Amendment No.4 to S-1

As filed with the Securities and Exchange Commission on January 9, 2006

Registration No. 333-128765

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Pre-effective Amendment No. 4

Form S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Iomai Corporation

(Exact name of Registrant as specified in its charter)


Delaware	2834	52-2049149
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

20 Firstfield Road, Suite 250

Gaithersburg, Maryland 20878

(301) 556-4500

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

Stanley C. Erck

Chief Executive Officer

Iomai Corporation

20 Firstfield Road, Suite 250

Gaithersburg, Maryland 20878

(301) 556-4500

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

Copies to:


Paul M. Kinsella Ropes & Gray LLP One International Place Boston, MA 02110-2624 Phone: (617) 951-7000 Fax: (617) 951-7050		Frederick W. Kanner Glenn R. Pollner Dewey Ballantine LLP 1301 Avenue of the Americas New York, NY 10019-6092 Phone: (212) 259-8000 Fax: (212) 259-6333

Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective.

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: o

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: o

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

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


CALCULATION OF REGISTRATION FEE

		Proposed Maximum	Proposed Maximum
Title of Each Class of Securities to	Amount to be	Offering Price	Aggregate	Amount of
be Registered	Registered(1)	Per Share(2)	Offering Price(1)(2)	Registration Fee(3)

Common Stock, $0.01 par value per share	7,187,500	$13.00	$93,437,500	$10,058



(1)	Includes offering price of shares that the underwriters have the option to purchase to cover over-allotments, if any.



(2)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) of the Securities Act of 1933, as amended.



(3)	Previously paid in the amount of $10,152 on October 3, 2005 in connection with the initial filing of this registration statement.

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 Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.


PRELIMINARY PROSPECTUS	SUBJECT TO COMPLETION	January 9, 2006

6,250,000 Shares

Common Stock

This is the initial public offering of our common stock. No public market currently exists for our common stock. We are offering all of the 6,250,000 shares of our common stock offered by this prospectus. We expect the public offering price to be between $11.00 and $13.00 per share.

We have applied to have our common stock included for quotation on The Nasdaq National Market under the symbol “IOMI.”

Certain of our existing stockholders and their affiliated entities have indicated an interest in purchasing up to $11.5 million of our common stock in this offering at the public offering price, or up to 958,333 shares of our common stock at an assumed public offering price of $12.00 per share. Although we expect these stockholders to purchase these shares of common stock, indications of interest are not binding agreements or commitments to purchase.

Investing in our common stock involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our common stock in “Risk factors” beginning on page 7 of this prospectus.

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.


	Per share	Total

Public offering price	$	$

Underwriting discounts and commissions	$	$

Proceeds, before expenses, to us	$	$

The underwriters may also purchase up to an additional 937,500 shares of our common stock at the public offering price, less the underwriting discounts and commissions payable by us, to cover over-allotments, if any, within 30 days from the date of this prospectus. If the underwriters exercise this option in full, the total underwriting discounts and commissions will be $ and our total proceeds, before expenses, will be $ .

The underwriters are offering the common stock as set forth under “Underwriting.” Delivery of the shares will be made on or about , 2006.


UBS Investment Bank	SG Cowen & Co.


First Albany Capital	Susquehanna Financial Group, LLLP

You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with additional information or information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of shares of our common stock.

TABLE OF CONTENTS


Prospectus summary			1
Risk factors			7
Special note regarding forward-looking statements			26
Use of proceeds			27
Dividend policy			27
Capitalization			28
Dilution			30
Selected financial data			32
Management’s discussion and analysis of financial condition and results of operations			34
Business			49
Management			70
Certain relationships and related party transactions			81
Principal stockholders			84
Description of capital stock			87
Shares eligible for future sale			91
Underwriting			94
Notice to investors			98
Material U.S. federal income and estate tax consequences to non-U.S. holders			101
Legal matters			105
Experts			105
Where you can find additional information			105
Index to financial statements			F-1

Through and including (the 25th day after the date of this prospectus), federal securities laws may require all dealers that effect transactions in our common stock, whether or not participating in this offering, to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

Iomai^®, Transcutaneous Immunization^tm, TCI^tm and the Iomai logo are trademarks or service marks of Iomai Corporation. All other trademarks and service marks appearing in this prospectus are the property of their respective holders.

