UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-52530

Omni Bio Pharmaceutical, Inc.

(Exact Name of Registrant as Specified in its Charter)

Colorado		20-8097969
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5350 South Roslyn, Suite 430, Greenwood Village, CO 80111
(Address of principal executive offices, including zip code)

303-867-3415
Registrant’s telephone number including, area code

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:

Common Stock Par Value $0.001
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act Yes o No þ

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.05 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) 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. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

The aggregate market value of the voting and non-voting common stock held by non-affiliates as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $224 million based on the closing sale price of the registrant’s common stock on such date as reported on the Over the Counter Bulletin Board.

The number of shares outstanding of the registrant’s common stock as of June 20, 2011 was 31,444,396.

 

 

TABLE OF CONTENTS

PART I
Item 1. Business			2
Item 1A. Risk Factors			13
Item 1B. Unresolved Staff Comments			24
Item 2. Properties			24
Item 3. Legal Proceedings			25
PART II
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			25
Item 6. Selected Financial Data			27
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			28
Item 7A. Quantitative and Qualitative Disclosures About Market Risk			36
Item 8 Financial Statements and Supplementary Data			37
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure			37
Item 9A. Controls and Procedures			37
Item 9B. Other Information			40
PART III
Item 10. Directors, Executive Officers and Corporate Governance			40
Item 11. Executive Compensation			43
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			47
Item 13. Certain Relationships and Related Transactions, and Director Independence			49
Item 14. Principal Accountant Fees and Services			49
PART IV
Item 15. Exhibits and Financial Statement Schedules			51
SIGNATURES			54
Exhibit 21
Exhibit 23.1
Exhibit 23.2
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1

PART I

ITEM 1.		BUSINESS.

Forward looking Statements

The following discussion contains forward-looking statements regarding us, our business, prospects and results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Factors that may affect such forward-looking statements include, without limitation: our ability to successfully develop new products and services for new markets; the impact of competition on our revenues, changes in law or regulatory requirements that adversely affect our ability to market our products; delays in the introduction of our products or services into the market; our ability to secure adequate financing for our operations; and our failure to keep pace with our competitors.

When used in this report, words such as “believes,” “anticipates,” “expects,” “intends” and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made by us in this report and other reports filed with the Securities and Exchange Commission (“SEC”) that attempt to advise interested parties of the risks and factors that may affect our business.

Except as the context otherwise requires, the terms “Company,” “we,” “our,” “us” or “Omni,” means Omni Bio Pharmaceutical, Inc. and its wholly-owned subsidiary, Omni Bio Operating, Inc.

Background and History

We were incorporated in Colorado under the name of Across America Financial Services, Inc. (“Across America”) on December 1, 2005 as a wholly-owned subsidiary of Across America Real Estate Corp. Across America completed a spin off from Across America Real Estate Corp. in March 2007. Across America intended to act as a mortgage broker for commercial real estate transactions; however, no revenues were generated from this business.

Prior to our formation, two separate corporations were formed for the purpose of evaluating new uses of an FDA- approved agent. One corporation, Maxcure Pharmaceutical, Inc. (“Maxcure”), was formed as a Colorado corporation on December 26, 2006. Maxcure was formed for the purpose of entering into a license agreement and research agreement with the Regents of the University of Colorado (“RUC”) to further scientific studies on an FDA-approved agent related to treatment and prevention of viral disorders. The second corporation, Apro Bio Pharmaceutical Corporation (“Apro Utah”), was formed as a Utah corporation on February 28, 2006. Apro Utah was formed for the purpose of entering into a license agreement and research agreement with RUC for advancing scientific studies on an FDA-approved agent related to treatment and prevention of bacterial disorders. Part of the motivation for formation of Apro Utah was to attain the ability to sell treatments and/or countermeasures related to the bacterial disorders to federal agencies. On March 31, 2008, Apro Utah was merged into Maxcure and the name of the merged entity was changed to Apro Bio Pharmaceutical Corporation (“Apro Bio”).

On March 31, 2009, Across America completed the acquisition of Apro Bio pursuant to the terms of the Agreement of Merger and Plan of Reorganization, as amended (the “Merger”), among Across America, Apro Bio and Across America Acquisition Corp. (“AAAC”), a Colorado corporation and a wholly-owned subsidiary of Across America. Pursuant to the terms of the Merger, AAAC was merged into Apro Bio, and Apro Bio became a wholly-owned subsidiary of Across America. As required by the terms of the Merger, on May 27, 2009, Across America changed its corporate name to Omni Bio Pharmaceutical, Inc.

Business Plan and Operation

We are in pursuit of advancing existing and novel therapies that we believe have the potential to move through clinical trials by shepherding them through the FDA approval processes and advancing them through to commercialization. This core strategy is based on licensing issued patents and pending patent applications that cover new uses for an existing FDA-approved drug, Alpha-1 Antitrypsin (“AAT”), that has come off of its initial patents. AAT is currently prescribed for the treatment of pulmonary emphysema and chronic obstructive pulmonary disease (“COPD”) among individuals with genetic deficiency of AAT. This indication is unrelated to our licensed intellectual property. Any patents originally issued to other entities claiming the composition of AAT have expired.

We are the licensee of three patent portfolios from RUC. These patent portfolios are comprised of three issued and 24 pending patent applications. One license agreement with RUC relates to the treatment of diabetes, transplantation or graft rejection and promotion of transplant or graft survival. Transplantation rejection includes cellular and organ transplant rejection. One focus related to cellular transplantation is islet cell transplantation for the treatment of some diabetics and the treatment of diabetes in general. We have 15 pending patent applications under this license agreement.

A second license agreement relates to the treatment and/or prevention of bacterial disorders, including bacterial pneumonia, tuberculosis and biowarfare agents such as anthrax and includes the licensing of one issued patent — United States Patent No. 7,850,970, Titled: Inhibitors of Serine Protease Activity, Methods and Compositions for Treatment of Bacterial Infections. This patent expires on August 26, 2024 and covers the prevention of anthrax infection. Additionally, we have five pending patent applications under this license agreement.

A third license agreement focuses on the treatment and/or prevention of viral disorders and includes the licensing of two issued patents: (1) United States Patent No. 6,849,605, Titled: Inhibitors of Serine Protease Activity, Methods and Compositions for Treatment of Viral Infections, expiring on March 3, 2020; and (2) United States Patent No. 7,807,781 Titled: Inhibitors of Serine Protease Activity, Methods and Compositions for Treatment of Viral Infections, expiring on January 28, 2025. Both of these patents cover the prevention of HIV. Additionally, we have four pending patent applications under this license agreement.

In addition to the three licenses with RUC, we are a licensee to a pending patent held by Bio Holding, LLC (“Bio Holding”) for the treatment of diabetes. The Bio Holding pending patent claims relating to the treatment of diabetes using AAT are separate and distinct from the claims filed by RUC and licensed by us. It is possible that RUC’s and Bio Holding’s patent filings could be issued or that one or the other set of claims may be allowed to the disadvantage of the other. Alternatively, both RUC’s and Bio Holding’s patent applications could be rejected, which could have an adverse material effect on our ability to develop a commercial market for AAT for the treatment of diabetes. See further discussion of our licensing arrangement with Bio Holding below under this Item. Dr. Leland Shapiro, our principal investigator for the University of Colorado Denver (“UCD”) on sponsored research agreements that are funded by us, is the majority shareholder of Bio Holding and beneficially owns approximately 12% of our common stock as of March 31, 2011.

There are three primary companies that currently manufacture and sell formulations of AAT for the treatment of genetic deficiency and the treatment for a pulmonary disorder (brand name in parenthesis): (i) Baxter International Inc. (“Baxter”) (Aralast NP ^TM), (ii) CSL Behring USA (Zemaira^®), and (iii) Talecris Biotherapeutics Corp. (“Talecris”) ( Prolastin C^®). The total estimated market for AAT in 2010 in the current AAT indications was approximately $475 million according to information published by Talecris, who has approximately 74% of the current market. Our licensed technologies focus on alternative uses of these commercially available products.

To date, our business efforts have been largely dedicated in pursuing additional capital in order to fund sponsored research agreements (“SRAs”) related to the licenses with RUC (the “RUC Licenses’) and Bio Holding (the “Bio Holding” License) to further research related to bacterial disorders, viral disorders, cellular transplantation/graft rejection and diabetes-related disorders, and to fund a human clinical trial in Type 1 diabetes. We intend to continue to outsource the normally capital intensive scientific research function to academic research institutions such as UCD. This approach can provide us with a specific scientific budget for funding each application, without the substantial cost of carrying-out basic research internally. With this approach, we expect to be able to work with each project’s lead scientists, overseeing patent application projects and closely managing our corporate overhead, which should allow most of our expenses to be concentrated on research and development efforts and prosecuting the patent applications we have licensed.

Type 1 Diabetes Clinical Trial

In the second half of 2009, we began our collaboration with the Barbara Davis Center for Childhood Diabetes (the “Barbara Davis Center”) to conduct a proof of principle clinical trial for the treatment of Type 1 diabetes patients. On June 7, 2010, Omni, RUC and The Barbara Davis Center (collectively with RUC, the “Institution”) entered into an Investigational Site Agreement (the “ISA”), whereby the Institution, acting on our behalf, agreed to arrange, administer and manage a clinical study to evaluate Baxter’s AAT formulation, Aralast NP^TM, in the treatment of patients with Type 1 diabetes (the “Diabetes Clinical Trial”). The Diabetes Clinical Trial currently includes 15 patients and is being conducted pursuant to an Investigational New Drug Application (the “IND”) granted to us by the United States Food and Drug Administration (“FDA”). The IND allows for the Diabetes Clinical Trial to include up to 50 patients. Base costs, which include the enrollment fee and other incidental charges for the 15 patients are expected to be approximately $585,000. Any increase in the patient size of the Diabetes Clinical Trial would require us to raise additional capital. To date, we have expended approximately $365,000 in cash related to the Diabetes Clinical Trial.

In March 2010, Omni and Baxter Healthcare Corporation, a subsidiary of Baxter (“Baxter Healthcare”) executed a Material Transfer Agreement (the “Material Transfer Agreement”), whereby Baxter Healthcare agreed to supply, at no cost, 1.25 kg of Aralast NP^TM, with a commercial value of $420,000, to us for use in the Diabetes Clinical Trial. Pursuant to the Material Transfer Agreement, we warrant that the Diabetes Clinical Trial will be conducted under either a waiver to an IND or an IND filed with the FDA. Under the Material Transfer Agreement, we are responsible to maintain the IND and comply with all reporting and other obligations associated with the IND. In addition, we are required to prepare for Baxter Healthcare a summary of the information and results generated by the Diabetes Clinical Trial upon its completion and provide copies of any interim reports provided to us by the Barbara Davis Center.

To date, eight young adult patients had undergone treatment and had completed the eight week infusion protocol. Upon receipt and review of the data to be provided by the Barbara Davis Center to the Data and Safety Monitoring Board of the NIH, we anticipate that clearance will be provided to initiate treatment of the remaining seven subjects (of the initial 15 patients) in the Diabetes Clinical Trial provided that no adverse events with any of the enrolled patients have occurred. The seven additional subjects enrolled into the trial will be juveniles. To date, there have been no adverse events reported in the Diabetes Clinical Trial.

License and Sponsored Research Agreements

RUC Licenses

Under the RUC Licenses, we have exclusive, royalty-bearing licenses to certain of RUC’s patent rights (the “Patent Rights”) on a worldwide basis. In addition, any improvements to the inventions covered by the RUC Licenses claimed in the Patent Rights or to any other preexisting patent application or patent that is dominated by the Patent Rights shall be included in the terms and conditions of the respective license agreement with no additional compensation to RUC.

The RUC Licenses further provide that in the event that an investigator makes any invention in the field of use, the practice of which would not require the practice of an invention claimed in or covered by the licensed Patent Rights (“Independent Invention”), then, provided such Independent Invention is not subject to any prior contractual or legal obligation, we would have an exclusive option (“Option”) to obtain the worldwide intellectual property rights and commercial rights on terms and conditions to be negotiated in good faith by the parties following the exercise of the Option.

Bacterial Disorders License

On May 15, 2006, we entered into our first exclusive license agreement with RUC covering patent applications directed to treatment and/or prevention of bacterial disorders (the “Bacterial License”). Some of these disorders include disorders due to anthrax, tuberculosis and bacterial pneumonia. Concurrently, we entered into a three year SRA with RUC on behalf of UCD for research to advance the bacterial disorders license agreement (the “Bacterial SRA”). Under the Bacterial SRA, we made payments aggregating $1,097,460, and we have no further obligations under this SRA. We are continuing to pursue patent rights directed to targeting bacterial disorders with the United States Patent and Trademark Office (“USPTO”) as well as international patent offices, which include Japan, Canada and Europe.

Viral Disorders License

On March 31, 2008, we entered into a license agreement with RUC covering patent applications and an issued patent directed to treatment and/or prevention of viral disorders (the “Viral License”). Some of these disorders include, but are not limited to, HIV and influenza. We are currently pursuing expanded patent rights based on our licensed technology directed to treating viral-related disorders with the USPTO.

On August 18, 2010, we entered into an SRA with RUC whereby UCD will perform studies “in vitro” and “in vivo” to determine the biological activity of AAT as an inhibitor of influenza (the “Viral SRA”). The Viral SRA was executed pursuant to the Viral License. We are obligated to make quarterly payments to UCD, which total approximately $440,000 over a two-year period. All rights to intellectual property developed in connection with the Viral SRA (the “Viral Intellectual Property”) will belong to RUC, and RUC will have the right to obtain patent protections on the Viral Intellectual Property. In accordance with the terms of the Viral SRA, RUC granted to us an option to acquire an exclusive, worldwide, royalty-bearing license of any of the Viral Intellectual Property, subject to certain conditions and exceptions. To date, we have made payments in the amount of approximately $110,000 under this SRA.

On June 8, 2011, we gave written notice to RUC terminating the Viral SRA. The termination of the Viral SRA will be effective 45 days from the date of written notification, unless an earlier termination date is negotiated with RUC. Unless otherwise negotiated with RUC, we must reimburse UCD for the total actual and reasonable costs it has incurred under the Viral SRA through the date of termination, including those costs necessary to implement the early termination of the Viral SRA and costs incurred by UCD as a result of non-cancelable obligations, which may extend beyond the date of such termination. In addition, certain indemnification obligations and intellectual property rights will survive the termination of the Viral SRA. The termination of the Viral SRA does not impact the continuance of the Viral License or licensing of the intellectual property and patents (both issued and pending).

Cellular Transplant License

On November 12, 2008, we entered into a license agreement with RUC for technology related to the treatment of cellular transplantation and graft rejection and diabetes (the “Cellular Transplant License”). The transplantation procedures include organ and cellular transplantation, including bone marrow, as well as pancreatic islet cells, heart, kidney and lung, among others. We are currently pursuing expanded patent rights based on our licensed technology directed to treating cellular transplantation and graft rejection disorders with the USPTO and international patent offices, which include Canada and Europe.

Bio Holding License

On September 28, 2009, we entered into a license agreement with Bio Holding for patent applications related to the treatment of diabetes (the “Diabetes License”). In addition, the Diabetes License grants us a first refusal to license any other intellectual property owned by Bio Holding that is not part of the Diabetes License.

In consideration for the Diabetes License, we were obligated to pay Bio Holding $25,000. As additional consideration, we issued to a minority shareholder of Bio Holding a warrant (the “Bio Holding Warrant”) to purchase 650,000 shares of our common stock at an exercise price of $3.00 per share. The Bio Holding Warrant expires on September 28, 2014. We estimated the fair value of the Bio Holding Warrant on the issuance date at $5,590,980, which was calculated using the Black-Scholes model. The total value ascribed to the Bio Holding License was $5,615,980.

On September 3, 2010 and pursuant to the Diabetes License, we executed an SRA with RUC (the “Diabetes SRA”), whereby UCD will study the effects of AAT on cytokine production by human pancreatic islet cells and the ability of AAT to protect these cells from induced toxicity (the “Project”). The Diabetes SRA will terminate on the earlier of the completion of the Project or February 28, 2012, unless extended or renewed in writing by either Omni or RUC or otherwise terminated prior to February 28, 2012 in accordance with the terms of the Diabetes SRA. We are obligated to make payments to UCD of $88,000 over a one-year period commencing in September 2010, and to date, we have made payments in the amount of approximately $58,000 under this SRA.

License Payments and Commitments

To date, the following consideration has been paid related to the RUC Licenses and the Diabetes License:

										Fair value of
						SRA				equity
License		License fee				payments				securities				Total
Bacterial License		$	20,000			$	1,097,460			$	64,301			$	1,181,761
Viral License		$	25,000			$	110,000			$	—			$	135,000
Cellular Transplant License		$	34,736			$	—			$	698,939			$	733,675
Diabetes License		$	25,000			$	58,000			$	5,590,980			$	5,673,980
		$	104,736			$	1,265,460			$	6,354,220			$	7,724,416

Future royalty payments under the RUC Licenses and Diabetes License are summarized below:

				Minimum		Milestone		Earned		Sublicense
License		Field of Use		Royalties		Royalties		Royalties (5)		Royalties (6)
Bacterial License		Bacterial Disorders		$25,000 per year starting May 15, 2011		(1)		4% of Net Sales		20% to 30%
Viral License		Viral Disorders (including HIV)		$50,000 per year after first commercial sale		(2)		4% of Net Sales		20% to 30%
Cellular License		Cellular Transplantation /Graft Rejection		$50,000 per year after first commercial sale		(3)		3% of Net Sales		20% to 30%
Diabetes License		Diabetes		None		None		4% of Gross Revenues (4)		30%(4)

(1)		Payable to RUC as follows: $30,000 upon completion of preclinical trial; $50,000 upon completion of a phase I clinical trial; $100,000 upon completion of a phase II clinical trial; $200,000 upon completion of a phase III clinical trial; and $300,000 upon receipt of approval of FDA or foreign equivalent.
(2)		Payable to RUC as follows: $100,000 upon completion of any phase III clinical trial and $150,000 upon first commercial sale. No milestone royalties are required for the first indication. For the second indication, 100% of the milestone royalties shall be paid, and for subsequent indications 50% of the milestone royalties shall be paid.

(3)		Payable to RUC as follows: $25,000 upon initiation of a phase II clinical trial; $100,000 upon initiation of a phase III clinical trial; and $200,000 upon receipt of approval of FDA or foreign equivalent.
(4)		Payable to Bio Holding.
(5)		Earned Royalties are based on direct net sales of product by Omni.
(6)		Sublicense Royalties are based on royalties received by Omni on a sublicense arrangement with a third party.

The license agreements expire upon the expiration date of the last patent covered by the agreement and may also be terminated by either party in the event of a default by the other party.

