10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2005

OR

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

For the transition period from                      to                     

Commission File No. 1-15803

ADVENTRX PHARMACEUTICALS, INC

(Exact name of registrant as specified in its charter)

Delaware	84-1318182
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

6725 Mesa Ridge Road, Ste 100 San Diego CA	92121
(Address of principal executive offices)	(Zip Code)

(858) 552-0866
(Registrant’s telephone number, including area code)

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

Common Stock, par value $0.001 per share

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

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 Section 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 periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statement 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, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o       Accelerated filer þ       Non-accelerated filer o

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2005 was approximately $106,604,071, based upon the closing price on the American Stock Exchange reported for such date. Shares of common stock held by each officer and director and by each person who is known to own 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates of the Company. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

68,796,978 shares of the registrant’s Common Stock were issued and outstanding as of March 13, 2006.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information required to be disclosed in Part III of this report is incorporated by reference from the registrant’s definitive Proxy Statement, which will be filed with the Securities and Exchange Commission in connection with the registrant’s Annual Meeting of Shareholders to be held on May 15, 2006.

Table of Contents

		Page
PART I		1
Item 1.	Business	1
Item 1A.	Risk Factors	13
Item 1B	Unresolved Staff Comments	19
Item 2.	Properties	20
Item 3.	Legal Proceedings	20
Item 4.	Submission of Matters to a Vote of Security Holders	20
PART II		21
Item 5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	21
Item 6.	Selected Financial Data	22
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 8.	Financial Statements and Supplementary Data	27
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	27
Item 9A.	Controls and Procedures	27
Item 9B.	Other Information	28
PART III
Item 10.	Directors and Executive Officers of the Registrant	28
Item 11.	Executive Compensation	28
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	28
Item 13.	Certain Relationships and Related Transactions	29
Item 14.	Principal Accountant Fees and Services	29
PART IV		30
Item 15.	Exhibits, Financial Statements and Schedules	30
	SIGNATURES	31
	EXHIBIT INDEX
EXHIBIT 3.1
EXHIBIT 10.10
EXHIBIT 10.11
EXHIBIT 10.13
EXHIBIT 10.17
EXHIBIT 10.19
EXHIBIT 21.1
EXHIBIT 23.1
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

PART I

Forward-Looking Statements

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which include, without limitation, statements about the market for our technology, our strategy, competition, expected financial performance and other aspects of our business identified in this Annual Report, as well as other reports that we file from time to time with the Securities and Exchange Commission. Any statements about our business, financial results, financial condition and operations contained in this Annual Report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “expects,” “intends,” “projects,” or similar expressions are intended to identify forward-looking statements. Our actual results could differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including the risk factors described in Part I., Item 1A,“Business—Risk Factors,” Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” and elsewhere in this report. We undertake no obligation to update publicly any forward-looking statements for any reason, except as required by law, even as new information becomes available or other events occur in the future.

ITEM 1. BUSINESS

     In this report, the terms “ADVENTRX,” “Company,” “we,” “us” and “our” refer to ADVENTRX Pharmaceuticals, Inc. The term “Common Stock” refers to our Common Stock, par value $0.001 per share.

     We organized as a corporation under the Delaware General Corporation Law in December 1995.

     On May 30, 2003, we merged our wholly owned subsidiary, Biokeys, Inc., into itself and changed our name from Biokeys Pharmaceuticals, Inc. to ADVENTRX Pharmaceuticals, Inc. The merger had no effect on our financial statements.

     In July 2004, we formed a wholly owned subsidiary, ADVENTRX (Europe) Ltd., in the United Kingdom for the purpose of conducting clinical trials in the European Union.

     CoFactor^â, SeloneÔandThiovirÔ are our trademarks, and we have an additional product, vinorelbine emulsion (ANX-530), for which we do not yet have registered trademark. Product names, trade names and trademarks of other entities are also referred to in this report.

Business of Issuer

     We are a biopharmaceutical research and development company focused on introducing new technologies for anticancer and antiviral treatments that surpass the performance and safety of existing drugs and address significant problems such as drug metabolism, toxicity, bioavailability and resistance. Our business is in the development stage; we have not generated any significant revenues and we have not yet marketed any products.

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Principal Products

     General information regarding each of the products currently in our pipeline is listed below.

Product/Description	Development Stage	Indication	Status
CoFactorÒ (ANX-510) 5-FU Biomodulator	Phase II — US and Europe	Metastatic Colorectal Cancer	Patient dosing completed. Complete clinical trial results currently expected in 2006.
	Phase IIb — Europe and India	Metastatic Colorectal Cancer	Over 50% of patients enrolled. Clinical trial results currently expected in 2007.
	Phase III — US	Metastatic Colorectal Cancer	Dosing currently expected to begin in Q2 2006.
Vinorelbine emulsion (ANX-530)	505(b)(2)	Non-small cell lung and other solid tumors	Currently plan to File IND in Q3 2006
Selone ™ Alkylating Agent	Preclinical	Drug Resistant Cancers	Continue preclinical testing in 2006
Thiovir ™ Pyrophosphate Analogue	Preclinical	HIV/AIDS and Avian Influenza	Currently plan to File INDs in Q2 2006
	Preclinical	Herpes	Preclinical testing during 2006.

CoFactor (ANX-510)

     CoFactor (ANX-510) is a folate-based biomodulator drug being developed to enhance the activity and reduce associated toxicity of the widely used cancer chemotherapeutic agent 5-fluorouracil (5-FU). CoFactor creates more stable binding of the active form of 5-FU, 5-fluorodeoxyuracil monophosphate (Fdump) to the target enzyme, thymidylate synthase (TS), improving 5-FU performance. We have an exclusive license to use certain patents and other intellectual property related to CoFactor from the University of Southern California which permits us to develop and commercialize CoFactor. We also have additional patents pending.

Preclinical studies

     We have presented results from preclinical studies using in vivo human tumor xenotransplant mouse models for colorectal and pancreatic cancer that demonstrated the antitumor efficacy of CoFactor/5-FU in combination with irinotecan, oxaliplatin, anti-VEGF antibody, and gemcitabine. CoFactor-containing combination regimens induced either equivalent or better antitumor responses, as noted by slower tumor growth and increased mouse survival, compared with leucovorin-containing combinations for all drug types tested. Furthermore, in an in vivo immunocompetent mouse model, CoFactor/5-FU induced less systemic toxicity than 5-FU/leucovorin either alone or in combination drug regimens. Lower hematological toxicity was observed including less thrombocytopenia, leukopenia, neutropenia and lymphopenia. Furthermore, weight loss was quantitatively less severe with drug treatments containing CoFactor. For example, while 5-FU/leucovorin/gemcitabine induced greater than 25% weight loss in 91% of mice, significantly less (p < 0.05, Fisher’s exact test) mice treated with 5-FU/CoFactor/gemcitabine (33% of mice) had this level of weight loss. Additional preclinical studies are planned for CoFactor during 2006.

Phase I/II single site clinical trial in gastrointestinal and breast cancers

     A Phase I/II single-arm clinical trial in 62 patients conducted at a single site in Sweden between November 1989 and March 1993 demonstrated increased clinical benefit, improved time to tumor progression, overall median survival and reduced toxicity in advanced colorectal, pancreatic, stomach and breast cancer patients treated with CoFactor plus 5-FU when compared historically with multiple studies using leucovorin plus 5-FU. In this clinical trial, treatment with CoFactor and 5-FU demonstrated the following rates of clinical benefit, defined as stable disease or tumor response: pancreatic (40%), colorectal (57%), gastric (66%) and breast (89%).

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Phase II multi-center clinical trial in first-line metastatic colorectal cancer

     We are evaluating CoFactor use with 5-FU in a 50-patient Phase II clinical trial for first line treatment of metastatic colorectal cancer at nine sites in the US and Serbia. The Phase II clinical trial is a single-arm, multi-center study to evaluate tumor response as the primary endpoint, and safety, time-to-tumor-progression and overall survival, as secondary endpoints, in patients treated with CoFactor and 5-FU in a weekly bolus regimen. We completed patient enrollment in the first quarter 2005. We reported preliminary Phase II results from an independent radiological assessment that found an overall clinical benefit of 85% and objective response of 35% in metastatic colorectal cancer patients treated with CoFactor and 5-FU. We also reported time to tumor progression (TTP) of 163 days. The response rate and time to tumor progression values from our Phase II clinical trial have surpassed previous published values from multiple institutional studies using Leucovorin and 5-FU, including the registration trials for irinotecan and capecitabine, for which the CoFactor Phase II time to tumor progression was approximately 25% longer. There were no drug-related grade 3 or grade 4 gastrointestinal or hematological toxicities. Median survival has not yet been reached but is expected to be announced during 2006. The study database was closed March 8, 2006 and a final study report is in preparation for submission to the FDA. Long-term follow-up and survival data will continue to be captured and analyzed.

Phase IIb multi-center clinical trial in first-line metastatic colorectal cancer

     We initiated a multi-national 300-patient Phase IIb randomized controlled clinical trial in the second quarter 2005 using CoFactor in first-line treatment of metastatic colorectal cancer. Patients are being randomized to one of two arms containing either CoFactor or leucovorin, each in combination with infusional 5-FU. We reported in the first quarter 2006 that we had enrolled more than 50% of the total patients in this clinical trial. The trial’s primary endpoint is a reduction in the frequency of grade 3 or grade 4 hematological or gastrointestinal toxicities. Secondary endpoints are response rate, time to tumor progression, and survival. We are conducting the study at 30 sites in Europe and India. We currently plan to have initial results from the clinical trial during 2007.

Phase III multi-center clinical trial in first-line metastatic colorectal cancer

     In the second quarter of 2005, we reported that the FDA granted clearance under a special protocol assessment (SPA) to initiate a 600-patient Phase III pivotal clinical trial using CoFactor in first-line treatment of metastatic colorectal cancer. Patients will be equally randomized to two arms containing either CoFactor or leucovorin, each in combination with 5-FU and bevacizumab (Avastin^®). The primary endpoint is progression-free survival. Secondary endpoints include response rate, duration of response, overall survival and incidence and severity of adverse events. In February 2006, following extensive consultations with thought-leading oncologists, we requested certain adjustments with the FDA with respect to certain revisions we would like to make to our protocol for this Phase III clinical trial, including increasing the trial size to 1,200 patients. We previously announced that we would begin dosing patients in this trial in the first quarter of 2006. We now plan to wait until after we receive the response to these adjustments from the FDA and expect that we will begin patient dosing for this clinical trial in the second quarter of 2006.

Proposed Phase III clinical trial in third-line breast cancer

     In addition to the clinical trials listed above, we announced in the first quarter 2006 that we plan to conduct a Phase III clinical trial in patients with advanced breast cancer who have completed taxane and doxorubicin treatment. Patients would be equally randomized to two arms containing either CoFactor in combination with 5-FU or capecitabine (Xeloda^®). We currently anticipate that we would enroll approximately 450 patients in this proposed Phase III clinical trial. This proposed Phase III clinical trial would require clearance regarding the clinical design from the FDA which we have not yet sought. We currently plan to seek clearance from the FDA regarding the clinical design in the fourth quarter 2006 and initiate the clinical trial in 2007.

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Vinorelbine emulsion (ANX-530)

     In the fourth quarter 2005 we announced that we obtained an exclusive license of certain rights to ANX-530, a novel emulsion formulation of vinorelbine tartrate. This new formulation emulsifies vinorelbine into a homogeneous suspension of nanoparticles, and is designed to protect the venous endothelium during administration into a peripheral vein, and therefore reduce associated vein irritation caused by the drug. Vinorelbine is a chemotherapeutic agent indicated as a single agent or in combination with cisplatin for treatment of advanced non-small cell lung cancer (NSCLC).

Preclinical studies

     In preclinical testing, ANX-530 demonstrated markedly reduced vein irritation following repeated IV injections compared with Navelbine^®, GlaxoSmithKline’s FDA-approved form of vinorelbine. Vein irritation was examined in rabbits following repeated IV injections in the marginal ear vein. In parallel studies in rodents ANX-530 demonstrated comparable efficiency to Navalbine.

Proposed 505(b)(2) clinical trial

     We had a pre-IND meeting with the FDA in the fourth quarter 2005, regarding our proposed 505(b)(2) New Drug Application (NDA) regulatory path for ANX-530. Section 505(b)(2) of the US Food, Drug & Cosmetic Act allows the FDA to approve a follow-on drug on the basis of data in the scientific literature or data used by the FDA in the approval of other drugs. This procedure potentially makes it easier for drug manufacturers to obtain rapid approval of new forms of drugs based on proprietary data of the original drug manufacturer. The FDA affirmed our proposal to conduct a single bioequivalency study of ANX-530 as a marketing-enabling clinical trial.

     We currently plan to file an IND for ANX-530 and begin dosing patients in the third quarter of 2006. The proposed protocol would be open-label, with a two-period crossover and would assess bioequivalence and pharmacokinetics of ANX-530 and Navelbine. If our planned marketing-enabling clinical trial is successful, we currently expect that we would file a new drug application (NDA) in the first quarter of 2007.

Selone

     Selone™ is a compound in a class of drugs known as organoselenones, consisting of carbon, oxygen and selenium. Selone and its analogues have shown effectiveness, at even relatively low concentrations, against human ovarian, breast, lung and head/neck cancers, and against leukemias and lymphomas, based upon current in vitro screening methods. Their potency is high for their rate of alkylating activity, suggesting an increased specificity of action. Preclinical efforts have demonstrated effectiveness of Selone in treatment of leukemia in mice at doses predicted to easily achieve effective blood concentrations, as well as in a variety of human tumor cell lines in laboratory testing. We intend to undertake further preclinical testing of Selone during 2006 in order to determine the potential for this drug to be moved into human testing in the future. We have an exclusive license to patents from the University of Southern California to develop and commercialize Selone.

Infectious Diseases

Thiovir for HIV/AIDS

     Thiovir™ is a broad spectrum anti-viral compound that has been shown to inhibit HIV, herpes and influenza A viruses. Thiovir is being developed as a non-nucleoside reverse transcriptase inhibitor (NNRTI) designed for oral delivery and as a component of highly active antiretroviral therapy (HAART) for HIV/AIDS. Thiovir is a prodrug for foscarnet, an FDA-approved intravenously-delivered therapy for opportunistic infections in HIV patients. Thiovir delivers both the active drug TPFA (thiophosphonoformate) and the active metabolite PFA (foscarnet) in an oral formulation. We have an exclusive license to patents from the University of Southern California to develop and commercialize Thiovir, and additional patents pending.

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     Foscarnet is an effective, broad-spectrum antiviral but we believe it has limitations from a commercial perspective because it must be delivered by protracted infusion. We believe that Thiovir can serve as an effective oral antiviral drug as part of HAART for HIV/AIDS. Preclinical studies have demonstrated that Thiovir is equivalent to foscarnet as a reverse transcriptase inhibitor and has a dosage profile similar to foscarnet to inhibit HIV polymerase, with less affect on human DNA polymerases.

Thiovir preclinical studies for HIV/AIDS

     In the third quarter 2005, we announced results from an in vitro study indicating that Thiovir demonstrated effectiveness against HIV-1 which is resistant to other NNRTIs and NRTIs. Thiovir also exhibited a slightly higher level of antiviral activity against HIV-1 than foscarnet. In combination testing with zidovudine (AZT), an NRTI, Thiovir was highly synergistic while foscarnet was only slightly synergistic to antagonistic. A poster of the study data was presented at the 3rd International AIDS Society Conference on HIV Pathogenesis and Treatment in Rio de Janeiro. We have demonstrated synergy of Thiovir with Tenofovir (an NRTI in Truvada® and Viread®) in preclinical studies, and we are planning additional preclinical studies testing synergy with Thiovir in combination with other NRTIs in 2006.

Proposed Phase I/II clinical trial for HIV/AIDS

     We currently plan to file an IND with the US Food and Drug Administration in the first half of 2006 for testing of Thiovir in patients with HIV/AIDS who have resistance to nucleoside reverse transcriptase inhibitors (NRTIs). The clinical trial is proposed to enroll patients who are resistant to one or more NRTIs. We currently plan to file an IND in the second quarter and initiate the clinical trial in the second half 2006.

Thiovir preclinical studies for Influenza A and avian flu

     We announced in the first quarter 2006 that a series of independent preclinical tests confirmed inhibition of influenza A virus by Thiovir. We conducted preliminary preclinical research on strains of influenza A, which includes the H5N1 avian flu strain. We filed a provisional patent application with the US Patent and Trademark Office on January 27, 2006 in connection with these findings. Additional preclinical studies are planned during 2006 to study Thiovir against strains of influenza A, including the H5N1 avian flu.

Markets for our Products

Cancer Chemotherapy Market

     On a worldwide basis, more than 11 million people each year are diagnosed with cancer and over 7 million people die each year from cancer, according to statistics published by the World Health Organization. In the U.S., cancer is responsible for approximately 25% of all deaths according to recent statistics. The American Cancer Society estimates that more than 1.3 million new cases of cancer were diagnosed and over 570,000 people died due to cancer in 2005 in the U.S.

     Treatment choices for the cancer patient depend on the stage of the cancerous tumor, and whether and/or how far the cancer has spread. Treatment options include surgery, radiation, chemotherapy, hormone therapy and immunotherapy. Treatment of cancer with chemicals is referred to as chemotherapy, which represents a current market in the U.S. of approximately $9 billion ($15 billion worldwide) per year, according to Frost & Sullivan Market Research and IMS Market Research.

Market for CoFactor

     Chemotherapy is highly individualized, depending on the type of disease and its progression, the action of the agents used, and the side effects in the patient, and may be used alone or in combination with other cancer therapies, such as surgery or radiation. Most chemotherapy drugs are chemical agents that are extremely toxic, are generally not curative, and historically achieve poor results in extending patient survival. The antimetabolite, 5-fluorouracil (5-FU) is a widely used chemotherapeutic agent. Primary use of 5-FU includes treatment of colorectal, breast, gastric and hepatic cancers. 5-FU is sometimes used to treat other cancers, such as ovarian, pancreatic, prostate, bladder, cervical and head and neck cancers.

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     Chemotherapy regimens for diseases such as metastatic colorectal cancer now include the addition of toxic agents, such as Camptosar^® (CPT-11, irinotecan) and Eloxatin^® (oxaliplatin), to 5-FU and the drug Leucovorin. Newer, antibody-based drugs, such as Erbitux^® (cetuximab) and Avastin^® (bevacizumab) may also be added to 5-FU and Leucovorin or be used as a monotherapy (as in the case of Erbitux).

     In order for 5-FU to work more effectively, the folate-based compound Leucovorin, is often administered to the cancer patient. Results from multiple clinical trials have shown that Leucovorin in combination with 5-FU is only modestly effective in improving clinical outcomes in cancer patients. Leucovorin efficiency is reduced since the drug must undergo several metabolic steps to the active form of folate. Our drug, CoFactor, bypasses the chemical pathway required for Leucovorin metabolism. This biochemical strategy delivers the correct form of folate that allows 5-FU to kill cancer cells more effectively while reducing 5-FU-associated toxicity. We believe that CoFactor overcomes the limitations of Leucovorin and will lead to developments that will increase patient survival, while reducing side effects and improving the quality of life of patients on chemotherapy.

     Worldwide sales of Leucovorin in 2005 were over $320M according to IMS Health. We believe that if CoFactor shows improved clinical benefit and patient survival, it may be widely used as a replacement for Leucovorin in 5-FU based cancer therapies.

Market for ANX-530 (vinorelbine emulsion)

     Our drug ANX-530 is a novel, emulsion formulation of vinorelbine tartrate that is designed to reduce vein irritation associated with the drug’s intravenous administration. Vinorelbine is a marketed chemotherapeutic agent indicated as a single agent or in combination with cisplatin for treatment of advanced non-small cell lung cancer (NSCLC). Vinorelbine also shows activity in breast, ovarian and other cancers. Data from IMS Health show annual generic vinorelbine sales in 2005 of approximately $60 million in the United States and approximately $120 million outside the U.S. and annual unit sales growth of greater than 10% worldwide. Two NSCLC clinical studies published in 2005 (ANITA trial results, presented by J. Douillard at 2005 ASCO Annual Meeting and Winton, et al, published in NEJM, June 23, 2005) showed an improvement in survival in patients treated with vinorelbine plus cisplatin following tumor resection. Based on these two studies, we believe that adjuvant use of vinorelbine could increase. We believe we could capture an increasing share of the total vinorelbine market following additional post-marketing clinical trials demonstrating the benefits to patients and clinicians from reduced vein irritation from ANX-530.

Market for Selone

     Selone, which functions in part as an alkylating agent against cancer cell lines that exhibit drug resistance to currently available alkylating and platinating agents, may serve as a useful new anticancer drug. Alkylating agents as a class are the most broadly used anticancer agents in the world, collectively surpassing the use of 5-FU as single agent. In recent years, they have been used increasingly in dose intensification strategies, such as bone marrow transplant, and have exhibited further promise when used with the thiophosphate protection agents. Approximately one-half of all cancers can become resistant to treatment with current chemotherapy products. Accordingly, we believe there is great potential for new products, such as Selone, that address drug resistance in cancer therapy.

HIV Drug Therapy Market

     The World Health Organization and the Centers for Disease Control report that there are 1.5 million HIV positive individuals in the U.S. and Europe where the vast majority of HIV drugs are used. According to a report by the United Nations Program on HIV/AIDS (UNAIDS), more than 40 million adults and children in the world are living with HIV and there are thousands of new infections each day.

     Significant advancements have been made in the treatment of asymptomatic HIV positive patients with highly active antiretroviral therapy (HAART) consisting of a three or four drug “cocktail” that can reduce HIV viral load to below “detectable levels.” However, studies have shown that poor patient treatment compliance, due to toxic side effects, number of pills and cost, will continue to cause problems of viral resistance, rendering many drugs ineffective. HIV has the ability to mutate into forms that are resistant to drug treatments. No one combination of drugs is effective for all patients and therapies are continually modified based upon patient progress.

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     According to Datamonitor, the global commercial market for HIV treatments is expected to grow to almost $12 billion by 2012. The current HIV market consists of 5 different classes of drugs: nucleoside reverse transcriptase inhibitors (NRTI), non-nucleoside reverse transcriptase inhibitors (NNRTI), nucleotide reverse transcriptase inhibitors (NtRTIs) and protease inhibitors (PI), which are dosed orally in various forms, as well as one entry inhibitor, which was approved in March 2003 and is dosed by injection. HIV entry inhibitors and maturation inhibitors are also currently under development by various pharmaceutical companies. NNRTI sales were approximately $972M in 2004 (NDC Health).

Market for Thiovir

     HIV replicates rapidly and can readily mutate to eventually evade inhibitor drugs and drug cocktails. Therefore, new drugs that target novel areas of the virus or overcome drug resistance are needed. We believe there is opportunity for Thiovir since its mechanism of action is different from other NNRTIs on the market or in development. Thiovir does not bind reverse transcriptase in the manner as currently-approved NNRTIs.

Competition

     If we receive regulatory approval to market, distribute and sell any of our products, we will face significant competition and believe significant long-term competition can be expected from pharmaceutical companies, pharmaceutical divisions of chemical companies and biotechnology companies. This competition can be expected to become more intense as commercial applications for biotechnology products increase. Most competitors, particularly large pharmaceutical companies, have greater clinical, regulatory and marketing resources and experience than we have. Many of these companies have commercial arrangements with other companies in the biotechnology industry to supplement their own research capabilities.

     The introduction of new products or the development of new processes by competitors or new information about our existing products may impact potential pricing of our products or cause us to discontinue the development of one or more of our products, even for products protected by patents. However, we believe our competitive position is enhanced by our commitment to research leading to the discovery and development of new products.

     Over the longer term, our and our collaborators’ abilities to successfully market, distribute and sell current products, expand their usage and bring new products to the marketplace will depend on many factors, including, but not limited to, the effectiveness and safety of the products, FDA and foreign regulatory agencies’ approvals of new products and indications, the degree of patent protection afforded to particular products and the effect of managed care as an important purchaser of pharmaceutical products.

CoFactor

     We intend to target replacement of Leucovorin with CoFactor in 5-FU/Leucovorin-based therapies for various cancers. With an ongoing need for significant improvement in the clinical response of tens of thousands of cancer patients, especially those with metastatic colorectal cancer where we believe 5-FU/Leucovorin performs poorly and other regimens that are highly toxic, we currently believe CoFactor could successfully compete against or be used in conjunction with other therapies.

     We know of no other company that is developing a metabolite of Leucovorin to enhance 5-FU activity. Leucovorin is marketed by more than a dozen companies as a generic drug for IV dosing in conjunction with 5-FU. As an IV drug, Leucovorin represents competition to CoFactor based upon generic pricing.

     Another source of competition for us is a branded prodrug (drug that activates in vivo) called XelodaÒ (marketed by Roche), which is an oral formulation that converts to 5-FU. Xeloda may be used with or without oral leucovorin. Since CoFactor is being currently developed as an IV drug, generic forms of oral Leucovorin represent competition for CoFactor. To address this threat, we are evaluating the development of an oral form for CoFactor. We have performed preclinical studies that show benefit of CoFactor use with Xeloda over that of Xeloda alone.

     Clinical studies in metastatic colorectal cancer are in progress or in the planning stages worldwide. In the clinical development for CoFactor, we will face competition from other groups for the pool of metastatic colorectal cancer patients that are eligible to enroll in our Phase III pivotal clinical trial. We may not finish the clinical trial in a timely fashion if we cannot readily recruit patients for this clinical trial.

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ANX-530

     We intend to develop ANX-530 via a 505(b)(2) registration strategy to demonstrate bioequivalency of ANX-530 and vinorelbine in patients with advanced solid tumors. While we intend to further develop ANX-530 as a form of vinorelbine that reduces vein irritation, we initially will market the drug as an equivalent or generic form of vinorelbine. There are approximately five manufacturers of generic vinorelbine in addition to GlaxoSmithKline which markets Navelbineâ, the branded version of vinorelbine. We will face price competition based on the generic status of vinorelbine. Our 505(b)(2) registration strategy will only allow us to market the drug as bioequivalent upon FDA marketing approval. In addition to generic competitors, there are companies that have developed novel formulation technologies such as those utilizing liposomal carriers that could develop or resume development of a novel formulation of vinorelbine. There is also an oral formulation of vinorelbine approved for use in Europe against which we would compete if ANX-530 were approved for use in Europe.

Thiovir

     We currently intend to develop Thiovir as a component of HAART for HIV/AIDS. Thiovir would compete in a large market of HAART drugs, and would be only one potential component of a three to four drug cocktail, but classified as a non-nucleoside reverse transcriptase inhibitor. There are currently three drugs approved in that specific sector with additional drugs under development.

     We are also investigating the use of Thiovir as a treatment for avian flu. There are numerous biotechnology and pharmaceutical companies also developing treatments for avian flu, representing potential competition for Thiovir in this indication.