Prospectus summary

This summary highlights selected information appearing elsewhere in this prospectus. While this summary highlights what we consider to be the most important information about us, you should carefully read this prospectus and the registration statement of which this prospectus is a part in their entirety before investing in our common stock, especially the risks of investing in our common stock which we discuss under “Risk factors”, and our financial statements and related notes beginning on page F-1.

Unless the context requires otherwise, the words “Iomai,” “we,” “us” and “our” refer to Iomai Corporation.

OUR BUSINESS

We are a biopharmaceutical company focused on the discovery, development and commercialization of vaccines and immune system stimulants delivered to the skin. Our products are designed to address large infectious disease markets where there are significant unmet medical needs or where we believe there is considerable potential for alternative delivery methods. Our proprietary technology, known as transcutaneous immunization, or TCI, is founded on the biological insight that the skin is a highly attractive environment for vaccination and immunostimulation, or stimulation of the immune system. TCI targets Langerhans cells, a specialized component of the immune system located in the outer layers of the skin, for the delivery of adjuvants, which are compounds that enhance the body’s immune response to the antigen in a vaccine, and/or antigens to stimulate a robust immune response. Our approach to vaccination and immunostimulation has the potential to enhance vaccine efficacy, expand the market for existing vaccines and enable the development of new vaccines.

We are developing two distinct product applications for our TCI technology. The first application is a needle-free vaccine patch applied to the skin that contains both pathogen-specific antigens, which are components of a pathogen that trigger immune responses that correspond with a specific disease, and an adjuvant. We are using this application to develop needle-free vaccines to replace currently injectable vaccines as well as novel vaccines that cannot be delivered by injection. The second application is an immunostimulant, or IS, patch that contains only an adjuvant. In this second application, we expect that our IS patch would be placed over the injection site of an existing injectable vaccine in order to stimulate a stronger immune response to that vaccine. Initially we expect to target our IS patch for use in patient populations with weakened or impaired immune systems, such as the elderly, for whom existing vaccines often do not elicit an adequate immune response. We are developing product candidates that utilize our TCI technology for the prevention of flu and travelers’ diarrhea. Each of these product candidates, consisting of a patch and one or more active ingredients, are treated together as a single investigational product candidate by the United States Food and Drug Administration, or FDA, even if any active ingredient is part of an existing approved product. None of our product candidates, or any of the active ingredients in our product candidates, have been approved by the FDA for sale or commercial use.

We currently have three product candidates in Phase 1 or Phase 2 clinical development:



Ø	Needle-free flu vaccine patch. We are developing a needle-free flu vaccine patch that combines flu antigens with an adjuvant in a single patch. We completed a Phase 1 study of our needle-free flu vaccine patch in Europe during the fourth quarter of 2004 and are working to further optimize our formulation and product design. We plan to file with the FDA an investigational new drug application, or IND, relating to this product candidate in the first half of 2006 and plan to commence a Phase 1/2 trial in mid- 2006, with the goal of stimulating an immune response equal to or greater than that of existing injectable vaccines. Each flu season, approximately 15 million to 60 million people in the United States become ill with influenza.



Ø	IS patch for elderly receiving flu vaccines. We are developing an IS patch to improve the immune response of the elderly to existing injectable influenza vaccines. We have completed a number of Phase 1 studies of our IS patch in the United States and Phase 1 and Phase 2 studies in Europe, and plan to commence a Phase 2 study in the United States in 2006. Approximately 40,000 individuals



	aged 65 and over die from influenza, influenza-related pneumonia and related respiratory complications in the United States each year, making influenza one of the leading causes of death among the elderly. Our IS patch, when administered in combination with existing commercially available injectable flu vaccines distributed by different flu vaccine manufacturers which would require individual testing and FDA approval with our IS patch, is designed to improve the immune response of the elderly to these flu vaccines.



