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SECURITIES AND EXCHANGE COMMISSION

Form 10-K

Commission file number 0-29993

Registrant’s telephone number, including area code:

Securities registered under Section 12(b) of the Exchange Act:

Securities registered under Section 12(g) of the Exchange Act:

          Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in PART III of this Form 10-K or any amendment to this Form 10-K.     þ

          Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).     Yes o          No þ

          The aggregate market value of the Common Stock, held by non-affiliates of the registrant, based on the closing price on June 30, 2003 as reported by the Nasdaq National Market was approximately $10,632,000. The determination of affiliate status for the purposes of this calculation is not necessarily a conclusive determination for other purposes. The calculation excludes approximately 613,000 shares held by directors, officers and stockholders whose ownership exceeds five percent of the Registrant’s outstanding common stock as of June 30, 2003. Exclusion of these shares should not be construed to indicate that such person controls, is controlled by or is under common control with the Registrant. The number of shares outstanding of the registrant’s Common Stock, par value $0.001 per share, as of February 27, 2004 was 5,310,661 shares.

DOCUMENTS INCORPORATED BY REFERENCE

          Part III — Portions of the registrant’s definitive proxy statement to be issued in conjunction with the registrant’s annual stockholders meeting to be held on June 10, 2004 are incorporated by reference into Part III of this report. Except as expressly incorporated by reference, the Registrant’s proxy statement shall not be deemed to be a part of this report.

TABLE OF CONTENTS

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PART I

      This report contains forward-looking statements. These forward-looking statements are based on our current expectations about our business and industry, and include, but are not limited to, statements and concerns about plans to: continue development of our current product candidate; conduct clinical trials with respect to product candidates; seek regulatory approvals; address certain markets; engage third party manufacturers to supply our commercial requirements; market, sell and distribute our products; and evaluate additional product candidates for subsequent clinical and commercial development. In some cases, these statements may be identified by terminology such as “may”, “will”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue”, or the negative of such terms and other comparable terminology. These statements involve known and unknown risks and uncertainties that may cause our or our industry’s results, levels of activity, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Factors that may cause or contribute to such differences include, among others, those discussed under the captions “Business”, “Factors That Could Affect Future Results” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Except as required by law, we undertake no obligation to update any forward-looking statement to reflect events after the date of this report.

BUSINESS

Overview

      Our strategy is to develop novel biopharmaceutical products for the management of serious infections, including those involving multi-drug-resistant organisms. We are currently developing an oral solution of iseganan hydrochloride (iseganan HCl), an antimicrobial drug, for the prevention of ventilator-associated pneumonia (VAP). VAP is a bacterial pneumonia that can develop in patients receiving mechanical (artificial) ventilation and is the most common infection occurring in patients in the intensive care unit. One potential benefit of preventing VAP would be to reduce the need for antibiotics and subsequent emergence of antibiotic resistance. There are no products approved by health authorities for the prevention of VAP. In addition, we intend to pursue additional indications for iseganan HCl, including treatment of infections in patients with cystic fibrosis. We own worldwide rights to iseganan HCl for all indications.

      In September 2003 we launched the first of two pivotal trials of iseganan HCl oral solution for the prevention of VAP. The U.S. Food and Drug Administration (FDA) have granted Fast-Track designation status and a Special Protocol Assessment agreement (SPA) on the design of the two pivotal efficacy trials for this indication. In addition, the FDA accepted the program for inclusion in its Continuous Marketing Application (CMA) Pilot 2 Program. The Fast-Track designation is intended to facilitate the development and expedite the review of a new drug that is intended to treat a serious or life-threatening condition, and that demonstrates the potential to address an unmet medical need. The SPA agreement specifies in writing the pivotal clinical trial requirements for registration of iseganan HCl for the prevention of VAP. The objective of the CMA Pilot 2 program is to evaluate the costs and benefits of enhanced sponsor access to guidance and feedback from the FDA during the Investigational New Drug (IND) phase of new drug development of Fast-Track products.

