced invention covered by PATENT RIGHTS in the United States and in certain foreign countries, and to manufacture, use and sell in the commercial market the products made in accordance therewith, and HARVARD is desirous of granting such a license to LICENSEE in accordance with the terms of this Agreement.

ARTICLE III

GRANT OF RIGHTS

3.1 HARVARD hereby grants to LICENSEE and LICENSEE accepts, subject to the terms and conditions hereof, in the TERRITORY and in the FIELD:

(a) an exclusive commercial license under PATENT RIGHTS, and

(b) a license to use BIOLOGICAL MATERIALS

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 RIGHTS. Such licenses shall include the right to grant sublicenses, subject to HARVARD’s approval, which approval shall not be unreasonably withheld. In order to provide LICENSEE with commercial exclusivity for so long as the license under PATENT RIGHTS remains exclusive, HARVARD agrees that it will not grant licenses under PATENT RIGHTS to others except as required by HARVARD’s obligations in paragraph 3.2(a) or as permitted in paragraph 3.2(b) and that it will not provide BIOLOGICAL MATERIALS to others for any commercial purpose.

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3.2 The granting and exercise of this license is subject to the following conditions:

(a) HARVARD’s “Statement of Policy in Regard to Inventions, Patents and Copyrights,” dated March 17, 1986, Public Law 96-517, Public Law 98-620, and HARVARD’s obligations under agreements with other sponsors of research. Any right granted in this Agreement greater than that permitted under Public Law 96-517, or Public Law 98-620, shall be subject to modification as may be required to conform to the provisions of those statutes.

(b) HARVARD reserves the right to

(i) make, use, and provide the BIOLOGICAL MATERIALS to others on a non-exclusive basis, and grant others non-exclusive licenses to make and use the BIOLOGICAL MATERIALS, all for NONCOMMERCIAL RESEARCH PURPOSES; and

(ii) make and use, and grant to others non-exclusive licenses to make and use for NON-COMMERCIAL RESEARCH PURPOSES the subject matter described and claimed in PATENT RIGHTS.

(c) LICENSEE shall use diligent efforts to effect introduction of the LICENSED PRODUCTS into the commercial market as soon as practicable, consistent with sound and reasonable business practice and judgment; thereafter, until the expiration of this Agreement, LICENSEE shall endeavor to keep LICENSED PRODUCTS reasonably available to the public.

(d) At any time after 2 (two) years from the effective date of this Agreement, HARVARD may terminate or render this license nonexclusive if, in HARVARD’s reasonable judgment, the Progress Reports furnished by LICENSEE do not demonstrate that LICENSEE:

(i) has put the licensed subject matter into commercial use in the country or countries hereby licensed, directly or through a sublicense, and is not keeping the licensed subject matter reasonably available to the public, or

(ii) is engaged in research, development, manufacturing, marketing or sublicensing activity appropriate to achieving 3.2(d)(i).

Additional, specific performance milestones which, if not complied with, may result in HARVARD terminating or rendering this license non exclusive:

(iii) LICENSEE to appoint within twelve (12) months of the execution of this Agreement, after consultation with the inventors, a consultant to advise on technetium kit development.

(iv) LICENSEE shall provide funding for a Physician Sponsored or corporate IND within six (6) months of successful completion of images in

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experimental primates, pharmakokenetic studies, and biodistribution, and toxicity studies.

(v) Following the Physician Sponsored IND a decision will be taken by LICENSEE, in consultation with INVENTORS, regarding Technepine’s suitability as a lead compound. If suitable, LICENSEE shall proceed to file a Corporate Sponsored IND. If Technepine is not a suitable lead compound then LICENSEE shall proceed by filing a Physician Sponsored IND with a more suitable lead compound if so generated by research of the INVENTORS, sponsored by LICENSEE, during the 18 (eighteen) month period from the execution of this Agreement, provided that the necessary preclinical studies been successfully completed, as provided in paragraph (iv) above.

(vi) One year from successful completion of Physician Sponsored IND LICENSEE shall submit a Corporate Sponsored IND.

(vii) Within two years of a successful Corporate Sponsored IND LICENSEE shall submit an NDA filing.

