Alzheimer’s disease is named after Dr. Alois Alzheimer, a German physician, who first described the disease in 1906. Alzheimer’s disease is a progressive, degenerative and ultimately terminal brain disorder that gradually destroys a person’s memory and ability to learn reason, make judgments, communicate and carry out daily activities.

Alzheimer’s disease is an age-related disease. The Alzheimer’s Association estimates that 10% of all individuals over the age of 65 suffer from Alzheimer’s disease and that nearly 50% of all individuals who reach age 85 suffer from Alzheimer’s disease. The Alzheimer’s Health Assistance Foundation estimates that approximately 350,000 new cases of Alzheimer’s disease are diagnosed annually in the United States. Alzheimer’s disease is roughly twice as prevalent in women as in men. Alzheimer’s disease onset has been reported in Down’s syndrome individuals aged as young as 30, with a dramatic increase in prevalence with aging. Approximately 18 million people worldwide suffer from Alzheimer’s disease, including an estimated 4.5 million Americans, more than double the number of Americans suffering from this disease in 1980.

The Alzheimer’s Association reports that Alzheimer’s disease patients live an average of eight years, with many patients living as much as 20 years, from the initial onset of symptoms. Direct and indirect annual costs of caring for individuals with Alzheimer’s disease in the United States are at least $100 billion, according to estimates used by the Alzheimer’s Association and the National Institute on Aging. The Alzheimer’s Association estimates the average lifetime cost of care for an individual with Alzheimer’s disease in the United States to be approximately $174,000.

The polymer in Memryte is similar to the material in soluble surgical stitches and degrades in the body. As a result, and in contrast to some other types of implantable drug delivery devices, surgical removal is not required. Memryte implants are inserted subcutaneously through a needle in the fleshy region on the side of the patient’s torso. The procedure is conducted in a physician’s office using a local anesthetic and takes approximately ten minutes. Administration of leuprolide acetate using the Memryte implant is designed to minimize an initial dosage peak and provide a steady leuprolide acetate level throughout the dosing period.

The Company is conducting a comprehensive clinical program to test leuprolide acetate and Memryte for the treatment of mild to moderate Alzheimer’s disease. The Company calls its clinical trial program “Antigonadotropin-Leuprolide in Alzheimer’s Disease Drug Investigation,” for which it use the acronym ALADDIN.

In the fourth quarter of 2005, the Company plans to initiate two randomized, double blind, placebo controlled, 56-week, pivotal Phase III clinical trials of Memryte for the treatment of mild to moderate Alzheimer’s disease as adjunctive therapy with ACIs. December 2004, the Company is completed a randomized, double blind, placebo controlled, dose-ranging, 48-week, Phase II clinical trial to assess the efficacy and safety of leuprolide acetate on cognitive and global function in women with mild to moderate Alzheimer’s disease. The Company calls this clinical trial ALADDIN I.

The Company is also performed a prospective analysis of 78 patients in the intent-to-treat population who were taking comparing results for the group of 24 patients treated with ACIs plus the high dose of leuprolide acetate used in the study and the group of 28 patients treated with ACIs plus the low dose of leuprolide acetate used in the study against the results for a group of 26 patients who were treated with ACIs and received placebo in the study.

General and administrative expense for the six months ended June 30, 2004 was $1.1 million compared to $3.1 million for the six months ended June 30, 2005.

Marketing expense for the six months ended June 30, 2004 was $368.0 thousand compared to $742.0 thousand for the six months ended June 30, 2005.

Net interest income for the six months ended June 30, 2004 was $25.0 thousand compared to $67.0 thousand for the six months ended June 30, 2005.