Ø	Needle-free travelers’ diarrhea vaccine patch. We are also developing a needle-free travelers’ diarrhea vaccine patch product candidate, consisting of a new vaccine and patch delivery system, for which we completed a safety and efficacy trial in the United States during the first quarter of 2005. We are currently preparing for Phase 2 trials designed to determine the final dry patch formulation, number and timing of doses, and duration of patch wear. If we successfully complete these Phase 2 trials as anticipated by early 2007, we expect to begin enrollment in Phase 3 clinical trials in mid-2007. Travelers’ diarrhea usually is contracted by the ingestion of food or water contaminated with Enterotoxigenic E. coli bacteria (ETEC). The United States Centers for Disease Control and Prevention estimates that 20% to 50% of international travelers contract travelers’ diarrhea. Currently, in the United States there are no approved vaccines against travelers’ diarrhea caused by ETEC.

IS patch for pandemic flu preclinical program. In addition, we are currently engaged in preclinical development of an IS patch to be administered in combination with pandemic flu vaccines. When a new, highly infectious and dangerous strain of the influenza virus appears, the general lack of immunity to this strain in the general population can lead to a pandemic outbreak that quickly spreads. Signs of a possible pandemic flu have emerged in Southeast Asia, as lethal infections of poultry and humans with avian influenza virus continue. In response, the United States government has been actively trying to address the risk. President Bush recently announced a $7.1 billion initiative to prevent the spread of pandemic flu. The United States government is also encouraging companies to expand the current United States vaccine production capacity. The manufacture of flu vaccine is a complex and time consuming process. As a result, vaccine manufacturers may not be able to rapidly scale up production to meet increased demand in the event of an outbreak of pandemic flu. Because of these manufacturing limitations, governments are exploring dose-sparing strategies by which a smaller dose of vaccine could produce an effective immune response.

We believe that our IS patch may play an important role in dose-sparing strategies by either reducing the required dose or improving the timing and/or magnitude of the immune response when the IS patch is administered in combination with an injected pandemic flu vaccine. We have conducted preclinical studies in mice that highlight the dose-sparing potential of our IS patch for injectable pandemic flu vaccines. We believe our IS patch for pandemic flu presents an attractive dose-sparing alternative because it has the potential to be used with pandemic flu vaccines being developed by different manufacturers without requiring different formulations or packaging. In January 2005, the NIH awarded us a two-year, $2.9 million grant for further development of our IS patch technology for pandemic flu applications. We are continuing to conduct preclinical studies of our IS patch for pandemic flu and continue to seek additional government funding for these studies. Because pandemic flu vaccines are still being developed by third parties and no pandemic flu vaccines have been approved by the FDA for use, and because our IS patch for pandemic flu is in the preclinical development stage and extensive additional preclinical and clinical testing would be required before approval, this product candidate may not be available for the potential treatment of pandemic flu in the next few years, if ever.

We believe, based on our Phase 1 and Phase 2 clinical trials and our preclinical development experience, that our TCI technology may offer the following potential advantages over traditional, injection-based approaches to vaccination:


Ø	increased efficacy with reduced risk of side effects;

Ø	increased patient compliance;

Ø	safer administration and disposal;


Ø	reduced dosages; and

Ø	cheaper transport and storage.

In addition to the risks related to our ability to successfully complete development of our product candidates, successfully complete clinical testing and obtain FDA approval, there are some potential disadvantages to our product candidates that may also adversely affect our ability to commercialize them. For example, as currently administered in our clinical trials, our product candidates require abrasive pretreatment of the skin, and the adjuvant in our product candidates also has known side effects, which may be disadvantages that limit their commercial acceptance. In addition, our patch-based technologies may be subject to lower levels of third-party reimbursement than injection-based vaccines or other competitive products. These and other potential disadvantages may hinder the development or commercialization of our product candidates.