(e) In all sublicenses granted by LICENSEE hereunder, LICENSEE shall include a requirement that the sublicensee use diligent efforts to bring the subject matter of the sublicense into commercial use as quickly as is reasonably possible. LICENSEE shall further provide in such sublicenses that such sublicenses are subject and subordinate to the terms and conditions of this Agreement, except: (i) the sublicensee may not further sublicense; and (ii) the rate of royalty on NET SALES paid by the sublicensee to the LICENSEE. Copies of all sublicense agreements shall be provided promptly to HARVARD.

(f) During the period of exclusivity of this license in the United States, LICENSEE shall cause any LICENSED PRODUCT produced for sale in the United States to be manufactured substantially in the United States.

3.3 All rights reserved to the United States Government and others under Public Law 96-517, and Public Law 98-620, shall remain and shall in no way be affected by this Agreement.

ARTICLE IV

ROYALTIES

4.1 LICENSEE shall pay to HARVARD a non-refundable license royalty fee in the sum of Three Hundred Thousand Dollars ($300,000). One Hundred and Fifty Thousand ($150,000) to be paid upon execution of this Agreement, and One Hundred and Fifty Thousand six (6) months later.

4.2 (a) LICENSEE shall pay to HARVARD during the term of this Agreement a royalty of six percent (6%) of NET SALES by LICENSEE up to fifty (50) million dollars; seven percent (7%) on NET SALES by LICENSEE from fifty (50) to one hundred (100)

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million dollars; and Eight (8%) on NET SALES by LICENSEE over one hundred (100) million dollars. In the case of sublicenses, LICENSEE shall, instead of the foregoing, pay to HARVARD a royalty of thirty percent (30%) of royalties received by LICENSEE on NET SALES by sublicensee up to fifty (50) million dollars; thirty three percent (33%) of royalties received by LICENSEE on NET SALES by sublicensee from fifty (50) to one hundred (100) million dollars; and thirty six percent (36%) of royalties received by LICENSEE on NET Sales by sublicensee over one hundred (100) million dollars. LICENSEE shall also pay to HARVARD a royalty of twenty five percent (25%) of NON-ROYALTY SUBLICENSE INCOME. This shall however exclude payments received from sublicensee for research and development.

(b) If the license pursuant to this Agreement is converted to a nonexclusive one and if other non-exclusive licenses in the same field and territory are granted, the above royalties shall not exceed the royalty rate to be paid by other licensees in the same field and territory during the term of the non-exclusive license.

(c) On sales between LICENSEE and its AFFILIATES or sublicensees for resale, the royalty shall be paid on the NET SALES of the AFFILIATE or sublicensee.

4.3 Milestone royalty payments:

Upon filing an IND	$	50,000
Upon successful completion of phase II clinical trial	$	100,000
Upon NDA Filing	$	100,000
Upon NDA Approval	$	250,000

ARTICLE V

REPORTING

5.1 Prior to signing this Agreement, LICENSEE has provided to HARVARD a written research and development plan (as appendix A of Sponsored Research Agreement).

5.2 No later than sixty (60) days after June 30 of each calendar year, LICENSEE shall provide to HARVARD a written annual Progress Report describing progress on research and development, regulatory approvals, manufacturing, sublicensing, marketing and sales during the most recent twelve (12) month period ending June 30 and plans for the forthcoming year. If multiple technologies are covered by the license granted hereunder, the Progress Report shall provide the information set forth above for each technology. If progress differs from that anticipated in the plan required under Paragraph 5.1, LICENSEE shall explain the reasons for the difference and propose a modified research and development plan for HARVARD’s review and approval. LICENSEE shall also provide any reasonable        additional data HARVARD requires to evaluate LICENSEE’s performance.

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5.3 LICENSEE shall report to HARVARD the date of first sale of LICENSED PRODUCTS (or results of LICENSED PROCESSES) in each country within thirty (30) days of occurrence.

5.4 (a) LICENSEE shall submit to HARVARD within sixty (60) days after each calendar half year ending June 30 and December 31, a Royalty Report setting forth for such half year at least the following information:

(i) the number of LICENSED PRODUCTS sold by LICENSEE, its AFFILIATES and sublicensees in each country;

(ii) total billings for such LICENSED PRODUCTS;

(iii) an accounting for all LICENSED PROCESSES used or sold;

(iv) deductions applicable to determine the NET SALES thereof;

(v) the amount of NON-ROYALTY SUBLICENSE INCOME received by LICENSEE; and

(vi) the amount of royalty due thereon, or, if no royalties are due to HARVARD for any reporting period, the statement that no royalties are due.