Targeted Markets

Type 1 Diabetes

In October 2008, Dr. Leland Shapiro, Dr. Charles Dinarello and Dr. Eli Lewis published in the Proceedings of the National Academy of Sciences (October 21, 2008 Volume 105, No. 42) a study titled, Alpha 1-Antitrypsin monotherapy induces immune tolerance during islet allograft transplantation in mice. This paper reported the success of an acceptable animal model study in support of the potential effectiveness of protecting the insulin-producing beta cells as well as during transplantation of islet cells in humans when AAT was administered to prevent organ rejection of islet cells. Further analysis of these mouse-model results caused these scientists to hypothesize that certain properties of AAT could result in reduced or eliminated islet damage, which is a probable cause of Type 1 diabetes. Based on this hypothesis, during the third calendar quarter of 2009, we pursued sponsoring a human clinical trial at the Barbara Davis Center.

In October 2010, the Diabetes Clinical Trial commenced with the first patient infusion. The purpose of the Diabetes Clinical Trial is to study whether administering AAT to recently diagnosed Type 1 diabetics could potentially mediate or eliminate the deterioration of humans having remaining islet cell populations. We believe that patients admitted into the Diabetes Clinical Trial could have a variety of outcomes, some or all of which may not be successful or even partially successful. Patients may have separate and distinct outcomes from the administration of the drug. They may exhibit no change in the rate of deterioration of their islet cells, or if a reduction in the rate of deterioration is determined, the rate may be inadequate to prevent the eventual occurrence of insulin dependency. Alternatively, the administration of AAT over the eight-week infusion period could cause a reduction or elimination of the deterioration of the islet cell destruction. There is also the possibility that the administration of AAT will only temporarily prevent islet cell deterioration and that, in such an event, the utilization of AAT could be uneconomical.

In the event there is some degree of favorable outcomes in the Diabetes Clinical Trial, we have approval and could choose to increase the enrollment of the patient population to as many as 50 patients, subsequent to the initial enrollment. Additional enrollment in the study would require a significant amount of capital that we currently do not have, and there is no assurance that such financial resources would be made available to us on favorable terms, if at all. In the event that we obtain favorable data from the Diabetes Clinical Trial, there is no assurance that we will obtain FDA approval for the use of AAT to treat Type 1 diabetes in humans. Additionally, there is no assurance that, if approved, we will have available resources to complete a Phase III clinical trial in a timely manner or at all.

According to the Juvenile Diabetes Research Foundation International, as many as three million Americans may have Type 1 diabetes. Each year over 15,000 children are diagnosed with diabetes in the U.S (approximately 40 children per day). We believe that AAT may arrest the loss of islets if treatment is initiated soon after diagnosis since there are residual beta cells at this early point in the disease progression. We believe that the market for the use of AAT in the treatment of Type 1 diabetes could potentially exceed over time its current market in the treatment of COPD and emphysema. In the U.S. alone, approximately 15,000 new patients per year could result in an addressable market size of approximately $400 million. However, serving this market would be subject to, among other things, the availability of AAT products from the current AAT manufacturers.

Cellular Transplantation

Researchers associated with us have hypothesized that AAT could be effective in reducing transplant rejection in various types of cellular and organ transplants. As reported above, a study was published in the Publications of the National Academy of Sciences in 2005 and 2008 that illustrated that AAT could be effective in treating Type 1 diabetes by, for example, reducing or eliminating transplantation rejection. One basic theory on why the therapeutic appears to be effective in the early mice studies is that it prevents or reduces an attack on the transplanted islets by the immune system or other method. Islets are cells that exist in the pancreas and are responsible for the production of insulin. Insulin is critical to the metabolism process in burning sugar and creating energy for the cells in the body. Sugar, if left unchecked by inadequate supplies of insulin, can result in weight gain, high blood pressure, cardiovascular disease, early blindness and stroke. A number of these conditions can result in early stages of death.

Islet transplantation in Type 1 diabetes normally incurs a very high rejection (or cell death rate), and in these early studies, mice treated at a certain level with the therapeutic evidenced a 100% acceptance of the graft transplant. Islet transplantation is a relatively simple one hour surgical procedure, but has been plagued with high levels of transplant rejection. This type of therapy in the human population could have a significant impact on the treatment of Type 1 diabetics if the rate of rejection can be reduced or eliminated. Typically, Type 1 islet transplantation occurs in very serious cases. The high incidence of graft rejection by recipients decreases the number of islet transplant patients that can be treated due in part to the fact that a recipient who has rejected islets will likely undergo additional procedures, which causes additional drain on the supply of islet cells that can be used for transplant.

Graft Versus Host Disease

An additional AAT indication is the treatment of graft versus host disease (“GVHD”). GVHD commonly occurs in a bone marrow transplant, but is also possible in other organ transplant procedures. Bone marrow transplantation is indicated for late stage cancer patients who have failed alternative therapies. Bone marrow is the soft tissue inside bones that helps form blood cells that are responsible for immune response. A donor other than an identical twin is normally a close, but not exact match to a recipient’s bone marrow. Differences between the donor’s and recipient’s bone marrow can cause T cells (a type of white blood cell) to attack the recipient’s body due to the foreign marrow being recognized as foreign substance by the T cells. Acute GVHD starts within the first three months after transplantation, while chronic GVHD starts three months after transplantation. GVHD can last three years or longer.

Once a recipient has received a bone marrow transplant, the recipient normally takes drugs that suppress the immune system, reducing the severity or risk of incurring GVHD. Acute symptoms of GVHD can include abdominal pain and cramps, diarrhea, fever, jaundice, skin rash, vomiting and weight loss. Chronic symptoms can include dry eyes and mouth, hair loss, hepatitis, lung and digestive tract disorders and skin rash. Increased rates of infection due to immune system suppression can be commonplace. Complications can include severe damage to the liver, lung or digestive tract, severe infection and severe lung disease. Some of these complications can lead to death. Mortality rates from GVHD depend on the degree of severity.

The market in the U.S. for bone marrow transplants is estimated at $1.3 billion. We believe that the market for the use of AAT in the treatment of GVHD could potentially exceed over time the current market in the treatment of COPD and emphysema. In the U.S. alone, approximately 25,000 new patients per year who are undergoing bone marrow transplants would result in an addressable market size of approximately $375 million. However, serving this market would be subject to, among other things, the availability of AAT products from the current AAT manufacturers.

Possible Future Clinical Trials Through Strategic Partnerships

In February 2011, we announced that we had obtained letters of intent for conducting future clinical trials as follows: (1) treatment of GVHD in bone marrow transplant patients; ( 2) two separate human clinical trials for the treatment of transplant rejection in kidney transplant recipients; (3) the initiation of a late stage Type 1 diabetes trial; and (4) the initiation of a trial in Type 2 diabetics that are not responding to currently available forms of therapy and are at risk of severe cardiovascular complications. We believe that advancing clinical trials in these indications could provide additional commercial opportunities where our intellectual property position is currently the strongest. As a first step, we will need to create a partnership, most likely with an existing AAT manufacturer, and with that partnership discuss the commercial viability of these indications. Based on their assessment of their current and future AAT production capabilities, their current and potential new AAT markets and the strength and commercial application of our intellectual property in these indications, we would hope to form a strategic partnership with one or more of them. We would position such a partnership(s) to supply AAT product free of charge and to fund the non-drug clinical trial costs. Subject to available financing, we would likely first commence a GVHD clinical trial.

Other AAT Indications

Mycobacterium Tuberculosis and Mycobacterium Avium Complex

Infection with tuberculosis (“TB”) is a global concern. According to data published by the World Health Organization in 2010, approximately one-third of the world population is infected with this organism and approximately 1.7 million people worldwide died from TB in 2009. The current antimicrobial agents used to treat TB must be administered for a prolonged period of time, in the range of 6 to 18 months. One growing concern is the detection of multi-drug resistant strains of TB that are difficult to treat with available anti-TB drugs and are on the rise. Some of these resistant strains of TB are all but incurable using currently available antibiotics. Our approach to TB treatment will be to use a different focus on alternative treatments than are currently available. It is possible that therapy based on our technology is impervious to mutated forms of TB, such as the multi-drug resistant strains of TB, because the targets that this potential technology therapy affects are part of the host and not part of the mycobacterium tuberculosis organism. Therefore, the target that the potential therapy treats does not change relative to the type of organism a patient is infected with and therapeutic effectiveness should not diminish.

Researchers at UCD have conducted numerous laboratory studies that support an anti-mycobacterial effect of this potential therapy. These studies have included investigation of the several molecules that are responsible for TB containment. The UCD researchers have demonstrated in laboratory testing that AAT blocks TB infection of human cells. This has been substantiated using at least two independent infection systems. Furthermore, the UCD researchers have replicated these successful studies using rapidly-growing mycobacteria (“RGM”) organisms that are related to TB.

Animal testing of this technology has been initiated through a study which was conducted at Colorado State University and funded by us, and these models can be used to demonstrate efficacy of a therapeutic against tuberculosis. We have used an animal model for our initial studies and these studies have had success in demonstrating efficacy of the potential therapeutic against tuberculosis. However, there is no proof that the potential therapy against TB and other mycobacterial will work in humans. Since we will not manufacture our own clinical therapeutic candidate (a drug has been utilized that is sold by a large biopharmaceutical company), it will be necessary to purchase candidate drugs from a manufacturer. Alternatively, this potential therapy could be licensed for its method of use to a manufacturer in exchange for royalties and additional compensation.

Influenza

The 2009 outbreak of the H1N1 influenza virus caused a sudden increase in the interest of developing new vaccines and treatments for “pandemic” types of flu. Although the outbreak did not reach the extreme levels that were predicted by some, the Center for Disease Control in March 2010 estimated that there had been about 12,000 deaths in the United States alone. The 1918 pandemic flu outbreak is the only massive recorded outbreak of deadly flu in modern history. It is estimated that in excess of 50,000,000 deaths occurred from this pandemic flu, and the outbreak resulted in a 10 year reduction in the average life expectancy of the population at its time.

Dr. Leland Shapiro has conducted limited animal studies that have evidenced that AAT could be used as a potential treatment for influenza infection. In animal studies when AAT was introduced, influenza cell production was limited by approximately 40% when compared to the control sample that had been similarly infected with influenza. In the same experiment, a larger dosage of AAT resulted in an approximate 70% reduction in the measurable amount of influenza when compared to the control. This treatment could potentially be utilized for seasonal flu, bird flu, swine flu and weaponized flu. Dr. Leland Shapiro’s laboratory findings in animal studies have determined that AAT is effective even if the influenza virus changes or mutates.

The origin of this technology dates to a discovery by UCD researchers. It was found that a human deficit in the natural human serine protease inhibitor has a significant correlation with increased incidence of influenza infection. The study reviewed patient data records of 140 patients over an approximate seven-year period. Of the 140 patients, 28 were deficient in the therapeutic, while 112 were not. Over the course of the study period, of the 28 patients with the deficiency, approximately 80% were diagnosed with the flu. It was also observed that of the 112 patients that did not have the deficiency, approximately 30% of this group were diagnosed with the flu.

Anthrax

The U.S. government in recent years has established a number of government programs including the Project Bioshield Act of 2004, which have provided funds to companies that are pursuing promising technologies for the prevention of or treatment of bio-hazard related diseases, including anthrax. Our original plans to pursue a commercial application for an anthrax treatment utilizing AAT have been deferred due to our belief that our potential treatment for immunological diseases such as Type 1 diabetes or other broad spread infectious diseases such as GVHD have a substantially greater opportunity of obtaining the requisite funding necessary to obtain regulatory approval. We are continuing to investigate options for governmental funding programs in the U.S. and in Europe, but have reduced our emphasis in this area.

Bacterial Pneumonia

Bacterial pneumonia in ICU’s is often caused by a class of organisms called gram-negative rods and account for a sizable percent of ICU-related deaths. These infections are challenging to treat because patients in the ICU are already weakened by serious underlying disease. Also, these gram-negative organisms are often resistant to the antibiotics used to treat these infections.

Our technology may be used to treat gram-negative rod pneumonias, and this approach has important advantages compared to standard antibiotic use. These advantages include the reduced possibility of bacterial mutation-induced resistance to this technology’s agents. Based in part on the mechanism of activity of this technology, we believe that a drug based on this concept would best work as a prophylactic agent that blocks the onset of pneumonia. It is less likely that this approach can be used as a treatment for bacterial pneumonia after infection has occurred. More research is needed, however, to investigate the possibility of benefit after pneumonia has occurred.

Commercialization and Competition

We will rely on the availability of AAT supply from one or more the current manufacturers: Talecris, Baxter, CSL Behring and Kamada Ltd. (collectively, the “AAT Manufacturers”). All of their products are currently FDA approved and used for treatment of emphysema among individuals with genetic deficiency of AAT.

We intend to commercialize the AAT indications covered under our licenses through sublicensing arrangements with one or more of the AAT Manufacturers. To date, we have not entered into any such arrangements. Our ability to sublicense to one or more of the AAT Manufacturers will likely be subject to their own marketing plans for current AAT indications, their desire and willingness to market their AAT products into new AAT markets covered by our licensed intellectual property and the availability of their AAT product supply for new AAT indications. Additional factors in our ability to execute sublicensing arrangements will be the satisfactory testing for efficacy of our AAT indications in human clinicals for one or more of the AAT products and the AAT Manufacturers’ determination of the marketability of our AAT indications based on an evaluation of the length, strength and enforceability of the patents included under our own licensing agreements.

Principal competitive factors in our industry include:

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the quality and breadth of an organization’s technology, research and development capabilities;

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an organization’s intellectual property;

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the skill of an organization’s employees and its ability to recruit and retain skilled employees;

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an organization’s intellectual property;

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the range of capabilities, from target identification and validation to drug discovery and development to manufacturing and marketing; and

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the availability of substantial capital resources to fund discovery, development and commercialization activities.

We believe that the breadth of the patent portfolio covered under our licensing agreements is a competitive strength. However, many other pharmaceutical and biotechnology companies have significantly larger intellectual property portfolios, substantially more capital resources and significantly more experience than we do in preclinical and clinical development, sales, marketing, manufacturing and regulatory affairs.

We are aware of products in research or development by our competitors that address all of the diseases we are targeting, and any of these products may compete with our product candidates. Our competitors may succeed in developing their products before we do, obtaining approvals from the FDA or other regulatory agencies for their products more rapidly than we do, or developing products that are more effective than our products. These products or technologies might render our technology obsolete or noncompetitive. Competition is based primarily on product efficacy, safety, timing and scope of regulatory approvals, availability of supply, price, marketing and sales capability, reimbursement coverage and patent position.

Government Regulation

Regulations in the U.S. and other countries will have a significant impact on our research, product development and manufacturing capability and, ultimately, the marketing of our products. All of our products will require regulatory approval prior to commercialization. In particular, our products will be subject to rigorous preclinical and clinical testing and other pre-market approval requirements by the FDA and similar regulatory authorities in other countries. Various statutes and regulations also govern or influence the manufacturing, practice, safety, labeling, storage, record keeping and marketing of our products. The lengthy process of seeking these approvals and the subsequent compliance with applicable statutes and regulations will require the expenditure of substantial resources. Any failure by us to obtain, or any delay in obtaining, regulatory approvals could have a material, adverse effect on our ability to commercialize our products in a timely manner, or at all.

Preclinical Testing. Before a drug may be clinically tested in the U.S., it must be the subject of rigorous preclinical testing. Preclinical tests include laboratory evaluation of product chemistry and animal studies to assess the potential safety and efficacy of the product and its formulations. The results of these studies must be submitted to the FDA as part of an investigational new drug application (“IND”), which is reviewed by the FDA before clinical testing in humans can begin.

Clinical Testing. Typically, clinical testing involves a three-phase process, which generally lasts four to seven years, and sometimes longer:

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Phase 1 clinical trials are conducted with a small number of subjects to determine the early safety profile and the pattern of drug distribution and metabolism.

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Phase 2 clinical trials are conducted with groups of patients afflicted with a specified disease in order to provide enough data to evaluate preliminary efficacy and optimal dosages statistically and to expand evidence of safety.

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Phase 3 clinical trials are large-scale, multi-center, comparative trials, which are designed to gather additional information for proper dosage and labeling of the drug and to demonstrate its overall safety and efficacy.

The FDA monitors the progress of each phase of testing and may require the modification, suspension or termination of a trial if it is determined to present excessive risks to patients. The clinical trial process may be accompanied by substantial delay and expense, and there can be no assurance that the data generated in these studies will ultimately be sufficient for marketing approval by the FDA.

Marketing Approvals. Before a product can be marketed and sold, the results of the preclinical and clinical testing must be submitted to the FDA for approval. This submission will be either an IND or a biologic license application, depending on the type of drug. In responding to an IND or a biologic license application, the FDA may grant marketing approval, request additional information or deny the application if it determines that the application does not provide an adequate basis for approval. There can be no assurance that any approval required by the FDA will be obtained on a timely basis, or at all.

In addition, the FDA may condition marketing approval on the conduct of specific post-marketing studies to further evaluate safety and efficacy. Rigorous and extensive FDA regulation of pharmaceutical products continues after approval, particularly with respect to compliance with current good manufacturing practices, reporting of adverse effects, advertising, promotion and marketing. Discovery of previously unknown problems or failure to comply with the applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions, any of which could materially adversely affect our business.

Foreign Regulation. We must obtain regulatory approval by governmental agencies in other countries prior to commercialization of our products in those countries. Foreign regulatory systems may be just as rigorous, costly and uncertain as in the U.S.

Possible Pricing Restrictions. The levels of revenues and profitability of biopharmaceutical companies may be affected by the continuing efforts of government and third party payers to contain or reduce the costs of health care through various means. For example, in certain foreign markets, pricing or profitability of therapeutic and other pharmaceutical products is subject to governmental control. In the U.S., there have been, and we expect that there will continue to be, a number of federal and state proposals to implement similar governmental control.

While we cannot predict whether any legislative or regulatory proposals will be adopted, the adoption of such proposals could have a material, adverse effect on our business, financial condition and profitability. In addition, in the U.S. and elsewhere, sales of therapeutic and other pharmaceutical products depend in part on the availability of reimbursement to the consumer from third party payors, such as government and private insurance plans. Third party payors are increasingly challenging the prices charged for medical products and services. There can be no assurance that any of our products will be considered cost effective or that reimbursement to the consumer will be available or will be sufficient to allow us to sell our products on a competitive and profitable basis.

Research and Development

For the fiscal years ended March 31, 2011, 2010 and 2009, we incurred approximately $578,000, $-0- and $241,000, respectively, in research and development expenses. For the fiscal year ended March 31, 2011, these expenses included costs incurred in the Diabetes Clinical Trial and costs incurred in SRAs covering diabetes and viral disorders. For the fiscal year ended March 31, 2009, research and development expense was comprised of costs incurred under an SRA covering bacterial disorders.

Backlog

Since inception, we have not recognized any revenue and have no products for sale. Accordingly, we had no customer backlog as of March 31, 2011.

Employees

As of March 31, 2011, our Chief Financial Officer and Chief Operating Officer were full-time employees, our Chief Executive Officer was a part-time employee and our Chief Scientific Officer was a part-time consultant.

Environmental Compliance

We do not expect that compliance with environmental laws to have any material impact on us.

