·

Completed two of three product performance pivotal trials to evaluate the safety and efficacy of SCOLR’s over-the-counter (OTC) 12-hour CDT-based ibuprofen. SCOLR currently expects to complete the third of these trials by the end of the second quarter of 2008. The Food and Drug Administration (FDA) recently provided guidance on a label comprehension study and a consumer use study that will be required for product approval. Subject to successful completion of this final performance trial, and any additional guidance from the FDA, SCOLR’s goal is to file a New Drug Application in the second half of 2008. If its ibuprofen product is approved by the FDA, SCOLR believes it would be the first and only 12-hour, extended-release ibuprofen product on the OTC market. Ibuprofen is used for the treatment of pain, fever, and inflammation that is sold in immediate-dose products such as Advil® and Motrin®, among others, as well as under numerous store brands;

 

 

·	Continued preparations for submission of SCOLR’s first Abbreviated New Drug Application (ANDA) for a 12-hour CDT-based pseudoephedrine product. SCOLR currently expects to submit its ANDA to the FDA in 2008;

 

 

·

Entered into a collaboration and license agreement with Dr. Reddy’s Laboratories (NYSE:RDY), for the development and commercialization of an undisclosed oral prescription drug with significant potential for the cardiopulmonary market utilizing SCOLR’s CDT technology. Under the terms of the agreement, Dr. Reddy’s will be responsible for the development, manufacturing and marketing of the product. SCOLR has completed initial formulation work and commenced product transfer activities. The agreement provides double-digit participation in net profits for SCOLR after recovery of development and commercialization expenses associated with the potential product.

 

 

·

Completed initial CDT formulations and preclinical evaluations of peramivir  Further steps to advance development are under discussion with BioCryst.  Peramivir is currently being tested in clinical trials by BioCryst as a potential intramuscular and intravenous treatment for seasonal and life-threatening influenza;

 

 

·

Completed internal development of SCOLR’s prototype once-daily CDT-based risperidone and rivastigmine formulations. SCOLR does not plan to initiate clinical studies for these products without additional funding. Risperidone is used for the management of schizophrenia and bipolar mania. Rivastigmine is typically prescribed for the management of Alzheimer’s disease;

 

 

·	Appointed Dr. Bruce S. Morra, Ph.D., M.B.A., Dr. Jeffrey B. Reich, M.D. and Gregory L. Weaver, CPA, M.B.A, three senior executives with strong backgrounds in healthcare to the board of directors;

 

 

·	Announced an extension of SCOLR’s research agreement for continuing formulation and prototype development activities for commercial evaluation of an undisclosed CDT-based application for a major consumer products company;

 

 

·

Received a fifth patent (#7,229,642) from the United States Patent and Trademark Office entitled “Amino Acid Modulated Extended Release Dosage Form.” This new patent is the third for SCOLR’s amino acid-based CDT drug delivery platform. SCOLR Pharma’s amino acid-based technology is one of the patented/proprietary approaches within its CDT drug delivery platform for formulating novel tablets and capsules; and,

 

 

·	Completed a registered direct offering for net proceeds of approximately $3.6 million in December 2007.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

		December 31,
		2007 (audited)				2006 (audited)
ASSETS
Current Assets
Cash and cash equivalents		$	11,825,371			$	15,217,946
Short-term investments			—				993,542
Accounts receivable			225,900				864,620
Interest and other receivables			16				15,576
Prepaid expenses			423,213				347,136
Total current assets			12,474,500				17,438,820
Property and Equipment—net			748,931				730,512
Intangible assets—net			464,023				325,148
		$	13,687,454			$	18,494,480
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable		$	757,420			$	189,065
Accrued liabilities			586,849				825,158
Current portion of term loan			80,047				—
Deferred revenue			—				185,577
Total current liabilities			1,424,316				1,199,800
Long-term portion of term loan			111,119				—
Fair value of warrants to purchase common stock			—				1,171,045
Total liabilities			1,535,435				2,370,845
Commitments and Contingencies
Stockholders’ Equity
Preferred stock, authorized 5,000,000 shares, $0.01 par value, none issued or outstanding			—				—
Common stock, authorized 100,000,000 shares, $0.001 par value 40,991,385 and 38,048,146 issued and outstanding  as of December 31, 2007 and 2006, respectively			40,991				38,048
Additional contributed capital			69,945,666				63,139,210
Accumulated other comprehensive gain			—				55
Accumulated deficit			(57,834,638	)			(47,053,678	)
Total stockholders’ equity			12,152,019				16,123,635
		$	13,687,454			$	18,494,480