Such report shall be certified as correct by an officer of LICENSEE and shall include a detailed listing of all deductions from royalties.

(b) LICENSEE shall pay to HARVARD with each such Royalty Report the amount of royalty due with respect to such half year. If multiple technologies are covered by the license granted hereunder, LICENSEE shall specify which PATENT RIGHTS and BIOLOGICAL MATERIALS are utilized for each LICENSED PRODUCT and LICENSED PROCESS included in the Royalty Report.

(c) All payments due hereunder shall be deemed received when funds are credited to Harvard’s bank account and shall be payable by check or wire transfer in United States dollars. Conversion of foreign currency to U.S. dollars shall be made at the conversion rate existing in the United States (as reported in the New York Times or the Wall Street Journal) on the last working day of each royalty period. No transfer, exchange, collection or other charges shall be deducted from such payments.

(d) All such reports shall be maintained in confidence by HARVARD except as required by law; however, HARVARD may include in its usual reports annual amounts of royalties paid.

(e) Late payments shall be subject to a charge of one and one half percent (1 1/2%) per month, or $250, whichever is greater.

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ARTICLE VI

RECORD KEEPING

6.1 LICENSEE shall keep, and shall require its AFFILIATES and sublicensees to keep, accurate records (together with supporting documentation) of LICENSED PRODUCTS made, used or sold under this Agreement, appropriate to determine the amount of royalties due to HARVARD hereunder. Such records shall be retained for at least three (3) years following the end of the reporting period to which they relate. They shall be available during normal business hours for examination by an accountant selected by HARVARD, for the sole purpose of verifying reports and payments hereunder. In conducting examinations pursuant to this paragraph, HARVARD’s accountant shall have access to all records which HARVARD reasonably believes to be relevant to the calculation of royalties under Article IV.

6.2 HARVARD’s accountant shall not disclose to HARVARD any information other than information relating to the accuracy of reports and payments made hereunder.

6.3 Such examination by HARVARD’s accountant shall be at HARVARD’s expense, except that if such examination shows an underreporting or underpayment in excess of five percent (5%) for any twelve (12) month period, then LICENSEE shall pay the cost of such examination as well as any additional sum that would have been payable to HARVARD had the LICENSEE reported correctly, plus interest on said sum at the rate of one and one half per cent (1 1/2%) per month.

ARTICLE VII

DOMESTIC AND FOREIGN PATENT FILING AND MAINTENANCE

7.1 Upon execution of this Agreement, LICENSEE shall reimburse HARVARD for all reasonable expenses HARVARD has incurred for the preparation, filing, prosecution and maintenance of PATENT RIGHTS. Thereafter, LICENSEE shall reimburse HARVARD for all such future expenses upon receipt of invoices from HARVARD. Late payment of these invoices shall be subject to interest charges of one and one-half percent (1 1/2%) per month. HARVARD shall, in its sole discretion, be responsible for the preparation, filing, prosecution and maintenance of any and all patent applications and patents included in PATENT RIGHTS. HARVARD shall consult with LICENSEE as to the preparation, filing, prosecution and maintenance of such patent applications and patents and shall furnish to LICENSEE copies of documents relevant to any such preparation, filing, prosecution or maintenance.

7.2 HARVARD and LICENSEE shall cooperate fully in the preparation, filing, prosecution and maintenance of PATENT RIGHTS and of all patents and patent applications licensed to LICENSEE hereunder, executing all papers and instruments or requiring members of HARVARD 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 name in any country. Each party shall provide to the other prompt notice as to all matters which

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come to its attention and which may affect the preparation, filing, prosecution or maintenance of any such patent applications or patents.

7.3 LICENSEE may elect to surrender its PATENT RIGHTS in any country upon sixty (60) 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 (60)-day notice period (or such longer period specified in LICENSEE’s notice).

ARTICLE VIII

INFRINGEMENT

8.1 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. HARVARD agrees to notify LICENSEE promptly of each infringement of such patents of which HARVARD 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 to potential effects on the public interest in making its decision whether or not to sue.