Recent Developments

On June 10, 2011, we accepted subscription agreements related to the sale of Units in a private placement (the “2011 Private Placement”). Each “Unit” is comprised of one share of our common stock and one warrant to purchase one share of our common stock for a purchase price of $1.25 per Unit. Each warrant in the Unit (the “2011 Private Placement Warrants”) is exercisable at $2.00 until five years from the initial closing of the 2011 Private Placement. The maximum Units to be sold in the 2011 Private Placement are 4,800,000 resulting in gross aggregate proceeds to us of up to $6.0 million. The net proceeds of the 2011 Private Placement will be used for general working capital purposes and research and development projects, which could include an equity investment of up to $2.0 million in a related party.

On June 10, 2011, we conducted the initial closing under the 2011 Private Placement, pursuant to which we entered into subscription agreements for the purchase of 2,463,900 Units for an aggregate subscription price of $3,079,875. After deducting offering expenses including commissions and expenses paid to the placement agent, net proceeds to us from such sales totaled $2,799,745. Certain of our officers and directors purchased an aggregate of 50,000 Units in the initial closing of the 2011 Private Placement. The 2011 Private Placement is expected to close in multiple closings on or before July 31, 2011.

On June 27, 2011, the Company conducted a second closing under the 2011 Private Placement, pursuant to which the Company entered into subscription agreements for the purchase of 338,000 Units for an aggregate subscription price of $422,500. After deducting offering expenses including commissions and expenses paid to the placement agent, net proceeds to the Company from such sales totaled approximately $384,000. Certain of our officers and directors purchased an aggregate of 50,000 Units in the second closing of the 2011 Private Placement.

How to Obtain Our SEC Filings

We file annual, quarterly, and special reports, proxy statements, and other information with the SEC. Reports, proxy statements and other information filed with the SEC can be inspected and copied at the public reference facilities of the SEC at 100 F Street N.E., Washington, DC 20549. Such material may also be accessed electronically by means of the SEC’s website at www.sec.gov.

Our investor relations department can be contacted at our principal executive office located at 5350 South Roslyn, Suite 430, Greenwood Village, CO 80111. Our phone number at our headquarters is (303) 867-3415 and our website is www.omnibiopharma.com.

ITEM 1A.		RISK FACTORS.

Our short and long-term success is subject to many factors beyond our control. If any of the following risks, as well as any risks described elsewhere in this Form 10-K, actually occur, our business, financial condition or results of operations could suffer. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

Financial and Market Risks

Since inception, we have not had any revenue and have incurred operating losses, and our accountants expressed doubts about our ability to continue as a going concern.

As a development-stage company, we have no operating history and have not commercialized any products or generated any revenue since our inception. We have incurred losses in each year since our inception. Our net losses were $8.2 million, $15.5 million and $4.5 million for the fiscal years ended March 31, 2011, 2010 and 2009, respectively, and as of March 31, 2011, we had an accumulated deficit of $31.2 million. As a result of these factors, for the fiscal years ended March 31, 2011, 2010 and 2009, our independent registered public accounting firms have included an explanatory paragraph within their report issued on our financial statements, which expressed substantial doubt about our ability to continue as a going concern. Provided that sufficient funding is available, we expect to continue to incur significant operating losses in the foreseeable future, as we continue our research activities, conduct the development of, and seek regulatory approvals for, our product candidates. The likelihood of our success must be considered in light of the expenses, difficulties and delays frequently encountered in connection with development-stage companies and the competitive environment of the biotechnology industry. There can be no assurance that we will be able to develop a revenue source or that our operations will become profitable.

To pursue our current business strategy and continue developing our products, we will need substantial additional funding in the future. If we do not obtain this funding on acceptable terms, we may not be able to continue our business and generate enough revenue to recover our investment in our product development efforts.

We have expended, and will continue to expend, substantial funds to continue our research and development programs and human studies. To date, we have financed our research and development efforts through the issuance of equity securities. We will need additional financing to fund our operating expenses and capital requirements. We may not be able to obtain additional financing on acceptable terms, or at all. If we are able to raise additional funds by issuing equity securities or equity-linked securities, the new equity securities may dilute the interests of our existing stockholders. Debt financing, if available, may involve agreements containing covenants limiting or restricting our ability to take certain actions, including incurring additional debt, making capital expenditures or declaring dividends.

In the long term, we will most likely need to partner with another pharmaceutical company in order to have sufficient funding to bring our products to market. The most likely partnership opportunities would be with one of the AAT Manufacturers, Talecris, Baxter, CSL Behring and Kamada. Currently the largest manufacturer is Talecris, who holds approximately 74% of the sales market for AAT in the U.S. On June 1, 2011, Talecris was acquired by Grifols S.A. (“Grifols”), a Spanish company, who is principally a producer of blood plasma-based products, including AAT. The acquisition of Talecris could result in a shift in its production and sales focus of their existing AAT product, Prolastinc^® C and its ability to execute strategic partnerships with companies focused on new indications for AAT use.

Our need for additional funding will depend on many factors, including, without limitation:

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the amount of revenue or cost sharing, if any, that we are able to obtain from others, any approved products, and the time and costs required to achieve those revenues;

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the timing, scope and results of preclinical studies and clinical trials;

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the size and complexity of our development programs;

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the time and costs involved in obtaining regulatory approvals;

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the costs of launching our products;

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the costs of commercializing our products, including marketing, promotional and sales costs;

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our ability to establish and maintain collaborative partnerships;

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competing technological and market developments;

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the costs involved in filing, prosecuting and enforcing patent claims; and

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scientific progress in our research and development programs.

If we are unable to raise additional funds, we may, among other things:

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delay, scale back or eliminate some or all of our research and development programs;

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delay, scale back or eliminate some or all of our commercialization activities;

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lose rights under existing licenses;

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relinquish more of, or all of, our rights to product candidates on less favorable terms than we would otherwise seek; and

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be unable to operate as a going concern.

We may be unsuccessful in commercializing our products. If we are unable to commercialize our products, we may not be able to recover the large investment that we have made and plan to make in our product development efforts.

We will have to make substantial expenditures before we are able to generate any revenue. Before we can commercialize a product, we must rigorously test the product in the laboratory and complete extensive human studies. We cannot assure you that the costs of testing and study will yield products approved for marketing by the FDA or that any such products will be profitable. We will incur substantial additional costs to continue these activities. If we are not successful in commercializing products, we may be unable to recover the large investment we have made and plan to make in research and development efforts.

Our business and results of operations may be negatively impacted by general economic and financial market conditions and such conditions may exacerbate the other risks that affect our business.

The world’s financial markets are currently experiencing significant turmoil, resulting in reductions in available credit, constraints in access to capital, extreme volatility in security prices, rating downgrades of investments and reduced valuations of securities generally. These economic conditions have had, and we expect will continue to have, an adverse impact on the pharmaceutical and biotechnology industries. Our business depends on our ability to raise substantial additional capital and to enter into collaborative research, development and commercialization agreements. Current market conditions could impair our ability to raise additional capital when needed for our research and development programs, or on attractive terms. Recent economic conditions may reduce the amount of discretionary investment that our prospective collaborators may have available to invest in our business. This may result in prospective collaborators electing to defer entering into collaborative agreements with us. A reduction in research and development funding, even if economic conditions improve, would significantly adversely impact our business, operating results and financial condition.

We are unable to predict the likely duration and severity of the current disruption in financial markets and adverse economic conditions in the U.S. and abroad, but the longer the duration the greater risks we face in operating our business. There can be no assurance, therefore, that current economic conditions or worsening economic conditions or a prolonged or recurring recession will not have a significant adverse impact on our operating results.

Our insurance policies are expensive and protect us only from some business risks, which may leave us exposed to significant, uninsured liabilities.

We carry insurance based on management’s and our Board’s assessment of related risk that our business may encounter. Currently, we believe overall coverage to be adequate based on the development stage of the Company. Our lack of liquidity generally requires us to pay higher than average premiums for certain insurance policies. In addition, such policies contain deductibles that we consider significant to our cash available for operations. In the future, we do not know if we will be able to obtain insurance with adequate levels of coverage or, if available, able to afford the premiums. Any significant uninsured liability may require us to pay substantial amounts, which would adversely affect our cash position and results of operations.

Product Development and Commercialization Risks

Our product development efforts depend on commercializing new methods of use for an existing drug. In addition, we have no experience in developing or commercializing products.

Commercialization of a new product or a new method of use for an existing product involves risks of failure inherent in the development of products based on innovative technologies and the risks associated with drug development generally. These risks include the following:

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These technologies or any or all of the products based on these technologies may be ineffective or toxic, or otherwise fail to receive necessary regulatory clearances;

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The products, even if safe and effective, may be difficult to manufacture on a large scale or uneconomical to market;

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Proprietary rights of third parties may prevent us from exploiting technologies or marketing products; and

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Third parties may market superior or equivalent products.

Our ability to commercialize AAT in new indications will depend on our ability to:

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complete laboratory testing and human studies;

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obtain and maintain necessary intellectual property rights to our products;

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obtain and maintain necessary regulatory approvals related to the efficacy and safety of our products; and

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entering into arrangements with one or more of the AAT Manufacturers to provide manufacturing capacity as well as sales and marketing resources.

We may not be successful in some or all of these initiatives, and as a result, fail to produce adequate or any revenues to sustain our business.

Because clinical trials for our products are expensive and protracted and their outcome is uncertain, we will have to invest substantial amounts of time and money that may not yield viable products.

Conducting clinical trials is a lengthy, time-consuming and expensive process. Before obtaining regulatory approvals for the commercial sale of any product, we must demonstrate through laboratory, animal and human studies that the product is both effective and safe for use in humans. We will incur substantial additional expense for and devote a significant amount of time to these studies.

Before a drug may be marketed in the U.S., a drug must be subjected to rigorous preclinical testing. The results of these studies must be submitted to the FDA as part of an NDA, which is reviewed by the FDA before clinical testing in humans can begin. The results of preclinical studies do not predict clinical success. A number of potential drugs have shown promising results in early testing, but subsequently failed to obtain necessary regulatory approvals. Data obtained from tests is susceptible to varying interpretations, which may delay, limit or prevent regulatory approval. Regulatory authorities may refuse or delay approval as a result of many other factors, including changes in regulatory policy during the period of product development.

Completion of clinical trials may take many years. The time required varies substantially according to the type, complexity, novelty and intended use of the product candidate. The progress of clinical trials is monitored by both the FDA and independent data monitoring committees, which may require the modification, suspension or termination of a trial if it is determined to present excessive risks to patients. Our rate of commencement and completion of clinical trials may be delayed by many factors, including:

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our inability to obtain sufficient quantities of materials for use in clinical trials;

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variability in the number and types of patients available for each study;

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difficulty in maintaining contact with patients after treatment, resulting in incomplete data;

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unforeseen safety issues or side effects;

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poor or unanticipated effectiveness of products during the clinical trials; or

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government or regulatory delays.

Our product development costs will also increase if we experience delays in testing or approvals. We do not know whether planned clinical trials will begin as planned, will need to be restructured or will be completed on schedule, if at all. Significant clinical trial delays also could allow our competitors to bring products to market before we do and impair our ability to commercialize our products or product candidates.

Our ongoing and anticipated clinical trials are required to use the branded formulation of AAT that we submit for use in an IND or waiver request with the FDA. If our clinical trial data were insufficient to determine a material improvement in patient disease outcome, or present safety issues in the use of the branded formulation of AAT, we may have to file for an additional trial or trials using another AAT Manufacturer’s AAT product. This could have a material, adverse effect on us due to loss of time, patent life and duplication of clinical trial costs. Alternatively, if we obtain a material improvement in patient disease outcome in our ongoing and or pending clinical trials and were unable to obtain a satisfactory sublicensing arrangement with the branded manufacturer of AAT used in the specific trial, we may have to file for an additional trial or trials using another AAT Manufacturer’s AAT product. This also would have a material adverse effect on us due to loss of time, patent life and duplication of clinical trial costs.

Because we will depend on third parties to conduct our human studies, we may encounter delays in, or lose some control over, our efforts to develop products.

We do not have the ability to independently conduct the clinical trials required to obtain regulatory approval for our products. We expect to contract with third-party research organizations to conduct all of our human studies. If we are unable to obtain necessary services on acceptable terms or at all, we may not complete our product development efforts in a timely manner.

Because we will rely on third parties for successful execution of our clinical trials, we will not be able to control many aspects of their activities. We will, however, remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial, and the FDA requires us to comply with certain standards, commonly referred to as Good Clinical Practices, for conducting and recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. Our reliance on third parties that we do not control will not relieve us of these responsibilities and requirements. Third parties may not complete activities on schedule, or may not conduct our clinical trials in accordance with regulatory requirements or our stated protocols. The failure of these third parties to carry out their obligations could delay or prevent the development, approval and commercialization of our product candidates.

Our business and products may subject us to the risk of product liability claims.

We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials and will face increased risk if we commercially sell any products that we develop. There can be no assurance that any insurance coverage that we obtain with respect to product liability will be adequate to protect us from liabilities that we might incur in connection with clinical trials or the commercialization of our products. Product liability insurance is expensive and may not be available on acceptable terms, or at all. Successful product liability claims brought against us in excess of our insurance coverage would have a material, adverse effect on our business. In addition, product liability claims, whether or not successful, may result in decreased demand for our products, injury to our reputation, withdrawal of clinical trial participants, defense costs and difficulty commercializing our product candidates.

We depend on, and will continue to depend on, collaboration with and licenses from third parties, and if we are not able to enter into and/or continue such collaborations or licenses, we may not be able to further develop our products without substantial additional expenditures and delays, if at all.

In addition to maintaining our collaborative relationships with RUC, UCD and Bio Holding, our strategy for the development, clinical testing, manufacturing and commercialization of our proposed products includes entering into various collaborations with corporate partners, licensors, licensees and other third parties in the future, and is dependent on the subsequent success of these third parties in performing their responsibilities. We intend to seek to enter into additional arrangements with other collaborators, although there can be no assurance that we will be able to enter into such collaborations and licenses, or, to the extent that we do, that such collaborations will be successful. Further, there can be no assurance that any future arrangements we may enter into will lead to the development of our products with commercial potential, that we will be able to obtain proprietary rights or licenses for proprietary rights with respect to any technology developed in connection with these arrangements or that we will be able to insure the confidentiality of any proprietary rights and information developed in such collaborative arrangements or prevent the public disclosure thereof.

In general, collaborative agreements provide that they may be terminated under certain circumstances. There can be no assurance that we will be able to extend any of our product collaborative agreements on their termination or expiration, or that we will be able to enter into new collaborative agreements with existing or new partners in the future. To the extent we choose not to or are unable to establish any additional collaborative arrangements, it would require substantially greater capital to undertake research, development and marketing of our proposed products. Additionally, we may find that the development, manufacture or sale of our proposed products is adversely affected by the absence of such collaborative agreements.

We will depend on others to manufacture and distribute our products, and we will be subject to their ability and willingness to manufacture AAT for our use. Such potential limitations on production of AAT could significantly affect our ability to sublicense our intellectual property rights related to AAT with the AAT Manufacturers.

AAT is a generic drug currently manufactured by four companies and sold into markets that are significantly smaller than the potential markets covered by the methods of use patents that we license. The amount of AAT currently manufactured is limited and its manufacturing costs and the cost per patient treatment in the current markets are expensive. As an example, the annual costs for treatment for a patient who has emphysema related to AAT deficiency is approximately $100,000. We do not have and will likely never have manufacturing facilities for AAT, and as such, we will be solely dependent on the current AAT Manufacturers, who will need to increase their current production levels.

We have not yet manufactured any products for commercial use and we do not have the financial resources or capability to process blood plasma into AAT on our own. We intend to contract with one or more of the AAT Manufacturers and our ability to provide our future products will depend on our ability to enter into and maintain acceptable collaborative arrangements with them. We will depend on the AAT Manufacturers to comply with acceptable manufacturing practices and other regulatory requirements and to deliver materials on a timely basis and in sufficient quantities. They may not perform satisfactorily and there can be no assurance that they will be able to supply our products in the required quantities, in compliance with our quality standards or at acceptable costs. Any product defects or production delays caused by the AAT Manufacturers may delay our development of products, the submission of the products for regulatory approval and the marketability of such products.

We intend to sublicense our intellectual property rights to one or more of the AAT Manufacturers of AAT. AAT is expensive to manufacture and the AAT Manufacturers may have production restraints due to plant capacity, or inability to obtain adequate supplies of human plasma to fractionate the AAT product. If we are successful in obtaining a sublicensing agreement(s) with an AAT Manufacturer, it could change its manufacturing plans at any time, resulting in potential product shortage that may impact us. Additionally, alternative indications for AAT where we do not have intellectual property could develop, which might influence the AAT Manufacturers to pursue other indications for marketing AAT, hence limiting our access to supply.

The commercial success of any products that we may develop will depend upon the degree of market acceptance by physicians, patients, healthcare payors and others in the medical community.

Any products that we bring to the market may not gain market acceptance by physicians, patients, healthcare payors and others in the medical community. If these products do not achieve an adequate level of acceptance, we may not generate material product revenues and we may not become profitable. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including:

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the prevalence and severity of any side effects;

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the efficacy and potential advantages of alternative treatments;

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the prices of our product candidates;

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the willingness of physicians to prescribe our products; and

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sufficient third-party coverage or reimbursement.

If we are not successful in commercializing our products that have been approved for commercial sale, we may be unable to recover the large investment we have made and plan to make in research and development efforts.

Intellectual Property Risks

We may rely on patents and proprietary rights that may fail to protect our business.

Although we have obtained licenses to use the rights under certain patent applications that have been filed with the USPTO, we may not be able to obtain the protection necessary to fully cover our proposed activities. Our success will also depend on our ability to operate without infringing the proprietary rights of other parties. Legal standards relating to the validity of patents covering pharmaceutical and biotechnological inventions and the scope of claims made under these patents are still developing. There is no consistent policy regarding the breadth of claims allowed in biotechnology patents. The patent position of a biotechnology company is susceptible to uncertainty and involves complex legal and factual questions.

We may have to initiate arbitration or litigation to enforce our patent and license rights. If our competitors file patent applications that claim technology also claimed by us, we may have to participate in interference or opposition proceedings to determine the priority of invention. An adverse outcome could subject us to significant liabilities to third parties and require us to cease using the technology or to license the disputed rights from third parties. We may not be able to obtain any required licenses on commercially acceptable terms or at all.

The cost to us of any litigation or proceeding relating to patent rights, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because of their substantially greater resources. Uncertainties resulting from the initiation and continuation of any pending patent or related litigation could have a material adverse effect on our ability to compete in the marketplace. If we are unable to obtain a license to the patented technology we need, or could only obtain a license on terms we consider to be unacceptable, or if we were unable to design our products or processes to avoid infringement of such patented technology, our business would be harmed.