Marketing, Distribution and Sales

     We have not received the necessary regulatory approval from the FDA or any other similar government agency to commercially market, distribute or sell any of our products. We presently have a Vice President of Business Development and a Director of Marketing with experience in biotechnical business development and marketing functions. If we approach the point at which we anticipate receiving regulatory approval to commercially market, distribute or sell any of our products, we will likely arrange with third parties, such as pharmaceutical companies, to market, distribute and sell our products. While we have held preliminary discussions on a number of occasions with potential commercialization and marketing partners, we have not yet entered into any binding agreements regarding the commercialization or marketing of any of our products.

Manufacturing

     We do not have our own manufacturing facilities, and do not currently intend to establish them. We contract with outside manufacturers in order to produce our clinical trial materials.

Raw Materials

     Raw materials and supplies required for the production of our products for clinical trials are generally available from various suppliers in quantities adequate to meet our needs. However, we will need to be selective with our choice of suppliers of raw materials for our products and use only suppliers who have expertise in production of either chemical or biological formulations in accordance with current Good Manufacturing Practices (“cGMP”).

Patents, Licensing and Research Agreements

Patents

     Listed below are all of the issued patents which we have the exclusive right to use pursuant to license agreements with the University of Southern California (USC). Our rights under these patents are more fully described below.

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Where		Expiration
Filed	Patent Title	Date
CoFactor Patents
US	5,10-Methylene-Tetrahydrofolate as a Modulator of a Chemotherapeutic Agent	12-23-13
US	5,10-Methylene-Tetrahydrofolate as a Modulator of a Chemotherapeutic Agent	10-20-14
CA	5,10-Methylene-Tetrahydrofolate as a Modulator of a Chemotherapeutic Agent	05-13-11
Thiovir Patents
US	Preparation and use of Thiophosphonates and Thio-analogues of Phosphonoformic Acid	06-21-09
US	Preparation and use of Thiophosphonates and Thio-analogues of Phosphonoformic Acid	09-30-11
US	Preparations of Thiophosphites and Thiophosphonates	05-03-19
US	Preparations of Thiophosphites and Thiophosphonates	11-01-20
EP	Preparation of Thiophosphonoformate Esters	05-03-20
US	Derivatives and Analogs	07-13-19
EP	Sulfur-containing Phosphonoformate Derivatives and their Uses	07-13-19
US	Synthesis and Antiviral Activity of a Series of Pyrophosphate Analogs	03-23-20
Selone Patent
US	Method of Treating Drug Resistant Tumor Cells using Organoselenones	03-25-14
Other Patent
US	Preparation and Use of Alpha-Keto Bisphosphonates	07-13-19

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     In addition, we have filed three patent applications covering technology developed pursuant to our research and development activities and have licensed the right to use certain intellectual property from SD Pharmaceuticals, Inc which is covered in part by a pending patent application (the “SD Pharma Application”).

     We cannot assure that the claims in our pending patent applications or the SD Pharma Application will be issued as patents, that any issued patents will provide us with significant competitive advantages, or that the validity or enforceability of any of the patents we have the right to practice will not be challenged or, if instituted, that these challenges will not be successful. The cost of litigation to uphold the validity and prevent infringement of the patents we have the right to practice could be substantial. Furthermore, we cannot assure that others will not independently develop similar technologies or duplicate our technologies or design around the patented aspects of our technologies. We can provide no assurance that our proposed technologies will not infringe patents or rights owned by others, the licenses to which might not be available to us.

     In addition, the approval process for patent applications in foreign countries may differ significantly from the process in the U.S. The patent authorities in each country administer that country’s laws and regulations relating to patents independently of the laws and regulations of any other country and the patents must be sought and obtained separately. Therefore, approval in one country does not necessarily indicate that approval can be obtained in other countries.

     Information regarding the status of our various research and development programs, and the amounts spent on major programs through the last two fiscal years, can be found under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

License Agreements

     USC Agreements

     Under an Option and License Agreement with the University of Southern California (USC) dated January 23, 1998 (as amended August 16, 2000), we hold exclusive rights to a number of patents that have issued in the United States and Canada covering products (CoFactor^® and Selone) and methods intended for use in connection with cancer chemotherapy. Under another Option and License Agreement with USC dated August 17, 2000 (as amended April 21, 2003), we hold exclusive rights to a number of additional patents that have issued in the United States and Europe relating to the antiviral product Thiovir™ and drugs useful for the treatment of HPV (human papillomavirus) infections, HIV infections, HIV/HPV coinfections and other human therapeutic uses. Additional patent applications relating to Thiovir™ are pending in Europe, Canada and Australia.

     The first license from USC provides for the payment to USC of a 3% royalty (on net sales of products made or sold in a country in which a patent has issued or is pending), while the second license provides for the payment of a 1% royalty. Both require the Company to pay USC a share of consideration received by the Company from any sublicensee as well as the cost of filing, prosecuting and maintaining the licensed patents. Under the second license (as amended), milestone payments will also be due based upon entry into human trials and regulatory approval for each drug candidate developed ($75,000 at Phase I, $100,000 at Phase II, $125,000 at Phase III and $250,000 at market approval). No royalties have been paid to date under these licenses.

SD Pharmaceuticals Agreement

     Under a License Agreement with SD Pharmaceuticals, Inc., dated April 29, 2005, we acquired an exclusive license to commercially develop, use and sell within the United States an invention relating to an emulsion composition for delivering highly water-soluble drugs, such as vinca alkaloids. Based upon this license, we are currently developing ANX-530, a vinorelbine emulsion, for use in the treatment of cancer. In consideration for the rights to develop this invention, we agreed to pay SD Pharmaceuticals license fees, milestone payments and royalties. No milestone payments or royalties have been paid to date.

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Sponsored Research Agreements

     We periodically enter into sponsored research agreements pursuant to which an institution will provide research service to us on a fee for services basis. We currently have no obligation to make payments under any such sponsored research agreements.

Government Regulations

     The manufacture, distribution, marketing and sale of therapeutic drugs are subject to government regulation in the U.S. and in various foreign countries including Japan and the member countries of the European Union. In the U.S., we must follow rules and regulations established by the FDA requiring the presentation of data indicating that our products are safe and efficacious and are manufactured in accordance with cGMP regulations. Japan, the member countries of the European Union and various other countries have similar rules and regulation with which we must comply.

     The steps required to be taken before a new prescription drug may be marketed in the U.S. include (i) preclinical laboratory and animal tests, (ii) the submission to the FDA of an IND application, which must be evaluated and found acceptable by the FDA before human clinical trials may commence, (iii) adequate and well-controlled human clinical trials to establish the safety and effectiveness of the drug, (iv) the submission of a New Drug Application (“NDA”) to the FDA and (v) FDA approval of the NDA. Prior to obtaining FDA approval of an NDA, the facilities that will be used to manufacture the drug must undergo a preapproval inspection to ensure compliance with the FDA’s cGMP regulations.

     Preclinical tests include laboratory evaluation of product chemistry or biology and animal studies to assess the safety and effectiveness of the product and its formulation. The results of the preclinical tests are submitted to the FDA as part of an IND application, and unless the FDA objects, the IND application will become effective 30 days following its receipt by the FDA, after which clinical trials can begin. If the FDA has concerns about the proposed clinical trial, it may delay the trial and require modifications to the trial protocol prior to permitting the trial to begin.

     Clinical trials involve the administration of the pharmaceutical product to healthy volunteers or to patients identified as having the condition for which the product is being tested. The pharmaceutical product is administered under the supervision of a qualified principal investigator. Clinical trials are conducted in accordance with protocols previously submitted to the FDA as part of the IND application that detail the objectives of the trial, the parameters used to monitor safety and the efficacy criteria that are being evaluated. Each clinical trial is conducted under the auspices of an institutional review board (“IRB”) at the institution at which the trial is conducted. The IRB considers, among other things, ethical factors, the safety of the human subjects and the possible liability risk for the institution.

     Clinical trials are typically conducted in three sequential phases that may or may not overlap. In Phase I, the initial introduction of the pharmaceutical into healthy human volunteers, the emphasis is on testing for safety (adverse effects), dosage tolerance, metabolism, distribution, excretion and clinical pharmacology. Phase II involves trials in a limited patient population to determine the effectiveness of the pharmaceutical for specific targeted indications, to determine dosage tolerance and optimal dosage and to identify possible adverse side effects and safety risks.

      In clinical trials for cancer indications, Phase II typically denotes an uncontrolled study which addresses primary response rate. Phase IIB studies are generally larger, and controlled, and serve to finalize dosing regimens for Phase III trials.

     In serious diseases such as HIV/AIDS, patients suffering from the disease rather than healthy volunteers are included in Phase I trials. In addition, Phase I trials may be divided between Phase Ia, in which single doses of the drug are given, and Phase Ib, in which multiple doses are given. In the latter instance, some efficacy data may be obtained if the subjects are patients suffering from the disease rather than healthy volunteers, and these trials are referred to as “Phase Ib/IIa.”

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     After a compound has been shown in Phase II trials to have an acceptable safety profile and probable effectiveness, Phase III trials are undertaken to evaluate clinical effectiveness further and to further test for safety within an expanded patient population at multiple clinical study sites. The FDA reviews both the clinical trial plans and the results of the trials at each phase, and may discontinue the trials at any time if there are significant safety issues.

     The sponsor of a clinical trial may request a special protocol assessment (SPA) from the FDA. If an SPA is requested, the FDA will evaluate within 45 days certain protocols, including Phase III clinical trial protocols, and issues relating to the protocols to assess whether they are adequate to meet scientific and regulatory requirements identified by the sponsor. In a Phase III clinical protocol SPA request, the sponsor requests that data used in a Phase III clinical trial form the primary basis for an efficacy claim. The clinical protocols for Phase III trials can relate to efficacy claims that will be part of an original new drug application (NDA) or biologics license application (BLA) or that will be part of an efficacy supplement to an approved NDA or BLA.

     The results of the preclinical tests and clinical trials are submitted to the FDA in the form of an NDA for marketing approval. The testing and approval process requires substantial time and effort, and FDA approval may not be granted on a timely basis or at all. The approval process is affected by a number of factors, including the severity of the disease, the availability of alternative treatments and the risks and benefits demonstrated in clinical trials. Additional animal studies or clinical trials may be requested during the FDA review process and may delay marketing approval.

     Section 505(b)(2) of the US Food, Drug & Cosmetic Act allows the FDA to approve a follow-on drug on the basis of data in the scientific literature or data used by the FDA in the approval of other drugs. This procedure potentially makes it easier for drug manufacturers to obtain rapid approval of new forms of drugs based on proprietary data of the original drug manufacturer. Some examples of products that may be allowed to follow a 505(b)(2) path to approval are drugs which have a new dosage form, strength, route of administration, formulation or indication.

     Upon approval, a drug may be marketed only for the FDA-approved indications in the approved dosage forms. Further clinical trials are necessary to gain approval for the use of the product for any additional indications or dosage forms. The FDA may also require post-market reporting and may require surveillance programs to monitor the side effects of the drug, which may result in withdrawal of approval after marketing begins.

     The FDA has developed several regulatory procedures to accelerate the clinical testing and approval of drugs intended to treat serious or life-threatening illnesses under certain circumstances. We believe that CoFactor, Thiovir and Selone may be candidates for accelerated development or approval under these procedures.

     Once the sale of a product is approved, the FDA regulates the manufacturing and marketing of the product. The FDA periodically inspects both domestic and foreign drug manufacturing facilities to ensure compliance with applicable cGMP regulations and other requirements. In addition, manufacturers in the U.S. must register with the FDA and submit a list of every drug in commercial distribution. Foreign manufacturers are subject only to the drug listing requirement. Post-marketing reports are also required to monitor the product’s usage and effects. Product approvals may be withdrawn, or sanctions imposed, if compliance with regulatory requirements is not maintained.

     Many foreign countries also regulate the clinical testing, manufacturing, marketing and use of pharmaceutical products. The requirements relating to the conduct of clinical trials, product approval, manufacturing, marketing, pricing and reimbursement vary widely from country to country. In addition to the import requirements of foreign countries, a company must also comply with U.S. laws governing the export of FDA-regulated products.

Health Care Reform Measures and Third Party Reimbursement

     Pharmaceutical companies are affected by the efforts of governments and third party payors to contain or reduce the cost of health care through various means. A number of legislative and regulatory proposals aimed at changing the health care system have been proposed in recent years including the Medicare Modernization Act of 2003 (MMA). In addition, increasing emphasis on managed care in the U.S. has and will continue to increase pressures on pharmaceutical pricing. While we cannot predict whether legislative or regulatory proposals will be

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adopted or the effect such proposals or managed care efforts may have on our business, the announcement or adoption of such proposals or efforts could have a material adverse effect on us. In the U.S. and elsewhere, sales of prescription pharmaceuticals are dependent in large part on the availability of reimbursement to the consumer from third party payors, such as government and private insurance plans that mandate predetermined discounts from list prices.

Employees

     As of March 10, 2006 we employed 20 persons, including 12 engaged in research and development activities, including preclinical research, clinical development, and regulatory affairs, and eight in general and administrative functions such as marketing, accounting, purchasing and investor relations. Our staff includes four employees with Ph.D. or M.D. degrees. None of our employees are unionized and we believe that our relationship with our employees is good.

Available Information

     Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge on our website (www.adventrx.com) as soon as reasonably practicable after they are filed with, or furnished to, the Securities and Exchange Commission.

ITEM 1A. RISK FACTORS

Risks Relating to Our Business

     Readers and prospective investors in our securities should carefully consider the following risk factors as well as the other information contained or incorporated by reference in this report.

     The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties that management is not aware of or focused on or that management currently deems immaterial may also impair our business operations. This report is qualified in its entirety by these risk factors.

     If any of the following risks actually occur, the Company’s financial condition and results of operations could be materially and adversely affected. If this were to happen, the value of the Company’s securities could decline significantly, and you could lose all or part of your investment.

We have a substantial accumulated deficit and limited working capital.

     We had an accumulated deficit of $59,964,840 as of December 31, 2005. Since we presently have no source of revenues and are committed to continuing our product research and development program, significant expenditures and losses will continue until development of new products is completed and such products have been clinically tested, approved by the FDA or other regulatory agencies and successfully marketed. In addition, we fund our operations primarily through the sale of equity securities, and have had limited working capital for our product development and other activities. We do not believe that debt financing from financial institutions will be available until at least the time that one of our products is approved for commercial production.

We have no current product sales revenues or profits.

     We have devoted our resources to developing a new generation of therapeutic drug products, but such products cannot be marketed until clinical testing is completed and governmental approvals have been obtained. Accordingly, there is no current source of revenues, much less profits, to sustain our present activities, and no revenues will likely be available until, and unless, the new products are clinically tested, approved by the FDA or other regulatory agencies and successfully marketed, either by us or a marketing partner, an outcome which we are not able to guarantee.

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It is uncertain that we will have access to future capital.

     We do not expect to generate positive cash flow from operations for at least the next several years. As a result, substantial additional equity or debt financing for research and development or clinical development will be required to fund our activities. Although we have raised equity financing in the past, including in April 2004 and July 2005, we cannot be certain that we will be able to continue to obtain such financing on favorable or satisfactory terms, if at all, or that it will be sufficient to meet our cash requirements. Any additional equity financing could result in substantial dilution to stockholders, and debt financing, if available, would likely involve restrictive covenants that preclude us from making distributions to stockholders and taking other actions beneficial to stockholders. If adequate funds are not available, we may be required to delay or reduce the scope of our drug development program or attempt to continue development by entering into arrangements with collaborative partners or others that may require us to relinquish some or all of our rights to proprietary drugs. The inability to adequately and timely fund our capital requirements would have a material adverse effect on us.

We are not certain that we will be successful in the development of our drug candidates.

     The successful development of any new drug is highly uncertain and is subject to a number of significant risks. Our drug candidates, all of which are in a development stage, require significant, time-consuming and costly development, testing and regulatory clearance. This process typically takes several years and can require substantially more time. Risks include, among others, the possibility that a drug candidate will (i) be found to be ineffective or unacceptably toxic, (ii) have unacceptable side effects, (iii) fail to receive necessary regulatory clearances, (iv) not achieve broad market acceptance, (v) be subject to competition from third parties who may market equivalent or superior products, (vi) be affected by third parties holding proprietary rights that will preclude us from marketing a drug product, or (vii) not be able to be manufactured by manufacturers in a timely manner in accordance with required standards of quality. There can be no assurance that the development of our drug candidates will demonstrate the efficacy and safety of our drug candidates as therapeutic drugs, or, even if demonstrated, that there will be sufficient advantages to their use over other drugs or treatments so as to render the drug product commercially viable. In the past, we have been faced with limiting the scope and/or delaying the launch of preclinical and clinical drug trials due to limited cash and personnel resources. We have also chosen to terminate licenses of some drug candidates that were not showing sufficient promise to justify continued expense and development. In the event that we are not successful in developing and commercializing one or more drug candidates, investors are likely to realize a loss of their entire investment.

     We have been delayed at certain times in the past in the development of our drug products by limited funding. In addition, if certain of our scientific and technical personnel resigned at or about the same time, the development of our drug products would probably be delayed until new personnel were hired and became familiar with the development programs.

     Positive results in preclinical and clinical trials do not ensure that future clinical trials will be successful or that drug candidates will receive all necessary regulatory approvals for the marketing, distribution or sale of such drug candidates.

     Success in preclinical and clinical trials does not ensure that large-scale clinical trials will be successful. Clinical results are frequently susceptible to varying interpretations that may delay, limit or prevent regulatory approvals. The length of time necessary to complete clinical trials and to submit an application for marketing approval for a final decision by a regulatory authority varies significantly and may be difficult to predict. In the past, we have terminated licenses of drug candidates when our preclinical trials did not support or verify earlier preclinical data. There is a significant risk that any of our drug candidates could fail to show satisfactory results in continued trials, and would not justify further development.

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We will face intense competition from other companies in the pharmaceutical industry.

     We are engaged in a segment of the pharmaceutical industry that is highly competitive and rapidly changing. If successfully developed and approved, any of our drug candidates will likely compete with several existing therapies. CoFactor, our leading drug candidate, would likely compete against a well-established product, leucovorin. In addition, there are numerous companies with a focus in oncology and/or anti-viral therapeutics that are pursuing the development of pharmaceuticals that target the same diseases as are targeted by the drugs being developed by us. We anticipate that we will face intense and increasing competition in the future as new products enter the market and advanced technologies become available. We cannot assure that existing products or new products developed by competitors will not be more effective, or more effectively marketed and sold than those we may market and sell. Competitive products may render our drugs obsolete or noncompetitive prior to our recovery of development and commercialization expenses.

     Many of our likely competitors, such as Merck and Pfizer, will also have significantly greater financial, technical and human resources and will likely be better equipped to develop, manufacture and market products. In addition, many of these competitors have extensive experience in preclinical testing and clinical trials, obtaining FDA and other regulatory approvals and manufacturing and marketing pharmaceutical products. A number of these competitors also have products that have been approved or are in late-stage development and operate large, well-funded research and development programs. Smaller companies may also prove to be significant competitors, particularly through collaborative arrangements with large pharmaceutical and biotechnology companies. Furthermore, academic institutions, government agencies and other public and private research organizations are becoming increasingly aware of the commercial value of their inventions and are actively seeking to commercialize the technology they have developed. Companies such as Gilead, Roche and GlaxoSmithKline all have drugs in various stages of development that could become competitors. Accordingly, competitors may succeed in commercializing products more rapidly or effectively than us, which would have a material adverse effect on us.

There is no assurance that our products will have market acceptance.

     Our success will depend in substantial part on the extent to which a drug product, if eventually approved for commercial distribution, achieves market acceptance. The degree of market acceptance will depend upon a number of factors, including (i) the receipt and scope of regulatory approvals, (ii) the establishment and demonstration in the medical community of the safety and efficacy of a drug product, (iii) the product’s potential advantages over existing treatment methods and (iv) reimbursement policies of government and third party payors. We cannot predict or guarantee that physicians, patients, healthcare insurers or maintenance organizations, or the medical community in general, will accept or utilize any of our drug products.

The unavailability of health care reimbursement for any of our products will likely adversely impact our ability to effectively market such products and whether health care reimbursement will be available for any of our products is uncertain.

     Our ability to commercialize our technology successfully will depend in part on the extent to which reimbursement for the costs of such products and related treatments will be available from government health administration authorities, private health insurers and other third-party payors. Significant uncertainty exists as to the reimbursement status of newly approved medical products. We cannot guarantee that adequate third-party insurance coverage will be available for us to establish and maintain price levels sufficient for realization of an appropriate return on our investments in developing new therapies. If we are successful in getting FDA approval for CoFactor, we will be competing against a generic drug, leucovorin, which has a lower cost and a long, established history of reimbursement. Receiving sufficient reimbursement for purchase costs of CoFactor will be necessary to make it cost effective and competitive versus the established drug, leucovorin. Government, private health insurers, and other third-party payors are increasingly attempting to contain health care costs by limiting both coverage and the level of reimbursement for new therapeutic products approved for marketing by the FDA. Accordingly, even if coverage and reimbursement are provided by government, private health insurers, and third-party payors for use of our products, the market acceptance of these products would be adversely affected if the amount of reimbursement available for the use of our therapies proved to be unprofitable for health care providers.

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Uncertainties related to health care reform measures may affect our success.

     There have been some federal and state proposals in the past to subject the pricing of health care goods and services, including prescription drugs, to government control and to make other changes to the U.S. health care system. None of the proposals seems to have affected any of the drugs in our programs. However, it is uncertain if future legislative proposals would be adopted that might affect the drugs in our programs or what actions federal, state, or private payors for health care treatment and services may take in response to any such health care reform proposals or legislation. Any such health care reforms could have a material adverse effect on the marketability of any drugs for which we ultimately require FDA approval.

Further testing of our drug candidates will be required and there is no assurance of FDA approval.

     The FDA and comparable agencies in foreign countries impose substantial requirements upon the introduction of medical products, through lengthy and detailed laboratory and clinical testing procedures, sampling activities and other costly and time-consuming procedures. Satisfaction of these requirements typically takes several years or more and varies substantially based upon the type, complexity, and novelty of the product.

     The effect of government regulation and the need for FDA approval will delay marketing of new products for a considerable period of time, impose costly procedures upon our activities, and provide an advantage to larger companies that compete with us. There can be no assurance that the FDA or other regulatory approval for any products developed by us will be granted on a timely basis or at all. Any such delay in obtaining or failure to obtain, such approvals would materially and adversely affect the marketing of any contemplated products and the ability to earn product revenue. Further, regulation of manufacturing facilities by state, local, and other authorities is subject to change. Any additional regulation could result in limitations or restrictions on our ability to utilize any of our technologies, thereby adversely affecting our operations.

     Human pharmaceutical products are subject to rigorous preclinical testing and clinical trials and other approval procedures mandated by the FDA and foreign regulatory authorities. Various federal and foreign statutes and regulations also govern or influence the manufacturing, safety, labeling, storage, record keeping and marketing of pharmaceutical products. The process of obtaining these approvals and the subsequent compliance with appropriate U.S. and foreign statutes and regulations are time-consuming and require the expenditure of substantial resources. In addition, these requirements and processes vary widely from country to country.

     Among the uncertainties and risks of the FDA approval process are the following: (i) the possibility that studies and clinical trials will fail to prove the safety and efficacy of the drug, or that any demonstrated efficacy will be so limited as to significantly reduce or altogether eliminate the acceptability of the drug in the marketplace, (ii) the possibility that the costs of development, which can far exceed the best of estimates, may render commercialization of the drug marginally profitable or altogether unprofitable, and (iii) the possibility that the amount of time required for FDA approval of a drug may extend for years beyond that which is originally estimated. In addition, the FDA or similar foreign regulatory authorities may require additional clinical trials, which could result in increased costs and significant development delays. Delays or rejections may also be encountered based upon changes in FDA policy and the establishment of additional regulations during the period of product development and FDA review. Similar delays or rejections may be encountered in other countries.

Our success will depend on licenses and proprietary rights we receive from other parties, and on any patents we may obtain.

     Our success will depend in large part on our ability and our licensors’ ability to (i) maintain license and patent protection with respect to their drug products, (ii) defend patents and licenses once obtained, (iii) maintain trade secrets, (iv) operate without infringing upon the patents and proprietary rights of others and (iv) obtain appropriate licenses to patents or proprietary rights held by third parties if infringement would otherwise occur, both in the U.S. and in foreign countries. We have obtained licenses to patents and other proprietary rights from the University of Southern California and SD Pharmaceuticals, Inc.

     The patent positions of pharmaceutical companies, including ours, are uncertain and involve complex legal and factual questions. There is no guarantee that we or our licensors have or will develop or obtain the rights to products or processes that are patentable, that patents will issue from any of the pending applications or that claims

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allowed will be sufficient to protect the technology licensed to us. In addition, we cannot be certain that any patents issued to or licensed by us will not be challenged, invalidated, infringed or circumvented, or that the rights granted thereunder will provide competitive disadvantages to us.

     Litigation, which could result in substantial cost, may also be necessary to enforce any patents to which we have rights, or to determine the scope, validity and unenforceability of other parties’ proprietary rights, which may affect our rights. U.S. patents carry a presumption of validity and generally can be invalidated only through clear and convincing evidence. There can be no assurance that our licensed patents would be held valid by a court or administrative body or that an alleged infringer would be found to be infringing. The mere uncertainty resulting from the institution and continuation of any technology-related litigation or interference proceeding could have a material adverse effect on us pending resolution of the disputed matters.

     We may also rely on unpatented trade secrets and know-how to maintain our competitive position, which we seek to protect, in part, by confidentiality agreements with employees, consultants and others. There can be no assurance that these agreements will not be breached or terminated, that we will have adequate remedies for any breach, or that trade secrets will not otherwise become known or be independently discovered by competitors.

Our license agreements can be terminated in the event of a breach.

     The license agreements pursuant to which we license our core technologies for our potential drug products permit the licensors, respectively the University of Southern California and SD Pharmaceuticals, Inc., to terminate the agreement under certain circumstances, such as the failure by us to use our reasonable best efforts to commercialize the subject drug or the occurrence of any other uncured material breach by us. The license agreements also provide that the licensor is primarily responsible for obtaining patent protection for the technology licensed, and we are required to reimburse the licensor for the costs it incurs in performing these activities. The license agreements also require the payment of specified royalties. Any inability or failure to observe these terms or pay these costs or royalties could result in the termination of the applicable license agreement in certain cases. In the past, we have let lapse certain licenses for drug candidates when we determined that the expense and risk of continued development outweighed the likely benefits of that continued development. The termination of any license agreement could have a material adverse effect on us.

Protecting our proprietary rights is difficult and costly.

     The patent positions of pharmaceutical and biotechnology companies can be highly uncertain and involve complex legal and factual questions. Accordingly, we cannot predict the breadth of claims allowed in these companies’ patents or whether we may infringe or be infringing these claims. Although we have not been notified of any patent infringement, nor notified others of patent infringement, such patent disputes are common and could preclude the commercialization of our products. Patent litigation is costly in its own right and could subject us to significant liabilities to third parties. In addition, an adverse decision could force us to either obtain third-party licenses at a material cost or cease using the technology or product in dispute.