We believe that TCI technology is broadly applicable and may provide the means to prevent or mitigate many diseases. On the basis of our clinical and preclinical findings to date, we believe products based on our TCI technology have the potential to address major unmet needs in preventing infectious diseases and could represent a fundamental change in the way vaccines are administered.

OUR STRATEGY

Our goal is to become a leader in the discovery, development and commercialization of vaccines and immunostimulants delivered to the skin. The key elements of our strategy are to:


Ø	seek a strategic collaboration for the development, marketing and commercialization of our needle-free flu vaccine;


Ø	commercialize our IS patch for elderly individuals receiving flu vaccines;


Ø	develop our IS patch for pandemic flu applications;

Ø	commercialize our needle-free travelers’ diarrhea vaccine patch;

Ø	continue to develop and expand our manufacturing capabilities to retain manufacturing rights; and

Ø	leverage our broad technology platform to develop additional product candidates.

RISKS ASSOCIATED WITH OUR BUSINESS

Our business is subject to numerous risks, as more fully described in the section entitled “Risk factors” immediately following this prospectus summary. We are a development-stage company with no commercial products. We have not received regulatory approval for, nor generated commercial revenue from, any of our product candidates. Our product candidates are at an early stage of development and are unproven. If we do not successfully commercialize our product candidates, we will be unable to achieve our business objectives. We have a limited operating history and have incurred substantial losses since inception. We incurred a net loss of approximately $11.5 million for the nine months ended September 30, 2005 and have an accumulated deficit of approximately $61.6 million from inception through September 30, 2005. We anticipate that, for the next several years, we will not generate revenues from commercial sales and will incur substantial additional losses. We will need additional funding, such funding may not be available on acceptable terms or at all. We may never become profitable.

CORPORATE INFORMATION

We were incorporated in Delaware on May 14, 1997. Our address is 20 Firstfield Road, Suite 250, Gaithersburg, Maryland 20878, U.S.A. Our telephone number is (301) 556-4500. Our website address is www.iomai.com. Information contained in, and that can be accessed through, our website is not incorporated into and does not form a part of this prospectus.

The offering



Common stock we are offering		6,250,000 shares



Common stock to be outstanding after this offering		18,147,388 shares



Use of proceeds after expenses		We estimate that the net proceeds from this offering will be approximately $67.8 million, or approximately $78.2 million if the underwriters exercise their over-allotment option in full. Net proceeds were calculated assuming underwriting discounts and commissions of 7%. We expect to use the net proceeds from this offering to fund our clinical trials and for other general corporate purposes.


Proposed Nasdaq National Market symbol		IOMI

The number of shares of our common stock to be outstanding after this offering is based on 11,897,388 shares of common stock outstanding as of December 31, 2005 after giving effect to the conversion of 144,324,612 shares of preferred stock outstanding as of December 31, 2005 into 11,101,866 shares of our common stock at the closing of this offering.

The number of shares of our common stock outstanding immediately after this offering excludes:



Ø	1,893,264 shares of common stock issuable upon the exercise of options outstanding as of December 31, 2005, with exercise prices ranging from $0.91 to $34.19 per share and a weighted average exercise price of $1.64 per share;



Ø	1,187,061 additional shares of common stock reserved for future grants under our 1998 Stock Option Plan, 1999 Stock Incentive Plan, 2005 Incentive Plan and 2006 Employee Stock Purchase Plan as of December 31, 2005;



Ø	35,243 shares of common stock issuable upon the exercise of warrants outstanding as of December 31, 2005, at a weighted average exercise price of $5.75 per share.

Unless otherwise indicated, all information in this prospectus:



Ø	assumes the issuance and sale of 6,250,000 shares of our common stock in the offering at an initial public offering price of $12.00 per share;



Ø	gives effect to our Third Amended and Restated Certificate of Incorporation, which we will file prior to the closing of this offering;


Ø	gives effect to a 1-for-13 reverse stock split that was effected on December 2, 2005;


Ø	gives effect to the automatic conversion of all outstanding shares of our preferred stock into 11,101,866 shares of common stock upon the closing of this offering; and



Ø	assumes no exercise by the underwriters of their option to purchase up to 937,500 shares of our common stock in this offering to cover over-allotments.

