Edgar Filing: GENTA INC DE/

Unassociated Document

As filed with the Securities and Exchange Commission on [____], 2009

Registration No. 333-[______]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

GENTA INCORPORATED

(Exact name of registrant as specified in its charter)

Delaware	2836	33-0326866
(State or other jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
incorporation or organization)	Classification Code Number)	Identification Number)

200 Connell Drive

Berkeley Heights, New Jersey 07922

(908) 286-9800

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Raymond P. Warrell, Jr., M.D.

Chairman and Chief Executive Officer

Genta Incorporated

200 Connell Drive

Berkeley Heights, New Jersey 07922

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Emilio Ragosa, Esq.

Morgan, Lewis & Bockius LLP

502 Carnegie Center

Princeton, New Jersey 08540

tel: (609) 919-6600

fax: (609) 919-6701

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

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

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

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

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

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

Large accelerated filer £

Accelerated filer £

Non-accelerated filer £

(Do not check if a smaller reporting company)

Smaller reporting company R

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to Be Registered	Amount to be Registered (1)			Proposed Maximum Offering Price Per Security		Proposed Maximum Aggregate Offering Price			Amount of Registration Fee
Shares of Common Stock (par value $0.001 per share)		38,990,000	(2)	$	0.77	$	30,022,300.00	(3)	$	1,675.00
Shares of Common Stock (par value $0.001 per share) underlying the July 2009 Notes		70,010,000	(4)	$	0.77	$	53,907,700.00	(3)	$	3,008.00
Shares of Common Stock underlying the July 2009 Warrants		23,502,500	(5)	$	1.00	$	23,502,500.00	(6)	$	1,312.00
Shares of Common Stock (par value $0.001 per share) underlying the September 2009 Notes		21,000,001	(7)	$	0.77	$	16,170,000.77	(3)	$	903.00
Shares of Common Stock underlying the September 2009 Warrants		7,050,000	(5)	$	1.00	$	7,050,000.00	(6)	$	394.00
TOTAL									$	7,292.00

(1)

In accordance with Rule 416 under the Securities Act of 1933, in order to prevent dilution, a presently indeterminable number of shares of common stock are registered hereunder which may be issued in the event of a stock split, stock dividend or similar transaction. No additional registration fee has been paid for these shares of common stock.

(2)	Represents shares of the registrant’s common stock being registered for resale that have been issued to the selling stockholders named in the prospectus.

(3)

Estimated solely for the purpose of calculating the amount of the registration in accordance with Rule 457(c) under the Securities Act of 1933, as amended, based on the average of the high and low sale prices of the Registrant’s common stock on September 18, 2009, as reported by the Over-the-Counter Bulletin Board.

(4)

Represents shares of the registrant’s common stock issuable upon conversion of 8% subordinated unsecured convertible notes (the “July 2009 Notes”) issued in the July 2009 private placement to certain accredited investors. Pursuant to the terms of the July 2009 Notes issued in connection with the private placement, the July 2009 Notes are initially, subject to adjustment, convertible or exercisable into an aggregate of 70,010,000 shares of common stock.

(5)	Represents shares of the registrant’s common stock issuable upon exercise of two-year warrants issued on July 7, 2009 and September 4, 2009, respectively, to purchase shares of the registrant’s common stock by the selling stockholders named in this registration statement.

(6)	Calculated in accordance with Rule 457(g) based upon the price at which the warrants may be exercised, after giving effect to the 1-for-50 reverse stock split that was effected on June 26, 2009.

(7)

Represents shares of the registrant’s common stock issuable upon conversion of 8% subordinated unsecured convertible notes (the “September 2009 Notes”) issued in the September 2009 private placement to certain accredited investors. Pursuant to the terms of the September 2009 Notes issued in connection with the private placement, the September 2009 Notes are initially, subject to adjustment, convertible or exercisable into an aggregate of 21,000,001 shares of common stock.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PROSPECTUS

Subject to completion, dated [____], 2009

GENTA INCORPORATED

160,552,501 Shares of Common Stock

This prospectus relates to offers and resales or other dispositions by certain of our security holders or their transferees of up to 160,552,501 shares of our common stock, par value $0.001 per share, including 38,990,000 shares issued as part of the July 7, 2009 and September 4, 2009 financings, 23,502,500 shares issuable upon the exercise of warrants issued pursuant to the July 7, 2009 securities purchase agreement, or the July 2009 Warrants, 7,050,000 shares issuable upon exercise of warrants issued pursuant to the September 4, 2009 securities purchase agreement, or the September 2009 Warrants, 70,010,000 shares issuable upon the conversion of 8% unsecured subordinated convertible notes issued pursuant to the July 7, 2009 securities purchase agreement, or the July 2009 Notes, and 21,000,001 shares issuable upon the conversion of 8% unsecured subordinated convertible notes issued pursuant to the September 4, 2009 securities purchase agreement, or the September 2009 Notes.

These shares may be sold by the selling stockholders from time to time in the over-the-counter market or other national securities exchange or automated interdealer quotation system on which our common stock is then listed or quoted, through negotiated transactions or otherwise. The prices at which the selling stockholders may sell the shares will be determined by prevailing market price for the shares or in negotiated transactions. We will not receive any of the proceeds from the disposition of these shares by the selling stockholders, other than as a result of the exercise of July 2009 Warrants and September 2009 Warrants for cash held by the selling stockholders. All costs associated with this registration will be borne by us. The selling stockholders will bear all commissions and discounts, if any, attributable to their respective sales of shares. On June 26, 2009, we effected a 1-for-50 reverse stock split. As a result, the share numbers and stock price numbers found herein are all reflected on a post-split basis.

On September 16, 2009, the closing price of our common stock was $0.58 per share. Our common stock is quoted on the OTC Bulletin Board under the symbol “GETA.OB”

Brokers or dealers effecting transactions in these shares should confirm that the shares are registered under the applicable state law or that an exemption from registration is available.

These securities are speculative and involve a high degree of risk.

Please refer to “Risk Factors” beginning on page 7.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is [____], 2009.

TABLE OF CONTENTS

		Page
PROSPECTUS SUMMARY		1
RISK FACTORS		7
FORWARD-LOOKING STATEMENTS		18
USE OF PROCEEDS		19
DETERMINATION OF OFFERING PRICE		19
DIVIDEND POLICY		19
CAPITALIZATION		20
DILUTION		21
SELLING STOCKHOLDERS		21
DESCRIPTION OF BUSINESS		31
DESCRIPTION OF PROPERTY		42
LEGAL PROCEEDINGS		42
PRICE RANGE OF COMMON STOCK		43
EQUITY COMPENSATION PLAN INFORMATION		44
SELECTED FINANCIAL INFORMATION		45
SUPPLEMENTARY FINANCIAL INFORMATION		46
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		47
CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		63
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		63
MANAGEMENT		64
EXECUTIVE COMPENSATION		66
SECURITY OWNERSHIP OF MANAGEMENT		79
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS		80
SHARES ELIGIBLE FOR FUTURE SALE		84
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		85
DESCRIPTION OF CAPITAL STOCK		86
PLAN OF DISTRIBUTION		89
LEGAL MATTERS		90
EXPERTS		90
HOW TO GET MORE INFORMATION		91
INDEX TO FINANCIAL STATEMENTS		F-1
PART II		II-1

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from the information contained in this prospectus. We are not making an offer to sell securities in any state where offers and sales are not permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of when this prospectus is delivered or when any sale of our common stock occurs.

FOR INVESTORS OUTSIDE THE UNITED STATES: We have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about, and to observe any restrictions relating to, this offering and the distribution of this prospectus.

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PROSPECTUS SUMMARY

This summary does not contain all of the information you should consider before buying our securities. You should read the entire prospectus carefully, especially the “Risk Factors” section and our consolidated financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in our securities.

Introduction

Unless otherwise stated, all references to “us,” “our,” “we,” “Genta,” the “Company” and similar designations refer to Genta Incorporated and its subsidiaries.

This prospectus relates to the resale by the selling stockholders identified in this prospectus of up to 160,552,501 shares of common stock, including 38,990,000 shares issued as part of the July 7, 2009 and September 4, 2009 financings, 23,502,500 shares issuable upon the exercise of the July 2009 Warrants, 7,050,000 shares issuable upon the exercise of the September 2009 Warrants, 70,010,000 shares issuable upon the conversion of the July 2009 Notes and 21,000,001 shares issuable upon the conversion of the September 2009 Notes. All of the shares, when sold, will be sold by these selling stockholders. The selling stockholders may sell their shares of common stock from time to time at market prices prevailing at the time of sale, at prices related to the prevailing market price or at negotiated prices. We will not receive any proceeds from the sale of the shares of common stock by the selling stockholders other than as a result of the exercise of the July 2009 Warrants and September 2009 Warrants for cash held by the selling stockholders.

Overview

We are a biopharmaceutical company engaged in pharmaceutical, or drug, research and development. We are dedicated to the identification, development and commercialization of novel drugs for the treatment of cancer and related diseases. Our research portfolio consists of two major programs: “DNA/RNA Medicines” (which includes our lead oncology drug, Genasense®); and “Small Molecules” (which includes our marketed product, Ganite®, and the investigational compounds tesetaxel and G4544).

The DNA/RNA Medicines program includes drugs that are based on using modifications of either DNA or RNA as drugs that can be used to treat disease. These technologies include antisense, decoys, and small interfering or micro RNAs. Our lead drug from this program is an investigational antisense compound known as Genasense®, an oblimersen sodium injection. Genasense® is designed to block the production of a protein known as Bcl-2. Current science suggests that Bcl-2 is a fundamental, although not the sole, cause of the inherent resistance of cancer cells to anticancer treatments, such as chemotherapy, radiation, and monoclonal antibodies. While Genasense® has displayed some anticancer activity when used by itself, we are developing the drug primarily as a means of amplifying the cytotoxic effects of other anticancer treatments.

Genasense®

The Company’s principal goal has been to secure regulatory approval for the marketing of Genasense®. Genasense® has been studied in combination with a wide variety of anticancer drugs in a number of different cancer indications. We have reported results from randomized trials of Genasense® in a number of diseases. Under our own sponsorship or in collaboration with others, we are currently conducting additional clinical trials. We are especially interested in the development, regulatory approval, and commercialization of Genasense® in at least three diseases: melanoma; chronic lymphocytic leukemia, referred to herein as CLL; and non-Hodgkin’s lymphoma, referred to herein as NHL.

Genasense® has been submitted for regulatory approval in the U.S. on two occasions and to the European Union (EU) once. These applications proposed the use of Genasense® plus chemotherapy for patients with advanced melanoma (U.S. and EU) and relapsed or refractory chronic lymphocytic leukemia (CLL) (U.S.-only). None of these applications resulted in regulatory approval for marketing. Nonetheless, we believe that Genasense® can ultimately be approved and commercialized and we have undertaken a number of initiatives in this regard that are described below.

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Melanoma

The Company’s major current initiative is a randomized controlled trial that tests whether the addition of Genasense to standard chemotherapy can improve outcomes for patients with advanced melanoma. In 2004, the Company withdrew its New Drug Application (NDA) for Genasense® in melanoma after an advisory committee to the Food and Drug Administration (FDA) failed to recommend approval. A negative decision was also received for a similar application in melanoma from the European Medicines Agency (EMEA) in 2007. Data from the Phase 3 trial that comprised the basis for these applications were published in 2006. These results showed that treatment with Genasense® plus dacarbazine compared with dacarbazine alone in patients with advanced melanoma was associated with a statistically significant increase in overall response, complete response, durable response, and progression-free survival (PFS). However, the primary endpoint of overall survival approached but did not quite reach statistical significance (P=0.077). Subsequently, our analysis of this trial showed that there was a significant treatment interaction effect related to levels of a blood enzyme known as LDH. When this effect was analyzed by treatment arm, survival was shown to be significantly superior for patients with a non-elevated LDH who received Genasense® (P=0.018; n=508). Moreover, this benefit was particularly noteworthy for patients whose baseline LDH did not exceed 80% of the upper limit of normal for this lab value. LDH had also been previously described by others as the single most important prognostic factor in advanced melanoma.

Based on these data, in August 2007 we initiated a new Phase 3 trial of Genasense® plus chemotherapy in advanced melanoma. This trial, known as AGENDA, is a randomized, double-blind, placebo-controlled study in which patients are randomly assigned to receive Genasense® plus dacarbazine or dacarbazine alone. The study uses LDH as a biomarker to identify patients who are most likely to respond to Genasense®, based on data obtained from our preceding trial in melanoma. The co-primary endpoints of AGENDA are progression-free survival (PFS) and overall survival.

AGENDA is designed to expand evidence for the safety and efficacy of Genasense® when combined with dacarbazine for patients who have not previously been treated with chemotherapy. The study prospectively targets patients who have low-normal levels of LDH. In March 2009, we completed accrual of 315 patients into AGENDA. In May 2009, an analysis by an independent Data Monitoring Committee for both safety and futility indicated that the study passed an evaluation for futility and safety. Accordingly, the Committee recommended that the study should continue to completion. We expect results on the primary assessment of PFS in the fourth quarter of 2009. If those data are positive, we currently expect to submit regulatory applications based upon confirmation that the addition of Genasense® to chemotherapy results in a statistically significant improvement in PFS. Approval by FDA and EMEA will allow Genasense® to be commercialized by us, alone or with a partner, in the U.S. and EU. Genasense® in melanoma has been designated an Orphan Drug in Australia and the U.S., and the drug has received Fast Track designation in the U.S.

We are conducting other trials of Genasense® in melanoma, including a Phase 2 trial of Genasense® plus chemotherapy consisting of Abraxane® (paclitaxel protein-bound particles for injectable suspension) (albumin bound) plus temozolomide (Temodar®). We also expect to examine different dosing regimens that will improve the dosing convenience and commercial acceptance of Genasense®, including its administration by brief 1-hour IV infusions.

CLL

As noted above, our NDA for the use of Genasense® plus chemotherapy in patients with relapsed or refractory in CLL was not approved. In CLL, we conducted a randomized Phase 3 trial in 241 patients with relapsed or refractory disease who were treated with fludarabine and cyclophosphamide, commonly known as Flu/Cy, with or without Genasense®. The trial achieved its primary endpoint: a statistically significant increase (17% vs. 7%; P=0.025) in the proportion of patients who achieved a complete response, or CR, defined as a complete or nodular partial response. Patients who achieved this level of response also experienced disappearance of predefined disease symptoms. A key secondary endpoint, duration of CR, was also significantly longer for patients treated with Genasense® (median > 36 months in the Genasense® group, versus 22 months in the chemotherapy-only group).

Several secondary endpoints were not improved by the addition of Genasense®. The percentage of patients who experienced serious adverse events was increased in the Genasense® arm; however, the percentages of patients who discontinued treatment due to adverse events were equal in the treatment arms. The incidence of certain serious adverse reactions, including but not limited to nausea, fever and catheter-related complications, was increased in patients treated with Genasense®.

We submitted our NDA to the FDA in December 2005 in which we sought accelerated approval for the use of Genasense® in combination with Flu/Cy for the treatment of patients with relapsed or refractory CLL who had previously received fludarabine. In December 2006, we received a “non-approvable” notice for that application from FDA. In April 2007, we filed an appeal of the non-approvable notice using FDA’s Formal Dispute Resolution process. In March 2008, we received a formal notice from FDA that indicated additional confirmatory evidence would be required to support approval of Genasense® in CLL, either from a new clinical trial or from collection of additional information regarding the progression of disease in patients from the completed trial.

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In June 2008, we announced results from 5 years of follow-up on patients who had been accrued to our completed Phase 3 trial. These data showed that patients treated with Genasense® plus chemotherapy who achieved either a complete response (CR) or a partial response (PR) also achieved a statistically significant increase in survival compared with patients treated with chemotherapy alone (median = 56 months vs. 38 months, respectively). After 5 years of follow-up, 22 of 49 (45%) responders in the Genasense® group were alive compared with 13 of 54 (24%) responders in the chemotherapy-only group (hazard ratio = 0.6; P = 0.038). Moreover, with 5 years of follow-up, 12 of 20 patients (60%) in the Genasense® group who achieved CR were alive, 5 of these patients remained in continuous CR without relapse, and 2 additional patients had relapsed but had not required additional therapy. By contrast, only 3 of 8 CR patients in the chemotherapy-only group were alive, all 3 had relapsed, and all 3 had required additional anti-leukemic treatment.

These data were again submitted to FDA in the second quarter of 2008, and the application was again denied in December 2008. Genta re-appealed the denial, and in March 2009, CDER decided that available data were still insufficient to support approval of Genasense® in CLL, and the Agency recommended conducting another clinical trial. We have made no decision whether to conduct this study.

As with melanoma, we believe the clinical activity in CLL should be explored with additional clinical research. We plan to explore combinations of Genasense® with other drugs that are used for the treatment of CLL, and to examine more convenient dosing regimens.

NHL

Several trials have shown definite evidence of clinical activity for Genasense® in patients with NHL. We would like to conduct additional clinical studies in patients with NHL to test whether Genasense® can be approved in this indication. Previously, we reported that randomized trials of Genasense® in patients with myeloma, AML, hormone-refractory prostate cancer, commonly known as HRPC, small cell lung cancer and non small cell lung cancer were not sufficiently positive to warrant further investigation on the dose-schedules that were examined or with the chemotherapy that was employed in these trials. Data from these trials have been presented at various scientific meetings. However, we believe that alternate dosing schedules, in particular the use of brief high-dose IV infusions, provide an opportunity to re-examine the drug’s activity in some of these indications.

Tesetaxel

In March 2008, we obtained an exclusive worldwide license for tesetaxel from Daiichi Sankyo Company Ltd. Tesetaxel is a novel taxane compound that is taken by mouth. Tesetaxel has completed Phase 2 trials in a number of cancer types, and the drug has shown definite evidence of antitumor activity in gastric cancer and breast cancer. Tesetaxel also appears to be associated with a lower incidence of peripheral nerve damage, a common side effect of taxanes that limits the maximum amount of these drugs that can be given to patients. At the time we obtained the license, tesetaxel was on “clinical hold” by FDA due to the occurrence of several fatalities in the setting of severe neutropenia. In the second quarter of 2008, we filed a response to the FDA requesting a lift of the clinical hold, which was granted in June 2008. In January 2009, we announced initiation of a new clinical trial with tesetaxel to examine the clinical pharmacology of the drug over a narrow dosing range around the established Phase 2 dose.