We may be unable to retain skilled personnel and maintain key relationships.

     The success of our business depends, in large part, on our ability to attract and retain highly qualified management, scientific and other personnel, and on our ability to develop and maintain important relationships with leading research institutions and consultants and advisors. Competition for these types of personnel and relationships is intense from numerous pharmaceutical and biotechnology companies, universities and other research institutions. We are currently dependent upon our scientific staff, which has a deep background in our drug candidates and the ongoing preclinical and clinical trials. Recruiting and retaining senior employees with relevant drug development experience in oncology and anti-viral therapeutics is costly and time-consuming. There can be no assurance that we will be able to attract and retain such individuals on an uninterrupted basis and on commercially acceptable terms, and the failure to do so could have a material adverse effect on us by significantly delaying one or more of our drug development programs. The loss of any of our senior executive officers, including our chief executive officer and chief financial officer, in particular, could have a material adverse effect on the company and the market for our common stock, particularly if such loss was abrupt or unexpected. All of our employees are employed on an at-will basis under offer letters. We do not have non-competition agreements with any of our employees.

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We currently have no sales capability, and limited marketing capability.

     We currently do not have sales personnel. We have limited marketing and business development personnel. We will have to develop a sales force, or rely on marketing partners or other arrangements with third parties for the marketing, distribution and sale of any drug product which is ready for distribution. There is no guarantee that we will be able to establish marketing, distribution or sales capabilities or make arrangements with third parties to perform those activities on terms satisfactory to us, or that any internal capabilities or third party arrangements will be cost-effective.

     In addition, any third parties with which we may establish marketing, distribution or sales arrangements may have significant control over important aspects of the commercialization of a drug product, including market identification, marketing methods, pricing, composition of sales force and promotional activities. There can be no assurance that we will be able to control the amount and timing of resources that any third party may devote to our products or prevent any third party from pursuing alternative technologies or products that could result in the development of products that compete with, or the withdrawal of support for, our products.

We do not have manufacturing capabilities and may not be able to efficiently develop manufacturing capabilities or contract for such services from third parties on commercially acceptable terms.

     We do not have any manufacturing capacity. When and if required, we will seek to establish relationships with third-party manufacturers for the manufacture of clinical trial material and the commercial production of drug products as we have with our current manufacturing partners. There can be no assurance that we will be able to establish relationships with third-party manufacturers on commercially acceptable terms or that third-party manufacturers will be able to manufacture a drug product on a cost-effective basis in commercial quantities under good manufacturing practices mandated by the FDA or other regulatory matters.

     The dependence upon third parties for the manufacture of products may adversely affect future costs and the ability to develop and commercialize a drug product on a timely and competitive basis. Further, there can be no assurance that manufacturing or quality control problems will not arise in connection with the manufacture of our drug products or that third party manufacturers will be able to maintain the necessary governmental licenses and approvals to continue manufacturing such products. Any failure to establish relationships with third parties for our manufacturing requirements on commercially acceptable terms would have a material adverse effect on us.

We are dependent in part on third parties for drug development and research facilities.

     We do not possess research and development facilities necessary to conduct all of our drug development activities. We engage consultants and independent contract research organizations to design and conduct clinical trials in connection with the development of our drugs. As a result, these important aspects of a drug’s development will be outside our direct control. In addition, there can be no assurance that such third parties will perform all of their obligations under arrangements with us or will perform those obligations satisfactorily.

In the future, we anticipate that we will need to obtain additional or increased product liability insurance coverage and it is uncertain that such increased or additional insurance coverage can be obtained on commercially reasonable terms.

     Our business will expose us to potential product liability risks that are inherent in the testing, manufacturing and marketing of pharmaceutical products. There can be no assurance that product liability claims will not be asserted against us. We intend to obtain additional limited product liability insurance for our clinical trials, directly or through our marketing development partners or contract research organization (CRO) partners, when they begin in the U.S. and to expand our insurance coverage if and when we begin marketing commercial products. However, there can be no assurance that we will be able to obtain product liability insurance on commercially acceptable terms or that we will be able to maintain such insurance at a reasonable cost or in sufficient amounts to protect against potential losses. A successful product liability claim or series of claims brought against us could have a material adverse effect on us.

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The market price of our shares, like that of many biotechnology companies, is highly volatile.

     Market prices for our common stock and the securities of other medical and biomedical technology companies have been highly volatile and may continue to be highly volatile in the future. Factors such as announcements of technological innovations or new products by us or our competitors, government regulatory action, litigation, patent or proprietary rights developments, and market conditions for medical and high technology stocks in general can have a significant impact on any future market for our common stock.

If we cannot satisfy AMEX’s listing requirements, it may delist our common stock and we may not have an active public market for our common stock. The absence of an active trading market would likely make the common stock an illiquid investment.

     Our common stock is quoted on the American Stock Exchange. To continue to be listed, we are required to maintain shareholders equity of $6,000,000 among other requirements. We do not satisfy that requirement as of December 31, 2005. The AMEX may consider delisting our common stock and suspend trading in the common stock in which case our common stock would likely trade in the over-the-counter market in the so-called “pink sheets” or, if available, the “OTC Bulletin Board Service.” As a result, an investor would likely find it significantly more difficult to dispose of, or to obtain accurate quotations as to the value of, our shares. Our ability to raise capital would most likely also be impaired due to our ineligibility to file resale registration statements under the Securities Act.

If our common stock is delisted, it may become subject to the SEC’s “penny stock” rules and more difficult to sell.

     SEC rules require brokers to provide information to purchasers of securities traded at less than $5.00 and not traded on a national securities exchange or quoted on the Nasdaq Stock Market. If our common stock becomes a “penny stock” that is not exempt from these SEC rules, these disclosure requirements may have the effect of reducing trading activity in our common stock and making it more difficult for investors to sell. The rules require a broker-dealer to deliver a standardized risk disclosure document prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny market. The broker must also give bid and offer quotations and broker and salesperson compensation information to the customer orally or in writing before or with the confirmation. The SEC rules also require a broker to make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction before a transaction in a penny stock.

Changes in laws and regulations that affect the governance of public companies has increased our operating expenses and will continue to do so.

     Recently enacted changes in the laws and regulations affecting public companies, including the provisions of the Sarbanes-Oxley Act of 2002 and the listing requirements for American Stock Exchange have imposed new duties on us and on our executives, directors, attorneys and independent accountants. In order to comply with these new rules, we have hired and expect to hire additional personnel and use additional outside legal, accounting and advisory services, which have increased and are likely to continue increasing our operating expenses. In particular, we expect to incur additional administrative expenses as we implement Section 404 of the Sarbanes-Oxley Act, which requires management to extensively evaluate and report on, and our independent registered public accounting firm to attest to, our internal controls. For example, we have incurred significant expenses, and expect to incur additional expenses, in connection with the evaluation, implementation, documentation and testing of our existing and newly implemented control systems. Management time associated with these compliance efforts necessarily reduces time available for other operating activities, which could adversely affect operating results. If we are unable to achieve full and timely compliance with these regulatory requirements, we could be required to incur additional costs, expend additional money and management time on additional remedial efforts which could adversely affect our results of operations.

Failure to implement effective control systems, or failure to complete our assessment of the effectiveness of our internal control over financial reporting, may subject us to regulatory sanctions and could result in a loss of public confidence, which could harm our operating results.

     Pursuant to Section 404 of the Sarbanes-Oxley Act, beginning with our fiscal year ending December 31, 2005, we are required to include in our annual report our assessment of the effectiveness of our internal control over financial reporting. Furthermore, our independent registered public accounting firm is required to issue an opinion on whether our assessment of the effectiveness of our internal control over financial reporting is fairly stated in all material respects and separately report on whether it believes we maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

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ITEM 2. PROPERTIES

     Our principal offices are located at 6725 Mesa Ridge Road, San Diego, California 92121. Our principal offices consist of 12,038 square feet of office and lab space, which we use pursuant to a lease which will expire on August 31, 2009. The base rent for this space is currently $242,209 annually, with incremental operating cost adjustments.

     We believe our facilities are in good operating condition and that the real property leased by us is adequate for all present and near term uses. We believe any additional facilities we may need in the foreseeable future can be obtained with our capital resources.

     We do not have any investments in and do not plan to make any investments in any real estate, real estate mortgages or securities of or interests in persons primarily engaged in real estate activities. We do not own or have an interest in any real property the book value of which amounts to 10% or more of our total assets.

ITEM 3. LEGAL PROCEEDINGS

     From time to time we may be subject to legal proceedings and claims in the ordinary course of business. These claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources. We are not currently involved in any legal proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     A special meeting of the stockholders of the Company was held on November 15, 2005. At the meeting, the stockholders approved (i) an amendment to our Certificate of Incorporation to prohibit us from establishing a classified board; (ii) an amendment to our Certificate of Incorporation to prohibit us from adopting or approving any “rights plan,” “poison pill” or other similar plan, agreement or device; and (iii) an amendment and restatement of our Certificate of Incorporation that, among other things, increased the number of shares of common stock we are authorized to issue to 200,000,000. Each of the foregoing matters approved by the stockholders are described in further detail in our Proxy Statement filed with the Securities and Exchange Commission on October 18, 2005.

     The following table shows the tabulation of the votes cast in connection with these matters:

			Votes
Proposal	Votes For		Against/Withheld		Votes Abstained
Amendment to Certificate of Incorporation regarding classified board prohibition		47,268,567		392,146		1,062,676
Amendment to Certificate of Incorporation regarding “poison pill” prohibition		47,453,882		204,481		1,065,026
Amendment and restatement of Certificate of Incorporation to increase authorized shares of common stock, among other things		46,437,170		1,287,043		999,176

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PART II

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

     Our common stock trades under the symbol “ANX” on the American Stock Exchange (the “AMEX”). The following table sets forth the high and low closing sales prices for our common stock in each of the quarters over the past two fiscal years, as quoted on the AMEX.

	Common Stock Price
	Fiscal 2005				Fiscal 2004
	High		Low		High		Low
First Quarter	$	1.69	$	0.90	$	2.40	$	0.87
Second Quarter	$	3.12	$	1.61	$	2.30	$	1.55
Third Quarter	$	4.13	$	2.18	$	1.74	$	0.99
Fourth Quarter	$	3.65	$	2.68	$	1.19	$	0.82

     On March 13, 2006, the closing sales price of Common Stock was $4.22 per share.

     As of March 10, 2006, we had approximately 7,021 stockholders, including 246 holders of record and an estimated 6,775 beneficial owners. We have not paid any dividends on our common stock since our inception and do not expect to pay dividends on our common stock in the foreseeable future.

Dividend Policy

     We have not declared or paid cash dividends on our common stock and do not anticipate paying any cash dividends in the foreseeable future. We expect to retain future earnings, if any, to fund the development and growth of our business. Our board of directors will determine future dividends, if any.

Equity Compensation Plan Information

     The following table provides information as of December 31, 2005 regarding equity compensation plans approved by the Company’s securityholders. The Company does not have any equity compensation plans that have not been approved by our securityholders.

					Number of securities
					remaining available for
					future issuance under
					equity compensation
	Number of securities to		Weighted-average		plans
	be issued upon exercise		exercise price of		(excluding securities
	of outstanding options,		outstanding options,		reflected in second
Plan Category	warrants and rights		warrants and rights		column)
2005 Equity Incentive Plan		2,457,000	$	1.45		3,258,000
2005 Employee Stock Purchase Plan		0	$	0		2,000,000

Recent Sales of Unregistered Securities

     From February 24, 2006 through March 13, 2006, we issued 509,124 shares of common stock to six of our warrant holders in connection with their exercise of outstanding warrants. We received gross proceeds of $683,979 upon exercise of these warrants. The issuances of shares of common stock upon exercise of these warrants were not registered under the Securities Act of 1933 in reliance upon Section 4(2) of such Act.

     Pursuant to the terms of an agreement we entered into with Burnham Hill Partners, a division of Pali Capital, Inc., in March 2004, we are obligated to pay a 4% cash commission on each cash exercise of warrants issued in a financing that we consummated in April 2004. In accordance with this obligation, we owe Burnham Hill Partners approximately $16,353 in connection with the exercises of warrants from February 24, 2006 through March 13, 2006. No other commission or other remuneration was paid or given directly or indirectly in connection with these warrant exercises.

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Item 6. SELECTED CONSOLIDATED FINANCIAL DATA

     The selected consolidated financial data set forth below at December 31, 2005 and 2004, and for the fiscal years ended December 31, 2005, 2004 and 2003, are derived from our audited consolidated financial statements included elsewhere in this report. This information should be read in conjunction with those consolidated financial statements, the notes thereto, and the report of independent registered public accounting firm thereon, and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The selected consolidated financial data set forth below at December 31, 2003, 2002 and 2001, and for the years ended December 30, 2002 and 2001, are derived from our audited consolidated financial statements that are contained in reports previously filed with the SEC. The quarterly consolidated financial data are derived from unaudited financial statements included in our Quarterly Reports on Form 10-Q.

Summary Financial Information

	Fiscal Years Ended December 31,
Statement of operations data:	2005			2004			2003			2002			2001
Loss from operations	$	(13,202,986	)	$	(6,701,048	)	$	(2,332,077	)	$	(2,105,727	)	$	(16,339,120	)
Net loss	$	(24,782,646	)	$	(6,701,048	)	$	(2,369,917	)	$	(2,347,927	)	$	(16,595,120	)
Basic and diluted net loss per share	$	(0.41	)	$	(0.13	)	$	(0.07	)	$	(0.15	)	$	(1.12	)
Weighted average number of shares of common stock outstanding:
Basic and diluted		59,828,357			50,720,180			31,797,986			15,681,743			14,805,150
Cash dividends declared per share	$	—		$	—		$	—		$	—		$	—

	December 31,
Balance sheet data:	2005			2004		2003		2002			2001
Cash and cash equivalents	$	14,634,618		$	13,032,263	$	4,226,397	$	103,928		$	164,476
Short-term investments		7,958,458			—		—		—			—
Total cash, cash equivalents and short-term investments		22,593,076			13,032,263		4,226,397		103,928			164,476
Working capital		(8,534,219	)		12,047,819		4,091,730		(822,274	)		(686,151	)
Total assets		23,621,773			13,608,787		4,283,356		130,345			278,006
Long-term obligations		57,078			—		—		56,873			—
Total liabilities		31,450,389			1,218,396		163,043		983,075			916,492
Shareholders’ equity/(deficit)		(7,828,616	)		12,390,391		4,120,313		(852,730	)		(638,486	)

	Fiscal Quarters Ended
Quarterly statement of operations data							September 30,
for fiscal 2005:	March 31, 2005			June 30, 2005			2005			December 31, 2005
Loss from operations	$	(2,844,934	)	$	(3,330,554	)	$	(3,482,475	)	$	(3,545,023	)
Net loss	$	(2,844,934	)	$	(3,330,554	)	$	(16,454,867	)	$	(2,152,291	)
Basic and diluted net loss per share	$	(0.05	)	$	(0.26	)	$	(0.26	)	$	(0.03	)
Basic and diluted weighted average number of shares of common stock outstanding		53,967,933			54,821,480			63,255,407			67,194,366

	Fiscal Quarters Ended
Quarterly statement of operations data							September 30,
for fiscal 2004:	March 31, 2005			June 30, 2005			2004			December 31, 2004
Net loss	$	(710,463	)	$	(1,509,254	)	$	(2,123,807	)	$	(2,357,524	)
Basic and diluted net loss per share	$	(0.02	)	$	(0.03	)	$	(0.04	)	$	(0.04	)
Basic and diluted weighted average number of shares of common stock outstanding		42,886,237			52,560,875			53,811,072			53,811,072

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

This annual report on Form 10-K contains forward-looking statements concerning future events and performance of our company. When used in this report, the words “intend,” “estimate,” “anticipate,” “believe,” “plan” and “expect” and similar expressions as they relate to Adventrx are included to identify forward-looking statements. You should not rely on these forward-looking statements, because they are only predictions based on our current expectations and assumptions. Many factors could cause our actual results to differ materially from those indicated in these forward-looking statements. You should review carefully the factors identified in this report in Part I., Item 1A,“Business—Risk Factors,” those set forth below under “—Critical Accounting Policies and Estimates” and elsewhere in this report..” We disclaim any obligation to update or announce revisions to any forward-looking statements to reflect actual events or developments.

Overview

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires that management make a number of assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses in our consolidated financial statements and accompanying notes. Management bases its estimates on historical information and assumptions believed to be reasonable. Although these estimates are based on management’s best knowledge of current events and circumstances that may impact us in the future, actual results may differ from these estimates.

     Our critical accounting policies are those that affect our financial statements materially and involve a significant level of judgment by management. Our critical accounting policies regarding revenue recognition are in the following areas: license and research contracts, royalty revenues, sale of rights to future royalties, grant revenues and product sales, however, since inception we have not recognized a material amount of revenue. Our critical accounting policies also include recognition of expenses in research contracts and research and development expenses.

Recognition of Expenses in Research Contracts

     Pursuant to management’s assessment of the services that have been performed on clinical trials and other contracts, we recognize expenses as the services are provided. Such management assessments generally consist of, but are not limited to, an evaluation by the project manager of the work that has been completed during the period, measurement of progress prepared internally and/or provided by the third-party service provider, analysis of data that justifies the progress, and finally, management’s judgment. Several of our contracts extend across multiple reporting periods.

Research and Development Expenses

     Research and development expenses consist of expenses incurred in performing research and development activities including salaries and benefits, facilities and other overhead expenses, clinical trials, contract services and other outside expenses. Research and development expenses are charged to operations as they are incurred.

     Acquired contractual rights. Payments to acquire contractual rights to a licensed technology or drug candidate are expensed as incurred when there is uncertainty in receiving future economic benefits from the acquired contractual rights. We consider the future economic benefits from the acquired contractual rights to a drug candidate to be uncertain until such drug candidate is approved by the FDA or when other significant risk factors are abated. To date, for expense accounting purposes management has viewed future economic benefits for all of our drug candidates to be uncertain.

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NATURE OF OPERATING EXPENSES

     Our total operating expenses are influenced substantially by the amount of spending devoted to research and development. During the past two years, we have expanded our drug development pipeline, which requires that we allocate significant amounts of our resources to such programs, including increased spending on clinical trials as those programs advance in their development. We expect research and development expenses will represent approximately 65% to 70% of our operating expenses for fiscal 2006. We expect that general and administrative expenses for fiscal 2006 will represent approximately 35% of our operating expenses.

     Our business is exposed to significant risks, as discussed in the section entitled “Risk Factors,” which may result in additional expenses, delays and lost opportunities that could have a material adverse effect on our results of operations and financial condition.

RESULTS OF OPERATIONS

     We operate our business on the basis of a single reportable segment – discovery, development and commercialization of novel therapeutics for chronic diseases.

Comparison of Fiscal 2005 and 2004

Operating Expenses — 2005 vs. 2004

     Total operating expenses amounted to $13.7 million in fiscal 2005, compared to $6.8 million in fiscal 2004. The $6.9 million or 101% increase in operating expenses was due to a $5.9 million or 216% increase in research and development expenses, a $900,000 or 22% increase in general and administrative expenses and a $74,000 or 180% increase in depreciation and amortization expense. Explanations of operating expenses in both fiscal 2005 and fiscal 2004 are described more fully in the paragraphs that follow.

	Operating Expenses
	Years Ended December 31,
	2005			2004			2003
Research and development		63	%		40	%		32	%
General and administrative		36	%		59	%		68	%
Depreciation and amortization		1	%		1	%		0	%
Total operating expenses		100	%		100	%		100	%

Research and development (R&D) expenses. R&D expenses increased to $8.7 million in fiscal 2005 from $2.7 million in fiscal 2004. The increase is primarily due to $3.5 million of expenses incurred for our Phase II and Phase IIB CoFactor clinical trials, an increase in preclinical expenditures of $1.2 million related to CoFactor, ANX-530 (vinorelbine emulsion) and Thiovir, an increase in wages and related employee expenses of $500,000 due to the hiring of additional clinical personnel, an increase in outside services expense of $225,000 related to clinical support efforts and an increase in stock compensation expense related to employee options of $584,000.

General and administrative (G&A) expenses. G&A expenses increased to $4.9 million in fiscal 2005 from $4.0 million in fiscal 2004. The increase is primarily due to an increase of $300,000 in wages and related employee expenses due to the hiring of finance and development personnel, an increase in outside consulting of $280,000 related to efforts to comply with the Sarbanes-Oxley Act of 2002 and related system implementation efforts, and an increase in facilities cost of $115,000 due to an increase in the amount of space leased.

24

Interest Income. Interest income increased by $393,000, or 381%, to $496,000 in fiscal 2005 from $103,000 in fiscal 2004. The increase is primarily due to the investment of the proceeds of an equity financing which occurred in July 2005 with net proceeds of $19 million which resulted in an increase in the average balance of investments in fiscal 2005, compared to fiscal 2004. In addition, we experienced a rise in interest rates in the second half of 2005.

Loss from Operations. Loss from operations was $13.2 million in fiscal 2005 compared to a net loss of $6.7 million in fiscal 2004. The increase in net loss was due to a large increase in R&D expenses related to our Phase II trial of CoFactor and increased preclinical expenses related to CoFactor and other drugs in development.

     We expect to continue to pursue our drug development strategy focused on the development of CoFactor, ANX-530 (vinorelbine emulsion) and Thiovir followed by other programs in earlier stages of development. To help fund and develop our product development efforts, we may elect to license certain of our technologies and drug candidates to third parties. These potential license arrangements could materially change our outlook for future revenues and costs. However, the timing of such potential arrangements is unpredictable.

Net Loss. Net loss was $24.8 million or $(0.41) per share in fiscal 2005 compared to a net loss of $6.7 million or $0.13 per share in fiscal 2004. The increase was due to reasons discussed above under Loss from Operations and an $11.6 million loss booked in the fourth quarter to book warrants issued in conjunction with financing at fair market value.

Comparison of Fiscal 2004 and 2003

Operating Expenses — 2004 vs. 2003

     Total operating expenses amounted to $6.8 million in fiscal 2004, compared to $2.3 million in fiscal 2003. The $4.5 million, or 190%, increase in operating expenses is discussed in the paragraphs below.

Research and development expenses. R&D expenses totaled $2.7 million in fiscal 2004 compared to $749,000 in fiscal 2003. The increase of $2.0 million or 266% was primarily related to costs incurred for our Phase II CoFactor trial which commenced in May 2004 as well as additional personnel costs due to the hiring of clinical and preclinical personnel in 2004.

General and administrative expenses. Our general and administrative expenses increased to $4.0 million in fiscal 2004, compared to $1.6 million in fiscal 2003. The increase of $2.4 million or 153% is primarily related to the hiring of a significant number of personnel including two executive level positions. In addition, occupancy, insurance and related costs all increased in 2004 as we leased more office and lab space and ramped up for our clinical trials.

Interest Income. Interest income increased to $103,000 in 2004 as compared to $9,000 in 2003. The increase of $94,000 was due to an increase in our cash balances due to the investment of the proceeds of an equity financing which closed in April 2004.

Net Loss. Net loss was $6.7 million, or $0.13 per share, in fiscal 2004 compared to a net loss of $2.4 million, or $0.07 per share, in fiscal 2003. The increase of $4.3 million or 183% in net loss was due to large increases in research and development and general and administrative costs which included the hiring of ten people including two executive level positions.

25

Liquidity and Capital Resources

     Historically, we have funded our operations primarily through sales of our equity securities. As of December 31, 2005, we had cash, cash equivalents and short-term investments in securities totaling $22.6 million, including cash and cash equivalents of $14.6 million and short-term investments of $8.0 million. Our net working capital balance as of December 31, 2005 was ($8.5) million. As of December 31, 2004, we had cash and cash equivalents totaling $13.0 million. Our net working capital balance as of December 31, 2004 was $12.0 million. Explanations of net cash provided by or used in operating, investing and financing activities are provided below.

				Increase
	December 31,			(Decrease)		December 31,
	2005			During Period		2004
Cash, cash equivalents and investments	$	22,593,076		$	9,560,813	$	13,032,263
Cash and cash equivalents		14,634,618			1,602,355		13,032,263
Net working capital	$	(8,534,219	)		9,114,373		12,047,819

	Year Ended			Change			Year Ended
	December 31,			Between			December 31,
	2005			Periods			2004
Net cash used in operating activities	$	(11,646,829	)	$	(6,471,439	)	$	(5,175,390	)
Net cash used in investing activities		(8,086,005	)		(7,780,232	)		(305,773	)
Net cash provided by financing activities		21,335,189			7,048,160			14,287,029
Net increase in cash and cash equivalents	$	1,602,355		$	(7,203,511	)	$	8,805,866

Operating activities. Net cash used for operating activities was $11.6 million in fiscal 2005, compared to $5.2 million in fiscal 2004. The increase in cash used for operating activities was mainly due to the increase in our research and development and general and administrative expenses.

Net cash used for operating activities in fiscal 2004 was $5.2 million, compared to net cash provided by operating activities of $2.2 million in fiscal 2003. The increase in cash used for operating activities was mainly due to our increased research and development and general and administrative expenses.

Investing activities. Net cash used by investing activities was $8.1 million in fiscal 2005, compared to $300,000 in fiscal 2004 and $16,000 in fiscal 2003. The increase in fiscal 2005 was mainly due to net purchases of short-term investments of $7.8 million. The increase in fiscal 2004 was due to purchases of fixed assets (office furniture and computer hardware).

Financing activities. Net cash provided by financing activities was $21.3 million in fiscal 2005, consisting primarily of $18.1 million in net proceeds from sales of our common stock through private placements and $3.0 million from exercises of warrants to purchase our common stock. Net cash provided by financing activities amounted to $14.3 million in the fiscal 2004, consisting of $14.3 million received from the sale of our common stock.

     As of December 31, 2005, we have contractual obligations for operating leases and purchase obligations, as summarized in the table that follows. We anticipate being able to satisfy the obligations described below out of cash, cash equivalents and investments in securities held by the Company as of December 31, 2005. We do not have any off balance sheet arrangements and no commitments for any significant additional capital expenditures.

	Payments Due by Period
			Less than						More than
	Total		1 Year		1-3 Years		3-5 Years		5 years
Operating lease obligations	$	935,651	$	248,364	$	687,287	$	0	$	0
Purchase obligations	$	423,934	$	423,934	$	0	$	0	$	0
Total	$	1,359,585	$	672,298	$	687,287	$	0	$	0

26

Management Outlook

     We believe that cash, cash equivalents, and short-term investments of approximately $22.6 million at December 31, 2005, should be sufficient to sustain our planned level of operations for at least the next 12 months.

     If we are unable to raise capital as needed to fund our operations then we may need to slow the rate of development of some of our programs or sell the rights to one or more of our drug candidates. For information regarding the risks associated with our need to raise capital to fund our ongoing and planned operations, please see “Risk Factors.”