Certain of our existing stockholders and their affiliated entities, including New Enterprise Associates, Essex Woodlands, and Technology Partners, have indicated an interest in purchasing up to $11.5 million of our common stock in this offering at the public offering price, or up to 958,333 shares of our common stock at an assumed public offering price of $12.00 per share. Although we expect these stockholders to purchase these shares of common stock, indications of interest are not binding agreements or commitments to purchase.

Summary financial data

We have derived our statement of operations data for the years ended December 31, 2002, 2003 and 2004 from our audited financial statements included in this prospectus. We have derived our balance sheet data as of September 30, 2005 and statement of operations data for each of the nine months ended September 30, 2004 and 2005 from our unaudited financial statements included in this prospectus. The unaudited financial statement data include, in our opinion, all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of our financial position and results of operations for these periods. Operating results for the nine months ended September 30, 2005 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2005. You should read the summary financial data set forth below in conjunction with “Management’s discussion and analysis of financial condition and results of operations” and with our financial statements and related notes included in this prospectus.


												Nine months ended
			Year ended December 31,									September 30,

Statement of operations data:			2002			2003			2004			2004			2005

												(unaudited)
			(in thousands, except share and per share data)
Revenues:
	License, option agreements and grants		$	995		$	1,601		$	2,345		$	2,244		$	2,330
Cost and expenses:
	Research and development			7,354			13,332			14,349			10,636			11,487
	General and administrative			2,411			3,348			3,206			2,257			2,516
	Purchased in-process research and development			2,518			—			—			—			—
	Reimbursed by related party			(426	)		—			—			—			—

		Total costs and expenses		11,857			16,680			17,555			12,893			14,003
Loss from operations				(10,861	)		(15,079	)		(15,210	)		(10,649	)		(11,673	)
Other (expense) income:
	Gain on discharge of convertible notes payable			11,219			—			—			—			—
	Interest income			57			953			620			505			322
	Interest expense			(2,120	)		(128	)		(265	)		(133	)		(355	)
	Other expense, net			(75	)		(448	)		(225	)		(214	)		(22	)

		Total other (expense) income, net		9,081			377			130			158			(55	)
Net loss				(1,780	)		(14,702	)		(15,080	)		(10,491	)		(11,728	)
Dividends on and accretion of convertible preferred stock				(380	)		(5,466	)		(5,525	)		(4,128	)		(4,162	)
Carrying value of preferred stock in excess of fair value transferred				11,092			—			—			—			—

Net income (loss) available to common stockholders			$	8,932		$	(20,168	)	$	(20,605	)	$	(14,619	)	$	(15,890	)
Net income (loss) per share of common stock—basic and diluted			$	11.79		$	(26.43	)	$	(26.90	)	$	(19.10	)	$	(20.31	)

Weighted average number of shares of common stock outstanding—basic and diluted				757,402			763,075			765,945			765,229			782,391

Pro forma net loss per share of common stock—basic and diluted (unaudited)⁽¹⁾									$	(1.27	)				$	(0.99	)

Pro forma weighted average shares of common stock outstanding— basic and diluted (unaudited)⁽¹⁾										11,867,811						11,884,257

⁽¹⁾

The pro forma basic and diluted net loss per share reflects the weighted effect of the assumed conversion of preferred stock. The pro forma amounts do not give effect to the exercise of warrants to purchase 35,243 shares of common stock at a weighted average exercise price of $5.75 per share. See Note 2 to our financial statements for information regarding computation of basic and diluted net loss per share attributed to common stockholders and pro forma basic and diluted net loss per share attributed to common stockholders. The pro forma basic and diluted net loss per share attributable to common stockholders reflects the weighted effect of the assumed conversion of our convertible preferred stock into shares of common stock at the conversion rates in effect for the period presented.