      Under our SPA agreement with the FDA, we are required to conduct two identical pivotal, randomized, double-blind, placebo-controlled, multinational clinical trials. The pivotal trials are designed to assess the safety and efficacy of iseganan HCl and to demonstrate iseganan HC1’s ability to reduce the incidence of VAP in patients who are undergoing mechanical ventilation and survive fourteen days. In each trial, approximately 900 patients will be enrolled and will be randomized to receive either iseganan HCl or placebo six times per day for up to 14 days, while being mechanically ventilated. We expect to announce results of the first pivotal trial by the end of 2004. If this trial is successful, we will then conduct the second pivotal trial to support registration of iseganan HCl. We cannot be certain that the first pivotal trial results will be available before the end of 2004, or whether this trial will be successful. In addition, prior to the submission of a New Drug

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      On December 31, 2003 we had cash, cash equivalents, restricted cash and short-term investments totaling $26.6 million, which we currently anticipate to be sufficient to fund operations for at least the next 12 months. We will need to raise substantial additional funds to continue our operations, complete the second pivotal efficacy trial of iseganan HCl for VAP if the first trial is successful, complete the FDA approval process, and commence commercialization if FDA approval is received.

Our Strategy

      Our goal is to build a biopharmaceutical company with a portfolio of products for the management of serious infections including those involving multi-drug-resistant organisms. The key elements of our strategy are to:

	•	Complete the clinical development of iseganan HCl for the prevention of VAP;
	•	Pursue additional indications for iseganan HCl, including treatment of infections in patients with cystic fibrosis;
	•	Opportunistically evaluate and acquire additional products that are consistent with our strategy, and;
	•	Leverage and expand our management, clinical and regulatory expertise in anti-infective therapeutics.

Clinical Pipeline

      Iseganan HCl belongs to a novel class of naturally-occurring antimicrobial peptides known as Protegrins. Protegrins were originally isolated from mammalian blood cells and are part of the body’s first line of biological defense against invading bacteria and fungi. Iseganan HCl is the company’s first product candidate. It is a synthetic version of naturally-occurring Protegrins and has shown potent and broad-spectrum antimicrobial properties, and is therefore believed to have great potential in fighting multi-drug-resistant bacteria and fungi that cannot be killed using conventional antibiotics.

      We have been developing iseganan HCl in the clinical setting since 1997. In 2002, we completed two phase III trials of iseganan HCl for the prevention of ulcerative oral mucositis, a complication that develops in cancer patients receiving chemotherapy or radiation therapy that results in painful ulcer-like sores in the mouth and throat. We were evaluating whether an infectious component of oral mucositis could be prevented or reduced by this drug candidate. We concluded two large studies, one in patients receiving radiation therapy to the head and neck, and a second in patients undergoing aggressive chemotherapy. In the radiation therapy study, there was no difference between iseganan HCl and placebo, and in the chemotherapy study, differences in favor of iseganan HCl were insufficient to achieve statistical significance. Iseganan HCl appears to be safe when applied to the oral cavity. We ceased further development of iseganan HCl for oral mucositis in 2002, and are currently not performing any drug research activities. We are now focused on developing iseganan HCl to prevent VAP, as well as evaluating its potential use in other applications.

      Iseganan HCl oral solution is currently in the first of two pivotal clinical trials for the prevention of VAP. VAP is the most common infection in the hospital intensive care unit (ICU). An important risk factor for the development of pneumonia in artificially-ventilated patients is the duration of mechanical ventilation. More than 1 million critically-ill patients in North America, Western Europe, and Japan receive life support via a mechanical ventilator for more than 48 hours. These patients are particularly vulnerable to developing VAP. Up to one in three patients ventilated for at least 48 hours will develop VAP. VAP arises following aspiration of the patient’s bacteria-laden saliva around the ventilator tube, which acts like a wick in the otherwise sterile lower airway. Introduction of bacteria into the lungs then increases the propensity for infection and pneumonia. VAP is associated with a high rate of morbidity, leading to prolonged dependence on artificial ventilation and extended hospital stays. The current treatment for VAP is broad-spectrum antibiotic therapy,

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      Prevention may be an effective means by which to reduce VAP and its associated morbidity. Effective prevention will reduce the morbidity in mechanically-ventilated patients, and may shorten the length of time patients require mechanical ventilation. Reduction of VAP may also decrease associated costs, as well as lessen the use of antibiotics to treat infections. It has been shown that other, conventional antibiotics can be used to prevent VAP and associated clinical complications, however, such antibiotics are known to cause overgrowth and resistance, thus reducing available treatment options. Currently no pharmaceutical product has been approved by health authorities for the prevention of VAP.