Recent Accounting Pronouncements

     See Note 2, “Summary of Significant Accounting Policies – Recent Accounting Pronouncements,” in the Notes to Consolidated Financial Statements for a discussion of recent accounting pronouncements and their effect, if any, on the Company.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     As described below, we are exposed to market risk related to changes in interest rates. Because substantially all our expenses, and capital purchasing activities are transacted in U.S. dollars, our exposure to foreign currency exchange rates is immaterial. Until such time as we are faced with material amounts of foreign currency exchange rate risks, we do not plan to use derivative financial instruments, which can be used to hedge such risks. We will evaluate the use of derivative financial instruments to hedge our exposures as the needs and risks should arise.

Interest Rate Sensitivity

     Our investment portfolio consists primarily of government or investment grade fixed income instruments with an average duration of under 60 days. The primary objective of our investments in debt securities is to preserve principal while achieving attractive yields, without significantly increasing risk. We classify our investments in securities as of December 31, 2005 as available-for-sale. These available-for-sale securities are subject to interest rate risk. Due to the short average duration as of December 31, 2005 the interest rate risks were not significant.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Our financial statements are annexed to this report beginning on page F-1.

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

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

     With the supervision and with the participation of our management, including the principal executive officer and principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined under Exchange Act Rules 13a-15(e) and 15(d)-15(e)), as of the end of the period covered by this report. Based on that evaluation, the principal executive officer and principal financial officer have concluded that these disclosure controls and procedures were effective as of the end of the period covered by this report. Additionally, there was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the fiscal quarter ended December 31, 2005 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

27

Management’s Report on Internal Control Over Financial Reporting

     Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control — Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2005.

     Our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005 has been audited by J.H. Cohn LLP, an independent registered public accounting firm, as stated in their report, which is set forth below in this Item 9A.

Report of Independent Registered Public Accounting Firm

To Board of Directors and Shareholders
Adventrx Pharmaceuticals, Inc.

We have audited management’s assessment, included in Item 9A, Management’s Report on Internal Control over Financial Reporting, that ADVENTRX Pharmaceuticals, Inc. and Subsidiary maintained effective internal control over financial reporting as of December 31, 2005 based on criteria established in “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. ADVENTRX Pharmaceuticals, Inc. and Subsidiary’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. Our responsibility is to express on opinion on management’s assessment and an opinion on the effectiveness of 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, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and 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 accounting principles generally accepted in the United States of America. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) 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 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, management’s assessment that ADVENTRX Pharmaceuticals, Inc. and Subsidiary maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on the criteria established in “Internal Control - Integrated Framework” issued by the Committee of the Sponsoring Organizations of the Treadway Commission. Also, in our opinion, ADVENTRX Pharmaceuticals, Inc. and Subsidiary maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on such criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of ADVENTRX Pharmaceuticals, Inc. and Subsidiary as of December 31, 2005, and the related consolidated statements of operations, shareholders’ equity and cash flows for the year then ended, and our report dated March 10, 2006 expressed an unqualified opinion thereon.

/s/ J. H. Cohn LLP
San Diego, California
March 10, 2006

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

     Information relating to our executive officers and directors will be presented under the caption “Executive Officers and Directors” in our definitive proxy statement in connection with our 2006 Annual Meeting of Stockholders to be held on or about May 15, 2006. That information is incorporated into this report by reference.

Code of Ethics

     We have adopted a code of business conduct and ethics for employees, executive officers and directors. This code of business conduct and ethics is available on the investors section of our website at www.adventrx.com. Any waivers from or amendments to the code of ethics will be filed with the SEC on Form 8-K.

ITEM 11. EXECUTIVE COMPENSATION

     The information required by this item is incorporated by reference to the information under the caption “Executive Compensation” contained in the Proxy Statement.

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

     The information required by this item is incorporated by reference to the information under the caption “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” contained in the Proxy Statement.

28

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this item is incorporated by reference to the information under the caption “Certain Relationships and Related Transactions” contained in the Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The information required by this item is incorporated by reference to the information under the caption “Fees for Independent Registered Public Accounting Firm” contained in the Proxy Statement.

29

PART IV

Item 15. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES

(a) Financial Statements and Schedules

     (1) Index to consolidated financial statements appears on page F-1.

The list of exhibits required by this Item is incorporated by reference to the Exhibit Index filed as part of this report.

30

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.

ADVENTRX Pharmaceuticals
By:	/s/ Evan M. Levine
	Evan M. Levine
	President and Chief Executive Officer

Date: March 16, 2006

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Evan Levine and Carrie Carlander as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

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 dates indicated.

Signature	Title	Date
/s/ Evan M. Levine	President and Chief Executive Officer	March 16, 2006
Evan M. Levine	(Principal Executive Officer)
	Chief Financial Officer, Senior Vice
/s/ Carrie Carlander	President, Finance, Secretary and Treasurer	March 16, 2006
Carrie Carlander	(Principal Financial and Accounting Officer)
/s/ Robert A. Daniel	Controller	March 16, 2006
Robert A. Daniel	(Principal Accounting Officer)
/s/ M. Ross Johnson	Chairman of the Board	March 16, 2006
M. Ross Johnson
/s/ Michael M. Goldberg	Director	March 16, 2006
Michael M. Goldberg
/s/ Mark J. Pykett	Director	March 16, 2006
Mark J. Pykett
/s/ Mark Bagnall	Director	March 16, 2006
Mark Bagnall
/s/ Keith Meister	Director	March 16, 2006
Keith Meister

31

Index to Consolidated Financial Statements

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Shareholders’ Equity	F-5 — F-6
Consolidated Statements of Cash Flows	F-7 — F-8
Notes to Consolidated Financial Statements	F-9 — F-24

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders
ADVENTRX Pharmaceuticals, Inc.

We have audited the accompanying consolidated balance sheets of ADVENTRX Pharmaceuticals, Inc. and Subsidiary (a development stage enterprise) as of December 31, 2005 and 2004, and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2005 and for the period from June 12, 1996 (date of inception) to December 31, 2005. 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 consolidated financial statements for the period from June 12, 1996 (date of inception) to December 31, 2001 were audited by other auditors whose report, dated April 10, 2003, expressed an unqualified opinion and included an explanatory paragraph concerning the Company’s ability to continue as a going concern. Our opinion on the consolidated statements of operations, shareholders’ equity and cash flows for the period from June 12, 1996 (date of inception) to December 31, 2005, insofar as it relates to amounts for the period for June 12, 1996 (date of inception) to December 31, 2001, is based solely on the report of the other auditors.

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 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 the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ADVENTRX Pharmaceuticals, Inc. and Subsidiary (a development stage enterprise) as of December 31, 2005 and 2004, and their results of operations and cash flows for each of the three years in the period ended December 31, 2005 and for the period from June 12, 1996 (date of inception) to December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of ADVENTRX Pharmaceuticals, Inc. and subsidiary’s internal control over financial reporting as of December 31, 2005, based on criteria established in “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 10, 2006 expressed an unqualified opinion thereon.

/s/ J.H. Cohn LLP

San Diego, California
March 10, 2006

F-2

ADVENTRX PHARMACEUTICALS, INC. AND SUBSIDIARY
Consolidated Balance Sheets

	December 31,
	2005			2004
Assets
Current assets:
Cash and cash equivalents	$	14,634,618		$	13,032,263
Accrued interest income		10,214			10,808
Prepaid expenses		255,802			115,144
Short-term investments		7,958,458			—
Assets available for sale		—			108,000
Total current assets		22,859,092			13,266,215
Property and equipment, net		407,544			285,304
Other assets		355,137			57,268
Total assets	$	23,621,773		$	13,608,787
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		593,228			532,327
Accrued liabilities		930,274			628,754
Accrued salary and related taxes		173,398			57,315
Warrant liability		29,696,411			—
Total current liabilities		31,393,311			1,218,396
Other long-term liabilities		57,078			—
Total liabilities		31,450,389			1,218,396
Committments and contingencies		—			—
Temporary equity:
Common stock subject to continuing registration, $.001 par value; 10,810,809 shares issued and outstanding		—			—
Shareholders’ equity/(deficit):
Common stock, $0.001 par value; authorized 200,000,000, issued and outstanding 56,529,388 and 53,834,237 shares in 2005 and 2004		67,364			53,835
Additional paid-in capital		52,105,329			47,553,497
Deficit accumulated during the development stage		(59,964,840	)		(35,182,194	)
Accumulated other comprehensive gains (losses)		(1,722	)		—
Treasury stock, at cost		(34,747	)		(34,747	)
Total shareholders’ equity		(7,828,616	)		12,390,391
Total liabilities and shareholders’ equity	$	23,621,773		$	13,608,787

See accompanying notes to consolidated financial statements.

F-3

ADVENTRX PHARMACEUTICALS, INC. AND SUBSIDIARY
(Formerly Biokeys Pharmaceuticals, Inc.)
(A Development Stage Enterprise)
Consolidated Statements of Operations

										Inception
										(June 12, 1996)
										through
	Years Ended December 31,									December 31,
	2005			2004			2003			2005
Net sales	$	—		$	—		$	—		$	174,830
Cost of goods sold		—			—			—			51,094
Gross margin		—			—			—			123,736
Grant revenue		—			—			3,603			129,733
Interest income		496,059			103,042			9,269			698,337
Total revenue		496,059			103,042			12,872			951,806
Operating expenses:
Research and development		8,682,498			2,744,328			748,997			16,156,752
General and administrative		4,901,002			4,018,453			1,585,596			17,334,299
Depreciation and amortization		115,545			41,309			8,970			10,255,561
Impairment loss — write—off of goodwill		—			—			—			5,702,130
Interest expense		—			—			1,386			179,090
Equity in loss of investee		—			—			—			178,936
Total operating expenses		13,699,045			6,804,090			2,344,949			49,806,768
Loss from operations		(13,202,986	)		(6,701,048	)		(2,332,077	)		(48,854,962	)
Loss on fair value of warrants		(11,579,660	)		—			—			(11,579,660	)
Loss before cumulative effect of change in accounting principle		(24,782,646	)		(6,701,048	)		(2,332,077	)		(60,434,622	)
Cumulative effect of change in accounting principle		—			—			—			(25,821	)
Net loss		(24,782,646	)		(6,701,048	)		(2,332,077	)		(60,460,443	)
Preferred stock dividends		—			—			(37,840	)		(621,240	)
Net loss applicable to common stock		(24,782,646	)		(6,701,048	)		(2,369,917	)	$	(61,081,683	)
Loss per common share- basic and diluted	$	(0.41	)	$	(0.13	)	$	(0.07	)
Weighted average shares outstanding- basic and diluted		59,828,357			50,720,180			31,797,986

See accompanying notes to consolidated financial statements.

F-4

ADVENTRX PHARMACEUTICALS, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
Consolidated Statements of Shareholders’ Equity
Inception (June 12, 1996) through December 31, 2005

																								Deficit
																						Accumulated		accumulated					Total
	Cumulative convertible				Cumulative convertible				Cumulative convertible										Additional			other		during the			Treasury		shareholders'
	preferred stock, series A				preferred stock, series B				preferred stock, series C				Common stock						paid-in			comprehensive		development			stock,		equity
	Shares		Amount		Shares		Amount		Shares		Amount		Shares			Amount			capital			loss		stage			at cost		(deficit)
Balances at June 12, 1996 (date of incorporation)		—	$	—		—	$	—		—	$	—		—		$	—		$	—		$	—	$	—		$	—	$	—
Sale of common stock without par value		—		—		—		—		—		—		503			5			5			—		—			—		10
Change in par value of common stock		—		—		—		—		—		—		—			(4	)		4			—		—			—		—
Issuance of common stock and net liabilities assumed in acquisition		—		—		—		—		—		—		1,716,132			1,716			3,224			—		(18,094	)		—		(13,154	)
Issuance of common stock		—		—		—		—		—		—		2,010,111			2,010			456			—		(2,466	)		—		—
Net loss		—		—		—		—		—		—		—			—			—					(259,476	)		—		(259,476	)
Balances at December 31, 1996		—		—		—		—		—		—		3,726,746			3,727			3,689			—		(280,036	)		—		(272,620	)
Sale of common stock, net of offering costs of $9,976		—		—		—		—		—		—		1,004,554			1,004			1,789,975			—		—			—		1,790,979
Issuance of common stock in acquisition		—		—		—		—		—		—		375,891			376			887,874			—		—			—		888,250
Minority interest deficiency at acquisition charged to the Company		—		—		—		—		—		—		—			—			—			—		(45,003	)		—		(45,003	)
Net loss		—		—		—		—		—		—		—			—			—					(1,979,400	)		—		(1,979,400	)
Balances at December 31, 1997		—		—		—		—		—		—		5,107,191			5,107			2,681,538			—		(2,304,439	)		—		382,206
Rescission of acquisition		—		—		—		—		—		—		(375,891	)		(376	)		(887,874	)		—		561,166			—		(327,084	)
Issuance of common stock at conversion of notes payable		—		—		—		—		—		—		450,264			451			363,549			—		—			—		364,000
Expense related to stock warrants issued		—		—		—		—		—		—		—			—			260,000			—		—			—		260,000
Net loss		—		—		—		—		—		—		—			—			—			—		(1,204,380	)		—		(1,204,380	)
Balances at December 31, 1998		—		—		—		—		—		—		5,181,564			5,182			2,417,213			—		(2,947,653	)		—		(525,258	)
Sale of common stock		—		—		—		—		—		—		678,412			678			134,322			—		—			—		135,000
Expense related to stock warrants issued		—		—		—		—		—		—		—			—			212,000			—		—			—		212,000
Net loss		—		—		—		—		—		—		—			—			—			—		(1,055,485	)		—		(1,055,485	)
Balances at December 31, 1999		—		—		—		—		—		—		5,859,976			5,860			2,763,535			—		(4,003,138	)		—		(1,233,743	)
Sale of preferred stock, net of offering costs of $76,500		3,200		32		—		—		—		—		—			—			3,123,468			—		—			—		3,123,500
Issuance of common stock at conversion of notes and interest payable		—		—		—		—		—		—		412,487			412			492,085			—		—			—		492,497
Issuance of common stock at conversion of notes payable		—		—		—		—		—		—		70,354			70			83,930			—		—			—		84,000
Issuance of common stock to settle obligations		—		—		—		—		—		—		495,111			496			1,201,664			—		—			—		1,202,160
Issuance of common stock for acquisition		—		—		—		—		—		—		6,999,990			7,000			9,325,769			—		—			—		9,332,769
Issuance of warrants for acquisition		—		—		—		—		—		—		—			—			4,767,664			—		—			—		4,767,664
Stock issued for acquisition costs		—		—		—		—		—		—		150,000			150			487,350			—		—			—		487,500
Expense related to stock warrants issued		—		—		—		—		—		—		—			—			140,000			—		—			—		140,000
Dividends payable on preferred stock		—		—		—		—		—		—		—			—			(85,000	)		—		—			—		(85,000	)
Cashless exercise of warrants		—		—		—		—		—		—		599,066			599			(599	)		—		—			—		—
Net loss		—		—		—		—		—		—		—			—			—			—		(3,701,084	)		—		(3,701,084	)
Balances at December 31, 2000		3,200		32		—		—		—		—		14,586,984			14,587			22,299,866			—		(7,704,222	)		—		14,610,263
Dividends payable on preferred stock		—		—		—		—		—		—		—			—			(256,000	)		—		—			—		(256,000	)
Repurchase of warrants		—		—		—		—		—		—		—			—			(55,279	)		—		—			—		(55,279	)
Sale of warrants		—		—		—		—		—		—		—			—			47,741			—		—			—		47,741
Cashless exercise of warrants		—		—		—		—		—		—		218,493			219			(219	)		—		—			—		—
Issuance of common stock to pay preferred dividends		—		—		—		—		—		—		93,421			93			212,907			—		—			—		213,000
Detachable warrants issued with notes payable		—		—		—		—		—		—		—			—			450,000			—		—			—		450,000
Issuance of warrants to pay operating expenses		—		—		—		—		—		—		—			—			167,138			—		—			—		167,138
Issuance of common stock to pay operating expenses		—		—		—		—		—		—		106,293			106			387,165			—		—			—		387,271
Issuance of preferred stock to pay operating expenses		137		1		—		—		—		—		—			—			136,499			—		—			—		136,500
Net loss		—		—		—		—		—		—		—			—			—			—		(16,339,120	)		—		(16,339,120	)
Balances at December 31, 2001		3,337		33		—		—		—		—		15,005,191			15,005			23,389,818			—		(24,043,342	)		—		(638,486	)
Dividends payable on preferred stock		—		—		—		—		—		—		—			—			(242,400	)		—		—			—		(242,400	)
Repurchase of warrants		—		—		—		—		—		—		—			—			—			—		—			—		—

F-5

																													Deficit
																										Accumulated			accumulated						Total
	Cumulative convertible						Cumulative convertible						Cumulative convertible										Additional			other			during the			Treasury			shareholders'
	preferred stock, series A						preferred stock, series B						preferred stock, series C						Common stock				paid-in			comprehensive			development			stock,			equity
	Shares			Amount			Shares			Amount			Shares			Amount			Shares		Amount		capital			loss			stage			at cost			(deficit)
Sale of warrants		—			—			—			—			—			—			240,000		240		117,613			—			—			—			117,853
Cashless exercise of warrants		—			—			—			—			—			—			100,201		100		(100	)		—			—			—			—
Exercise of warrants		—			—			—			—			—			—			344,573		345		168,477			—			—			—			168,822
Sale of preferred stock at $1.50 per share		—			—			200,000			2,000			—			—			—		—		298,000			—			—			—			300,000
Sale of preferred stock at $10.00 per share		—			—			—			—			70,109			701			—		—		700,392			—			—			—			701,093
Conversion of preferred stock into common stock		(3,000	)		(30	)		—			—			—			—			1,800,000		1,800		(1,770	)		—			—			—			—
Preferred stock dividends forgiven		—			—			—			—			—			—			—		—		335,440			—			—			—			335,440
Issuance of warrants to pay operating expenses		—			—			—			—			—			—			—		—		163,109			—			—			—			163,109
Issuance of common stock to pay operating expenses		—			—			—			—			—			—			6,292		6		12,263			—			—			—			12,269
Issuance of preferred stock to pay operating expenses		136			1			—			—			—			—			—		—		6,000			—			—			—			6,001
Issuance of stock options to employees		—			—			—			—			—			—			—		—		329,296			—			—			—			329,296
Net loss		—			—			—			—			—			—			—		—		—			—			(2,105,727	)		—			(2,105,727	)
Balances at December 31, 2002		473			4			200,000			2,000			70,109			701			17,496,257		17,496		25,276,138			—			(26,149,069	)		—			(852,730	)
Dividends payable on preferred stock		—			—			—			—			—			—			—		—		(37,840	)		—			—			—			(37,840	)
Conversion of Series C preferred stock into common stock		—			—			—			—			(70,109	)		(701	)		14,021,860		14,022		(13,321	)		—			—			—			—
Issuance of common stock to pay interest on Bridge Notes		—			—			—			—			—			—			165,830		165		53,326			—			—			—			53,491
Sale of common stock at $0.40 per share, net of issuance costs		—			—			—			—			—			—			6,640,737		6,676		2,590,656			—			—			—			2,597,332
Sale of common stock at $1.00 per share, net of issuance costs		—			—			—			—			—			—			3,701,733		3,668		3,989,181			—			—			—			3,992,849
Exchange of warrants		—			—			—			—			—			—			235,291		235		49,486			—			—			—			49,721
Issuance of common stock to pay operating expenses		—			—			—			—			—			—			230,000		230		206,569			—			—			—			206,799
Issuance of warrants to pay operating expenses		—			—			—			—			—			—			—		—		156,735			—			—			—			156,735
Issuance of stock options to employees		—			—			—			—			—			—			—		—		286,033			—			—			—			286,033
Net loss		—			—			—			—			—			—			—		—		—			—			(2,332,077	)		—			(2,332,077	)
Balances at December 31, 2003		473			4			200,000			2,000			—			—			42,491,708		42,492		32,556,963			—			(28,481,146	)		—			4,120,313
Extinguishment of dividends payable on preferred stock		—			—			—			—			—			—			—		—		72,800			—			—			—			72,800
Conversion of Series A cumulative preferred stock		(473	)		(4	)		—			—			—			—			236,500		236		(232	)		—			—			—			—
Conversion of Series B preferred stock		—			—			(200,000	)		(2,000	)		—			—			200,000		200		1,800			—			—			—			—
Cashless exercise of warrants																				464,573		465		(465	)		—			—			—			—
Exercise of warrants		—			—			—			—			—			—			23,832		23		27,330			—			—			—			27,353
Issuance of warrants in settlement of a claim																				—		—		86,375			—			—			—			86,375
Sale of common stock at $1.50 per share		—			—			—			—			—			—			10,417,624		10,419		15,616,031			—			—			—			15,626,450
Payment of financing and offering costs		—			—			—			—			—			—			—		—		(1,366,774	)		—			—			—			(1,366,774	)
Issuance of stock options to employees		—			—			—			—			—			—			—		—		524,922			—			—			—			524,922
Acquisition of treasury stock		—			—			—			—			—			—			—		—		34,747			—			—			(34,747	)		—
Net loss		—			—			—			—			—			—			—		—		—						(6,701,048	)		—			(6,701,048	)
Balances at December 31, 2004		—			—			—			—			—			—			53,834,237		53,835		47,553,497			—			(35,182,194	)		(34,747	)		12,390,391
Comprehensive income:
Net loss		—			—			—			—			—			—			—		—		—			—			(24,782,646	)		—			(24,782,646	)
Effect of change in fair value of available for sale securities		—			—			—			—			—			—			—		—		—			(1,722	)		—			—			(1,722	)
Total comprehensive loss		—			—			—			—			—			—			—		—		—			—			—			—			(24,784,368	)
Par value of shares issued in conjunction with mezzanine financing		—			—			—			—			—			—			10,810,809		10,811		(10,811	)		—			—			—			—
Exercise of warrants		—			—			—			—			—			—			2,408,316		2,408		3,071,030			—			—			—			3,073,438
Exercise of stock options																				185,000		185		144,815			—			—			—			145,000
Issuance of stock options to employees		—			—			—			—			—			—			—		—		994,874			—			—			—			994,874
Issuance of stock options to non-employee		—			—			—			—			—			—			—		—		93,549			—			—						93,549
Issuance of common stock to vendor		—			—			—			—			—			—			125,000		125		258,375			—			—			—			258,500
Balances at December 31, 2005		—		$	—			—		$	—			—		$	—			67,363,362	$	67,364	$	52,105,329		$	(1,722	)	$	(59,964,840	)	$	(34,747	)	$	(7,828,616	)

See accompanying notes to consolidated financial statements.

F-6

ADVENTRX PHARMACEUTICALS, INC. AND SUBSIDIARY
(Formerly Biokeys Pharmaceuticals, Inc.)
(A Development Stage Enterprise)
Consolidated Statements of Cash Flows

										Inception
										(June 12, 1996)
										through
	Years ended December 31,									December 31,
	2005			2004			2003			2005
Cash flows from operating activities:
Net loss	$	(24,782,646	)	$	(6,701,048	)	$	(2,332,077	)	$	(60,460,443	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		115,545			41,309			8,970			9,805,561
Fair value of warrant liability		11,579,660			—			—			11,578,971
Amortization of debt discount		—			—			—			450,000
Forgiveness of employee receivable		—			—			—			30,036
Impairment loss — write — off of goodwill		—			—			—			5,702,130
Expenses paid by warrants		—			86,375			156,735			573,357
Expenses paid by preferred stock		—			—			—			142,501
Expenses related to stock warrants issued		—			—			—			612,000
Expenses related to employee stock options issued		994,874			524,922			286,033			2,135,125
Expenses related to options issued to non-employees		93,549			—			—			93,549
Expenses paid by issuance of common stock		101,833			—			206,799			919,381
Equity in loss of investee		—			—			—			178,936
Write-off of license agreement		—			—			—			152,866
Write-off assets available for sale		108,000			—			—			108,000
Cumulative effect of change in accounting principle		—			—			—			25,821
Accretion of discount		(111,960	)		—			—			(111,960	)
Changes in assets and liabilities, net of effect of acquisitions:
Increase in prepaid and other assets		(281,266	)		(255,101	)		(23,136	)		(711,854	)
Increase (decrease) in accounts payable and accrued liabilities		478,504			1,128,153			(550,433	)		1,175,629
Increase in long-term liabilities		57,078			—			—			57,078

F-7

										Inception
										(June 12, 1996)
										through
	Years ended December 31,									December 31,
	2005			2004			2003			2005
Increase in sponsored research payable and license obligation		—			—			—			924,318
Net cash used in operating activities		(11,646,829	)		(5,175,390	)		(2,247,109	)		(26,618,309	)
Cash flows from investing activities:
Purchase of certificate of deposit		—			—			—			(1,016,330	)
Maturity of certificate of deposit		—			—			—			1,016,330
Purchases of property and equipment		(237,785	)		(305,773	)		(16,376	)		(666,027	)
Purchase of short-term investments		(13,123,220	)		—			—			(13,123,220	)
Proceeds from sales of short-term investments		5,275,000			—			—			5,275,000
Payment on obligation under license agreement		—			—			—			(106,250	)
Cash acquired in acquisition of subsidiary		—			—			—			64,233
Issuance of note receivable — related party		—			—			—			(35,000	)
Payments on note receivable		—			—			—			405,993
Advance to investee		—			—			—			(90,475	)
Cash transferred in rescission of acquisition		—			—			—			(19,475	)
Cash received in rescission of acquisition		—			—			—			230,000
Net cash used in investing activities		(8,086,005	)		(305,773	)		(16,376	)		(8,065,221	)
Cash flows from financing activities:
Proceeds from sale of preferred stock		—			—			—			4,200,993
Proceeds from sale of common stock		19,999,997			15,626,450			6,590,181			44,152,593
Proceeds from exercise of stock options		145,000			—			—			145,000
Proceeds from sale or exercise of warrants		3,073,438			27,353			—			3,485,028
Repurchase of warrants		—			—			49,721			(55,279	)
Payment of financing and offering costs		(1,883,246	)		(1,366,774	)		—			(3,348,996	)
Payments of notes payable and long-term debt		—			—			(253,948	)		(605,909	)
Proceeds from issuance of notes payable and detachable warrants		—			—			—			1,344,718
Net cash provided by financing activities		21,335,189			14,287,029			6,385,954			49,318,148
Net increase in cash and cash equivalents		1,602,355			8,805,866			4,122,469			14,634,618
Cash and cash equivalents at beginning of period		13,032,263			4,226,397			103,928			—
Cash and cash equivalents at end of period	$	14,634,618		$	13,032,263		$	4,226,397		$	14,634,618

 See accompanying notes to consolidated financial statements.