	As of September 30, 2005

						Pro forma as
Balance sheet data:	Actual			Pro forma⁽¹⁾		adjusted⁽²⁾

	(unaudited)
	(in thousands)
Cash, cash equivalents and marketable securities⁽³⁾	$	11,668			11,668		78,764
Working capital		6,813			6,813		74,568
Total assets		17,662			17,656		85,416
Debt and capital lease obligations		4,630			4,630		4,630
Redeemable convertible preferred stock and Series C warrant		69,093			—		—
Common stock subject to put right		1,958			1,958		—
Total stockholders’ equity (deficit)		(61,060	)		8,059		77,772



⁽¹⁾	Pro forma to give effect to the conversion, upon the closing of this offering of all preferred stock into 11,101,866 shares of our common stock. The pro forma amounts do not give effect to the exercise of warrants to purchase 35,243 shares of common stock at a weighted average exercise price of $5.75 per share.



⁽²⁾	Pro forma as adjusted to give further effect to the sale of 6,250,000 shares of our common stock we are offering pursuant to this prospectus at an assumed initial public offering price of $12.00 per share and the receipt of the estimated net proceeds therefrom after deducting underwriting discounts and commissions and estimated offering expenses payable by us. The pro forma amounts do not give effect to the exercise of warrants to purchase 35,243 shares of common stock at a weighted average exercise price of $5.75 per share.



⁽³⁾	Includes restricted cash of $63 and restricted marketable securities of $596.

Risk factors

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below with all of the other information included in this prospectus before deciding to invest in our common stock. If any of the following risks actually occur, they may materially harm our business and our financial condition and results of operations. In this event, the market price of our common stock could decline and you could lose part or all of your investment.

RISKS RELATING TO OUR BUSINESS

We are a biopharmaceutical company with a limited operating history and have generated no revenue from product sales. As a development stage company, we face many risks inherent in our business. If we do not overcome these risks, our business will not succeed.

Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. We commenced operations in May 1997, and since that time we have been engaged in research and development activities in connection with our product candidates. We have never generated any revenue from product sales. All of our current product candidates are at an early stage of development, and we do not expect to realize revenue from product sales for several more years, if at all. In addition, we are not currently receiving any significant funding for our research and development programs from third parties through collaborations or grants. We are seeking to create a business based upon new technology that is intended to change existing practices of vaccine delivery. As such, we are subject to all the risks incident to the creation of new products and may encounter unforeseen expenses, difficulties, complications and delays and other unknown factors. You also should consider that we will need to:


Ø	obtain sufficient capital to support our efforts to develop our technology and commercialize our product candidates;

Ø	complete and continue to enhance the product characteristics and development of our product candidates; and

Ø	attempt to transition from a development stage company to a company capable of supporting commercial activities.

We have a history of operating losses and may never be profitable.

We have incurred substantial losses since our inception, and we expect to continue to incur substantial losses for the foreseeable future. Our net loss for the nine months ended September 30, 2005 was $11.5 million. As of September 30, 2005, we had an accumulated deficit of approximately $61.6 million. These losses have resulted principally from costs incurred in our research and development programs and from our general and administrative costs. We expect to incur additional operating losses in the future, and we expect these losses to increase significantly, whether or not we generate revenue, as we expand our product development and clinical trial efforts. These losses have had, and are expected to continue to have, an adverse impact on our working capital, total assets and stockholders’ equity.

To date, we have generated no revenue from product sales or royalties. We do not expect to achieve any revenue from product sales or royalties unless and until we receive regulatory approval and begin commercialization of our product candidates. We are not certain of when, if ever, that will occur.

Even if the regulatory authorities approve any of our product candidates and we commercialize these candidates, we may never be profitable. Even if we achieve profitability for a particular period, we may not be able to sustain or increase profitability.

Risk factors

We will need additional funding, and we cannot guarantee that we will find adequate sources of capital in the future.