We have also submitted applications to FDA for designation of tesetaxel as an Orphan Drug for treatment of patients with advanced gastric cancer and for patients with advanced melanoma. Both of these designations were granted. Our initial priority for clinical testing of tesetaxel includes the evaluation of safety and efficacy in patients with advanced gastric cancer. Maintenance of the license from Daiichi Sankyo requires certain payments that include amortization of licensing fees and milestones. If such payments are not made, Daiichi Sankyo may elect to terminate the license; however, a portion of the licensing fees are due even in the event of termination.

Oral Gallium-Containing Compounds (G4544)

Our third pipeline product is G4544, which is a novel oral formulation of a gallium-containing compound that we developed in collaboration with Emisphere Technologies, Inc. We completed a single-dose Phase 1 study of an initial formulation of this new drug known as “G4544(a)”, the results of which were presented in the second quarter of 2008. We are currently contemplating a second study using a modified formulation, known as “G4544(b)”, in order to test whether this formulation will prove more clinically acceptable.

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If we are able to identify a clinically and commercially acceptable formulation of G4544 or another oral gallium-containing compound, we currently intend to pursue a 505(b)(2) strategy to establish bioequivalence to our marketed product, Ganite®, for its initial regulatory approval. We believe a drug of this type may also be broadly useful for treatment of other diseases associated with accelerated bone loss, such as bone metastases, Paget’s disease and osteoporosis. In addition, new uses of gallium-containing compounds have been identified for treatment of certain infectious diseases. While we have no current plans to begin clinical development in the area of infectious disease, we intend to support research conducted by certain academic institutions by providing clinical supplies of our gallium-containing drugs.

Ganite®

We are currently marketing Ganite® in the U.S., which is an intravenous formulation of gallium, for treatment of cancer-related hypercalcemia that is resistant to hydration. We have announced our intention to seek a buyer for Ganite®, but we have not yet found an acceptable transaction.

About Us

Genta was incorporated in Delaware on February 4, 1988. Our principal executive offices are located at 200 Connell Drive, Berkeley Heights, New Jersey 07922. Our telephone number is (908) 286-9800. The address of our website is www.Genta.com. Information on our website is not part of this prospectus. Our website address is included in this prospectus as an inactive technical reference only.

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SUMMARY OF THE OFFERING

Common stock offered by selling stockholders		• 160,552,501 shares of our common stock, including 38,990,000 shares issued as part of the July 7, 2009 and September 4, 2009 financings, 23,502,500 shares issuable upon the exercise of the July 2009 Warrants, 7,050,000 shares issuable upon the exercise of the September 2009 Warrants, 70,010,000 shares issuable upon the conversion of the July 2009 Notes and 21,000,001 shares issuable upon the conversion of the September 2009 Notes.

Use of proceeds		We will not receive any proceeds from the sale of the shares of our common stock by the selling stockholders other than as a result of the exercise of the July 2009 Warrants and September 2009 Warrants for cash held by the selling stockholders.

Trading		Our common stock is traded on the OTC Bulletin Board under the symbol “GETA.OB.”

Risk Factors		You should read the “Risk Factors” section of this prospectus for a discussion of factors to consider carefully before deciding to invest in our common stock.

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SUMMARY SELECTED FINANCIAL INFORMATION

The following table summarizes our selected financial information. You should read the selected financial information together with our consolidated financial statements and the related notes appearing at the end of this prospectus, and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and other financial information included in this prospectus.

	Six months ended June 30, (unaudited)			Year ended December 31,
	2009			2008			2007			2006
Consolidated Statements of Operations Data
(in thousands except per share amounts):
Product sales — net	$	131		$	363		$	580		$	708
Costs of goods sold		1			102			90			108
Operating expenses		10,112			33,410			26,116			59,764
Amortization of deferred financing costs and debt discount		(16,912	)		(11,229	)		—			—
Fair value — conversion feature liability		(19,040	)		(460,000	)		—			—
Fair value — warrant liability		(7,655	)		(2,000	)		—			—
All other (expense)/income -net		(561	)		(1,435	)		836			1,454
Loss before income taxes		(54,149	)		(507,813	)		(24,790	)		(57,710	)
Income tax benefit		-			1,975			1,470			929
Net loss	$	(54,149	)	$	(505,838	)	$	(23,320	)	$	(56,781	)
Net loss per basic and diluted common share *	$	(1.24	)	$	(455.09	)	$	(39.36	)	$	(125.88	)
Common shares used in computing net loss per basic and diluted share *		43,575			1,112			592			451

*	all figures prior to June 26, 2009 have been retroactively adjusted to reflect a 1-for-50 reverse stock split effected in June 2009

	June 30, 2009 as adjusted for the July 2009 financing and the September 2009 financing (unaudited)		June 30, 2009 as adjusted for the July 2009 financing (unaudited)				June 30, 2009 (unaudited, as reported)				December 31, 2008
Balance Sheet Data
(in thousands except per share amounts):
Cash and cash equivalents	$	12,611		$	3,396			$	696			$	4,908
Working capital (deficiency)		1,229			(7,986	)			(10,686	)			(5,220	)
Total assets		22,165			12,950				10,250				12,693
Total stockholders’ equity/(deficit)		8,668			(1,332	)			(4,332	)			(4,864	)

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RISK FACTORS

You should carefully consider the following risks and all of the other information set forth in this prospectus before deciding to invest in our securities. The risks described below are not the only ones facing us. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations.

If any of the following risks actually occurs, our business, financial condition or results of operations would likely suffer. In such case, the market price of our common stock would likely decline due to the occurrence of any of these risks, and you may lose all or part of your investment.

Risks Related to Our Business

Our business will suffer if we fail to obtain timely funding.

Our operations to date have required significant cash expenditures. Our future capital requirements will depend on the results of our research and development activities, preclinical studies and clinical trials, competitive and technological advances, and regulatory activities of the FDA and other regulatory authorities. In order to commercialize our products, seek new product candidates and continue our research and development programs, we will need to raise additional funds.

On June 9, 2008, we placed $20 million of senior secured convertible notes, or the 2008 Notes, with certain institutional and accredited investors. The 2008 Notes bear interest at an annual rate of 15% payable at quarterly intervals in other senior secured convertible promissory notes to the holder, and are presently convertible into shares of Genta common stock at a conversion rate of 10,000 shares of common stock for every $1,000.00 of principal. Certain members of our senior management participated in this offering. The 2008 Notes are secured by a first lien on all of our assets.

On July 7, 2009, we entered into a securities purchase agreement with certain accredited institutional investors to place up to $10 million in aggregate principal amount of units consisting of (i) 70% unsecured subordinated convertible notes, or the July 2009 Notes, and (ii) 30% common stock, or the July 2009 financing. In connection with the sale of the units, we also issued to the investors two-year warrants to purchase common stock in an amount equal to 25% of the number of shares of common stock issuable upon conversion of the July 2009 Notes purchased by each investor. We closed on $3 million of such July 2009 Notes, common stock and warrants on July 7, 2009.

On August 6, 2009 and August 24, 2009, the Company entered into amendment agreements whereby, among other things, certain accredited institutional investors who were parties to the July 2009 securities purchase agreement agreed to permit us to raise up to $10 million through the sale of additional shares of common stock, July 2009 Notes and warrants at an additional closing under the July 7, 2009 Securities Purchase Agreement, increasing the aggregate amount that we may raise to $13 million, and delaying our obligations to file a registration statement covering the shares of common stock and shares of common stock underlying the July 2009 Notes and warrants that were issued on July 7, 2009.

On September 4, 2009, the Company entered into a consent and amendment agreement whereby, among other things, certain accredited institutional investors who were parties to the July 2009 securities purchase agreement agreed to decrease the amount we could raise under the July 2009 securities purchase agreement to $10 million in the aggregate and delay our obligation to file a registration statement covering the shares of common stock and shares of common stock underlying the July 2009 Notes and July 2009 Warrants. On that same date, we closed on $7 million of additional July 2009 Notes, common stock and July 2009 Warrants.

Also on September 4, 2009, the Company entered into a securities purchase agreement with certain accredited institutional investors, pursuant to which we issued $3 million of units consisting of (i) 70% September 2009 Notes, and (ii) 30% common stock, or the September 2009 financing. In connection with the sale of the units, we also issued to the investors September 2009 Warrants. Pursuant to the terms of the securities purchase agreement, the investors had four business days from the date of the agreement to sign the agreement and provide their respective investment to the Company. Certain investors chose not to participate, and therefore, all of the investors who chose to participate in the September 2009 financing agreed to a revised allocation of the $3 million investment among the investors.

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We will need to obtain more funding in the future through collaborations or other arrangements with research institutions and corporate partners or public and private offerings of our securities, including debt or equity financing. We may not be able to obtain adequate funds for our operations from these sources when needed or on acceptable terms. Future collaborations or similar arrangements may require us to license valuable intellectual property to, or to share substantial economic benefits with, our collaborators. If we raise additional capital by issuing additional equity or securities convertible into equity, our stockholders may experience dilution and our share price may decline. Any debt financing may result in restrictions on our spending.

If we are unable to raise additional funds, we will need to do one or more of the following:

delay, scale back or eliminate some or all of our research and product development programs;

license third parties to develop and commercialize products or technologies that we would otherwise seek to develop and commercialize ourselves;

attempt to sell our company;

cease operations; or

declare bankruptcy.

Presently, with no further financing, management projects that we will run out of funds in January 2010. If we are unable to raise additional financing, we could be required to reduce our spending plans, reduce our workforce, license to others products or technologies we would otherwise seek to commercialize ourselves and sell certain assets. There can be no assurance that we can obtain financing, if at all, on terms acceptable to us.

We may be unsuccessful in our efforts to obtain approval from the FDA or EMEA and commercialize Genasense® or our other pharmaceutical products.

The commercialization of our pharmaceutical products involves a number of significant challenges. In particular, our ability to commercialize products, such as Ganite® and Genasense®, depends, in large part, on the success of our clinical development programs, our efforts to obtain regulatory approvals and our sales and marketing efforts directed at physicians, patients and third-party payors. A number of factors could affect these efforts, including:

our ability to demonstrate clinically that our products are useful and safe in particular indications;

delays or refusals by regulatory authorities in granting marketing approvals;

our limited financial resources and sales and marketing experience relative to our competitors;

actual and perceived differences between our products and those of our competitors;

the availability and level of reimbursement for our products by third-party payors;

incidents of adverse reactions to our products;

side effects or misuse of our products and the unfavorable publicity that could result; and

the occurrence of manufacturing, supply or distribution disruptions.

We cannot assure you that Genasense® will receive FDA or EMEA approval. For example, the NDA for Genasense® in melanoma was withdrawn in 2004 after an advisory committee to the FDA failed to recommend approval. A negative decision was also received for a similar application in melanoma from the EMEA in 2007. Our NDA for Genasense® plus chemotherapy in patients with relapsed or refractory CLL was also unsuccessful.

Our financial condition and results of operations have been and will continue to be significantly affected by FDA and EMEA action with respect to Genasense®. Any adverse outcomes with respect to FDA and/or EMEA approvals could negatively impact our ability to obtain additional funding or identify potential partners.

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Ultimately, our efforts may not prove to be as effective as those of our competitors. In the U.S. and elsewhere, our products will face significant competition. The principal conditions on which our product development efforts are focused and some of the other disorders for which we are conducting additional studies, are currently treated with several drugs, many of which have been available for a number of years or are available in inexpensive generic forms. Thus, even if we obtain regulatory approvals, we will need to demonstrate to physicians, patients and third-party payors that the cost of our products is reasonable and appropriate in light of their safety and efficacy, the price of competing products and the relative health care benefits to the patient. If we are unable to demonstrate that the costs of our products are reasonable and appropriate in light of these factors, we will likely be unsuccessful in commercializing our products.

Recurring losses and negative cash flows from operations raise substantial doubt about our ability to continue as a going concern and we may not be able to continue as a going concern.

Our recurring losses from operations and negative cash flows from operations raise substantial doubt about our ability to continue as a going concern and as a result, our independent registered public accounting firm included an explanatory paragraph in its report on our consolidated financial statement for the year ended December 31, 2008 with respect to this uncertainty. Substantial doubt about our ability to continue as a going concern may create negative reactions to the price of the common shares of our stock and we may have a more difficult time obtaining financing.

We have prepared our financial statements on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of liabilities that might be necessary should we be unable to continue in existence.

We have relied on and continue to rely on our contractual collaborative arrangements with research institutions and corporate partners for development and commercialization of our products. Our business could suffer if we are not able to enter into suitable arrangements, maintain existing relationships, or if our collaborative arrangements are not successful in developing and commercializing products.

We have entered into collaborative relationships relating to the conduct of clinical research and other research activities in order to augment our internal research capabilities and to obtain access to specialized knowledge and expertise. Our business strategy depends in part on our continued ability to develop and maintain relationships with leading academic and research institutions and with independent researchers. The competition for these relationships is intense, and we can give no assurances that we will be able to develop and maintain these relationships on acceptable terms.

We also seek strategic alliances with corporate partners, primarily pharmaceutical and biotechnology companies, to help us develop and commercialize drugs. Various problems can arise in strategic alliances. A partner responsible for conducting clinical trials and obtaining regulatory approval may fail to develop a marketable drug. A partner may decide to pursue an alternative strategy or focus its efforts on alliances or other arrangements with third parties. A partner that has been granted marketing rights for a certain drug within a geographic area may fail to market the drug successfully. Consequently, strategic alliances that we may enter into may not be scientifically or commercially successful.

We cannot control the resources that any collaborator may devote to our products. Any of our present or future collaborators may not perform their obligations as expected. These collaborators may breach or terminate their agreements with us, for instance upon changes in control or management of the collaborator, or they may otherwise fail to conduct their collaborative activities successfully and in a timely manner.

In addition, our collaborators may elect not to develop products arising out of our collaborative arrangements or to devote sufficient resources to the development, regulatory approval, manufacture, marketing or sale of these products. If any of these events occur, we may not be able to develop or commercialize our products.

An important part of our strategy involves conducting multiple product development programs. We may pursue opportunities in fields that conflict with those of our collaborators. In addition, disagreements with our collaborators could develop over rights to our intellectual property. The resolution of such conflicts and disagreements may require us to relinquish rights to our intellectual property that we believe we are entitled to. In addition, any disagreement or conflict with our collaborators could reduce our ability to obtain future collaboration agreements and negatively impact our relationship with existing collaborators. Such a conflict or disagreement could also lead to delays in collaborative research, development, regulatory approval or commercialization of various products or could require or result in litigation or arbitration, which would be time consuming and expensive, divert the attention of our management and could have a significant negative impact on our business, financial condition and results of operations.

We anticipate that we will incur additional losses and we may never be profitable.

We have never been profitable. We have incurred substantial annual operating losses associated with ongoing research and development activities, preclinical testing, clinical trials, regulatory submissions and manufacturing activities. From the period since our inception to June 30, 2009, we have incurred a cumulative net deficit of $978.7 million. We may never achieve revenue sufficient for us to attain profitability. Achieving profitability is unlikely unless Genasense® receives approval from the FDA or EMEA for commercial sale in one or more indications.

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Our business depends heavily on a small number of products.

We currently market and sell one product, Ganite® and the principal patent covering its use for the approved indication expired in April 2005. If Genasense® is not approved, if approval is significantly delayed, or if in the event of approval the product is commercially unsuccessful, then we do not expect significant sales of other products to offset this loss of potential revenue.

To diversify our product line in the long term, it will be important for us to identify suitable technologies and products for acquisition or licensing and development. If we are unable to identify suitable technologies and products, or if we are unable to acquire or license products we identify, we may be unable to diversify our product line and to generate long-term growth.

We may be unable to obtain or enforce patents, other proprietary rights and licenses to protect our business; we could become involved in litigation relating to our patents or licenses that could cause us to incur additional costs and delay or prevent our introduction of new drugs to market.

Our success will depend to a large extent on our ability to:

obtain U.S. and foreign patent or other proprietary protection for our technologies, products and processes;

preserve trade secrets; and

operate without infringing the patent and other proprietary rights of third parties.

Legal standards relating to the validity of patents covering pharmaceutical and biotechnological inventions and the scope of claims made under these types of patents are still developing, and they involve complex legal and factual questions. As a result, our ability to obtain and enforce patents that protect our drugs is highly uncertain. If we are unable to obtain and enforce patents and licenses to protect our drugs, our business, results of operations and financial condition could be adversely affected.

We hold numerous U.S., foreign and international patents covering various aspects of our technology, which include novel compositions of matter, methods of large-scale synthesis and methods of controlling gene expression and methods of treating disease. In the future, however, we may not be successful in obtaining additional patents despite pending or future applications. Moreover, our current and future patents may not be sufficient to protect us against competitors who use similar technology. Additionally, our patents, the patents of our business partners and the patents for which we have obtained licensing rights may be challenged, narrowed, invalidated or circumvented. Furthermore, rights granted under our patents may not be broad enough to cover commercially valuable drugs or processes, and therefore, may not provide us with sufficient competitive advantage with respect thereto.

The pharmaceutical and biotechnology industries have been greatly affected by time-consuming and expensive litigation regarding patents and other intellectual property rights. We may be required to commence, or may be made a party to, litigation relating to the scope and validity of our intellectual property rights or the intellectual property rights of others. Such litigation could result in adverse decisions regarding the patentability of our inventions and products, the enforceability, validity or scope of protection offered by our patents or our infringement of patents held by others. Such decisions could make us liable for substantial money damages, or could bar us from the manufacture, sale or use of certain products. Moreover, an adverse decision may also compel us to seek a license from a third party. The costs of any license may be prohibitive and we may not be able to enter into any required licensing arrangement on terms acceptable to us.

The cost to us of any litigation or proceeding relating to patent or license rights, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustain the costs of complex patent or licensing litigation more effectively than we can because of their substantially greater resources. Uncertainties resulting from the initiation and continuation of any patent or related litigation could have a material adverse effect on our ability to compete in the marketplace.

We also may be required to participate in interference proceedings declared by the U.S. Patent and Trademark Office in opposition or similar proceedings before foreign patent offices and in International Trade Commission proceedings aimed at preventing the importation of drugs that would compete unfairly with our drugs. These types of proceedings could cause us to incur considerable costs.

The principal patent covering the use of Ganite® for its approved indication, including Hatch-Waxman extensions, expired in April 2005.

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Genta’s patent portfolio includes approximately 65 granted patents and 66 pending applications in the U.S. and foreign countries. We endeavor to seek appropriate U.S. and foreign patent protection on our oligonucleotide technology.