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

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

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

8.3 If LICENSEE elects to commence an action as described above, LICENSEE may deduct from its royalty payments to HARVARD with respect to the patent(s) subject to suit an amount not exceeding fifty percent (50%) of LICENSEE’s expenses and costs of such action, including reasonable attorneys’ fees; provided, however, that such reduction shall not exceed fifty percent (50%) of the total royalty due to HARVARD with respect to the patent(s) subject to suit for each calendar year. If such fifty percent (50%) of LICENSEE’s expenses and costs exceeds the amount of royalties deducted by LICENSEE for any calendar year, LICENSEE may to that extent reduce the royalties due to HARVARD from LICENSEE in succeeding calendar years, but never by more than fifty percent (50%) of the total royalty due in any one year with respect to the patent(s) subject to suit.

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

8.5 Recoveries or reimbursements from actions commenced pursuant to this Article shall first be applied to reimburse LICENSEE and HARVARD for litigation costs not paid from royalties and then to reimburse HARVARD for royalties deducted by LICENSEE pursuant to paragraph 8.3. Any remaining recoveries or reimbursements shall be shared equally by LICENSEE and HARVARD.

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

8.7 Without limiting the generality of paragraph 8.6, 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 is or becomes aware. If, by the end of such sixty (60)-day period, LICENSEE has not commenced such an action, HARVARD 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 in good faith, LICENSEE shall pay over to Harvard 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’s unreimbursed litigation expenses (including, but not limited to, reasonable attorneys’ fees).

8.8 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 in connection with any such action.

ARTICLE IX

TERMINATION OF AGREEMENT

9.1 This Agreement, unless terminated as provided herein, shall remain in effect until the last patent or patent application in PATENT RIGHTS has expired or been abandoned.

9.2 HARVARD may terminate this Agreement as follows:

(a) If LICENSEE does not make a payment due hereunder and fails to cure such non-payment (including the payment of interest in accordance with paragraph 5.4(e)) within forty-five (45) days after the date of notice in writing of such non-payment by HARVARD.

(b) If LICENSEE defaults in its obligations under paragraph 10.4(c)and(d) to procure and maintain insurance.

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(c) If LICENSEE shall become insolvent, shall make an assignment for the benefit of creditors, or shall have a petition in bankruptcy filed for or against it. Such termination shall be effective immediately upon HARVARD giving written to LICENSEE.

(d) If an examination by Harvard’s accountant pursuant to Article VI shows an underreporting or underpayment by LICENSEE in excess of 20% for any twelve (12) month period.

(e) If LICENSEE is convicted of a felony relating to the manufacture, use, or sale of LICENSED PRODUCTS.

(f) Except as provided in subparagraphs (a), (b), (c), (d), (e) and (f) above, if LICENSEE defaults in the performance of any obligations under this Agreement and the default has not been remedied within ninety (90) days after the date of notice in writing of such default by HARVARD.

9.3 LICENSEE shall provide, in all sublicenses granted by it under this Agreement, that LICENSEE’s interest in such sublicenses shall at HARVARD’s option terminate or be assigned to HARVARD upon termination of this Agreement.

9.4 LICENSEE may terminate this Agreement by giving ninety (90) days advance written notice of termination to HARVARD and paying a termination fee of twenty thousand dollars ($20,000). Upon termination, LICENSEE shall submit a final Royalty Report to HARVARD and any royalty payments and unreimbursed patent expenses invoiced by HARVARD shall become immediately payable.

9.5 Upon termination pursuant to Paragraph 9.2, whether by HARVARD or by LICENSEE, LICENSEE shall cease all use of the BIOLOGICAL MATERIALS and shall, upon request, return or destroy (at HARVARD’s option) all BIOLOGICAL MATERIALS under its control or in its possession.

9.6 Paragraphs 6.1, 6.2, 6.3, 7.1, 8.5, 9.4, 9.5, 9.6, 10.2, 10.4, 10.5, 10.8 and 10.9 of this Agreement shall survive termination.

ARTICLE X

GENERAL

10.1 HARVARD does not warrant the validity of the PATENT RIGHTS licensed hereunder and makes no representations whatsoever with regard to the scope of the licensed PATENT RIGHTS or that such PATENT RIGHTS or BIOLOGICAL MATERIALS may be exploited by LICENSEE, an AFFILIATE, or sublicensee without infringing other patents.