      A phase I/ IIa trial of iseganan HCl oral solution evaluating safety and antimicrobial activity in mechanically-ventilated patients was completed in February 2001. A phase I/ IIa trial attempts to obtain preliminary indicators of safety and efficacy of a drug candidate in a smaller patient population than a phase II or phase III trial. In the phase I/ IIa trial, we administered iseganan HCl to patients for up to five days and demonstrated that the oral solution was well tolerated and provided a significant antimicrobial effect in mechanically-ventilated patients. The trial demonstrated that single doses of iseganan HCl reduced the level of bacteria in the oral cavity by more than 100-fold compared to pre-treatment baseline levels in patients who required mechanical ventilation. In this study, we also selected the optimal formulation and dosage strength of iseganan HCl, and demonstrated that administration every four hours progressively reduced the level of bacteria in the oral cavity. We believe these results support further development of iseganan HCl oral solution for the prevention of VAP.

      We believe iseganan HCl may be effective in treating respiratory infections in cystic fibrosis (CF) patients. CF is the most common, lethal inherited abnormality in Caucasians. As a result of inheritance of an abnormal gene from each parent, CF patients produce a thick, sticky mucous from their lungs, and recurrent infection of the airway occurs. Patients require antibiotic therapy, delivered either by inhalation or intravenously, from early in life. Eventually, bacteria become resistant to the antibiotics used and alternative antibiotics must be used. In spite of the use of antibiotics, airway infection persists and progressive destruction of lung function ensues. Patients usually succumb to their progressive pulmonary infection, and the median survival is only 34 years of age.

      We have shown that iseganan HCl is active in killing the predominant pathogens involved in infections experienced by patients suffering from CF, including those pathogens that are resistant to today’s antibiotics. Because iseganan HCl is active against a wider range of pathogens and is unlikely to generate antibiotic resistance, we believe iseganan HCl may offer significant advantages over current therapy and other antibiotics in development. We have shown that iseganan HCl reduces lung infection in an animal model when delivered by aerosol, suggesting that iseganan HCl may offer patients a new alternative. Iseganan HCl has not been observed to cause resistance to other micro-organisms, or to itself.

      Two phase I studies of iseganan HCl solution for inhalation, administered as a single dose or up to five doses, have enabled us to establish the dose tolerance and further develop the formulation for this product candidate. These studies also demonstrated that iseganan HCl solution for inhalation was well tolerated when administered to patients with CF. However, we cannot be certain that after further study iseganan HCl solution for inhalation will prove to be safe or effective in treating respiratory infections, or will receive regulatory approvals. In addition, we are currently focusing our resources on the VAP program and are not expending significant resources on the program for respiratory infections in CF patients.

Clinical Supplies and Manufacturing

      We currently have sufficient quantities of iseganan HCl to complete the planned pivotal clinical trials for the prevention of VAP, but further quantities will be required to validate the manufacturing process and for commercial use if we successfully obtain FDA registration for this indication. We intend to use contract manufacturers for the supply of our clinical and commercial product needs. To date, we have relied on a single

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Commercialization Strategy

      We own worldwide rights to iseganan HCl, and are currently evaluating our alternatives for commercialization of iseganan HCl. We may choose to form a partnership with an established pharmaceutical company for commercialization worldwide. Alternatively, we may pursue a hybrid strategy of establishing a partnership covering commercialization outside of the U.S., while retaining commercial rights for ourselves in the U.S. We cannot guarantee that we will successfully develop or commercialize our product candidate, establish a successful partnership, achieve significant market penetration, or generate any revenues from our product.

Competition

      We are not aware of any products that compete with iseganan HCl for the prevention of VAP. However, pharmaceutical companies and biotechnology companies may develop products in the future that compete with iseganan HCl for the prevention of VAP. Many of these companies have substantially greater experience, financial and other resources than we do. In addition, they may have greater experience in developing drugs, obtaining regulatory approvals and manufacturing and marketing products. We believe the principal bases for competition for our drug candidate are potential effectiveness, price and reimbursement status, ease of administration and side-effect profile. We cannot give any assurances that we can effectively compete with these other pharmaceutical and biotechnology companies.