We have licensed ten U.S. patents relating to Genasense® and its backbone chemistry that expire between 2008 and 2015. Corresponding patent applications have been filed in three foreign countries. We also own five U.S. patent applications relating to methods of using Genasense® expected to expire in 2020 and 2026, with approximately 50 corresponding foreign patent applications and granted patents.

Most of our products are in an early stage of development, and we may never receive regulatory approval for these products.

Most of our resources have been dedicated to the research and development of potential antisense pharmaceutical products such as Genasense®, based upon oligonucleotide technology. While we have demonstrated the activity of antisense oligonucleotide technology in model systems in vitro and in animals, Genasense® is our only antisense product to have been tested in humans. Several of our other technologies that serve as a possible basis for pharmaceutical products are only in preclinical testing. Results obtained in preclinical studies or early clinical investigations are not necessarily indicative of results that will be obtained in extended human clinical trials. Our products may prove to have undesirable and unintended side effects or other characteristics that may prevent our obtaining FDA or foreign regulatory approval for any indication. In addition, it is possible that research and discoveries by others will render our oligonucleotide technology obsolete or noncompetitive.

We will not be able to commercialize our product candidates if our preclinical studies do not produce successful results or if our clinical trials do not demonstrate safety and efficacy in humans.

Our success will depend on the success of our currently ongoing clinical trials and subsequent clinical trials that have not yet begun. It may take several years to complete the clinical trials of a product, and a failure of one or more of our clinical trials can occur at any stage of testing. We believe that the development of each of our product candidates involves significant risks at each stage of testing. If clinical trial difficulties and failures arise, our product candidates may never be approved for sale or become commercially viable. We do not believe that any of our product candidates have alternative uses if our current development activities are unsuccessful.

There are a number of difficulties and risks associated with clinical trials. These difficulties and risks may result in the failure to receive regulatory approval to sell our product candidates or the inability to commercialize any of our product candidates. The possibility exists that:

·	we may discover that a product candidate does not exhibit the expected therapeutic results in humans, may cause harmful side effects or have other unexpected characteristics that may delay or preclude regulatory approval or limit commercial use if approved;

·	the results from early clinical trials may not be statistically significant or predictive of results that will be obtained from expanded, advanced clinical trials;

institutional review boards or regulators, including the FDA, may hold, suspend or terminate our clinical research or the clinical trials of our product candidates for various reasons, including noncompliance with regulatory requirements or if, in their opinion, the participating subjects are being exposed to unacceptable health risks;

·	subjects may drop out of our clinical trials;

·	our preclinical studies or clinical trials may produce negative, inconsistent or inconclusive results, and we may decide, or regulators may require us, to conduct additional preclinical studies or clinical trials; and

·	the cost of our clinical trials may be greater than we currently anticipate.

Between 2004 and 2007, we reported that randomized trials of Genasense® in patients with myeloma, acute myeloid leukemia, (AML), hormone-refractory prostate cancer, small cell lung cancer and non small cell lung cancer were not sufficiently positive to warrant further investigation on the dose-schedules that were examined or with the chemotherapy that was employed in these trials. Data from these trials have been presented at various scientific meetings.

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We cannot assure you that our ongoing preclinical studies and clinical trials will produce successful results in order to support regulatory approval of Genasense® in any territory or for any indication. Failure to obtain approval, or a substantial delay in approval of Genasense® for these or any other indications would have a material adverse effect on our results of operations and financial condition.

Clinical trials are costly and time consuming and are subject to delays; our business would suffer if the development process relating to our products were subject to meaningful delays.

Clinical trials are very costly and time-consuming. The length of time required to complete a clinical study depends upon many factors, including but not limited to the size of the patient population, the ability of patients to get to the site of the clinical study, the criteria for determining which patients are eligible to join the study and other issues. Delays in patient enrollment and other unforeseen developments could delay completion of a clinical study and increase its costs, which could also delay any eventual commercial sale of the drug that is the subject of the clinical trial.

Our commencement and rate of completion of clinical trials also may be delayed by many other factors, including the following:

inability to obtain sufficient quantities of materials for use in clinical trials;

inability to adequately monitor patient progress after treatment;

unforeseen safety issues;

the failure of the products to perform well during clinical trials; and

government or regulatory delays.

If we fail to obtain the necessary regulatory approvals, we cannot market and sell our products in the United States.

The FDA imposes substantial pre-market approval requirements on the introduction of pharmaceutical products. These requirements involve lengthy and detailed preclinical and clinical testing and other costly and time-consuming procedures. Satisfaction of these requirements typically takes several years or more depending upon the type, complexity and novelty of the product. We cannot apply for FDA approval to market any of our products under development until preclinical and clinical trials on the product are successfully completed. Several factors could prevent successful completion or cause significant delays of these trials, including an inability to enroll the required number of patients or failure to demonstrate adequately that the product is safe and effective for use in humans. If safety concerns develop, the FDA could stop our trials before completion. We may not market or sell any product for which we have not obtained regulatory approval.

We cannot assure you that the FDA will ever approve the use of our products that are under development. If the patient populations for which our products are approved are not sufficiently broad, or if approval is accompanied by unanticipated labeling restrictions, the commercial success of our products could be limited and our business, results of operations and financial condition could consequently be materially adversely affected.

If the third party manufacturers upon which we rely fail to produce our products in the volumes that we require on a timely basis, or to comply with stringent regulations applicable to pharmaceutical drug manufacturers, we may face delays in the commercialization of, or be unable to meet demand for, our products and may lose potential revenues.

We do not manufacture any of our products or product candidates and we do not plan to develop any capacity to do so. We have contracted with third-party manufacturers to manufacture Ganite® and Genasense®. The manufacture of pharmaceutical products requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturers of pharmaceutical products often encounter difficulties in production, especially in scaling up initial production. These problems include difficulties with production costs and yields, quality control and assurance and shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations. Our third-party manufacturers may not perform as agreed or may terminate their agreements with us.

In addition to product approval, any facility in which Genasense® is manufactured or tested for its ability to meet required specifications must be approved by the FDA and/or the EMEA before it can manufacture Genasense®. Failure of the facility to be approved could delay the approval of Genasense®.

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We do not currently have alternate manufacturing plans in place. The number of third-party manufacturers with the expertise, required regulatory approvals and facilities to manufacture bulk drug substance on a commercial scale is limited, and it would take a significant amount of time to arrange for alternative manufacturers. If we need to change to other commercial manufacturers, the FDA and comparable foreign regulators must approve these manufacturers’ facilities and processes prior to our use, which would require new testing and compliance inspections, and the new manufacturers would have to be educated in or independently develop the processes necessary for the production of our products.

Any of these factors could cause us to delay or suspend clinical trials, regulatory submissions, required approvals or commercialization of our products or product candidates, entail higher costs and result in our being unable to effectively commercialize our products. Furthermore, if our third-party manufacturers fail to deliver the required commercial quantities of bulk drug substance or finished product on a timely basis and at commercially reasonable prices, and we were unable to promptly find one or more replacement manufacturers capable of production at a substantially equivalent cost, in substantially equivalent volume and on a timely basis, we would likely be unable to meet demand for our products and we would lose potential revenues.

Even if we obtain regulatory approval, we will be subject to ongoing regulation, and any failure by us or our manufacturers to comply with such regulation could suspend or eliminate our ability to sell our products.

Ganite®, Genasense® (if it obtains regulatory approval), and any other product we may develop will be subject to ongoing regulatory oversight, primarily by the FDA. Failure to comply with post-marketing requirements, such as maintenance by us or by the manufacturers of our products of current Good Manufacturing Practices as required by the FDA, or safety surveillance of such products or lack of compliance with other regulations could result in suspension or limitation of approvals or other enforcement actions. Current Good Manufacturing Practices are FDA regulations that define the minimum standards that must be met by companies that manufacture pharmaceuticals and apply to all drugs for human use, including those to be used in clinical trials, as well as those produced for general sale after approval of an application by the FDA. These regulations define requirements for personnel, buildings and facilities, equipment, control of raw materials and packaging components, production and process controls, packaging and label controls, handling and distribution, laboratory controls and recordkeeping. Furthermore, the terms of any product candidate approval, including the labeling content and advertising restrictions, may be so restrictive that they could adversely affect the marketability of our product candidates. Any such failure to comply or the application of such restrictions could limit our ability to market our product candidates and may have a material adverse effect on our business, results of operations and financial condition. Such failures or restrictions may also prompt regulatory recalls of one or more of our products, which could have material and adverse effects on our business.

The raw materials for our products are produced by a limited number of suppliers, and our business could suffer if we cannot obtain needed quantities at acceptable prices and qualities.

The raw materials that we require to manufacture our drugs, particularly oligonucleotides and taxanes, are available from only a few suppliers. If these suppliers cease to provide us with the necessary raw materials or fail to provide us with an adequate supply of materials at an acceptable price and quality, we could be materially adversely affected.

If third-party payors do not provide coverage and reimbursement for use of our products, we may not be able to successfully commercialize our products.

Our ability to commercialize drugs successfully will depend in part on the extent to which various third-party payors are willing to reimburse patients for the costs of our drugs and related treatments. These third-party payors include government authorities, private health insurers and other organizations, such as health maintenance organizations. Third-party payors often challenge the prices charged for medical products and services. Accordingly, if less costly drugs are available, third-party payors may not authorize or may limit reimbursement for our drugs, even if they are safer or more effective than the alternatives. In addition, the federal government and private insurers have changed and continue to consider ways to change the manner in which health care products and services are provided and paid for in the United States. In particular, these third-party payors are increasingly attempting to contain health care costs by limiting both coverage and the level of reimbursement for new therapeutic products. In the future, it is possible that the government may institute price controls and further limits on Medicare and Medicaid spending. These controls and limits could affect the payments we collect from sales of our products. Internationally, medical reimbursement systems vary significantly, with some countries requiring application for, and approval of, government or third-party reimbursement. In addition, some medical centers in foreign countries have fixed budgets, regardless of levels of patient care. Even if we succeed in bringing therapeutic products to market, uncertainties regarding future health care policy, legislation and regulation, as well as private market practices, could affect our ability to sell our products in quantities, or at prices, that will enable us to achieve profitability.

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Our business exposes us to potential product liability that may have a negative effect on our financial performance and our business generally.

The administration of drugs to humans, whether in clinical trials or commercially, exposes us to potential product and professional liability risks, which are inherent in the testing, production, marketing and sale of human therapeutic products. Product liability claims can be expensive to defend and may result in large judgments or settlements against us, which could have a negative effect on our financial performance and materially and adversely affect our business. We maintain product liability insurance (subject to various deductibles), but our insurance coverage may not be sufficient to cover claims. Furthermore, we cannot be certain that we will always be able to maintain or increase our insurance coverage at an affordable price. Even if a product liability claim is not successful, the adverse publicity and time and expense of defending such a claim may interfere with or adversely affect our business and financial performance.

We may incur a variety of costs to engage in future acquisitions of companies, products or technologies, and the anticipated benefits of those acquisitions may never be realized.

As a part of our business strategy, we may make acquisitions of, or significant investments in, complementary companies, products or technologies, although no significant acquisition or investments are currently pending. Any future acquisitions would be accompanied by risks such as:

difficulties in assimilating the operations and personnel of acquired companies;

diversion of our management’s attention from ongoing business concerns;

our potential inability to maximize our financial and strategic position through the successful incorporation of acquired technology and rights to our products and services;

additional expense associated with amortization of acquired assets;

maintenance of uniform standards, controls, procedures and policies; and

impairment of existing relationships with employees, suppliers and customers as a result of the integration of new management personnel.

We cannot guarantee that we will be able to successfully integrate any business, products, technologies or personnel that we might acquire in the future, and our failure to do so could harm our business.

We face substantial competition from other companies and research institutions that are developing similar products, and we may not be able to compete successfully.

In many cases, our products under development will be competing with existing therapies for market share. In addition, a number of companies are pursuing the development of antisense technology and controlled-release formulation technology and the development of pharmaceuticals utilizing such technologies. We compete with fully integrated pharmaceutical companies that have more substantial experience, financial and other resources and superior expertise in research and development, manufacturing, testing, obtaining regulatory approvals, marketing and distribution. Smaller companies may also prove to be significant competitors, particularly through their collaborative arrangements with large pharmaceutical companies or academic institutions. Furthermore, academic institutions, governmental agencies and other public and private research organizations have conducted and will continue to conduct research, seek patent protection and establish arrangements for commercializing products. Such products may compete directly with any products that may be offered by us.

Our competition will be determined in part by the potential indications for which our products are developed and ultimately approved by regulatory authorities. For certain of our potential products, an important factor in competition may be the timing of market introduction of our or our competitors’ products. Accordingly, the relative speed with which we can develop products, complete the clinical trials and approval processes and supply commercial quantities of the products to the market are expected to be important competitive factors. We expect that competition among products approved for sale will be based, among other things, on product efficacy, safety, reliability, availability, price, patent position and sales, marketing and distribution capabilities. The development by others of new treatment methods could render our products under development non-competitive or obsolete.

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Our competitive position also depends upon our ability to attract and retain qualified personnel, obtain patent protection or otherwise develop proprietary products or processes and secure sufficient capital resources for the often-substantial period between technological conception and commercial sales. We cannot assure you that we will be successful in this regard.

We are dependent on our key executives and scientists, and the loss of key personnel or the failure to attract additional qualified personnel could harm our business.

Our business is highly dependent on our key executives and scientific staff. The loss of key personnel or the failure to recruit necessary additional or replacement personnel will likely impede the achievement of our development objectives. There is intense competition for qualified personnel in the pharmaceutical and biotechnology industries, and there can be no assurances that we will be able to attract and retain the qualified personnel necessary for the development of our business.

Risks Related to Outstanding Litigation

The outcome of and costs relating to pending litigation are uncertain.

In November 2008, a complaint against us and our transfer agent, BNY Mellon Shareholder Services, was filed in the Supreme Court of the State of New York by an individual stockholder. The complaint alleges that we and our transfer agent caused or contributed to losses suffered by the stockholder. We deny the allegations of the complaint and intend to vigorously defend this lawsuit.

In September 2008, several of our stockholders, on behalf of themselves and all others similarly situated, filed a class action complaint against us, our Board of Directors, and certain of our executive officers in Superior Court of New Jersey, captioned Collins v. Warrell, Docket No. L-3046-08. The complaint alleged that in issuing convertible notes in June 2008, our Board of Directors, and certain officers breached their fiduciary duties, and we aided and abetted the breach of fiduciary duty. We filed a motion to dismiss on December 29, 2008. On March 20, 2009, our motion to dismiss was granted, and on April 30, 2009, the plaintiffs filed a notice of appeal with the Appellate Division. On May 13, 2009, the plaintiffs filed a motion for relief from judgment based on a claim of new evidence, which was denied on June 12, 2009. The plaintiffs also asked the Appellate Division for a temporary remand to permit the Superior Court judge to resolve the issues of the new evidence plaintiffs sought to raise. By order dated June 25, 2009, and filed on July 6, 2009, the Appellate Division granted the motion for temporary remand, and directed the issues on remand to be resolved in 30 days. A hearing on the plaintiff’s motion was held on July 31, 2009, at which time the Court permitted letter briefing on the issues raised during that hearing. The plaintiffs submitted a letter brief on August 3, 2009, and the Company submitted a letter brief on August 5, 2009. By order dated August 28, 2009, the Court denied plaintiffs’ motion for relief from judgment. Pursuant to the Superior Court’s previous orders, the matter will now proceed in the appellate court. The defendants intend to continue their vigorous defense of this matter.

Risks Related to Our Common Stock

Provisions in our restated certificate of incorporation and bylaws and Delaware law may discourage a takeover and prevent our stockholders from receiving a premium for their shares.

Provisions in our restated certificate of incorporation and bylaws may discourage third parties from seeking to obtain control of us and, therefore, could prevent our stockholders from receiving a premium for their shares. Our restated certificate of incorporation gives our Board of Directors the power to issue shares of preferred stock without approval of the holders of common stock. Any preferred stock that is issued in the future could have voting rights, including voting rights that could be superior to that of our common stock. The affirmative vote of 66 2/3% of our voting stock is required to approve certain transactions and to take certain stockholder actions, including the amendment of certain provisions of our certificate of incorporation. Our bylaws contain provisions that regulate how stockholders may present proposals or nominate directors for election at annual meetings of stockholders.

In addition, we are subject to Section 203 of the Delaware General Corporation Law, which contains restrictions on stockholder action to acquire control of us.

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In September 2005, our Board of Directors approved a Stockholder Rights Plan and declared a dividend of one preferred stock purchase right, which we refer to as a Right, for each share of our common stock held of record as of the close of business on September 27, 2005. In addition, Rights shall be issued in respect of all shares of common stock issued after such date. The Rights contain provisions to protect stockholders in the event of an unsolicited attempt to acquire us, including an accumulation of shares in the open market, a partial or two-tier tender offer that does not treat all stockholders equally and other activities that the Board believes are not in the best interests of stockholders. The Rights may discourage a takeover and prevent our stockholders from receiving a premium for their shares.

We have not paid, and do not expect to pay in the future, cash dividends on our common stock.

We have never paid cash dividends on our common stock and do not anticipate paying any such dividends in the foreseeable future. We currently intend to retain our earnings, if any, for the development of our business.

Our stock price is volatile.

The market price of our common stock, like that of the common stock of many other biopharmaceutical companies, has been and likely will continue to be highly volatile. Factors that could have a significant impact on the future price of our common stock include but are not limited to:

the results of preclinical studies and clinical trials by us or our competitors;

announcements of technological innovations or new therapeutic products by us or our competitors;

government regulation;

developments in patent or other proprietary rights by us or our competitors, including litigation;

fluctuations in our operating results; and

market conditions for biopharmaceutical stocks in general.

At June 30, 2009, our outstanding convertible notes were convertible into 88 million shares of common stock. On July 7, 2009, we sold $3 million of notes, common stock and warrants. On September 4, 2009, we sold $3 million of the September 2009 Notes, common stock and September 2009 Warrants, and an additional $7 million of July 2009 Notes, common stock and July 2009 Warrants. Future sales of shares of our common stock by existing stockholders, holders of preferred stock who might convert such preferred stock into common stock, holders of convertible notes who might convert such convertible notes into common stock and option and warrant holders who may exercise their options and warrants to purchase common stock also could adversely affect the market price of our common stock. Moreover, the perception that sales of substantial amounts of our common stock might occur could adversely affect the market price of our common stock.

As our convertible noteholders convert their notes into shares of our common stock, our stockholders will be diluted.