10.2 HARVARD EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED OR EXPRESS WARRANTIES AND MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE

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PATENT RIGHTS, BIOLOGICAL MATERIALS, OR INFORMATION SUPPLIED BY HARVARD, LICENSED PROCESSES OR LICENSED PRODUCTS CONTEMPLATED BY THIS AGREEMENT. Further HARVARD has made no investigation and makes no representation that the BIOLOGICAL MATERIALS supplied by it or the methods used in making or using such materials are free from liability for patent infringement.

10.3 LICENSEE shall not distribute or release the BIOLOGICAL MATERIALS to others except to further the purposes of this Agreement. LICENSEE shall protect the BIOLOGICAL MATERIALS at least as well as it protects its own valuable tangible personal property and shall take measures to protect the BIOLOGICAL MATERIALS from any claims by third parties including creditors and trustees in bankruptcy.

10.4 (a) LICENSEE shall indemnify, defend and hold harmless HARVARD and its current or former directors, governing board members, trustees, officers, faculty, medical and professional staff, employees, students, and agents and their respective successors, heirs and assigns (collectively, the “Indemnitees”), against any liability, damage, loss or expenses (including reasonable attorneys’ fees and expenses of litigation) incurred by or imposed upon the Indemnitees or any of them in connection with any claims, suits, actions, demands or judgments arising out of any theory of product liability (including, but not limited to, actions in the form of tort, warranty, or strict liability) concerning any product, process or service made, used or sold pursuant to any right or license granted under this Agreement.

(b) LICENSEE shall, at its own expense, provide attorneys reasonably acceptable to HARVARD to defend against any actions brought or filed against any Indemnitee hereunder with respect to the subject of indemnity contained herein, whether or not such actions are rightfully brought.

(c) Beginning at the time any such product, process or service is being commercially distributed or sold (other than for the purpose of obtaining regulatory approvals) by LICENSEE or by a sublicensee, AFFILIATE or agent of LICENSEE, LICENSEE shall, at its sole cost and expense, procure and maintain commercial general liability insurance in amounts not less than $2,000,000 per incident and $2,000,000 annual aggregate and naming the Indemnitees as additional insureds. During clinical trials of any such product, process or service, LICENSEE shall, at its sole cost and expense, procure and maintain commercial general liability insurance in such equal or lesser amount as HARVARD shall require, naming the Indemnitees as additional insureds. Such commercial general liability insurance shall provide (i) product liability coverage and (ii) broad form contractual liability coverage for LICENSEE’s indemnification under this Agreement. If LICENSEE elects to self-insure all or part of the limits described above (including deductibles or retentions which are in excess of $250,000 annual aggregate) such self-insurance program must be acceptable to HARVARD and the Risk Management Foundation of the Harvard Medical Institutions, Inc. in their sole discretion. The minimum amounts of insurance coverage required shall not be construed to create

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a limit of LICENSEE’s liability with respect to its indemnification under this Agreement.

(d) LICENSEE shall provide HARVARD with written evidence of such insurance upon request of HARVARD. LICENSEE shall provide HARVARD with written notice at least fifteen (15) days prior to the cancellation, non-renewal or material change in such insurance; if LICENSEE does not obtain replacement insurance providing comparable coverage within such fifteen (15) day period, HARVARD shall have the right to terminate this Agreement effective at the end of such fifteen (15) day period without notice or any additional waiting periods.

(e) LICENSEE shall maintain such commercial general liability insurance beyond the expiration or termination of this Agreement during (i) the period that any product, process, or service, relating to, or developed pursuant to, this Agreement is being commercially distributed or sold by LICENSEE or by a sublicensee, AFFILIATE or agent of LICENSEE and (ii) a reasonable period after the period referred to in (e)(i) above which in no event shall be less, than fifteen (15) years.

10.5 LICENSEE shall not use HARVARD’s name or insignia, or any adaptation of them, or the name of any of HARVARD’s inventors in any advertising, promotional or sales literature without the prior written approval of HARVARD.

