According to the American Cancer Society, Acute Myelogenous Leukemia, or AML, represents approximately 90% of all acute leukemias in adults. In the United States, approximately 16,000 adult patients have AML with approximately 12,000 new patients diagnosed each year. Although induction chemotherapy, typically with Ara-C and an anthracycline such as daunorubicin or idarubicin, results in complete remission in an average of 65% of patients, relapse is common and long-term survival rates are less than 20%.

Myelodysplastic Syndromes, or MDS, represents a group of cancers in which bone marrow does not make enough mature, healthy blood cells. MDS occurs when blood cells remain in an immature stage within the bone marrow and never develop into mature cells capable of performing their necessary functions. MDS patients often need frequent blood transfusions to help fight fatigue and anemia. According to the Aplastic Anemia & MDS International Foundation, more than 80% of MDS cases occur in persons over 60 years old.

According to the American Cancer Society, pancreatic cancer currently ranks as the fourth leading cause of cancer death in the United States. Survival rates for pancreatic cancer are extremely low, and the American Cancer Society estimates that there will be approximately 32,180 new cases of pancreatic cancer and 31,800 deaths in 2005. The disease is often resistant to chemotherapy and radiation therapy and tends to spread quickly to other parts of the body. According to the American Cancer Society, only 4% of all patients are alive five years after a diagnosis of pancreatic cancer.

According to the National Comprehensive Cancer Network, renal cell carcinoma comprises about 90% of kidney cancer. This cancer develops within the kidney’s microscopic filtering systems, the lining of tiny tubes that ultimately lead to the bladder. The American Cancer Society estimates that, in the United States in 2005, approximately 36,160 new cases of kidney cancer will be diagnosed, and an estimated 12,660 deaths will occur. According to the American Cancer Society, the overall five-year relative survival rate is 64%.

In 2006, the Company is planning to initiate a single-arm, open-label Phase I/II clinical trial of CI Troxatyl in MDS patients who have failed Vidaza. It will conduct a dose-escalation trial in an attempt to identify a Phase II CI Troxatyl dose and dosing regimen for MDS. If results of this trial are positive, the Company would have then conducted a larger Phase II CI Troxatyl clinical trial in high-risk patients as first-line therapy in combination with Vidaza.

The Company is also building an internal oncology product pipeline and generating lead compounds for multiple partners through the application of its proprietary fragment-based drug discovery platform, Fragments of Active Structures, or FAST. The Company has successfully applied FAST to generate novel, potent and selective small molecule compounds in a matter of months for many well-validated, but challenging targets.

The Company expects to begin clinical development in 2006 for its first product candidate discovered using FAST, an inhibitor of an enzyme known as BCR-ABL. The Company designed and is developing this product candidate as a treatment for Chronic Myelogenous Leukemia, or CML, which is resistant to treatment with the current standard of care.

An additional internal program is focused on the targets MET and RON, two closely related proteins, known as receptor tyrosine kinases, implicated in a range of solid tumors, and is at the lead optimization stage, in which the Company seeks to improve the potency, specificity and in vivo efficacy of lead compounds and reduce their toxicity.

Research and development expense increased from $15.3 million for the six months ended June 30, 2004 to $16.7 million for the six months ended June 30, 2005.

General and administrative expense increased from $3.3 million for the six months ended June 30, 2004 to $4.7 million for the six months ended June 30, 2005.

Interest income increased from $44.0 million for the six months ended June 30, 2004 to $115.0 million for the six months ended June 30, 2005.