As of September 30, 2005, we had approximately $11.0 million in cash, cash equivalents and marketable securities. As of December 31, 2005, this amount was approximately $5.2 million. We have incurred negative cash flows from operations since inception and have expended, and expect to continue to expend, substantial funds to conduct our research and development programs. We believe that our current working capital and reimbursement of expenses under our existing grants will be sufficient to fund our operating expenses and capital requirements into the second quarter of 2006, and, if the assumed net proceeds from this offering are included, through 2007, although we cannot assure you that we will not require additional funds before then. We have based this estimate on assumptions that may prove to be wrong. Our future capital requirements will depend on many factors, including:



Ø	the number, size and complexity of our clinical trials;



Ø	our progress in developing our product candidates;



Ø	the timing of and costs involved in obtaining regulatory approvals;



Ø	costs of manufacturing our product candidates;



Ø	costs to maintain, expand and protect our intellectual property portfolio; and



Ø	costs to develop our sales and marketing capability.

We expect to seek to raise additional funds in advance of when we exhaust our cash resources, which, if we raise additional funds by issuing equity securities, will result in further dilution to our stockholders. Any equity securities issued also may provide for rights, preferences or privileges senior to those of holders of our common stock. If we raise additional funds by issuing debt securities, these debt securities would have rights, preferences and privileges senior to those of holders of our common stock, and the terms of the debt securities issued could impose significant restrictions on our operations. If we raise additional funds through collaborations and licensing arrangements, we might be required to relinquish significant rights to our technology, product candidates or products that we would otherwise seek to develop or commercialize ourselves, or to grant licenses on terms that are not favorable to us.

We do not know whether additional financing will be available on commercially acceptable terms when needed. If adequate funds are not available or are not available on commercially acceptable terms, we may need to downsize or halt our operations and may be unable to continue developing our products.

The success of some programs, such as our needle-free flu vaccine patch, may depend on licensing biologics from, and entering into collaboration arrangements with, third parties. We cannot be certain that our licensing or collaboration efforts will succeed or that we will realize any revenue from them.

The success of our business strategy is, in part, dependent on our ability to enter into multiple licensing and collaboration arrangements and to manage effectively the numerous relationships that will result. For example, we currently do not intend to manufacture any product components other than LT adjuvant and formulated patches. Therefore, we will need to negotiate agreements to acquire biologics, such as the flu antigens contained in our needle-free flu vaccine patch, and other product components from third parties in order to develop some of our vaccine candidates (other than our needle-free travelers’ diarrhea vaccine patch and IS patch). We are seeking a collaboration with respect to our needle-free flu patch. A failure to enter into a collaboration could delay development of this

Risk factors

product candidate. Also, we may not establish a direct sales force for our products and, therefore, may need to establish marketing arrangements with third parties or major pharmaceutical companies.

Our ability to enter into agreements with commercial partners depends in part on convincing them that our TCI technology can help achieve and accelerate their goals or efforts. This may require substantial time and effort on our part. While we anticipate expending substantial funds and management effort, we cannot assure you that a strategic relationship will result or that we will be able to negotiate additional strategic agreements in the future on acceptable terms, if at all. Furthermore, we may incur significant financial commitments to collaborators in connection with potential licenses and sponsored research agreements. Generally, we will not be able to directly control the areas of responsibility undertaken by our strategic partners and will be adversely affected should these partners prove unable to carry the product candidates forward to full commercialization or should they lose interest in dedicating the necessary resources toward developing such products quickly.

Third parties may terminate our licensing and other strategic arrangements if we do not perform as required under these arrangements. Generally, we expect that agreements for rights to develop technologies will require us to exercise diligence in bringing product candidates to market and will require us to make milestone and royalty payments that, in some instances, are substantial. Our failure to exercise the required diligence or make any required milestone or royalty payment could result in the termination of the relevant license agreement, which could have a material adverse effect on us and our operations. In addition, these third parties may also breach or terminate their agreements with us or otherwise fail to conduct their activities in connection with our relationships in a timely manner. If we or our partners terminate or breach any of our licenses or relationships, we:



Ø	may lose our rights to develop and market our product candidates;<