On June 9, 2008, we placed $20 million of senior secured convertible notes, or the 2008 Notes, with certain institutional and accredited investors. The 2008 Notes bear interest at an annual rate of 15% payable at quarterly intervals in other senior secured convertible promissory notes to the holder, and are presently convertible, after adjusting for the April 2009 Note offering and the 1:50 reverse stock split, into shares of our common stock at a conversion rate of 10,000 shares of common stock for every $1,000.00 of principal. Certain members of our senior management participated in this offering. The 2008 Notes are secured by a first lien on all of our assets. At June 30, 2009, our outstanding 2008 Notes were convertible into approximately 28.3 million shares of our common stock.

On April 2, 2009, we entered into a securities purchase agreement with certain accredited institutional investors to place up to $12 million of senior secured convertible notes, or the April 2009 Notes, and corresponding warrants to purchase common stock. We closed the sale of approximately $6 million of such notes and warrants on April 2, 2009. The April 2009 Notes bear interest at an annual rate of 8% payable semi-annually in other senior secured convertible promissory notes to the holder, and are convertible into shares of our common stock at a conversion rate of 10,000 shares of common stock for every $1,000.00 of principal amount outstanding. The April 2009 Notes are secured by a first lien on all of our assets, which security interest is pari passu with the security interest held by the holders of the 2008 Notes. At June 30, 2009, our outstanding April 2009 Notes were convertible into approximately 59.5 million shares of our common stock.

-16-

On July 7, 2009, we entered into a securities purchase agreement with certain accredited institutional investors to place up to $10 million in aggregate principal amount of units consisting of (i) 70% unsecured subordinated convertible notes, or the July 2009 Notes, and (ii) 30% common stock. In connection with the sale of the units, we also issued to the investors two-year warrants to purchase common stock in an amount equal to 25% of the number of shares of common stock issuable upon conversion of the July 2009 Notes purchased by each investor. We closed on $3 million of such July 2009 Notes, common stock and warrants on July 7, 2009.

The conversion of some or all of our notes dilute the ownership interests of existing stockholders. Any sales in the public market of the common stock issuable upon conversion of the notes could adversely affect prevailing market prices of our common stock. In addition, the existence of the notes may encourage short selling by market participants because the conversion of the notes could depress the price of our common stock.

If holders of our notes elect to convert their notes and sell material amounts of our common stock in the market, such sales could cause the price of our common stock to decline, and such downward pressure on the price of our common stock may encourage short selling of our common stock by holders of our notes or others.

If there is significant downward pressure on the price of our common stock, it may encourage holders of notes or others to sell shares by means of short sales to the extent permitted under the U.S. securities laws. Short sales involve the sale by a holder of notes, usually with a future delivery date, of common stock the seller does not own. Covered short sales are sales made in an amount not greater than the number of shares subject to the short seller’s right to acquire common stock, such as upon conversion of notes. A holder of notes may close out any covered short position by converting its notes or purchasing shares in the open market. In determining the source of shares to close out the covered short position, a holder of notes will likely consider, among other things, the price of common stock available for purchase in the open market as compared to the conversion price of the notes. The existence of a significant number of short sales generally causes the price of common stock to decline, in part because it indicates that a number of market participants are taking a position that will be profitable only if the price of the common stock declines.

Our common stock is considered a “penny stock” and does not qualify for exemption from the “penny stock” restrictions, which may make it more difficult for you to sell your shares.

Our common stock is classified as a “penny stock” by the SEC and is subject to rules adopted by the SEC regulating broker-dealer practices in connection with transactions in “penny stocks.” The SEC has adopted regulations which define a “penny stock” to be any equity security that has a market price of less than $5.00 per share, or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, these rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule relating to the penny stock market. Disclosure is also required to be made about current quotations for the securities and commissions payable to both the broker-dealer and the registered representative. Finally, broker-dealers must send monthly statements to purchasers of penny stocks disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. As a result of our shares of common stock being subject to the rules on penny stocks, the liquidity of our common stock may be adversely affected.

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FORWARD-LOOKING STATEMENTS

This prospectus contains certain forward-looking statements regarding management’s plans and objectives for future operations including plans and objectives relating to our planned marketing efforts and future economic performance. The forward-looking statements and associated risks set forth in this prospectus include or relate to, among other things, (a) our projected sales and profitability, (b) our growth strategies, (c) anticipated trends in our industry, (d) our ability to obtain and retain sufficient capital for future operations, and (e) our anticipated needs for working capital. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business”, as well as in this prospectus generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in this prospectus generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this prospectus will in fact occur.

The forward-looking statements herein are based on current expectations that involve a number of risks and uncertainties. Such forward-looking statements are based on assumptions that there will be no material adverse competitive or technological change in conditions in our business, that demand for our products and services will significantly increase, that our President will remain employed as such, that our forecasts accurately anticipate market demand, and that there will be no material adverse change in our operations or business or in governmental regulations affecting us or our manufacturers and/or suppliers. The foregoing assumptions are based on judgments with respect to, among other things, future economic, competitive and market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Accordingly, although we believe that the assumptions underlying the forward-looking statements are reasonable, any such assumption could prove to be inaccurate and therefore there can be no assurance that the results contemplated in forward-looking statements will be realized. In addition, as disclosed elsewhere in the “Risk Factors” section of this prospectus, there are a number of other risks inherent in our business and operations which could cause our operating results to vary markedly and adversely from prior results or the results contemplated by the forward-looking statements. Growth in absolute and relative amounts of cost of goods sold and selling, general and administrative expenses or the occurrence of extraordinary events could cause actual results to vary materially from the results contemplated by the forward-looking statements. Management decisions, including budgeting, are subjective in many respects and periodic revisions must be made to reflect actual conditions and business developments, the impact of which may cause us to alter marketing, capital investment and other expenditures, which may also materially adversely affect our results of operations. In light of significant uncertainties inherent in the forward-looking information included in this prospectus, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives or plans will be achieved.

Some of the information in this prospectus contains forward-looking statements that involve substantial risks and uncertainties. Any statement in this prospectus and in the documents incorporated by reference into this prospectus that is not a statement of an historical fact constitutes a “forward-looking statement”. Further, when we use the words “may”, “expect”, “anticipate”, “plan”, “believe”, “seek”, “estimate”, “internal” and similar words, we intend to identify statements and expressions that may be forward-looking statements. We believe it is important to communicate certain of our expectations to our investors. Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions that could cause our future results to differ materially from those expressed in any forward-looking statements. Many factors are beyond our ability to control or predict. You are accordingly cautioned not to place undue reliance on such forward-looking statements. Important factors that may cause our actual results to differ from such forward-looking statements include, but are not limited to, the risk factors discussed above. Before you invest in our common stock, you should be aware that the occurrence of any of the events described under “Risk Factors” or elsewhere in this prospectus could have a material adverse effect on our business, financial condition and results of operation. In such a case, the trading price of our common stock could decline and you could lose all or part of your investment.

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USE OF PROCEEDS

We will not receive any of the proceeds from the sale of shares of our common stock by the selling stockholders, but will receive proceeds related to the exercise of the July 2009 Warrants and September 2009 Warrants for cash held by the selling stockholders. We cannot estimate how many, if any, July 2009 Warrants or September 2009 Warrants may be exercised as a result of this offering. We will bear all costs, expenses and fees in connection with the registration of shares of our common stock to be sold by the selling stockholders. The selling stockholders will bear all commissions and discounts, if any, attributable to their respective sales of shares.

DETERMINATION OF OFFERING PRICE

We are not selling any of the common stock that we are registering. The common stock will be sold by the selling stockholders listed in this prospectus. The selling stockholders may sell the common stock at the market price as of the date of sale or a price negotiated in a private sale. Our common stock is currently traded on the OTC Bulletin Board under the symbol “GETA.OB”.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our common stock. We currently intend to retain our future earnings, if any, to finance the expansion of our business and do not expect to pay any cash dividends in the foreseeable future. Payment of future cash dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs and plans for expansion and restrictions imposed by lenders, if any.

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CAPITALIZATION

The following table describes our capitalization as of June 30, 2009:

•

on an actual basis; and

•

on an as adjusted basis to give effect to our July 2009 financing and September 2009 financing.

You should read this capitalization table together with our consolidated financial statements and the related notes appearing at the end of this prospectus and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and other financial information included in this prospectus.

(000)

As of June 30, 2009

	As reported (unaudited)			As adjusted for the July 2009 financing (unaudited)			As adjusted for the July 2009 financing and September 2009 financing (unaudited)
Convertible notes as of June 30, 2009 actual $8,779 outstanding net of debt discount of ($7,434), as of June 30, 2009 adjusted for July 7, 2009 financing, $10,880 outstanding net of debt discount of ($9,535), and as of June 30, 2009 adjusted for July 7, 2009 financing and September 4, 2009 financing, $17,880 outstanding net of debt discount of ($16,535)	$	1,344		$	1,344	(1)	$	1,344	(2)
Common stock, $.001 par value; 6,000,000 shares authorized, 99,771 shares issued and outstanding at June 30, 2009, 108,761 shares issued and outstanding as of June 30, 2009 adjusted for the July 7, 2009 financing, and 138,761 shares issued and outstanding as of June 30, 2009 adjusted for the July 7, 2009 financing and September 4, 2009 financing		100			109			139
Preferred stock, 5,000 authorized:
Series A convertible preferred stock, $.001 par value; 8 shares issued and outstanding, liquidation value of $385 at June 30, 2009 (actual and as adjusted)		—			—			—
Series G participating cumulative preferred stock, $.001 par value; 0 shares issued and outstanding at June 30, 2009 (actual and as adjusted)		—			—			—
Additional paid-in capital		993,843			996,834			1,006,804
Accumulated deficit		(998,275	)		(998,275	)		(998,275	)

Total stockholders’(deficit)/equity		(4,332	)		(1,332	)		8,668

Total capitalization	$	(2,988	)	$	12			10,012

(1)

At the time the July 2009 Notes were issued on July 7, 2009, the Company recorded a debt discount (beneficial conversion) relating to the conversion feature and warrants in the amount of $2.1 million. The aggregate intrinsic value of the difference between the market price of the Company’s share of stock on July 7, 2009 and the effective conversion price of the notes was in excess of the face value of the $2.1 million notes, and thus, a full debt discount was recorded in an amount equal to the face value of the debt.

(2)

On September 4, 2009, the Company issued September 2009 Notes and additional July 2009 Notes and recorded a debt discount (beneficial conversion) relating to the conversion feature and warrants in the amount of $7.0 million. The aggregate intrinsic value of the difference between the market price of the Company’s share of stock on September 4, 2009 and the effective conversion price of the notes was in excess of the face value of the $2.1 million notes, and thus, a full debt discount was recorded in an amount equal to the face value of the debt.

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DILUTION

We are not offering or selling any of the shares of common stock in this offering. All of the offered shares of our common stock are held or will be held by the selling stockholders at the time of sale and, accordingly, no dilution will result from the sale of the shares.

SELLING STOCKHOLDERS

A portion of the shares of common stock being offered by the selling stockholders are issuable upon conversion of the July 2009 Notes and September 2009 Notes and upon exercise of the July 2009 Warrants and September 2009 Warrants. For additional information regarding the issuance of the July 2009 Notes, July 2009 Warrants, September 2009 Notes and September 2009 Warrants, see the Company’s Forms 8-K filed with the SEC on July 8, 2009 and September 9, 2009. We are registering the shares of common stock in order to permit the selling stockholders to offer the shares for resale from time to time. Except as otherwise noted and except for the ownership of the convertible notes and the warrants issued pursuant to a securities purchase agreement between the Company and certain accredited institutional investors, the selling stockholders have not had any material relationship with us within the past three years.

The table below lists the selling stockholders and other information regarding the beneficial ownership of the shares of common stock by each of the selling stockholders. The second column lists the number of shares of common stock held or acquirable (without restriction) by each selling stockholder, based on its ownership of the convertible notes, common stock and warrants, as of September 16, 2009, assuming conversion of all convertible notes and exercise of the warrants held by the selling stockholder on that date, without regard to any limitations on conversions or exercise. The third column lists the number of shares of common stock beneficially owned by each selling stockholder, based on its ownership of the convertible notes, common stock and warrants, as of September 16, 2009, determined in accordance with Rule 13d-3 of the Exchange Act, and taking into account any limitations on conversions or exercise. The fourth column lists the shares of common stock being offered by this prospectus by the selling stockholders. In accordance with the terms of a registration rights agreement with the selling stockholders, this prospectus generally covers the resale of at least (i) 100% of the number of conversion shares issued and issuable pursuant to the July 2009 Notes and September 2009 Notes as of the trading day immediately preceding the date the registration statement is initially filed with the SEC, and (ii) 100% of the number of warrant shares issued and issuable pursuant to the July 2009 Warrants and September 2009 Warrants as of the trading day immediately preceding the date the registration statement is initially filed with the SEC. Because the conversion price of the July 2009 Notes and September 2009 Notes and the exercise price of the July 2009 Warrants and September 2009 Warrants may be adjusted, the number of shares that will actually be issued may be more or less than the number of shares being offered by this prospectus. The fifth and sixth columns assume the sale of all of the shares offered by the selling stockholders pursuant to this prospectus.

Under the terms of the July 2009 Notes and September 2009 Notes, a selling stockholder may not convert the July 2009 Notes or September 2009 Notes to the extent such conversion would cause such selling stockholder, together with its affiliates, to beneficially own a number of shares of common stock which would exceed 9.999% of our then outstanding shares of common stock following such conversion, excluding for purposes of such determination shares of common stock issuable upon conversion of the July 2009 Notes or September 2009 Notes which have not been converted. Under the terms of the July 2009 Warrants and September 2009 Warrants, a selling stockholder may not exercise the warrants to the extent such exercise would cause such selling stockholder, together with its affiliates, to beneficially own a number of shares of common stock which would exceed 4.999% of our then outstanding shares of common stock issuable upon exercise, excluding for purposes of such determination shares of common stock issuable upon exercise of the Warrants which have not been exercised. The number of shares in the second and fifth columns do not reflect this limitation. The selling stockholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”

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	Number of Shares held or acquirable (without reference to restrictions prior to the Offering)		Shares of Common Stock Beneficially Owned Prior to the Offering				Maximum Number of Shares to be Sold Pursuant to this Prospectus		Number of Shares held or acquirable (without reference to restrictions) After the Offering (4)		Shares of Common Stock Beneficially Owned After the Offering
Selling stockholder			Number of Shares Beneficially Owned (1)		Percent of Class (1)(2)(3)						Number of Shares Beneficially Owned (4)		Percent of Class (1)(2)(3)
Tang Capital Partners, LP		125,817,573(5)		16,966,752		9.999%		49,792,009		76,025,564		16,966,752		9.999%

667, L.P.		112,962,361(6)		16,966,752		9.999%		4,569,360		68,522,480		16,966,752		9.999%

667, L.P. #2		112,962,361(7)		16,966,752		9.999%		3,725,485		68,522,480		16,966,752		9.999%

Baker Brothers Life Sciences, L.P.		112,962,361(8)		16,966,752		9.999%		35,018,477		68,522,480		16,966,752		9.999%

14159, L.P.		112,962,361(9)		16,966,752		9.999%		1,126,559		68,522,480		16,966,752		9.999%

BAM Opportunity Fund, L.P.		32,868,814(10)		13,277,527		7.825%		12,868,814		20,000,000		13,277,527		7.618%

Boxer Capital LLC		36,064,344(11)		14,384,927		8.043%		13,069,908		22,994,436		14,384,927		8.043%

Cat Trail Private Equity Fund, LLC		49,004,563(12)		16,966,752		9.999%		18,099,203		30,905,360		16,966,752		9.999%

Arcus Ventures Fund		19,539,199(13)		9,597,016		5.656%		9,049,601		10,489,598		9,597,016		5.536%

Cranshire Capital LP		2,450,192(14)		2,450,192		1.432%		950,192		1,500,000		1,500,000		*

Rockmore Investment Master Fund Ltd.		2,514,583(15)		2,514,583		1.470%		610,809		1,903,774		1,903,774		1.117%

RRC BioFund, LP		1,225,096(16)		1,225,096		*		475,096		750,000		750,000		*

Rodman & Renshaw, LLC (17)		13,896,252(18)		8,954,327		5.032%		8,773,296		5,122,956		5,122,956		2.942%

MVA Investors LLC, IIl		2,423,691(19)		2,423,691		1.413%		2,423,691		0		0		*

Represents beneficial ownership of less than one percent of our outstanding common stock.

(1)

The Issuer’s 15% Senior Secured Convertible Promissory Notes due June 2011 (the “June 2008 Notes”) and the Issuer’s 8% Senior Secured Convertible Promissory Notes due April 2012 (the “April 2009 Notes”) can only be converted to the extent that, after such conversion, the Reporting Persons would beneficially own no more than 4.999% of the Issuer’s Common Stock. The July 2009 Notes and the September 2009 Notes can only be converted to the extent that, after such conversion, the Reporting Persons would beneficially own no more than 9.999% of the Issuer’s Common Stock. Warrants issued in April 2009 (the “April 2009 Warrants”) are not exercisable until after October 2, 2009, the July 2009 Warrants are not exercisable until after January 7, 2010 and March 4, 2010, respectively, and the September 2009 Warrants are not exercisable until after March 4, 2010, and after each such date, the warrants are only exercisable to the extent that, after such exercise, the Reporting Persons would beneficially own no more than 4.999% of the Issuer’s Common Stock. Additionally, the July 2009 Notes and the September 2009 Notes can only be converted beginning the earlier of (i) two weeks from the effectiveness of a resale registration statement registering the common stock underlying such notes and (ii) the date that is six months following the issuance date. The beneficial ownership total in this column assumes that this registration statement has been declared effective and the July 2009 Notes and the September 2009 Notes are currently convertible according to their respective terms. The shares numbers and percentages set forth in the columns below reflect these limitations on conversion and exercise.

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(2)

Calculated assuming the total number of shares of common stock outstanding are 169,684,485, the number of shares of common stock outstanding on September 16, 2009.

(3)

Shares of common stock underlying convertible notes or warrants are deemed outstanding for computing the percentage ownership of the selling stockholder holding the convertible notes or warrants, prior to and after giving effect to the offering, but are not deemed outstanding for computing the percentage ownership of any other selling stockholder.

(4)

We do not know when or in what amounts a selling stockholder may offer shares for sale. The selling stockholders might not sell any or all of the shares offered by this prospectus. Because the selling stockholders may offer all or some of the shares pursuant to this offering and because there are currently no agreements, arrangements or understandings with respect to the sale of any of the shares, we cannot estimate the number of the shares that will be held by the selling stockholders after completion of the offering. However, for purposes of this table, we have assumed that, after completion of the offering, none of the shares covered by this prospectus will be held by the selling stockholders.