Intellectual Property

      In April 1994, we entered into a license agreement with The Regents of the University of California, under which we have exclusive rights to develop and commercialize Protegrin-based products, such as iseganan HCl. To date, we have paid a $50,000 licensing fee, $25,000 upon the filing of an Investigational New Drug application and $50,000 upon the initiation of a phase III trial. We are obligated to bear all patent costs and submit semi-annual progress reports to the Regents until the first commercial sale. Subsequent to this sale, we are obligated to provide quarterly royalty reports and make quarterly royalty payments to the Regents. The Regents have the right to inspect our royalty records at any time.

      We may terminate the agreement upon prior written notice, which shall be effective 90 days after the date of such notice. The Regents may provide a notice of default if any of the following occur: we fail to use diligent efforts to develop and commercialize Protegrin-based products, we are unable to meet certain targets for raising capital or expending resources for the development and commercialization of Protegrin-based products, or we cannot achieve the commercialization milestones stated in a development plan that we presented to the Regents. Upon receipt of the notice of default, we have 90 days to cure the default. If we do not cure the default, the agreement automatically terminates. The agreement is effective for the life of the Regents’ patent rights, unless all patent applications are abandoned or no patents are issued, or for 17 years from the first commercial sale of the licensed product, whichever comes first.

      We own one U.S. patent which contains claims covering, among other antimicrobial peptides, iseganan HCl, and methods of making and using these antimicrobial peptides. We also own another U.S. patent that contains claims covering pharmaceutical compositions of antimicrobial peptides, including iseganan HCl, and

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      Applications covering iseganan HCl and the related antimicrobial peptides, as well as their uses, are either pending or have issued in major foreign jurisdictions. Australia has issued patents covering iseganan HCl and the related antimicrobial peptides, as well as their uses. Such patents expire no earlier than 2016. In addition, patent applications covering iseganan HCl and the related antimicrobial peptides, as well as their uses and/or pharmaceutical compositions, are pending in Japan, Canada, Hong Kong, and Israel, and are pending or granted in Europe. Currently the most important patents in the portfolio are the issued patents covering iseganan HCl and pharmaceutical compositions thereof and the pending patents covering the use of iseganan HCl to prevent VAP.

      We cannot guarantee that patents will be issued as a result of any patent application or that patents that have issued will be sufficient to protect our technology or products. We cannot predict the enforceability or scope of any issued patent or those that may issue in the future. Moreover, others may independently develop similar technologies or duplicate the technology we have developed. We also rely on trade secrets and proprietary know-how for protection of certain of our intellectual property. We cannot guarantee that our confidentiality agreements provide adequate protection or remedies in the event of unauthorized use or disclosure of our intellectual property. Third parties may assert infringement or other claims against us. Even if these claims are without merit, defending a lawsuit takes significant time, may be expensive and may divert management attention from other business concerns and if unsuccessful, we may be forced to license the intellectual property.

Government Regulation

      Governmental authorities in the U.S. and other countries extensively regulate, among other things, the research, development, testing, manufacture, labeling, promotion, advertising, distribution, and marketing, of our products. The FDA regulates drugs, including antibiotics, under the Federal Food, Drug, and Cosmetic Act and its implementing regulations. Failure to comply with the applicable U.S. requirements may subject us to administrative or judicial sanctions, such as FDA refusal to approve pending new drug applications, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, and/or criminal prosecution.

      The steps required before a drug may be marketed in the U.S. include:

	•	submission to the FDA of an investigational new drug exemption for human clinical testing, which must become effective before human clinical trials may commence;
	•	adequate and well-controlled clinical trials to establish the safety and efficacy of the drug for each indication;
	•	submission to the FDA of a new drug application; and
	•	FDA review and approval of the new drug application.

      An investigational new drug application automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions about issues such as the conduct of the trials as outlined in the investigational new drug exemption. In such a case, the investigational new drug application sponsor and the FDA must resolve any outstanding FDA concerns or questions before clinical trials can proceed. We cannot be sure that submission of an investigational new drug application will result in the FDA allowing clinical trials to commence.