F-8

ADVENTRX Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
December 31, 2005

(1)	Description of the Company
	ADVENTRX Pharmaceuticals, Inc., a Delaware corporation, (the Company), is a biopharmaceutical research and development company focused on introducing new technologies for anticancer and antiviral treatments that surpass the performance and safety of existing drugs and address significant problems such as drug metabolism, toxicity, bioavailability and resistance. The Company currently does not manufacture, market, sell or distribute any product. Through our license agreements with the University of Southern California (USC) and SD Pharmaceuticals, Inc., the Company has rights to drug candidates in varying early stages of development.
	On May 30, 2003, the Company merged its wholly owned subsidiary, Biokeys, Inc., into itself and changed the name of the Company from Biokeys Pharmaceuticals, Inc. to ADVENTRX Pharmaceuticals, Inc. The merger had no effect on the financial statements of the Company.
	In July 2004, the Company formed a wholly owned subsidiary, ADVENTRX (Europe) Ltd., in the United Kingdom for the purpose of conducting drug trials in the European Union.
(2)	Summary of Significant Accounting Policies
	Use of Estimates
	The preparation of financial statements in conformity with accounting principles generally accepted in the U. S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
	Accounting for Stock-Based Compensation
	The Company applies Statement of Financial Accounting Standards No. 123 and related interpretations in accounting for employee stock-based compensation, and includes the required footnote disclosures thereon.
	Cash Equivalents
	Highly liquid investments with original maturities of three months or less when purchased are considered to be cash equivalents.
	Short-term Investments
	We account for and report our investments in accordance with Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities.” Investments are comprised of marketable

F-9

ADVENTRX Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 2005

securities consisting primarily of certificates of deposit, federal, state and municipal government obligations and corporate bonds. All marketable securities are held in our name and primarily under the custodianship of two major financial institutions. Our policy is to protect the principal value of our investment portfolio and minimize principal risk. Our marketable securities are classified as “available-for-sale” and stated at fair value, with net unrealized gains or losses recorded as a component of accumulated other comprehensive loss. Short-term investments are marketable securities with maturities of less than one year from the balance sheet date. Marketable securities are evaluated periodically for impairment. If it is determined that a decline of any investment is other than temporary, then the investment basis would be written down to fair value and the write-down would be included in earnings as a loss.

Concentrations

Substantially all of our cash and cash equivalents are maintained with two major financial institutions in the United States. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and, therefore, bear minimal risk. At December 31, 2005, cash and cash equivalents with banks exceeded federally insured limits by approximately $14,714,000.

Financial instruments that potentially subject us to concentrations of credit risk consist principally of marketable securities and interest rate instruments. The counterparties to our investment securities and interest rate instruments are various major corporations and financial institutions of high credit standing.

During 2005, approximately 20% of our total vendor payments were made to a contract research organization that is assisting us in our clinical trial administration and data management. In the event we lost this vendor, we could experience delays in continuing our trial efforts which would result in increased costs as well as delays in obtaining FDA approvals.

Fair Value of Financial Instruments

At December 31, 2005 and 2004, our financial instruments included cash and cash equivalents, short-term investments, accounts payable, accrued expenses, and accrued compensation and payroll taxes. The carrying amount of cash and cash equivalents, accounts payable, accrued expenses and accrued compensation and payroll taxes approximates fair value due to the short-term maturities of these instruments. Our short-term investments in securities are carried at fair value based on quoted market prices.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets. The costs of improvements that extend the lives of the assets are capitalized. Repairs and maintenance are expensed as incurred.

Revenue Recognition

In the past the Company has recognized revenue at the time service is performed on commercial contracts and ability to collect was reasonably assured. Revenue from government grants was a reimbursement for expenditures associated with the research. The Company submitted bills to the grant agency and revenue was recognized at the time reimbursement is requested.

Research and Development Costs

All research and development costs are expensed as incurred, including Company-sponsored research and development and cost of patent rights and technology rights under license agreements that have no alternative future use when incurred.

F-10

ADVENTRX Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 2005

Impairment of Long-lived Assets

In the event that facts and circumstances indicate that property and equipment and intangible or other long-lived assets with finite lives may be impaired, an evaluation of the recoverability of currently recorded costs will be made. If an evaluation is required, the estimated value of undiscounted future net cash flows associated with the asset is compared to the asset’s carrying value to determine if impairment exists. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Marketing Expenses

Marketing costs are expensed as incurred. Marketing costs charged to operations for the years ended December 31, 2005, 2004 and 2003 totaled $33,064, $67,782 and $88,221 respectively.

Income Taxes

Income taxes are accounted for using the asset and liability method under which deferred tax assets and liabilities are recognized for estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax expense or benefit is recognized as a result of the change in the asset or liability during the period.

Supplementary Cash Flow Information

No interest was paid during the years ended December 31, 2005 and 2004. Interest of $1,386 was paid during the year ended December 31, 2003. No income taxes were paid during 2005, 2004 or 2003.

Noncash investing and financing transactions excluded from the consolidated statements of cash flows for the years ended December 31, 2005, 2004, and 2003 and for the period from Inception (June 12, 1996) to December 31, 2005 are as follows:

F-11

							Inception
							(June 12, 1996)
	Years ended December 31,						through
	2005		2004		2003		December 31, 2005
Issuance of warrants, common stock and preferred stock for:
Conversion of notes payable and accrued interest	$	—	$	—	$	53,491	$	1,213,988
Payment of operating expenses		258,500		—		—		1,482,781
Conversion of preferred stock		—		2,004		701		2,705
Acquisitions		—		—		—		14,617,603
Payment of dividends		—		—		—		213,000
Financial advisor services in conjunction with private placement		—		1,137,456		—		1,137,456
Settlement of claim		—		86,375		—		86,375
Acquisition of treasury stock in settlement of a claim		—		34,747		—		34,747
Assumptions of liabilities in acquisitions		—		—		—		1,009,567
Acquisition of license agreement for long-term debt		—		—		—		161,180
Cashless exercise of warrants		150		465		2,360		3,892
Dividends accrued		—		—		37,840		621,040
Trade asset converted to available for sale asset		—		108,000		—		108,000
Dividends extinguished		—		72,800		0		408,240
Trade payable converted to note payable		—		—		—		83,948
Issuance of warrants for return of common stock		—		—		50,852		50,852
Detachable warrants issued with notes payable		—		—		—		450,000
Unrealized loss on short-term investments		1,722		—		—		1,722

F-12

ADVENTRX Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 2005

New Accounting Pronouncements

In December 2004, the FASB issued SFAS No. 123 (R), “Share-Based Payment.” SFAS No. 123 (R) establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. SFAS No. 123 (R) focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS No. 123 (R) requires that the fair value of such equity instruments be recognized as expense in the historical financial statements as services are performed. Prior to SFAS No. 123 (R), only certain pro forma disclosures of fair value were required. SFAS No.123 (R) shall be effective for all of the Company’s interim and annual reporting periods commencing on January 1, 2006 and is not expected to have a material impact on the financial statements of the Company during the fiscal year 2007 and thereafter as the Company has already adopted SFAS No. 123.

In November 2004, the FASB issued SFAS No. 151, “Inventory Costs.” SFAS No. 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) that previously stated that “. . . under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges. . . .” SFAS No. 151 requires that those items be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal.” In addition, SFAS No. 151 requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The adoption of this new accounting pronouncement did not have a material impact on the Company’s financial statements.

In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets.” SFAS No.153 is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. The guidance in APB Opinion 29, however, included certain exceptions to that principle. SFAS No. 153 amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The adoption of this new accounting pronouncement did not have a material impact on the Company’s financial statements.

In May 2005, the FASB issued SFAS No. 154 “Accounting Changes and Error Corrections” for the accounting for and reporting of a change in accounting principles. SFAS No.154 applies to all voluntary changes in accounting principles. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. Under the provisions of APB Opinion 20, most accounting changes were recognized by including in net income of the period of the change the cumulative effect of changing to the newly adopted accounting principle. SFAS No.154 improves financial reporting because its requirement to report voluntary changes in accounting principles via retrospective application, unless impractical, enhances the consistency of financial information between periods. That improved consistency enhances the usefulness of the financial information, especially by facilitating analysis and understanding of comparative accounting data. Also, in instances in which full retrospective application is impracticable, SFAS No. 154 improves consistency of financial information between periods by requiring that a new accounting principle be applied as of the earliest date practicable. The adoption of this new accounting principle did not have a material impact on the Company’s financial statements.

F-13

ADVENTRX Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 2005

SFAS No. 154 also requires that a change in depreciation, amortization or depletion methods for long-lived, nonfinancial assets be accounted for as a change in accounting estimate that is effected by a change in accounting principles. The provisions of SFAS No. 154 better reflect the fact that an entity should change its depreciation, amortization or depletion methods only in recognition of changes in estimated future benefits of an asset, in the pattern of consumption of those benefits, or in the information available to the entity about those benefits. The adoption of this new accounting pronouncement did not have a material impact on the Company’s financial statements.

(3) Short-term investments

The following table summarizes our investments in securities, all of which are classified as available for sale.

	2005
			Gross Unrealized
	Cost		Gains (Losses)			Fair Value
Government debt securities	$	1,443,845	$	165		$	1,444,010
Commercial paper		6,215,397		(1,690	)		6,213,707
Corporate bonds		300,938		(197	)		300,741
	$	7,960,180	$	(1,722	)	$	7,958,458

(4)	Property and Equipment
	Property and equipment at December 31, 2005 and 2004 were as follows:

	Useful
	lives	2005			2004
Office furniture, computer and lab equipment	3 - 5 years	$	513,222		$	333,286
Computer software	3 years		64,559			11,845
			577,781			345,131
Less accumulated depreciation and amortization			(170,237	)		(59,827	)
		$	407,544		$	285,304

F-14

(5)	Income Taxes
	Due to the Company’s net loss position for the years ended December 31, 2005, 2004 and 2003, and as the Company has recorded a full valuation allowance against deferred tax assets, there was no provision or benefit for income taxes recorded. There were no components of current or deferred federal, state or foreign tax provisions for the years ended December 31, 2005, 2004 and 2003.
	The income tax provision is different from that which would be obtained by applying the statutory Federal income tax rate (34%) to income before income tax expense. The items causing this difference for the period are as follows:

	2005			2004			2003
Income tax expense at federal statutory rate	$	4,489,000		$	2,278,000		$	793,000
State tax on continuing operations		1,000			1,000			1,000
Other		371,000			(19,000	)		3,000
Change in federal valuation allowance		(4,861,000	)		(1,778,000	)		(797,000	)
Stock options previously expensed		—			(112,000	)		—
	$	—		$	—		$	—

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2005 and 2004 are as follows:

	December 31,
	2005			2004
Deferred tax assets:
Accrued expenses	$	47,028		$	231,000
Stock options expense under SFAS No. 123		772,919			292,000
Net operating loss carryforwards		11,068,149			6,864,000
Income tax credit carryforwards		844,509			—
Property, plant and equipment		5,628			2,000
Intangibles		600,162			—
Other		577			1,000
Total deferred tax assets		13,338,972			7,390,000
Less: valuation allowance		(13,338,972	)		(7,390,000	)
Total deferred tax assets, net of valuation allowance	$	—		$	—

The Company has established a valuation allowance against its deferred tax asset due to the uncertainty surrounding the realization of such assets. Management periodically evaluates the recoverability of the deferred tax asset. At such time as it is determined that it is more likely than not that the deferred tax assets are realizable, the valuation allowance will be reduced. The Company has recorded a valuation allowance of $13,338,972 as of December 31, 2005 to reflect the estimated amount of deferred taxes that may not be realized. The Company increased its valuation allowance by $5,948,972 for the year ended December 31, 2005. The valuation allowance includes approximately $50,000 related to stock option deductions, the benefit of which may eventually be credited to equity.

F-15

ADVENTRX Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 2005

	At December 31, 2005 the Company had federal and California tax loss carryforwards of approximately $29,263,000 and $19,113,000 respectively. The federal net operating loss carryforwards begin to expire in 2011 and 2013 respectively, if unused. At December 31, 2005, the Company had federal and state tax credit carryforwards of approximately $565,000 and $424,000 respectively. The federal credits will begin to expire in 2024.
	The utilization of net operating loss carryforwards and tax credit carryforwards is dependent on the future profitability of the Company. Furthermore, the Internal Revenue Code imposes a substantial restriction on the utilization of net operating loss and tax credit carryforwards in the event of an “ownership change” of more than 50 percentage points during any three year period. As a result of the “change in ownership” provisions, utilization of net operating loss and tax credit carryforwards may be subject to an annual limitation in future periods. As a result of an annual limitation, a portion of these carryforwards may expire before ultimately becoming available to reduce future taxable income or income tax. The extent of such limitations, if any, are not known.
(6)	Financing Activities
	On July 21, 2005, the Company entered into a Securities Purchase Agreement with Icahn Partners LP, Icahn Partners Master Fund LP, High River Limited Partnership, Viking Global Equities LP, VGE III Portfolio Ltd., North Sound Legacy Institutional Fund LLC, North Sound Legacy International Ltd. and the Royal Bank of Canada for the sale of 10,810,809 shares of Common Stock at a purchase price of $1.85 per share for aggregate gross proceeds of $19,999,996.65, and the issuance of 7-year warrants to purchase 10,810,809 shares of Common Stock at an exercise price of $2.26 per share. The Company received net proceeds of $18,116,751 as of July 21, 2005, which increased by $197,000 to $18,313,751 the fourth quarter. The private placement consisted of accredited institutional investors.
	Pursuant to the terms of the Securities Purchase Agreement entered into in connection with the transaction, if (i) a Registration Statement covering (A) all of the Shares and the Warrant Shares and (B) any other shares of Common Stock issued or issuable in respect to the Shares and the Warrant Shares because of stock splits, stock dividends, reclassifications, recapitalizations or similar events (together, the “Registrable Shares”) required to be covered thereby and required to be filed by the Company is (A) not filed with the SEC on or before forty-five (45) days after the Closing Date (a “Filing Failure”) or (B) if such Registration Statement is not declared effective by the SEC on or before (1) ninety (90) days after the Closing Date (an “Effectiveness Failure”) or (ii) on any day after the effective date of the Registration Statement sales of all the Registrable Shares required to be included on such Registration Statement cannot be made (other than as permitted during a suspension pursuant to this Agreement) pursuant to such Registration Statement (including, without limitation, because of a failure to keep such Registration Statement effective, to disclose such information as is necessary for sales to be made pursuant to such Registration Statement or to register sufficient shares of Shares) (a “Maintenance Failure”), then, the Company shall pay as liquidated damages (the “Liquidated Damages”) for such failure and not as a penalty to any Purchaser an amount in cash determined in accordance with the formula set forth below:
	For each 30-day period that a Filing Failure, Effectiveness Failure or Maintenance Failure remains uncured, the Company shall pay an amount equal to the purchase price paid to the Company for all Shares then held by such Purchaser multiplied by 1% for the first 30-day period or any portion thereof and increasing by an additional 1% with regard to each additional 30-day period until such Filing Failure, Effectiveness Failure or Maintenance Failure is cured. For any partial 30-day period in which a Filing Failure, Effectiveness Failure or Maintenance Failure exists but is cured prior to the end of the 30-day period, the Company shall pay the Purchasers a pro rata portion of the amount which would be due if the failure continued for the entire 30-day period. For example, if the purchase price paid for all Shares then held by a Purchaser is $5,000,000, then, (a) at the end of the 30th day, the Liquidated Damages would be 1% or $50,000, (b) at the end of the 60th day, the Liquidated Damages for the first 30-day period would have been 1% or $50,000 and for the second 30-day period would be 2% or $100,000, and (c) at the end of the 105th day, the Liquidated Damages for the first 30-day period would have been 1% or $50,000, for the second 30-day period 2% or $100,000, for the third 30-day period 3% or $150,000, and for the final 15-day period, 4% applied pro rata to such 15 days, or $100,000.
	Payments to be made pursuant to this Agreement shall be due and payable to the Purchasers at the end of each calendar month during which Liquidated Damages shall have accrued. No Liquidated Damages shall be due or payable to a Purchaser in any event if as of the date of the Filing Failure, Effectiveness Failure or Maintenance Failure such Purchaser could sell all of the Registrable Shares such Purchaser then holds without registration by reason of Rule 144(k) of the Securities Act.
	The registration statement was filed and declared effective by the SEC within the allowed time. The Company has not yet been required to pay any liquidated damages in connection with the filing or effectiveness of the registration.
	In accordance with Emerging Issues Task Force (EITF) Issue No. 00-19, “Accounting for Derivative Financial Instruments Indexed To, and Potentially Settled In a Company’s Own Stock,” and the SEC’s December 2005 interpretation the terms of the warrants and the transaction documents, the fair value of the warrants was accounted for as a liability, with an offsetting reduction to additional paid-in capital at the closing date (July 21, 2005). At the end of each reporting period, the value of the warrants will be remeasured based on the fair market value of the underlying shares, and changes to the warrant liability and related gain or loss will be made appropriately. The warrant liability will be reclassified to equity when the registration statement is no longer subject to risk for Maintenance Failures.
	The fair value of the warrants was estimated using the Black-Scholes option-pricing model with the following assumptions: no dividends; risk-free (10-year Treasury yield) interest rate of 4.39%; the contractual life of 7 years and volatility of 90%. The fair value of the warrants was estimated to be $19,439,185 on the closing date of the transaction. The difference between the fair value of the warrants of $19,439,185 and the gross proceeds from the offering was classified as “Loss on fair value of warrants” in the Company’s statement of operations, and included in “Warrant liability” on the Company’s’ balance sheet. The fair value of the warrants was then re-measured at December 31, 2005 and estimated to be $29,695,722 with the increase in fair value due to the increase in the market value of the Company’s common stock. The increase in fair value of the warrants of $10,256,537 from the transaction date to December 31, 2005 was recorded as “Loss on fair value of warrants” in the Company’s statement of operations, and included in “Warrant liability” on the Company’s’ balance sheet.
	The Company paid the placement agents $1,600,000 in cash as fees for services performed in conjunction with the private placement. The Company also incurred $283,246 in other legal and accounting fees. In the fourth quarter, $197,000 of the placement agent fees was refunded to the Company, reducing our fees for placement services to $1,403,000.
	The adjustments required by EITF Issue No. 00-19 as interpreted by the SEC in December 2005 were triggered by the terms of the Company’s agreements for the private placement it completed in July 2005, specifically related to the potential penalties if the Company did not timely register the common stock underlying the warrants issued in the transaction, and remain effective during the registration period. The adjustments for EITF Issue No. 00-19 had no impact on the Company’s cash flow, liquidity, or business operations.
	The Company intends to utilize the net proceeds of $18,313,751 to fund pivotal clinical trials for its various compounds, and meet working capital needs through December 31, 2005.
(7)	Equity Transactions
	In January 2003, the Company paid accrued interest on notes payable through the issuance of 119,454 shares of Common Stock, having a fair market value on the date of issuance of $26,646.
	In January 2003, the Company completed a private placement of 1,589,856 shares of Common Stock and warrants to purchase an additional 476,962 shares of Common Stock at $0.40 per share to investors for gross proceeds of $635,949 in cash.
	In March 2003, the holders of 70,109.3 shares of Series C convertible Preferred Stock elected to convert their shares of Series C Preferred Stock into 14,021,860 shares of Common Stock.
	In March 2003, the Company paid two consulting firms for services rendered with 125,000 shares of Common Stock with a fair market value on the date of issuance of $68,750, and two warrants to purchase 37,500 shares of Common Stock at an exercise price of $0.50 per share. The fair market value of the warrants on the date of issuance was $33,777.
	In March 2003, the Company issued three warrants to three individuals in consideration of certain investment banking advice. The three warrants represent the right to purchase 50,000, 50,000 and 10,000 shares of Common Stock at an exercise price of $0.50 per share. The fair market value of the warrants on the date of issuance was $52,886.
	In March 2003, the Company issued a warrant to a former executive in consideration of certain covenants related to his separation from the Company. The warrant represents the right to purchase 150,000 shares of Common Stock at an exercise price of $1.25 per share. The Company recognized compensation expense of $50,852 in connection with the issuance of this warrant.
	During the three months ended March 31, 2003, $10,955 was recognized in conjunction with the vesting of warrants previously issued for consulting services.
	In April 2003, the Company paid accrued interest on notes payable through the issuance of 46,376 shares of Common Stock, having a fair market value on the date of issuance of $26,845.
	In June 2003, the Company completed a private placement of 5,027,328 shares of Common Stock and warrants to purchase an additional 1,508,199 shares of Common Stock at $0.60 per share to private investors for gross proceeds of $2,010,931 in cash.
	The Company paid cash commissions of $49,400 in connection with the private placement.

F-16

ADVENTRX Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 2005

In June 2003 the Company issued 59,535 shares of Common Stock as commissions on the private placement. The value of the commission was $56,099.

In June 2003 the Company issued warrants to purchase 43,422 shares of Common Stock at $0.60 per share and warrants to purchase 86,844 shares of Common Stock at $0.01 per share as commissions on the private placement. The value of these warrants was $129,521.

In June 2003, the Company paid a consulting firm for services rendered with 75,000 shares of Common Stock with a fair market value on the date of issuance of $91,500.

Between August 2003 and October 2003, the Company completed a private placement of 2,691,990 shares of Common Stock and warrants to purchase an additional 834,600 shares of Common Stock at $1.25 per share to private investors for gross proceeds of $2,691,990 in cash.

The Company paid cash commissions of $124,500 in connection with the private placement.

In September 2003 the Company issued 124,200 shares of Common Stock as commissions on the private placement. The value of the commission was $188,596.

In September 2003, a warrant to purchase a total of 150,000 shares of Common Stock at $1.25 per share was exercised in a cashless exchange for 23,165 shares of Common Stock.

In November 2003, the Company paid a consulting firm for services rendered with 30,000 shares of Common Stock with a fair market value on the date of issuance of $46,549.

In December 2003, the Company completed a private placement of 849,561 shares of Common Stock, 649,797 shares of treasury stock, and warrants to purchase an additional 435,000 shares of Common Stock at $1.25 per share to private investors for gross proceeds of $1,488,961.

In December 2003, the Company paid $63,750 and issued warrants to purchase 63,750 shares of Common Stock as commissions on the private placement. The value of the commission was $56,478.

In December 2003, warrants to purchase a total of 244,526 shares of Common Stock at between $0.01 and $0.60 per share were exercised. Warrants representing 175,100 shares of Common Stock were issued for proceeds of $49,721. The remaining warrants representing 69,426 shares of Common Stock were exchanged for a total of 37,026 shares in a cashless exchange.

In March 2004, a warrant to purchase 3,750 shares of Common Stock at $0.60 per share was exercised for proceeds of $2,250 and the Company issued 38,372 shares of Common Stock upon the cashless exercise of a warrant to purchase 50,000 shares of Common Stock at $0.50 per share.

In March 2004, 473 shares of Series A cumulative convertible Preferred Stock, representing all of the Series A cumulative convertible Preferred Stock then outstanding, were converted into 236,500 shares of Common Stock. In conjunction with the conversion, dividends payable of $72,800 at December 31, 2003, were extinguished.

In March 2004, 200,000 shares of Series B convertible Preferred Stock, representing all of the Series B convertible Preferred Stock then outstanding, were converted into 200,000 shares of Common Stock.

In April 2004, the Company sold 10,417,624 shares of Common Stock at $1.50 per share and issued warrants to purchase 3,125,272 shares of Common Stock at $2.00 and warrants to purchase 2,083,518 shares of Common Stock at $2.50 per share in a private placement for aggregate gross proceeds of $15,626,450 in cash. In connection with the private placement, the Company paid cash commissions of $900,452 and other related expenses of $466,322 and issued warrants to purchase 632,547 shares of Common Stock at $2.00 per share to two placement agents, having a fair market value of $890,963 on the date of issuance.

F-17

ADVENTRX Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 2005

In April 2004, the Company engaged W.R. Hambrecht + Co., LLC for financial advisory and investment banking services related to the private placement, and in connection with that engagement, issued to it a warrant to purchase 175,000 shares of Common Stock at $2.00 per share, having a fair market value of $246,493 on the date of issuance.

In May 2004, a warrant to purchase 20,082 shares of Common Stock at $1.25 per share was exercised for gross proceeds of $25,103.

In May 2004, the Company issued 46,784 shares of Common Stock upon the cashless exercise of two warrants to purchase a total of 60,000 shares of Common Stock at $0.50 per share.

In June 2004, the Company issued 379,417 shares of Common Stock upon the cashless exercise of a warrant to purchase 502,528 shares of Common Stock at $0.49 per share.

In October 2004, the Company issued a warrant to purchase 300,000 shares of Common Stock at an exercise price of $2.50 in settlement of a claim. The warrant had a value of $86,375 on the date of issuance.

In April 2005, the Company issued 25,000 shares of Common Stock as partial payment for services rendered by a consulting firm. Those shares were recognized at fair market value as of the date of obligation and resulted in compensation expense of $23,500 in the first quarter of 2005, when the services were performed.

In July 2005, the Company issued 100,000 shares of Common Stock pursuant to a consulting agreement entered into in January 2005. Those shares were recognized at fair market value as of the date of issuance and resulted in compensation expense of $78,333 for the year ended December 31, 2005.

In July 2005, the Company issued 10,810,809 shares in conjunction with a private placement which resulted in net proceeds of $18,116,751. The net proceeds increased by $197,000 in the fourth quarter of 2005 due to a partial refund of commissions paid. The Company also issued warrants to purchase 10,810,809 shares of Common Stock at an exercise price of $2.26 per share with this placement.

In 2005, Company employees exercised vested stock options for total proceeds of $145,000 and were issued 185,000 shares of Common Stock. Over the same period, investors exercised warrants for total proceeds of $3,073,438 and were issued 2,408,316 shares of Common Stock. There were also 125,000 shares of Common Stock issued to vendors and consultants in 2005.

Nonemployee stock-based compensation that is not valued at the fair value of consideration received is valued, as of the grant date, using the Black-Scholes pricing model with the following assumptions for grants in 2005, 2004 and 2003: no dividend yield for either year; expected volatility of 81% to 199%; risk-free interest rates 2.78% to 4.74%; and expected lives of three and seven years, respectively.

F-18

ADVENTRX Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 2005

At December 31, 2005, there were outstanding warrants to purchase a total of 19,629,933 shares of Common Stock as follows:

Warrants		Exercise price		Expiration date
	1,305,025	$	0.60	May-06
	502,528	$	0.49	Jun-06
	49,118	$	10.00	Jun-06
	811,693	$	1.25	Oct-06
	165,601	$	0.50	Nov-06
	250,000	$	0.50	Dec-06
	309,750	$	1.25	Dec-06
	100,000	$	3.00	Dec-06
	50,000	$	2.50	Apr-07
	300,000	$	2.50	Oct-07
	2,689,536	$	1.98	Apr-09
	1,705,826	$	2.38	Apr-09
	580,047	$	1.98	Jun-09
	10,810,809	$	2.26	Jul-12
	19,629,933

(8) Stock Compensation Plans

In October 2002, the Company granted two non-statutory stock options to purchase an aggregate of 1,500,000 shares and one non-statutory stock option to purchase 165,000 shares of Common Stock at $0.20 and $0.50 per share, respectively. The value of the options on the date of the grant was $329,296. In July 2004, stock options to purchase an aggregate of 1,665,000 shares of Common Stock were forfeited.