10.6 Without the prior written approval of HARVARD in each instance, neither this Agreement nor the rights granted hereunder shall be transferred or assigned in whole or in part by LICENSEE to any person whether voluntarily or involuntarily, by operation of law or otherwise. This Agreement shall be binding upon the respective successors, legal representatives and assignees of HARVARD and LICENSEE.

10.7 The interpretation and application of the provisions of this Agreement shall be governed by the laws of the Commonwealth of Massachusetts.

10.8 LICENSEE shall comply with all applicable laws and regulations. In particular, it is understood and acknowledged that the transfer of certain commodities and technical data is subject to United States laws and regulations controlling the export of such commodities and technical data, including all Export Administration Regulations of the United States Department of Commerce. These laws and regulations among other things, prohibit or require a license for the export of certain types of technical data to certain specified countries. LICENSEE hereby agrees and gives written assurance that it will comply with all United States laws and regulations controlling the export of commodities and technical data, that it will be solely responsible for any violation of such by LICENSEE or its AFFILIATES or sublicensees, and that it will defend and hold HARVARD harmless in the event of any legal action of any nature occasioned by such violation.

10.9 LICENSEE agrees (i) to obtain all regulatory approvals required for the manufacture and sale of LICENSED PRODUCTS and LICENSED PROCESSES and (ii) to utilize appropriate patent marking on such LICENSED PRODUCTS. LICENSEE also agrees to

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register or record this Agreement as is required by law or regulation in any country where the license is in effect.

10.10 Any notices to be given hereunder shall be sufficient if signed by the party (or party’s attorney) giving same and either (a) delivered in person, or (b) mailed certified mail return receipt requested, or (c) faxed to other party if the sender has evidence of successful transmission and if the sender promptly sends the original by ordinary mail, in any event to the following addresses:

If to LICENSEE:

Boston Life Sciences, Inc.

31 Newbury Street, Suite 300

Boston, MA 02116

Fax No: 617 425 0996

If to Harvard to:

Office for Technology and Trademark Licensing

Harvard University

124 Mt. Auburn Street, Suite 410

South Cambridge, MA 02138

Fax No.: 617-495-9568

By such notice either party may change their address for future notices.

Notices delivered in person shall be deemed given on the date delivered. Notices sent by fax shall be deemed given on the date faxed. Notices mailed shall be deemed given on the date postmarked on the envelope.

10.11 Should a court of competent jurisdiction later hold any provision of this Agreement to be invalid, illegal, or unenforceable, and such holding is not reversed on appeal, it shall be considered severed from this Agreement. All other provisions, rights and obligations shall continue without regard to the severed provision, provided that the remaining provisions of this Agreement are in accordance with the intention of the parties.

10.12 In the event of any controversy or claim arising out of or relating to any provision of this Agreement or the breach thereof, the parties shall try to settle such conflict amicably between themselves. Subject to the limitation stated in the final sentence of this section, any such conflict which the parties are unable to resolve promptly shall be settled through arbitration conducted in accordance with the rules of the American Arbitration Association. The demand for arbitration shall be filed within a reasonable time after the controversy or claim has arisen, and in no event after the date upon which institution of legal proceedings based on such controversy or claim would be barred by the applicable statute of limitation. Such arbitration shall be held in Boston, Massachusetts. The award through arbitration shall be final and binding. Either party may enter any such award in a

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court having jurisdiction or may make application to such court for judicial acceptance of the award and an order of enforcement, as the case may be. Notwithstanding the foregoing, either party may, without recourse to arbitration, assert against the other party a third-party claim or cross-claim in any action brought by a third party, to which the subject matter of this Agreement may be relevant.

10.13 This Agreement constitutes the entire understanding between the parties and neither party shall be obligated by any condition or representation other than those expressly stated herein or as may be subsequently agreed to by the parties hereto in writing.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives.

PRESIDENT AND FELLOWS OF HARVARD COLLEGE	LICENSEE
/s/    JOYCE BRINTON	/s/    MARC E. LANSER
Joyce Brinton, Director	Signature
Office for Technology and Trademark Licensing
	Marc E. Lanser
	Name
	Exec VP
	Title
10/16/96	10/18/96
Date	Date

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Appendix B

Biomaterials: None

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: November 14, 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: November 14, 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 September 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: November 14, 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 September 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: November 14, 2005