(5)

Tang Capital Partners, LP has the right to acquire (setting aside for these purposes the restrictions described in footnote 1) 125,817,573 shares of Common Stock, comprised of 16,497,257 shares of Common Stock, $82,937.58 face amount of the June 2008 Notes, which are convertible into 829,376 shares of Common Stock, $1,911,666.67 face amount of the April 2009 Notes, which are convertible into 19,116,667 shares of Common Stock, $1,954,299.48 face amount of July 2009 Notes, which are convertible into 19,542,995 shares of Common Stock, and $633,614.68 face amount of September 2009 Notes, which are convertible into 6,336,147 shares of Common Stock. Additionally, Tang Capital Partners, LP holds an April 2009 Warrant to purchase 4,625,000 shares of the Issuer’s Common Stock at an exercise price of $0.50 per share, July 2009 Warrants to purchase 5,831,576 shares of the Issuer’s Common Stock at an exercise price of $1.00 per share and a September 2009 Warrant to purchase 1,584,037 shares of the Issuer’s Common Stock at an exercise price of $1.00 per share. Tang Capital Partners, LP also has the right, pursuant to a Securities Purchase Agreement dated April 2, 2009, to purchase an additional $1,850,000.00 face amount of the April 2009 Notes, which are convertible into 18,500,000 shares of Common Stock, and a warrant to purchase 4,625,000 shares at an exercise price of $0.50 per share. Tang Capital Partners LP also has the right, pursuant to a Consent Agreement dated April 2, 2009, and amended on May 22, 2009 and July 7, 2009, to purchase $2,832,951.79 face amount of the April 2009 Notes, which are convertible into 28,329,518 shares of Common Stock. Tang Capital Partners shares voting and dispositive power over such shares, notes and warrants with Tang Capital Management and Kevin C. Tang. Tang Capital Management, as the general partner of Tang Capital Partners, may be deemed to beneficially own the shares held or acquirable by Tang Capital Partners. Tang Capital Management shares voting and dispositive power over such shares with Tang Capital Partners and Kevin C. Tang. Kevin C. Tang, as manager of Tang Capital Management, may be deemed to beneficially own the shares held or acquirable by Tang Capital Partners. Mr. Tang shares voting and dispositive power over such shares with Tang Capital Partners and Tang Capital Management. Mr. Tang disclaims beneficial ownership of all shares reported herein except to the extent of his pecuniary interest therein.

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(6)

667, L.P., 667, L.P. #2, Baker Brothers Life Sciences, L.P. and 14159, L.P. (collectively, the “Baker Bros. Affiliates”) have the right to acquire (setting aside for these purposes the restrictions described in footnote 1) a total of 112,962,361 shares of Common Stock which are held as set forth below. 667, L.P.: 9,545,699 shares of Common Stock, comprised of 1,551,822 shares of Common Stock, $9,479.51 of the June 2008 Notes, which are convertible into 94,795 shares of Common Stock, $196,333.33 of the April 2009 Notes, which are convertible into 1,963,333 shares of Common Stock, $162,303.62 of July 2009 Notes, which are convertible into 1,623,036 shares of Common Stock, and $78,279.60 of September 2009 Notes, which are convertible into 782,796 shares of Common Stock. The fund also holds an April 2009 Warrant to purchase 475,000 shares with an exercise price of $0.50 per share, which warrant is not exercisable until October 2, 2009, a July 2009 Warrant to purchase 170,000 shares with an exercise price of $1.00 per share, which warrant is not exercisable until January 7, 2010, a July 2009 Warrant to purchase 314,217 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010, and a September 2009 Warrant to purchase 195,700 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010. The fund also has the right, pursuant to a Securities Purchase Agreement dated April 2, 2009, to purchase an additional $190,000.00 face amount of the April 2009 Notes, which are convertible into 1,900,000 shares of Common Stock, and a warrant to purchase 475,000 shares with an exercise price of $0.50 per share. 667, L.P. #2: 7,661,357 shares of Common Stock, comprised of 1,262,179 shares of Common Stock, $7,568.57 of the June 2008 Notes, which are convertible into 75,686 shares of Common Stock, $160,166.07 of the April 2009 Notes, which are convertible into 1,601,667 shares of Common Stock, $120,325.80 of July 2009 Notes, which are convertible into 1,203,258 shares of Common Stock, and $63,798.40 of September 2009 Notes, which are convertible into 637,984 shares of Common Stock. The fund also holds an April 2009 Warrant to purchase 387,500 shares with an exercise price of $0.50 per share, which warrant is not exercisable until October 2, 2009, a July 2009 Warrant to purchase 140,000 shares with an exercise price of $1.00 per share, which warrant is not exercisable until January 7, 2010, a July 2009 Warrant to purchase 256,087 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010, and a September 2009 Warrant to purchase 159,496 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010. The fund also has the right, pursuant to a Securities Purchase Agreement dated April 2, 2009, to purchase an additional $155,000.00 face amount of the April 2009 Notes, which are convertible into 1,550,000 shares of Common Stock, and a warrant to purchase 387,500 shares with an exercise price of $0.50 per share. Baker Brothers Life Sciences L.P.: 93,416,380 shares of Common Stock, comprised of 11,882,595 shares of Common Stock, $70,459.50 of the June 2008 Notes, which are convertible into 704,595 shares of Common Stock, $1,506,600 of the April 2009 Notes, which are convertible into 15,066,000 shares of Common Stock, $1,192,999.17 of July 2009 Notes, which are convertible into 11,929,992 shares of Common Stock, and $599,836.10 of September 2009 Notes, which are convertible into 5,998,361 shares of Common Stock. The fund also holds an April 2009 Warrant to purchase 3,645,000 shares with an exercise price of $0.50 per share, which warrant is not exercisable until October 2, 2009, a July 2009 Warrant to purchase 1,307,500 shares with an exercise price of $1.00 per share, which warrant is not exercisable until January 7, 2010, a July 2009 Warrant to purchase 2,407,747 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010, and a September 2009 Warrant to purchase 1,499,590 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010. The fund also has the right, pursuant to a Securities Purchase Agreement dated April 2, 2009, to purchase an additional $1,458,000.00 face amount of the April 2009 Notes, which are convertible into 14,580,000 shares of Common Stock, and a warrant to purchase 3,645,000 shares with an exercise price of $0.50 per share. The fund also has the right, pursuant to a Consent Agreement dated April 2, 2009, and amended on May 22, 2009 and July 7, 2009, to purchase $2,075,000 face amount of the April 2009 Notes, which are convertible into 20,750,000 shares of Common Stock. 14159, L.P.: 2,338,925 shares of Common Stock, comprised of 381,318 shares of Common Stock, $2,146.14 of the June 2008 Notes, which are convertible into 21,462 shares of Common Stock, $48,566.67 of the April 2009 Notes, which are convertible into 485,667 shares of Common Stock, $38,443.80 of July 2009 Notes, which are convertible into 384,438 shares of Common Stock, and $19,288.96 of September 2009 Notes, which are convertible into 192,890 shares of Common Stock. The fund also holds an April 2009 Warrant to purchase 117,500 shares with an exercise price of $0.50 per share, which warrant is not exercisable until October 2, 2009, a July 2009 Warrant to purchase 42,500 shares with an exercise price of $1.00 per share, which warrant is not exercisable until January 7, 2010, a July 2009 Warrant to purchase 77,427 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010, and a September 2009 Warrant to purchase 48,223 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010. The fund also has the right, pursuant to a Securities Purchase Agreement dated April 2, 2009, to purchase an additional $47,000.00 face amount of the April 2009 Notes, which are convertible into 470,000 shares of Common Stock, and a warrant to purchase 117,500 shares with an exercise price of $0.50 per share. By virtue of their ownership of entities that have the power to control the investment decisions of the Baker Bros. Affiliates, Felix J. Baker and Julian C. Baker may each be deemed to be beneficial owners of shares held or acquirable by the Baker Bros Affiliates and may be deemed to have shared power to vote or direct the vote of and shared power to dispose or direct the disposition of such securities.

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(7)

The Baker Bros. Affiliates have the right to acquire (setting aside for these purposes the restrictions described in footnote 1) a total of 112,313,289 shares of Common Stock which are held as set forth below. 667, L.P.: 9,545,699 shares of Common Stock, comprised of 1,551,822 shares of Common Stock, $9,479.51 of the June 2008 Notes, which are convertible into 94,795 shares of Common Stock, $196,333.33 of the April 2009 Notes, which are convertible into 1,963,333 shares of Common Stock, $162,303.62 of July 2009 Notes, which are convertible into 1,623,036 shares of Common Stock, and $78,279.60 of September 2009 Notes, which are convertible into 782,796 shares of Common Stock. The fund also holds an April 2009 Warrant to purchase 475,000 shares with an exercise price of $0.50 per share, which warrant is not exercisable until October 2, 2009, a July 2009 Warrant to purchase 170,000 shares with an exercise price of $1.00 per share, which warrant is not exercisable until January 7, 2010, a July 2009 Warrant to purchase 314,217 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010, and a September 2009 Warrant to purchase 195,700 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010. The fund also has the right, pursuant to a Securities Purchase Agreement dated April 2, 2009, to purchase an additional $190,000.00 face amount of the April 2009 Notes, which are convertible into 1,900,000 shares of Common Stock, and a warrant to purchase 475,000 shares with an exercise price of $0.50 per share. 667, L.P. #2: 7,661,357 shares of Common Stock, comprised of 1,262,179 shares of Common Stock, $7,568.57 of the June 2008 Notes, which are convertible into 75,686 shares of Common Stock, $160,166.07 of the April 2009 Notes, which are convertible into 1,601,667 shares of Common Stock, $120,325.80 of July 2009 Notes, which are convertible into 1,203,258 shares of Common Stock, and $63,798.40 of September 2009 Notes, which are convertible into 637,984 shares of Common Stock. The fund also holds an April 2009 Warrant to purchase 387,500 shares with an exercise price of $0.50 per share, which warrant is not exercisable until October 2, 2009, a July 2009 Warrant to purchase 140,000 shares with an exercise price of $1.00 per share, which warrant is not exercisable until January 7, 2010, a July 2009 Warrant to purchase 256,087 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010, and a September 2009 Warrant to purchase 159,496 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010. The fund also has the right, pursuant to a Securities Purchase Agreement dated April 2, 2009, to purchase an additional $155,000.00 face amount of the April 2009 Notes, which are convertible into 1,550,000 shares of Common Stock, and a warrant to purchase 387,500 shares with an exercise price of $0.50 per share. Baker Brothers Life Sciences L.P.: 93,416,380 shares of Common Stock, comprised of 11,882,595 shares of Common Stock, $70,459.50 of the June 2008 Notes, which are convertible into 704,595 shares of Common Stock, $1,506,600 of the April 2009 Notes, which are convertible into 15,066,000 shares of Common Stock, $1,192,999.17 of July 2009 Notes, which are convertible into 11,929,992 shares of Common Stock, and $599,836.10 of September 2009 Notes, which are convertible into 5,998,361 shares of Common Stock. The fund also holds an April 2009 Warrant to purchase 3,645,000 shares with an exercise price of $0.50 per share, which warrant is not exercisable until October 2, 2009, a July 2009 Warrant to purchase 1,307,500 shares with an exercise price of $1.00 per share, which warrant is not exercisable until January 7, 2010, a July 2009 Warrant to purchase 2,407,747 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010, and a September 2009 Warrant to purchase 1,499,590 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010. The fund also has the right, pursuant to a Securities Purchase Agreement dated April 2, 2009, to purchase an additional $1,458,000.00 face amount of the April 2009 Notes, which are convertible into 14,580,000 shares of Common Stock, and a warrant to purchase 3,645,000 shares with an exercise price of $0.50 per share. The fund also has the right, pursuant to a Consent Agreement dated April 2, 2009, and amended on May 22, 2009 and July 7, 2009, to purchase $2,075,000 face amount of the April 2009 Notes, which are convertible into 20,750,000 shares of Common Stock. 14159, L.P.: 2,338,925 shares of Common Stock, comprised of 381,318 shares of Common Stock, $2,146.14 of the June 2008 Notes, which are convertible into 21,462 shares of Common Stock, $48,566.67 of the April 2009 Notes, which are convertible into 485,667 shares of Common Stock, $38,443.80 of July 2009 Notes, which are convertible into 384,438 shares of Common Stock, and $19,288.96 of September 2009 Notes, which are convertible into 192,890 shares of Common Stock. The fund also holds an April 2009 Warrant to purchase 117,500 shares with an exercise price of $0.50 per share, which warrant is not exercisable until October 2, 2009, a July 2009 Warrant to purchase 42,500 shares with an exercise price of $1.00 per share, which warrant is not exercisable until January 7, 2010, a July 2009 Warrant to purchase 77,427 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010, and a September 2009 Warrant to purchase 48,223 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010. The fund also has the right, pursuant to a Securities Purchase Agreement dated April 2, 2009, to purchase an additional $47,000.00 face amount of the April 2009 Notes, which are convertible into 470,000 shares of Common Stock, and a warrant to purchase 117,500 shares with an exercise price of $0.50 per share. By virtue of their ownership of entities that have the power to control the investment decisions of the Baker Bros. Affiliates, Felix J. Baker and Julian C. Baker may each be deemed to be beneficial owners of shares held or acquirable by the Baker Bros. Affiliates and may be deemed to have shared power to vote or direct the vote of and shared power to dispose or direct the disposition of such securities.

-25-

(8)

-26-

(9)

(10)

The BAM Opportunity Fund, L.P. has the right to acquire (setting aside for these purposes the restrictions described in footnote 1) 32,868,814 shares of Common Stock, comprised of 8,681, 214 shares of Common Stock, $547,635 of the April 2009 Notes, which are convertible into 5,476,350 shares of Common Stock, and $479,500 of September 2009 Notes, which are convertible into 4,795,000 shares of Common Stock. The fund also holds an April 2009 Warrant to purchase 2,000,000 shares at an exercise price of $0.50 per share, which warrant is not exercisable until October 2, 2009, a July 2009 Warrant to purchase 717,500 shares with an exercise price of $1.00 per share, which warrant is not exercisable until January 7, 2010, and a September 2009 Warrant to purchase 1,198,750 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010. The fund also has the right, pursuant to a Securities Purchase Agreement dated April 2, 2009, to purchase an additional $800,000 face amount of the April 2009 Notes, which are convertible into 8,000,000 shares of Common Stock, and a warrant to purchase 2,000,000 shares with an exercise price of $0.50 per share. The BAM Opportunity Fund, L.P. is a private investment partnership, the sole general partner of which is BAM Capital, LLC. As the sole general partner, BAM Capital, LLC has the power to vote and dispose of the Common Stock owned by the BAM Opportunity Fund, L.P. and, accordingly, may be deemed the “beneficial owner” of such Common Stock. As the investment manager of the BAM Opportunity Fund, L.P., BAM Management, LLC has the power to vote and dispose of the Common Stock owned by the BAM Opportunity Fund, L.P. and, accordingly, may be deemed the “beneficial owner” of such Common Stock. The managing members of BAM Capital, LLC and BAM Management, LLC are Hal Mintz and Ross Berman. Each of BAM Capital, LLC, BAM Management, LLC, Hal Mintz and Ross Berman disclaims beneficial ownership of all shares of Common Stock held or acquirable by the BAM Opportunity Fund, L.P., except to the extent of their pecuniary interest therein.

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(11)

Boxer Capital LLC has the right to acquire (setting aside for these purposes the restrictions described in footnote 1) a total of 36,064,344 shares of Common Stock, comprised of 5,221,907 shares of Common Stock, $525,000 face amount of April 2009 Notes, which are convertible into 5,250,000 shares of Common Stock, $469,868.53 of July 2009 Notes, which are convertible into 4,698,685 shares of Common Stock, and $120,371.47 of September 2009 Notes, which are convertible into 1,203,715 shares of Common Stock. The fund also holds an April 2009 Warrant to purchase 1,312,500 shares with an exercise price of $0.50 per share, which warrant is not exercisable until October 2, 2009, a July 2009 Warrant to purchase 470,000 shares with an exercise price of $1.00 per share, which warrant is not exercisable until January 7, 2010, a July 2009 Warrant to purchase 1,174,671 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010, and a September 2009 Warrant to purchase 300,929 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010. The fund also has the right, pursuant to a Securities Purchase Agreement dated April 2, 2009, to purchase an additional $525,000 face amount of the April 2009 Notes, which are convertible into 5,250,000 shares of Common Stock, and a warrant to purchase 1,312,500 shares with an exercise price of $0.50 per share. The fund also has the right, pursuant to a Consent Agreement dated April 2, 2009, and amended on May 22, 2009 and July 7, 2009, to purchase $986,943.70 face amount of the April 2009 Notes, which are convertible into 9,869,437 shares of Common Stock. Boxer Asset Management Inc. is the managing member and majority owner of Boxer Capital LLC. Joseph Lewis is the sole indirect owner and controls Boxer Asset Management Inc. Boxer Capital LLC has shared voting and dispositive power with regard to the Common Stock, the warrants to purchase Common Stock, and the notes convertible into shares of Common Stock it owns directly. Boxer Asset Management Inc. and Joseph Lewis each have shared voting and dispositive power with regard to the Common Stock owned directly by Boxer Capital LLC. MVA Investors LLC, II is the independent, personal investment vehicle of certain employees of Boxer Capital LLC and Tavistock Life Sciences Company, which is a Delaware corporation and an affiliate of Boxer Capital LLC. Investment decisions of Boxer Capital LLC are made by a majority vote of its investment committee. As such, MVA Investors LLC, II is not controlled by Boxer Capital LLC, Boxer Asset Management Inc. or Joseph Lewis. MVA Investors LLC, II has sole voting and dispositive power over the Common Stock, the warrants to purchase Common Stock and the notes convertible into Common Stock owned by it. Neither Boxer Capital LLC, Boxer Asset Management Inc. nor Mr. Lewis have any voting or dispositive power with regard to the Common Shares held by MVA Investors LLC, II. For more information regarding MVA Investors LLC, II, see footnote 19.