In March 2003, the Company granted four non-statutory stock options to purchase an aggregate of 1,900,000 shares of the Company’s Common Stock at $0.50 per share. The options were valued using the Black-Scholes pricing model. The value of the options on the date of the grant was $948,846. In April and June 2003, the Company and four of our option holders agreed to revise the vesting schedules of the non-statutory stock options held by such optionholders. No other terms were changed. In addition, in June 2003 one non-statutory stock option was modified such that any portion of the option that was not vested as of July 1, 2003 was cancelled in exchange for cash compensation.

In July 2003, the Company formed a Scientific Advisory Board (the SAB). Each of the three initial SAB members was granted an option to purchase 30,000 shares of Common Stock at a purchase price of $1.25 per share. The value of the options on the date of grant, July 1, 2003, was $97,086.

In November 2003, the Company granted a non-statutory stock option to purchase 50,000 shares of the Company’s Common Stock at $1.25 per share. The value of the option on the date of grant was $68,088.

In January and February 2004, three individuals became members of the Company’s board of directors. Each new director was granted an option to purchase 50,000 shares of Common Stock at a purchase price of $1.50 per share. The options expire on December 30, 2008. The value of the options on the dates of grant was $223,826.

F-19

ADVENTRX Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 2005

In February 2004, an individual became a member of the SAB. The new SAB member was granted an option to purchase 30,000 shares of Common Stock at a purchase price of $1.50 per share. The option will vest in equal installments over eight quarters, starting March 1, 2004. The value of the option on the date of grant was $45,350.

In March 2004, the Company granted an option to purchase 100,000 shares of Common Stock at a purchase price of $1.50 per share to the Company’s Vice President of Clinical and Medical Affairs. The option will vest in three installments over three years starting March 2004. The value of the option on the date of grant was $88,627.

In April 2004, the Company granted an option to purchase 30,000 shares of Common Stock at a purchase price of $1.50 per share to the Director of Antiviral Research. The option will vest in three installments over three years starting April 2004. The value of the option on the date of grant was $37,600.

In the period May 2004 through August 2004, the Company granted options to purchase an aggregate of 66,000 shares of Common Stock at purchase prices of $1.20 to $1.80 per share to employees. AMEX listing requirements prohibit granting equity without a shareholder vote or an approved stock option plan; therefore, the options were rescinded in February 2005. Accordingly, the financial statement effect of the options granted has been reversed in 2004.

On May 24, 2005, at the Company’s annual meeting of stockholders, the Company’s stockholders approved the 2005 Equity Incentive Plan (the 2005 Plan) and the 2005 Employee Stock Purchase Plan. The 2005 Plan is intended to encourage ownership of shares of common stock by directors, officers, employees, consultants and advisors of the Company and its affiliates and to provide additional incentive for them to promote the success of the Company’s business through the grant of equity-based awards. The 2005 Plan permits the Company to issue options, share appreciation rights, restricted shares, restricted share units, performance awards, annual incentive awards and other share-based awards and cash-based awards. The maximum aggregate number of shares of Common Stock which may be issued pursuant to or subject to the foregoing types of awards granted under the 2005 Plan at the time of adoption was 6,000,000. This maximum number is subject to an annual automatic increase beginning on January 1, 2006 equal to the lesser of (i) 1% number of outstanding shares of common stock on such day, (ii) 750,000 and (iii) such other amount as the Company’s board of directors may specify. The 2005 Plan is intended to comply with applicable securities law requirements, permit performance-based awards that qualify for deductibility under Section 162(m) of the Internal Revenue Code and allow for the issuance of incentive stock options.

In July 2005, the Company granted 1,625,000 options to employees under the 2005 Plan to replace pre-existing options that were not issued under the 2005 Plan or any other incentive plan approved by the Company’s stockholders. In addition in July 2005, the Company granted 1,103,000 new options to employees and board members under the 2005 Plan. In December 2005, the exercise prices on 743,000 of the 1,103,000 options were increased to equal the fair market value of Common Stock on the date of grant in July 2005. In addition, the exercise prices on 730,000 of the pre-existing options were increased to equal the fair market value of Common Stock on the original grant dates. There was no material impact to the compensation expense as a result of this change. The Company has acknowledged that this increase in exercise prices could adversely impact affected employees’ morale and the Company’s ability to retain these employees. However, the Company has not yet taken any action to remedy any such impact. For purposes of Black-Scholes pricing model the following assumptions were used to estimate a fair value for these option grants: no dividend yield, expected volatility 81% to 90%, risk-free interest rates 3.30% to 4.74% and expected lives of 3 to 5 years. The Company cancelled 200,000 options in the year ended December 31, 2005 related to terminated employees. The Company recognized compensation expense of $994,874, $524,922 and $286,033 in the years ended December 31, 2005 and 2004, respectively, related to the portion of the options that vested in that period.

In July 2005, the Company granted 114,000 options to consultants. These option grants were valued as of December 31, 2005 using the Black-Scholes pricing model with the following assumptions: no dividend yield, expected volatility of 90%, risk-free interest rate 4% and expected life of 3 or 5 years. The Company recognized $93,549 in compensation expense for these options in the year ended December 31, 2005.

F-20

ADVENTRX Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 2005

There were 1,557,503 options exercisable at year end. The weighted average fair value of options granted during the year was $2.34.

				Weighted
				Average
				Exercise
Stock Options	Shares (000)			Price
Outstanding at January 1, 2003		1,690		$	0.23
Granted		2,040		$	0.58
Forfeited		(750	)	$	0.50
Outstanding at December 31, 2003		2,980		$	0.38
Granted		310		$	1.50
Exercised		—
Forfeited		(1,665	)	$	0.23
Outstanding at December 31, 2004		1,625		$	0.75
Granted		1,217		$	2.34
Exercised		(185	)	$	0.78
Forfeited		(200	)	$	1.41
Outstanding at December 31, 2005		2,457		$	1.45

	Options Outstanding						Options Exercisable
			Weighted-
			Average		Weighted-				Weighted-
	Number		Remaining		Average		Number		Average
	Outstanding		Contractual		Exercise		Exercisable		Exercise
Range of Exercise Price	at 12/31/05 (000)		Life		Price		at 12/31/05 (000)		Price
$0.50 to $2.04		1,400		2.96	$	0.77		1,307	$	0.78
$2.30		757		8.68	$	2.30		168	$	2.30
$2.42 to $2.50		300		7.86	$	2.45		83	$	2.42
		2,457		5.32	$	1.45		1,558	$	1.03

F-21

ADVENTRX Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 2005

(9) Net Loss per Common Share

	2005			2004			2003
Numerator:
Net loss	$	(24,782,646	)	$	(6,701,048	)	$	(2,332,077	)
Preferred Stock dividends		—			—			(37,840	)
Numerator for basic and diluted loss per common share	$	(24,782,646	)	$	(6,701,048	)		(2,369,917	)
Denominator for basic and and diluted loss per share- weighted average common shares outstanding		59,828,357			50,720,180			31,797,986
Loss per common share- basic and diluted	$	(0.41	)	$	(0.13	)	$	(0.07	)

Net loss per common share is calculated according to Statement of Financial Accounting No. 128, Earnings per Share, using the weighted average number of shares of Common Stock outstanding during the period. The following potentially dilutive shares were not included in the computation of net loss per common share — diluted, as their effect would have been anti-dilutive due to the Company’s net losses in 2005, 2004 and 2003:

	2005		2004		2003
Preferred stock		—		—		318,250
Warrants		19,629,933		11,154,964		5,474,987
Options		2,457,000		1,625,000		2,980,000
		22,086,933		12,779,964		8,773,237

F-22

ADVENTRX Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 2005

(10) License Agreements

M.D. Anderson

Pursuant to a patent and technology license agreement dated June 14, 1996 between M.D. Anderson and the Company (the M.D. Anderson License Agreement), the Company acquired a license to seven patents and patent applications related to technology for HIV/AIDS therapy and prevention. Under the M.D. Anderson License Agreement, the Company was obligated to pay M.D. Anderson for all out-of-pocket expenses incurred in filing, prosecuting, enforcing, and maintaining the licensed patent rights and all future patent-related expenses paid by M.D. Anderson as long as the M.D. Anderson License Agreement remained in effect. In 2005, the Company terminated this agreement.

USC Agreement

Under an Option and License Agreement with the University of Southern California (USC) dated January 23, 1998 (as amended August 16, 2000), the Company holds exclusive rights to a number of patents that have issued in the United States and Canada covering products (CoFactor^® and Selone) and methods intended for use in connection with cancer chemotherapy. Under another Option and License Agreement with USC dated August 17, 2000 (as amended April 21, 2003), the Company holds exclusive rights to a number of additional patents that have issued in the United States and Europe relating to the antiviral product Thiovir™ and drugs useful for the treatment of HPV (human papillomavirus) infections, HIV infections, HIV/HPV coinfections and other human therapeutic uses. Additional patent applications relating to Thiovir™ are pending in Europe, Canada and Australia.

The first license from USC provides for the payment to USC of a 3% royalty (on net sales of products made or sold in a country in which a patent has issued or is pending), while the second license provides for the payment of a 1% royalty. Both require the Company to pay USC a share of consideration received by the Company from any sublicensee as well as the cost of filing, prosecuting and maintaining the licensed patents. Under the second license (as amended), milestone payments will also be due based upon entry into human trials and regulatory approval for each drug candidate developed ($75,000 at Phase I, $100,000 at Phase II, $125,000 at Phase III and $250,000 at market approval). No royalties have been paid to date under these licenses.

NIH Agreement

During December 2002, the Company entered into a worldwide exclusive patent license agreement with the Public Health Service National Institutes of Health (NIH) concerning composition of matter for BlockAide/CR, a drug we were previously developing. Under the terms of the agreement, the Company agreed to pay minimum royalty payments during the first year of the license and minimum annual royalties thereafter or the higher amount based upon a percentage of net sales. In addition, there were benchmark royalties based upon: initiation of Phase I trials, initiation of Phase II trials, initiation of Phase III trials, and upon first approval of a Product License Application for an HIV therapeutic or vaccine in the U.S. and for first approval in Europe. No material amount was paid under this agreement. In 2005, the Company terminated this agreement.

SD Pharma Agreement

We signed an exclusive license agreement in the third quarter of 2005 with SD Pharmaceuticals, Inc. (SD Pharma) for rights to a patent application which describes an invention relating to an emulsion composition for delivering highly water-soluble vinca alkaloid drugs (the Invention). The rights include the right to commercial development, use, and sale of the Invention. ANX-530 (vinorelbine emulsion) is included in the license agreement and is the drug which we currently plan to develop. In consideration for these rights, we agreed to pay SD Pharma a license fee, milestone payments and royalties.

F-23

ADVENTRX Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 2005

(11) Commitments and Contingencies

Operating Leases

The Company is obligated under operating leases for office space and equipment. In July 2004, the Company entered into a lease for its current office space in San Diego, California. In June 2005, the Company leased additional space in the same facility. Based on a straight-line basis, the lease requires a monthly payment of $20,798. The lease expires in August 2009. Rent expense was $220,517, $118,966 and $40,648 during the years ended December 31, 2005, 2004 and 2003, respectively.

Future rental commitments under all operating leases amounts are as follows:

Year Ending
December 31,
2006	$	248,364
2007		255,630
2008		256,959
2009		174,698
Total	$	935,651

(12) Litigation

In the normal course of business, the Company may become subject to lawsuits and other claims and proceedings. Such matters are subject to uncertainty. Management is not aware of any pending or threatened lawsuit or proceeding that would have a material adverse effect on the Company’s financial position, results of operations or cash flows.

(13) 401(k) Plan

In January 2005, the Company adopted a plan intended to qualify as a qualified cash or deferred arrangement under Section 401(k) of the Internal Revenue Code of 1986, as amended (the 401(k) Plan). Under the provisions of the 401(k) Plan, the Company is required to make matching contributions in the amount of 100% of salary deferrals up to 3% and 50% of salary deferrals between 3% and 5% of the annual salary of the contributing employee. During 2005, the Company incurred a total charge of $61,354 in employer matching contributions.

(14) Preferred Stock

In November 2005, at a special meeting of the Company’s stockholders, the stockholders approved a proposal to increase the number of shares of Common Stock the Company is authorized to issue to 200,000,000 shares. The number of authorized shares of Preferred Stock remains unchanged at 1,000,000 shares. The Series A, Series B and Series C Preferred Stock were eliminated, and the Company is no longer authorized to issue any such series of Preferred Stock as previously designated. We have no present plans to issue any new shares or designate any series of Preferred Stock.

F-24

Exhibit Index

Exhibit	Description
3.1	Amended and Restated Certificate of Incorporation
3.2 (1)	Amended and Restated Bylaws of Biokeys Pharmaceuticals, Inc.
4.1 (2)	Common Stock and Warrant Purchase Agreement, dated as of April 5, 2004, among the Company and the Investors named therein
4.2 (2)	A-1 Warrant to Purchase Common Stock issued to Investors pursuant to the Common Stock and Warrant Purchase Agreement with the Investors
4.3 (2)	A-2 Warrant to Purchase Common Stock issued to Investors pursuant to the Common Stock and Warrant Purchase Agreement with the Investors
4.4 (3)	Common Stock and Warrant Purchase Agreement, dated April 8, 2004, between the Company and CD Investment Partners, Ltd.
4.5 (3)	A-1 Warrant to Purchase Common Stock issued to CD Investment Partners, Ltd.
4.6 (3)	A-2 Warrant to Purchase Common Stock issued to CD Investment Partners, Ltd.
4.7 (3)	Warrant to Purchase Common Stock issued on April 8, 2004 to Burnham Hill Partners
4.8 (3)	Warrant to Purchase Common Stock issued on April 8, 2004 to Ernest Pernet
4.9 (3)	Warrant to Purchase Common Stock issued on April 8, 2004 to W.R. Hambrecht + Co., LLC
4.10 (2)	Registration Rights Agreement, dated as of April 5, 2004, among the Company and the Investors named therein
4.11 (3)	Registration Rights Agreement, dated as of April 8, 2004, between the Company and CD Investment Partners, Ltd.
4.14 (4)	Common Stock and Warrant Purchase Agreement, dated April 19, 2004, between the Company and Franklin Berger
4.15 (4)	A-1 Warrant to Purchase Common Stock issued to Franklin Berger
4.16 (4)	A-2 Warrant to Purchase Common Stock issued to Franklin Berger
4.17 (4)	Registration Rights Agreement, dated as of April 19, 2004, between the Company and Franklin Berger
4.18 (2)	Registration Rights Agreement, dated ___, 2001, between the Company and certain stockholders
4.19 (2)	Warrant to Purchase Common Stock issued by the Company
4.20 (2)	Stock Subscription Agreement
4.21 (2)	Warrant to Purchase Common Stock issued by the Company
4.22 (2)	Warrant for the Purchase of Shares of Common Stock No. WA-2A issued June 14, 2001 to Robert J. Neborsky and Sandra S. Neborsky, JTWROS
4.23 (5)	Securities Purchase Agreement, dated July 21, 2005, among the Registrant and the Purchasers named therein
4.24 (5)	Rights Agreement, dated July 27, 2005, among the Registrant and the Purchasers named therein
4.25 (5)	Common Stock Warrants Nos. WP-1 to WP-5 and WP-8
4.26 (5)	Common Stock Warrants Nos. WP-6 and WP-7
4.31 (6)	Warrant to Purchase Common Stock, No. WC-290, issued to Robert J. Neborsky MD Inc Combination Retirement Trust
4.32 (6)	Warrant to Purchase Common Stock, No. WC-291, issued to S. Neborsky and R Neborsky TTEE Robert J. Neborsky MD Inc Comb Retirement Trust
4.33 (6)	Warrant to Purchase Common Stock, No. WC-292, issued to S. Neborsky and R Neborsky TTEE Robert J. Neborsky MD Inc Comb Retirement Trust
4.34 (6)	Warrant to Purchase Common Stock, No. WC-287, issued to Thomas J. DePetrillo
10.1 (7)	2005 Equity Incentive Plan
10.2 (7)	Form of Stock Option Agreement under the 2005 Equity Incentive Plan
10.3 (7)	2005 Employee Stock Purchase Plan
10.4 (7)	Form of Subscription Agreement under the 2005 Employee Stock Purchase Plan
10.5 (8)	Option and License Agreement, dated January 23, 1998, between the Company and the University of Southern California (Request for confidential treatment of certain data)
10.6 (1)	First Amendment to License Agreement, dated August 16, 2000, between the Company and the University of Southern California (Request for confidential treatment of certain data)
10.7 (8)	Option and License Agreement, dated August 17, 2000, between the Company and the University of Southern California (Request for confidential treatment of certain data)
10.8 (9)	Amendment to Option and License Agreement, dated April 21, 2003, the Company and the University of Southern California

10.9 (10)	License Agreement, effective April 29, 2005, between the Company and SD Pharmaceuticals, Inc
10.10	Agreement, effective as of May 1, 2005, between the Company and Pharm-Olam International Ltd.
10.11	Amendment dated July 19, 2005 to the Agreement between the Company and Pharm-Olam International Ltd.
10.12 (11)	Standard Multi-Tenant Office Lease — Gross, dated June 3, 2004, between the Company and George V. Casey & Ellen M. Casey, Trustees of the Casey Family Trust dated June 22, 1998
10.13	First Amendment to the Standard Multi-Tenant Office Lease — Gross, dated June 3, 2004 between the Company and George V. & Ellen M. Casey, Trustees of the Casey Family Trust dated June 22, 1998
10.14 (12)	Offer Letter, dated March 5, 2003, from the Company to Joan M. Robbins, Ph.D.
10.15 (13)	Offer Letter, dated November 15, 2004, from the Company to Brian Culley
10.16 (14)	Offer Letter, dated November 17, 2004, from the Company to Carrie Carlander
10.17	Offer Letter, dated October 30, 2003, from the Company to Mark Cantwell
10.19	Form of Restricted Share Award Agreement under the 2005 Equity Incentive Plan
21.1	List of Subsidiaries
23.1	Consent of JH Cohn LLP, Independent Registered Public Accounting Firm
31.1	Rule 13a-14(a)/15d-14(a) Certification
31.2	Rule 13a-14(a)/15d-14(a) Certification
32.1	Section 1350 Certification
32.2	Section 1350 Certification

(1)	Incorporated by reference to the same-numbered exhibit to the Company’s Registration Statement on Form 10-SB, filed October 2, 2001.
(2)	Incorporated by reference to the same-numbered exhibit to the Company’s Registration Statement on Form S-3, filed June 30, 2004.
(3)	Incorporated by reference to the same-numbered exhibit to the Company’s Current Report on Form 8-K, filed April 13, 2004.
(4)	Incorporated by reference to the same-numbered exhibit to the Company’s Quarterly Report on Form 10-QSB, filed May 12, 2004.
(5)	Incorporated by reference to the same-numbered exhibit to the Company’s Quarterly Report on Form 10-QSB, filed August 12, 2005.
(6)	Incorporated by reference to the same-numbered exhibit to the Company’s Registration Statement on Form S-3, filed August 26, 2005.
(7)	Incorporated by reference to the same-numbered exhibit to the Company’s Registration Statement on Form S-8, filed August 26, 2005.
(8)	Incorporated by reference to the same-numbered exhibit to the Company’s Registration Statement on Form 10-SB/A, filed January 14, 2002.
(9)	Incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-QSB, filed August 14, 2003.
(10)	Incorporated by reference to Exhibit 10.14 to the Company’s Quarterly Report on Form 10-QSB, filed November 14, 2005.
(11)	Incorporated by reference to the same-numbered exhibit to the Company’s Quarterly Report on Form 10-QSB, filed August 10, 2004.
(12)	Incorporated by reference to the same-numbered exhibit to the Company’s Annual Report on Form 10-KSB, filed April 16, 2003
(13)	Incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-KSB, filed March 31, 2005.
(14)	Incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-KSB, filed march 31, 2005.

EX-3.1

Exhibit 3.1

Amended and Restated Certificate of Incorporation

of

ADVENTRX Pharmaceuticals, Inc.

     The undersigned, Evan M. Levine and Carrie E. Carlander, hereby certify that:

     1. They are the duly elected and acting President and Treasurer, respectively, of ADVENTRX Pharmaceuticals, Inc., a Delaware corporation (the “Corporation”).

     2. The Certificate of Incorporation of the Corporation was originally filed with the Secretary of State of Delaware on December 1, 1995, and the name under which the Corporation was originally incorporated was Victoria Enterprises, Inc.

     3. Pursuant to Sections 242 and 245 of the Delaware General Corporation Law (the “DGCL”), the Amended and Restated Certificate of Incorporation attached hereto as Appendix I (the “Amended and Restated Charter”) restates, integrates and amends the provisions of the Corporation’s Certificate of Incorporation in its entirety as heretofore amended or supplemented.

     4. The Amended and Restated Charter has been duly adopted by the Corporation’s Board of Directors and stockholders in accordance with the applicable provisions of Sections 242 and 245 of the DGCL and the Corporation’s Certificate of Incorporation.

     Executed at San Diego, California, on November 14, 2005.

/s/Evan M. Levine

Evan M. Levine, President

/s/Carrie E. Carlander

Carrie E. Carlander, Secretary

Appendix I

Amended and Restated Certificate of Incorporation

of

ADVENTRX Pharmaceuticals, Inc.

ARTICLE I

     The name of this corporation is ADVENTRX Pharmaceuticals, Inc. (the “Corporation”).

ARTICLE II

     The address of the Corporation’s registered office in the State of Delaware is Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, County of New Castle, Delaware 19808. The name of its registered agent at such address is Corporation Service Company.

ARTICLE III

     The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law (the “DGCL”).

ARTICLE IV

     (A) Classes of Stock. The Corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares which the Corporation is authorized to issue is Two Hundred One Million (201,000,000) shares, each with a par value of $0.001 per share. Two Hundred Million (200,000,000) shares shall be Common Stock, and One Million (1,000,000) shares shall be Preferred Stock.

     (B) Preferred Stock. Except as otherwise provided in any certificate(s) of designations duly filed with the Secretary of State of the State of Delaware, the Board of Directors of the Corporation (the “Board”) is hereby expressly authorized to provide for the issuance, in one or more series, of all or any of the shares of Preferred Stock and to fix or alter the rights, preferences, privileges and restrictions granted to or imposed upon such series of Preferred Stock, and the number of shares constituting any such series and the designations thereof, or of any of them, such designations, preferences, and relative, participating, optional or other rights and such qualifications, limitations, or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board providing for the issuance of such shares and as may be permitted by the DGCL. The rights, privileges, preferences and restrictions of any such series of Preferred Stock may be subordinated to, pari passu with (including, without limitation, inclusion in provisions with respect to liquidation and acquisition preferences, redemption or approval of matters by vote or written consent), or senior to any of those of any present or future class or series of Preferred Stock or Common Stock. The Board is also expressly authorized to increase or decrease the number of shares of any series prior or subsequent to the issue of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series shall be so decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series.

ARTICLE V

     The Board shall not be divided into classes and the Board may not by resolution or otherwise divide the Board into classes. Each director that shall be elected or appointed to the Board shall hold office until the next annual meeting of stockholders of the Corporation following such election or appointment and until their successor shall have been elected and qualified. Notwithstanding the foregoing, this Article V shall be of no further force or effect upon the earlier to occur of (i) July 27, 2012; (ii) the date that Icahn Partners LP, Icahn Partners Master Fund LP, High River Limited Partnership, Viking Global Equities LP and VGE III Portfolio Ltd. (together, the “Icahn/Viking Investors”), collectively, hold in the aggregate (either of record or beneficially) less than 4,054,053 of the shares of common stock of the Corporation (as adjusted for stock splits, stock dividends, reorganizations and other similar events) that the Icahn/Viking Investors purchased (or for which they exercise warrants for common stock issued) pursuant to the Securities Purchase Agreement, dated July 21, 2005, among the Corporation, the Icahn/Viking Investors and the other investors named therein; and (iii) the time of (A) any acquisition of the Corporation (whether or not the Corporation is the surviving corporation) by means of merger, consolidation or other form of corporate reorganization (other than a reincorporation transaction or change of domicile) following which the holders of the outstanding voting securities of the Corporation immediately prior to such merger, consolidation or other reorganization do not hold (in their capacity as such) equity securities representing a majority of the voting power of the surviving or resulting entity immediately following such merger, consolidation or other reorganization or (B) a sale of all or substantially all of the assets of the Corporation other than to a buyer in which the holders of the outstanding voting securities of the Corporation immediately prior to such sale hold (in their capacity as such) equity securities representing a majority of the voting power immediately following such sale (such earlier date set forth in (i), (ii) and (iii), the “Prohibition Termination Date”). For purposes of this Article V, the determination of the Prohibition Termination Date and without limitation, the holdings of common stock of the Icahn/Viking Investors will be determined on a net basis after giving effect to any sale or other disposition, contract or option to sell any shares of common stock, and any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of shares of common stock, whether such arrangement provides for settlement by delivery of securities, the payment of cash or otherwise.

ARTICLE VI

     The Corporation shall not adopt or approve any “rights plan,” “poison pill” or other similar plan, agreement or device designed to prevent or make more difficult a hostile takeover of the Corporation by increasing the cost to a potential acquirer of such a takeover either through the issuance of new rights, shares of common stock or preferred stock or any other security or device that may be issued to stockholders of the Corporation other than all stockholders of the Corporation that carry severe redemption provisions, favorable purchase provisions or otherwise. Notwithstanding the foregoing, this Article VI shall be of no further force or effect upon the Prohibition Termination Date.

ARTICLE VII

     In furtherance and not in limitation of the powers conferred by statutes, the Board is expressly authorized to make, alter, amend or repeal the Bylaws of the Corporation.

ARTICLE VIII

     The business and affairs of the Corporation shall be managed by or under the direction of the Board. In addition to the powers and authority expressly conferred upon them by statute or by this Certificate of Incorporation or the Bylaws of the Corporation, the Board is hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation. Elections of members of the Board need not be by written ballot unless otherwise provided in the Bylaws of the Corporation.

ARTICLE IX

     (A) To the fullest extent permitted by the DGCL, as the same exists or as may hereafter be amended, a director shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director.

     (B) The Corporation shall indemnify to the fullest extent permitted by law any person made or threatened to be made a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that such person, such person’s testator or intestate is or was a director or officer of the Corporation or any predecessor of the Corporation, or serves or served at any other enterprise as a director or officer of the Corporation at the request of the Corporation or any predecessor to the Corporation.

     (C) Neither any amendment nor repeal of this Article IX, nor the adoption of any provision of the Corporation’s Certificate of Incorporation inconsistent with this Article IX, shall eliminate or reduce the effect of this Article IX in respect of any matter occurring, or any action or proceeding accruing or arising or that, but for this Article IX, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision.