      Clinical trials typically are conducted in three sequential phases, but the phases may overlap or be combined. A phase I or phase II trial attempts to obtain preliminary indicators of safety and efficacy of a drug candidate in a smaller patient population. Phase II/ III or phase III trials that are suitable for FDA

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      Assuming successful completion of the required clinical testing, the results of the pre-clinical studies and of the clinical trials, together with other detailed information, including information on the manufacture and composition of the drug, are submitted to the FDA in the form of a new drug application requesting approval to market the product for one or more indications. Before approving a new drug application, the FDA usually will inspect the facility or the facilities at which the drug is manufactured, and will not approve the product unless compliance with current good manufacturing practices is satisfactory. If the FDA determines the new drug application and the manufacturing facilities are acceptable, the FDA will issue an approval letter. If the FDA determines the new drug application submission or manufacturing facilities are not acceptable, the FDA will outline the deficiencies in the submission and often will request additional testing or information. Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the new drug application does not satisfy the regulatory criteria for approval. The testing and approval process requires substantial time, effort, and financial resources, and we cannot be sure that any approval will be granted on a timely basis, if at all. After approval, certain changes to the approved product, such as adding new indications, manufacturing changes, or additional labeling claims are subject to further FDA review and approval.

      If regulatory approval is obtained, we will be required to comply with a number of post-approval requirements. For example, as a condition of approval of the new drug application, the FDA may require post marketing testing and surveillance to monitor the drug’s safety or efficacy. In addition, holders of an approved new drug application are required to report certain adverse reactions, if any, to the FDA, and to comply with certain requirements concerning advertising and promotional labeling for their products. Also, quality control and manufacturing procedures must continue to conform to current good manufacturing practices after approval, and the FDA periodically inspects manufacturing facilities to assess compliance with current good manufacturing practices. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain compliance with current good manufacturing practices.

      We use and will continue to use third-party manufacturers to produce our products in clinical and commercial quantities, and we cannot be sure that future FDA inspections will not identify compliance issues at the facilities of our contract manufacturers that may disrupt production or distribution, or require substantial resources to correct. In addition, discovery of problems with a product may result in restrictions on a product, manufacturer, or holder of an approved new drug application, including withdrawal of the product from the market. Also, new government requirements may be established that could delay or prevent regulatory approval of our products under development.

      The FDA provides periods of marketing exclusivity for new drugs that are the subject of an approved new drug application. Iseganan HCl oral solution, if approved, may qualify for marketing exclusivity, which would prevent any competitors from seeking approval of a generic version until five years after approval of our product candidate. Even if a product is approved and granted exclusivity, it does not prevent the approval and marketing of competing products.

      Outside the U.S., our ability to market our products will also be contingent upon receiving marketing authorizations from the appropriate regulatory authorities. The foreign regulatory approval process includes all the risks associated with FDA approval described above. The requirements governing conduct of clinical trials and marketing authorization vary widely from country to country.

      Under European Union regulatory systems, marketing authorizations may be submitted either under a centralized or decentralized procedure. The centralized procedure provides for the grant of a single marketing authorization that is valid for all European Union member states. The decentralized procedure provides for mutual recognition of national approval decisions. Under this procedure, the holder of a national marketing authorization may submit an application to the remaining member states. Within 90 days of receiving the applications and assessment report, each member state must decide whether to recognize approval.

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      We plan to choose the appropriate route of European regulatory filing in an attempt to accomplish the most rapid regulatory approvals. However, the chosen regulatory strategy may not secure regulatory approvals or approvals of the chosen product indications. In addition, these approvals, if obtained, may take longer than anticipated. We cannot assure you that any of our product candidates will prove to be safe or effective, will receive regulatory approvals, or will be successfully commercialized.

Employees

      As of February 27, 2004, we had ten full-time employees, five of whom are engaged in product development activities and five of whom are engaged in general and administrative activities. We also make extensive use of consultants and other third party clinical service providers in the execution of our strategy. Our employees are not represented by a collective bargaining agreement. We believe that we have good relations with our employees.

Available Information

      Our website address is www.intrabiotics.com. We make available free of charge through our website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to these reports as soon as reasonably practicable after filing.

      We are currently leasing one facility at 2483 East Bayshore Road, Suite 100, in Palo Alto, California. The facility provides approximately 3,600 square feet of office space. The lease expires on May 31, 2004 and includes an option to extend until November 30, 2004. We believe that we will need to add additional facilities to allow for growth in headcount within the next year.

      (a) We are not a party to any material legal proceedings.

      (b) No legal proceedings were terminated in the fourth quarter.

      No matters were submitted to the vote of stockholders through the solicitation of proxies or otherwise during the three-month period ended December 31, 2003.