(12)

Cat Trail Private Equity Fund, LLC has the right to acquire (setting aside for these purposes the restrictions described in footnote 1) 49,004,563 shares of Common Stock, comprised of 8,709,023 shares of Common Stock and $450,000 face amount of April 2009 Notes, which are convertible into 4,500,000 shares of Common Stock, and $1,078,643.21 face amount of July 2009 Notes, which are convertible into 10,786,432 shares of Common Stock. The fund also holds an April 2009 Warrant to purchase 1,125,000 shares with an exercise price of $0.50 per share, which warrant is not exercisable until October 2, 2009, a July 2009 Warrant to purchase 405,000 shares with an exercise price of $1.00 per share, which warrant is not exercisable until January 7, 2010, and a July 2009 Warrant to purchase 2,291,608 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010. The fund also has the right, pursuant to a Securities Purchase Agreement dated April 2, 2009, to purchase an additional $450,000 face amount of the April 2009 Notes, which are convertible into 4,500,000 shares of Common Stock, and a warrant to purchase 1,125,000 shares with an exercise price of $0.50 per share. The fund also has the right, pursuant to a Consent Agreement dated April 2, 2009, and amended on May 22, 2009 and July 7, 2009, to purchase $1,556,250 face amount of the April 2009 Notes, which are convertible into 15,562,500 shares of Common Stock. David Dekker, as the managing member of Cat Trail Private Equity, LLC, may be deemed to beneficially own the shares of Common Stock held or acquirable by Cat Trail Private Equity, LLC. Mr. Dekker shares voting and dispositive power over such shares with Cat Trail Private Equity, LLC. Mr. Dekker disclaims beneficial ownership of all shares reported herein except to the extent of his pecuniary interest therein.

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(13)

Arcus Ventures Fund has the right to acquire (setting aside for these purposes the restrictions described in footnote 1) 23,007,926 shares of Common Stock. The fund owns 5,920,156 shares of Common Stock and $458,321.61 of July 2009 Notes, which are convertible into 4,583,216 shares of Common Stock. The fund also holds an April 2009 Warrant to purchase 562,500 shares of Common Stock with an exercise price of $0.50 per share, which warrant is not exercisable until October 2, 2009, a July 2009 Warrant to purchase 202,500 shares with an exercise price of $1.00 per share, which warrant is not exercisable until January 7, 2010, and a July 2009 Warrant to purchase 1,145,804 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010. The fund also has the right, pursuant to a Securities Purchase Agreement dated April 2, 2009, to purchase an additional $225,000 face amount of the April 2009 Notes, which are convertible into 2,250,000 shares of Common Stock, and a warrant to purchase 562,500 shares with an exercise price of $0.50 per share. The fund also has the right, pursuant to a Consent Agreement dated April 2, 2009, and amended on May 22, 2009 and July 7, 2009, to purchase $778,125 face amount of the April 2009 Notes, which are convertible into 7,781,250 shares of Common Stock. As the general partner of Arcus Ventures Fund, Arcus Ventures Management, LLC may be deemed to be the beneficial owner of the shares held or acquirable by the fund. As members of Arcus Ventures Management, LLC, James B. Dougherty and Steven Soignet may be deemed to be the beneficial owners of the shares held or acquirable by the fund. Each of Messrs. Dougherty and Soignet disclaims beneficial ownership of the shares of Common Stock held or acquirable by the fund, except to the extent of his pecuniary interest therein.

(14)

Cranshire Capital LP has the right to acquire (setting aside for these purposes the restrictions described in footnote 1) 2,450,192 shares of Common Stock, comprised of 1,057,692 shares of Common Stock and $35,000 of September 2009 Notes, which are convertible into 350,000 shares of Common Stock. The fund also holds an April 2009 Warrant to purchase 150,000 shares of Common Stock with an exercise price of $0.50 per share, which warrant is not exercisable until October 2, 2009, a July 2009 Warrant to purchase 55,000 shares of Common Stock with an exercise price of $1.00 per share, which warrant is not exercisable until January 7, 2010, and a September 2009 Warrant to purchase 87,500 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010. The fund also has the right, pursuant to a Securities Purchase Agreement dated April 2, 2009, to purchase an additional $60,000 face amount of the April 2009 Notes, which are convertible into 600,000 shares of Common Stock, and a warrant to purchase 150,000 shares with an exercise price of $0.50 per share. Downsview Capital, Inc. (“Downsview”) is the general partner of Cranshire Capital LP, and consequently, has voting control and investment discretion over securities held by Cranshire Capital LP. Mitchell P. Kopin, President of Downsview, has voting control over Downsview. As a result of the foregoing, each of Mr. Kopin and Downsview may be deemed to have beneficial ownership (as determined under Section 13(d) of the Exchange Act) of the shares of Common Stock beneficially owned by Cranshire Capital LP.

(15)

Rockmore Investment Master Fund Ltd. has the right to acquire (setting aside for these purposes the restrictions described in footnote 1) 2,514,583 shares of Common Stock, comprised of 1,114,710 shares of Common Stock, $30,000 face amount of April 2009 Notes, which are convertible into 300,000 shares of Common Stock, $22,341.93 face amount of July 2009 Notes, which are convertible into 223,419 shares of Common Stock, and $14,243.07 of September 2009 Notes, which are convertible into 142,431 shares of Common Stock. The fund also holds an April 2009 Warrant to purchase 75,000 shares with an exercise price of $0.50 per share, which warrant is not exercisable until October 2, 2009, a July 2009 Warrant to purchase 27,500 shares with an exercise price of $1.00 per share, which warrant is not exercisable until January 7, 2010, a July 2009 Warrant to purchase 28,355 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010, and a September 2009 Warrant to purchase 35,608 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010. The fund also has the right, pursuant to a Securities Purchase Agreement dated April 2, 2009, to purchase an additional $30,000 face amount of the April 2009 Notes, which are convertible into 300,000 shares of Common Stock, and a warrant to purchase 75,000 shares with an exercise price of $0.50 per share. The fund also has the right, pursuant to a Consent Agreement dated April 2, 2009, and amended on May 22, 2009 and July 7, 2009, to purchase $19,256 face amount of the April 2009 Notes, which are convertible into 192,560 shares of Common Stock. Rockmore Capital, LLC (“Rockmore Capital”) and Rockmore Partners, LLC (“Rockmore Partners”), each a limited liability company formed under the laws of the State of Delaware, serve as the investment manager and general partner, respectively, to Rockmore Investments (US) LP, a Delaware limited partnership, which invests all of its assets through Rockmore Investment Master Fund Ltd., an exempted company formed under the laws of Bermuda. By reason of such relationships, Rockmore Capital and Rockmore Partners may be deemed to share dispositive power over the shares of Common Stock owned by Rockmore Investment Master Fund Ltd. Rockmore Capital and Rockmore Partners disclaim beneficial ownership of such shares of Common Stock. Rockmore Partners has delegated authority to Rockmore Capital regarding the portfolio management decisions with respect to the shares of Common Stock owned by Rockmore Investment Master Fund Ltd. and, as of September 16, 2009, Mr. Bruce T. Bernstein and Mr. Brian Daly, as officers of Rockmore Capital, are responsible for the portfolio management decisions of the shares of Common Stock owned by Rockmore Investment Master Fund Ltd. By reason of such authority, Messrs. Bernstein and Daly may be deemed to share dispositive power over the shares of Common Stock owned by Rockmore Investment Master Fund Ltd. Messrs. Bernstein and Daly disclaim beneficial ownership of such shares of Common Stock and neither of such persons has any legal right to maintain such authority. No other person has sole or shared voting or dispositive power with respect to the shares of Common Stock as those terms are used for purposes under Regulation 13D-G of the Exchange Act. No person or “group” (as that term is used in Section 13(d) of the Exchange Act, or the SEC’s Regulation 13D-G) controls Rockmore Investment Master Fund Ltd.

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(16)

RRC BioFund, LP has the right to acquire (setting aside for these purposes the restrictions described in footnote 1) 1,225,096 shares of Common Stock, comprised of 528,846 shares of Common Stock and $17,500 of September 2009 Notes, which are convertible into 175,000 shares of Common Stock. The fund also holds an April 2009 Warrant to purchase 75,000 shares with an exercise price of $0.50 per share, which warrant is not exercisable until October 2, 2009, a July 2009 Warrant to purchase 27,500 shares with an exercise price of $1.00 per share, which warrant is not exercisable until January 7, 2010, and a September 2009 Warrant to purchase 43,750 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010. The fund also has the right, pursuant to a Securities Purchase Agreement dated April 2, 2009, to purchase an additional $30,000 face amount of the April 2009 Notes, which are convertible into 300,000 shares of Common Stock, and a warrant to purchase 75,000 shares with an exercise price of $0.50 per share. As manager of RRC Management, LLC, the sole general partner of RRC BioFund, LP, James A. Silverman has the sole authority to vote and dispose of all of the shares held by RRC BioFund, LP.

(17)

Rodman & Renshaw, LLC is a broker-dealer under the Exchange Act.

(18)

Rodman & Renshaw, LLC has the right to acquire (setting aside for these purposes the restrictions described in footnote 1) 13,896,252 shares of Common Stock, comprised of 682,502 shares of Common Stock, $41,554.49 of July 2009 Notes, which are convertible into 415,545 shares of Common Stock, and $5,625.51 of September 2009 Notes, which are convertible into 56,255 shares of Common Stock. They also hold a June 2008 Warrant to purchase 800,000 shares with an exercise price of $1.00 per share, an April 2009 Warrant to purchase 2,916,000 shares with an exercise price of $0.50 per share, which warrant is not exercisable until October 2, 2009, a July 2009 Warrant to purchase 1,827,500 shares with an exercise price of $1.00 per share, which warrant is not exercisable until January 7, 2010, a July 2009 Warrant to purchase 4,303,886 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010, and a September 2009 Warrant to purchase 1,814,064 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010 . Rodman has the right, pursuant to a Securities Purchase Agreement dated April 2, 2009, to purchase an additional $30,000 face amount of the April 2009 Notes, which are convertible into 300,000 shares of Common Stock, and a warrant to purchase 75,000 shares with an exercise price of $0.50 per share. Rodman also has the right, pursuant to a Consent Agreement dated April 2, 2009, and amended on May 22, 2009 and July 7, 2009, to purchase $70,550 face amount of the April 2009 Notes, which are convertible into 705,500 shares of Common Stock. 15,800,000 of the total shares set forth above were acquired by Rodman & Renshaw, LLC as compensation in connection with its service as placement agent to the Company for the June 2008 financing, April 2009 financing, July 2009 financing and September 2009 financing. Dave Horin, the Chief Financial Officer of Rodman & Renshaw, LLC, has sole voting and dispositive power over the shares held by Rodman & Renshaw, LLC.

(19)

MVA Investors LLC, II has the right to acquire (setting aside for these purposes the restrictions described in footnote 1) 2,423,691 shares of Common Stock, comprised of 618,815 shares of Common Stock, $111,448.90 of July 2009 Notes, which are convertible into 1,114,489 shares of Common Stock, and $32,941.16 of September 2009 Notes, which are convertible into 329,412 shares of Common Stock. They also hold a July 2009 Warrant to purchase 278,622 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010, and a September 2009 Warrant to purchase 82,353 shares with an exercise price of $1.00 per share, which warrant is not exercisable until March 4, 2010. MVA Investors LLC, II has sole voting and dispositive power over the Common Stock, the warrants to purchase Common Stock and the notes convertible into Common Stock owned by it. MVA Investors LLC, II is the independent, personal investment vehicle of certain employees of Boxer Capital LLC and Tavistock Life Sciences Company, which is a Delaware corporation and an affiliate of Boxer Capital LLC. As such, MVA Investors LLC, II is not controlled by Boxer Capital, Boxer Asset Management Inc. or Joseph Lewis. Neither Boxer Capital LLC, Boxer Asset Management Inc. nor Mr. Lewis have any voting or dispositive power with regard to the Common Shares held by MVA Investors LLC, II. Investment decisions of MVA Investors LLC II are made by a majority vote of its investment committee. For additional information regarding Boxer Capital LLC, see footnote 11.

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DESCRIPTION OF BUSINESS

Overview

We are a biopharmaceutical company engaged in pharmaceutical (drug) research and development. We are dedicated to the identification, development and commercialization of novel drugs for the treatment of cancer and related diseases. Our research portfolio consists of two major programs: “DNA/RNA Medicines” (which includes our lead oncology drug, Genasense®); and “Small Molecules” (which includes our marketed product, Ganite®, and the investigational compounds tesetaxel and G4544).

The DNA/RNA Medicines program includes drugs that are based on using modifications of either DNA or RNA as drugs that can be used to treat disease. These technologies include antisense, decoys, and small interfering or micro RNAs. Our lead drug from this program is an investigational antisense compound known as Genasense® (oblimersen sodium injection). Genasense® is designed to disrupt a specific mRNA, which then block the production of a protein known as Bcl-2. Current science suggests that Bcl-2 is a fundamental (although not sole) cause of the inherent resistance of cancer cells to anticancer treatments, such as chemotherapy, radiation, and monoclonal antibodies. While Genasense® has displayed some anticancer activity when used alone, we are developing the drug primarily as a means of amplifying the cytotoxic effects of other anticancer treatments.

Genasense®

Melanoma

-31-

AGENDA is designed to expand evidence for the safety and efficacy of Genasense® when combined with dacarbazine for patients who have not previously been treated with chemotherapy. The study prospectively targets patients who have low-normal levels of LDH. In March 2009, we have completed accrual of 315 patients into AGENDA. In May 2009, an analysis by an independent Data Monitoring Committee for both safety and futility indicated that the study passed an evaluation for futility and safety. Accordingly, the Committee recommended that the study should continue to completion. We expect results on the primary assessment of PFS in the fourth quarter of 2009. If those data are positive, we currently expect to submit regulatory applications based upon confirmation that the addition of Genasense® to chemotherapy results in a statistically significant improvement in PFS. Approval by FDA and EMEA will allow Genasense® to be commercialized by us in the U.S. and EU. Genasense® in melanoma has been designated an Orphan Drug in Australia and the U.S., and the drug has received Fast Track designation in the U.S.

We are conducting other trials of Genasense ® in melanoma including a Phase 2 trial of Genasense® plus chemotherapy consisting of Abraxane® (paclitaxel protein-bound particles for injectable suspension) (albumin bound) plus temozolomide (Temodar®). We also expect to examine different dosing regimens that will improve the dosing convenience and commercial acceptance of Genasense®, including its administration by brief 1- hour IV infusions.

CLL

As noted above, our NDA for the use of Genasense® plus chemotherapy in patients with relapsed or refractory CLL was not approved. We conducted a randomized Phase 3 trial in 241 patients with relapsed or refractory CLL who were treated with fludarabine and cyclophosphamide (Flu/Cy) with or without Genasense®. The trial achieved its primary endpoint: a statistically significant increase (17% vs. 7%; P=0.025) in the proportion of patients who achieved a complete response (CR), defined as a complete or nodular partial response. Patients who achieved this level of response also experienced disappearance of predefined disease symptoms. A key secondary endpoint, duration of CR, was also significantly longer for patients treated with Genasense® (median exceeding 36+ months in the Genasense® group, versus 22 months in the chemotherapy-only group).

In June 2008, we announced results from 5 years of follow-up on patients who had been accrued to our completed Phase 3 trial. These data showed that patients treated with Genasense® plus chemotherapy who achieved either a complete response (CR) or a partial response (PR) also achieved a statistically significant increase in survival with chemotherapy alone (median = 56 months vs. 38 months, respectively). After 5 years of follow-up, 22 of 49 (45%) responders in the Genasense® group were alive compared with 13 of 54 (24%) responders in the chemotherapy-only group (hazard ratio = 0.6; P = 0.038). Moreover, with 5 years of follow-up, 12 of 20 patients (60%) in the Genasense® group who achieved CR were alive, 5 of these patients remained in continuous CR without relapse, and 2 additional patients had relapsed but had not required additional therapy. By contrast, only 3 of 8 CR patients in the chemotherapy-only group were alive, all 3 had relapsed, and all 3 had required additional anti-leukemic treatment.

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NHL

Several trials have shown definite evidence of clinical activity for Genasense® in patients with non-Hodgkin’s lymphoma (NHL). We would like to conduct additional clinical studies in patients with NHL to test whether Genasense® can be approved in this indication. Previously, we reported that randomized trials of Genasense® in patients with myeloma, acute myeloid leukemia, (AML), hormone-refractory prostate cancer (HRPC), small cell lung cancer and non small cell lung cancer were not sufficiently positive to warrant further investigation on the dose-schedules that were examined or with the chemotherapy that was employed in these trials. Data from these trials have been presented at various scientific meetings. However, we believe that alternate dosing schedules, in particular the use of brief high-dose IV infusions, provide an opportunity to re-examine the drug’s activity in some of these indications.

Tesetaxel

We have also submitted applications to FDA for designation of tesetaxel as an Orphan Drug for treatment of patients with advanced gastric cancer and for patients with advanced melanoma. Both of these designations were granted. Our initial priority for clinical testing of tesetaxel includes the evaluation of safety and efficacy in patients with advanced gastric cancer. Other disease priorities for clinical research include advanced melanoma and bladder cancer, among other disorders. Maintenance of the license from Daiichi Sankyo requires certain payments that include amortization of licensing fees and milestones. If such payments are not made, Daiichi Sankyo may elect to terminate the license; however, a portion of the licensing fees are due even in the event of termination.

Oral Gallium-Containing Compounds (G4544)

Our third pipeline product is G4544, which is a novel oral formulation of a gallium-containing compound that we developed in collaboration with Emisphere Technologies, Inc. We completed a single-dose Phase 1 study of an initial formulation of this new drug known as “G4544(a)”, the results of which were presented at a scientific meeting in the second quarter of 2008. We are currently contemplating a second study using a modified formulation, known as “G4544(b)”, in order to test whether this formulation will prove more clinically acceptable.

If we are able to identify a clinically and commercially acceptable formulation of G4544 or another oral gallium-containing compound, we currently intend to pursue a 505(b)(2) strategy to establish bioequivalence to our marketed product, Ganite®, for its initial regulatory approval of G4544. We believe a drug of this type may also be broadly useful for treatment of other diseases associated with accelerated bone loss, such as bone metastases, Paget’s disease and osteoporosis. In addition, new uses of gallium-containing compounds have been identified for treatment of certain infectious diseases. While we have no current plans to begin clinical development in the area of infectious disease, we intend to support research conducted by certain academic institutions by providing clinical supplies of our gallium-containing drugs.

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Ganite®

Summary of Business and Research and Development Programs

Our goal is to establish Genta as a biopharmaceutical leader and preferred partner in the oncology market and eventually, as direct marketers of our products in the United States. Our key strategies in this regard are:

•

Build on our core competitive strength of oncology development expertise to establish a leadership position in providing biopharmaceutical products for the treatment of cancer.