The enforcement of the issued patents and pending patent applications that we currently license from RUC and Bio Holding may be subject to challenge by the AAT Manufacturers or other competitors. These issued patents and pending patent applications cover “methods of use” versus “composition of matter.” Generally, composition of matter patents afford better protection from challenges by competitors. Since our plan for commercializing AAT indications most likely involves sublicensing the methods of use covered in the RUC and Bio Holding patents to one or more of the AAT Manufacturers, they may attempt to develop their own, new methods of use in our current AAT indications that would allow them to claim a method of use separate and distinct from ours. This could result in limited, if any, royalties being paid to us.

Patents have a 20 year life from the date of filing of the application or parent application, not from the date of issuance. The issued and pending patent applications that we have licensed have varying patent lives remaining, ranging from 8 to 14 years, and our ability to obtain revenue from them will largely be based upon the value ascribed by a sublicensor as determined by the remaining patent life of each patent or patent application.

If patent laws or the interpretation of patent laws change, our competitors may be able to develop and commercialize our discoveries.

Important legal issues remain to be resolved as to the extent and scope of available patent protection for biotechnology products and processes in the U.S. and other important markets outside the U.S., such as Europe and Japan. Foreign markets may not provide the same level of patent protection as provided under the U.S. patent system. We expect that litigation or administrative proceedings may be necessary to determine the validity and scope of certain of our and others’ proprietary rights. Any such litigation or proceeding may result in a significant commitment of resources in the future and could force us to do one or more of the following: cease selling or using any of our products that incorporate the challenged intellectual property, which would adversely affect our revenue; obtain a license from the holder of the intellectual property right alleged to have been infringed, which license may not be available on reasonable terms, if at all; and redesign our products to avoid infringing the intellectual property rights of third parties, which may be time-consuming or impossible to do. In addition, changes in, or different interpretations of, patent laws in the U.S. and other countries may result in patent laws that allow others to use our discoveries or develop and commercialize our products. We cannot assure you that the patents we obtain or the unpatented technology we hold will afford us significant commercial protection.

If the patent applications for which we have obtained a license do not result in issued patents, our competitors may obtain rights to and commercialize the discoveries.

The pending patent applications for which we have obtained licenses may not result in the issuance of any patents. The applications may not be sufficient to meet the statutory requirements for patentability in all cases or may be the subject of interference proceedings by the Patent and Trademark Office. These proceedings determine the priority of inventions and, thus, the right to a patent for technology in the U.S. Additionally, the patents related to the method of use for treatment of diseases that we are currently focused on, diabetes, GVHD and islet transplantation, have not been issued.

If others file patent applications or obtain patents similar to those we have licensed, such patents may restrict the use of our discoveries.

Universities and companies working in the biotechnology and pharmaceutical fields have filed patent applications and have been granted patents in the U.S. and in other countries that cover subject matter potentially useful or necessary to our business. Some of these patents and patent applications claim only specific products or methods of making products, while others claim more general processes or techniques useful in the discovery and manufacture of a variety of products. The risk of third parties obtaining additional patents and filing patent applications will continue to increase as the biotechnology industry expands. We cannot predict the ultimate scope and validity of existing patents and patents that may be granted to third parties, nor can we predict the extent to which we may wish or be required to obtain licenses to such patents, or the availability and cost of acquiring such licenses. To the extent that licenses are required, the owners of the patents could bring legal actions against us to claim damages or to stop our manufacturing and marketing of the affected products. We believe that there will continue to be significant litigation in our industry regarding patent and other intellectual property rights. If we become involved in litigation, it could consume a substantial portion of our resources.

Because our current intellectual property may not fully protect our discoveries, others may be able to commercialize products in indications that are similar to those covered by issued patents that we have licensed.

Issued patents may not provide commercially meaningful protection against competitors and may not provide us with competitive advantages. Our current intellectual property is comprised of licenses to methods of use for issued patents and patent applications for alternative uses of AAT, which is a currently prescribed FDA-approved, generic drug. As compared to a composition of matter patent, a method of use patent generally has a greater chance of being challenged by another party through another method of use patent.

Other parties may challenge the patents or design around the issued patents or patent methods of use that are similar to the methods of use for which we have obtained a license. In addition, others may discover uses other than those uses covered by the patent rights we license, and these other uses may be separately patentable. The holder of a patent covering the use of a technology for which we have a patent claim could exclude us from selling a product for a use covered by its patent.

If we are unable to protect our trade secrets, others may be able to use our secrets to compete more effectively.

We may not be able to meaningfully protect our trade secrets. We rely on trade secret protection to protect our confidential and proprietary information. We believe we have acquired or developed proprietary procedures and materials for the production of proteins. We have not sought patent protection for these procedures. While we have entered into confidentiality agreements with employees and academic collaborators, we may not be able to prevent their disclosure of these data or materials. Others may independently develop substantially equivalent information and processes.

If we lose our right to license and use of certain critical intellectual property from RUC or Bio Holding for any reason, our business would be in jeopardy.

If we breach or fail to perform the material conditions of, including our payment obligations under, or fail to extend the term of the agreements under which we license critical intellectual property from RUC and Bio Holding, we may lose all or some of our rights to such intellectual property, and such loss would have a material adverse effect on our business. If we lost our rights to such intellectual property, we would need to find existing alternative, non-infringing technology, if any exists, or develop new technology ourselves. The pursuit of any such alternative would cause significant delay in the development and commercialization of our proposed products.

Regulatory Risks

Because we are subject to extensive changing government regulatory requirements, we may be unable to obtain government approval of our products in a timely manner or at all.

Regulations in the U.S. and other countries will have a significant impact on our research, product development and manufacturing activities and will be a significant factor in the marketing of our products. All of our products will require regulatory approval prior to commercialization. In particular, our products are subject to rigorous preclinical and clinical testing and other pre-market approval requirements by the FDA and similar regulatory authorities in other countries, such as Europe and Japan. Various statutes and regulations also govern or influence the manufacturing, safety, labeling, storage, record keeping and marketing of our products. The lengthy process of seeking these approvals, and the subsequent compliance with applicable statutes and regulations, require the expenditure of substantial resources. Changes in regulatory approval policies during the development period, changes in or the enactment of additional statutes and regulations, or changes in regulatory review for each product application may delay or prevent regulatory approval of an application. The FDA has substantial discretion in the approval process and may refuse to accept any application or may require additional preclinical, clinical or other studies. Any failure by us to obtain, or any delay in obtaining, regulatory approvals could materially adversely affect our ability to commercialize our products in a timely manner, or at all.

If we or third-party manufacturers or suppliers fail to comply with ongoing FDA or other regulatory authority requirements, or if we experience unanticipated problems with our products, our products could be subject to restrictions or withdrawal from the market.

Rigorous and extensive regulation by the FDA and other domestic and foreign regulatory bodies continues after approval, particularly with respect to compliance with current good manufacturing practices, reporting of adverse effects, advertising, promotion and marketing. Particularly, we and third-party manufacturers will be required to comply with the FDA’s regulations covering manufacturing, design, testing, production, control, quality assurance, labeling, packaging, storage and shipping of the products for which we obtain approval. These regulations are enforced through periodic inspections. Even if regulatory approval of a product is granted, the approval may be subject to limitations on the indicated uses for which the product may be marketed or contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product. Discovery of previously unknown problems or failure to comply with the applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions.

Failure to obtain regulatory approval in international jurisdictions would prevent us from marketing our products abroad.

We must obtain regulatory approval by governmental agencies in other countries prior to commercialization of our products in those countries. Foreign regulatory systems may be just as rigorous, costly and uncertain as in the U.S. and may require additional testing and review. The time required to obtain approval may be longer than that required to obtain FDA approval and may involve additional risks. Approval of our products by the FDA does not ensure approval by regulatory authorities in foreign jurisdictions, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign jurisdictions or the FDA. We may not obtain foreign regulatory approvals on a timely basis, if at all.

Other Risks Related to Our Business

If we lose or are unable to attract key management or other personnel, we may experience delays in product development.

We are highly dependent on the services of our senior executive officers, particularly, Dr. James Crapo, our CEO, and Dr. Charles Dinarello, our Chief Scientific Officer. Neither Dr. Crapo nor Dr. Dinarello works for us on a full-time basis. If either of them decides to terminate his business relationship with us, this could delay the commercialization of our products or prevent us from becoming profitable. Competition for qualified individuals is intense among pharmaceutical and biotechnology companies, and the loss of qualified individuals, or an inability to attract, retain and motivate additional highly skilled individuals required for the expansion of our activities, could hinder our ability to complete human studies successfully and develop marketable products. Currently, we do not carry key-man life insurance policies on any of our key personnel.

If the health care system or reimbursement policies change, the prices of our potential products may be lower than expected and our potential sales may decline.

The levels of revenues and profitability of biopharmaceutical companies like ours may be affected by the continuing efforts of government and third party payers to contain or reduce the costs of health care through various means. For example, in certain foreign markets, pricing or profitability of therapeutic and other pharmaceutical products is subject to governmental control. In the U.S. there have been, and we expect that there will continue to be, a number of federal and state proposals to implement similar governmental control. In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act. In addition, in the U.S., a number of proposals have been made to reduce the regulatory burden of follow-on biologics, which could affect the prices and sales of our products in the future. While we cannot predict whether any legislative or regulatory proposals will be adopted, the adoption of such proposals could have a material adverse effect on our business, financial condition and profitability. In addition, in the U.S. and elsewhere, sales of therapeutic and other pharmaceutical products depend in part on the availability of reimbursement to the consumer from third party payers, such as government and private insurance plans. Third party payors are increasingly challenging the prices charged for medical products and services. We cannot assure you that any of our products will be considered cost effective or that reimbursement to the consumer will be available or will be sufficient to allow us to sell our products on a competitive and profitable basis.

We may not be able to successfully compete against companies in our industry with greater resources or otherwise.

The development and commercialization of new drugs is highly competitive. We face competition with respect to our current product candidates and any products we may seek to develop or commercialize in the future from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. Our competitors may develop products that are more effective, safer, more convenient or less costly than any that we are developing. Our competitors may also obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours.

There are approved products on the market for most of the diseases and indications for which we are developing products. In many cases, these products have well known brand names, are distributed by large pharmaceutical companies with substantial resources and have achieved widespread acceptance among physicians and patients. In addition, we are aware of product candidates of third parties that are in development, which, if approved, would compete against product candidates for which we receive marketing approval.

Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Smaller or early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to or necessary for our programs or advantageous to our business.

If we fail to establish and maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired, which would adversely affect our operating results, financial condition and stock price.

Ensuring that we have adequate internal financial and accounting controls and procedures in place to produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. Our failure to maintain effective internal financial and accounting controls would cause our financial reporting to be unreliable, could have a material adverse effect on our business, operating results, financial condition and cash flows, and could cause the trading price of our common stock to decline. We had a material weakness in our disclosure controls and procedures as of June, 30, 2009, September 30, 2009, December 31, 2009, March 31, 2010, June 30, 2010 and September 30, 2010 as a result of a restatement related to accounting for share-based compensation and other equity-based instruments. As a result of this material weakness, the Company’s Chief Executive Officer and Chief Financial Officer determined that, as of the aforementioned periods, our disclosure controls and procedures and internal controls over financial reporting were not effective to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of financial statements for external reporting in accordance with GAAP. Management has subsequently remediated the material weakness and concluded that its disclosure controls and procedures and internal controls over financial reporting were effective to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of financial statements for external reporting in accordance with GAAP as of March 31, 2011.

The restatement of our financial statements and other reports filed with the SEC has subjected the Company to additional costs and additional risks and uncertainties.

As previously disclosed in a Form 8-K/A filed with the SEC on October 25, 2010, we restated our previously issued financial statements for the year ended March 31, 2010 and each of the quarters ended June 30, 2009, September 30, 2009, December 31, 2009, and June 30, 2010. This restatement subjected the Company to unanticipated costs in the form of accounting, legal and filing fees, in addition to the substantial diversion of time and attention of the Company’s Audit Committee, its Chief Financial Officer and other executive officers in dealing with the restatements. Although the restatements are complete, the Company can give no assurance that it will not incur additional costs associated with the restatements. The restatements also may lead to claims from shareholders and regulators, which may subject the Company to significant costs and diversion of management time.

Risks Related to Our Common Stock

Insiders control a significant portion of our common stock and their interests may differ from those of other stockholders.

As of June 10, 2011, our executive officers and directors as a group beneficially own approximately 20.35% of our outstanding common stock. The interests of these stockholders may not always coincide with our interests as a company or the interests of other stockholders. The sale or prospect of sale of a substantial number of the shares could have an adverse effect on the market price of our common stock.

Our articles of incorporation and bylaws could discourage acquisition proposals, delay a change in control or prevent other transactions.

Provisions of our articles of incorporation and bylaws, as well as provisions of the Colorado Business Corporation Act, may discourage, delay or prevent a change in control of our company or other transactions that you as a stockholder may consider favorable and may be in your best interest. Our articles of incorporation and bylaws contain provisions that:

•

authorize the issuance of up to 5,000,000 shares of “blank check” preferred stock that could be issued by our board of directors to increase the number of outstanding shares and discourage a takeover attempt; and

•

limit who may call special meetings of stockholders.

Our stock price is volatile.

From April 1, 2010 to March 31, 2011, our common stock traded from $2.40 to $10.10 per share on the OTCBB. The future market price of our common stock could continue to fluctuate widely because of:

•

the minimal amount of “public float” in our common stock, which is significantly affected by a limitation on trading a substantial amount of our shares as a result of “lock-up” and “leakage” provisions that are in place until March 31, 2012;

•

shares of our common stock are not eligible to be deposited in the Depository Trust Company (“DTC”), and as a result, shares of our common stock must be traded using physical delivery of all transacted shares. The inability to utilize an electronic exchange such as DTC may restrict the timeliness of a shareholder to buy or sell shares of our common stock.

•

future announcements about our company or our competitors, including the results of testing; technological innovations or new commercial products;

•

negative regulatory actions with respect to our potential products or regulatory approvals with respect to our competitors’ products;

•

changes in government regulations;

•

changes in general economic conditions and in the biotechnology industry;

•

developments in our relationships with our partners;

•

developments affecting our partners;

•

announcements relating to health care reform and reimbursement levels for new drugs;

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our failure to acquire or maintain proprietary rights to the gene sequences we discover or the products we develop;

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litigation; and

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public concern as to the safety of our products.

The stock market has experienced price and volume fluctuations that have particularly affected the market price for many emerging and biotechnology companies. These fluctuations have often been unrelated to the operating performance of these companies. These broad market fluctuations may cause the market price of our common stock to be lower or more volatile than otherwise expected.

We have the ability to issue additional equity securities, which would lead to dilution of our issued and outstanding common stock.

The issuance of additional equity securities or securities convertible into or exercisable for equity securities would result in dilution of then-existing stockholders’ equity interests in us. We may issue shares to raise capital, as acquisition consideration, as employee incentives or compensation, and for other corporate purposes. Our board of directors has the authority to issue, without vote or action of stockholders, up to 200,000,000 shares of common stock and 5,000,000 shares of preferred stock. We may issue preferred stock in one or more series, and the board of directors has the ability to fix the rights, preferences, privileges and restrictions of any such series. Any such series of preferred stock could contain dividend rights, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences or other rights superior to the rights of holders of our common stock.

The applicability of “penny stock rules” to broker-dealer sales of our common stock may have a negative effect on the liquidity and market price of our common stock.

Trading in our shares is subject to the “penny stock rules” adopted pursuant to Rule 15g-9 of the Securities and Exchange Act of 1934, as amended, which apply to companies that are not listed on an exchange and whose common stock trades at less than $5.00 per share or which have a tangible net worth of less than $5,000,000 or $2,000,000 if they have been operating for three or more years. The penny stock rules impose additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and institutional accredited investors. For transactions covered by this rule, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. Consequently, the penny stock rules will affect the ability of broker-dealers to sell shares of our common stock and may affect the ability of stockholders to sell their shares in the secondary market, as compliance with such rules may delay and/or preclude certain trading transactions. The rules could also have an adverse effect on the market price of our common stock.

These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for our common stock. Many brokers may be unwilling to engage in transactions in our common stock because of the added disclosure requirements, thereby making it more difficult for stockholders to dispose of their shares. You may also find it difficult to obtain accurate information about, and/or quotations as to the price of our common stock.

The lack of a broker or dealer to create or maintain a market in our stock could adversely impact the price and liquidity of our securities.

We have no agreement with any broker or dealer to act as a market maker for our securities and there is no assurance that we will be successful in obtaining any market makers. The lack of a market maker for our securities could adversely influence the market for and price of our securities, as well as your ability to dispose of, or to obtain accurate information about, and/or quotations as to the price of, our securities.

Future sales of our common stock may cause our stock price to decline.

Sales of substantial amounts of our common stock in the public market or the perception that these sales may occur, could cause the market price of our common stock to decline. In addition, the sale of these shares could impair our ability to raise capital through the sale of additional common or preferred stock or other securities.

ITEM 1B.		UNRESOLVED STAFF COMMENTS.

None.

ITEM 2.		PROPERTIES.

We currently lease approximately 1,100 square feet for our corporate office. Our address is 5350 South Roslyn Street, Suite 430, Greenwood Village, CO 80111.

ITEM 3.		LEGAL PROCEEDINGS.

We are not a party to any material legal proceedings nor is our property the subject of any material legal proceedings.

PART II

ITEM 5.		MARKET FOR REGISTRANT’S COMMON EQUITY, AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our common stock is currently traded on the Over the Counter Bulletin Board (the “OTCBB”) maintained by the Financial Industry Regulatory Authority under the symbol OMBP. Our common stock began trading on the OTCBB in December 2007. The following table sets forth the range of high and low bid quotations for our common stock during each calendar quarter beginning June 30, 2009 and ending March 31, 2011. The figures have been rounded to the nearest whole cent.

		High				Low
Fiscal year 2011
March 31, 2011		$	5.50			$	2.40
December 31, 2010		$	5.25			$	3.00
September 30, 2010		$	10.00			$	3.55
June 30, 2010		$	10.10			$	8.00
Fiscal year 2010
March 31, 2010		$	12.00			$	7.50
December 31, 2009		$	15.00			$	11.05
September 30, 2009		$	15.00			$	8.00
June 30, 2009		$	13.50			$	0.50

The above quotations reflect inter-dealer prices, without retail mark-up, mark-down, or commission and may not necessarily represent actual transactions.

Number of Shareholders of Record and Dividends

The number of shareholders of record of our outstanding common stock as of June 10, 2011 was approximately 380. This number was derived from our stockholder records and does not include beneficial owners of our common stock whose shares are held in the names of various dealers, clearing agencies, banks, brokers, and other fiduciaries.

Holders of common stock are entitled to receive such dividends as may be declared by our Board of Directors. No dividends on the common stock were paid by us during our last two fiscal years and we do not anticipate paying dividends in the foreseeable future.

Performance Graph

The following performance graph compares the cumulative total return of our common stock with that of the NASDAQ Composite Index and the NASDAQ Biotechnology Index. Our stock was initially listed on the OTCBB on December 21, 2007 and the date that our shares began to trade publicly. The graph assumes an investment of $100 on December 21, 2007 and reinvestments of all dividends and other distributions.

