Lipid-lowering therapeutics represents one of the largest markets in the pharmaceutical industry, with as many as 52 million patients in the United States alone eligible for therapy. Worldwide revenues for lipid-lowering therapeutics were approximately $30 billion for the twelve months ended December 31, 2006. However, significant unmet medical needs remain for patients with elevated lipid levels, in particular LDL-C.

Recent clinical trials add to the substantial evidence that there is a direct relationship between lower LDL-C levels and decreased risk for major cardiovascular events. These findings prompted the National Cholesterol Education Program, or the NCEP, in 2004 to introduce optional LDL-C guidelines, endorsed by the American Heart Association, the American College of Cardiology and others, advising physicians to consider more intensive treatment options for people with high and moderately high-risk of a cardiovascular event.

Several recent clinical trials have shown that combination therapy with multiple, differently acting compounds is the most effective way to achieve these more aggressive LDL-C goals. For example, one recent clinical trial demonstrated that use of Vytorin, a fixed-dose combination of the statin Zocor (simvastatin) and the cholesterol absorption inhibitor Zetia (ezetimibe), results in a greater percentage of high-risk patients reaching their LDL-C goal than does the use of the leading marketed statin, Lipitor (atorvastatin), alone.

One of the Company’s two product candidates, AEGR-733, is an MTP-I that it is developing for the oral, once-a-day treatment of individuals with high lipid levels, or hyperlipidemia, in particular in those patients with high cholesterol, or hypercholesterolemia, and/or high triglyceride levels, or hypertriglyceridemia, who are unable to meet specified target goals.

In a recently completed Phase II clinical trial, AEGR-733 10 mg when used as a monotherapy resulted in significantly greater LDL-C lowering efficacy than Zetia (ezetimibe) 10 mg (29.9% vs. 19.9%, respectively). In 2007, the Company intends to initiate additional Phase II trials of AEGR-733 to further evaluate its potential role in reducing LDL-C, both as a monotherapy and in combination with Lipitor (atorvastatin) and other lipid-lowering therapies.

The Company’s second product candidate, AEGR-427 (implitapide), is also an MTP-I that it is developing for the oral, once-a-day treatment of hyperlipidemia. In Phase II trials conducted by Bayer Healthcare AG, implitapide 40 mg was shown to lower LDL-C by an average of 22% and triglycerides by an average of 11%, with a discontinuation rate the same as placebo (2%).

In the second half of 2007, the Company plans to initiate a pharmacokinetic trial to study AEGR-427 (implitapide) in combination with a variety of statin therapies as well as a dose ranging trial to evaluate its efficacy and safety/tolerability profile in doses ranging from 30 mg to 50 mg.

Research and development expenses were $10.7 million for the nine months ended September 30, 2007, compared with $2.8 million for the nine months ended September 30, 2006.

Interest expense was $0.7 million for the nine months ended September 30, 2007, compared with no interest expense for the nine months ended September 30, 2006.

Interest income was $0.7 million for the nine months ended September 30, 2007, compared with $0.6 million for the nine months ended September 30, 2006.