•

Expand our pipeline of products in two therapeutic categories, DNA/RNA Medicines and Small Molecules, through internal development, licensing and acquisitions.

•

Establish our lead antisense compound, Genasense®, as the preferred chemosensitizing drug for use in combination with other cancer therapies in a variety of human cancer types; and

•

Establish a sales and marketing presence in the U.S. oncology market.

Research and Development Programs

DNA/RNA Medicines

A number of technologies have been developed using modifications of DNA or RNA. These agents have been used as scientific tools for laboratory use to identify gene function, as diagnostic probes to evaluate diseases, and — more recently — as potential drugs to treat human diseases. Collectively, these technologies include methods known as antisense, RNA interference, micro-RNA, decoys and gene therapy. Founded in 1988, Genta was one of the first companies established to exploit these new technologies for use as potential drugs and we remain broadly committed to research and development of these compounds with a specific focus on cancer medicine, commonly known as oncology. Our most advanced drugs in our DNA/RNA Medicines program involve the use of antisense technology.

Antisense Technology

Most cellular functions, including whether cells live or die, are carried out by proteins. The genetic code for a protein is contained in DNA, which is made up of bases known as nucleotides that are arranged in a specific sequence. The specificity of the sequence accounts for the production of a specific protein. In order for DNA to produce a protein, an intermediate step is required. In this step, DNA is transcribed into messenger RNA, or mRNA. The sequence of mRNA that encodes a protein is oriented in only one direction, which is known as the “sense” orientation.

Antisense drugs are short sequences of chemically modified DNA bases that are called oligonucleotides, or oligos. The oligos are engineered in a sequence that is exactly opposite (hence “anti”) to the “sense” coding orientation of mRNA. Because antisense drugs bind only short regions of the mRNA (rather than the whole message itself), they contain far fewer nucleotides than the whole gene. Moreover, since they are engineered to bind only to the matching sequence on a specific mRNA, antisense drugs have both high selectivity and specificity, which can be used to attack production of a single, disease-causing protein. Genasense® is an antisense oligo that is designed to block the production of Bcl-2.

We have devoted significant resources towards the development of antisense oligos that contain a phosphorothioate backbone, which is the nucleotide chain comprised of ribose and phosphate groups. However, we also have patents and technologies covering later generation technologies that involve mixed backbone structures, as well as sterically fixed chemical bonds, that may further enhance the molecule’s ability to bind to the intended target. Moreover, we have developed certain formulations that can be used to more efficiently increase the uptake of oligos into cells. Some of these advanced technologies may be incorporated into future products from our DNA/RNA Medicines program.

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Genasense® as a Regulator of Apoptosis (“Programmed Cell Death”)

The programmed death of cells, also known as apoptosis, is necessary to accommodate the billions of new cells that are produced daily and also to eliminate aged or damaged cells. However, abnormal regulation of the apoptotic process can result in disease.

Cancer is commonly associated with the over- or under-production of many types of proteins. These proteins may be directly cancer-causing (i.e., “oncogenic”) or they may contribute to the malignant nature of cancer (for instance, by increasing the longevity of cancer cells or making them more likely to spread throughout the body). The ability to selectively halt the production of certain proteins may make the treatment of certain diseases more effective. Apoptosis is regulated by a large number of proteins, particularly members of the Bcl-2 protein family. In an effort to make existing cancer therapy more effective, we are developing Genasense® to target and block the production of Bcl-2, a protein that is central to the process of apoptosis.

Bcl-2 as an Inhibitor of Programmed Cell Death

Normally, when a cancer cell is exposed to treatment, such as with chemotherapy, radiation or immunotherapy, a “death signal” is sent to an organelle within the cell called the mitochondrion. The mitochondrion then releases a factor known as cytochrome C that activates a series of enzymes called caspases. These enzymes cause widespread fragmentation of cellular proteins and DNA, which ultimately causes cell death.

Bcl-2 is normally found in the mitochondrial membrane where it regulates the release of cytochrome C. High levels of Bcl-2 are associated with most types of human cancer, including major hematologic cancers such as lymphomas, myeloma, and leukemia, and solid tumors such as melanoma and cancers of the lung, colon, breast and prostate. In these diseases, Bcl-2 inhibits the release of cytochrome C that would ordinarily be triggered by cancer therapy. Thus, Bcl-2 appears to be a major contributor to both inherent and acquired resistance to cancer treatments. Overcoming resistance to chemotherapy poses a major challenge for cancer treatment.

In cancer cells, Bcl-2 inhibits the process of programmed cell death, thereby allowing cells to survive for much longer than normal cells. Genasense® has been developed as a chemosensitizing drug to block production of Bcl-2, thereby dramatically increasing the sensitivity of cancer cells to standard cancer treatment.

Genasense®

Genasense® has been designed to block the production of Bcl-2. Current science suggests that Bcl-2 is a fundamental — although not sole — cause of the inherent resistance of cancer cells to most types of existing anticancer treatments, such as chemotherapy, radiation or monoclonal antibodies. Blocking Bcl-2, therefore, may enable cancer treatments to be more effective. While Genasense® has displayed some anticancer activity when used by itself, we believe the drug can be optimally used as a means of amplifying the effectiveness of other cancer therapies, most of which function by triggering apoptosis, which, as noted, is relatively blocked in cancer cells due to over-production of Bcl-2.

Overview of Preclinical and Clinical studies of Genasense®

Preclinical Studies

A number of preclinical studies in cell lines and in animals have shown enhancement of tumor cell killing when Bcl-2 antisense was used in combination with standard cancer therapies, including anti-metabolites, alkylating agents, corticosteroids, other cytotoxic chemotherapy, radiation and monoclonal antibodies. Several studies have demonstrated enhanced antitumor activity and durable tumor regression in animals engrafted with human cancers that were treated with Bcl-2 antisense followed by antitumor agents that induce programmed cell death. These studies include human lymphoma, melanoma, breast cancer and prostate cancers, which were treated with Genasense® in combination with cyclophosphamide, dacarbazine, docetaxel and paclitaxel, respectively.

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Clinical Studies

Genasense® has been in clinical trials since 1995. We currently have efficacy and safety data on over 2,000 patients in Phase 1, Phase 2 and Phase 3 clinical trials that have been conducted in the U.S., Europe, South America and Australia. These studies have included patients with a wide variety of tumor types, including advanced melanoma, several types of acute and chronic leukemia, NHL, multiple myeloma and cancers of the prostate, colon, lung, breast and other tumor types. Since 2001, Genta and its collaborators have jointly initiated approximately twenty clinical trials. Results of these clinical trials suggest that Genasense® can be administered to cancer patients with acceptable side-effects and that such treatment may reduce the level of Bcl-2 protein in cancer cells. The results of most of these trials have been publicly presented at scientific meetings and/or published in peer-reviewed scientific journals.

Based on work accomplished to date, we have focused on three indications for Genasense®: melanoma; CLL; and non-Hodgkin’s lymphoma. In addition, we have sought to develop treatment methods for Genasense® that do not involve the use of continuous IV infusions.

In the first quarter of 2007, we completed a trial using a concentrated solution of Genasense® administered by bolus subcutaneous injection. This trial showed that a total dose of 225 mg could be administered as a single subcutaneous injection, which is approximately equivalent to the daily dose used in the Phase 3 trial of Genasense® in CLL. The limiting reaction in this study was a localized and reversible skin rash. In 2007, we began a new Phase 1 trial of Genasense® administered as an IV infusion over 2 hours. This trial showed that the maximally tolerable dose was 900 mg, and we have now advanced that study into a trial at that dose administered twice per week. We have also continued to escalate the single dose of Genasense® up to a total of 1200 mg over 2 hours. The pharmacokinetic and pharmacodynamic data from these trials may be useful for determining whether the prior requirement for treatment by continuous IV infusion can ultimately be eliminated by these more convenient dosing regimens.

For additional background information on the drug application process and clinical trials, see “Government Regulation.”

Ganite®

Ganite® as a Treatment for Cancer-Related Hypercalcemia

In October 2003, we began marketing Ganite® for the treatment of cancer-related hypercalcemia. Ganite® is our first drug to receive marketing approval. The principal patent covering the use of Ganite® for its approved indication, including potential extensions under Hatch-Waxman provisions in the U.S., expired in April 2005.

Hypercalcemia is a life-threatening condition caused by excessive buildup of calcium in the bloodstream, which may occur in up to 20% of cancer patients. Gallium nitrate was originally studied by the NCI as a new type of cancer chemotherapy. More than 1,000 patients were treated in Phase 1 and Phase 2 trials, and the drug showed promising antitumor activity against NHL, bladder cancer and other diseases. In the course of these studies, gallium nitrate was also shown to strongly inhibit bone resorption. Gallium nitrate underwent additional clinical testing and was approved by the FDA in 1991 as a treatment for cancer-related hypercalcemia. Lower doses of Ganite® were also tested in patients with less severe bone loss, including bone metastases, a cancer that has spread to bone, Paget’s disease, an affliction of older patients that causes pain and disability, and osteoporosis.

Side effects of Ganite® include nausea, diarrhea and kidney damage. (A complete listing of Ganite®’s side effects is contained in the product’s Package Insert that has been reviewed and approved by the FDA.)

In May 2004, we eliminated our sales force and significantly reduced our marketing support for Ganite®. Since then, we have continued only minimal marketing support of the product. On March 2, 2006, we announced publication of a randomized, double blind, Phase 2 trial that showed Ganite® was highly effective when compared with Aredia® (pamidronate disodium; Novartis, Inc.) in hospitalized patients with cancer-related hypercalcemia.

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Ganite® as a Treatment for Non-Hodgkin’s Lymphoma and Other Cancer Types

Based on previously published data, Ganite® showed clear anticancer activity in patients with certain types of cancer, particularly NHL. Due to patent expirations previously described, we do not plan further clinical trials for Ganite® as an anticancer drug.

Other Pipeline Products and Technology Platforms

Oral Gallium-Containing Compounds

We have sought to develop novel formulations of gallium-containing compounds that can be taken orally and that will have extended patent protection. Such formulations might be useful for diseases in which long-term low-dose therapy is deemed desirable, such as bone metastases, Paget’s disease and osteoporosis. In March 2006, Genta and Emisphere Technologies, Inc. announced that the two companies had entered into an exclusive worldwide licensing agreement to develop an oral formulation of a gallium-containing compound. A number of candidate formulations have been developed in this collaboration. In August 2007, we announced submission of an Investigational New Drug Application, or IND, to the Endocrinologic and Metabolic Drugs Division of the FDA for a new drug known as G4544. G4544 is a new tablet formulation that enables oral absorption of the active ingredient contained in Ganite®. Results of the initial clinical trial were presented at a scientific meeting in the second quarter of 2008. In January 2009, we announced that two new patents related to the Company’s franchise in gallium-containing products have issued in the United States. Applications similar to these patents are pending worldwide, and several additional applications that address other compositions and uses have been filed in the U.S. and other territories. These patents and filings provide for claims of compositions and uses of gallium compounds that can be taken by mouth over extended periods for treatment of skeletal diseases as well as other indications. Progress in the clinical development of G4544 program was delayed in 2008 due to financial constraints, but we currently expect to continue our program when our financial condition improves.

Antisense and RNAi Research and Discovery

We have had several other oligonucleotide-based discovery programs and collaborations devoted to the identification of both antisense- and RNAi-based inhibitors of oncology gene targets. However, spending on these research programs was sharply reduced due to financial constraints. We have no current agents that we consider “lead compounds” that would justify advancement into late-stage preclinical testing.

We intend to continue to evaluate novel nucleic acid chemistries, through sponsored research and collaborative agreements, depending upon the availability of resources.

Patents and Proprietary Technology

It is our policy to protect our technology by filing patent applications with respect to technologies important to our business development. To maintain our competitive position, we also rely upon trade secrets, unpatented know-how, continuing technological innovation, licensing opportunities and certain regulatory approvals (such as orphan drug designations).

We own or have licensed several patents and applications to numerous aspects of oligonucleotide technology, including novel compositions of matter, methods of large-scale synthesis, methods of controlling gene expression and methods of treating disease. our patent portfolio includes approximately 65 granted patents and 66 pending applications in the U.S. and foreign countries. We endeavor to seek appropriate U.S. and foreign patent protection on our oligonucleotide technology.

We have licensed ten U.S. patents relating to the composition of Genasense® and its backbone chemistry that expire between 2008 and 2015. The U.S. composition patents for Genasense may be eligible for extension under Waxman-Hatch provisions. Corresponding patent applications have been filed in three foreign countries. We also own five U.S. patent applications relating to methods of using Genasense® expected to expire in 2020 and 2026, with approximately 50 corresponding foreign patent applications and granted patents.

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Included among our intellectual property rights are certain rights licensed from the NIH covering phosphorothioate oligonucleotides. We also acquired from the University of Pennsylvania exclusive rights to antisense oligonucleotides directed against the Bcl-2 mRNA, as well as methods of their use for the treatment of cancer. The claims of the University of Pennsylvania patents cover our proprietary antisense oligonucleotide molecules, which target the Bcl-2 mRNA, including Genasense® and methods employing them. Other related U.S. and corresponding foreign patent applications are still pending.

Tesetaxel, its potential uses, composition, and methods of manufacturing are covered under a variety of patents licensed exclusively from Daiichi Sankyo, Inc. We believe that composition-of-matter claims on tesetaxel extend to at least 2020 in the U.S. and Europe and to 2022 in Japan. A number of other patents have been filed worldwide for this compound.

The principal patent covering the use of Ganite® for its approved indication, including extensions expired in April 2005.

The patent positions of biopharmaceutical and biotechnology firms, including Genta, can be uncertain and can involve complex legal and factual questions. Consequently, even though we are currently pursuing our patent applications with the United States and foreign patent offices, we do not know whether any of our applications will result in the issuance of any patents, or if any issued patents will provide significant proprietary protection, or even if successful that these patents will not be circumvented or invalidated. Even if issued, patents may be circumvented or challenged and invalidated in the courts. Because some applications in the United States are kept in secrecy until an actual patent is issued, we cannot be certain that others have not filed patent applications directed at inventions covered by our pending patent applications, or that we were the first to file patent applications for such inventions. Thus, we may become involved in interference proceedings declared by the U.S. Patent and Trademark Office (or comparable foreign office or process) in connection with one or more of our patents or patent applications to determine priority of invention, which could result in substantial costs to us, as well as an adverse decision as to priority of invention of the patent or patent application involved.

Competitors or potential competitors may have filed applications for, or have received patents and may obtain additional patents and proprietary rights relating to, compounds or processes competitive with those of ours. Accordingly, there can be no assurances that our patent applications will result in issued patents or that, if issued, the patents will afford protection against competitors with similar technology. We cannot provide assurance that any patents issued to us will not be infringed or circumvented by others, nor can there be any assurance that we will obtain necessary patents or technologies or the rights to use such technologies.

In addition, there may be patents which are unknown to us and which may block our ability to make, use or sell our product. We may be forced to defend ourselves against charges of infringement or we may need to obtain expensive licenses to continue our business. See the above Risk Factor entitled “We may be unable to obtain or enforce patents, other proprietary rights and licenses to protect our business; we could become involved in litigation relating to our patents or licenses that could cause us to incur additional costs and delay or prevent our introduction of new drugs to market”.

We also rely upon unpatented trade secrets. No assurances can be given as to whether third parties will independently develop substantially equivalent proprietary information and techniques, or gain access to our trade secrets, or disclose such technologies to the public, or that we can meaningfully maintain and protect unpatented trade secrets.

We require our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors to execute confidentiality agreements with us. These agreements generally provide that all confidential information developed or made known to an individual during the course of the individual’s relationship with us shall be kept confidential and shall not be disclosed to third parties except in specific circumstances. In the case of employees, the agreement generally provides that all inventions conceived by the individual shall be assigned to us, and made our exclusive property. There can be no assurance, however, that these agreements will provide meaningful protection to our trade secrets, or guarantee adequate remedies in the event of unauthorized use or disclosure of confidential proprietary information or in the event of an employee’s refusal to assign any patents to us in spite of his/her contractual obligation.

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Research and Development

In addition to our current focus in the areas described above, we continually evaluate our programs in light of the latest market information and conditions, the availability of third party funding, technological advances, financial liquidity and other factors. As a result of such evaluations, we change our product development plans from time to time and anticipate that we will continue to do so. We recorded research and development expenses of $20.0 million, $13.5 million and $28.1 million during the years ended December 31, 2008, 2007 and 2006, respectively.

Sales and Marketing

Currently we do not have a sales force. Personnel who had been hired into our sales teams were terminated following workforce reductions that took place in 2004 and 2006, owing to adverse regulatory decisions. W. Lloyd Sanders, who is presently Senior Vice President and Chief Operating Officer, was hired in January 2006 to run our sales and marketing programs.

At the present time, we do not contemplate rebuilding a sales and marketing infrastructure in the United States absent favorable regulatory actions on Genasense®. For international product sales, we may distribute our products through collaborations with third parties.

Manufacturing and Raw Materials

Our ability to conduct clinical trials on a timely basis, to obtain regulatory approvals and to commercialize our products will depend in part upon our ability to manufacture our products, either directly or through third parties, at a competitive cost and in accordance with applicable FDA and other regulatory requirements, including current Good Manufacturing Practice regulations.

We currently rely on third parties to manufacture our products. We have a manufacturing and supply agreement with Avecia Biotechnology, Inc., or Avecia, a leading multinational manufacturer of pharmaceutical products, to supply quantities of Genasense®. This agreement renews automatically at the end of each year, unless either party gives one-year notice. We are not obligated to purchase further drug substance from Avecia prior to approval of Genasense®. We believe this agreement is sufficient for our production needs with respect to Genasense®.

For Ganite® we have a manufacturing and supply agreement with Johnson Matthey Inc. that renews automatically at the end of each year, unless either party gives one-year notice. Under the agreement, we will purchase a minimum of 80% of our requirements for quantities of Ganite®; however, there are no minimum purchase requirements.

For tesetaxel, we are currently evaluating new suppliers of both bulk drug substance and finished goods with the intent of completely replacing the supply chain that was previously used to manufacture this compound. Until the new supply chain is established, we will continue to use investigational supplies of the compound that was manufactured and is currently in inventory at Daiichi Sankyo Company, Ltd.

The raw materials that we require to manufacture our drugs are available only from a few suppliers. Under the terms of our manufacturing and supply agreement, Avecia is responsible for procuring the raw materials needed to manufacture Genasense®. We believe that we have adequately addressed our needs for suppliers of raw materials to manufacture Genasense® and Ganite® and to meet future customer demand.