		For the Years Ended								For the Years Ended
		December 31,								March 31,
		2007				2008				2009 (1)				2010				2011
Omni Bio Pharmaceutical, Inc.		$	100.00			$	44.00			$	40.00			$	808.00			$	240.00
NASDAQ Composite Index		$	100.00			$	59.46			$	57.63			$	90.41			$	104.86
NASDAQ Biotechnology Index		$	100.00			$	87.37			$	81.78			$	112.46			$	125.57

(1)		The Company changed its year end effective March 31, 2009.

ITEM 6.		SELECTED FINANCIAL DATA.

The fiscal years ended March 31, 2011, 2010, 2009 and 2008 statements of operations data, and the fiscal years ended March 31, 2011 and 2010 balance sheet data, have been derived from our consolidated financial statements and notes appearing in Item 15 of this report. The statement of operations and balance sheet data for the fiscal year ended March 31, 2007 have been derived from our historical financial statements for those years.

The statement of operations data for fiscal years ended March 31, 2008 and 2007 are derived from the financial statements of our accounting predecessor, Apro Bio Pharmaceutical Corporation.

The following table should be read in conjunction with our consolidated financial statements and associated notes found in Item 15 of this report.

		Years Ended March 31,
		2011				2010				2009				2008				2007
Statements of Operations Data:
Net sales		$	—			$	—			$	—			$	—			$	—
Loss from operations (1)			(8,227,331	)			(12,991,722	)			(1,992,983	)			(1,763,142	)			(1,095,154	)
Net loss (1) (2)			(8,225,477	)			(15,478,884	)			(4,544,521	)			(1,812,567	)			(1,100,674	)
Net loss per share — basic and diluted			(0.29	)			(0.58	)			(0.25	)			(0.16	)			(0.10	)
Balance Sheet Data:
Cash and cash equivalents			301,765				1,802,366				1,805,395				17,309				46,748
Total assets			407,237				1,880,378				1,901,717				65,702				70,446
Long-term debt			—				—				10,000				—				—

(1)		The loss from operations and net loss for the fiscal years ended March 31, 2011, 2010, 2009, 2008 and 2007 included share-based compensation in the amounts of $6,466,435, $6,395,302, $740,251, $692,638 and $32,925, respectively.
(2)		The net loss for the fiscal years ended March 31, 2010 and 2009 included non-cash charges related to the issuance of common stock purchase warrants to investors and related parties and modifications of certain common stock purchase warrants held by investors in the amounts of $8,069,980 and $2,504,273, respectively.

ITEM 7.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Overview

On March 31, 2009, Across America completed the acquisition of Apro Bio pursuant to the Merger. On May 27, 2009 Across America changed its name to Omni Bio Pharmaceutical, Inc. (“Omni”).

The Merger was accounted for as a reverse acquisition with Apro Bio being treated as the acquirer for accounting purposes. Accordingly, for the year ended March 31, 2009 presented in this report, the financial statements of Apro Bio have been adopted as the historical financial statements of Omni.

We are in pursuit of advancing existing and novel therapies that we believe have the potential to move through clinical trials by shepherding them through the FDA approval processes and advancing them through to commercialization. This core strategy is based on licensing issued and pending patent applications that cover new uses for an existing FDA-approved drug, Alpha-1 Antitrypsin (“AAT”), that has come off of its initial patents. AAT is currently prescribed for the treatment of pulmonary emphysema among individuals with genetic deficiency of AAT. This indication is unrelated to our licensed intellectual property. Any patents originally issued to other entities claiming the composition of AAT have expired.

Omni is the licensee of three patent portfolios from the Regents of the University of Colorado (“RUC”). These patent portfolios are comprised of three issued and 24 pending patent applications. One license agreement with RUC relates to the treatment of diabetes, transplantation or graft rejection and promotion of transplant or graft survival. Transplantation rejection includes cellular and organ transplant rejection. One focus related to cellular transplantation is islet cell transplantation for the treatment of some diabetics and the treatment of diabetes in general. We have 15 pending patent applications under this license agreement.

A second license agreement relates to the treatment and/or prevention of bacterial disorders, including bacterial pneumonia, tuberculosis and biowarfare agents such as anthrax and includes the licensing of one issued patent — United States Patent No. 7,850,970, Titled: Inhibitors of Serine Protease Activity, Methods and Compositions for Treatment of Bacterial Infections. This patent expires on August 26, 2024 and covers the prevention of anthrax infection. Additionally, we have five pending patent applications under this license agreement.

A third license agreement focuses on the treatment and/or prevention of viral disorders and includes the licensing of two issued patents — 1) United States Patent No. 6,849,605, Titled: Inhibitors of Serine Protease Activity, Methods and Compositions for Treatment of Viral Infections. This patent expires on March 3, 2020 and 2) United States Patent No. 7,807,781 Titled: Inhibitors of Serine Protease Activity, Methods and Compositions for Treatment of Viral Infections. This patent expires on January 28, 2025. Both of these patents cover the prevention of HIV. Additionally, we have four pending patent applications under this license agreement.

In addition to the three licenses with RUC, we are a licensee to a pending patent held by Bio Holding, LLC (“Bio Holding”), a private company, for the treatment of diabetes. Dr. Leland Shapiro, our principal investigator for the University of Colorado Denver (“UCD”) on sponsored research agreements that have been funded by us, is the majority shareholder of Bio Holding and beneficially owns approximately 12% of our common stock as of March 31, 2011.

There are three primary companies that currently manufacture and sell their formulations of AAT for the treatment of genetic deficiency and the treatment for a pulmonary disorder (brand name in parenthesis): (i) Baxter International Inc. (“Baxter”) (Aralast NP ^TM), (ii) CSL Behring USA (Zemaira^®), and (iii) Talecris Biotherapeutics Corp. (“Talecris”) ( Prolastin C^®). The total estimated market for AAT in 2010 in the current AAT indications was approximately $475 million according to Talecris, who has approximately 74% of the current market. Our licensed technologies focus on alternative uses of these commercially available products.

To date, our business efforts have been largely dedicated in pursuing additional capital in order to fund sponsored research Agreements (“SRAs”) related to the licenses with RUC and Bio Holding to further research related to bacterial disorders, viral disorders, cellular transplantation/graft rejection and diabetes-related disorders, and to fund a human clinical trial in Type 1 diabetes. We intend to continue to outsource the normally capital intensive scientific research function to academic research institutions such as UCD. This approach can provide us with a specific scientific budget for funding each application, without the substantial cost of carrying-out basic research internally. With this approach, we expect to be able to work with each project’s lead scientists, overseeing patent application projects and closely managing our corporate overhead. This should allow most of our expenses to be concentrated on research and development efforts and prosecuting the patent applications we have licensed.

Recent Developments

Private Placement

On June 10, 2011, we accepted subscription agreements related to the sale of Units in a private placement (the “2011 Private Placement”). Each “Unit” is comprised of one share of our common stock and one warrant to purchase one share of our common stock for a purchase price of $1.25 per Unit. Each warrant in the Unit (the “2011 Private Placement Warrants”) is exercisable at $2.00 until five years from the initial closing of the 2011 Private Placement. The maximum Units to be sold in the 2011 Private Placement are 4,800,000 resulting in gross aggregate proceeds to the Company of up to $6.0 million. The net proceeds of the 2011 Private Placement will be used for general working capital purposes and research and development projects, which could include an equity investment of up to $2.0 million in a related party.

On June 10, 2011, we conducted the initial closing under the 2011 Private Placement, pursuant to which we entered into subscription agreements for the purchase of 2,463,900 Units for an aggregate subscription price of $3,079,875. After deducting offering expenses including commissions and expenses paid to the placement agent, net proceeds to us from such sales totaled $2,799,745. Certain of our officers and directors purchased an aggregate of 50,000 Units in the initial closing of the 2011 Private Placement. The 2011 Private Placement is expected to close in multiple closings on or before July 31, 2011.

On June 27, 2011, the Company conducted a second closing under the 2011 Private Placement, pursuant to which the Company entered into subscription agreements for the purchase of 338,000 Units for an aggregate subscription price of $422,500. After deducting offering expenses including commissions and expenses paid to the placement agent, net proceeds to the Company from such sales totaled approximately $384,000. Certain of our officers and directors purchased an aggregate of 50,000 Units in the second closing of the 2011 Private Placement.

GVC Capital served as the placement agent for the 2011 Private Placement and earned a commission of 9% of the gross proceeds raised. In addition, we were obligated to sell for a nominal fee to GVC Capital, as the placement agent, warrants to purchase 9% of the total number of shares of our common stock sold in the 2011 Private Placement, which are exercisable at a price of $1.50 per share (the “2011 Private Placement PA Warrants”). The 2011 Private Placement PA Warrants expire five years from the date of the final closing of the 2011 Private Placement. A total of 252,171 of 2011 Private Placement PA Warrants were issued in conjunction with the two closings of the 2011 Private Placement.

Type 1 Diabetes Clinical Trial

On June 7, 2010, Omni, RUC and The Barbara Davis Center (collectively with RUC, the “Institution”) entered into an Investigational Site Agreement (the “ISA”), whereby the Institution, acting on our behalf, agreed to arrange, administer and manage a clinical study to evaluate Baxter’s AAT formulation, Aralast NP^TM, in the treatment of patients with Type 1 diabetes (the “Diabetes Clinical Trial”). The Diabetes Clinical Trial currently includes 15 patients and is being conducted pursuant to an Investigational New Drug Application (the “IND”) granted to Omni by the United States Food and Drug Administration (“FDA”). The IND allows for the Diabetes Clinical Trial to include up to 50 patients. Base costs, which include the enrollment fee and other incidental charges for the 15 patients will be approximately $585,000. Any increase in the patient size of the Diabetes Clinical Trial would require Omni to raise additional capital. To date, we have expended approximately $365,000 in cash related to the Diabetes Clinical Trial.

In March 2010, Omni and Baxter Healthcare Corporation, a subsidiary of Baxter, (“Baxter Healthcare”) executed a Material Transfer Agreement (the “Material Transfer Agreement”) whereby Baxter Healthcare agreed to supply, at no cost, 1.25 kg of Aralast NP^TM, with a commercial value of $420,000 (the “Materials”), to Omni for use in the Diabetes Clinical Trial as described above. Omni warrants that the Diabetes Clinical Trial will be conducted under either a waiver to an IND or an IND filed with the FDA. Under the Material Transfer Agreement, we are responsible to maintain the IND and comply with all reporting and other obligations associated with the IND. The Material Transfer Agreement will terminate upon completion of the Diabetes Clinical Trial unless Omni and Baxter mutually agree in writing to extend its term. The Material Transfer Agreement may be terminated by either party (i) upon a material breach of the Material Transfer Agreement, or (2) in the event of an Adverse Event (as defined in the Material Transfer Agreement) that warrants termination of the Diabetes Clinical Trial. In addition, we are required to prepare for Baxter a summary of the information and results generated as of certain milestones during the two-year period of the Diabetes Clinical Trial.

License and Sponsored Research Agreements

Bacterial Disorders License

On May 15, 2006, we entered into our first exclusive license agreement with RUC covering patent applications directed to treatment and/or prevention of bacterial disorders (the “Bacterial License”). Some of these disorders include disorders due to anthrax, tuberculosis and bacterial pneumonia. Concurrently, we entered into a three year SRA with RUC on behalf of UCD for research to advance the bacterial disorders license agreement (the “Bacterial SRA”). Under the Bacterial SRA, we made payments aggregating $1,097,460 and we have no further obligations under this SRA. We are continuing to pursue patent rights directed to targeting bacterial disorders with the United States Patent and Trademark Office (“USPTO”) as well as international patent offices, which include Japan, Canada and Europe.

Viral Disorders License

On March 31, 2008, we entered into a license agreement with RUC covering patent applications and an issued patent directed to treatment and/or prevention of viral disorders (the “Viral License”). Some of these disorders include, but are not limited to, HIV and influenza. We are currently pursuing expanded patent rights based on our licensed technology directed to treating viral-related disorders with the USPTO.

On August 18, 2010, we entered into an SRA with RUC whereby UCD will perform studies “in vitro” and “in vivo” to determine the biological activity of AAT as an inhibitor of influenza (the “Viral SRA”). The Viral SRA was executed pursuant to the Viral License. We are obligated to make quarterly payments to UCD, which total approximately $440,000 over a two-year period. All rights to intellectual property developed in connection with the Viral SRA (the “Viral Intellectual Property”) will belong to RUC, and RUC will have the right to obtain patent protections on the Viral Intellectual Property. In accordance with the terms of the Viral SRA, UCD granted to us an option to acquire an exclusive, worldwide, royalty-bearing license of any of the Viral Intellectual Property, subject to certain conditions and exceptions. To date, we have made payments in the amount of approximately $110,000 under this SRA.

On June 8, 2011, we gave written notice to RUC terminating the Viral SRA. The termination of the Viral SRA will be effective 45 days from the date of written notification, unless an earlier termination date is negotiated with RUC. Unless otherwise negotiated with RUC, we must reimburse UCD for the total actual and reasonable costs it has incurred by it under the Viral SRA through the date of termination, including those costs necessary to implement the early termination of the Viral SRA and costs incurred by UCD as a result of non-cancelable obligations, which may extend beyond the date of such termination. In addition, certain indemnification obligations and intellectual property rights will survive the termination of the Viral SRA. The termination of the Viral SRA does not impact the continuance of the Viral License or licensing of the intellectual property and patents (both issued and pending).

Cellular Transplant License

On November 12, 2008, we entered into a license agreement with RUC for technology related to the treatment of cellular transplantation and graft rejection, diabetes and other indications (the “Cellular Transplant License”). We are currently pursuing expanded patent rights based on our licensed technology directed to treating cellular transplantation and graft rejection disorders with the USPTO and international patent offices, which include Canada and Europe.

Bio Holding License

On September 28, 2009, we entered into a license agreement with Bio Holding for patent applications related to the treatment of diabetes (the “Diabetes License”). In addition, the Diabetes License grants us a first refusal to license any other intellectual property owned by Bio Holding that is not part of the Diabetes License.

In consideration for the Diabetes License, we were obligated to pay Bio Holding of $25,000. As additional consideration, we issued to a minority shareholder of Bio Holding a warrant (the “Bio Holding Warrant”) to purchase 650,000 shares of our common stock at an exercise price of $3.00 per share. The Bio Holding Warrant expires on September 28, 2014 and contains a cashless exercise provision. The Bio Holding Warrant was subject to the execution of a subscription and lock-up agreement by the minority shareholder that restricts the sale or transfer of the underlying shares until March 31, 2012. We estimated the fair value of the Bio Holding Warrant on the issuance date at $5,590,980, which was calculated using the Black-Scholes model. The total value ascribed to the Bio Holding License was $5,615,980.

On September 3, 2010 and pursuant to the Diabetes License, Omni and RUC executed an SRA (the “Diabetes SRA”), whereby UCD will study the effects of AAT on cytokine production by human pancreatic islet cells and the ability of AAT to protect these cells from induced toxicity (the “Project”). The Diabetes SRA will terminate on the earlier of the completion of the Project or February 28, 2012, unless extended or renewed in writing by either Omni or UCD or otherwise terminated prior to February 28, 2012 in accordance with the terms of the Diabetes SRA. We are obligated to make payments to UCD of $88,000 over a one-year period commencing in September 2010, and to date, we have made payments in the amount of approximately $58,000 under this SRA.

Future royalty payments under our license agreements are summarized below:

				Minimum		Milestone		Earned		Sublicense
License		Field of Use		Royalties		Royalties		Royalties (5)		Royalties (6)
Bacterial License		Bacterial		$25,000 per year starting May 15, 2011		(1)		4% of Net Sales		20% to 30%
Viral License		Viral (including HIV)		$50,000 per year after first commercial sale		(2)		4% of Net Sales		20% to 30%
Cellular Transplant License		Cellular Transplantation /Graft Rejection		$50,000 per year after first commercial sale		(3)		3% of Net Sales		20% to 30%
Diabetes License		Diabetes		None		None		4% of Gross Revenues (4)		30% (4)

(1)		Payable to RUC as follows: $30,000 upon completion of preclinical trial; $50,000 upon completion of a phase I clinical trial; $100,000 upon completion of a phase II clinical trial; $200,000 upon completion of a phase III clinical trial; and $300,000 upon receipt of approval of FDA or foreign equivalent.
(2)		Payable to RUC as follows: $100,000 upon completion of any phase III clinical trial and $150,000 upon first commercial sale. No milestone royalties are required for the first indication. For the second indication, 100% of the milestone royalties shall be paid, and for subsequent indications 50% of the milestone royalties shall be paid.
(3)		Payable to RUC as follows: $25,000 upon initiation of a phase II clinical trial; $100,000 upon initiation of a phase III clinical trial; and $200,000 upon receipt of approval of FDA or foreign equivalent.
(4)		Payable to Bio Holding.
(5)		Earned Royalties are based on direct net sales of product by Omni.
(6)		Sublicense Royalties are based on royalties received by Omni on a sublicense arrangement with a third party.

The license agreements expire upon the expiration date of the last patent covered by the agreement and may also be terminated by either party in the event of a default by the other party.

Possible Future Clinical Trials Through Strategic Partnerships

In February 2011, we announced that we had obtained letters of intent for conducting future clinical trials as follows: (1) treatment of GVHD in bone marrow transplant patients; (2) two separate human clinical trials for the treatment of transplant rejection in kidney transplant recipients; (3) the initiation of a late stage Type 1 diabetes trial; and (4) the initiation of a trial in Type 2 diabetics that are not responding to currently available forms of therapy and are at risk of severe cardiovascular complications. We believe that advancing clinical trials in these indications could provide additional commercial opportunities where our intellectual property position is currently the strongest. As a first step, we will need to create a partnership, most likely with an existing AAT Manufacturer, and with that partnership discuss the commercial viability of these indications. Based on their assessment of their current and future AAT production capabilities, their current and potential new AAT markets and the strength and commercial application of our intellectual property in these indications, we would hope to form a strategic partnership with one or more of them. We would position such a partnership(s) to supply AAT product free of charge and to fund the non-drug clinical trial costs. Subject to available financing, we would likely first commence a GVHD clinical trial.

Significant Trends, Uncertainties and Challenges

We believe that the significant trends, uncertainties and challenges that directly or indirectly affect our financial performance and results of operations include, but are not limited to:

•

Our ability to raise sufficient capital to fund our operations and future clinical trials;

•

The continued expected growth in the biopharmaceutical sector;

•

Our ability to license key intellectual property and protect our current intellectual property relating to our development of therapies;

•

Our ability to fund and enter into SRAs and clinical trials necessary for our development of therapies;

•

Our ability to devote our resources to therapies that are the most likely to result in commercialization;

•

Our ability to shepherd potential therapies through the FDA approval process;

•

Our ability to compete against companies in our industry with greater resources; and

•

Our ability to partner with an existing AAT Manufacturer.