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PART II

Market for Common Equity

      Our common stock began trading on the Nasdaq National Market on March 28, 2000, under the symbol “IBPI.” Prior to that time, there had been no public market for our common stock. We effected a 1:12 stock split on April 10, 2003. The table below sets forth the high and low bid prices for our common stock for the periods indicated:

*	Bid price is adjusted to reflect the 1:12 stock split effected on April 10, 2003.

      As of February 27, 2004, there were 137 holders of record of common stock. We estimate that included within the holders of record are approximately 3,000 beneficial owners of common stock. As of February 27, 2004, the closing price for our common stock was $18.00.

Recent Sales of Unregistered Securities

      On May 1, 2003, in a private placement transaction, the Company sold 350 shares of a newly created Series A convertible preferred stock (the “Preferred Stock”), $0.001 par value, and issued warrants to purchase 920,699 shares of the Company’s common stock, resulting in net cash proceeds of $3.2 million. The primary purpose of completing the private placement was to provide funds for a clinical trial of iseganan HCl for the prevention of ventilator-associated pneumonia (VAP), as well as for other general corporate purposes and working capital. The foregoing purchases and sales were exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(2) thereof, on the basis that the transaction did not involve a public offering.

      On October 10, 2003, in a private placement transaction, the Company sold 1,774,000 shares of newly issued common stock, $0.001 par value, and issued warrants to purchase 354,800 shares of the Company’s common stock, resulting in net cash proceeds of $18.5 million. The primary purpose of completing the private placement was to provide additional funding for the two pivotal trials of iseganan HCl for the prevention of VAP, as well as for other general corporate purposes and working capital. The foregoing purchases and sales were exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(2) thereof, on the basis that the transaction did not involve a public offering.

Dividend Policy

      We have not paid and do not plan to pay any cash dividends on our common stock in the foreseeable future. We intend to retain any earnings for use in our business operations.

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Equity Compensation Plan Information

      The following table provides certain information with respect to all equity compensation plans in effect as of December 31, 2003.

(1)	No new stock awards may be granted under the Amended and Restated 1995 Stock Option Plan.
(2)	Generally, on each December 31, the 2000 Employee Stock Purchase Plan share reserve will increase automatically by the lesser of (i) 1% of the outstanding Common Stock, (ii) 41,666 shares, or (iii) a lesser amount determined by the Board. However, this plan was suspended in March 2003, and consequently there are currently no securities reserved for issuance under this plan.
(3)	On each December 31, the 2000 Equity Incentive Plan share reserve will increase automatically by the lesser of (i) 5% of the outstanding shares of Common Stock on a fully diluted basis, (ii) 166,666 shares, or (iii) a lesser amount determined by the Board. An additional increase in the reserve of 158,333 shares was approved by the stockholders of IntraBiotics in a special meeting on April 3, 2003.

      The following is a brief summary of material features of plans adopted without stockholder approval.

2002 Non-Officer Equity Incentive Plan

      Our 2002 Non-Officer Equity Incentive Plan provides for stock awards (grants of non-statutory stock options, stock bonuses or rights to acquire restricted stock) to employees and consultants who are not our officers. Officers not previously employed by us may also be granted stock awards. An aggregate of 190,965 shares of common stock have been reserved for issuance under this plan. As of December 31, 2003, options to purchase 180,541 shares were outstanding and 10,424 shares remained available for grant. The exercise price of options granted under the plan may not be less than 85% of the fair market value of our common stock on the date of the grant. Options granted under the plan have a maximum term of ten years and typically vest over a four-year period. Options may be exercised prior to vesting, subject to repurchase rights in favor of IntraBiotics that expire over the vesting period. Shares issued under a stock bonus award may be issued in exchange for past services performed for us. Shares issued pursuant to restricted stock awards may not be purchased for less than 85% of the fair market value of our common stock on the date of grant. Shares issued pursuant to stock bonuses and restricted stock awards may be subject to vesting and a repurchase option in favor of IntraBiotics. The plan and stock awards issued thereunder may be amended by the Board at any time or from time to time. The plan is subject to certain adjustment and change of control provisions similar to those governing the terms of our equity incentive plans approved by stockholders.

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      The following selected financial data should be read in conjunction with our financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Items 7 and 8 of this report. The financial data for periods prior to the financial statements presented in Item 8 of this Form 10-K are derived from audited financial statements not included in this Form 10-K.