Human Resources

As of September 22, 2009, we had 23 employees, 7 of whom hold doctoral degrees. As of that date, there were 17 employees engaged in research, development and other technical activities and 6 in administration. None of our employees are represented by a union. Most of our management and professional employees have had prior experience and positions with pharmaceutical and biotechnology companies. We believe we maintain satisfactory relations with our employees and have not experienced interruptions of operations due to employee relations issues.

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Government Regulation

Regulation by governmental authorities in the United States and foreign countries is a significant factor in our ongoing research and product development activities and in the manufacture and marketing of our proposed products. All of our therapeutic products will require regulatory approval by governmental agencies prior to commercialization. In particular, human therapeutic products are subject to rigorous preclinical and clinical testing and pre-market approval procedures by the FDA and similar authorities in foreign countries. Various federal, and in some cases, state statutes and regulations, also govern or affect the development, testing, manufacturing, safety, labeling, storage, recordkeeping and marketing of such products. The lengthy process of seeking these approvals, and the subsequent compliance with applicable federal and, in some cases, state statutes and regulations, require substantial expenditures. Any failure by us, our collaborators or our licensees to obtain, or any delay in obtaining, regulatory approvals could adversely affect the marketing of our products and our ability to receive products or royalty revenue.

The activities required before a new pharmaceutical agent may be marketed in the United States begin with preclinical testing. Preclinical tests include laboratory evaluation of product chemistry and animal studies to assess the potential safety and efficacy of the product and its formulations. The results of these studies must be submitted to the FDA as part of an IND. An IND becomes effective within 30 days of filing with the FDA unless the FDA imposes a clinical hold on the IND. In addition, the FDA may, at any time, impose a clinical hold on ongoing clinical trials. If the FDA imposes a clinical hold, clinical trials cannot commence or recommence, as the case may be, without prior FDA authorization, and then only under terms authorized by the FDA.

Clinical trials are generally categorized into four phases.

Phase 1 trials are initial safety trials on a new medicine in which investigators attempt to establish the dose range tolerated by a small group of patients using single or multiple doses, and to determine the pattern of drug distribution and metabolism.

Phase 2 trials are clinical trials to evaluate efficacy and safety in patients afflicted with a specific disease. Typically, Phase 2 trials in oncology comprise 14 to 50 patients. Objectives may focus on dose-response, type of patient, frequency of dosing or any of a number of other issues involved in safety and efficacy.

In the case of products for life-threatening diseases, the initial human testing is generally done in patients rather than in healthy volunteers. Since these patients are already afflicted with the target disease, it is possible that such studies may provide results traditionally obtained in Phase 2 trials.

Phase 3 trials are usually multi-center, comparative studies that involve larger populations. These trials are generally intended to be pivotal in importance for the approval of a new drug. In oncology, Phase 3 trials typically involve 100 to 1,000 patients for whom the medicine is eventually intended. Trials are also conducted in special groups of patients or under special conditions dictated by the nature of the particular medicine and/or disease. Phase 3 trials often provide much of the information needed for the package insert and labeling of the medicine. A trial is fully enrolled when it has a sufficient number of patients to provide enough data for the statistical proof of efficacy and safety required by the FDA and others. After a sufficient period of follow-up has elapsed to satisfactorily evaluate safety and efficacy, the trials’ results can then be analyzed. Those results are then commonly reported at a scientific meeting, in a medical journal and to the public.

Depending upon the nature of the trial results, a company may then elect to discuss the results with regulatory authorities such as the FDA. If the company believes the data may warrant consideration for marketing approval of the drug, the results of the preclinical and clinical testing, together with chemistry, manufacturing and control information, are then submitted to the FDA for a pharmaceutical product in the form of an NDA. In responding to an NDA, biologics license application or premarket approval application, the FDA may grant marketing approval, request additional information or deny the application if it determines that the application does not satisfy its regulatory approval criteria. There can be no assurance that the approvals that are being sought or may be sought by us in the future will be granted on a timely basis, if at all, or, if granted, will cover all the clinical indications for which we are seeking approval or will not contain significant limitations in the form of warnings, precautions or contraindications with respect to conditions of use. Phase 3b trials are conducted after submission of a NDA, but before the product’s approval for market launch. Phase 3b trials may supplement or complete earlier trials, or they may seek different kinds of information, such as quality of life or marketing. Phase 3b is the period between submission for approval and receipt of marketing authorization.

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After a medicine is marketed, Phase 4 trials provide additional details about the product’s safety and efficacy.

In circumstances where a company intends to develop and introduce a novel formulation of an active drug ingredient already approved by the FDA, clinical and preclinical testing requirements may not be as extensive. Limited additional data about the safety and/or effectiveness of the proposed new drug formulation, along with chemistry and manufacturing information and public information about the active ingredient, may be satisfactory for product approval. Consequently, the new product formulation may receive marketing approval more rapidly than a traditional full new drug application; although no assurance can be given that a product will be granted such treatment by the FDA.

Under European Union regulatory systems, we may submit requests for marketing authorizations either under a centralized or decentralized procedure. The centralized procedure provides for the grant of a single marketing authorization that is valid for all European Union member states. The decentralized procedure provides for mutual recognition of national approval decisions. Under this procedure, the holder of a national marketing authorization from a European state may submit an application to the remaining member states. Within 90 days of receiving the applications and assessment report, each member state must decide whether to recognize approval.

We and our third-party manufacturers are also subject to various foreign, federal, state and local laws and regulations relating to health and safety, laboratory and manufacturing practices, the experimental use of animals and the use, manufacture, storage, handling and disposal of hazardous or potentially hazardous substances, including radioactive compounds and infectious disease agents, used in connection with our research and development work and manufacturing processes. We currently incur costs to comply with laws and regulations and these costs may become more significant.

Competition

In many cases, our products under development will be competing with existing therapies for market share. In addition, a number of companies are pursuing the development of antisense technology and controlled-release formulation technology and the development of pharmaceuticals utilizing such technologies. We compete with fully integrated pharmaceutical companies that have substantially more experience, financial and other resources and superior expertise in research and development, manufacturing, testing, obtaining regulatory approvals, marketing and distribution. Smaller companies may also prove to be significant competitors, particularly through their collaborative arrangements with large pharmaceutical companies or academic institutions. Furthermore, academic institutions, governmental agencies and other public and private research organizations have conducted and will continue to conduct research, seek patent protection and establish arrangements for commercializing products. Such products may compete directly with any products that may be offered by us.

Our competitive position also depends upon our ability to attract and retain qualified personnel, obtain patent protection, or otherwise develop proprietary products or processes and secure sufficient capital resources for the often-substantial period between technological conception and commercial sales.

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Available Information

Our reports that have been filed with the Securities and Exchange Commission, or SEC, are available on our website free of charge, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, Forms 3, 4 and 5 filed on behalf of directors and executive officers and any amendments to such reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Copies of our Annual Report on Form 10-K may also be obtained without charge electronically or by paper by contacting the Company at (908) 286-9800.

In addition, we make available on our website (i) the charters for the committees of the Board of Directors, including the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, (ii) the Company’s Code of Business Conduct (the Code of Conduct) governing its directors, officers. Within the time period required by the SEC, we will post on our website any modifications to the Code of Business Conduct and Ethics, as required by the Sarbanes-Oxley Act of 2002.

The public may also read and copy the materials we file with the SEC at its Public Reference Room at 100 F Street, N.E., Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a web site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding companies that file electronically with the SEC.

DESCRIPTION OF PROPERTY

We lease approximately 25,000 square feet of office space in Berkeley Heights, New Jersey. Our annual rental costs for this space are approximately $0.7 million. Our lease on this space terminates in 2010.

LEGAL PROCEEDINGS

In September 2008, several shareholders of our Company, on behalf of themselves and all others similarly situated, filed a class action complaint against our Company, our Board of Directors, and certain of our executive officers in Superior Court of New Jersey, captioned Collins v. Warrell, Docket No. L-3046-08. The complaint alleged that in issuing convertible notes, our Board of Directors, and certain officers breached their fiduciary duties, and our Company aided and abetted the breach of fiduciary duty. On March 20, 2009, the Superior Court of New Jersey granted the motion of our Company to dismiss the class action complaint and dismissed the complaint with prejudice. The plaintiffs have filed a notice of appeal to the Appellate Division of the Superior Court from the order dismissing this case. On May 13, 2009, the plaintiffs filed a motion for relief from judgment based on a claim of new evidence, which was denied on June 12, 2009. The plaintiffs also asked the Appellate Division for a temporary remand to permit the Superior Court judge to resolve the issues of the new evidence plaintiffs sought to raise. By order dated June 25, 2009, and filed on July 6, 2009, the Appellate Division granted the motion for temporary remand, and directed the issues on remand to be resolved in 30 days. A hearing on the plaintiffs’ motion was held on July 31, 2009, at which time the Court permitted letter briefing on the issues raised during that hearing. The plaintiffs submitted a letter brief on August 3, 2009, and the Company submitted a letter brief on August 5, 2009. By order dated August 28, 2009, the Court denied plaintiffs’ motion for relief from judgment. Pursuant to the Superior Court’s previous orders, the matter will now proceed in the appellate court. The defendants intend to continue their vigorous defense of this matter.

In November 2008, a complaint against our Company and its transfer agent, BNY Mellon Shareholder Services, was filed in the Supreme Court of the State of New York by an individual stockholder. The complaint alleges that our Company and our transfer agent caused or contributed to losses suffered by the stockholder. Our Company denies the allegations of this complaint and intends to vigorously defend this lawsuit.

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PRICE RANGE OF COMMON STOCK

Our common stock was traded on the NASDAQ Global Market under the symbol “GNTA” until May 7, 2008. The following table sets forth the high and low prices per share of our common stock, as reported on the NASDAQ Global Market, for the periods indicated.

	High*		Low*
2007
First Quarter	$	168.00	$	93.00
Second Quarter	$	123.00	$	84.00
Third Quarter	$	90.00	$	40.00
Fourth Quarter	$	65.50	$	26.00

2008
First Quarter	$	43.50	$	18.50
Second Quarter (through May 7, 2008)	$	22.50	$	7.50

*	all figures have been retroactively adjusted to reflect a 1-for-50 reverse stock split effected in June 2009.

Our common stock began trading on the OTC Bulletin Board under the symbol “GNTA.OB” on May 7, 2008. As a result of a reverse stock split effected on June 26, 2009, our symbol was changed to “GETA.OB.” The following table sets forth the high and low prices per share of our common stock, as reported on the OTC Bulletin Board, for the periods indicated.

	High*		Low*
2008
Second Quarter (from May 7, 2008)	$	20.50	$	5.00
Third Quarter	$	37.50	$	12.50
Fourth Quarter	$	20.00	$	0.135

2009
First Quarter	$	15.50	$	0.145
Second Quarter	$	1.06	$	0.27
Third Quarter (through September 16, 2009)	$	0.58	$	0.34

*	all figures prior to June 26, 2009 have been retroactively adjusted to reflect a 1-for-50 reverse stock split effected in June 2009.

The closing price of our common stock on the OTC Bulletin Board on September 16, 2009 was $0.58 per share. There were 120 holders of record of our common stock as of September 16, 2009. We estimate that there are approximately 19,250 beneficial owners of our common stock.

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EQUITY COMPENSATION PLAN INFORMATION

The following table provides information as of December 31, 2008 with respect to the shares of our common stock that may be issued under our existing equity compensation plans.

Plan Category	Number of Securities to Be Issued Upon Exercise of Outstanding Options and Rights		Weighted-Average Exercise Price of Outstanding Options and Rights			Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the First Column)
Equity compensation plans approved by security holders(1)		39,594	$	1,053.50	(2)		3,070	(3)
Equity compensation plans not approved by security holders		—					—
Total		39,594	$	1,053.50			3,070

(1)	Consists of the 1998 Stock Incentive Plan and the Non-Employee Directors’ 1998 Stock Option Plan.

(2)

This calculation takes into account the 5,070 shares of Common Stock subject to outstanding restricted stock units. Such shares will be issued at the time the restricted stock units vest, without any cash consideration payable for those shares. If the calculation did not take into account the 5,070 shares of Common Stock subject to outstanding restricted stock units, the weighted-average exercise price of outstanding options would be $1,188.50.

(3)	Consists of shares available for future issuance under the Non-Employee Directors’ 1998 Stock Option Plan.

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SELECTED FINANCIAL INFORMATION

The following tables summarize our selected financial information. You should read the selected financial information together with our consolidated financial statements and the related notes appearing at the end of this prospectus, and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and other financial information included in this prospectus.

	Six Months ended June 30, 2009			Year Ended December 31, (in thousands except per share amounts)
	(Unaudited)			2008			2007			2006			2005			2004
Consolidated Statements of Operations Data:
License fees & royalties	$	—		$	—		$	—		$	—		$	5,241		$	3,022
Development funding		—			—			—			—			20,988			12,105
Product sales — net		131			363			580			708			356			(512	)
Total revenues		131			363			580			708			26,585			14,615
Costs of goods sold		1			102			90			108			52			170
Provision for excess inventory		—			—			—			—			—			1,350
Total cost of goods sold		—			102			90			108			52			1,520
Operating expenses — gross		10,112			33,410			26,116			59,764			37,006			101,324
sanofi-aventis reimbursement		—			—			—			—			(6,090	)		(43,292	)
Operating expenses — net		10,112			33,410			26,116			59,764			30,916			58,032

Gain on forgiveness of debt		—			—			—			—			1,297			11,495
Amortization of deferred financing costs and debt discount		(16,912	)		(11,229	)		—			—			—			—
Fair value — conversion feature liability		(19,040	)		(460,000	)		—			—			—			—
Fair value — warrant liability		(7,655	)		(2,000	)		—			—			—			—
All other (expense)/income-net		(561	)		(1,435	)		836			1,454			502			(147	)
Loss before income taxes		(54,149	)		(507,813	)		(24,790	)		(57,710	)		(2,584	)		(33,589	)
Income tax benefit		—			1,975			1,470			929			381			904
Net loss	$	(54,149	)	$	(505,838	)	$	(23,320	)	$	(56,781	)	$	(2,203	)	$	(32,685	)
Net loss per basic and diluted common share *	$	(1.24	)	$	(455.09	)	$	(39.36	)	$	(125.88	)	$	(6.42	)	$	(122.87	)

Shares used in computing net loss per basic and diluted common share*		43,575			1,112			592			451			343			266

*	all figures prior to June 26, 2009 have been retroactively adjusted to reflect a 1-for-50 reverse stock split effected in June 2009.

	At June 30, 2009 (unaudited)			At December 31, (in thousands)
				2008			2007		2006		2005		2004
Balance Sheet Data:
Cash, cash equivalents and marketable securities	$	696		$	4,908		$	7,813	$	29,496	$	21,282	$	42,247
Working capital (deficit)		(10,686	)		(5,220	)		877		12,682		11,703		(4,269	)
Total assets		10,250			12,693			29,293		51,778		27,386		50,532
Total stockholders’ equity (deficit)		(4,332	)		(4,864	)		2,931		14,642		15,697		1,752

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SUPPLEMENTARY FINANCIAL INFORMATION

The following table presents our condensed operating results for each of the eight (8) fiscal quarters through the period ended June 30, 2009. The information for each of these quarters is unaudited. In the opinion of management, all necessary adjustments, which consist only of normal and recurring accruals, have been included to fairly present the unaudited quarterly results. This data should be read together with our consolidated financial statements and the notes thereto, the Report of Independent Registered Public Accounting Firm and Management’s Discussions and Analysis of Financial Condition and Results of Operations.

	Three Months Ended (unaudited) (in thousands except per share amounts)
	Jun 30 2009			Mar 31 2009			Dec 31 2008		Sep 30 2008		June 30 2008			Mar 31 2008			Dec 31 2007			Sep 30 2007
Total revenues	$	68		$	62		$	—	$	115	$	131		$	117		$	266		$	115
Net income/(loss)	$	(43,082	)	$	(11,067	)	$	29,569	$	212,613	$	(738,364	)	$	(9,657	)	$	(1,748	)	$	(7,732	)
Net income/(loss) per basic common share: *	$	(0.63	)	$	(0.61	)	$	12.90	$	289.22	$	(1,004.58	)	$	(14.29	)	$	(2.85	)	$	(12.63	)
Net income/(loss) per diluted common share: *	$	(0.63	)	$	(0.61	)	$	1.08	$	5.12	$	(1,004.58	)	$	(14.29	)	$	(2.85	)	$	(12.63	)
Shares used in computing basic per common share amounts: *		68,870			17,999			2,292		735		735			676			612			612
Shares used in computing diluted per common share amounts: *		68,870			17,999			27,401		41,524		735			676			612			612

*	all figures prior to June 26, 2009 have been retroactively adjusted to reflect a 1-for-50 reverse stock split effected in June 2009.

-46-

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Overview

Genta Incorporated is a biopharmaceutical company engaged in pharmaceutical research and development. We are dedicated to the identification, development and commercialization of novel drugs for the treatment of cancer and related diseases. Our research portfolio consists of two major programs: DNA/RNA Medicines (which includes our lead oncology drug, Genasense®); and Small Molecules (which includes our marketed product, Ganite®, and the investigational compounds tesetaxel and G4544). We have had recurring annual operating losses since inception and we expect to incur substantial operating losses due to continued requirements for ongoing and planned research and development activities, pre-clinical and clinical testing, manufacturing activities, regulatory activities and the eventual establishment of a sales and marketing organization.

From our inception to June 30, 2009, we have incurred a cumulative net deficit of $998.3 million. Our recurring losses from operations and our negative cash flow from operations raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. We expect that such losses will continue at least until our lead product, Genasense®, is approved by one or more regulatory authorities for commercial sale in one or more indications. Achievement of profitability is currently dependent on the timing of Genasense® regulatory approvals. We have experienced significant quarterly fluctuations in operating results and we expect that these fluctuations in revenues, expenses and losses will continue.

Irrespective of whether regulatory applications, such as a New Drug Application (NDA) or Marketing Authorization Application (MAA), for Genasense® are approved, we anticipate that we will require additional cash in order to maximize the commercial opportunity and continue its clinical development opportunities. Alternatives available to us to sustain our operations include collaborative agreements, equity financing, debt and other financing arrangements with potential corporate partners and other sources. However, there can be no assurance that any such collaborative agreements or other sources of funds will be available on favorable terms, if at all. We will need substantial additional funds before we can expect to realize significant product revenue.

We had $0.7 million of cash and cash equivalents on hand at June 30, 2009. Cash used in operating activities during the first six months of 2009 was $9.5 million.

On June 9,