Results of Operations — Fiscal Year Ended March 31, 2011 Compared to Fiscal Year Ended March 31, 2010

The following discussion relates to Omni’s operations for the year ended March 31, 2011 (“Fiscal year 2011”) as compared to the year ended March 31, 2010 (“Fiscal year 2010”).

Net loss — For Fiscal year 2011, we reported a net loss of $8,225,477 as compared to a net loss of $15,478,874 for Fiscal year 2010, a decrease of $7,253,397. This decrease was primarily attributable to a non-cash charge of $5,615,980 related to a license fee and a non-cash charge of $2,479,000 related to a modification of a warrant recorded in Fiscal year 2010. These variances are further discussed below.

General and administrative expenses — General and administrative expenses for Fiscal year 2011 were $7,649,818, and included $6,466,435 of share-based compensation, as compared to $7,375,732 in Fiscal year 2011, which included $6,395,302 of share-based compensation. As we have disclosed in prior filings, management views general and administrative expenses exclusive of share-based compensation as an important non-GAAP measure, as we are in development stage, have not recorded any revenue since inception and closely monitor operating expenses to manage and control cash. Accordingly, excluding share-based compensation, general and administrative expenses for Fiscal year 2011 were $1,183,383 as compared to $980,430 for Fiscal year 2010, an increase of $202,953 or approximately 21%. This increase was primarily due to higher expenses in the following categories: 1) office rent and investor relations, which increased approximately $85,000 (both of which commenced in the three months ended March 31, 2010); 2) business insurance, which increased approximately $81,000 as a result of higher director and officer insurance premiums; 3) approximately $53,000 of expenses incurred for a pilot study in biohazard treatments, which commenced in March 2010; and 4) officer salaries of approximately $57,000 as a result of part-time CEO compensation commencing in May 2010, and higher CFO compensation as a result of the position becoming a full-time position in January 2010. Legal expenses related to SEC compliance, capital raising and intellectual property protection for Fiscal year 2011 decreased approximately $87,000 from Fiscal year 2010.

Research and development — For Fiscal year 2011, we incurred approximately $578,000 of research and development expense related to: 1) the Clinical Trial, as a result of the commencement of patient infusions in October 2010; and 2) the Viral and Diabetes SRAs. For Fiscal year 2010, we had no research and development expense.

License fee — related party — During Fiscal year 2010, we executed the Diabetes License. The total value ascribed to the license agreement was $5,615,980, which was expensed during Fiscal year 2010. The license fee was comprised of a cash payment of $25,000 and a warrant to purchase 650,000 shares of our common stock, which was valued using the Black-Scholes model in the amount of $5,590,980.

Non-operating income (expense) — For Fiscal year 2011, non-operating income, net of non-operating expense, was $1,854 and was comprised of interest income of $4,854 and accretion expense of $3,000 on a note with a related party. For Fiscal year 2010, non-operating expense, net of non-operating income, was $2,487,162 and was comprised of a non-cash charge of $2,479,000 related to a common stock warrant modification, interest income of $3,838 and accretion expense of $12,000 on a note with a related party.

Results of Operations — Fiscal Year Ended March 31, 2010 Compared to Fiscal Year Ended March 31, 2009

The following discussion relates to Omni’s operations for Fiscal year 2010) as compared to the year ended March 31, 2009 (“Fiscal year 2009”).

Net loss — For Fiscal year 2010, we reported a net loss of $15,478,884 as compared to a net loss $4,544,521 for Fiscal year 2009, an increase of $10,934,363. We have not reported any revenue since inception and it is highly likely that we will not recognize any revenue in the near term.

General and administrative expenses — General and administrative expenses for Fiscal year 2010 were $7,375,742, which included $6,395,302 of share-based compensation, as compared to $1,031,911 for Fiscal year 2009, which included $740,251 of share-based compensation. Management views general and administrative expenses, exclusive of share-based compensation, as an important non-GAAP measure, as we are in development stage, have not recorded any revenue since inception and closely monitor operating expenses to manage and control cash. Management also believes this measure is helpful to investors so they can better understand our cash expenditures. Accordingly, excluding share-based compensation, general and administrative expenses for Fiscal year 2010 were $980,440 as compared to $291,660 for Fiscal year 2009, an increase of $688,780 or approximately 236%. This increase was primarily due to public company reporting and administrative related expenses in the areas of external audit and reporting, legal, stock administration, investor relations and insurance that were incurred in Fiscal year 2010 and not incurred for Fiscal year 2009, as we were not an SEC reporting company until March 31, 2009. Also in Fiscal year 2010, we had significant increases in legal expenses associated with patents related to our licensing arrangements and consulting and scientific advisory expenses as compared to Fiscal year 2009.

Other operating expense — In Fiscal year 2010, we executed the License Agreement with Bio Holding, a related party, whose majority shareholder is a significant shareholder of Omni. We paid a license fee of $25,000 and issued to the minority shareholder of Bio Holding a warrant to purchase 650,000 shares of our common stock at an exercise price of $3.00. The value of the warrant was calculated at $5,590,980 using the Black-Scholes pricing model, and this amount was recorded as a non-cash operating expense for Fiscal year 2010. For Fiscal year 2009, we incurred non-cash operating expenses in the amount of $719,772 associated with issuances of shares of our common stock to the University License Equity Holdings, Inc., a beneficiary of RUC, that were required under anti-dilution provisions associated with our licenses for viral disease treatment and cellular transplantation/graft rejection.

Research and development — Research and development expenses for Fiscal year 2010 were $-0- as compared to $241,300 in Fiscal year 2009. The decrease was attributable to not having any SRAs in place for Fiscal year 2010.

Other non-operating expenses — For Fiscal year 2010, we recognized accretion expense on notes payable with related parties of $12,000 as compared to $41,125 for Fiscal year 2009. The decrease was primarily the result of the conversion of one of the notes in conjunction with a private placement equity offering (the “PP Offering”) that was completed on March 31, 2009. All unamortized discount on this note was expensed upon the conversion of the note on March 31, 2009. For Fiscal year 2009, we recorded non-cash charges for the issuances of common stock purchase warrants issuances to investors and related parties of $2,354,587 as compared to $-0- for Fiscal year 2010. The decrease was a result of the warrant issuances to outside investors and related parties in conjunction with the Merger and the PP Offering that were completed on March 31, 2009. In Fiscal year 2010, we recorded a charge in the amount of $2,479,000 for a modification of an investor warrant to purchase 250,000 shares of common stock. This warrant was revalued on the modification date at an estimated fair value of $10.91 per share. In Fiscal year 2009 and prior to becoming a reporting company, we recorded a charge in the amount of $152,686 for modifications of investor warrants to purchase approximately 788,000 shares of common stock. These warrants were revalued on the modification dates at a weighted-average estimated fair value of $0.20 per share.

Interest income/expense net — For Fiscal year 2010, we recorded net interest income of $3,838 as compared to net interest expense of $6,140 for Fiscal year 2009. The net increase in interest income for Fiscal year 2010 was primarily due to interest earned on an interest-bearing cash account as a result of our private placement equity offering that generated approximately $1.8 million and occurred during December 2009 and January 2010 (the “2010 Private Placement”).

Liquidity and Capital Resources

Our consolidated financial statements as presented in Item 15 of this report have been prepared in conformity with US GAAP, which contemplate our continuation as a going concern. However, the report of our independent registered public accounting firm on our consolidated financial statements, as of and for the year ended March 31, 2011, contains an explanatory paragraph expressing substantial doubt as to our ability to continue as a going concern. The “going concern” qualification results from, among other things, our development-stage status, no revenue recognized since inception or likely to be recognized in the near term, and our inception to date net losses, which total approximately $31.2 million and include non-cash charges of approximately $25.8 million. Our consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary if we were unable to continue as a going concern.

We expect that the cash raised in the 2011 Private Placement will allow us to fund our operations for approximately the next twelve months based on current operating levels, however, we will likely need to engage in additional capital raising to operate beyond that period. There is no assurance that we will be successful in raising additional capital on acceptable terms or at all. Failure to obtain additional capital may have a material adverse impact on our ability to continue our research and development efforts and fund our operating expenses beyond June 30, 2012.

Cash and Cash Equivalents

We consider all liquid investments purchased within 90 days of their original maturity to be cash equivalents. Our cash and cash equivalents were $302,000 and $1.8 million at March 31, 2011 and 2010, respectively.

Cash Flows from Operating Activities

For Fiscal year 2011, net cash used in operations was 1,722,739. The primary uses of cash from operations were general and administrative expenses excluding share-based compensation, which totaled $1,183,383 and research and development expense of $577,513. For Fiscal year 2010, net cash used in operations was $1,793,869. The primary uses of cash from operations were general and administrative expenses excluding share-based compensation, which totaled $980,040 and a reduction in accounts payable, amounts due under the Bacterial SRA, accrued liabilities and amounts due to related parties, which totaled approximately $814,000. The significant decrease in these liabilities was a result of a significant pay-down on these liabilities during the first quarter of Fiscal year 2010, which had largely been incurred during the first nine months of Fiscal year 2009 because we had negligible cash on hand during Fiscal year 2009 to settle liabilities on reasonable and, as applicable, contractual payment terms.

Cash Flows from Investing Activities

For fiscal years 2011 and 2010, we did not generate or expend cash from investing activities.

Cash Flows from Financing Activities

For fiscal year 2011, we generated approximately $222,000 of cash related to the exercise of common stock purchase warrants from investors. For fiscal year 2010, we generated $1,790,840 of cash from financing activities, of which $1,786,890 was generated from the 2010 Private Placement.

Anticipated Cash Commitments

During the remainder of 2011, we may expand the patient size of the Clinical Trial and potentially fund an additional clinical trial, both subject to raising additional equity or debt capital or developing a strategic partnership.

Contractual Obligations

Our cash payments due under contractual obligations as of March 31, 2011 were as follows:

		Less than												More than
		1 Year				1 - 3 Years				3 - 5 Years				5 Years				Total
Diabetes Clinical Trial		$	365,000			$	—			$	—			$	—			$	365,000
SRA payments (1)			250,000				110,000												360,000
Corporate office lease			19,666				16,727				—				—				36,393
Office equipment lease			2,298				2,107				—				—				4,405
		$	636,964			$	128,834			$	—			$	—			$	765,798

(1)		As of June 8, 2011, we gave notice to terminate the Viral SRA and our obligations under SRA payments may be reduced.

Critical Accounting Policies

We prepare our financial statements in accordance with US GAAP. Our significant accounting policies are disclosed in Note 2 to our consolidated financial statements contained under Item 15 in this report. The accounting policies most fundamental to the understanding of our financial statements are our use of estimates, including the computation of share-based compensation which is further disclosed in Note 7 to our consolidated financial statements; research and development cost; capitalization of license agreements and impairment analysis of the capitalized license costs; and the valuation, classification and recording of debt and equity transactions, including those that include stock purchase warrants.

Share-based Compensation

A significant amount of our general and administrative expenses for the years ended March 31, 2011, 2010 and 2009 is comprised of share-based compensation in the amounts of $6,466,435, $6,395,302 and $740,251, respectively, related to warrants to purchase shares of our common stock issued to employees, consultants and directors. We have computed the share-based compensation charges using the Black-Scholes pricing model, which incorporates estimates as to the expected term that a warrant holder will hold a warrant and the expected volatility of a company’s stock price over a specified term.

For fiscal year 2010, we recorded significant charges in the amount of $8,069,980 for warrants issued as a partial payment for a licensing fee with a related party and for a modification of an outside investor warrant. We calculated the estimated values of these warrants using the Black-Scholes model and assessed the appropriateness of the variables employed in the model, including an appropriate discount to the closing OTC price of our common stock as the result of contractual restrictions on the sale of shares of our common stock underlying these warrants. We are likely to issue more equity instruments, which may be in the forms of common stock with detachable warrants, convertible debt with detachable warrants or convertible preferred with detachable warrants. These potential types of transactions require extensive analysis to determine the proper asset, liability and/or equity classification and the application of estimates in deriving values to be assigned under the Black-Scholes model. Future issuances of these transactions may result in significant expenses being recorded in our consolidated financial statements.

Research and Development Costs

A significant amount of our operating expenses is comprised of costs incurred under SRAs and the Diabetes Clinical Trial, which we group as research and development costs. For Fiscal year 2011, we expensed approximately $578,000 related to research and development activities. Under current GAAP, all research and development costs are expensed as incurred. The accounting for costs incurred for clinical trials is not specifically identified under current GAAP, but we believe that our policy of expensing all specifically identifiable costs for the Diabetes Clinical Trial upon patient infusions is consistent with the principles surrounding accounting for research and development costs and current practice for accounting for clinical drug trials. During Fiscal year 2011, eight patients were infused, and all identifiable costs related to these patients were expensed during this year.

Capitalized License Costs

Since inception, we have capitalized approximately $80,000 related to direct costs incurred to establish our ability to license potential future patents in the bio pharmaceutical areas that are associated with our licenses. We commence amortization of these costs when a patent is applied for and continue the amortization over the expected life of the patent. The assignment of an estimated life to a license is also an estimate that we must monitor as well as the net carrying value of the license. Because we are in development stage and have not generated any revenue or identified which of the licenses may potentially generate revenue, a formal impairment analysis is not practical at this time. We will continue to monitor our license agreements as to the appropriateness of definite lives in relation to patent development and formalize our potential impairment analysis as we correlate evidence as to the potential marketability of product(s) related to our license agreements.

ITEM 7A.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As of March 31, 2011, approximately 75% of our total assets were comprised of cash and cash equivalents, which were held in operating and short-term, interest-bearing money market accounts. Additionally, as of March 31, 2011, we did not have any outstanding debt obligations or any credit facilities in place. As we are a development stage company and have not reported any revenue from inception, we currently utilize 100% of our cash and cash equivalents on hand to fund general operating expenses and research and development activities. We do not anticipate investing any cash or cash equivalents in any marketable equity or debt securities in the foreseeable future and, as such, we are not subject to interest rate risk associated with debt securities or debt obligations or market risk associated with equity securities investments.

ITEM 8.		FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Financial Statements

Our consolidated financial statements are included as a separate section of this report beginning on page F-1 immediately following the signature page to this report.

Supplementary Data

Supplementary data for each quarter in our fiscal years ended March 31, 2011 and 2010 is as follows:

		For the Quarter Ended
Fiscal Year 2011		June 30				September 30				December 31				March 31
Net sales		$	—			$	—			$	—			$	—
Net loss			(2,735,325	)			(2,714,431	)			(1,341,055	)			(1,434,666	)
Net loss per share — basic and Diluted			(0.10	)			(0.10	)			(0.05	)			(0.05	)

		For the Quarter Ended
Fiscal Year 2010		June 30				September 30				December 31				March 31
Net sales		$	—			$	—			$	—			$	—
Net loss			(807,096	)			(6,533,403	)			(5,032,094	)			(3,106,291	)
Net loss per share — basic and diluted			(0.03	)			(0.25	)			(0.19	)			(0.11	)

ITEM 9.		CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES.

None.

ITEM 9A.		CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We are responsible for establishing and maintaining disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of March 31, 2011, and concluded that our disclosure controls and procedures were effective as of that date.

Management’s Annual Report on Internal Control over Financial Reporting

Our management, including the Chief Executive Officer and the Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended. Our internal controls were designed to provide reasonable assurance as to the reliability of its financial reporting and the preparation and presentation of the consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Management has used the framework set forth in the report entitled Internal Control — Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission to evaluate the effectiveness of the Company’s internal control over financial reporting. As of March 31, 2011, management concluded that our internal control over financial reporting was effective as of such date.

Hein & Associates LLP, an independent registered public accounting firm, has issued an attestation report on our internal control over financial reporting, which is included herein.

Change in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during the fourth quarter of the fiscal year ended March 31, 2011 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders
Omni Bio Pharmaceutical, Inc.

We have audited Omni Bio Pharmaceutical, Inc.’s internal control over financial reporting as of March 31, 2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Omni Bio Pharmaceutical, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Omni Bio Pharmaceutical, Inc. maintained, in all material respects, effective internal control over financial reporting as of March 31, 2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of Omni Bio Pharmaceutical, Inc. and our report dated June 29, 2011 expressed an unqualified opinion.

/s/ HEIN & ASSOCIATES LLP

Denver, Colorado
June 29, 2011

ITEM 9B.		OTHER INFORMATION.

None.

PART III

ITEM 10.		DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Executive Officers and Directors

The following table sets forth the names and ages of each of our directors and executive officers as of June 6, 2011:

Name		Age				Position
James D. Crapo			68			Chief Executive Officer and Director
Robert C. Ogden			50			Chief Financial Officer, Secretary and Treasurer
Edward C. Larkin			60			Chief Operating Officer
Charles A. Dinarello			68			Chief Scientific Officer
Vicki D.E. Barone			51			Chairperson of the Board
Michael D. Iseman			72			Director
Michael D. Wort			61			Director
Albert L. Kramer			78			Director
Steven M. Bathgate			56			Director
Jeffrey S. Sperber			46			Director

The directors named above serve for one-year terms until our next annual meeting of stockholder or their earlier resignation or removal. Information concerning our directors and our executive officers is set forth below:

James D. Crapo, MD has served as our Chief Executive Officer and a member of our Board of Directors since March 2011, and he also has served on our Scientific Advisory Board since March 2009. Since 1996, Dr. Crapo has been a Professor at National Jewish Medical and Research Center (“NJH”), where he served as Executive Vice President of Academic Affairs and Chairman of Medicine from 1996 to 2004. NJH is a private institution specializing in immunology and allergic diseases. From July 2004 to December 2004, Dr. Crapo served as Chief Executive Officer of Aeolus Pharmaceuticals, Inc., a developer of a new class of catalytic anti-oxidant compounds that protects healthy tissue from the damaging effects of radiation. He was the first scientist to extend Dr. Fridovich’s and Dr. Joe McCord’s original discovery of superoxide dismutase, a natural antioxidant referred to as “SOD,” to mammalian models of disease.

Prior to joining NJH, Dr. Crapo spent over 15 years as the Chief of the Pulmonary and Critical Care Medicine Division at Duke University Medical Center. He is involved in a number of professional societies, including service on the NHLBI Advisory Council and serving as President of the American Thoracic Society and President of the Fleischner Society. He currently serves on the board of directors and as the chairman of the audit committee of Lifevantage Corporation (LFVN.OB), a maker of science-based solutions to oxidative stress. From 2007 to 2009, he served as the chairman of the board of directors of Lifevantage Corporation. We believe that Dr. Crapo’s prior and current director positions with public companies and his scientific and business executive expertise give him the qualifications and skills to serve as a director.