ARTICLE X

     The Corporation reserves the right at any time, and from time to time, to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed by law; and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended are granted subject to the rights reserved in this Article X.

EX-10.10

Exhibit 10.10

Note: Confidential treatment has been requested with respect to certain redacted portions of this agreement that are identified herein by three bracketed asterisks, i.e. [***].  A complete copy of this agreement, including the confidential information has been filed separately with the securities and Exchange Commission.

     ADVENTRX PHARMACEUTICALS, INC.

AND

PHARM-OLAM INTERNATIONAL LTD.

AGREEMENT

     Protocol Number 03-CoFactor™

TABLE OF CONTENTS

Introduction		1
1.	Definitions	1
2.	Interpretation	4
3.	Appointment of Pharm-Olam	4
4.	Pharm-Olam’s Obligations	4
5.	The Company’s Obligations	5
6.	Payment	6
7.	VAT	7
8.	Confidentiality	7
9.	Publication	8
10.	Intellectual Property	8
11.	Warranties	8
12.	Indemnity	8
13.	Insurance	9
14.	Liability	9
15.	Term and Termination	10
16.	Consequences of Termination	10
17.	Sub-Contracting and Assignment	11
18.	Non Solicitation of Staff	11
19.	Variation	11
20.	Relationship of Parties	11
21.	Waiver	12
22.	Severance	12
23.	Force Majeure	12
24.	Entire Agreement	12
25.	Notices	12
26.	Change Of Address	13
27.	Further Assurance	13
28.	Applicable Law	13

Schedule 1: Clinical Trial Protocol
Schedule 2: Division of Responsibilities
Schedule 3: Consideration and Cost Calculation
Schedule 4: Reporting/Collection Timelines

This Agreement is made on the: Tuesday, March 29, 2005

Between:

(1)	Adventrx Pharmaceuticals, Inc., whose principal place of business is at 6725 Mesa Ridge Road, Suite 100, San Diego, CA 92121, U.S.A. (“ADVENTRX”) and
(2)	Pharm-Olam International Ltd., whose principal place of business is at 450 N. Sam Houston Parkway, Suite 250, Houston, TX 77060, U.S.A. (“Pharm-Olam”).

Introduction

(A)	ADVENTRX is involved in the research and development of pharmaceutical products.
(B)	Pharm-Olam is a contract research organization involved in the planning, implementation, managing and conducting of clinical research and clinical trials
(C)	ADVENTRX wishes to engage Pharm-Olam to carry out Services (as hereinafter defined) upon the terms and conditions below, and Pharm-Olam is willing and has agreed to perform such Services.

     The parties hereby agree as follows:

1.	DEFINITIONS
1.1	Words and terms defined in the Protocol shall have the same meaning in this Agreement. In addition, the following words which begin with capital letters have the precise meanings set out below. For the avoidance of doubt, where a defined word or term used in this Agreement is also used in the Protocol, the defined word or term used in this Agreement shall apply:

1.1.1	“Adverse Event” means any untoward medical occurrence in a patient or clinical investigation subject to whom a Pharmaceutical Product has been administered
1.1.2	“Company Obligations” means the obligations of ADVENTRX set out in the Table of Responsibilities.
1.1.3	“Confidential Information” means any information provided under or in connection with this Agreement from either party to the other including (without limitation) and relating to:

1.1.3.1	Products, the Study and details of this Agreement or the involvement of either party in it;
1.1.3.2	ADVENTRX’S proprietary information, including information relating to its research results, proprietary methods, technologies, processes and products;
1.1.3.3	ADVENTRX’S know how, accounts, budgets, ledgers, account records and other information of ADVENTRX, any Group Company or Pharm-Olam;
1.1.3.4	Documents, letters and memoranda of ADVENTRX, any Group Company or Pharm-Olam;
1.1.3.5	Information (whether or not in writing) which is obtained during or as a consequence of any negotiations or discussions relating to this Agreement; and

1.1.3.6	Information in relation to which any member of the Pharm-Olam and its associated companies owes a duty of confidentiality to a third party, provided that Pharm-Olam notifies ADVENTRX of the confidential nature of that information.
	save to the extent that information is Public Information.

1.1.4	“Consideration” means the amounts payable to Pharm-Olam as set out in Schedule 3.
1.1.5	“CRF” means the case report form relating to each subject in the Study.
1.1.6	“Currency” means US dollars, unless otherwise specified.
1.1.7	“Effective Date” means May 1, 2005.
1.1.8	“Final Study Report” means the document prepared at the end of the Study that describes the objectives, design, methodology, statistical analysis, results and conclusions of the Study including the CRFs.
1.1.9	“Force Majeure Event” means an event beyond the reasonable control of the relevant party including without limitation:

1.1.9.1	Strikes, lockouts, or other industrial action taken by the employees of any party or any third party;
1.1.9.2	Civil commotion, embargo, governmental legislation or regulation, riot, invasion, war, threat of preparation of war;
1.1.9.3	Fire, explosion, storm, flood, earthquake, subsidence, epidemic or other natural physical disaster; or
1.1.9.4	The refusal or withdrawal by any relevant governing regulatory body or ethics committee of its approval of the Study.

1.1.10

“Good Clinical Practice” means, a standard for the design, conduct, performance, monitoring, auditing, recording, analyses and reporting of clinical trials that provides assurance that the data and reported results are credible and accurate, and that the rights, integrity and confidentiality of trial subjects are protected as are generally accepted as standard in the industry at Effective Date and as specified by World Medical Association Declaration of Helsinki.

1.1.11

“Group” means (as constituted at the date of this Agreement or subsequently):

1.1.11.1	Pharm-Olam;
1.1.11.2	Any subsidiary of Pharm-Olam;
1.1.11.3	Any Company over which Pharm-Olam has control within the meaning of section 840 of the Income and Corporation Taxes Act 1988; and
1.1.11.4	Any Company which is an associated Company of Pharm-Olam as defined in section 13 of the Income and Corporation Taxes Act 1988.

1.1.12	“Investigator(s)” means person(s) responsible for the conduct of a trial at a Study site.
1.1.13	“Life Threatening Event” means an event in which the subject is at serious risk of death at the time of the event;
1.1.14	“Investigational Product” means the product which is the subject of the Study as described in the Protocol.

1.1.15	“Protocol” means a document that describes the objective(s), design, methodology, statistical considerations and organization of the Study as set out at Schedule 1.
1.1.16	“Public Information” means:

1.1.16.1	Information that is generally available to third parties (unless available as a result of a breach of the terms of this Agreement or any other confidentiality undertaking); or
1.1.16.2	Which was lawfully in both parties’ possession prior to the date of this Agreement and not acquired directly or indirectly from the other party.

1.1.17	“Regulatory Requirements” means those laws, regulations and guidelines that are current during the Term and which are applicable to the countries in which the Study is being conducted or are applicable to the class of pharmaceutical product being tested or the clinical specialty involved.
1.1.18	“Serious Adverse Event” means an untoward medical occurrence that at any dose:

1.1.18.1	May produce a congenital anomaly or birth defect;
1.1.18.2	Is a Life Threatening Event;
1.1.18.3	Requires in-patient hospitalization or prolongation of existing hospitalization;
1.1.18.4	Results in death;
1.1.18.5	Results in persistent or significant disability or incapacity.

1.1.19	“Services” means the Service to be provided by Pharm-Olam in connection with the Study as set out in this Agreement including Pharm-Olam’s Obligations.
1.1.20	“Standard Operating Procedures” means Pharm-Olam’s internal procedures in force designed to achieve measured, consistent and controlled performance of a specific function.
1.1.21	“Study” means the Investigational Product trial, details of which are set out in Schedule 1.
1.1.22	“Study Documents” means documents produced by Pharm-Olam in its conduct of the Study necessary for production of the Final Report.
1.1.23	“Division of Responsibilities” means the obligations, requirements and responsibilities of both parties as set out in Schedule 2.
1.1.24	“Term” means the duration of this Agreement as set out in clause 15.
1.1.25	“Timescales” means the times set out in Schedules 1-4 within which the parties intend to perform their respective obligations.
1.1.26	“Pharm-Olam’s Obligations” means the obligations of Pharm-Olam set out in the Division of Responsibilities, Schedule 2.

2.	Interpretation
2.1	Where appropriate, the singular includes the plural and vice versa.

2.2	Unless otherwise stated, any reference to a provision of any legislation or regulation is a reference to that provision as amended, extended or re-enacted by any subsequent legislation.
2.3	The headings in this Agreement are for convenience only and shall not affect its interpretation.
2.4	References to clauses and Schedules are to the clauses of, and schedules to, this Agreement.
2.5	The Schedules are deemed to be incorporated and form part of this Agreement and the term “Agreement” shall be construed accordingly.
3.	appointment of Pharm-Olam
3.1	ADVENTRX hereby appoints Pharm-Olam, and Pharm-Olam agrees to provide, for the Consideration, the Services in accordance with the Protocol.
4.	Pharm-Olam’s Obligations
4.1	Pharm-Olam shall apply to the Study systems of quality control to Standard Operating Procedures to ensure that as far as is reasonably practicable the Study is conducted, that data is generated, recorded and reported, and the last investigative center is closed, in compliance with the Protocol, Good Clinical Practice and all applicable Regulatory Requirements. To the extent that there should be any conflict between the provisions of Regulatory Requirements, Good Clinical Practice, the Protocol and this Agreement in relation to the conduct of the Study, they shall prevail in that order.
4.2	Pharm-Olam shall use all reasonable endeavours to ensure that:

4.2.1	The Services including Pharm-Olam’s Obligations are performed within the Timescales; and
4.2.2	The trial centers, the Investigators and the staff employed by Pharm-Olam and involved in the Study comply with the Protocol, their responsibilities under Good Clinical Practice, and all applicable Regulatory Requirements; and
4.2.3	Patient Recruitment Targets are met within the agreed study timelines. However, there is no implied guarantee contained in this Agreement that Patient Recruitment Targets will be met as this may be subject to factors outside Pharm-Olam’s control.

4.3	Subject to the provisions of Section 4.1, Pharm-Olam shall conduct the Study in accordance with applicable local laws and regulations of the countries in which the Study takes place.
4.4	Before commencement of the Study, Pharm-Olam shall assign to the Study staff and at least one Investigator with suitable experience or training to perform the defined duties and functions required to fulfil the Services. Pharm-Olam shall not change the staff or Investigator assigned to the Study without ADVENTRX’s prior written consent.
4.5	Pharm-Olam shall return all material Study Documents to ADVENTRX following closure of the final investigative center. Pharm-Olam may retain one copy of all relevant documents for its own archiving purposes.
4.6	ADVENTRX shall be entitled upon reasonable written notice of not less than 2 working days, and during normal working hours on any business day convenient to both parties and the investigator to:

4.6.1	Visit and co-monitor any of the Study sites; and
4.6.2	Inspect and audit any of the Study Documents held by Pharm-Olam.

4.7	Pharm-Olam will provide ADVENTRX with written updates on the progress of the Services in accordance with the Timescales, or in default at monthly intervals.
4.8	Pharm-Olam shall notify ADVENTRX in writing of all:

4.8.1 Adverse Events, periodically and at the end of the Study; and

4.8.2 Serious Adverse Events immediately after being aware of it, by phone and faxed report within 24 hours of Pharm-Olam’s discovery of such events.

5.	The Company’s obligations
5.1	ADVENTRX agrees to comply with Company Obligations at its own expense within the Timescales and in any event in a timely manner.
5.2	In particular, ADVENTRX will provide to Pharm-Olam at its own expense all timely help and assistance to Pharm-Olam which may be necessary or useful for the expedient fulfilment of the Services including without limitation provision of:

5.2.1	Investigational Product development information;
5.2.2	Investigational Product use guidelines;
5.2.3	Advice and guidance from ADVENTRX staff, agents and contractors; and
5.2.4	Clinical Trial Materials.
5.2.5	In the event that such assistance is necessary, Pharm-Olam will use all reasonable efforts to advise and inform ADVENTRX of needed assistance with sufficient time such that ADVENTRX can provide the requested assistance in a timely manner, understanding the particular importance of any matters raised as Serious Adverse Events as noted in Schedule 1.
5.3	In the event that the Study is delayed or suspended by ADVENTRX, ADVENTRX will agree to compensate Pharm-Olam for retention of the assigned study personnel on the specific ADVENTRX project. Pharm-Olam will immediately provide ADVENTRX with a list of such assigned study personnel. In such cases the assigned Pharm-Olam study personnel will not be re-assigned unless otherwise informed, in writing, by ADVENTRX. The said compensation will be in addition to the study budget and will be charged at the rates agreed for the period of the Study. The compensation period will last for a maximum of three months. Pharm-Olam will automatically re-assign its staff if the delay is longer than three months. In the event that Study personnel are reassigned to other POI projects or obligations, ADVENTRX is explicitly not responsible for compensation of reassigned personnel, except as to the extent that the reassigned personnel must perform certain limited duties to ensure that the Study will be able to be restarted.

6.	Payment
6.1	During the Term, in consideration of the Services ADVENTRX shall pay Pharm-Olam the Consideration in the manner set out in Schedule 3.

6.1.1	Beginning on the Effective Date, ADVENTRX shall pay equal monthly installments over the duration of the Study as a deposit against the net service fees charged by Pharm-Olam. In the event the reassignment provisions in Section 5.3 of this Agreement are triggered, any remaining deposit is to be applied to any amount ADVENTRX is responsible for under the terms of that reassignment Section.
6.1.2	All payments shall be in US dollars unless otherwise denoted in Schedule 3.
6.1.3	Pharm-Olam shall submit invoices to ADVENTRX on a monthly basis in respect of all fees and expenses due. ADVENTRX shall make full payment of such sums in cleared funds to such bank account in the United States as Pharm-Olam may reasonably specify from time to time, within 30 days of an invoice being submitted, without any deduction, set off or withholding except any tax which ADVENTRX is required by law to deduct or withhold. If ADVENTRX is required by law to make any such tax deduction or withholding, ADVENTRX shall do all things in its power which may be necessary to reasonably enable or assist Pharm-Olam to claim exemption from or, if that is not possible, a credit for the deduction or withholding under any applicable double taxation or similar agreement and from time to time give to Pharm-Olam proper evidence as to the deduction or withholding and payment over of the tax deducted or withheld;

6.1.4	At the end of each calendar quarter, Pharm-Olam shall submit a written report to ADVENTRX detailing the actual work performed by Pharm-Olam in providing the Services during that quarter, itemizing the work as set forth in Schedule 3. In each of May 2006 and May 2007, the parties shall meet to discuss whether the assumptions of Schedule 3 remain valid in light of the work actually performed until then, and shall negotiate in good faith a reasonable readjustment of the amount of the monthly installment should be necessary;
6.1.5	To the extent that any fees, expenses (within maximum 30 days) or other sums due under these terms are not paid by ADVENTRX on the due date, ADVENTRX shall, in addition, pay Pharm-Olam interest on such sums, both before and after any judgment, from the date due until the date on which such sums are actually paid (inclusive) at the rate of 2% over prime base lending rate from time to time;
6.1.6	ADVENTRX shall reimburse Pharm-Olam for all reasonable travelling, hotel subsistence and other expenses incurred by Pharm-Olam in the proper performance of the Services to be provided by Pharm-Olam; and
6.1.7	In the event that these terms may conflict with those in Schedule 3, then those terms stated in Schedule 3 will govern.

7.	VAT
7.1	All sums payable under this Agreement unless otherwise stated are exclusive of VAT and other duties or taxes.
7.2	Any VAT or other duties or taxes payable in respect of such sums shall be payable in addition to such sums.
7.3	Any VAT or other duties or taxes will be noted in Pharm-Olam’s monthly invoices.
8.	Confidentiality
8.1	All documentation and Confidential Information disclosed by each party to the other during the period of this Agreement shall be regarded as between the parties as the property of the disclosing party, shall be kept confidential and shall be used solely and exclusively for the purposes of this Agreement and for no other purpose whatsoever.
8.2	Neither party shall disclose any Confidential Information to any third party other than employees, agents or sub-contractors (including Investigators) duly appointed in accordance with this Agreement and in any event only for the proper performance of their duties. Both parties shall use all reasonable endeavours to ensure that all parties to whom Confidential Information is disclosed conform with the provisions of this clause 8 as if they were party to this Agreement.
8.3	The parties agree fully to adhere to the principles of medical confidentiality in relation to the patients involved in the Study.
8.4	Pharm-Olam may disclose such Confidential Information as necessary pursuant to a legal or regulatory requirement provided that as soon as Pharm-Olam is aware of each of the same, Pharm-Olam expressly notifies ADVENTRX in writing of respectively the requirement and relevant Confidential Information and in sufficient time to allow ADVENTRX to take such measures as may be available to limit the disclosure and preserve the Confidentiality of Information nevertheless required to be disclosed. Pharm-Olam will take all measures necessary to assist ADVENTRX in any effort ADVENTRX makes intended to limit disclosures and preserve Confidential Information.
9.	Publication
9.1	Pharm-Olam agrees not to publish or present results of the Study or to contribute to any paper or article which utilizes any data generated from the Study or any other Confidential Information.

10.	Intellectual Property
10.1	Pharm-Olam acknowledges that, as between ADVENTRX and Pharm-Olam, any and all intellectual property rights that may arise in the Study itself, including Study data, shall belong solely to ADVENTRX.
11.	Warranties
11.1	Pharm-Olam warrants to ADVENTRX that:

11.1.1		It has the authority to enter into this Agreement; and
11.1.2		It will perform the Services with all reasonable skill and care.
11.2	ADVENTRX warrants to Pharm-Olam that:
11.2.1		It has the authority to enter into this Agreement;
11.2.2		All consents and approvals required for the Study (except for the consent of individual patients used in the Study and local research ethics committee approvals) have been obtained and are current and effective as at the Effective Date and shall so remain during the Term: and
11.2.3		It will perform its obligations under this Agreement with all reasonable skill and care.

12.	Indemnity
12.1	Subject to clause 14.2, Pharm-Olam shall indemnify and keep ADVENTRX (and all its officers, servants and agents) fully and effectively indemnified on demand up to a total maximum aggregate liability [***] against all loss, liabilities, damages, costs and expenses (including without limitation reasonable legal fees) suffered or incurred by ADVENTRX as a result of Pharm-Olam’s negligence in performing the Services.
12.2	ADVENTRX shall indemnify and keep Pharm-Olam (and all its officers, servants and agents, the study site and investigators) fully and effectively indemnified up to a total of $10 million against all loss, liabilities, damages, costs and expenses (including without limitation reasonable legal fees) suffered or incurred by Pharm-Olam, the study site and investigators as a result of:

12.2.1	Pharm-Olam’s proper use of the Investigational Product in the Study including any claim that such use infringes the rights of any third party; and
12.2.2	Any wilful misconduct or negligence of ADVENTRX, its employees or contractors in their involvement with the Study;
12.2.3	All the indemnities set out in this clause 12 shall be conditional upon the indemnified party:
12.3.4	Notifying the indemnifying party in writing of any claim or threatened claim;
12.3.5	Making no written admission as to liability in relation to any such claim without the indemnifying party’s approval; and
12.2.6	Providing the indemnifying party with all reasonable assistance in relation to any such claim which the indemnifying party defends subject to the indemnifying party indemnifying the indemnified party against all costs and expenses that the indemnified party incurs in assisting the indemnifying party.

13.	Insurance
13.1	ADVENTRX and Pharm-Olam shall each effect and maintain adequate insurance with a reputable insurer in respect of their respective liabilities under this Agreement during, and for a period of 12 months after the Term.

13.2	Each party shall provide to the other a copy of the relevant insurance policies prior to the execution of this Agreement. Subsequent to the execution of this Agreement, each party shall, upon the request of the other, provide the other,, within 14 days of the same being requested, a certified copy of the insurance policy referred to in clause 13.1 and all amendments and renewals to the policy.
14.	Liability
14.1	Notwithstanding anything else in this Agreement, nothing in this Agreement shall exclude or restrict Pharm-Olam’s liability in respect of death or personal injury caused by its negligence.
14.2	For the avoidance of doubt, Pharm-Olam shall not be liable under this Agreement for any indirect or consequential loss including (without limitation) loss of profits, the value of lost contracts, or damage to goodwill, unless such loss or damage results from Pharm-Olam's gross negligence in providing the Services.
15.	TERM AND TERMINATION
15.1	This Agreement shall commence on the Effective Date and (subject to the early termination provisions of this Agreement) shall continue until such time as the Services are completed.
15.2	Either party may, without prejudice to any rights or remedies which it may have against the other party, by notice in writing to the other party forthwith terminate this Agreement if:

15.2.1	The other party shall be in material breach of any provision of this Agreement and such party has failed to remedy that breach (if capable of remedy) within 30 days after receiving notice of such breach;
15.2.2	An order is made or a resolution passed for the winding up or administration of a party (or if a receiver or administrative receiver is appointed in relation to all or any of the assets of the other party) other than for a voluntary liquidation for the purposes of a bona fide amalgamation or reconstruction;
15.2.3	The other party does or fails to do anything which will entitle any person to apply for any such matter referred to in clause 15.2.2 above to occur;
15.2.4	The other party is unable to pay its debts as and when they fall due or enters into any arrangement for the benefit of, or composition with, its creditors;
15.2.5	The other party ceases or threaten to cease to carry on its business or a substantial part of its business; and
15.2.6	If either party is reasonably of the opinion, after obtaining independent medical advice, that it is in the best interests of the patients involved in the Study for the Study to cease. Such termination shall be effective immediately upon notification by telephone, which shall then be followed by written confirmation;

15.3	ADVENTRX may terminate this Agreement for any reason including but not limited to the occurrence of a Serious Adverse Event upon sixty days’ written notice to Pharm-Olam. In the event of a Serious Adverse Event the parties will take all steps to preclude further liabilities, if any, from arising.
16.	CONSEQUENCES OF TERMINATION
16.1	On the expiry or early termination of this Agreement, such expiry or termination shall be without prejudice to either of the party’s rights that may have already accrued.
16.2	All rights and obligations of the parties on termination or expiry shall cease forthwith except where it is expressly stated otherwise in this Agreement.
16.3	In the event of this Agreement being terminated for reasons other than breach of Agreement by Pharm-Olam, Pharm-Olam shall be entitled to payment of all outstanding monies due including Consideration then due, and in addition all reasonable costs:

16.3.1 Including fees, expenses and disbursements irrevocably incurred and committed up to the date of termination; and

*** Confidential treatment has been requested with respect to this redacted portion of the agreement. A complete copy of this agreement, including this confidential information, has been filed separately with the Securities and Exchange Commission.

16.3.2 Required to complete activities associated with any termination and close out of the services including, for example, any activities necessary to satisfy the requirements of any competent authority.

16.4	Notwithstanding expiry or early termination of this Agreement, the provisions of this clause and clauses 8, 12, 13 18, 20 and 28 shall survive expiry or earlier termination of this Agreement.
16.5	[***]
16.6	Pharm-Olam will retain one copy of all relevant study documentation for its own files. All original study documentation will be returned to ADVENTRX.
17.	Sub-Contracting and Assignment
17.1	This Agreement is personal to Pharm-Olam and ADVENTRX and neither shall without the other’s prior written consent assign or delegate or sub-contract any of its rights or obligations hereunder (consent not to be unreasonably withheld) provided that ADVENTRX may assign the whole or any part of this Agreement to any affiliate or any entity which enters into a licensing or other relationship with Adventrx in connection with the Investigational Product which affiliate or entity shall be bound by the terms and obligations of this Agreement.
18.	Non Solicitation of Staff
18.1	Neither party shall during the term of this Agreement and for a period of twelve months following its termination, either directly or indirectly solicit or entice any employee, contractor or Investigator of the other party with whom it comes into contact as a result of participation on the Study, to be employed by it or any other person, firm or Company and shall not approach any such employee, contractor or Investigator for such purpose or authorize or approve the taking of such action by any other person.
19.	VARIATION
19.1	No variation of this Agreement will be valid unless made in writing and signed by a duly authorized representative of each of the parties.
20.	Relationship of Parties
20.1	Nothing in this Agreement shall be construed as creating a partnership, agency or joint venture between the parties.
21.	WAIVER
21.1	The failure by any of the parties to enforce at any time or for any period any one or more of its rights under this Agreement shall not release the other party to this Agreement from any of the warranties, liabilities or obligations under this Agreement and any failure to enforce shall not be deemed to be a waiver of such rights or of any subsequent right to enforce any or all of the terms and conditions of this Agreement.
22.	SEVERANCE
22.1	If any provision of the Agreement is held by any competent authority to be invalid or unenforceable in whole or in part, the validity of the other provisions of the Agreement and the remainder of the provisions in questions shall not be affected.
23.	FORCE MAJEURE
23.1	Neither party shall be liable to the other for any delay in performance of its respective obligations under this Agreement to the extent that such performance is prevented by a Force Majeure Event.
24.	ENTIRE AGREEMENT
24.1	This Agreement shall constitute the entire agreement between the parties and shall supersede all prior agreements, understandings and arrangements between them, whether oral or written, which relate to the subject matter of this Agreement.
24.2	Each party warrants to the other that it has not been induced to enter into the Agreement by any prior oral or written innocent or negligent misrepresentation.
24.3	Any changes or Amendments to this Agreement require the written consent of both parties.

*** Confidential treatment has been requested with respect to this redacted portion of the agreement. A complete copy of this agreement, including this confidential information, has been filed separately with the Securities and Exchange Commission.

25.	NOTICES
25.1	Any notice to be given pursuant to this Agreement shall be in writing in English and shall be delivered by courier, sent by post or sent by facsimile to the address of the facsimile number of the recipient set out below or as specified by the recipient from time to time in a written notice.
25.2	Any notice given pursuant to this clause 26 shall be deemed to have been received:

25.2.1	In the case of delivery by courier, when delivered;
25.2.2	In the case of sending by post:

25.2.2.1	Where posted in the country of the addressee, on the second working day following posting: and
25.2.2.2	Where posted in any other country on the fifth working day following the day of posting providing, however, that such posting shall always be by airmail; or

25.2.3 In the case of facsimile, on acknowledgement by the recipient’s facsimile receiving equipment on a business day if the acknowledgement occurs before 1700 local time on a business day of the recipient and in any other case on the next following business day.

25.3	All notices to the Company shall be addressed to:
	Joan Robbins, Ph.D. Chief Technology Officer Adventrx Pharmaceuticals, Inc. 6725 Mesa Ridge Road, Suite 100 San Diego, CA 92121
	Fax:858 552 0876
25.4	All notices to Pharm-Olam shall be addressed to:
	Mr. John Hovre Executive Vice-President Pharm-Olam International Ltd. 450 N. Sam Houston Parkway Suite 250 Houston, TX 77060
	Fax: 713 463 8281

26.	CHANGE OF ADDRESS
26.1	The parties shall give notice to each other of any change of their address or telephone, facsimile or similar number at the earliest possible opportunity.
27.	FURTHER ASSURANCE
27.1	Both parties shall at their own expense do all acts and execute all deeds and documents as may be necessary validly to transfer and to assure to the other all rights agreed respectively to be granted to the other under this Agreement.
28.	APPLICABLE LAW

28.1 This Agreement shall be governed by and be construed under the laws of the State of New York, without giving effect to its choice-of-law rules.

