Atherosclerosis, or the narrowing and hardening of the arteries, is a disease that commonly presents with symptoms in people 50 years of age or older. Two processes occur simultaneously in atherosclerosis: the thickening of the two innermost layers of the arterial wall and the formation and buildup of plaque, which is comprised of fat, cholesterol and fibrous tissue. Plaque can protrude into the artery causing a narrowing referred to as stenosis, or it can break off and obstruct smaller arteries. Soft plaque is considered the active inflammatory component of plaque. Elevated levels of cholesterol, high blood pressure, cigarette smoke, diabetes and family history are traditional risk factors associated with atherosclerosis. Atherosclerosis can affect any artery and most commonly occurs in peripheral, coronary, carotid, cerebrovascular and renal arteries. Atherosclerosis and its complications lead to half of all adult deaths in the United States and other western societies.

Peripheral Arterial Disease, or PAD, affects between eight and 12 million people in the United States according to an article published in the Journal of the American Medical Association. Other published articles indicate that approximately 30 to 40% of all people in the United States with PAD experience intermittent claudication associated with PAD, and PAD becomes more common with age, affecting 12 to 20% of Americans over 65. It is believed that the aging of the population and the increase in diabetes and obesity in the United States will result in an increasing incidence of PAD. The Sage Marketing Group, an independent market research organization, predicts that the number of persons affected with PAD in the United States will increase to 22 million by 2020.

The significant morbidity and costs associated with PAD have recently prompted medical associations to highlight the risk factors, symptoms and treatment options for PAD through journal publications and online medical communities. Pharmaceutical companies and the Vascular Disease Foundation have been enhancing awareness of PAD through consumer advertising and publications in popular press. It is believed increased awareness by physicians and patients will lead to increased screening for PAD, which may further increase the market for PAD therapies.

The Company’s second product candidate, M40403, is a proprietary small molecule that is designed to mimic the function of a naturally occurring enzyme that plays a role in several inflammatory disease states. The Company plans to initiate a Phase II clinical trial of M40403 for the management of post-operative ileus, or POI, which is the temporary impairment of bowel function following surgery. The Company currently holds worldwide commercial rights to all of its product candidates.

Rifalazil is a proprietary, orally administered antibacterial agent which is in a Phase III clinical trial for the treatment of intermittent claudication associated with PAD.

The Company’s ongoing Phase III clinical trial of Rifalazil is called PROVIDENCE-1, or the Prospective evaluation of Rifalazil effect On Vascular symptoms of Intermittent clauDication and other ENdpoints in Chlamydia sEropositive patients. PROVIDENCE-1 is a double-blind, randomized, placebo-controlled, international clinical trial designed to study the effect of Rifalazil in treating intermittent claudication associated with PAD in patients with high levels of antibodies to C. pneumoniae. The presence of antibodies indicates prior exposure to C. pneumoniae.

M40403 is a proprietary synthetic small molecule that the Company is developing for the management of POI. To date, the intravenous formulation of M40403 has been evaluated in approximately 700 patients in several clinical trials in indications other than POI with no reports of serious drug-related adverse events.

The Company is developing ABI-0043 as a proprietary antibacterial agent for the treatment of complicated skin and skin structure infections, or cSSSI, caused mainly by Staphylococcus aureus, or S. aureus, including methicillin-resistant S. aureus, or MRSA.

General and administrative expense was $2.0 million for the three months ended March 31, 2006, an increase of $1.0 million, or 90%, from $1.1 million for the three months ended March 31, 2005.

Interest income was $60,000 for the three months ended March 31, 2006, a decrease of $54,000, or 47%, from $0.1 million for the three months ended March 31, 2005.