Robert C. Ogden has served as our Chief Financial Officer, Treasurer and Secretary since May 2009. From 2007 to 2009, Mr. Ogden was a financial consultant, primarily providing services to public companies, including Fortune 500 and micro-cap entities. From May 2004 to June 2007, Mr. Ogden served as Chief Financial Officer, Treasurer and Secretary of SAN Holdings, Inc., a publicly-traded data storage solutions provider and software company, where he was responsible for all administrative and finance functions. In November 2007, SAN Holdings, Inc. filed a voluntary petition for relief under Chapter 7 of the U.S. Bankruptcy Code. From 2000 to May 2004, he was a multi-industry financial consultant providing financial controller and reporting services to both private and public companies. His prior experience includes financial executive positions with two micro-cap companies. Mr. Ogden began his career as a public accountant with PricewaterhouseCoopers LLP. Mr. Ogden received a BS in Commerce from the University of Virginia and is a CPA.

Edward C. Larkin has served as our Chief Operating Officer since May 2009. From March 2009 until May 2009, Mr. Larkin served as our Interim Chief Financial Officer. From January 2007 until March 2009, he served as Interim Chief Financial Officer of Apro Bio Pharmaceutical Corporation, our predecessor operating company (“Apro Bio”). Currently, Mr. Larkin is also a registered broker with GVC Capital LLC (“GVC Capital”) and from 2002 until February 2010, he served as Director of Corporate Finance for GVC Capital. His prior experience has included a variety of executive positions with several investment banking firms and he began his career with FINRA (formerly the NASD). He is one of the 12 founding members and a former member of the board of directors of the National Investment Banking Association. Mr. Larkin received a BS in Finance and Marketing from the University of Colorado and an MBA from the University of Denver.

Charles A. Dinarello, MD has served as our Chief Scientific Officer since March 2011 and is a member of our Scientific Advisory Board. From March 2009 through March 2011, he served as our Acting Chief Executive Officer and a member of our Board of Directors. Since 1996, Dr. Dinarello has been Professor of Medicine and Immunology at the University of Colorado Denver. Prior to joining the University of Colorado Denver, he was Professor of Medicine at Tufts University. Dr. Dinarello has published over 700 original research articles on cytokines, particularly interleukin-1 (IL-1) and tumor necrosis factor, and is considered a “founding father” of cytokine biology. Dr. Dinarello currently serves as a director of Techne Corporation (NASDAQ NNM: TECH), and is a Scientific Advisory Board member of Senesco Technologies, Inc., Source MDx, Inc., GlobeImmune, Inc., and Capstone Pharmaeuticals, Inc. He is also a member of the editorial board of the Proceedings of the National Academy of Sciences.

Vicki D.E. Barone has served as the Chairperson of our Board of Directors since March 2009 and is a member of our Audit Committee. From March 2008 until March 2009, she was the Chairperson of the Board of Directors of Apro Bio. Since 1996, Ms. Barone has served as the Chief Financial and Compliance Officer for GVC Capital where she is also a Senior Managing Partner and a member of the Commitment Committee, and actively manages the corporate finance projects of the firm. Since 2010, she has served on the board of the National Investment Banking Association, which she also served on from 2005 to 2007, including serving as the Chairperson in 2007 and Secretary and Treasurer in 2006. She is a CPA and a Certified Financial Planner and received a BS in Finance and MS in Accounting from the University of Colorado. We believe that Ms. Barone’s executive, financial and business expertise, including her background as the chairperson of the Board of Directors of another company, give her the qualifications and skills to serve as a director and as the Chairperson of our Board of Directors.

Michael D. Iseman, MD has served as a member of our Board of Directors since March 2009. From August 2008 until March 2009, he was a director of Apro Bio. Since 1980, Dr. Iseman has been a Professor of Medicine at the University of Colorado Denver with appointments in the Division of Pulmonary Medicine and the Division of Infectious Diseases. Since 1983, he has also been a physician with NJH and currently serves as its Chief of Clinical Mycobacterial Disease Service. Dr. Iseman received his undergraduate degree with honors from Princeton University and his MD from Columbia University’s College of Physicians and Surgeons. We believe that Dr. Iseman’s scientific and business expertise, including his background as a former director of another company, give him the qualifications and skills to serve as a director.

Michael D. Wort has served as a member of our Board of Directors since March 2009. Mr. Wort was a founder of Apro Bio, which commenced operations in February 2006. From October 2008 until March 2009, he was a director of Apro Bio and from October 2008 until December 2008, he served as its Interim Chief Executive Officer. Since 2007, Mr. Wort has served as the Managing Director of De Facto Communications, a subsidiary of Chime Communications, which is listed on the London Stock Exchange. In 2004, Mr. Wort founded MC BioCommunications, an investor and public relations firm specializing in emerging bioscience companies. He is also a founder and director of BeckPharma Limited, a technology transfer company, and PharmScape, a biotechnology consultancy company, both of which were founded in 2003. Mr. Wort’s other prior experience includes various sales, marketing and general management positions with GlaxoSmithKline plc. Additionally, he has served as an advisor and consultant on fund raising for more than 15 small-cap, biotechnology companies. Mr. Wort received his BSC in Applied Biology and is a Chartered Graduate Biologist in Industrial Microbiology. We believe that Mr. Wort’s management, financial and industry expertise give him the qualifications and skills to serve as a director.

Albert L. Kramer has served as a member of our Board of Directors since March 2009. From April 2008 until March 2009, he was a director of Apro Bio. Since 1993, Mr. Kramer has served as an attorney with the Kramer Law Firm. From 1993 to 2005, Mr. Kramer served as Special Counsel to Syratech Corporation. From 2004 to 2008, he served as Chief Counsel to Travelers Marketing, LLC. From 1975 to 1992, Mr. Kramer served as a District Court Judge for the Massachusetts Trial Court. He received his undergraduate and law degrees from Boston University. We believe that Mr. Kramer’s legal and financial expertise give him the qualifications and skills to serve as a director.

Steven M. Bathgate has served as a member of our Board of Directors since March 2009. From April 2008 until March 2009, he was a director of Apro Bio. Since 1996, Mr. Bathgate has served as Senior Managing Partner of GVC Capital and is one of its founders. Prior to starting GVC Capital, he was Chairman and Chief Executive Officer of Cohig & Associates, Inc., an investment banking firm. Mr. Bathgate currently serves on the board of directors of Peerless Systems Corp. (Nasdaq: PRLS), Creston Resources, Inc. (Pink Sheets: CSTJ) and formerly served on the board of directors of Birner Dental Management Services, Inc. (Nasdaq: BDMS). He received a BS degree in Finance from the University of Colorado. We believe that Mr. Bathgate’s executive and business expertise, including his background as a director for several public companies, give him the qualifications and skills to serve as a director.

Jeffrey S. Sperber has served as a member of our Board of Directors since October 2009 and currently serves as the Chairman of our Audit Committee. Since October 2010, he has served as the Chief Financial Officer of Arrogene Nanotechnology, Inc., a development-stage biotechnology firm. From 2005 through June 2011, Mr. Sperber served as the Chief Financial Officer and a director of Ceragenix Pharmaceuticals, Inc., a publicly traded medical device company (Pink Sheets: CGXP). In June 2010, Ceragenix Pharmaceuticals, Inc. filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code. The proceeding is still ongoing. From 2001 to 2004, he served as the Vice President and Controller of TeleTech Holdings, Inc., a $1 billion global public company providing outsourced call center services. Mr. Sperber began his career at an public accountant with Arthur Andersen LLP and received his CPA license in the State of Colorado, which has since expired. He received a BS in Accounting from Colorado State University. We believe that Mr. Sperber’s financial, accounting and business expertise, including his background as the Chief Financial Officer of a public company, gives him the qualifications and skills to serve as a director and as the Chairman of our Audit Committee.

Compliance With Section 16(a) Of The Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires our officers, directors and holders of more than 10% of our common stock to file reports of ownership of our securities and changes in ownership with the SEC. Based solely on a review of the Section 16(a) reports furnished to us during the fiscal year ended March 31, 2011, we believe that all filings required to be made during fiscal year ended March 31, 2011.

Code of Ethics

We have a Code of Ethics applicable to all of our officers, other employees and directors. Among other things, the Code of Ethics is designed to deter wrongdoing and to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; to promote full, fair, accurate, timely, and understandable disclosures in periodic reports required to be filed by us; and to promote compliance with applicable governmental laws, rules and regulations. The Code of Ethics provides for the prompt internal reporting of violations of the Code of Ethics to an appropriate person identified in the Code of Ethics and contains provisions regarding accountability for adherence to the Code of Ethics. A copy of our Code of Ethics is filed as Exhibit 14.1 to our Annual Report on Form 10-K for the fiscal year ended March 31, 2010.

Audit Committee

We have a separately-designated standing audit committee comprised of two members, Jeffrey Sperber (Chairman) and Vicki Barone. The Board of Directors has determined that Jeffrey Sperber is an independent director in accordance with SEC rules. The Audit Committee has sole authority to retain, compensate, terminate, oversee and evaluate the independent auditors, and reviews and approves in advance all audit and non-audit services (other than prohibited non-audit services) performed by the independent auditors. In addition, the Audit Committee reviews and discusses with management and the independent auditors the audited financial statements included in our filings with the SEC; oversees our compliance with legal and regulatory requirements; and meets separately with the independent auditors as often as deemed necessary or appropriate by the Committee. In this regard, the Audit Committee also reviews major issues regarding accounting principles and financial statement presentation, and periodically discusses with management our major financial risk exposures and the steps that management has taken to monitor and control such exposures.

The Board of Directors has determined that Jeffrey Sperber is an “audit committee financial expert” as such term is defined in applicable SEC regulations.

ITEM 11.		EXECUTIVE COMPENSATION.

Compensation Discussion and Analysis

General Philosophy and Objectives

Our success depends on the expertise, talent, experience and long-term commitment of our executive management. Currently, we do not have a Compensation Committee. Our Chairperson, with consultation from our Board, has determined base salaries and equity-based compensation for our executive officers. Overall, our compensation practices and programs are intended to achieve the following objectives:

•

To attract, retain, motivate and reward key employees to drive the successful implementation of our current and long-term strategic, business and financial goals;

•

To align the financial interests of our executives with those of our shareholders;

•

To establish appropriate incentives for management and employees that are consistent with our culture and values; and

•

To provide an annual compensation program with a high emphasis on long-term equity-based compensation.

To accomplish these objectives, we use a combination of base salary and equity-based compensation, which has been in the form of common stock purchase warrants and restricted stock units. We believe this creates an environment that allows us to achieve our objectives and maximize value for our shareholders. Currently, we do not have a shareholder approved equity compensation plan.

As we are in development-stage, conversation of cash is a primary management objective, and accordingly, cash compensation has only been in the form of base salary. We believe that our officers are strongly motivated and dedicated to the growth in stockholder value of the Company. Further, we believe that our salaried officers are receiving salary compensation in the lower range relative to comparable positions with other similar size and industry type companies, but that their performance incentives are heavily based on their personal shareholding and/or incentive equity-based compensation.

Salaries

Salaries paid to our other executive officers are determined by evaluating the responsibilities of the position held and the experience of the individual, and by reference to the competitive marketplace for executive talent. Due to our limited cash, salary levels are below the industry average and we did not pay any cash bonuses in Fiscal year 2011.

Equity Incentive Compensation

The use of equity-based compensation is intended to align the interests of the executives and other key employees with those of the stockholders. Equity-based compensation also serves to increase management ownership in the Company, provides a level of deferred compensation, aids in employee retention and conserves cash. In the near term, we believe that equity compensation is the best means to motivate our executive officers to perform at a high level and in the best interest of our shareholders.

Equity-based compensation for our executive officers is based primarily on three factors: (1) an evaluation of the responsibilities of the executive officer’s position; (2) the competitive marketplace for executive talent; and (3) executive compensation of similar size and industry type companies. During Fiscal year 2011, our Board of Directors granted restricted stock units (“RSUs”) to our Chief Executive Officer (“CEO”) and Chief Scientific Officer (“CSO”). In determining the number of RSUs to grant to these individuals, the Board of Directors considered each individual’s position, the number of shares of common stock and common stock purchase warrants outstanding, their base salaries and the equity ownership of our other executive officers and directors. Both the CEO and CSO received grants of RSUs when they commenced service in their current positions with us. These grants vest over three years assuming continuous service with us. The Board of Directors may consider additional grants of RSUs to these individuals and the other executive officers commensurate with any additional equity capital that we may raise.

Tax and Accounting Considerations

Tax Deductibility of Executive Compensation. Section 162(m) of the Internal Revenue Code disallows a tax deduction for any publicly held corporation for individual compensation of more than $1.0 million in any taxable year to any named executive officers, other than compensation that is performance-based under a plan that is approved by shareholders and that meets certain other technical requirements. The Board’s policy with respect to Section 162(m) is to make every reasonable effort to ensure that compensation is deductible to the extent permitted while simultaneously providing our executives with appropriate rewards for their performance. In the appropriate circumstances, however, the Board is prepared to exceed the limit on deductibility under Section 162(m) to the extent necessary to ensure our executive officers are compensated in a manner consistent with our best interests and those of our shareholders.

Accounting. Under US GAAP, we are required to recognize an expense for the fair value of equity-based compensation awards. The Board regularly considers the accounting implications of significant compensation decisions, especially in connection with decisions that relate to equity compensation awards. As accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.

Compensation Committee Report

The Board of Directors has reviewed the foregoing Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and discussed the Compensation Discussion and Analysis with the Company’s management. Based on such review and discussions with management, the Board of Directors has determined that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K for the fiscal year ended March 31, 2011.

BOARD OF DIRECTORS
Vicki D.E. Barone
Michael D. Iseman
Michael D. Wort
Jeffrey S. Sperber
Albert L. Kramer
Steven M. Bathgate
James D. Crapo

Summary Compensation Table

The following table sets forth the total compensation earned by each of our named executive officers for Fiscal year 2011. Our named executive officers (“NEOs”) are our Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, and Chief Scientific Officer.

																		All Other
Name and Principal		Fiscal				Salary				Stock Awards (1)				Option Awards (2)				Compensation
Position		Year				($)				$				$				($)				Total ($)
James D. Crapo (3)			2011			$	12,000			$	1,125,000			$	—			$	—			$	1,137,000
Chief Executive Officer
Charles A. Dinarello (4)			2011			$	35,000			$	562,500			$	—			$	—			$	597,500
Chief Scientific Officer			2010			$	—			$	—			$	6,896,971			$	—			$	6,896,971
(formerly Acting Chief Executive Officer)
Robert C. Ogden (5)			2011			$	112,500			$	—			$				$	—			$	112,500
Chief Financial Officer			2010			$	72,500			$	—			$	3,227,663			$	—			$	3,300,163
Edward C. Larkin (6)			2011			$	130,000			$	—			$	—			$	12,654			$	142,654
Chief Operating Officer			2010			$	130,000			$	—			$	—			$	10,146			$	140,146

(1)		The amounts shown represent the fair value of RSUs granted to the named executive officers based on the closing price of our common stock on March 31, 2011 as quoted by the OTCBB.
(2)		The amounts shown represent the estimated fair value on the date of grant of common stock purchase warrants granted to the named executive officers. The estimated fair value was calculated using the Black-Scholes pricing model.
(3)		Dr. Crapo was appointed as our Chief Executive Officer on March 1, 2011. Dr. Crapo’s salary for Fiscal year 2011 represents salary paid from that date through March 31, 2011. Effective with the commencement of his employment, he was granted 300,000 RSUs, which vest as follows: 100,000 on March 1, 2012, 100,000 on March 1, 2013 and 100,000 on March 1, 2014.
(4)		Dr. Dinarello served as our Acting Chief Executive Officer through February 22, 2011, and as of that date was appointed Chief Scientific Officer. For Fiscal year 2011, he was paid $2,500 per month, commencing May 1, 2010 for his services as our Acting Chief Executive Officer. Effective March 1, 2011, he is being paid $10,000 per month for his services as Chief Scientific Officer. On March 1, 2011, he was granted 150,000 RSUs, which vest over a three-year period as follows: 50,000 on March 1, 2012, 50,000 on March 1, 2013 and 50,000 on March 1, 2014. During Fiscal year 2010, he was granted warrants to purchase 1,200,000 shares of our common stock. 600,000 warrants are currently exercisable at $0.50 per share and 300,000 are currently exercisable at $3.00 per share.
(5)		During Fiscal year 2010, Mr. Ogden was granted warrants to purchase 350,000 shares of our common stock. 50,000 are currently exercisable at $0.50 per share and 140,000 are currently exercisable at $3.00 per share.
(6)		Mr. Larkin received other compensation in the form of health and dental insurance premiums paid on his behalf by us.

Outstanding Equity Awards at Fiscal Year-End

The following table provides a summary of equity awards outstanding at March 31, 2011 for each of our NEOs.

		Option Awards																Stock Awards
						Number Of												Number Of				Market Value
		Number Of				Securities												Shares Or				Of Shares Or
		Securities				Underlying												Units Of				Units Of
		Underlying				Unexercised				Option								Stock That				Stock That
		Unexercised				Options				Exercise								Have Not				Have Not
		Options				Unexercisable				Price				Option Expiration				Vested				Vested (5)
Name		Exercisable(#)				(#)				($)				Date				(#)				($)
James D. Crapo														—					300,000	(3)		$	900,000
Charles A. Dinarello			600,000				—			$	0.50			April 7, 2016
			300,000				300,000	(1)		$	3.00			November 13, 2016
														—					150,000	(4)		$	450,000
Robert C. Ogden			50,000				—			$	0.50			April 15, 2016
			140,000				160,000	(2)		$	3.00			November 13, 2016

(1)		The warrants were granted on December 16, 2009 and vest as follows: 150,000 on March 31, 2012 and 150,000 on March 31, 2013.
(2)		The warrants were granted on December 16, 2009 and vest as follows: 80,000 on September 30, 2011 and 80,000 on September 30, 2012.
(3)		Represent RSUs and vest as follows: 100,000 on March 1, 2012, 100,000 on March 1, 2013 and 100,000 on March 1, 2014.
(4)		Represent RSUs and vest as follows: 50,000 on March 1, 2012, 50,000 on March 1, 2013 and 50,000 on March 1, 2014.
(5)		Calculated based on the closing price of our common stock on March 31, 2011 as reported by the OTCBB.

Option Exercises and Stock Vested

None of our NEOs exercised warrants or options during Fiscal year 2011.

Potential Payments Upon Change in Control

James Crapo is eligible to receive a cash bonus upon the sale of us or sale of certain of our intellectual property as follows: 1.0% of the total net cash proceeds received by us for a transaction up to $100 million; 1.5% of the total net cash proceeds received by us for a transaction above $100 million up to $200 million; 2.0% of the total net cash proceeds received by us for a transaction above $200 million up to $300 million; and 3.0% of the total net cash proceeds received by us for a transaction that exceeds $300 million.

Director Compensation

Currently, we do not have a formal director compensation plan and in the past we compensated directors in the form of common stock purchase warrants. Equity-based awards may be issued to directors on a discretionary basis by a vote of the directors. During Fiscal year 2011, we did not grant any equity-based awards or pay any other form of compensation to any of our directors.

Compensation Committee Interlocks and Insider Participation

We do not have a separately-designated standing Compensation Committee, rather the entire Board of Directors acts as the Compensation Committee. None of our executive officers participated in the deliberations of the Board of Directors concerning executive compensation. None of our executive officers serves as a member of a board of directors or compensation committee of any entity that has one or more executive officers who serve on our Board of Directors.