IN WITNESS of which the parties have signed this Agreement.

For and on behalf of Pharm-Olam International Ltd. the presence of :

/s/ John Hovre
Name: John Hovre
Title: E.V.P.
Date: 9/29/05

For and on behalf of Adventrx Pharmaceuticals, Inc.

in the presence of :

/s/ Carrie Carlander
Name: Carrie Carlander
Title: CFO
Date: 11/15/2005

SCHEDULE 1

CONFIDENTIAL

CLINICAL TRIAL PROTOCOL

PROTOCOL TITLE:	A Multi-Center, Open Label, Parallel Group, Randomised, Phase IIB Clinical Trial to Evaluate the Safety and Efficacy of CoFactor and 5-FU versus Leucovorin and 5-FU in Subjects with Metastatic Colorectal Carcinoma
[***]

*** Confidential treatment has been requested with respect to this redacted portion of the agreement which consists of 60 pages. A complete copy of this agreement, including this confidential information, has been filed separately with the Securities and Exchange Commission.

SCHEDULE 2

Division of Responsibilities

[***]

*** Confidential treatment has been requested with respect to this redacted portion of the agreement which consists of five pages. A complete copy of this agreement, including this confidential information, has been filed separately with the Securities and Exchange Commission.

SCHEDULE 3
CONSIDERATION AND COST CALCULATION
SERVICE FEES

[***]

*** Confidential treatment has been requested with respect to this redacted portion of the agreement which consists of three pages. A complete copy of this agreement, including this confidential information, has been filed separately with the Securities and Exchange Commission.

SCHEDULE 4

Reporting/Collection Timelines

CRF collection CRFs to be sent to Adventrx as complete modules (Period 1 or Period 2)

                       CRFs to be sent to Adventrx on a regular basis and not less than every 4 weeks

                       Last subject CRFs to be sent to Adventrx within 10 days of the last subject visit

Data Resolution Forms Research

Site Visit Reports Finalized Report to be sent to Adventrx within 15 days of a site visit

Status Reports Monthly status reports to be sent to Adventrx on the 25^th day of each month

Recruitment Weekly updates on status of recruitment to be sent to Adventrx by e-mail or fax every Friday

EX-10.11

Exhibit 10.11

Amendment dated July 19^th, 2005 to the Agreement dated March 29, 2005 regarding Protocol Number 03-CoFactor, for Services provided by Pharm-Olam International Ltd. to Adventrx

     In compliance with Section 25.3 of the Agreement, both Adventrx Pharmaceuticals, Inc., and Pharm-Olam International Ltd., agree that the following provisions are binding amendments to that Agreement:

     Section 4.9. As part of its monitoring duties outlined in Schedule 2 to this Agreement, Pharm-Olam will visit each clinical site no less than once a month. Pharm-Olam’s reporting regarding the monitoring visit shall be provided to Adventrx no later than three weeks from the site visit. Request for payment due Pharm-Olam regarding monitoring visits and associated expenses shall not be made until Adventrx received the above noted reporting.

     Section 6.2. All supporting documentation evidencing payments due under Schedule 3 shall be in English, or shall include an accurate English translation summary, and be attached to requests for payment of invoices.

     Section 6.2.1. Receipts and other documentation evidencing amounts due from Adventrx as outlined in the ‘Estimated Pass Through Costs” table in Schedule 3 must be submitted to Adventrx within 75 days of occurrence of the cost eligible for payment.

SIGNED by /s/ John Hovre

For and on behalf of Pharm-Olam International Ltd., in the presence of:

Witness: Shari Milligan [print]

Signature: /s/ Shari Milligan

Name: Shari Milligan

Occupation: Executive Administrator

Address: 450 N. Sam Houston Pkwy.
Suite 250
Houston, TX 77060

SIGNED by /s/ Carrie Carlander

For and on behalf of Adventrx Pharmaceuticals, Inc.,

in the presence of:

Witness: Beth Marion [print]

Signature: /s/ Beth Marion

Name: Beth Marion

Occupation: Office Manager

Address: 6725 Mesa Ridge Rd #100
San Diego, CA 92121

EX-10.13

Exhibit 10.13

FIRST AMENDMENT TO LEASE

THIS FIRST AMENDMENT TO LEASE IS MADE AND ENTERED INTO THIS 12^TH DAY OF MAY 2005, BY AND BETWEEN GEORGE V. CASEY & ELLEN M. CASEY, TRUSTEES OF THE CASEY FAMILY TRUST DATED JUNE 22, 1998 (“LESSOR”) AND ADVENTRX PHARMACEUTICALS, INC., A DELAWARE CORPORATION (“LESSEE”)

RECITALS

WHEREAS, on June 3, 2004, George V. Casey & Ellen M. Casey (“Lessor”) and Adventrx Pharmaceuticals, Inc. (“Lessee”), entered into that certain lease agreement (“Lease”) for leased premises consisting of approximately 8,865 rentable square feet (“rsf”) on the first floor of that certain office building (“Building”) located at 3725 Mesa Ridge Road, Suite 100, San Diego, California, 92121; and

WHEREAS, Lessor wishes to provide for an increase in the area of the Existing Premises, by adding thereto the area known as 6275 Mesa Ridge Road, Suite 102, consisting of approximately 3,173 rsf (the “Expansion Premises”) as depicted on the attached Exhibit A. The entire area of Premises occupied by Lessee shall now contain approximately 12,038 rsf.

WHEREAS, the lease for the Existing Premises is scheduled to expire on August 31, 2009 (the “Existing Premises Lease Expiration Date”).

NOW, THEREFORE, in consideration of the foregoing and intending to be legally bound, Lessor and Lessee agree as follows:

1. COMMENCEMENT DATE AND DELIVERY OF THE EXPANSION PREMISES. The Commencement Date for the Expansion Premises (“Expansion Premise Commencement Date”) shall be June 15, 2005. Delivery of the Premises shall refer only to that portion of the Premises known a 6725 Mesa Ridge Road, Suite 102. The estimated Delivery of the Expansion Premises (the “Expansion Premises Delivery Date”) shall be the date on which Lessor delivers the Premises to Lessee, subject to the terms and conditions of Sections 3.2 and 3.3 (Early Possession and Delay in Possession), and shall occur upon: a) full execution of this First Amendment; b) delivery of a check in the amount of $7,833.28 for Initial Monthly Base Rent (June 15 – June 30, 2005) and Security Deposit for the Expansion Premises; and c) evidence of liability insurance coverage for the Expansion Premises. Such Early Possession shall be subject to all provisions of the Lease excluding payment of Monthly Base Rent for such period (however not Lessee’s share of Operating Expenses).

2. EXPANSION PREMISES. Lessor leases to Lessee and Lessee hires from Lessor for a term beginning on the Expansion Premises Commencement Date and ending on August 31, 2009, the Expansion Premises on all of the terms and conditions of the Lease; provided, however, that monthly Base Rent for the entire Premises shall be as set forth in Paragraph 3 below.

          The following table confirms the area of the Premises:

Area of Premises	RSF
Existing Premises – 6725 Mesa Ridge Road, Suite 100		8,865
Expansion Premises – 6725 Mesa Ridge Road, Suite 102		3,173
Total Rentable Square Feet		12,038

3. MONTHLY BASE RENT. The flowing table sets forth the revised schedule of the monthly Base Rent (net of utilities and Operating Expenses) payable for both the Exhibiting Premises and the Expansion Premises:

Month of Term	No. of
	Months	Existing	Expansion	Total Monthly
	Payable	Premises	Premises	Base Rent
June 1, 2005 – June 31, 2005	1	$14,627.25	$2,459.08	$17,086.33
June 1, 2005 – August 31, 2005	2	$14,627.25	$4,918.15	$19,545.40
Sept 1, 2005 – August 31, 2006	12	$15,066.08	$4,918.15	$19,984.23
Sept 1, 2006 – August 31, 2007	12	$15,518.05	$5,065.70	$20,583.75
Sept 1, 2007 – August 31, 2008	12	$15,983.60	$5,217.67	$21,201.27
Sept 1, 2008 – August 31, 2009	12	$16,463.10	$5,374.20	$21,837.30

4. TENANT IMPROVEMENTS. Prior to September 1, 2005, Lessee shall cause nonstructural, permanent improvements to be made to the interior of the Premises, using building standard materials, such as painting, carpet cleaning and the installation of ceiling tiles and voice and data cabling (“the “Improvements”), which Improvements shall be performed in a good and workmanlike manner. Provided Lessee is not in default under this Lease, Lessor shall reimburse Lessee up to %5,000 for the cost of such Improvements. The Improvements shall not include any partitions or other personal property of Lessee. The cost of the Improvements shall be the reasonable charges of third parties, unrelated to Lessee, for the construction of the Improvements.

          Not more often than once each calendar month and upon (i) receipt of copies of invoices paid by Lessee for the Upgrades and Improvements, along with appropriate mechanics lien waivers for said invoices and (ii) Lessor’s approval of the Upgrades and Improvements constructed thus far, Lessor shall pay Lessee ninety percent (90%) of the total of said invoices. After October 15, 2005, provided Lessor has (i) received copies of invoices paid by Lessee totaling $5,000 for the Improvements, along with appropriate mechanics lien waivers for said invoices and (ii) all Upgrades and Improvements have been complete to Lessor’s reasonable satisfaction, Lessor shall pay Lessee the remaining ten percent (10%) of such invoices if no mechanic’s lien or stop notice claims have been made in connection with the Upgrades or Improvements. The forgoing notwithstanding, nothing herein shall require Lessor to pay more than $5,000 for the cost of the Improvements. Any cost of the Upgrades or Improvements in excess of those amounts shall be paid by Lessee.

          All plans and contracts for the Upgrades and Improvements and the contractor(s) selected to constructed the Upgrades and Improvements shall be subject to Lessor’s prior approval, which approval will not be unreasonably withheld.

5. OPERATING EXPENSES AND OTHER AREA DEPENDENT TERMS. On the Effective Date, Lessee’s Share of Operating Expenses (as such term is defined in Section 1.6 of the Lease) shall be increased by 9.77% for a total of 37.29% Lessee shall continue to pay Lessee’s Share of Operating Expenses as set forth in Section 4.2 of the Lease.

6. PARKING. As a result of the addition of the Expansion Premises, on the Expansion Premises Commencement Date, Lessee’s parking spaces shall be increased by twelve (12) spaces to a total of forty-two (42) parking spaces. All parking shall be on a non-reserved basis.

7. SECURITY DEPOSIT. As a result of the addition of the Expansion Premise, concurrent with Lessee’s execution and delivery of this First Amendment to Lessor, Lessee shall deposit with Lessor an additional amount of $5,374.20 as an increase in the Security Deposit, with a new total of $54,763.50, to be held by Lessor.

No Waiver: Lessor’s agreement to this Amendment is specifically conditioned upon the agreement of Lessee that by entering into this Agreement, Lessor shall not charge, relinquish or waive any of the Lessor’s rights under the Lease, except as specifically stated herein. Lessee hereby agrees that no act or omission of Lessor as of the date hereof, including, but no limited to Lessor’s agreement to the Amendment, constitutes or has resulted in a waiver of any or Lessor’s rights or a breach of Lessor’s duties under the Lease.

ALL OF THE OTHER TERMS AND CONDITIONS OF THE ABOVE DESCRIBED LEASE SHALL REMAIN IN FULL FORCE AND EFFECT EXCEPT AS MAY BE MODIFED HEREIN.

LESSOR: GEORGE V. CASEY & ELLEN M. CASEY, TRUSTEES OF THE CASEY FAMILY TRUST DATED JUNE 22, 1998

By:	[ILLEGIBLE]
Title:	[ILLEGIBLE]
Date:	6/1/05

LESSEE: ADVENTRX PHARMACEUTICALS, INC, A DELAWARE CORPORATION

By:	[ILLEGIBLE]	By:	[ILLEGIBLE]
Title:	[ILLEGIBLE]	Title:	[ILLEGIBLE]
Date:	5/26/05	Date:	6/1/05

2

EX-10.17

Exhibit 10.17

Mark J. Cantwell, Ph.D. October 30, 2003

Dear Mark,

Thank you for your comments today and your interest in working for us. This letter is to confirm our offer to you to join ADVENTRX Pharmaceuticals as a full-time employee as of Monday, November 3, 2003.

You will begin employment as Director, Preclinical Programs, reporting directly to me, at a starting salary of $90,000.00 annually, paid every two weeks on the 1^st and 15^th of each month. We have agreed to this level of compensation with the understanding that you have opted to not participate in the Employee Benefits Program for Healthcare coverage. You will receive a performance review on an annual basis, which will be based upon an assessment of your ability to achieve agreed upon goals and the extent of your contribution to the overall organization. Employment is on an at-will basis.

You will be responsible for conducting R & D activities both internally, once new laboratories are in place, and externally to implement our testing and development programs to further our preclinical and clinical projects. You will take primary responsibility for the implementation of our new laboratory facilities and be in charge of managing laboratory budgets and expenditures under my direction. A key responsibility will be to develop a plan and implementation schedule for submitting and obtaining government and commercial grants to support our preclinical and clinical programs. We expect you to work on grant proposals that are directed to the Company and grant proposals that can be submitted in conjunction with our key outside researchers and clinicians. You will assist me in efforts that will result in speaking engagements at research and clinical meetings, assist me in the development of research and clinical protocols and lend assistance to management on marketing and technical materials for the Company. You will also be expected to assist me in technical searches, R&D planning, technology assessments and marketing research.

You will be awarded 50,000 stock options, under the currently approved Employee Stock Option Program of ADVENTRX, at a price of $1.25 per share. The first 25,000 options will vest at the first anniversary of your employment and the second 25,000 options will vest on your second anniversary. There will also be the possibility to receive additional stock options in the future based upon your performance and the overall success of the

9948 Hibert St., Suite 100 • San Diego, CA 92131
Telephone (858) 271-9671 • Fax (858-271-9678 • www.adventrx.com • OTCBB:AVRX

Company. Your Non Statutory Stock Option Agreement is attached. It is subject to acceptance of your employment offer and approval by the Board of Directors.

You are entitled to 2 weeks paid vacation per year during your first three years of employment and 3 weeks paid vacation thereafter. You will also have time off on holidays with full pay. In addition, based upon hours worked and expected fluctuations in schedules, you will receive comp time based upon my recommendation and corporate approval.

In your new capacity you will play an instrumental role in the future success of the Company, as we move from our preclinical to clinical development status. I would suggest that we work together to define your job description in greater detail so that we are both in agreement with objectives that will meet your personal goals and the overall goals of ADVENTRX.

Please sign both copies of this letter with your acceptance and return one in the envelope provided.

Sincerely,

/s/ Joan M. Robbins
Joan M. Robbins, Ph. D	/s/ Mark J. Cantwell	10-31-03
Chief Technical Officer	Acceptance — Mark J. Cantwell, Ph.D. —	date signed

EX-10.19

Exhibit 10.19

ADVENTRX Pharmaceuticals, Inc.

Restricted Share Award Agreement

     This Restricted Share Award Agreement (this “Agreement”), dated as of ___ ___, 200_, is entered into between ADVENTRX Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and ___, an individual (“Grantee”).

Background

     The Company has established the 2005 Equity Incentive Plan (“Plan”), to provide incentive awards, among other things.

     Grantee has performed various services for the Company.

     The Compensation Committee of the Board of Directors of the Company has determined that Grantee be granted shares of Common Stock of the Company (“Common Stock”) under the Plan subject to the restrictions stated below and as hereinafter set forth.

Agreement

     The parties to this Agreement, intending to be legally bound, agree as follows:

     1. Terms of Plan. All capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed thereto in the Plan. Grantee confirms and acknowledges that Grantee has received and reviewed a copy of the Plan and the Information Statement, dated July ___, 2005, with respect to the Plan. Grantee and the Company agree that the terms and conditions of the Plan are incorporated in this Agreement by this reference.

     2. Grant of Shares. Subject to the terms and conditions of this Agreement and of the Plan, including without limitation the vesting provisions set forth in Section 3, in consideration for services previously rendered by Grantee, the Company hereby grants to Grantee ________ (___) shares of Common Stock (the “Shares”).

     3. Lapse of Risk of Forfeiture of Shares. All of the Shares are subject to a Risk of Forfeiture should Grantee’s Continuous Service be terminated. [At the end of each calendar month after ___, 200_], subject to Grantee’s Continuous Service, the Risk of Forfeiture of the Shares shall lapse with respect to ___ of the Shares and such portion of the Shares shall vest and become free of any restriction pursuant to this Agreement. Upon the termination of Grantee’s Continuous Service, all of the Shares which continue to be subject to a Risk of Forfeiture (“Forfeited Shares”) immediately prior to such termination shall be forfeited by Grantee, ownership of all such Forfeited Shares shall transfer back to the Company and Grantee shall have no further rights with respect to any of such Forfeited Shares.

     4. Restrictions Period. The Shares granted hereunder which are at any time subject to a Risk of Forfeiture pursuant to Section 3, may not be sold, pledged, gifted or otherwise transferred until such Shares are no longer subject to a Risk of Forfeiture pursuant to this

Agreement. The period of time prior to the date Shares are no longer subject to a Risk of Forfeiture pursuant to this Agreement is referred to herein as the “Restriction Period.”

     5. Legend. All certificates representing any Shares subject to a Risk of Forfeiture pursuant to this Agreement (such Shares, the “Unvested Shares”) shall have endorsed thereon during the Restriction Period the following legend:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS CORPORATION.

     6. Retention of Certificate. Any certificate or certificates evidencing any Unvested Shares shall be deposited with the Secretary of the Company. The Unvested Shares may also be held in a restricted book entry account in the name of Grantee. Any such certificates or such book entry shares are to be held by the Company until such time as the Risk of Forfeiture of such Shares shall lapse pursuant to Section 3, after which the Company shall release certificate(s) representing such Shares to Grantee.

     7. Grantee Stockholder Rights. During the Restriction Period, Grantee shall have all the rights of a stockholder with respect to Unvested Shares except for the right to transfer the Unvested Shares (as set forth in Section 4). Accordingly, Grantee shall have the right to vote the Unvested Shares and receive any dividends payable with respect to Unvested Shares.

     8. Taxes. Grantee shall be liable for any and all taxes, including withholding taxes, arising out of the grant, issuance or lapse of the Risk of Forfeiture of Shares. Grantee shall be responsible for filing with the Internal Revenue Service an appropriate written notice of election pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, if Grantee wishes to make such an election. Grantee shall notify the Company in writing if Grantee files such an election (a form of which is attached hereto) within 30 days of the date of this Agreement. The Company intends, in the event it does not receive from Grantee evidence of such filing, to claim a tax deduction for any amount which would otherwise be taxable to Grantee in the absence of such an election. GRANTEE ACKNOWLEDGES THAT IT IS GRANTEE’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF GRANTEE REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON GRANTEE’S BEHALF.

     9. Fractional Shares. The Company shall not be required to deliver any fractional Shares the Risk of Forfeiture of which may lapse pursuant to this Agreement. In lieu of any delivery of any such fractional Share, the Company shall, promptly after Grantee’s written request received after such time as such fractional Share would otherwise be deliverable, pay to Grantee an amount in cash (rounded to the nearest whole cent) equal to product of (x) the closing price of a share of Common Stock on the trading day immediately prior to such date multiplied by (y) the fraction of a Share to which Grantee would otherwise be entitled.

     10. Miscellaneous.

          10.1. Transfers in Violation of Restrictions. The Company shall not be required (i) to transfer on its books any Shares which shall have been sold or transferred in violation of any of the provisions set forth in this Agreement, or (ii) to treat as owner of such shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom such shares shall have been so transferred.

          10.2. Further Assurances. The parties agree to execute such further instruments and to take such action as may reasonably be necessary to carry out the intent of this Agreement.

          10.3. Notices. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon delivery to Grantee at such Grantee’s address then on file with the Company.

          10.4. No Employment or Guarantee of Continued Relationship. Nothing contained in this Agreement or the Plan will be construed as creating an employment relationship between the Company and Grantee. Nothing contained in this Agreement or the Plan will be deemed to grant either party any right, power or authority or create any obligation or duty, express or implied, to continue the relationship between the parties.

          10.5. Entire Agreement. This Agreement, including the Plan, constitute the entire agreement of the parties with respect to the subject matter hereof.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

ADVENTRX Pharmaceuticals, Inc.	Grantee
By:
	(sign above this line)
Name:
Its:	Name:
	(please print)

SECTION 83(b) ELECTION

     When you receive stock from the company in connection with your performance of services the full enjoyment of which is conditioned upon the future performance of substantial services by you, your income tax consequences are determined under Section 83 of the Internal Revenue Code.

     The general rule of Section 83 is that you have a taxable event at the time the stock vests or the risk of forfeiture lapses. At that time, you have ordinary income equal to the excess (the “delta”) of the fair market value of the stock at the time of vesting over the price paid by the person for the stock, if any. If the stock has appreciated between the time of acquisition and the time of vesting, the appreciation would be ordinary income to you (as would any delta that existed when the stock was acquired). The tax holding period of the stock commences when the stock vests and any subsequent appreciation would be capital gain. If the stock is held for more than one year from the vesting date any capital gain would be long-term capital gain.

     You may view this tax treatment as undesirable for two reasons. First, the appreciation of the shares between the grant date and the vesting date would be ordinary income to you. Ordinary income is currently taxed at federal rates up to 35%, while the maximum federal rate on long-term capital gain is currently 15%. Second, the taxable event that occurs on the vesting date may not coincide with a liquidity event, such as the sale of the corporation or shares of the company. In the absence of a liquidity event, you may have a taxable event but no cash with which to pay the taxes.

     For unvested stock, Section 83(b) of the Internal Revenue Code offers a solution to the above-described tax consequences. A person who receives unvested stock may elect to be taxed at the time the stock is granted. If you timely make the Section 83(b) election, you would have ordinary income equal to the delta at the time of grant (rather than at the time the stock vests). The holding period would commence at the grant date and any subsequent appreciation would be capital gain. If the one-year tax holding period is satisfied, all of the gain would be long-term capital gain. Thus, the Section 83(b) election can result in all of your gain being capital gain, however, tax would be due with respect to the delta at the time you make the election.

     In order to timely make an election under Section 83(b), you must file the Section 83(b) election with the Internal Revenue Service Center where you file your income tax returns. You must file the election not later than 30 days after the stock is granted. There is no relief for failing to timely file the election. If you make this election, you must provide the election to us and you must include a copy of the election with your tax return for the taxable year in which the stock is acquired.

     NOTE: The foregoing is not a complete or thorough discussion of income and other tax consequences of the receipt of stock and the company is not hereby rendering any such advice. You are strongly urged to consult their own tax advisors. Stock acquired from the exercise of stock options may subject you to additional and different income and tax consequences, none of which are discussed above.

ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to Sections 55 and 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”), to include in taxpayer’s gross income or alternative minimum taxable income (to the extent applicable under Section 83), as applicable, for the current taxable year, the amount of any income that may be taxable to taxpayer in connection with taxpayer’s receipt of the property described below:

1. The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

NAME OF TAXPAYER:

NAME OF SPOUSE:

ADDRESS:

TAXPAYER IDENTIFICATION NO.:

SPOUSE IDENTIFICATION NO.:

TAXABLE YEAR:

2. The property with respect to which the election is made is described as follows:

___ shares of Common Stock of ADVENTRX Pharmaceuticals, Inc. (the “Company”) received pursuant to a Restricted Share Award Agreement, dated ___, between the Company and the taxpayer.

3. The date on which the property was transferred is: _____ ____, 2006

4. The property is subject to the following restrictions:

The shares vest over time, subject to the taxpayer’s continuous relationship as a consultant or employee with the Company. Upon the termination of the taxpayer’s relationship with the Company, all of the unvested shares outstanding immediately prior to such termination shall be forfeited by the taxpayer, ownership of all such unvested shares shall transfer back to the Company and the taxpayer would have no further rights with respect to any of such unvested shares.

5.	The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is: $___ per share for an aggregate fair market value of $___.
6.	The amount (if any) paid for such property: $0.

The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned’s receipt of the above-described property. The transferee of such property is the person performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.

Dated:
	Print Name:
The undersigned spouse of taxpayer joins in this election.
Dated:
	Spouse of Taxpayer
	Print Name:

EX-21.1

Exhibit 21.1

LIST OF SUBSIDIARIES

ADVENTRX (Europe) Ltd.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-117022 and 333-127857) and Form S-8 (No. 333-126551) of ADVENTRX Pharmaceuticals, Inc. of our reports dated March 10, 2006 with respect to our audits of the consolidated financial statements of ADVENTRX Pharmaceuticals, Inc. and Subsidiary as of December 31, 2005 and 2004 and for each of the years in the three-year period ended December 31, 2005 and the effectiveness of ADVENTRX Pharmaceuticals, Inc and Subsidiary’s internal control over financial reporting as of December 31, 2005, which reports appear in this annual report on Form 10-K for the year ended December 31, 2005.

/s/ J.H. Cohn LLP
San Diego, California
March 10, 2006

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934

I, Evan Levine, certify that:

1. I have reviewed this annual report on Form 10-K of ADVENTRX Pharmaceuticals, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f), for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date March 16, 2006

/s/ Evan Levine  

Evan Levine 

President and Chief Executive Officer
(Principal Executive Officer) 

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934

I, Carrie Carlander, certify that:

1. I have reviewed this annual report on Form 10-K of ADVENTRX Pharmaceuticals, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f), for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date March 16, 2006

/s/ Carrie Carlander  

Carrie Carlander 

Chief Financial Officer, Senior Vice President,
Finance, Secretary and Treasurer
(Principal Financial Officer) 

EX-32.1

Exhibit 32.1

Certification of CEO and CFO Furnished Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant To
Section 906 of The Sarbanes-Oxley Act of 2002

In connection with the Annual Report of ADVENTRX Pharmaceuticals, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof, I, Evan Levine, Chief Executive Officer of the Company, certify for the purposes of section 1350 of chapter 63 of title 18 of the United States Code that, to the best of my knowledge,

(i) the Annual Report of the Company on Form 10-K for the year ended December 31, 2005 (the “Report”), fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934, and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Evan Levine  

Evan Levine 

President and Chief Executive Officer
March 16, 2006 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification of CEO and CFO Furnished Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant To
Section 906 of The Sarbanes-Oxley Act of 2002

In connection with the Annual Report of ADVENTRX Pharmaceuticals, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof, I, Carrie Carlander, Chief Financial Officer of the Company, certify for the purposes of section 1350 of chapter 63 of title 18 of the United States Code that, to the best of my knowledge,

(i) the Annual Report of the Company on Form 10-K for the year ended December 31, 2005 (the “Report”), fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934, and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Carrie Carlander  

Carrie Carlander 

Chief Financial Officer, Senior Vice President,
Finance, Secretary and Treasurer
March 16, 2006 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.