ITEM 12.		SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth certain information with respect to the beneficial ownership of our common stock as of June 10, 2011 by (i) each person known to us to own beneficially more than five percent of our common stock, (ii) each of our named executive officers, (iii) each director and (iv) all directors and executive officers as a group.

						Percent of
		Number of Shares				Outstanding
Name of Beneficial Owner		Beneficially Owned				Shares (1)
5% Stockholders:
BOCO Investments, LLC			7,584,000	(2)			21.13	%
262 East Mountain Avenue Fort Collins, CO 80524
Leland Shapiro			3,368,750	(3)			10.71	%
8765 East 29th Place Denver, CO 80238
F. Steven and Gayle S. Mooney			5,585,000	(4)			16.31	%
3677 S. Huron Street, Suite 102 Englewood, CO 80110
Directors and Named Executive Officers:
Vicki D.E. Barone			1,887,743	(5)			5.95	%
Michael D. Iseman			200,000	(6)			*
Michael D. Wort			1,150,000	(7)			3.64	%
Albert L. Kramer			925,000	(8)			2.93	%
Steven M. Bathgate			1,931,364	(9)			6.10	%
Jeffrey S. Sperber			100,000	(10)			*
Charles A. Dinarello			900,000	(11)			2.78	%
Edward C. Larkin			520,000	(12)			1.65	%
Robert C. Ogden			210,000	(13)			*
James D. Crapo			—				—
All directors and executive officers as a group (10 persons)			6,847,357				20.35	%

 

*		Less than one percent

(1)		Applicable percentage of ownership is based on 31,444,396 shares of common stock outstanding on June 10, 2011. Beneficial ownership is determined in accordance with the rules and regulations of the SEC and means that the holder has voting or investment power with respect to the subject securities. Shares of common stock issuable from vested RSUs or RSUs that vest within 60 days of June 10, 2011 or upon the exercise of common stock purchase warrants exercisable currently or within 60 days of June 10, 2011 (unless otherwise noted) are deemed outstanding and to be beneficially owned by the person holding such warrant for purposes of computing such person’s percentage ownership but are not deemed outstanding for the purpose of computing the percentage ownership of any other person. Except for shares held jointly with a person’s spouse or subject to applicable community property laws, or as indicated in the footnotes to this table, each stockholder identified in the table possesses sole voting and investment power with respect to all shares of common stock shown as beneficially owned by such stockholder. Unless otherwise provided, the address of all stockholders is 5350 S. Roslyn Street, Suite 430, Greenwood Village, CO 80111.
(2)		Includes 3,134,000 shares owned, 3,000,000 shares underlying warrants currently exercisable at $0.50 per share and 1,450,000 shares underlying a warrant currently exercisable at $1.00 per share.
(3)		Based solely on information included in a Form 3 filed with the SEC on April 10, 2009. Represents 3,368,750 shares owned.
(4)		Includes 2,785,000 shares owned, 800,000 shares underlying a warrant currently exercisable at $0.50 per share, 400,000 shares underlying a warrant currently exercisable at $1.00 per share and 1,600,000 shares underlying a warrant currently exercisable at $2.00 per share.
(5)		Includes 637,437 shares directly owned (of which 35,000 shares are held by Ms. Barone’s IRA), 100,000 shares underlying a warrant currently exercisable at $1.00 per share, 100,000 shares underlying a warrant currently exercisable at $1.25 per share, 10,000 shares underlying a warrant currently exercisable at $2.00 per share, 50,000 shares underlying a warrant currently exercisable at $3.00 per share, 6,778 shares underlying a warrant currently exercisable at $2.50 per share and 6,778 shares underlying a warrant currently exercisable at $3.75 per share. Also includes 976,750 shares owned by GVC Capital, of which Ms. Barone is a Senior Managing Partner. Ms. Barone disclaims beneficial ownership of these shares.
(6)		Includes 75,000 shares underlying a warrant currently exercisable at $1.25 per share and 125,000 shares underlying a warrant currently exercisable at $3.00 per share.
(7)		Includes 1,000,000 shares owned, 50,000 shares underlying a warrant currently exercisable at $1.25 per share and 100,000 shares underlying a warrant currently exercisable at $3.00 per share.
(8)		Includes 775,000 shares owned, 100,000 shares underlying a warrant currently exercisable at $1.25 per share and 50,000 shares underlying a warrant currently exercisable at $3.00 per share.
(9)		Includes 45,000 shares directly owned (all of which are held by Mr. Bathgate’s IRA), 604,000 shares owned by Mr. Bathgate’s spouse, 50,000 shares owned by Mr. Bathgate’s daughter, 30,000 shares owned by Bathgate Family Partnership Ltd., 50,000 shares underlying a warrant currently exercisable at $0.50 per share held by Mr. Bathgate’s spouse, 100,000 shares underlying a warrant currently exercisable at $1.25 per share, 20,000 shares underlying a warrant currently exercisable at $2.00 per share, 50,000 shares underlying a warrant currently exercisable at $3.00 per share, 2,807 shares underlying a warrant currently exercisable at $2.50 per share and 2,807 shares underlying a warrant currently exercisable at $3.75 per share. Mr. Bathgate disclaims beneficial ownership of all of the shares owned by his family members and Bathgate Family Partnership Ltd. Also includes 976,750 shares owned by GVC Capital, of which Mr. Bathgate is a Senior Managing Partner. Mr. Bathgate disclaims beneficial ownership of these shares.
(10)		Includes 100,000 shares underlying a warrant currently exercisable at $3.00 per share.
(11)		Includes 600,000 shares underlying a warrant currently exercisable at $0.50 per share and 300,000 shares underlying a warrant currently exercisable at $3.00 per share.
(12)		Represents 510,000 shares owned and 10,000 shares underlying a warrant currently exercisable at $2.00 per share.
(13)		Includes 10,000 shares owned, 50,000 shares underlying a warrant currently exercisable at $0.50 per share, 10,000 shares underlying a warrant currently exercisable at $2.00 per share and 140,000 shares underlying a warrant currently exercisable at $3.00 per share.

ITEM 13.		CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Related Parties and Transactions

There were no related party transactions to report under this Item for the fiscal year ended March 31, 2011.

Approval of Related Party Transactions

We have not formally adopted any policies or procedures for approval of related party transactions. All proposed related party transactions are disclosed to our Board of Directors and are considered and approved on a case-by-case basis.

Director Independence

The Board of Directors has determined that each of Jeffrey Sperber, Michael Iseman, Albert Kramer and Michael Wort is an independent director and each of Vicki Barone and Steven Bathgate is not an independent director within the meaning of the rules of the Nasdaq Stock Market, Inc. Ms. Barone and Mr. Bathgate are not deemed independent as a result of the positions each holds at GVC Capital. GVC served as the placement agent in our private placement equity transactions in 2009, 2010 and the current one that commenced in June 2011.

ITEM 14.		PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Hein & Associates LLP (“Hein”) has served as our independent registered public accounting firm since June 5, 2009 and audited our financial statements for the fiscal years ended March 31, 2011 and 2010. An estimate of the pre-approved audit fees for Hein’s audit of the financial statements for the fiscal year ended March 31, 2011 are included in the total of audit fees for 2011, but will be billed in fiscal year 2012.

		2011				2010
Audit Fees		$	116,640			$	85,490
Audit-Related Fees			—				—
Tax Fees			5,000				5,000
All Other Fees			—				—
Total		$	121,640			$	90,490

Audit Fees

This category includes the aggregate fees billed for professional services for the audit of our annual financial statements for the fiscal years ended March 31, 2011 and 2010, the audit of the effectiveness of our internal control over financial reporting as of March 31, 2011 and the review of the financial statements included in our quarterly reports on Form 10-Q filed during the fiscal years ended March 31, 2011 and 2010.

Audit-Related Fees

There were no fees billed during the fiscal years ended March 31, 2011 and 2010 for assurance and related services rendered by Hein that were reasonably related to the performance of the audit or review of our consolidated financial statements and were not reported under “Audit Fees” above.

Tax Fees

This category includes fees billed for professional services for tax compliance, tax advice and tax planning.

All Other Fees

There were no fees billed during the fiscal years ended March 31, 2011 and 2010 for products and services provided by Hein, other than the services referred to above.

The Audit Committee reviews and approves in advance the retention of the independent auditors for the performance of all audit and non-audit services that are not prohibited and the fees for such services. Pre-approval of audit and non-audit services that are not prohibited may be approved pursuant to appropriate policies and procedures established by the Audit Committee for the pre-approval of such services, including through delegation of authority to a member of the Committee or Company management. For the fiscal years ended March 31, 2011 and 2010, all audit fees were reviewed and approved in advance of such services.

PART IV

Item 15.		EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Consolidated Financial Statements - See Index to Consolidated Financial Statements at page F-1 of this Report.

(b) Financial Statement Schedules - Not applicable.

(c) Exhibits

EXHIBIT #				DESCRIPTION
	2.1			Agreement of Merger and Plan of Reorganization dated November 17, 2008 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on November 21, 2008)
	2.2			Agreement to Amend and Extend Agreement of Merger and Plan of Reorganization dated February 11, 2009 (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on February 18, 2009)
	2.3			Second Agreement to Amend and Extend Agreement of Merger and Plan of Reorganization dated March 11, 2009 (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on March 13, 2009)
	2.4			Third Agreement to Amend Agreement of Merger and Plan of Reorganization dated March 30, 2009 (incorporated by reference to Exhibit 2.4 to the Company’s Current Report on Form 8-K filed on April 6, 2009)
	2.5			Agreement and Plan of Merger between Maxcure Pharmaceutical, Inc. and Apro Bio Pharmaceutical Corporation dated March 18, 2008 (incorporated by reference to Exhibit 2.5 to the Company’s Annual Report on Form 10-K filed on June 29, 2009)
	3.1			Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form SB-2 filed on March 2, 2007)
	3.2			Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on January 5, 2010)
	3.3			Articles of Amendment for Across America Financial Services, Inc. (incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed on June 2, 2009)
	10.1			Exclusive License Agreement with the Regents of the University of Colorado dated May 15, 2006 (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on April 6, 2009)
	10.2			Exclusive License Agreement with the Regents of the University of Colorado dated March 31, 2008, as amended (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed on April 6, 2009)
	10.3			Exclusive License Agreement with the Regents of the University of Colorado dated November 12, 2008 (incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed on April 6, 2009)
	10.4			License Agreement with Bio Holding, Inc. dated September 28, 2009 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 2, 2009)

EXHIBIT #				DESCRIPTION
	10.5			Form of Advisor Warrant dated March 31, 2009 (incorporated by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K filed on June 29, 2009)
	10.6			Subscription Agreement and Letter of Investment (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K filed on June 29, 2009)
	10.7			Form of Investor Warrant exercisable at $0.50 per share dated March 31, 2009 (incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K filed on June 29, 2009)
	10.8			Form of Investor Warrant exercisable at $1.00 per share dated March 31, 2009 (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K filed on June 29, 2009)
	10.9			Form of Two-Year Subscription and Lock-up Agreement (incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K filed on June 29, 2009)10.10 Form of Three-Year Subscription and Lock-up Agreement (incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K filed on June 29, 2009)
	10.11			Warrant dated December 16, 2009 issued to Charles A. Dinarello (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 22, 2009)
	10.12			Warrant dated April 7, 2009 issued to Charles A. Dinarello (incorporated by reference to Exhibit 10.18 to the Company’s Amendment No. 1 to the Annual Report on Form 10-K filed on November 8, 2010.
	10.13			Warrant dated December 16, 2009 issued to Robert C. Ogden (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed December 22, 2009)
	10.14			Sponsored Research Agreement, dated September 3, 2010 between Omni Bio Operating, Inc. and the Regents of the University of Colorado (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 9, 2010)
	10.15			Sponsored Research Agreement, dated August 18, 2010 between Omni Bio Operating, Inc. and the Regents of the University of Colorado (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 24, 2010)
	10.16			Investigational Site Agreement, dated June 7, 2010, among Omni Bio Operating, Inc., the Regents of the University of Colorado, The Barbara Davis Center for Childhood Diabetes and Dr. Peter Gottlieb (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on July 30, 2010)
	10.17			Material Transfer Agreement, dated March 19, 2010, between the Company and Baxter Healthcare Corporation (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on July 30, 2010)
	14.1			Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to the Company’s Annual Report on Form 10-K filed on June 23, 2010)

EXHIBIT #				DESCRIPTION
	21			Subsidiaries of the Company #
	23.1			Consent of Hein & Associates LLP #
	23.2			Consent of Cordovano and Honeck LLP #
	31.1			Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 #
	31.2			Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 #
	32.1			Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code #

#		Filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

Omni Bio Pharmaceutical, Inc. and Subsidiary

Index to Financial Statements

		Page
Report of Independent Registered Public Accounting Firm			F-2
Report of Independent Registered Public Accounting Firm			F-3
Consolidated Balance Sheets as of March 31, 2011 and 2010			F-4
Consolidated Statements of Operations for the Years Ended March 31, 2011, 2010, 2009 and the period from February 28, 2006 (Inception) through March 31, 2011			F-5
Consolidated Statements of Stockholders’ Equity for the Years Ended March 31, 2011, 2010, 2009 and the period from February 28, 2006 (Inception) through March 31, 2011			F-6
Consolidated Statements of Cash Flows for the Years Ended March 31, 2011, 2010, 2009 and the period from February 28, 2006 (Inception) through March 31, 2011			F-12
Notes to Consolidated Financial Statements			F-14

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders
Omni Bio Pharmaceutical, Inc. & Subsidiary
Greenwood Village, Colorado

We have audited the accompanying consolidated balance sheets of Omni Bio Pharmaceutical, Inc. and Subsidiary (a development stage company) as of March 31, 2011 and 2010, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years ended March 31, 2011, 2010 and 2009 and for the period from February 28, 2006 (inception) to March 31, 2011. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. The cumulative statements of operations, stockholders’ equity, and cash flows for the period February 28, 2006 (inception) to March 31, 2010 include amounts for the period from February 28, 2006 (inception) to March 31, 2008, which were audited by other auditors, and our opinion, insofar as it relates to the amounts included for the period February 28, 2006 through March 31, 2008, is based solely on the report of other auditors.

We conducted our audits in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Omni Bio Pharmaceutical, Inc. and Subsidiary (a development stage company) as of March 31, 2011 and 2010, and the consolidated results of their operations and their cash flows for the years ended March 31, 2011, 2010 and 2009 and for the period February 28, 2006 (inception) to March 31, 2011, in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred recurring losses from operations that raise substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Omni Bio Pharmaceutical, Inc. and Subsidiary’s internal control over financial reporting as of March 31, 2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated June 29, 2011 expressed an unqualified opinion on the effectiveness of Omni Bio Pharmaceutical, Inc. and Subsidiary’s internal control over financial reporting as of March 31, 20111 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

/s/ HEIN & ASSOCIATES LLP

Denver, Colorado
June 29, 2011

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders:
Omni Bio Pharmaceutical, Inc. & Subsidiary
(formerly Apro Bio Pharmaceutical Corporation)
Greenwood Village, Colorado

We have audited the accompanying consolidated balance sheet of Omni Bio Pharmaceutical, Inc. & Subsidiary (formerly Apro Bio Pharmaceutical Corporation) (A Development Stage Company) as of March 31, 2008 (not separately included herein) and the related consolidated statements of operations, shareholders’ deficit, and cash flows for the period from February 28, 2006 (inception) through March 31, 2008. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Omni Bio Pharmaceutical, Inc. & Subsidiary (formerly Apro Bio Pharmaceutical Corporation) as of March 31, 2008 and the consolidated results of their operations and their cash flows for the period from February 28, 2006 (inception) through March 31, 2008, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/ Cordovano and Honeck LLP   Cordovano and Honeck LLP
Englewood, Colorado
February 28, 2009

OMNI BIO PHARMACEUTICAL, INC. & SUBSIDIARY
(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

		March 31,
		2011				2010
ASSETS
Current assets:
Cash and cash equivalents		$	301,765			$	1,802,366
Other current assets			43,541				10,049
Total current assets			345,306				1,812,415
Property and equipment, net			—				848
Intangible assets, net			61,931				67,115
Total long-term assets			61,931				67,963
TOTAL ASSETS		$	407,237			$	1,880,378
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	41,763			$	94,356
Accrued research and development costs			44,736				—
Accrued liabilities			116,500				97,487
Amounts due to related party			3,750				4,125
Note payable — related party, net of discount of $3,000 at March 31, 2010			—				22,000
Total current liabilities			206,749				217,968
Commitments and Contingencies (Notes 1 and 4)
Stockholders’ equity:
Preferred stock, $0.10 par value, 5,000,000 shares authorized, -0- shares issued and outstanding			—				—
Common stock, $0.001 par value; 200,000,000 shares authorized; 28,980,496 and 27,987,018 shares issued and outstanding, respectively			28,980				27,987
Additional paid-in capital			31,336,345				24,573,783
Deficit accumulated during the development stage			(31,164,837	)			(22,939,360	)
Total stockholders’ equity			200,488				1,662,410
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	407,237			$	1,880,378

The accompanying notes are an integral part of these consolidated financial statements.

OMNI BIO PHARMACEUTICAL, INC. & SUBSIDIARY
(A Development Stage Company)

														February 28,
														2006 (Inception)
		For the Years Ended March 31,												Through March
		2011				2010				2009				31, 2011
Operating expenses
General and administrative (including share-based compensation of $6,466,435, $6,395,302, $740,251 and $14,327,551, respectively)		$	7,649,818			$	7,375,742			$	1,031,911			$	17,983,816
License fee — related party			—				5,615,980				—				5,615,980
Research and development			577,513				—				241,300				1,710,010
Charge for common stock issued pursuant to license agreements			—				—				719,772				763,240
Total operating expenses			8,227,331				12,991,722				1,992,983				26,073,046
Loss from operations			(8,227,331	)			(12,991,722	)			(1,992,983	)			(26,073,046	)
Non-operating income (expenses)
Interest income (expense), net			4,854				3,838				(6,140	)			(52,393	)
Accretion expense on notes payable — related parties			(3,000	)			(12,000	)			(41,125	)			(56,125	)
Charges for warrants issued in merger — related parties			—				—				(1,948,237	)			(1,948,237	)
Charges for warrants issued in private placement — related parties			—				—				(403,350	)			(403,350	)
Charges for modifications to warrants			—				(2,479,000	)			(152,686	)			(2,631,686	)
Total non-operating income (expenses)			1,854				(2,487,162	)			(2,551,538	)			(5,091,791	)
Net loss		$	(8,225,477	)		$	(15,478,884	)		$	(4,544,521	)		$	(31,164,837	)
Basic and diluted net loss per share		$	(0.29	)		$	(0.58	)		$	(0.25	)
Weighted average shares outstanding — basic and diluted			28,331,560				26,845,209				18,254,573