Regenerx Biopharmaceuticals Inc.
Annual Report 2011

Plain-text annual report

Morningstar® Document Research℠ FORM 10-KREGENERX BIOPHARMACEUTICALS INC - RGRXFiled: April 04, 2012 (period: December 31, 2011)Annual report with a comprehensive overview of the companyThe information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The userassumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot belimited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K(Mark One)xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934For the fiscal year ended December 31, 2011or ¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934For the transition period from to Commission file number: 001-15070 RegeneRx Biopharmaceuticals, Inc.(Exact name of registrant as specified in its charter) Delaware 52-1253406State or other jurisdiction ofincorporation or organization (I.R.S. EmployerIdentification No.)15245 Shady Grove Road, Suite 470, Rockville, MD 20850(Address of principal executive offices) (Zip Code)Registrant’s telephone number, including area code: 301-208-9191Securities registered pursuant to Section 12(b) of the Act: None.Securities registered pursuant to section 12(g) of the Act:Common Stock, $0.001 par value, including associated Series A Participating Cumulative Preferred Stock Purchase RightsWarrants to Purchase Common Stock, $0.001 par value Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨ Yes x NoIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨ Yes x NoIndicate 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 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. x Yes ¨ NoIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required tosubmit and post such files). Yes x No ¨Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and willnot be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K orany amendment to this Form 10-K. xIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. Seedefinitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Securities Exchange Act of 1934. (Check one): Large accelerated filer ¨ Accelerated filer ¨Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company xIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ¨ Yes x NoAs of June 30, 2011, the aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $8.7 million. Such aggregateSource: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.market value was computed by reference to the closing price of the Common Stock as quoted on the Over-the-Counter Bulletin Board, or the OTC BulletinBoard, on June 30, 2011.The number of shares outstanding of the registrant’s common stock as of April 3, 2012 was 81,390,618.DOCUMENTS INCORPORATED BY REFERENCENone. Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTABLE OF CONTENTS PART I 3 Item 1. Business 3 Item 1A. Risk Factors 12 Item 1B. Unresolved Staff Comments 26 Item 2. Properties 26 Item 3. Legal Proceedings 26 Item 4. Mine Safety Disclosures 26 PART II 27 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Securities 27 Item 6. Selected Financial Data 27 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation 27 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 33 Item 8. Financial Statements and Supplementary Data 33 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 33 Item 9A. Controls and Procedures 33 Item 9B. Other Information 34 PART III 34 Item 10. Directors, Executive Officers and Corporate Governance 34 Item 11. Executive Compensation 37 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 42 Item 13. Certain Relationships and Related Transactions, and Director Independence 44 Item 14. Principal Accounting Fees and Services 45 PART IV 46 Item 15. Exhibits, Financial Statement Schedules 46 SIGNATURES 51 INDEX TO FINANCIAL STATEMENTS F-1 EXHIBIT INDEX 2Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsPART IThis Annual Report on Form 10-K, including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results ofOperations,” contains forward-looking statements regarding us and our business, financial condition, results of operations and prospects within themeaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the words “project,” “believe,”“anticipate,” “plan,” “expect,” “estimate,” “intend,” “should,” “would,” “could,” “will,” “may” or other similar expressions. In addition, anystatements that refer to projections of our future financial performance or capital resources, our clinical development programs and schedules, ouranticipated growth and trends in our business, and other characterizations of future events or circumstances are forward-looking statements. Wecannot guarantee that we will achieve the plans, intentions or expectations expressed or implied in our forward-looking statements. There are anumber of important factors that could cause actual results, levels of activity, performance or events to differ materially from those expressed orimplied in the forward-looking statements we make, including those described under “Risk Factors” set forth below. In addition, any forward-lookingstatements we make in this report speak only as of the date of this report, and we do not intend to update any such forward-looking statements toreflect events or circumstances that occur after that date.Item 1. Business.GeneralWe are a biopharmaceutical company focused on the development of a novel therapeutic peptide, Thymosin beta 4, or Tß4, for tissue and organprotection, repair, and regeneration. We have formulated Tß4 into three distinct product candidates in clinical development: • RGN-259, a topical eye drop for regeneration of corneal tissues damaged by injury, disease or other pathology; • RGN-352, an injectable formulation to treat cardiovascular diseases, central and peripheral nervous system diseases, and other medicalindications that may be treated by systemic administration; and • RGN-137, a topical gel for dermal wounds and reduction of scar tissue.We have a fourth formulation, RGN-457, in preclinical development. RGN-457 is a liquid aerosol formulation of Tß4 targeting cystic fibrosis and otherpulmonary diseases by inhalation.We are continuing strategic partnership discussions with biotechnology and pharmaceutical companies regarding the further clinical development of allof our product candidates.In addition to our four pharmaceutical product candidates, we are also pursuing the commercial development of peptide fragments and derivatives ofTß4 for potential cosmeceutical use. These fragments are amino acid sequences, and variations thereof, within the Tß4 molecule that have demonstratedactivity in several in vitro preclinical research studies that we have sponsored. We believe the biological activities of these fragments may be useful, forexample, in developing novel cosmeceutical products for the anti-aging market. Our strategy is to collaborate with another company to develop cosmeceuticalformulations based on these peptides.Current Financial CircumstancesDue to our current financial condition as described further in this report, beginning in late 2011, we began implementing significant cost-savingmeasures to conserve capital resources and maintain a minimal level of operations, while seeking to receive additional funding and/or complete a strategictransaction. To that end, we have greatly reduced salaries and work schedules of our employees and have increasingly relied on reimbursements under a grantthat we received from the National Institutes of Health (NIH), to fund employee salaries. We have also engaged investment bankers to help us explore financingalternatives, including a possible equity financing or licensing transaction, in order to continue the development of our product candidates, as well as theexploration of other strategic alternatives, including a possible asset out-licensing, asset sale or sale of our company.In March 2012, we entered into a term sheet with Lee’s Pharmaceutical (HK) for the development of Tß4 in any pharmaceutical formulation in China,Hong Kong and Macau. At the time of the signing of the term sheet, we received a $200,000 payment from Lee’s. Upon execution of the definitive licenseagreement, we will receive an additional $200,000 payment from Lee’s. While we expect that these funds will allow us to continue our minimal level ofoperations through June 2012, we will still need to complete a financing or strategic transaction within the second quarter of 2012 to continue as a goingconcern, or we may be forced to cease operations, seek protection under the provisions of the U.S. Bankruptcy Code, or liquidate and dissolve our company. 3Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsOverview of Tß4Tß4 is a naturally occurring 43-amino acid peptide that was originally isolated from bovine thymus glands. It plays a vital role in cell structure andmotility and in the protection, regeneration, remodeling and healing of tissues.Although it is recognized that wound healing and tissue regeneration are complex processes, most companies working to develop new drugs in this areahave focused primarily on the development of growth factors to stimulate healing only and have, to date, failed to demonstrate dramatic improvements in thehealing process. Unlike growth factors, numerous preclinical animal studies, published by independent researchers, have identified several importantbiological activities involving Tß4 that we believe make it potentially useful as a wound healing, repair and tissue regenerating agent. These activities include: • Progenitor (Stem) Cell Differentiation. Research published in the journal Nature in November 2006 featured the discovery that Tß4 isthe key signaling molecule that triggers adult epicardial progenitor cells, or EPCs, to differentiate into coronary blood vessels. EPCs arepartially differentiated stem cells that can further differentiate into specific cell types when needed. Confirmatory research published in2009 in the Journal of Molecular and Cellular Cardiology concluded that Tß4 is responsible for the initiation of the embryoniccoronary developmental program and EPC differentiation in adult mice. These publications confirm that Tß4’s interaction with EPCs isnecessary for the maintenance of a healthy adult animal heart, as well as for normal embryo and fetal heart development in mammals. • Actin Regulation. Tß4 regulates actin, which comprises up to 10% of the protein of non-muscle cells in the body and plays a central rolein cell structure and in the movement of cells. Research studies have indicated that Tß4 stimulates the migration of human keratinocytes,or skin cells, as well as corneal epithelial cells that protect the eye, human endothelial cells and progenitor cells of the heart and brain.Endothelial cells are the major cell type responsible for the formation of new blood vessels, a process known as angiogenesis. Certain ofthese studies conducted at the National Institutes of Health, or NIH, were the first to suggest the role of Tß4 in wound healing. The datafrom these studies encouraged us to license the rights to Tß4 from the NIH in 2001 and to launch an initial clinical development programthat targeted the use Tß4 for chronic dermal wounds. • Reduction of Inflammation. Uncontrolled inflammation is the underlying basis of many pathologies and injuries. Research has shownthat Tß4 is a potent anti-inflammatory agent in skin cells and in corneal epithelial cells in the eye. Tß4 has also been shown to decrease thelevels of inflammatory mediators and to significantly reduce the influx of inflammatory cells in the reperfused heart of animals. Morerecent preclinical research suggests that Tß4 blocks activation of the NFkB pathway, which is involved in DNA activation ofinflammatory mediators, thereby modulating inflammation in the body. This anti-inflammatory activity may explain, in part, themechanism by which Tß4 appeared to improve functional outcome in the mouse multiple sclerosis model described above, as well aspromoting repair in the heart and skin. Identifying a factor such as Tß4 that blocks activation of NFkB suggests that Tß4 could haveadditional important therapeutic applications for inflammation-related diseases, such as cancer, osteoarthritis, rheumatic diseases,autoimmune diseases, inflammatory pulmonary disease and pancreatitis. • Collagen and Laminin-5 Stimulation. Tß4 has a number of additional biological activities shown to reduce inflammation, stimulate theformation of collagen, and up-regulate the expression of laminin-5, a subepithelial basement membrane protein. Both collagen andlaminin-5 are central to healthy tissue and the prevention of disease. • Apoptosis. Tß4 has been shown to prevent apoptosis, or programmed cell death, in two animal models and in two tissue types. In therodent model, corneal apoptosis, or loss of corneal epithelial cells leading to corneal epithelial thinning, was prevented through topicaladministration of Tß4 eye drops. In the heart muscle of ischemic animal models, such as in mice and pigs, cell death was prevented byeither local or systemic administration of Tß4.The 2006 Nature publication also concluded that Tß4’s interaction with EPCs resulted in the formation of cardiomyocytes that repaired damagedmyocardium, or heart tissue, in mice after an induced acute myocardial infarction, or AMI, commonly known as a heart attack. Research published in thejournal Circulation in April 2008 showed Tß4’s cardioprotective effects in a pig ischemic-reperfusion model. This pig model is accepted as an importantmodel upon which to base human clinical research, as pigs are larger mammals, the anatomy of the pig heart is similar to the human heart, and vascularresponse processes are completed five to six times faster in pigs than in humans, so that long-term results can be obtained in a relatively short period of time.This research also identified Tß4’s interaction with EPCs as the underlying basis of cardioprotection through the differentiation of EPCs into cardiomyocytes,yielding statistically significant cardiac functional recovery results when compared to the administration of placebo. 4Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsSimilar research in the area of brain tissue was published in the journal Neuroscience in September 2009. This publication concluded that Tß4triggered the differentiation of oligodendrocyte progenitor cells to form myelin-producing oligodendrocytes, which led to the remyelination of axons in the brainof mice with experimental autoimmune encephalomyelitis, or EAE. This mouse model is an accepted small animal model for the study of multiple sclerosis. In2010, research published in the Journal of Neurosurgery showed that Tß4 could improve functional neurological outcome in an animal stroke model. In2011, another study was published in the Journal of Neurosurgery demonstrating that administration of Tb4 can significantly improve histological andfunctional outcomes in rats with traumatic brain injury, or TBI, indicating that Tb4 has considerable therapeutic potential for patients with TBI.We believe that these various biological activities work in concert to play a vital role in the healing and repair of injured or damaged tissue and suggestthat Tß4 is an essential component of the tissue protection and regeneration process that may lead to many potential medical applications. All of our productcandidates are based on Tß4 and are manufactured by solid-phase peptide synthesis as a copy of the naturally occurring peptide and formulated for variousroutes of administration and applications.Our Product CandidatesRGN-259RGN-259 is our proprietary preservative-free eye drop formulation of Thymosin beta 4. In September 2011, we completed a Phase 2a exploratoryclinical trial evaluating the safety and efficacy of RGN-259 in 72 patients with dry eye syndrome. Patients were randomly assigned to receive either RGN-259or placebo in this double-masked, placebo-controlled trial. All patients received either RGN-259 (0.1% concentration) or placebo, twice daily for 30 days.Various signs and symptoms of dry eye, such as the degree of ocular surface damage, ocular itching, burning and grittiness, among others, were gradedperiodically during and following the treatment period. The trial was conducted by Ora Inc., an ophthalmic contract research organization that specializes indry eye research and clinical trials, and utilized Ora’s Controlled Adverse Environment (CAE) chamber, which is a generally accepted model that exacerbatesdry eye signs and symptoms in the dry eye patient.In November 2011, we reported preliminary safety and efficacy results from the trial. RGN-259 was deemed safe and well-tolerated, with no observeddrug-related adverse events.The co-primary outcome measures evaluated in the trial were inferior corneal fluorescein staining and decreased ocular discomfort on day 29. Varioussecondary outcome measures were also evaluated in the trial. While the study did not meet the co-primary outcome measures, during and after challenge in theCAE chamber, RGN-259 showed statistically significant efficacy results in other measured endpoints, meaning a p-value equal to or less than 0.05, whichindicates a 5% or less likelihood that the results were due to chance, as follows: • Patients receiving RGN-259 experienced a 325% greater reduction from baseline in central corneal fluorescein staining compared toplacebo at the 24 hour recovery period (p = 0.0075). Reduction of fluorescein staining is indicative of a reduction in ocular surface damageof the central cornea; • Patients receiving RGN-259 experienced a 257% greater reduction from baseline in exacerbation of superior corneal fluorescein staining inthe chamber as compared to the placebo (p = 0.0210); and • Patients receiving RGN-259 experienced a 27.3% greater reduction in exacerbation of ocular discomfort at day 28 during a 75-minutechallenge in a controlled adverse environment compared to the placebo group (p = 0.0244). Reduction indicates that RGN-259 can slowexacerbation of ocular symptoms in patients with dry eye syndrome.Other CAE-related findings, such as superior corneal staining reduction and peripheral (combination of the average of superior and inferior) cornealstaining reduction, were observed having statistical significance, while others had positive trends after treatment with RGN-259. These observations are inline with the known biological properties and mechanisms of action of RGN-259 reported in various nonclinical studies.With respect to inferior corneal fluorescein staining, we did see a trend toward improvement, meaning that we observed reduced staining, at day 28during exposure to adverse conditions in the CAE chamber in patients receiving RGN-259 compared to placebo, although this improvement was not deemed tobe statistically significant (p=0.0968). 5smSource: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe co-primary outcome measures, selected at the outset of this initial exploratory trial, were based on the best available animal data at the time butwithout the benefit of any actual human clinical experience in dry eye. Therefore, we believe that our not having met the co-primary outcome measures at thisstage is not as important as identifying statistically significant outcomes that could potentially serve as approvable endpoints in later stage or in pivotal Phase 3clinical trials. We believe that the statistically significant observation of reduction in central corneal staining, as well as symptom improvements observed inthe trial and described above, reflect actual patient benefits and represent acceptable outcome measures to the FDA for use in follow-up Phase 2 or confirmatorypivotal Phase 3 trials. We are currently preparing a clinical study report for submission to the FDA, which will confirm these results of the exploratory Phase 2clinical trial.Separately, we are continuing to support a small physician-sponsored clinical trial in patients with dry eye, in order to evaluate RGN-259’s ability torepair and regenerate damaged ophthalmic tissues in a heterogeneous group of patients, some of whom have severe dry eye as a sequel to graft vs. host disease.Our support includes supplying RGN-259 and placebo for the trial and providing regulatory and clinical guidance.Lee’s Pharmaceuticals. On March 27, 2012, we announced that we had signed a term sheet with Lee’s Pharmaceutical (HK) Limited, headquarteredin Hong Kong, for the license of Thymosin Beta 4 in any pharmaceutical form, including our RGN-259, RGN-352 and RGN-137 product candidates, inChina, Hong Kong and Macau. Lee’s paid us $200,000 upon signing of the term sheet, and Lee’s will pay us an additional $200,000 upon signing of thedefinitive license agreement, which we expect to occur by May 31, 2012. Lee’s is an affiliate of Sigma Tau, which collectively with its affiliates is our largeststockholder. For a discussion of the material terms of the term sheet and expected terms of the definitive license agreement, see “—Material Agreements—Lee’sPharmaceuticals.”Future Plans. We are in the process of seeking a financial sponsor to allow for the continued clinical development of RGN-259. Based on the results ofour Phase 2a clinical trial in patients with dry eye syndrome conducted in 2011 and, subject to the availability of sufficient financial resources, we aredesigning a Phase 2b clinical trial utilizing Ora’s CAE model that we believe could generate important registration data. We are also engaged in discussionswith ophthalmic specialty companies regarding product licensing to advance clinical development of this product candidate.RGN-352During 2009, we completed a Phase 1 clinical trial evaluating the safety, tolerability and pharmacokinetics of the intravenous administration of RGN-352 in 60 healthy subjects. Based on the results of this Phase 1 trial and extensive preclinical efficacy data published in peer-reviewed journals, in the secondhalf of 2010, we began start-up activities for a Phase 2 study to evaluate RGN-352 in patients who had suffered an AMI. We had planned to begin enrollingpatients in this clinical trial near the end of the first quarter of 2011. However, in March 2011, we were notified by the FDA that the trial was placed onclinical hold as a result of our contract manufacturer’s alleged failure to comply with current Good Manufacturing Practices, or cGMPs. We have since learnedthat the manufacturer has closed its manufacturing facility and filed for bankruptcy protection. The FDA has prohibited us from using any of the active drugor placebo formulated by this manufacturer in human trials; consequently, we must have RGN-352 manufactured by a new cGMP-compliant manufacturerin the event we seek to resume this trial.Significant preparatory time and procedures will be required and expenses would need to be incurred before any new cGMP-compliant manufacturerwould be able to manufacture RGN-352 for the AMI trial and for us to resume study start-up activities. Due to these factors, including the time required forrevalidation of processes and assays related to production that were already in place with the original manufacturer, we have elected to postpone activities onthis trial until the requisite funding is secured.In addition to the potential application of RGN-352 for the treatment of cardiovascular disease, preclinical research published in the scientific journalsNeuroscience and the Journal of Neurosurgery indicates that RGN-352 may also prove useful for patients with multiple sclerosis, or MS, as well as strokeand traumatic brain injury. In these studies, the administration of Tß4 resulted in regeneration of neuronal tissue by promoting remyelination of axons andstimulating oligodendrogenesis, resulting in improvement of neurological functional activity. Based on this preclinical research, depending on our capitalresources, and if we are able to separately procure cGMP-compliant clinical trial material, we may also support a proposed physician-sponsored Phase 1/2clinical trial to be conducted at a major U.S. medical center to evaluate the therapeutic potential of RGN-352 in patients with MS and traumatic brain injury.RGN-137Clinical Development — Epidermolysis Bullosa. In 2005, we began enrolling patients in a Phase 2 trial designed to assess the safety andeffectiveness of RGN-137 for the treatment of patients with EB. EB is a genetic defect that results in fragile skin and other epithelial tissues that can blister orseparate at the slightest trauma or friction, creating a wound that at times does not heal or heals poorly. In this randomized, double-blind, placebo-controlled,dose-response trial, nine U.S. clinical sites have been enrolling patients to evaluate the safety, tolerability, and wound healing effectiveness of three differentconcentrations of RGN-137 compared to placebo. RGN-137 is being applied topically to the skin, once daily for up to 56 consecutive days. EB has beendesignated as an “orphan” indication by the FDA’s Office of Orphan Drugs. A portion of this trial was funded by a grant of $681,000 received from the FDA.We have completed enrollment of 30 out of the original target of 36 patients and closed the Phase 2 trial in late 2011 as the availability of eligible patients hasbeen exhausted. 6Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsClinical Development — Pressure Ulcers. In late 2005, we began enrolling patients in a Phase 2 clinical trial designed to assess the safety andeffectiveness of RGN-137 for the treatment of patients with chronic pressure ulcers, commonly known as bedsores. In this randomized, double-blind, placebo-controlled, dose-response trial, 15 clinical sites in the United States enrolled a total of 72 patients to evaluate the safety, tolerability, and wound healingeffectiveness of three different concentrations of RGN-137 compared to placebo. RGN-137 was applied topically to the ulcers, once daily for up to 84consecutive days. Patients in the trial were between 19 and 85 years old and had at least one stable Stage III or IV pressure ulcer with a surface area between 5and 70 cm. Stage III and IV pressure ulcers are full thickness wounds that penetrate through the skin and muscle, sometimes completely to the bone.In January 2009, we reported final data from this trial. RGN-137 was well-tolerated at all three dose levels studied, with no dose-limiting adverse events,which achieved the primary objective of the study. As for efficacy, all Tß4 doses performed similarly compared to placebo, with no statistically significantefficacy results. However, patients treated with the middle dose showed a 17% rate of wound healing, which was the highest rate among the three active dosesevaluated. The improvement in ulcer healing in this middle dose group following nine weeks of treatment was equal to the improvement in patients treated withplacebo after 12 weeks of treatment. A follow-on evaluation, reported at the 3 International Symposium on the Thymosins in Health and Disease in March2012, showed that for those pressure ulcer patients’ wounds that healed, RGN-137 mid dose (0.02% Tb4 gel product) accelerated wound closure with amedian time to healing of 22 days as compared to 57 days for the placebo. However, those results were not statistically significant.Clinical Development — Venous Stasis Ulcers. In 2006, we began enrolling patients in a Phase 2 trial designed to assess the safety and effectivenessof RGN-137 for the treatment of patients with venous stasis ulcers. In this randomized, double-blind dose-response trial, eight clinical sites in Italy and Polandenrolled a total of 73 patients to evaluate the safety, tolerability, and wound healing effectiveness of three different concentrations of RGN-137 compared toplacebo. RGN-137 was applied topically to the ulcers, once daily for up to 84 consecutive days. Patients in the trial were between 18 to 79 years old and had atleast one venous stasis ulcer with a surface area between 3 and 30 cm. We were the sponsor of the trial, which was conducted and funded by Sigma-Tau.In March 2009, we reported final data from the trial. RGN-137 was well-tolerated at all three dose levels, with no dose-limiting adverse events, whichachieved the primary objective of the study. Thirty-three percent (33%) of the patients who received the middle dose of RGN-137 had their ulcers healcompletely after the 12 weeks of treatment, compared to 24% of patients receiving the placebo, 16% of patients receiving the lowest drug dose and 17% ofpatients receiving the highest drug dose. Of the patients receiving the middle dose whose ulcers healed completely, the median time to complete healingdecreased by approximately 45%, as compared to a 37% decrease in the time to healing for patients in the placebo-treated group. None of the differencesobserved between RGN-137 and placebo were statistically significant. A follow-on evaluation, reported at the 3 International Symposium on the Thymosinsin Health and Disease in March 2012, showed that for venous stasis ulcers greater than 3 cm that healed, the median time to healing for the RGN-137 (0.03%Tb4) treated wounds was 49 days as compared to 78 days for placebo. Those results were statistically significant (p value < 0.05).Future Plans. Following the EB trial closure, we will analyze the data and submit a clinical study report to the FDA for review, if requisite funding todo so is secured. Results of the EB trial in conjunction with study outcomes from our two other completed Phase 2 trials of RGN-137 in pressure and venousstasis ulcers, along with preclinical data indicating Tß4’s ability to reduce scarring, will allow us to further evaluate our strategy for the clinical developmentof RGN-137.RGN-457Our preclinical product candidate RGN-457 is based on Tß4 formulated as a liquid aerosol for inhalation therapy. We have completed a substantialamount of preclinical work necessary for an investigational new drug, or IND, application, and we are currently seeking a strategic partner to assist in thedevelopment of RGN-457 for the treatment of cystic fibrosis, or CF. The anti-inflammatory, mucoactive and antimicrobial properties of Tb4 provide thescientific rationale for use of the RGN-457 in this indication. CF is a life-threatening, hereditary disease that impairs the patient’s ability to breathe due to theaccumulation of mucus secretions in the airways of the lungs. The predicted median age of survival for patients with cystic fibrosis is 37 years. There areestimated to be approximately 30,000 CF patients in the United States and approximately 40,000 CF patients in Europe. It is therefore considered to be anorphan disease in both territories. While we believe RGN-457 may prove beneficial in the treatment of CF, we remain focused primarily on development of ourother product candidates while we continue strategic partnership discussions with respect to RGN-457. 72rd2rd2Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsPeptide Fragments for Cosmeceutical ApplicationsWe are also seeking to identify and evaluate Tß4 peptide fragments and derivatives that may be useful as novel components in cosmeceutical andconsumer products. We have identified several amino acid sequences, and variations thereof, within the Tß4 molecule that have demonstrated in vitro activityin preclinical research studies that we have sponsored, and we have filed a number of patent applications related to this research. We believe the biologicalactivities of these fragments may be useful, for example, in developing novel cosmeceutical products for the anti-aging market. To date, research has suggestedthat these fragments suppress inflammation, accelerate the deposition of certain types of collagen, promote the production of elastin, and inhibit programmedcell death, among other activities. Our development and commercialization strategy is to identify suitable commercial partners to license these novel fragmentsfor various cosmeceutical applications. We have held discussions with several multinational cosmetics and consumer products companies focused on potentialcollaborations to further develop and commercialize these fragments.Our StrategyWe seek to maximize the value of our product candidates by advancing their clinical development and then identifying suitable partners for furtherdevelopment, regulatory approval, and marketing. We intend to engage in strategic partnerships with companies with clinical development andcommercialization strengths in desired pharmaceutical therapeutic fields. We are actively seeking partners with suitable infrastructure, expertise and a long-term initiative in our medical fields of interest.We have entered into a strategic partnership with Defiante Farmaceutica S.A., or Defiante, a subsidiary and one of several entities affiliated with Sigma-Tau Group, a leading international pharmaceutical company which collectively comprise our largest shareholder, or Sigma-Tau, for development andmarketing of RGN-137 and RGN-352 for specified indications in Europe and other contiguous countries. Sigma-Tau also funded and co-managed our Phase 2clinical trial of RGN-137 in Europe for the treatment of venous stasis ulcers.We recently have signed a term sheet with Lee’s Pharmaceutical (HK) Limited, headquartered in Hong Kong, for the license of Thymosin Beta 4 in anypharmaceutical form, including our RGN-259, RGN-352 and RGN-137 product candidates, in China, Hong Kong and Macau. Lee’s is an affiliate of SigmaTau, which collectively with its affiliates is our largest stockholder. For a discussion of the material terms of the term sheet and expected terms of the definitivelicense agreement, see “—Material Agreements—Lee’s Pharmaceuticals.”ManufacturingWe use a major contract manufacturer to produce bulk Tß4, which is the active pharmaceutical ingredient, or API, by an established and provenmanufacturing process known as solid-phase peptide synthesis, and are in the early stages of qualifying a backup manufacturer. While we do not currentlyhave long-term supply agreements in place, we intend to establish a long-term supply arrangement with at least one manufacturer once practicable. Noassurance can be given, however, that such agreements will be negotiated on favorable terms, or at all. Contractors are selected on the basis of their supplycapability, ability to produce a product in accordance with cGMP requirements of the FDA and ability to meet our established specifications and qualityrequirements. If we obtain sufficient capital, we will authorize our primary contract manufacturer to begin the cGMP validation process and consistency runs,among other things, to prepare for the manufacture of bulk Tb4 for use in future clinical trials utilizing our formulated product candidates.We also use a number of outside contract manufacturers to formulate bulk Tß4 into our product candidates, RGN-137, RGN-259 and RGN-352, andRGN-457. We use separate manufacturers for each formulation of Tß4. All of these formulations may require modifications, along with additional studies, aswe advance our clinical development programs. As described elsewhere in this report, our contract manufacturer for RGN-352 underwent a manufacturinginspection by the FDA and was found not to be in compliance with cGMP, resulting in a clinical hold of our Phase 2 AMI clinical trial. This manufacturerhas closed its manufacturing facility and filed for bankruptcy protection. If we are to continue clinical development of RGN-352, we will need to secure aGMP-compliant manufacturer of RGN-352.CompetitionWe are engaged in a business that is highly competitive, and our target medical indications are ones with significant unmet needs. Moreover, thecosmetic and cosmeceutical industries are rapidly developing new products based on new scientific research. Consequently, there are many enterprises, bothdomestic and foreign, pursuing therapies and products that could compete with ours. Most of these entities have financial and human resources that aresubstantially greater than ours, specifically with regard to the conduct of clinical research and development activities, clinical testing and in obtaining theregulatory approvals necessary to market pharmaceutical products. Brief descriptions of some of these competitive products follow: 8Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsRGN-259. Most specialty ophthalmic companies have a number of products on the market that could compete with RGN-259. There are numerousantibiotics to treat eye infections that cause corneal wounds and many eye lubrication products that are soothing to the eye and help eye healing, many ofwhich are sold without prescriptions. Companies also market steroids to treat certain conditions within our area of interest. Allergan, Inc. markets Restasis™,Ophthalmic Emulsion, the only commercially available and FDA-approved eye drop to treat dry eye.RGN-352. Currently, there are no approved pharmaceutical products for regenerating cardiac tissue following a heart attack, nor are there approvedpharmaceutical products for the remyelination of axons for patients with multiple sclerosis or patients suffering from traumatic brain injury. However, manypharmaceutical companies and research organizations are developing products, therapies and technologies that are intended to prevent cardiac damage,improve cardiac function, and regenerate cardiac muscle after a heart attack. There are also companies developing products that remyelinate neurons andprovide functional improvement for patients suffering from multiple sclerosis, stroke and traumatic brain injury. If we were to successfully develop RGN-352for other cardiovascular indications, such as acute or chronic heart failure, such a product would have to compete with other drugs or therapies currentlymarketed by large pharmaceutical companies for similar indications, as would products for the treatment of central nervous system disorders.RGN-137. Johnson & Johnson has marketed Regranex Gel for patients with diabetic foot ulcers. Companies such as Novartis are developing andmarketing artificial skins, which would compete with RGN-137 in the treatment of dermal wound healing. There are other companies developing newpharmaceutical products for wound healing. Products and therapies such as antibiotics, honey-based ointments, silver-based compounds and low frequencycavitational ultrasound are also used to treat certain types of dermal wounds. Moreover, dermal wound healing is a large and highly fragmented marketplacethat includes numerous therapeutic products and medical devices for treating acute and chronic dermal wounds.RGN-457. CF is a genetic defect for which there is no cure. There are mucolytic agents and antibiotic drugs on the market, such as Genentech’spulmozyme and Novartis’s TOBI , an inhaled version of tobramycin, respectively, that relieve the symptoms posed by CF and could potentially competewith RGN-457.Cosmeceuticals. The cosmetics industry is highly competitive and dependent on effective marketing and distribution. There are multiple productsavailable from several major international cosmetic companies that claim the same or similar benefits that may be claimed with our product candidates.Government RegulationIn the United States, the Federal Food, Drug, and Cosmetic Act, as amended, or FFDCA, and the regulations promulgated thereunder, and other federaland state statutes and regulations govern, among other things, the testing, manufacturing, labeling, storing, recordkeeping, distribution, advertising andpromotion of our product candidates. Regulation by governmental authorities in the United States and foreign countries will be a significant factor in themanufacturing and potential marketing of our product candidates and in our ongoing research and product development activities. Any product candidate wedevelop will require regulatory approval by governmental agencies prior to commercialization. In particular, human therapeutic products are subject to rigorouspreclinical studies, clinical trials and other approval procedures by the FDA and similar health authorities in foreign countries. The process of obtaining theseapprovals and subsequent compliance with appropriate federal and state statutes and regulations requires the expenditure of substantial resources.Preclinical studies must ordinarily be conducted to evaluate an investigational new drug’s potential safety by toxicology studies and potential efficacy bypharmacology studies. The results of these studies, among other things, are submitted to the FDA as part of an Investigational New Drug Application, or IND,which must be reviewed by the FDA before clinical trials can begin. Typically, clinical evaluation involves a three-stage process. Phase 1 clinical trials areconducted with a small number of healthy volunteers to determine the safety profile and the pattern of drug absorption, distribution, metabolism and excretion,and to assess the drug’s effect on the patient. Phase 2, or therapeutic exploratory, trials are conducted with somewhat larger groups of patients, who are selectedby relatively narrow criteria yielding a more homogenous population that is afflicted with the target disease, in order to determine preliminary efficacy, optimaldosages and expanded evidence of safety. Phase 2 trials should allow for the determination of the dose to be used in Phase 3 clinical trials. Phase 3, ortherapeutic confirmatory, large scale, multi-center, comparative trials are conducted with patients afflicted with a target disease in order to provide enough datafor the statistical proof of safety and efficacy required by the FDA and other regulatory authorities. The primary objective of Phase 3 clinical trials is to showthat the drug confers therapeutic benefit that outweighs any safety risks. All clinical trials must be registered with a central public database, such aswww.clinicaltrials.gov, and once completed, results of the clinical trials must be entered in the database. 9TM®Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe results of all of these preclinical studies and clinical trials, along with detailed information on manufacturing, are submitted to the FDA in the formof a New Drug Application, or NDA, for approval to commence commercial sales. The FDA’s review of an NDA requires the payment of a user fee currentlyin excess of $1.8 million, which may be waived for the first NDA submitted by a qualifying small business. In responding to an NDA, the FDA may refuseto file the application if the FDA determines that the application does not satisfy its regulatory approval criteria, request additional information or grantmarketing approval. Therefore, even if we complete Phase 3 clinical trials for our product candidates and submit an NDA to the FDA, there can be noassurance that the FDA will grant marketing approval, or if granted, that it will be granted on a timely basis. If the FDA does approve a product candidate, itmay require, among other things, post-marketing testing, including potentially expensive Phase 4 trials, which monitor the safety of the drug. In addition, theFDA may in some circumstances impose risk evaluation and mitigation strategies that may be difficult and expensive to administer. Product approvals may bewithdrawn if compliance with regulatory requirements is not maintained or if problems occur after the product reaches the market.Among the conditions for NDA approval is the requirement that the applicable clinical, pharmacovigilance, quality control and manufacturingprocedures conform on an ongoing basis with current Good Clinical Practices, Good Laboratory Practices, current Good Manufacturing Practices, andcomputer information system validation standards. During the review of an NDA, the FDA will perform a pre-licensing inspection of select clinical sites,manufacturing facilities and the related quality control records to determine the applicant’s compliance with these requirements. To assure compliance,applicants must continue to expend time, money and effort in the area of training, production and quality control. After approval of any product,manufacturers are subject to periodic inspections by the FDA. If a company fails to comply with FDA regulatory requirements, FDA may pursue a wide rangeof remedial actions, including seizure of products, corrective actions, warning letters and fines. As described in this report, one of our prior contractmanufacturers was alleged by the FDA to have not complied with current Good Manufacturing Practices, which has impaired our ability to conduct ourpending Phase 2 AMI trial with RGN-352.We have received orphan drug designation from the FDA for Tß4 for the treatment of EB. The FDA may designate a product or products as havingorphan drug status to treat a disease or condition that affects less than 200,000 individuals in the United States, or, if patients of a disease number more than200,000, the sponsor can establish that it does not realistically anticipate its product sales will be sufficient to recover its costs. If a product candidate isdesignated as an orphan drug, then the sponsor may receive incentives to undertake the development and marketing of the product, including grants forclinical trials, as well as a waiver of the user fees for submission of an NDA application. For example, as described above, we received a grant from the FDAfor our Phase 2 clinical trial of RGN-137 to treat patients with EB.Generally, if a product with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has suchdesignation, the product is entitled to marketing exclusivity for a period of seven years in the United States. There may be multiple designations of orphandrug status for a given drug and for different indications. Orphan drug designation does not guarantee that a product candidate will be approved by the FDAfor marketing for the designation, and even if a sponsor of a product candidate for an indication for use with an orphan drug designation is the first to obtainFDA approval of an NDA for that designation and obtains marketing exclusivity, another sponsor’s application for the same drug product may be approvedby the FDA during the period of exclusivity if the FDA concludes that the competing product is clinically superior. In this instance, the orphan designationand marketing exclusivity originally granted would be lost in favor of the clinically superior product.Intellectual PropertyWe hold worldwide patents and patent applications covering peptide compositions, uses and formulations related to dermal and ophthalmic indicationsand other organ and tissue repair activities, as well as for cosmetic and consumer product applications. In 2001, we entered into a license agreement with theNIH under which we received an exclusive worldwide license from the NIH for all claims within the scope of the NIH’s patent application, and any issuedpatents, covering the use of Tß4 as a tissue repair and regeneration factor. During 2007, patents were issued in Europe and the United States related to theoriginal NIH patent application, which patents expire in July 2019. Corresponding patents have been granted in Hong Kong, Australia and China and certainother territories. The issued European patent was opposed by a third party at the European Patent Office, and in December 2009, we argued the case before theOpposition Division of the European Patent Office in Munich, Germany and prevailed with certain amendments to the claims. In exchange for the exclusivelicense, we agreed to make certain minimum royalty and milestone payments to the NIH. Through December 31, 2011, we have complied with all minimumroyalty requirements, and no milestone payments have been required under the agreement.We hold a U.S. patent relating to the use of Tß4 for treatment of alopecia, an autoimmune skin disease that results in hair loss, which expires in 2017,with corresponding patents in Europe and Singapore that expire in 2018. In 2006, we were issued a patent in China for the use of Tß4 to treat EB, whichexpires in 2022.We hold a U.S. patent relating to the use of Tß4 for the treatment of congestive heart failure. This patent issued in January 2012, and will expire in 2032.Under a research agreement with The George Washington University, or GWU, we funded Tß4 research at GWU and received a sole and exclusiveworldwide license to any resulting patents. While we no longer fund any research under this agreement, we remain obligated to pay GWU a royalty of 4% ofthe net sales, if any, of specified products covered by patents issued in connection with the agreement. Pursuant to the research agreement, we have exclusiverights to patent applications filed in the United States and in Europe disclosing the use of Tß4 for the treatment of septic shock and associated syndromes,including Adult Respiratory Distress Syndrome. Two U.S. patents covered by this agreement have been issued, which expire in 2013 and 2014. 10Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsWe have also filed numerous additional U.S. and international patent applications covering various compositions, uses, formulations and othercomponents of Tß4, as well as for novel peptides resulting from our research efforts, the latest of which were filed during 2011. There can be no assurancethat these, or any other future patent applications under which we have rights, will result in the issuance of a patent or that any patent issued will not besubject to challenge or opposition. In the case of a claim of patent infringement by or against us, there can be no assurance that we will be able to afford theexpense of any litigation that may be necessary to enforce our proprietary rights.Material AgreementsNational Institutes of HealthWe have entered into a license agreement with NIH under which we are obligated to pay an annual minimum royalty of $25,000. Additionally, we areobligated to pay the NIH a percentage of sales of qualifying product candidates, if any. There have been no such sales to date.Defiante/Sigma-TauWe have exclusively licensed certain internal and external wound healing European rights to Tß4 to Defiante. These licensed rights to Tß4 include its useto treat indications that are the subject of all of our current dermal clinical trials of RGN-137, as well as the treatment of heart attacks. The license excludes theuse of Tß4 in any ophthalmic indications and other indications that are disease-based and not the result of a wound. Under the agreement, Sigma-Tau maydevelop Tß4 for the treatment of internal and external wounds in Europe and certain other contiguous and geographically relevant countries. The licenseagreement expires on a country-by-country basis upon the later of the expiration of the last to expire of any granted patent in the territory having at least onevalid claim covering the products then on the market, the expiration of any other exclusive or proprietary marketing rights, or January 2016.Under the license agreement, Sigma-Tau is obligated to pay us a royalty on commercial sales, if any, and we will supply all required Tß4 fordevelopment. Upon the completion of a Phase 2 clinical trial for the covered indications that yields positive results in terms of efficacy and safety, Sigma-Taumust either pay us a $5 million milestone payment or initiate and fund a pivotal Phase 3 clinical trial for the applicable product candidate in order to maintainthe license. We have completed two Phase 2 clinical trials of RGN-137 for the treatment of pressure ulcers and venous stasis ulcers, which, due to the lack ofstatistical significance of the reported efficacy results, neither triggered any payment obligations to us.The license agreement with Defiante also contains future clinical and regulatory milestones in the licensed territory. If those milestones are attained,certain performance criteria regarding commercial registration and minimum annual royalties will be payable to us in each licensed country. The agreementdoes not prevent us from sublicensing the technology in countries outside the licensed territory, and has no impact on any U.S. rights.Lee’s PharmaceuticalsOn March 27,2012 we entered into a term sheet with Lee’s Pharmaceutical (HK) Limited, headquartered in Hong Kong, for the license of ThymosinBeta 4 in any pharmaceutical form, including our RGN-259, RGN-352 and RGN-137 product candidates, in China, Hong Kong and Macau. Lee’s paid us$200,000 upon execution of the term sheet and will pay us an additional $200,000 upon signing of the definitive license agreement, which we expect to occurby May 31, 2012.The terms of the license agreement will include aggregate potential milestone payments of up to $3.6 million and royalties ranging from low double digitto high single digit royalties on commercial sales, if any. We will have an exclusive supply agreement for Tb4 with Lee’s, although Lee’s will have the option tomanufacture Tb4 for the licensed territory.Lee’s will pay for all developmental costs associated with each product candidate. We will provide Tb4 to Lee’s at no charge for a Phase 2 ophthalmicclinical trial and will provide Tb4 to Lee’s for all other developmental and clinical work at a price equal to our cost.The two companies will create a joint development committee to discuss and agree on the development of the licensed products and share informationrelating thereto. Both companies will also share all non-clinical and clinical data and other information related to development of the licensed productcandidates. 11, Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe foregoing description of the expected license agreement is based on the term sheet with Lee’s. The execution of a definitive agreement will involve thenegotiation of additional provisions, which may be material, and there is a risk that we may not be able to enter into a definitive agreement on commerciallyreasonable terms or at all. Therefore, the foregoing description is qualified in its entirety by reference to the final agreement to be entered into with Lee’s. See“Risk Factors—We may not be able to enter into a definitive license agreement with Lee’s Pharmaceuticals, which would have a material adverse effect on ourcapital resources.”Development AgreementsWe have entered into agreements with outside service providers for the manufacture and development of Tß4, the formulation of Tß4 into our productcandidates, the conduct of nonclinical safety, toxicology and efficacy studies in animal models, and the management and execution of clinical trials inhumans. Terms of these agreements vary in that they can last from a few months to more than a year in duration. Certain of these agreements require initialupfront payments ranging from 25% to 50% of the total estimated cost. For additional information regarding our research and development expenses over thepast two years, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” in this report.EmployeesDue to our current financial condition, beginning in late 2011, we began implementing significant cost-saving measures to conserve capital resourcesand maintain a minimal level of operations, while seeking additional funding and/or complete a strategic transaction. To that end, in December 2011, wereduced salaries of all of our employees to approximately $2,800 per month, and we granted new stock options in lieu of a portion of the cash salaryadjustment. Beginning in January 2012, all employees became part-time hourly employees with reduced work schedules. Additionally, in January 2012, wediscontinued providing employee health benefits and company-sponsored 401(k) matching contributions. The majority of our research and developmentstaff’s efforts since this time have been directed to work under a grant that we received from the NIH. We currently have eight hourly employees and we retainseveral independent contractors. We believe that we have good relations with our employees.Corporate InformationWe were incorporated in Delaware in 1982 under the name Alpha 1 Biomedicals, Inc. In 2000, we changed our corporate name to RegeneRxBiopharmaceuticals, Inc. Our principal executive office is located at 15245 Shady Grove Road, Suite 470, Rockville, Maryland 20850. Our telephonenumber is (301) 208-9191.Available InformationOur corporate website is www.regenerx.com. Our electronic filings with the U.S. Securities and Exchange Commission, or SEC, including our annualreport on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to these reports filed or furnished pursuant toSection 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge through our website as soon as reasonably practicableafter we have electronically filed such information with, or furnished such information to, the SEC.Item 1A. Risk FactorsRisks Related to Our Liquidity and Need for FinancingBefore giving effect to any potential sales of our securities, we estimate that our existing capital resources, coupled with the receipt of the secondLee’s payment, will only be sufficient to fund our operations through June 2012.We are focusing our current efforts on the development of RGN-259 for ophthalmic indications. We recently completed a Phase 2 clinical trial toevaluate RGN-259 in patients suffering from dry eye syndrome, and we intend to pursue partnering opportunities for RGN-259 based on the data from thistrial. We are also supporting a small physician-sponsored Phase 2 study of RGN-259 in severe dry eye. We have completed enrolling 30 patients in our Phase2 trial for RGN-137 in EB patients. We had intended to commence patient enrollment in a Phase 2 clinical trial of RGN-352 for AMI patients near the end ofthe first quarter of 2011, but this trial was placed on clinical hold by the FDA. The AMI trial remains on hold pending resolution of regulatory issues and ouraccess to sufficient capital resources. Depending on our capital resources, and if regulatory and manufacturing issues with RGN-352 are resolved, we mayalso continue to support a proposed physician-sponsored Phase 1/2 clinical trial to evaluate the therapeutic potential of RGN-352 in patients with multiplesclerosis. 12Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsEven with the change in our clinical development priorities during 2011, we currently do not have sufficient capital resources to fund our ongoingresearch and development activities, and we will not be able to sponsor any clinical trials in 2012 without additional funding. We project that our existingcapital resources will only be adequate to fund our operations into May 2012. We also expect to receive an additional $200,000 from Lee’s Pharmaceuticalsupon the execution of the definitive license agreement that is the subject of a term sheet, although we only expect these additional proceeds, if received, to besufficient to fund our operations through June 2012. If our stock price increases from its current level, we may, however, make additional sales of commonstock under our committed equity facility with Lincoln Park Capital, as described below, which would extend our resources, but our ability to use thecommitted equity facility depends upon our share price and trading volume. However, even if we are able to sell shares of our common stock under the LPCfacility, based on our current stock price the amount of proceeds we would be able to raise, doing so would not extend our capital resources significantlybeyond the second quarter of 2012 and, accordingly, we will also need to seek other sources of capital.Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement andinvolves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed elsewhere in this report. Wehave based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect.We may not be able to enter into a definitive license agreement with Lee’s Pharmaceuticals, which would have a material adverse effect on ourcapital resources.In March 2012, we entered into a term sheet with Lee’s Pharmaceuticals to license the development of Tb4 in any pharmaceutical form, including ourRGN-259, RGN-137 and RGN-352 product candidates, in China, Hong Kong and Macau. Upon signing the term sheet, Lee’s paid us $200,000. We expectthat the definitive license agreement with Lee’s will be completed by the end of May 2012, and upon the execution of the definitive agreement, we will receive anadditional $200,000 payment from Lee’s. However, the execution of the definitive agreement with Lee’s is subject to risks, including the negotiation ofmutually acceptable terms. If we are unable to agree to the terms of a definitive agreement with Lee’s within 60 days of the date of the term sheet, Lee’s will bepermitted to terminate discussions regarding the agreement, in which case we would not receive the additional payment and we would be required to refund theoriginal $200,000 payment. Given our current financial circumstances, unless we are able to generate addition capital resources, we would likely be unable torefund this payment, which would have a material adverse impact on our financial condition and ability to continue operations.We are not currently able to access the LPC committed equity facility and, if we are able to do so in the future, we may not be able to access the fullamount available under the facility.In January 2011, we entered into a committed equity facility with Lincoln Park Capital, or LPC, under which we may direct LPC to purchase up to$11,000,000 worth of shares of our common stock through October 2013, generally in amounts of up to 200,000 shares every two business days. The amountwe can sell under the facility may be increased to 400,000 shares every two business days, as long as the closing sale price of our common stock is not below$0.35 per share on the purchase date. However, the extent to which we will rely on the facility as a source of funding will depend on a number of factors,including the prevailing market price of our common stock and volume of trading and the extent to which we are able to secure working capital from othersources. Specifically, LPC does not have the obligation to purchase any shares of our common stock on any business day that the price of our common stockis less than $0.15 per share. As of the date of this report, we have sold a total of 1.5 million shares to LPC for gross proceeds of approximately $350,000.Depending on the prevailing market price of our common stock, we may not be able to sell shares to LPC for the maximum $11,000,000 over the term ofthe facility. At the minimum price of $0.15 per share, we would be able to sell 200,000 shares for proceeds of $30,000 on each purchase date. Assuming thatwe sold shares to LPC ten times each month, we would receive $300,000 in proceeds per month, up to the maximum amount available over the remaining termof the facility. In the event that we make less frequent sales to LPC, the aggregate proceeds available to us will be even less.Currently, we have only registered for resale 12,541,667 additional shares of our common stock that we may sell to LPC. These shares, if and whenissued to LPC, would be a combination of shares purchased at the price per share set forth in our purchase agreement with LPC and shares issued asadditional pro rata commitment shares for no additional consideration, based on the formula set forth in the agreement. However, because the registrationstatement related to those shares has ceased to be effective under the Securities Act, we would need to prepare and file a post-effective amendment to theregistration statement and have that post-effective amendment declared effective by the SEC before we can sell any of these shares to LPC. Assuming apurchase price of $0.15 per share, which is the minimum issuance price of our common stock under the facility, we would generate net cash proceeds ofapproximately $1.9 million. In the event we elect to issue more than the originally registered 15,000,000 shares, we would be required to file a new registrationstatement and have it declared effective by the SEC before selling such additional shares. 13Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAs described elsewhere in this report, we do not currently expect that funding from LPC will be sufficient to extend our operations beyond the secondquarter of 2012, and we will need to secure another source of funding in order to satisfy our near term working capital needs. Should the financing we requireto sustain our working capital needs be unavailable or prohibitively expensive when we require it, the consequences could be a material adverse effect on ourbusiness, operating results, financial condition and prospects.In addition to our current development objectives, we will need substantial additional capital for the continued development of product candidatesthrough marketing approval and for our longer-term future operations.Beyond our current liquidity needs, we anticipate that substantial new capital resources will be required to continue our longer-term independent productdevelopment efforts, including any and all follow-on trials that will result from our current clinical programs beyond those currently contemplated, and toscale up manufacturing processes for our product candidates. We may be able to obtain funding under the committed equity facility with LPC in order tofurther some of these efforts. However, the actual amount of funds that we will need will be determined by many factors, some of which are beyond ourcontrol. These factors include, without limitation: • the scope of our clinical trials, which is significantly influenced by the quality of clinical data achieved as trials are completed and therequirements established by regulatory authorities; • the speed with which we complete our clinical trials, which depends on our ability to attract and enroll qualifying patients and the quality of thework performed by our clinical investigators and contract research organizations chosen to conduct the studies; • the time required to prosecute, enforce and defend our intellectual property rights, which depends on evolving legal regimes and infringementclaims that may arise between us and third parties; • the ability to manufacture at scales sufficient to supply commercial quantities of any of our product candidates that receive regulatory approval,which may require levels of effort not currently anticipated; and • the successful commercialization of our product candidates, which will depend on our ability to either create or partner with an effectivecommercialization organization and which could be delayed or prevented by the emergence of equal or more effective therapies.Emerging biotechnology companies like us may raise capital through corporate collaborations and by licensing intellectual property rights to otherbiotechnology or pharmaceutical enterprises. We intend to pursue this strategy, but there can be no assurance that we will be able to license our intellectualproperty or product development programs on commercially reasonable terms, if at all. There are substantial challenges and risks that will make it difficult tosuccessfully implement any of these alternatives. If we are successful in raising additional capital through such a license or collaboration, we may have to giveup valuable rights to our intellectual property. In addition, the business priorities of a strategic partner may change over time, which creates the possibility thatthe interests of the strategic partner in developing our technology may diminish and could have a potentially material negative impact on the value of ourinterest in the licensed intellectual property or product candidates.Further, if we raise additional funds by selling shares of our common stock or securities convertible into our common stock, including under ourcommitted equity facility with LPC, the ownership interest of our existing stockholders may be significantly diluted. If additional funds are raised through theissuance of preferred stock or debt securities, these securities are likely to have rights, preferences and privileges senior to our common stock and may involvesignificant fees, interest expense, restrictive covenants or the granting of security interests in our assets.Our failure to successfully address both our short-term and long-term liquidity requirements would have a material negative impact on our business,including the possibility of surrendering our rights to some technologies or product opportunities, delaying our clinical trials or ceasing our operations.We have incurred losses since inception and expect to incur significant losses in the foreseeable future and may never become profitable.We have not commercialized any product candidates to date and incurred net operating losses every year since our inception in 1982. We believe theselosses will continue for the foreseeable future, and may increase, as we pursue our product development efforts related to Tß4. As of December 31, 2011, ouraccumulated deficit totaled approximately $95.5 million.As we expand our research and development efforts and seek to obtain regulatory approval of our product candidates to make them commercially viable,we anticipate substantial and increasing operating losses. Our ability to generate revenues and to become profitable will depend largely on our ability, alone orthrough the efforts of third-party licensees and collaborators, to efficiently and successfully complete the development of our product candidates, obtainnecessary regulatory approvals for commercialization, scale-up commercial quantity manufacturing capabilities either internally or through third-partysuppliers, and market our product candidates. There can be no assurance that we will achieve any of these objectives or that we will ever become profitable orbe able to maintain profitability. Even if we do achieve profitability, we cannot predict the level of such profitability. If we sustain losses over an extendedperiod of time and are not otherwise able to raise necessary funds to continue our development efforts and maintain our operations, we may be forced to ceaseoperations. 14Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsOur common stock is quoted on the over-the-counter market, which subjects us to the SEC’s penny stock rules and may decrease the liquidity ofour common stock.Our common stock is traded over-the-counter on the OTC Bulletin Board. Over-the-counter markets are generally considered to be less efficient than,and not as broad as, a stock exchange. There may be a limited market for our stock now that it is quoted on the OTC Bulletin Board, trading in our stockmay become more difficult and our share price could decrease. Specifically, you may not be able to resell your shares of common stock at or above the priceyou paid for such shares or at all.In addition, our ability to raise additional capital may be impaired because of the less liquid nature of the over-the-counter markets. While we cannotguarantee that we would be able to complete an equity financing on acceptable terms, or at all, we believe that dilution from any equity financing while ourshares are quoted on an over-the-counter market would likely be substantially greater than if we were to complete a financing while our common stock is tradedon a national securities exchange. Further, we are unable to use short-form registration statements on Form S-3 for the registration of our securities, whichcould impair our ability to raise additional capital as needed.Our common stock is also subject to penny stock rules, which impose additional sales practice requirements on broker-dealers who sell our commonstock. The SEC generally defines “penny stock” as an equity security that has a market price of less than $5.00 per share, subject to certain exceptions. Theability of broker-dealers to sell our common stock and the ability of our stockholders to sell their shares in the secondary market will be limited and, as aresult, the market liquidity for our common stock will likely be adversely affected. We cannot assure you that trading in our securities will not be subject tothese or other regulations in the future.The report of our independent registered public accounting firm contains explanatory language that substantial doubt exists about our ability tocontinue as a going concern.The report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2011 contains explanatorylanguage that substantial doubt exists about our ability to continue as a going concern, without raising additional capital. As described in this report, weestimate that our existing capital resources, without giving effect to potential additional sales of common stock under our committed equity facility with LPC,will be adequate to fund our operations into May 2012. We also expect to receive an additional $200,000 from Lee’s Pharmaceuticals upon the execution of thedefinitive license agreement that is the subject of a term sheet, although we only expect these additional proceeds, if received, to be sufficient to fund ouroperations through June 2012. We continue to seek other sources of capital, but if we are unable to obtain sufficient financing in the near term, then we would,in all likelihood, experience severe liquidity problems and may have to curtail our operations. If we curtail our operations, we may be placed into bankruptcyor undergo liquidation, the result of which will adversely affect the value of our common shares.Risks Related to Our Business and OperationsOur pending Phase 2 clinical trial of RGN-352 was placed on clinical hold by the FDA in March 2011 and we are unsure when, if ever, we will beable to resume this trial.In the second half of 2010, we implemented the development plans for our phase 2 clinical trial to evaluate RGN-352 in patients who have suffered anacute myocardial infarction, or AMI. We had planned to begin enrolling patients near the end of the first quarter of 2011. However, in March 2011, we werenotified by the FDA that the trial was placed on clinical hold as a result of our contract manufacturer’s alleged failure to comply with current GoodManufacturing Practices. The FDA has prohibited us from using any of the active drug or placebo manufactured by this manufacturer in human trials,which will require us to identify a cGMP-compliant manufacturer and to have new material produced in the event that we seek to resume this trial. We havealso learned that the contract manufacturer has closed its manufacturing facility and has filed for bankruptcy protection. Significant preparatory time andprocedures will be required before any new suitable manufacturer would be able to manufacture RGN-352 for the AMI trial. Since we are unable to estimate thelength of time that the trial will be on clinical hold, we have elected to cease activities on this trial until the FDA clinical hold is resolved and the requisitefunding might be secured. Consequently, there can be no assurance that we will be able to timely resume or complete this trial, if at all. 15Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAll of our drug candidates are based on a single compound.Our current primary business focus is the development of Tß4, and its analogues, derivatives and fragments, for the regeneration and accelerated repairof damaged tissue from non-healing dermal and corneal wounds, cardiac injury, central/peripheral nervous system diseases and other conditions, as well asan improvement in various functions, such as, but not limited to, cardiac and neurological. Unlike many pharmaceutical companies that have a number ofunique chemical entities in development, we are dependent on a single molecule, formulated for different routes of administration and different clinicalindications, for our potential commercial success. As a result, any common safety or efficacy concerns for Tß4-based products that cross formulations wouldhave a much greater impact on our business prospects than if our product pipeline were more diversified.We may never be able to commercialize our product candidates.Although Tß4 has shown biological activity in in vitro and animal models and we observed some efficacy in our recent RGN-259 phase 2a trial andearlier Phase 2 dermal trials, we cannot assure you that our product candidates will exhibit activity or importance in humans in large-scale trials. Our drugcandidates are still in research and development, and we do not expect them to be commercially available for the foreseeable future, if at all. Only a smallnumber of research and development programs ultimately result in commercially successful drugs. Potential products that appear to be promising at earlystages of development may not reach the market for a number of reasons. These include the possibility that the potential products may: • be found ineffective or cause harmful side effects during preclinical studies or clinical trials; • fail to receive necessary regulatory approvals; • be precluded from commercialization by proprietary rights of third parties; • be difficult to manufacture on a large scale; or • be uneconomical or otherwise fail to achieve market acceptance.If any of these potential problems occurs, we may never successfully market Tß4-based products.We are subject to intense government regulation, and we may not receive regulatory approvals for our drug candidates.Our product candidates will require regulatory approvals prior to sale. In particular, therapeutic agents are subject to stringent approval processes, priorto commercial marketing, by the FDA and by comparable agencies in most foreign countries. The process of obtaining FDA and corresponding foreignapprovals is costly and time-consuming, and we cannot assure you that such approvals will be granted. Also, the regulations we are subject to changefrequently and such changes could cause delays in the development of our product candidates.Three of our drug candidates are currently in the clinical development stage, and we cannot be certain that we or our collaborators will successfullycomplete the clinical trials necessary to receive regulatory product approvals. The regulatory approval process is lengthy, unpredictable and expensive. Toobtain regulatory approvals in the United States, we or a collaborator must ultimately demonstrate to the satisfaction of the FDA that our product candidatesare sufficiently safe and effective for their proposed administration to humans. Many factors, known and unknown, can adversely impact clinical trials andthe ability to evaluate a product candidate’s safety and efficacy, including: • the FDA or other health regulatory authorities, or institutional review boards, or IRBs, do not approve a clinical trial protocol or place a clinicaltrial on hold; • suitable patients do not enroll in a clinical trial in sufficient numbers or at the expected rate, for reasons such as the size of the patient population,the proximity of patients to clinical sites, the eligibility criteria for the trial, the perceptions of investigators and patients regarding safety, and theavailability of other treatment options; • clinical trial data is adversely affected by trial conduct or patient withdrawal prior to completion of the trial; • there may be competition with ongoing clinical trials and scheduling conflicts with participating clinicians; • patients experience serious adverse events, including adverse side effects of our drug candidates, for a variety of reasons that may or may not berelated to our product candidates, including the advanced stage of their disease and other medical problems; 16Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents • patients in the placebo or untreated control group exhibit greater than expected improvements or fewer than expected adverse events; • third-party clinical investigators do not perform the clinical trials on the anticipated schedule or consistent with the clinical trial protocol and goodclinical practices, or other third-party organizations do not perform data collection and analysis in a timely or accurate manner; • service providers, collaborators or co-sponsors do not adequately perform their obligations in relation to the clinical trial or cause the trial to bedelayed or terminated; • we are unable to obtain a sufficient supply of manufactured clinical trial materials; • regulatory inspections of manufacturing facilities, which may, among other things, require us or a co-sponsor to undertake corrective action orsuspend the clinical trials, such as the clinical hold with respect to our Phase 2 clinical trial of RGN-352; • the interim results of the clinical trial are inconclusive or negative; • the clinical trial, although approved and completed, generates data that is not considered by the FDA or others to be clinically relevant or sufficientto demonstrate safety and efficacy; and • changes in governmental regulations or administrative actions affect the conduct of the clinical trial or the interpretation of its results.There can be no assurance that our clinical trials will in fact demonstrate, to the satisfaction of the FDA and others, that our product candidates aresufficiently safe or effective. The FDA or we may also restrict or suspend our clinical trials at any time if either believes that we are exposing the subjectsparticipating in the trials to unacceptable health risks.Clinical trials for product candidates such as ours are often conducted with patients who have more advanced forms of a particular condition or otherunrelated conditions. For example, in clinical trials for our product candidate RGN-137, we have studied patients who are not only suffering from chronicepidermal wounds but who are also older and much more likely to have other serious adverse conditions. During the course of treatment with our productcandidates, patients could die or suffer other adverse events for reasons that may or may not be related to the drug candidate being tested. Further, and as aconsequence that all of our drug candidates are based on Tß4, crossover risk exists such that a patient in one trial may be adversely impacted by one drugcandidate, and that adverse event may have implications for our other trials and other drug candidates. However, even if unrelated to our product candidates,such adverse events can nevertheless negatively impact our clinical trials, and our business prospects would suffer.These factors, many of which may be outside of our control, may have a negative impact on our business by making it difficult to advance productcandidates or by reducing or eliminating their potential or perceived value. As a consequence, we may need to perform more or larger clinical trials thanplanned. Further, if we are forced to contribute greater financial and clinical resources to a study, valuable resources will be diverted from other areas of ourbusiness. If we fail to complete or if we experience material delays in completing our clinical trials as currently planned, or we otherwise fail to commence orcomplete, or experience delays in, any of our other present or planned clinical trials, including as a result of the actions of third parties upon which we rely forthese functions, our ability to conduct our business as currently planned could materially suffer.We may not successfully establish and maintain development and testing relationships with third-party service providers and collaborators, whichcould adversely affect our ability to develop our product candidates.We have only limited resources, experience with and capacity to conduct requisite testing and clinical trials of our drug candidates. As a result, we relyand expect to continue to rely on third-party service providers and collaborators, including corporate partners, licensors and contract research organizations, orCROs, to perform a number of activities relating to the development of our drug candidates, including the design and conduct of clinical trials, and potentiallythe obtaining of regulatory approvals. For example, we currently rely on several third-party contractors to manufacture and formulate Tß4 into the productcandidates used in our clinical trials, develop assays to assess Tß4’s effectiveness in complex biological systems, recruit clinical investigators and sites toparticipate in our trials, manage the clinical trial process and collect, evaluate and report clinical results. 17Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsWe may not be able to maintain or expand our current arrangements with these third parties or maintain such relationships on favorable terms. Ouragreements with these third parties may also contain provisions that restrict our ability to develop and test our product candidates or that give third partiesrights to control aspects of our product development and clinical programs. In addition, conflicts may arise with our collaborators, such as conflictsconcerning the interpretation of clinical data, the achievement of milestones, the interpretation of financial provisions or the ownership of intellectual propertydeveloped during the collaboration. If any conflicts arise with our existing or future collaborators, they may act in their self-interest, which may be adverse toour best interests. Any failure to maintain our collaborative agreements and any conflicts with our collaborators could delay or prevent us from developing ourproduct candidates. We and our collaborators may fail to develop products covered by our present and future collaborations if, among other things: • we do not achieve our objectives under our collaboration agreements; • we or our collaborators are unable to obtain patent protection for the products or proprietary technologies we develop in our collaborations; • we are unable to manage multiple simultaneous product development collaborations; • our collaborators become competitors of ours or enter into agreements with our competitors; • we or our collaborators encounter regulatory hurdles that prevent commercialization of our product candidates; or • we develop products and processes or enter into additional collaborations that conflict with the business objectives of our other collaborators.We also have less control over the timing and other aspects of our clinical trials than if we conducted the monitoring and supervision entirely on ourown. Third parties may not perform their responsibilities for our clinical trials on our anticipated schedule or consistent with a clinical trial protocol orapplicable regulations. We also rely on clinical research organizations to perform much of our data management and analysis. They may not provide theseservices as required or in a timely manner. If any of these parties do not meet deadlines or follow proper procedures, including procedures required by law, thepreclinical studies and clinical trials may take longer than expected, may be delayed or may be terminated, which would have a materially negative impact onour product development efforts. If we were forced to find a replacement entity to perform any of our preclinical studies or clinical trials, we may not be able tofind a suitable entity on favorable terms or at all. Even if we were able to find a replacement, resulting delays in the tests or trials may result in significantadditional expenditures and delays in obtaining regulatory approval for drug candidates, which could have a material adverse impact on our results ofoperations and business prospects.We are subject to intense competition from companies with greater resources and more mature products, which may result in our competitorsdeveloping or commercializing products before or more successfully than we do.We are engaged in a business that is highly competitive. Research and development activities for the development of drugs to treat indications within ourfocus are being sponsored or conducted by private and public research institutions and by major pharmaceutical companies located in the United States and anumber of foreign countries. Most of these companies and institutions have financial and human resources that are substantially greater than our own andthey have extensive experience in conducting research and development activities and clinical trials and in obtaining the regulatory approvals necessary tomarket pharmaceutical products that we do not have. As a result, they may develop competing products more rapidly that are safer, more effective, or havefewer side effects, or are less expensive, or they may develop and commercialize products that render our product candidates non-competitive or obsolete.With respect to our product candidate RGN-259, there are also numerous ophthalmic companies developing drugs for corneal wound healing and otheroutside-of-the-eye diseases and injuries. Amniotic membranes have been successfully used to treat corneal wounds in certain cases, as have topical steroidsand antibacterial agents.We have initially targeted our product candidate RGN-352 for cardiovascular indications. Most large pharmaceutical companies and many smallerbiomedical companies are vigorously pursuing the development of therapeutics to treat patients after heart attacks and for other cardiovascular indications.With respect to our product candidate RGN-137 for wound healing, Johnson & Johnson has previously marketed Regranex™ for this purpose inpatients with diabetic foot ulcers. Other companies, such as Novartis, are developing and marketing artificial skins, which we believe could also compete withRGN-137. Moreover, wound healing is a large and highly fragmented marketplace attracting many companies, large and small, to develop products fortreating acute and chronic wounds, including, for example, honey-based ointments, hyperbaric oxygen therapy, and low frequency cavitational ultrasound.We are also developing potential cosmeceutical products, which are loosely defined as products that bridge the gap between cosmetics andpharmaceuticals, for example, by improving skin texture and reducing the appearance of aging. This industry is intensely competitive, with potentialcompetitors ranging from large multinational companies to very small specialty companies. New cosmeceutical products often have a short product life and arefrequently replaced with newer products developed to address the latest trends in appearance and fashion. We may not be able to adapt to changes in theindustry as quickly as larger and more experienced cosmeceutical companies. Further, larger cosmetics companies have the financial and marketing resourcesto effectively compete with smaller companies like us in order to sell products aimed at larger markets. 18Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsEven if approved for marketing, our technologies and product candidates are unproven and they may fail to gain market acceptance.Our product candidates, all of which are based on the molecule Tß4, are new and unproven and there is no guarantee that health care providers orpatients will be interested in our product candidates, even if they are approved for use. If any of our product candidates are approved by the FDA, our successwill depend in part on our ability to demonstrate sufficient clinical benefits, reliability, safety, and cost effectiveness of our product candidates relative to otherapproaches, as well as on our ability to continue to develop our product candidates to respond to competitive and technological changes. If the market does notaccept our product candidates, when and if we are able to commercialize them, then we may never become profitable. Factors that could delay, inhibit orprevent market acceptance of our product candidates may include: • the timing and receipt of marketing approvals; • the safety and efficacy of the products; • the emergence of equivalent or superior products; • the cost-effectiveness of the products; and • ineffective marketing.It is difficult to predict the future growth of our business, if any, and the size of the market for our product candidates because the markets arecontinually evolving. There can be no assurance that our product candidates will prove superior to products that may currently be available or may becomeavailable in the future or that our research and development activities will result in any commercially profitable products.We have no marketing experience, sales force or distribution capabilities. If our product candidates are approved, and we are unable to recruit keypersonnel to perform these functions, we may not be able to commercialize them successfully.Although we do not currently have any marketable products, our ability to produce revenues ultimately depends on our ability to sell our productcandidates if and when they are approved by the FDA and other regulatory authorities. We currently have no experience in marketing or selling pharmaceuticalproducts, and we do not have a marketing and sales staff or distribution capabilities. Developing a marketing and sales force is also time-consuming andcould delay the launch of new products or expansion of existing product sales. In addition, we will compete with many companies that currently have extensiveand well-funded marketing and sales operations. If we fail to establish successful marketing and sales capabilities or fail to enter into successful marketingarrangements with third parties, our ability to generate revenues will suffer.If we enter markets outside the United States our business will be subject to political, economic, legal and social risks in those markets, whichcould adversely affect our business.There are significant regulatory and legal barriers to entering markets outside the United States that we must overcome if we seek regulatory approval tomarket our product candidates in countries other than the United States. We would be subject to the burden of complying with a wide variety of national andlocal laws, including multiple and possibly overlapping and conflicting laws. We also may experience difficulties adapting to new cultures, business customsand legal systems. Any sales and operations outside the United States would be subject to political, economic and social uncertainties including, among others: • changes and limits in import and export controls; • increases in custom duties and tariffs; • changes in currency exchange rates; • economic and political instability; • changes in government regulations and laws; 19Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents • absence in some jurisdictions of effective laws to protect our intellectual property rights; and • currency transfer and other restrictions and regulations that may limit our ability to sell certain product candidates or repatriate profits to theUnited States.Any changes related to these and other factors could adversely affect our business if and to the extent we enter markets outside the United States.Governmental and third-party payors may subject any product candidates we develop to sales and pharmaceutical pricing controls that could limitour product revenues and delay profitability.The successful commercialization of our product candidates, if they are approved by the FDA, will likely depend on our ability to obtainreimbursement for the cost of the product and treatment. Government authorities, private health insurers and other organizations, such as health maintenanceorganizations, are increasingly seeking to lower the prices charged for medical products and services. Also, the trend toward managed health care in the UnitedStates, the growth of healthcare maintenance organizations, and recently enacted legislation reforming healthcare and proposals to reform government insuranceprograms could have a significant influence on the purchase of healthcare services and products, resulting in lower prices and reducing demand for ourproduct candidates. The cost containment measures that healthcare providers are instituting and any healthcare reform could reduce our ability to sell ourproduct candidates and may have a material adverse effect on our operations. We cannot assure you that reimbursement in the United States or foreigncountries will be available for any of our product candidates, and that any reimbursement granted will be maintained, or that limits on reimbursementavailable from third-party payors will not reduce the demand for, or the price of, our product candidates. The lack or inadequacy of third-partyreimbursements for our product candidates would decrease the potential profitability of our operations. We cannot forecast what additional legislation orregulation relating to the healthcare industry or third-party coverage and reimbursement may be enacted in the future, or what effect the legislation or regulationwould have on our business.We have no manufacturing or formulation capabilities and are dependent upon third-party suppliers to provide us with our product candidates. Ifthese suppliers do not manufacture our product candidates in sufficient quantities, at acceptable quality levels and at acceptable cost, or if we areunable to identify suitable replacement suppliers if needed, our clinical development efforts could be delayed, prevented or impaired.We do not own or operate manufacturing facilities and have little experience in manufacturing pharmaceutical products. We currently rely, and expect tocontinue to rely, primarily on peptide manufacturers to supply us with Tß4 for further formulation into our product candidates. We have historically engagedthree separate smaller drug formulation contractors for the formulation of clinical grade product candidates, one for each of our three product candidates inclinical development, although, as described in this report, the contractor we engaged for RGN-352 has filed for bankruptcy and closed its manufacturingfacility, and our clinical trials involving RGN-352 have been placed on clinical hold. We currently do not have an alternative source of supply for either Tß4or the individual drug candidates. If these suppliers, together or individually, are not able to supply us with either Tß4 or individual product candidates on atimely basis, in sufficient quantities, at acceptable levels of quality and at a competitive price, or if we are unable to identify a replacement manufacturer toperform these functions on acceptable terms as needed, our development programs could be seriously jeopardized.The clinical hold on our RGN-352 trial will require us to have new material manufactured by a new manufacturer in the event that we seek to resumethis trial. Significant preparatory time and procedures will be required before any new manufacturer would be able to manufacture RGN-352 for the AMI trial,due to the time required for revalidation of processes and assays related to such production that were already in place with the original manufacturer. Since weare unable to estimate the length of time that the trial will be on clinical hold, we have elected to cease activities on this trial until the FDA clinical hold isresolved and the requisite funding might be secured.Other risks of relying solely on single suppliers for each of our product candidates include: • the possibility that our other manufacturers, and any new manufacturer that we may identify for RGN-352, may not be able to ensure quality andcompliance with regulations relating to the manufacture of pharmaceuticals; • their manufacturing capacity may not be sufficient or available to produce the required quantities of our product candidates based on our plannedclinical development schedule, if at all; • they may not have access to the capital necessary to expand their manufacturing facilities in response to our needs; 20Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents • commissioning replacement suppliers would be difficult and time-consuming; • individual suppliers may have used substantial proprietary know-how relating to the manufacture of our product candidates and, in the event wemust find a replacement or supplemental supplier, our ability to transfer this know-how to the new supplier could be an expensive and/or time-consuming process; • an individual supplier may experience events, such as a fire or natural disaster, that force it to stop or curtail production for an extended period; • an individual supplier could encounter significant increases in labor, capital or other costs that would make it difficult for them to produce ourproducts cost-effectively; or • an individual supplier may not be able to obtain the raw materials or validated drug containers in sufficient quantities, at acceptable costs or insufficient time to complete the manufacture, formulation and delivery of our product candidates.Our suppliers may use hazardous and biological materials in their businesses. Any claims relating to improper handling, storage or disposal ofthese materials could be time-consuming and costly to us, and we are not insured against such claims.Our product candidates and processes involve the controlled storage, use and disposal by our suppliers of certain hazardous and biological materialsand waste products. We and our suppliers and other collaborators are subject to federal, state and local regulations governing the use, manufacture, storage,handling and disposal of materials and waste products. Even if we and these suppliers and collaborators comply with the standards prescribed by law andregulation, the risk of accidental contamination or injury from hazardous materials cannot be completely eliminated. In the event of an accident, we could beheld liable for any damages that result, and we do not carry insurance for this type of claim. We may also incur significant costs to comply with current orfuture environmental laws and regulations.We face the risk of product liability claims, which could adversely affect our business and financial condition.We may be subject to product liability claims as a result of our testing, manufacturing, and marketing of drugs. In addition, the use of our productcandidates, when and if developed and sold, will expose us to the risk of product liability claims. Product liability may result from harm to patients using ourproduct candidates, such as a complication that was either not communicated as a potential side effect or was more extreme than anticipated. We require allpatients enrolled in our clinical trials to sign consents, which explain various risks involved with participating in the trial. However, patient consents provideonly a limited level of protection, and it may be alleged that the consent did not address or did not adequately address a risk that the patient suffered.Additionally, we will generally be required to indemnify our clinical product manufacturers, clinical trial centers, medical professionals and other partiesconducting related activities in connection with losses they may incur through their involvement in the clinical trials.Our ability to reduce our liability exposure for human clinical trials and commercial sales, if any, of Tß4 is dependent in part on our ability to obtainsufficient product liability insurance or to collaborate with third parties that have adequate insurance. Although we intend to obtain and maintain productliability insurance coverage if we gain approval to market any of our product candidates, we cannot guarantee that product liability insurance will continue tobe available to us on acceptable terms, or at all, or that its coverage will be sufficient to cover all claims against us. A product liability claim, even one withoutmerit or for which we have substantial coverage, could result in significant legal defense costs, thereby potentially exposing us to expenses significantly inexcess of our revenues, as well as harm to our reputation and distraction of our management.If any of our key employees discontinue their services with us, our efforts to develop our business may be delayed.We are highly dependent on the principal members of our management team. The loss of our chairman and chief scientific advisor, Allan Goldstein, ourchief executive officer, J.J. Finkelstein or David Crockford, our VP of Clinical and Regulatory Affairs, could prevent or significantly delay the achievement ofour goals. In December 2011, we terminated our employment agreements with Dr. Goldstein, Mr. Finkelstein and Mr. Crockford, who are currently engagedonly as part-time employees. And substantially all of our employees are now working only part-time schedules. We cannot assure you that Dr. Goldstein,Mr. Finkelstein or Mr. Crockford, or any other key employees, will not elect to terminate their employment. We do not currently have a full-time chief financialofficer. In addition, we do not maintain a key man life insurance policy with respect to any of our management personnel. In the future, we anticipate that wewill also need to add additional management and other personnel. Competition for qualified personnel in our industry is intense, and our success will dependin part on our ability to attract and retain highly skilled personnel. We cannot assure you that our efforts to attract or retain such personnel will be successful. 21Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsMauro Bove, a member of our Board, is also a director and officer of entities affiliated with Sigma-Tau and a director of Lee’s Pharmaceuticals,relationships which could give rise to a conflict of interest involving Mr. Bove.Mauro Bove, a member of our Board of Directors, is also a director and officer of entities affiliated with Sigma-Tau, which collectively make up ourlargest stockholder group. Sigma-Tau has provided us with significant funding, may continue doing so in the future, and is also our strategic partner inEurope with respect to the development of certain of our drug candidates. We have issued shares of common stock and common stock warrants to Sigma-Tauin several private placement financing transactions, including as recently as January 2011, but we retained the right to repurchase some of these shares undercertain circumstances.We have licensed certain rights to our product candidates generally for the treatment of dermal and internal wounds to Sigma-Tau. Under the licenseagreement, upon the completion of a Phase 2 clinical trial of either of these product candidates that yields positive results in terms of clinical efficacy andsafety, Sigma-Tau is obligated to either make a $5 million milestone payment to us or to initiate and fund a pivotal Phase 3 clinical trial of the productcandidate. In 2009, we completed two Phase 2 clinical trials of RGN-137, but these trials were not sufficient to trigger the milestone obligation. There can be noassurance that we will ever receive this payment or be able to initiate a pivotal Phase 3 clinical trial of RGN-137 that would be funded by Sigma-Tau. As aresult of Mr. Bove’s relationship with Sigma-Tau, there could be a conflict of interest between Sigma-Tau and our other stockholders with respect to these andother agreements and circumstances that may require the exercise of the Board’s discretion with respect to Sigma-Tau. Any decision in the best interests ofSigma-Tau may not be in the best interest of our other stockholders.Additionally, Mr. Bove is a non-executive director of Lee’s Pharmaceuticals, in which affiliates of Sigma-Tau have a significant equity interest. InMarch 2012, we entered into a term sheet in connection with the license of TB4 in any pharmaceutical form, including our RGN-259, RGN-352 and RGN-137 product candidates for development in China, Hong Kong and Macau. Under the expected terms of the license agreement, we are to receive a $200,000payment from Lee’s upon the execution of the definitive license agreement. There can be no assurance that we will be able to enter into a definitive agreementwith Lee’s, or that we will ever receive this payment, or that we will ever receive any further payments from Lee’s under the agreement. As a result ofMr. Bove’s relationship with Lee’s and Sigma-Tau, Mr. Bove may be subject to a conflict of interest in fulfilling his duties to Lee’s, Sigma-Tau and us, inconnection with these and other agreements and circumstances that may require the exercise of the Board’s discretion with respect to Lee’s. These conflictscould potentially result in decisions that may not be in the best interest of our other stockholders.Risks Related To Our Intellectual PropertyWe are heavily reliant on our license from the National Institutes of Health for the rights to Tß4, and any loss of these rights would adverselyaffect our business.We have received an exclusive worldwide license to intellectual property discovered at the National Institutes of Health, or NIH, pertaining to the use ofTß4 in wound healing and tissue repair. The intellectual property rights from this license form the basis for our current commercial development focus withTß4. This license terminates upon the last to expire of the patent applications that are filed, or any patents that may issue from such applications, inconnection with the license. This license requires us to pay a minimum annual royalty to the NIH, regardless of the success of our product developmentefforts, plus certain other royalties upon the sale of products created by the intellectual property granted under the license. This license may be terminated for anumber of reasons, including our non-payment of the royalty or lack of continued product development, among others. While to date we believe that we havecomplied with all requirements to maintain the license, the loss of this license would have a material adverse effect on our business and business prospectsand may require us to cease development of our current line of Tß4-based product candidates.If we are not able to maintain adequate patent protection for our product candidates, we may be unable to prevent our competitors from using ourtechnology or technology that we license.Our success will depend in substantial part on our ability to obtain, defend and enforce patents, maintain trade secrets and operate without infringingupon the proprietary rights of others, both in the United States and abroad. Pursuant to an exclusive worldwide license from the NIH, we have exclusive rightsto use Tß4 in the treatment of non-healing wounds. While patents covering our use of Tß4 have issued in some countries, we cannot guarantee whether or whencorresponding patents will be issued, or the scope of any patents that may be issued, in other countries. We have attempted to create a substantial intellectualproperty portfolio, submitting patent applications for various compositions of matter, methods of use and fragments and derivatives of Tß4. We have also in-licensed other intellectual property rights from third parties that could be subject to the same risks as our own patents. If any of these patent applications donot issue, or do not issue in certain countries, or are not enforceable, the ability to commercialize Tß4 in various medical indications could be substantiallylimited or eliminated. 22Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsIn addition, the patent positions of the products being developed by us and our collaborators involve complex legal and factual uncertainties. As a result,we cannot assure you that any patent applications filed by us, or by others under which we have rights, will result in patents being issued in the United Statesor foreign countries. In addition, there can be no assurance that any patents will be issued from any pending or future patent applications of ours or ourcollaborators, that the scope of any patent protection will be sufficient to provide us with competitive advantages, that any patents obtained by us or ourcollaborators will be held valid if subsequently challenged or that others will not claim rights in or ownership of the patents and other proprietary rights we orour collaborators may hold. Unauthorized parties may try to copy aspects of our product candidates and technologies or obtain and use information weconsider proprietary. Policing the unauthorized use of our proprietary rights is difficult. We cannot guarantee that no harm or threat will be made to our or ourcollaborators’ intellectual property. In addition, changes in, or different interpretations of, patent laws in the United States and other countries may alsoadversely affect the scope of our patent protection and our competitive situation.Due to the significant time lag between the filing of patent applications and the publication of such patents, we cannot be certain that our licensors werethe first to file the patent applications we license or, even if they were the first to file, also were the first to invent, particularly with regards to patent rights inthe United States. In addition, a number of pharmaceutical and biotechnology companies and research and academic institutions have developed technologies,filed patent applications or received patents on various technologies that may be related to our product candidates. Some of these technologies, applications orpatents may conflict with our or our licensors’ technologies or patent applications. A conflict could limit the scope of the patents, if any, that we or ourlicensors may be able to obtain or result in denial of our or our licensors’ patent applications. If patents that cover our activities are issued to other companies,we may not be able to develop or obtain alternative technology.Additionally, there is certain subject matter that is patentable in the United States but not generally patentable outside of the United States. Differences inwhat constitutes patentable subject matter in various countries may limit the protection we can obtain outside of the United States. For example, methods oftreating humans are not patentable in many countries outside of the United States. These and other issues may prevent us from obtaining patent protectionoutside of the United States, which would have a material adverse effect on our business, financial condition and results of operations.Changes to U.S. patent laws could materially reduce any value our patent portfolio may have.The value of our patents depends in part on their duration. A shorter period of patent protection could lessen the value of our rights under any patentsthat may be obtained and may decrease revenues derived from its patents. For example, the U.S. patent laws were previously amended to change the term ofpatent protection from 17 years following patent issuance to 20 years from the earliest effective filing date of the application. Because the time from filing toissuance of biotechnology applications may be more than three years depending on the subject matter, a 20-year patent term from the filing date may result insubstantially shorter patent protection. Future changes to patent laws could shorten our period of patent exclusivity and may decrease the revenues that wemight derive from the patents and the value of our patent portfolio.We may not have adequate protection for our unpatented proprietary information, which could adversely affect our competitive position.In addition to our patents, we also rely on trade secrets, know-how, continuing technological innovations and licensing opportunities to develop andmaintain our competitive position. However, others may independently develop substantially equivalent proprietary information and techniques or otherwisegain access to our trade secrets or disclose our technology. To protect our trade secrets, we may enter into confidentiality agreements with employees,consultants and potential collaborators. However, we may not have such agreements in place with all such parties and, where we do, these agreements may notprovide meaningful protection of our trade secrets or adequate remedies in the event of unauthorized use or disclosure of such information. Also, our tradesecrets or know-how may become known through other means or be independently discovered by our competitors. Any of these events could prevent us fromdeveloping or commercializing our product candidates.We may be subject to claims that we or our employees have wrongfully used or disclosed alleged trade secrets of former employers.As is commonplace in the biotechnology industry, we employ now, and may hire in the future, individuals who were previously employed at otherbiotechnology or pharmaceutical companies, including competitors or potential competitors. Although there are no claims currently pending against us, wemay be subject to claims that we or certain employees have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of formeremployers. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result insubstantial costs and would be a significant distraction to management. 23Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsRisks Related To Our SecuritiesOur common stock price is volatile, our stock is highly illiquid, and any investment in our securities could decline substantially in value.For the period from January 1, 2011through December 31, 2011, the closing price of our common stock has ranged from $0.08 to $0.32, with anaverage daily trading volume of approximately 103,000 shares. In light of our small size and limited resources, as well as the uncertainties and risks that canaffect our business and industry, our stock price is expected to continue to be highly volatile and can be subject to substantial drops, with or even in theabsence of news affecting our business. The following factors, in addition to the other risk factors described in this report, and the potentially low volume oftrades in our common stock since it is not listed on a national securities exchange, may have a significant impact on the market price of our common stock,some of which are beyond our control: • results of pre-clinical studies and clinical trials; • commercial success of approved products; • corporate partnerships; • technological innovations by us or competitors; • changes in laws and government regulations both in the U.S. and overseas; • changes in key personnel at our company; • developments concerning proprietary rights, including patents and litigation matters; • public perception relating to the commercial value or safety of any of our product candidates; • future sales of our common stock, including to LPC under our committed equity facility; • other issuances of our common stock, or securities convertible into or exercisable for our common stock, causing dilution; • anticipated or unanticipated changes in our financial performance; • general trends related to the biopharmaceutical and biotechnological industries; and • general conditions in the stock market.The stock market in general has recently experienced relatively large price and volume fluctuations. In particular, the market prices of securities ofsmaller biotechnology companies have experienced dramatic fluctuations that often have been unrelated or disproportionate to the operating results of thesecompanies. Continued market fluctuations could result in extreme volatility in the price of our common stock, which could cause a decline in its value. Youshould also be aware that price volatility may be worse if the trading volume of the common stock remains limited or declines.Our principal stockholders have significant voting power and may take actions that may not be in the best interests of our other stockholders.Our officers, directors and principal stockholders together control approximately 46% of our outstanding common stock. Included in this group isSigma-Tau and its affiliates, which together hold outstanding shares representing approximately 39% of our outstanding common stock. A portion of theshares of common stock currently held by Sigma-Tau and its affiliates are subject to voting agreements under which our Board controls the voting power ofsuch stock. We cannot assure you that such voting agreements would prevent Sigma-Tau and its affiliates from taking actions not in your best interests andeffectively exercising control over us. These voting agreements expire periodically through September 2012. After their expiration, we will have no control overthe voting of these shares controlled by Sigma-Tau, including with respect to the election of directors and approval of significant corporate transactions. Thisconcentration of ownership may have the effect of delaying or preventing a change in control and might adversely affect the market price of our commonstock, and therefore may not be in the best interest of our other stockholders.If securities or industry analysts do not publish research or reports or publish unfavorable research about our business, the price of ourcommon stock and other securities and their trading volume could decline.The trading market for our common stock and other securities will depend in part on the research and reports that securities or industry analystspublish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If securities orindustry analysts do not commence or maintain coverage of us, the trading price for our common stock and other securities would be negatively affected. Inthe event we obtain securities or industry analyst coverage, if one or more of the analysts who covers us downgrades our securities, the price of our securitieswould likely decline. If one or more of these analysts ceases to cover us or fails to publish regular reports on us, interest in the purchase of our securities coulddecrease, which could cause the price of our common stock and other securities and their trading volume to decline. 24Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe exercise of options and warrants and other issuances of shares of common stock or securities convertible into common stock will dilute yourinterest.As of March 31, 2012, there are outstanding options to purchase an aggregate of 5,524,599 shares of our common stock at exercise prices rangingfrom $0.14 per share to $3.82 per share and outstanding warrants to purchase 11,332,059 shares of our common stock at a weighted average exercise price of$0.67 per share. The exercise of options and warrants at prices below the market price of our common stock could adversely affect the price of shares of ourcommon stock. Additional dilution may result from the issuance of shares of our capital stock in connection with collaborations or manufacturingarrangements or in connection with other financing efforts, including our committed equity facility with LPC.Any issuance of our common stock that is not made solely to then-existing stockholders proportionate to their interests, such as in the case of a stockdividend or stock split, will result in dilution to each stockholder by reducing his, her or its percentage ownership of the total outstanding shares. Moreover, ifwe issue options or warrants to purchase our common stock in the future and those options or warrants are exercised or we issue restricted stock, stockholdersmay experience further dilution. Holders of shares of our common stock have no preemptive rights that entitle them to purchase their pro rata share of anyoffering of shares of any class or series.In addition, most of the outstanding warrants to purchase shares of our common stock have an exercise price above the current market price for ourcommon stock. As a result, these warrants may not be exercised prior to their expiration, in which case we would not realize any proceeds from their exercise.The sale of shares of our common stock to LPC may cause substantial dilution to our existing stockholders and could cause the price of ourcommon stock to decline.Under our committed equity facility with LPC, we may sell to LPC, under certain circumstances, up to $11,000,000 of our common stock throughOctober 2013. Generally, we have the right, but no obligation, to direct LPC to periodically purchase up to $11,000,000 of our common stock in specificamounts under certain conditions, which periodic purchase amounts can be increased under specified circumstances. Through the date of this report, we havesold approximately 1,500,000 shares to LPC for net proceeds of $348,200.We have also agreed to issue to LPC up to an aggregate of 1,916,666 shares of common stock as a fee for LPC’s commitment to purchase our shares.Of these commitment shares, we issued one-half, or 958,333 shares, upon entering into the facility with LPC. The remaining commitment shares are issuableto LPC on a pro rata basis as purchases are made under the facility. In connection with the purchases made to date, we have issued 30,336 of the remainingcommitment shares.Depending upon market liquidity at the time, sales of shares of our common stock to LPC may cause the trading price of our common stock to decline.LPC may ultimately purchase all, some or no additional portion of the $11,000,000 of common stock, and after it has acquired shares, LPC may sell all,some or none of those shares. Therefore, sales to LPC by us could result in substantial dilution to the interests of other holders of our common stock. The saleof a substantial number of shares of our common stock to LPC, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales. However, we have the right to control the timing and amountof any sales of our shares to LPC, and we may terminate the facility at any time, in our discretion, without any cost to us.Our certificate of incorporation, our stockholder rights plan and Delaware law contain provisions that could discourage or prevent a takeover orother change in control, even if such a transaction would be beneficial to our stockholders, which could affect our stock price adversely andprevent attempts by our stockholders to replace or remove our current management.Our certificate of incorporation provides our Board with the power to issue shares of preferred stock without stockholder approval. In addition, underour stockholder rights plan, our Board has the discretion to issue certain rights to purchase our capital stock when a person acquires in excess of 25% of ouroutstanding common shares. Our Board has exempted purchases by Sigma-Tau to date and purchases that may be made by LPC under the committed equityfacility from the operation of our stockholder rights plan. The stockholder rights plan may make it more difficult for stockholders to take corporate actionsand may have the effect of delaying or preventing a change in control, even if such actions or change in control would be in your best interests. In addition, weare subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law. Subject to specified exceptions, this section provides that acorporation may not engage in any business combination with any interested stockholder, as defined in that statute, during the three-year period following thetime that such stockholder becomes an interested stockholder. This provision could also have the effect of delaying or preventing a change of control of ourcompany. The foregoing factors could reduce the price that investors or an acquirer might be willing to pay in the future for shares of our common stock. 25Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsWe may become involved in securities class action litigation that could divert management’s attention and harm our business and our insurancecoverage may not be sufficient to cover all costs and damages.The stock market has from time to time experienced significant price and volume fluctuations that have affected the market prices for the common stockof pharmaceutical and biotechnology companies. These broad market fluctuations may cause the market price of our common stock to decline. In the past,following periods of volatility in the market price of a particular company’s securities, securities class action litigation has often been brought against thatcompany. We may become involved in this type of litigation in the future. Litigation often is expensive and diverts management’s attention and resources,which could hurt our business, operating results and financial condition.Item 1B. Unresolved Staff Comments.None.Item 2. Properties.Our corporate headquarters are located in Rockville, Maryland where we lease office space with a term through January 31, 2013. We believe that ourfacilities are generally suitable to meet our needs for the foreseeable future; however, we will continue to seek alternate or additional space as needed.Item 3. Legal Proceedings.None.Item 4. Mine Safety Disclosures.Not applicable. 26Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsPART IIItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Securities.Our common stock is quoted on the OTC Bulletin Board under the symbol “RGRX.” Our common stock last traded at $0.18 on April 2, 2012. Prior toDecember 23, 2010, our stock traded on the NYSE Amex stock exchange under the symbol “RGN.” The following table provides the high and low closingprices for our common stock for each quarterly period within the two most recent fiscal years as quoted on the NYSE Amex or reported by the OTC BulletinBoard, as appropriate. The quotation reported by the OTC Bulletin Board reflects inter-dealer prices, without retail mark-up, mark-down or commission andmay not represent actual transactions.The following table sets forth the high and low bid prices for our common stock for the periods indicated. 2011 2010 High Low High Low First Quarter $0.27 $0.20 $0.65 $0.53 Second Quarter $0.23 $0.18 $0.68 $0.26 Third Quarter $0.32 $0.19 $0.35 $0.24 Fourth Quarter $0.30 $0.08 $0.30 $0.21 As of December 31, 2011, we had 835 holders of record of our common stock and over 3,700 beneficial holders of our common stock.We have never declared or paid a cash dividend on our common stock and since all of our funds are committed to clinical research we do not anticipatethat any cash dividends will be paid on our common stock in the foreseeable future.Item 6. Selected Financial Data.Not Applicable.Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.You should read the following discussion and analysis together with our consolidated financial statements and the related notes includedelsewhere in this annual report.Business OverviewWe are a biopharmaceutical company focused on the development of a novel therapeutic peptide, Thymosin beta 4, or Tß4, for tissue and organprotection, repair, and regeneration. We have formulated Tß4 into three distinct product candidates currently in clinical development: • RGN-259, a topical eye drop for regeneration of corneal tissues damaged by injury, disease or other pathology; • RGN-352, an injectable formulation to treat cardiovascular diseases, central and peripheral nervous system diseases and other medicalindications that may be treated by systemic administration; and • RGN-137, a topical gel for dermal wounds and reduction of scar tissue.We have a fourth formulation, RGN-457, in preclinical development. RGN-457 is a liquid aerosol formulation of Tß4 targeting cystic fibrosis and otherpulmonary diseases.We are continuing strategic partnership discussions with biotechnology and pharmaceutical companies regarding the further clinical development of allof our product candidates.In addition to our four pharmaceutical product candidates, we are also pursuing the commercial development of peptide fragments and derivatives ofTß4 for potential cosmeceutical use. These fragments are amino acid sequences, and variations thereof, within the Tß4 molecule that have demonstratedactivity in several in vitro preclinical research studies that we have sponsored. We believe the biological activities of these fragments may be useful, forexample, in developing novel cosmeceutical products for the anti-aging market. Our strategy is to collaborate with another company to develop cosmeceuticalformulations based on these peptides. 27Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsCurrent Financial CircumstancesDue to our current financial condition, beginning in late 2011, we began implementing significant cost-saving measures to conserve capital resourcesand maintain a minimal level of operations, while seeking to receive additional funding and/or complete a strategic transaction. To that end, we have greatlyreduced salaries and work schedules of our employees and have increasingly relied on reimbursements under a grant that we received from the NIH to fundemployee salaries. We have also engaged investment bankers to help us explore financing alternatives, including a possible equity financing or licensingtransaction, in order to continue the development of our product candidates, as well as the exploration of other strategic alternatives, including a possible assetout-licensing, asset sale or sale of our company.In March 2012, we entered into a term sheet with Lee’s Pharmaceutical (HK) for the development of Tß4 in any pharmaceutical formulation in China,Hong Kong and Macau. At the time of the signing of the term sheet, we received a $200,000 payment from Lee’s, and we project that our existing capitalresources will fund our planned, minimal operating activities into May 2012. Upon execution of the definitive license agreement, we expect to receive anadditional $200,000 payment from Lee’s. While we expect that these funds will allow us to continue our minimal level of operations through June 2012, wewill continue to have insufficient resources to complete any of our active trials or to initiate any additional trials that we have planned. As a result, we will stillneed to complete a financing or strategic transaction by the end of the second quarter of 2012 to continue as a going concern or we may be forced to ceaseoperations, seek protection under the provisions of the U.S. Bankruptcy Code or liquidate and dissolve our company.Financial Operations OverviewWe have never generated product revenues, and we do not expect to generate product revenues until the FDA approves one of our product candidates, ifever, and we begin marketing and selling it. Subject to the availability of financing, we expect to invest increasingly significant amounts in the furtherance ofour current clinical programs and may add additional nonclinical studies and new clinical trials as we explore the potential of our current product candidatesin other indications and explore new formulations of Tß4-based product candidates. As we expand our clinical development initiatives, we expect to incursubstantial and increasing losses. Accordingly, we will need to generate significant product revenues in order to ultimately achieve and then maintainprofitability. Also, we expect that we will need to raise substantial additional capital in order to meet product development requirements. We cannot assureinvestors that such capital will be available when needed, on acceptable terms, or at all.Most of our expenditures to date have been for research and development, or R&D, activities and general and administrative, or G&A, activities. R&Dcosts include all of the wholly-allocable costs associated with our various clinical programs passed through to us by our outsourced vendors. Those costsinclude manufacturing Tß4 and peptide fragments, formulation of Tß4 into our product candidates, stability studies for both Tß4, and the variousformulations, preclinical toxicology, safety and pharmacokinetic studies, clinical trial management, medical oversight, laboratory evaluations, statistical dataanalysis, regulatory compliance, quality assurance and other related activities. R&D includes cash and non-cash compensation, employee benefits, travel andother miscellaneous costs of our internal R&D personnel, five persons in total, who are wholly dedicated either on a full or part-time basis to R&D efforts.R&D also includes a proration of our common infrastructure costs for office space and communications. We expense our R&D costs as they are incurred.R&D expenditures are subject to the risks and uncertainties associated with clinical trials and the FDA review and approval process. As a result, theseexpenses could exceed our expectations, possibly materially. We are uncertain as to what we will incur in future research and development costs for our clinicalstudies, as these amounts are subject to the outcome of current studies, management’s continuing assessment of the economics of each individual research anddevelopment project and the internal competition for project funding. As described below under “Sources of Liquidity,” in May 2010 we were awarded a grantfrom the NIH to support the development of RGN-352. Subject to our compliance with the terms and conditions of the grant, we are eligible to receive up to$3.0 million over a three-year period in cost reimbursements related to the purposes set forth in the grant. We intend to use proceeds from the grant for thepayment of research and development staff in connection with our grant related research and development activities and, as described above, we haveincreasingly relied on this grant for purposes of funding our R&D employees’ reduced salaries. Proceeds from the grant have been used for animal studiessupporting our clinical work to develop RGN-352 for myocardial infarction, as well as to manufacture additional quantities of Tb4.G&A costs include outside professional fees for legal, business development, audit and accounting services. G&A also includes cash and non-cashcompensation, employee benefits, travel and other miscellaneous costs of our internal G&A personnel, three in total, who are wholly dedicated to G&A efforts.G&A also includes a proration of our common infrastructure costs for office space, and communications. Our G&A expenses also include costs to maintainour intellectual property portfolio. We have expanded our patent prosecution activities and have been reviewing our pending patent applications in the UnitedStates, Europe and other countries with the advice of outside legal counsel. In some cases, we have filed patent applications for non-critical strategic purposesintended to prevent others from filing similar patent claims. We continue to closely monitor our patent applications to determine if they will continue to providestrategic benefits. In cases where we believe the benefit has been realized or it becomes unnecessary due to the issuance of other patents, or for other reasons thatwill not affect the strength of our intellectual property portfolio, we will abandon these patent applications in order to reduce our costs of prosecution. 28Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsCritical Accounting PoliciesWe prepare our financial statements in conformity with accounting principles generally accepted in the United States. Such accounting principles requirethat our management make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Our actual resultscould differ materially from those estimates. The items in our financial statements that have required us to make significant estimates and judgments are asfollows:Share-based paymentWe account for share-based compensation based on the estimated grant date fair value of the award using the Black-Scholes option-pricing model. Theestimated grant date fair value is recognized over the requisite service period.Determining the appropriate fair value model and calculating the fair value of share-based payment awards require the input of highly subjectiveassumptions, including the expected life of the share-based payment awards and stock price volatility. Since our historical data is limited, the expected life wasdetermined in accordance with SEC Staff Accounting Bulletin No. 107 guidance for “plain vanilla” options. Since our historical trading volume is relativelylow, we estimated the expected volatility based on monthly closing prices for a period consistent with the expected life of the option.The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involveinherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our stock-basedcompensation expense could be materially different in the future. In addition, we are required to estimate the expected forfeiture rate and only recognize expensefor those shares expected to vest. If our actual forfeiture rate is materially different from our estimate, the stock-based compensation expense could besignificantly different from what we have recorded in the current period. See Notes 2 and 7 to the Financial Statements for a further discussion on stock-basedcompensation and the relative ranges of our historical, underlying assumptions.Costs of pre-clinical studies and clinical trialsWe accrue estimated costs for pre-clinical studies and clinical trials conducted by contract research organizations and participating hospitals. Thesecosts are a significant component of research and development expenses. We accrue costs for pre-clinical studies and clinical trials performed by contractresearch organizations based on estimates of work performed under the contracts. Costs of setting up hospital sites for participation in trials are accruedimmediately. Hospital costs related to patient enrollment are accrued as patients are entered in the trial.Results of OperationsComparison of years ended December 31, 2011 and 2010Revenues. For the year ended December 31, 2011, grant revenue was $1.5 million compared to $850,000 for the year ended December 31, 2010. In May2010, we were awarded a grant from NIH’s National Heart Lung & Blood Institute (“NHLBI”). This grant was for $1 million per year for three years. All ofthe revenue recognized in 2011 was from the NIH grant to offset costs incurred. During the year ended December 31, 2010, we recognized $117,000 based oncosts incurred related to this grant. In addition, in October 2010 we were awarded $733,000 under the Patient Protection and Affordable Care Act as part of anincentive for biotechnology companies.Expenses—Research and development. For the year ended December 31, 2011, our R&D expenditures increased by $2.4 million, or 87%, to $5.1million, from $2.7 million in 2010.Our outsourced R&D costs, which are costs paid directly to contract research organizations and outside consultants, increased by $2.6 million, or245%, to $3.7 million, from $1.1 million. This increase was related to 2011 costs associated with the Phase 2 dry eye trial for RGN-259, pre-dosing clinicaltrial costs for the anticipated AMI trial with RGN-352 and additional costs resulting from the acquisition of unformulatedTß4.During 2011 we engaged a contract research organization to execute a preclinical dry eye study and to conduct a Phase 2 trial in dry eye patients andincurred $1.48 million in CRO costs associated with this trial. We also commissioned a manufacturing run of additional Tß4 for $840,000 and incurred costsof $715,000 associated with our Phase 2 trial of RGN-352 that has been placed on clinical hold. In contrast, during 2010, we focused our efforts on enrollingEB patients and commenced work on our Phase 2 trials with RGN-259 to treat patients with dry eye and our Phase 2 trial to treat AMI patients, resulting inan overall lower level of clinical activity. 29Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsOur internal R&D costs decreased by $200,000 to $1.4 million from the 2010 amount of $1.6 million. The decrease reflects reduced staffing levels andemployee compensation, coupled with lower non-cash stock option expense.Expenses—General and administrative. For the year ended December 31, 2011, our G&A expenses decreased by $718,000, or 23%, to $2.5 million,from $3.2 million in 2010. This decrease is the result of a reduction of $350,000 in legal fees incurred for the prosecution of our patent portfolio and a$250,000 decrease in personnel-related expenses, including non-cash stock option compensation.Interest Income. For the year ended December 31, 2011, our interest income decreased by approximately $6,600, or 80%, to approximately $1,600,from approximately $8,200 in 2010. The decrease was due to lower average interest-bearing cash balances during 2011.Liquidity and Capital ResourcesWe have not commercialized any of our product candidates to date and have incurred significant losses since inception. We have primarily financed ouroperations through the issuance of common stock and common stock warrants in private and public financings, although as discussed below we have beenawarded government grants and will continue to pursue other governmental funding sources. The report of our independent registered public accounting firmregarding our financial statements for the year ended December 31, 2011 contains an explanatory paragraph regarding our ability to continue as a goingconcern based upon our history of net losses and dependence on future financing in order to meet our planned operating activities.We incurred a net loss of $6.0 million for the year ended December 31, 2011. We only had cash and cash equivalents of $116,000 at December 31,2011. Based on our current operations, we believe our existing cash resources, coupled with the payments associated with the Lee’s licensing agreement will beadequate to fund our operations through June 2012, without considering any potential other sources of capital. In any event, we will continue to have a need forfinancing, which we may not be able to complete either on favorable terms or at all.Net Cash Used in Operating Activities. Net cash used in operating activities was $5.4 million and $5.0 million for the years ended December 31,2011 and 2010, respectively. Our reported net loss for the year ended December 31, 2011 was $6.0 million, which included $222,000 in non-cash share-based compensation, an increase of $204,000 in grants receivable, a decrease of $360,000 in prepaid expenses and other current assets and an increase incurrent liabilities of $194,000. During 2010, $474,000 in non-cash share based compensation expenses was offset by $316,000 of cash used for workingcapital purposes resulting in net cash used in operating activities approximating the net loss reported for the year.Net Cash Used in Investing Activities. Net cash used in investing activities was approximately $1,000 and $26,000 for the years ended December 31,2011 and 2010, respectively. Our only such activities during these periods were purchases of office equipment and furnishings.Net Cash Provided by Financing Activities. Net cash provided by financing activities totaled approximately $1.7 million and $4.5 million for theyears ended December 31, 2011 and 2010, respectively. In both periods, these net proceeds result from the issuance of common stock and warrants topurchase common stock as more fully described in Note 7 to our financial statements included in this report.Future Funding RequirementsThe expenditures that will be necessary to execute our business plan are subject to numerous uncertainties that may adversely affect our liquidity andcapital resources. We are not currently enrolling patients in any clinical trials. We had intended to commence patient enrollment in a Phase 2 clinical trial ofRGN-352 for AMI patients near the end of the first quarter of 2011, but this trial has been placed on clinical hold by the FDA pending resolution of certainmanufacturing compliance issues at our original contract manufacturer, which was responsible for formulating, filling and finishing RGN-352. We have putthe AMI trial on hold pending access to sufficient capital resources to enable us to retain a cGMP-compliant drug product manufacturer and are focusing ourcurrent efforts on the development of RGN-259 for ophthalmic indications. 30Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsEven with this change in our clinical development priorities, we currently do not have sufficient capital resources to continue product developmentbeyond May 2012 without additional capital. While we expect to receive an additional $200,000 payment from Lee’s by the end of May 2012, we expect thatthese funds will allow us to continue our minimal level of operations through June 2012, and we will continue to have insufficient resources to initiate anyadditional trials that we have planned. As described below, we have established a committed equity facility with LPC, but we are currently unable to draw onthe facility and our ability to draw on the facility in the future is subject to a number of limitations, including our stock price, as described in “Risk Factors—Risks Related to Our Liquidity and Need for Financing—We are not currently able to access the LPC committed equity facility and, if we are able to do soin the future, we may not be able to access the full amounts available under the LPC committed equity facility.” Therefore, even if we were able to sell sharesof our common stock under the LPC facility, based on our recent stock price, the amount of proceeds we would be able to raise would likely not extend ourcapital resources significantly beyond the second quarter of 2012.In addition, the length of time required for clinical trials varies substantially according to the type, complexity, novelty and intended use of a productcandidate. Some of the factors that could impact our liquidity and capital needs include, but are not limited to: • the progress of our clinical trials; • the progress of our research activities; • the number and scope of our research programs; • the progress of our preclinical development activities; • the costs involved in preparing, filing, prosecuting, maintaining, enforcing and defending patent and other intellectual property claims; • the costs related to development and manufacture of preclinical, clinical and validation lots for regulatory purposes and commercialization of drugsupply associated with our product candidates; • our ability to enter into corporate collaborations and the terms and success of these collaborations; • the costs and timing of regulatory approvals; and • the costs of establishing manufacturing, sales and distribution capabilities.In addition, the duration and the cost of clinical trials may vary significantly over the life of a project as a result of differences arising during the clinicaltrial protocol, including, among others, the following: • the number of patients that ultimately participate in the trial; • the duration of patient follow-up that seems appropriate in view of the results; • the number of clinical sites included in the trials; and • the length of time required to enroll suitable patient subjects.Also, we test our product candidates in numerous preclinical studies to identify indications for which they may be efficacious. We may conductmultiple clinical trials to cover a variety of indications for each product candidate. As we obtain results from trials, we may elect to discontinue clinical trialsfor certain product candidates or for certain indications in order to focus our resources on more promising product candidates or indications.Our proprietary product candidates also have not yet achieved FDA regulatory approval, which is required before we can market them as therapeuticproducts. In order to proceed to subsequent clinical trial stages and to ultimately achieve regulatory approval, the FDA must conclude that our clinical dataestablish safety and efficacy. Historically, the results from preclinical studies and early clinical trials have often not been predictive of results obtained in laterclinical trials. A number of new drugs and biologics have shown promising results in clinical trials, but subsequently failed to establish sufficient safety andefficacy data to obtain necessary regulatory approvals.In addition to our obligations under clinical trials, we are committed under an office space lease through January 2013 that requires average base rentalpayments of approximately $7,300 per month.Sources of LiquidityWe have not commercialized any of our product candidates to date and have primarily financed our operations through the issuance of common stockand common stock warrants in private and public financings. Our largest stockholder group, which we refer to as Sigma-Tau, has historically providedsignificant equity capital to us, including private placements of $950,000 in January 2011 and $1.6 million in October 2009. In January 2011, we alsoraised $500,000 from a registered direct offering of our securities to LPC and an additional $348,200 in sales of common stock to LPC under an equity linefacility discussed below. During 2010 we raised approximately $4.5 million from an underwritten public offering of our securities. 31Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsCommitted Equity Line with LPCIn January 2011, we also entered into an $11 million committed equity facility with LPC. We have an effective registration statement for the resale byLPC of 15 million shares of common stock issuable under the facility through October 2013. The facility provides us with the right but not the obligation todirect LPC to purchase up to 200,000 shares of common stock every two business days at a purchase price calculated by reference to the prevailing marketprice of our common stock without any fixed discount, subject to the floor price of $0.15 per share. While we may sell up to $11,000,000 worth of sharesunder the facility, we currently are not able to access the facility given our current stock price. Additionally, because the registration statement related to thoseshares has ceased to be effective under the Securities Act, we would need to prepare and file a post-effective amendment to the registration statement and havethat post-effective amendment declared effective by the SEC before we can sell any of these shares to LPC.There are no trading volume requirements or restrictions under the facility, and we will control the timing and amount of any sales of our common stockto LPC. Our ability to sell our shares to LPC is also subject to our obtaining all necessary consents, amendments or waivers as may be required, and subjectto the shares to be sold having been registered for resale. LPC has no right to require any sales by us, but is obligated to make purchases from us as we directin accordance with the facility. We can also accelerate the amount of common stock to be purchased under certain circumstances. There are no limitations onuse of proceeds, financial or business covenants, restrictions on future funding, rights of first refusal, participation rights, penalties or liquidated damages.We may terminate the facility at any time, in our discretion, without any penalty or cost to us. To date, we have issued an aggregate of 1,530,336 shares ofcommon stock to LPC under this facility for net proceeds of $348,200.Licensing AgreementsWe also have a license agreement with Sigma-Tau that provides the opportunity for us to receive milestone payments upon specified events and royaltypayments in connection with commercial sales of Tß4 in Europe. However, we have not received any milestone payments to date, and there can be noassurance that we will be able to attain such milestones and generate any such payments under the agreement.We also have entered into a term sheet with Lee’s Pharmaceuticals that provides for a definitive license agreement with the opportunity for us to receivemilestone payments upon specified events and royalty payments in connection with any commercial sales of Tß4-based products in China, Hong Kong andMacau. However, we have not yet executed the definitive license agreement with Lee’s, and we cannot assure you that we will be able to do so, nor can weassure you that we will be able to attain any such milestones or generate any such royalty payments under the agreement.Government GrantsWe are also aggressively pursuing government funding. In May 2010, we were awarded a grant from the NIH’s National Heart, Lung and Blood Instituteto support the requisite nonclinical development of RGN-352 for patients who have suffered a heart attack. These nonclinical activities are being conductedeven though our pending Phase 2 clinical trial of RGN-352 is on clinical hold. Subject to our compliance with the terms and conditions of the grant, we areeligible to receive up to $3.0 million over a three-year period in cost reimbursements for our associated costs incurred for the purposes set forth in the grant.Revenue from the grant will be recorded during the same periods when we incur eligible expenses.The Patient Protection and Affordable Care Act enacted in 2010 included a new incentive for biotechnology companies like ours, known as theQualifying Therapeutic Discovery Project grant program. Under this program, small businesses were able to apply for a federal grant in an amount equal to50% of their eligible investment in qualifying therapeutic discovery projects for 2009 and 2010. Qualifying therapeutic discovery projects included thosedesigned to treat or prevent diseases or conditions by conducting pre-clinical or clinical activities for the purpose of securing FDA approval of a product. Wesubmitted three applications, covering each of our clinical-stage product candidates, and in October 2010 were awarded an aggregate of $733,438 under thisprogram.Other Financing SourcesOther potential sources of outside capital include entering into strategic business relationships, additional issuances of equity securities or debt financingor other similar financial instruments. If we raise additional capital through a strategic business relationship, we may have to give up valuable rights to ourintellectual property. If we raise funds by selling additional shares of our common stock or securities convertible into our common stock, the ownershipinterest of our existing stockholders may be significantly diluted. In addition, if additional funds are raised through the issuance of preferred stock or debtsecurities, these securities are likely to have rights, preferences and privileges senior to our common stock and may involve significant fees, interest expense,restrictive covenants and the granting of security interests in our assets. 32Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsOur failure to successfully address ongoing liquidity requirements would have a materially negative impact on our business, including the possibility ofsurrendering our rights to some technologies or product opportunities, delaying our clinical trials, or ceasing operations. There can be no assurance that we willbe able to obtain additional capital in sufficient amounts, on acceptable terms, or at all.Off-Balance Sheet ArrangementsWe do not have any off-balance sheet arrangements, as such term is defined in Item 303(a)(4) of Regulation S-K.Item 7A. Quantitative and Qualitative Disclosures About Market Risk.Our cash equivalents, which are generally comprised of Federally-insured bank deposits and short-term U.S. government debt securities, are subject todefault, changes in credit rating and changes in market value. These investments are also subject to interest rate risk and will decrease in value if marketinterest rates increase. As of December 31, 2011, we had $116,000 of cash and cash equivalents. Due to the short-term nature of these investments, if marketinterest rates differed by 10% from their levels as of December 31, 2011, the change in fair value of our financial instruments would not have been material.Item 8. Financial Statements and Supplementary Data.The financial statements required by this item are included beginning on page F-1 of this report.Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.None.Item 9A. Controls and Procedures.We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in reports that we file orsubmit under the Exchange Act is recorded, processed, summarized and timely reported as provided in SEC rules and forms and that such information isaccumulated and communicated to our management, including our Chief Executive Officer who current serves as both our principal executive officer and ourprincipal financial officer, as appropriate, to allow for timely decisions regarding required disclosure. We periodically review the design and effectiveness ofour disclosure controls and procedures, including compliance with various laws and regulations that apply to our operations. We make modifications toimprove the design and effectiveness of our disclosure controls and procedures and may take other corrective action, if our reviews identify a need for suchmodifications or actions. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter howwell designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and we apply judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions aboutthe likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions;over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Becauseof the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected.We have carried out an evaluation, under the supervision and the participation of our management, including our Chief Executive Officer, of theeffectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), as ofDecember 31, 2011, the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer, in his capacity of principalexecutive officer and principal financial officer, concluded that our disclosure controls and procedures were effective as of December 31, 2011 at thereasonable assurance level.Management’s Annual Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in ExchangeAct Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Acompany’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonabledetail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions arerecorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts andexpenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect onour consolidated financial statements. 33Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsBecause of its inherent limitations, including the possibility of human error and the circumvention or overriding of controls, a system of internal controlover financial reporting can provide only reasonable assurance and may not prevent or detect all misstatements. Therefore, even those systems determined to beeffective can provide only reasonable assurance with respect to financial statement preparation and presentation. Further, because of changes in conditions,effectiveness of internal control over financial reporting may vary over time.A significant deficiency is a control deficiency, or combination of control deficiencies, in internal control over financial reporting that is less severe thana material weakness, yet important enough to merit attention by those responsible for oversight of the company’s financial reporting. A material weakness is adeficiency, or combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a materialmisstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.Under the supervision and with the participation of our management, including our Chief Executive Officer in his capacity of principal executive officerand principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework set forthin Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation,management has concluded that our internal control over financial reporting was effective as of December 31, 2011 to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accountingprinciples.Changes in Internal Control over Financial ReportingThere were no changes in our internal control over financial reporting during the three months ended December 31, 2011 that have materially affected, orwhich are reasonably likely to materially affect, our internal control over financial reporting.Item 9B. Other Information.As reported on a Current Report on Form 8-K filed on January 6, 2012, the Company previously entered into letter agreements with each of J.J.Finkelstein, the Company’s President and Chief Executive Officer, David Crockford, the Company’s vice president of clinical and regulatory affairs, andAllan Goldstein, the Company’s chief scientific advisor and a member of the Company’s board of directors, relating to their employment with the Company.In addition, the Company entered into change of control agreements with each of Mr. Finkelstein, Mr. Crockford and Dr. Goldstein, providing for the paymentof severance obligations upon specified terminations of employment.The employment letter agreements and change in control agreements each had a term that was scheduled to expire on March 31, 2012. On April 3, 2012,the Board of Directors of the Company approved, and the Company and each officer entered into, amendments to each of the letter agreements to extend theirterms through June 30, 2012. On that date, the Board of Directors of the Company also approved, and the Company and each officer entered into, amendedand restated change in control agreements to: (i) provide that, upon the occurrence of a change in control of the Company, all outstanding stock options held bythe officers will become fully vested and exercisable upon the effectiveness of the change in control transaction; (ii) clarify the definition of “net proceeds”under the agreements in the event of a reverse merger transaction; and (iii) extend their respective terms through June 30, 2012.PART IIIItem 10. Directors, Executive Officers and Corporate Governance.Executive Officers and DirectorsThe following table sets forth as of March 15, 2012 the name, age and position of each person who serves as an executive officer or director of ourcompany. There are no family relationships among any of our executive officers or directors, with the exception that Mr. Finkelstein is the first cousin ofDr. Goldstein’s wife. 34Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsWe seek to assemble a board that, as a whole, possesses the appropriate balance of professional and industry knowledge. financial expertise and high-level management experience necessary to oversee and direct our business. To that end, our board intends to maintain membership of directors whocomplement and strengthen the skills of other members and who also exhibit integrity, collegiality, sound business judgment and other qualities that we viewas critical to effective functioning of the board. The brief biographies below include information, as of the date of this report, regarding the specific andparticular experience, qualifications, attributes or skills of each director or nominee that led the board to believe that the director should serve on the board. Name Age PositionExecutive Officers: Mr. J.J. Finkelstein 60 President, Chief Executive Officer and DirectorMr. David R. Crockford 66 Vice President, Clinical and Regulatory AffairsDirectors: Dr. Allan L. Goldstein 74 Former Chairman, Department of Biochemistry and Molecular Biology, The George WashingtonUniversity School of Medicine and Health Sciences; Founder, Chairman of the Board and ChiefScientific AdvisorMr. R. Don Elsey 58 Senior Vice President Finance & Administration and Chief Financial Officer of EmergentBioSolutions, Inc.Mr. Joseph C. McNay 78 Chairman, Chief Investment Officer and Managing Principal, Essex Investment ManagementCompanyMr. Mauro Bove 57 Head of Corporate and Business Development and Director, Sigma-Tau Finanziaria S.p.A andcertain of its affiliatesDr. L. Thompson Bowles, M.D. 80 Retired, former thoracic surgeon and former Dean of Medicine and Professor of Surgery, The GeorgeWashington University School of Medicine and Health SciencesMr. Finkelstein has served as our President and Chief Executive Officer and a member of our Board of Directors since 2002. Mr. Finkelstein alsoserved as our Chief Executive Officer from 1984 to 1989 and as the Vice Chairman of our Board of Directors from 1989 to 1991. Mr. Finkelstein hasworked as an executive officer and consultant in the bioscience industry for the past 30 years, including serving from 1989 to 1996 as chief executive officerof Cryomedical Sciences, Inc., a publicly-traded medical device company. Mr. Finkelstein has significant experience in developing early-stage companies. Hehas been responsible for the regulatory approval and marketing of several medical devices in the U.S. and abroad. Mr. Finkelstein has served on the executivecommittee of the Board of Directors of the Technology Council of Maryland since 2006, MdBio, Inc. since 1998 and currently chairs the MdBio Foundation,all of which are non-profit entities that support bioscience development and education in the State of Maryland. Mr. Finkelstein received a business degree infinance from the University of Texas. The Board believes that Mr. Finkelstein’s history and long tenure as our Chief Executive Officer positions him tocontribute to the Board his extensive knowledge of our company and to provide Board continuity. In addition, the Board believes that his experience at priorcompanies has provided him with operational and industry expertise, as well as leadership skills that are important to the Board.Mr. Crockford has served as our Vice President of Clinical and Regulatory Affairs since March 2005 and was a consultant to the Company from 2000until his appointment as Vice President. He has more than 25 years of experience in the biotechnology and pharmaceutical industries. During his career as aclinical and regulatory affairs professional, Mr. Crockford has established strategic plans, implemented and obtained marketing approval for 18 drugproducts, including one of the first human growth hormone preparations sold in the U.S., 17 in vitro diagnostic tests, and an intraoperative medical device todetect and treat cancer. Mr. Crockford’s other clinical and regulatory achievements include the cost-effective and timely development of a number of innovativeinvestigational drugs. Mr. Crockford is the author of a number of publications, including Development of Thymosin ß4 for Treatment of Patients withIschemic Heart Disease, and is an inventor or co-inventor on approximately two dozen patents related to drug development. Mr. Crockford has a B.A. degreein biology and chemistry from Boston University. He also completed biochemistry and clinical chemistry course studies in Princeton, New Jersey, andseminars in reproductive medicine at medical schools at Wayne State University and UCLA.Dr. Goldstein has served as the Chairman of our Board of Directors and our Chief Scientific Advisor since he founded our company in 1982.Dr. Goldstein has been a Professor of Biochemistry since 1978 and served as Chairman of the Department of Biochemistry and Molecular Biology at theGeorge Washington University School of Medicine and Health Sciences until 2009. Dr. Goldstein is a recognized expert in the field of immunology and proteinchemistry, having authored over 430 scientific articles in professional journals. He is also the inventor on over 25 issued and/or pending patents inbiochemistry, immunology, cardiology, cancer and wound healing. Dr. Goldstein discovered several important compounds, including Ta1, which ismarketed worldwide, and Tb4, which is the basis for RegeneRx’s clinical program. Dr. Goldstein has served on the Board of Trustees of the Sabin VaccineInstitute since 2000 and on the Board of Directors of the Richard B. and Lynne V. Cheney Cardiovascular Institute since 2006. Dr. Goldstein has also donepioneering work in the area of medical education, developing distance learning programs offered through “Frontiers in Medicine,” a medical education seriesthat Dr. Goldstein developed. The Board believes that Dr. Goldstein’s scientific expertise, industry background and prior experience as our founder all positionhim to make an effective contribution to the medical and scientific understanding of the Board, which the committee believes to be particularly important as wecontinue our Tb4 development efforts. 35Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsMr. Elsey has served as a member of our Board of Directors since September 2010. He has served as senior vice president and chief financial officer ofEmergent BioSolutions Inc., a publicly held biopharmaceutical company, since May 2007, and as its chief financial officer since March 2006 and Treasurersince June 2005. Mr. Elsey previously served as vice president, finance of Emergent BioSolutions from June 2005 to May 2007. He served as the director offinance and administration at IGEN International, Inc., a publicly held biotechnology company, and its successor BioVeris Corporation, from April 2000 toJune 2005. Prior to joining IGEN, Mr. Elsey served as director of finance at Applera, a genomics and sequencing company, and in several finance positions atInternational Business Machines, Inc. He received an M.B.A. in finance and a B.A. in economics from Michigan State University. Mr. Elsey is a certifiedmanagement accountant. The Board believes that Mr. Elsey’s experience as chief financial officer of a public company is particularly valuable to our businessin that it positions him to contribute to our board’s and audit committee’s understanding of financial matters.Mr. McNay has served as a member of our Board of Directors since 2002. He is currently Chairman, Chief Investment Officer and ManagingPrincipal of Essex Investment Management Company, LLC, positions he has held since 1976 when he founded Essex. He has direct portfolio managementresponsibilities for a variety of funds and on behalf of private clients. He is also a member of the firm’s Management Board. Prior to founding Essex,Mr. McNay was Executive Vice President and Director of Endowment Management & Research Corp. from 1967. Prior to that, Mr. McNay was VicePresident and Senior Portfolio Manager at the Massachusetts Company. Currently he is serving as Trustee of National Public Radio, Trustee of the DanaFarber Cancer Institute, and is a Trustee and member of the Children’s Hospital Investment Committee. He received his A.B. degree from Yale University andhis M.B.A. degree in finance from the Wharton School of the University of Pennsylvania. The Board believes that Mr. McNay’s extensive financial experienceis valuable to our business and also positions him to contribute to the audit committee’s understanding of financial matters.Mr. Bove has served as a member of our Board of Directors since 2004 and has more than 30 years of business and management experience within thepharmaceutical industry. Mr. Bove is currently the Head of Corporate & Business Development of Sigma-Tau Finanziaria S.p.A., the holding company ofSigma-Tau Group, a leading international pharmaceutical company, and certain Sigma-Tau affiliates, positions he has held since 1993. Sigma-TauFinanziaria S.p.A. and its affiliates are collectively our largest stockholder. Mr. Bove has also held a number of senior positions in business, licensing andcorporate development within Sigma-Tau Group, which has subsidiaries in most European countries and the United States. Mr. Bove obtained his law degreeat the University of Parma, Italy, in 1980. In 1985, he attended the Academy of American and International Laws at the International and Comparative LawCenter, Dallas, Texas. The Board believes that Mr. Bove’s extensive business and management experience within the pharmaceutical industry allows him torecognize and advise the Board with respect to recent industry developments.Dr. Bowles has served as a member of our Board of Directors since 2006. He retired from his career as a thoracic surgeon in 1988. Dr. Bowles servedas Dean of Medicine and Professor of Surgery at The George Washington University (“GWU”) School of Medicine and Health Sciences from 1976 to 1988and as Vice President for Medical Affairs and Executive Dean of the GWU Medical Center from 1988 to 1992. Dr. Bowles previously served as President ofthe National Board of Medical Examiners, a medical accrediting organization, from 1992 to 2000. He has also been a member of the National Academy ofSciences Institute of Medicine since 1988 and currently serves as a member of several other national medical societies including: The American College ofSurgeons, The American Association for Thoracic Surgery, The Society of Thoracic Surgeons, The American College of Chest Physicians, The AmericanGerontological Society, The Society of Medical Administrators, The College of Physicians of Philadelphia, and The Washington Academy of Surgeons.Dr. Bowles has served on the editorial board of a number of medical journals, including the Journal of Medical Education and continued on as chairman of itsnewly revised updated version, Academic Medicine. Dr. Bowles has been President of the District of Columbia’s medical licensing board called the HealingArts Commission (1977-1979), and was a member of the National Library of Medicine’s Board of Regents (1982-1986), chairman (1984-1986), memberof the Special Medical Advisory Group of Veterans Administration (now Dept. of Veterans Affairs) 1984-1992, chairman 1992-1994. Dr. Bowles was alsochairman of the National Committee on Foreign Medical Education and Accreditation, 1994-1996. Dr. Bowles received his medical degree from DukeUniversity and his Ph.D. in higher education from New York University. The Board believes that Dr. Bowles’ distinguished medical career positions him tobring extensive medical and clinical trial experience to the Board. The Board expects that this experience will permit Dr. Bowles to provide leadership andinsight as we translate our laboratory discoveries into human clinical trials and advance our product candidates through clinical development towardcommercialization. 36Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsSection 16(a) Beneficial Ownership Reporting ComplianceSection 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than ten percent of a registered class of ourequity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of ourcompany. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) formsthey file.To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required,during the fiscal year ended December 31, 2011, all Section 16(a) filing requirements applicable to our officers, directors and greater than ten percentbeneficial owners were complied with.Corporate Code of Conduct and EthicsWe have adopted a corporate code of conduct and ethics that applies to all of our employees, officers and directors, as well as a separate code of ethicsthat applies specifically to our principal executive officer and principal financial officer. The corporate code of conduct and ethics and the code of ethics forour principal executive and financial officers are available on our corporate website at www.regenerx.com. If we make any substantive amendments to thecorporate code of conduct and ethics or the code of ethics for our principal executive and financial officers, or grant any waivers from a provision of thesecodes to any executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website.Audit Committee and Audit Committee Financial ExpertWe have a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The members of theaudit committee are Messrs. McNay and Elsey, and Dr. Bowles. Mr. McNay serves as chairman of the audit committee.Our board of directors periodically reviews the independence of our audit committee members and has determined that all current members of our auditcommittee are independent under NYSE Amex listing standards. Although our common stock is no longer listed on the NYSE Amex exchange, we havedetermined the independence of our audit committee members using the NYSE Amex definitions of independence.Our board of directors has also determined that each of Mr. McNay and Mr. Elsey qualifies as an audit committee financial expert, as defined inapplicable SEC rules.Item 11. Executive Compensation.Summary Compensation TableThe following table shows, for the fiscal years ended December 31, 2011 and 2010, compensation awarded to or paid to, or earned by, our chiefexecutive officer and our other executive officer who was serving at December 31, 2011, as well as our former chief financial officer who terminated hisemployment prior to December 31, 2011. For purposes of this report, we refer to these officers as the named executive officers.Of note, our annual rates of compensation for our named executive officers and all employees were reduced effective December 1, 2011. Until that timethe compensation rates in effect for our named executive officers were the same as at December 31, 2010. For the month of December 2011, each executiveofficer received a cash salary of $2,800 and options to purchase shares of our common stock at an exercise price of $0.16 per share. Consequently, the salaryamounts set forth in the following table may differ from the disclosed annual base salaries then in effect. These options vested in full on December 31, 2011and remain outstanding and are set forth in the table within the “Outstanding Equity Awards at December 31, 2011” section below. Name and Principal Position Year Salary(1)($) Bonus(2)($) OptionAwards(3)($) All OtherCompensation(4)($) Total($) J.J. Finkelstein, President and Chief Executive Officer 2011 252,400 — 22,432 17,476 292,308 2010 299,520 — 19,396 18,425 337,341 David R. Crockford, 2011 195,505 — 20,107 11,234 226,846 Vice President, Clinical and Regulatory Affairs 2010 210,223 2,000 15,284 10,321 237,828 C. Neil Lyons, 2011 135,025 — — 5,401 140,426 Former Chief Financial Officer (5) 2010 202,537 2,000 15,284 6,886 226,707 37Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents (1)Reflects base salary before pretax contributions and therefore includes compensation deferred under our 401(k) plan.(2)Reflects the payment of discretionary bonus.(3)These amounts reflect the aggregate total grant date fair values (computed in accordance with FASB ASC Topic 718) of options granted to executivesduring the respective fiscal years.(4)Primarily reflects our match of executive compensation deferrals into our 401(k) plan, along with supplemental life and disability insurance premiums.None of the individual items exceeded $10,000.(5)Mr. Lyons terminated his employment with us effective August 31, 2011.Employment Agreements; Potential Payments Upon Termination or Change in ControlWe are party to written agreements with our currently serving executive officers. These agreements contain severance and other provisions that mayprovide for payments to the currently serving executive officers following termination of employment with us in specified circumstances. The following is asummary of the material terms of these agreements with our currently serving executive officers.J.J. Finkelstein. We entered into an employment agreement with Mr. Finkelstein in January 2002 for him to serve as our president and chief executiveofficer. Mr. Finkelstein’s employment agreement had an initial three-year term, which was automatically renewed for additional one-year periods. Thisagreement was amended and restated during 2008 and again in 2009. Immediately prior to November 30, 2011, Mr. Finkelstein’s annual base salary was$299,520.On November 30, 2011, the Company and Mr. Finkelstein amended the employment agreement to reduce Mr. Finkelstein’s salary, effective as ofDecember 1, 2011. Pursuant to the amendment, Mr. Finkelstein’s annual base salary was reduced from $299,520 to $33,600 effective as of December 1,2011. In consideration for the salary reduction, on December 2, 2011, the Company granted to Mr. Finkelstein an option to purchase 80,135 shares of theCompany’s common stock. This option vested in full on December 31, 2011.In addition to the change in salary, Mr. Finkelstein’s amended employment agreement also changed the Company’s severance obligations. Pursuant to therevised severance obligations, Mr. Finkelstein’s severance was reduced from one year’s salary to two weeks’ salary, and he was not entitled to severance in theevent that his employment was terminated by the Company because the Company ceased operations as a result of financial losses, lack of funding, legaldecisions, administrative rulings, declaration of war, dissolution, national or local economic depression or crisis or any reasons beyond the control of theCompany.Effective as of January 1, 2012, the Company and Mr. Finkelstein entered into a letter agreement for temporary employment and terminated the previousemployment agreement, changing Mr. Finkelstein’s status to that of a part-time temporary employee. In connection with this conversion, the Company paidMr. Finkelstein two weeks of severance based on his December 2011 salary (payment equal to $1,400) plus accrued vacation. Pursuant to his letter agreement,Mr. Finkelstein receives a salary at a rate of $50.00 per hour, subject to deductions and withholdings. Mr. Finkelstein’s typical work schedule is up to 100hours per month, with no guaranteed minimum number of hours. In accordance with the letter agreement, the employment termination date for Mr. Finkelsteinwas originally March 31, 2012, unless terminated prior to March 31, 2012 by Mr. Finkelstein or the Company. As a result of the receipt of funding inconnection with the Lee’s term sheet, the Company and Mr. Finkelstein extended the term of the letter agreement to June 30, 2012. Mr. Finkelstein was alsogranted an option to purchase 35,000 shares of the Company’s common stock at an exercise price of $0.16 per share, which option will vest in full onJune 30, 2012 subject to Mr. Finkelstein’s continued service. 38Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsIn addition to the letter agreement, the Company and Mr. Finkelstein also entered into a change in control agreement effective January 1, 2012, whichwas amended on April 3, 2012. Pursuant to the change in control agreement, as amended, if a change in control of the Company is consummated and theemployment of Mr. Finkelstein is (i) within twelve months following such change in control (a) terminated by the Company for any reason, other than forcause or due to death or disability of Mr. Finkelstein or (b) terminated by Mr. Finkelstein by resignation for good reason, or (ii) terminated by the Company forany reason (other than for cause or due to death or disability of Mr. Finkelstein) in connection with or in anticipation of such change in control, thenMr. Finkelstein may be eligible to receive severance. The amount of severance due to Mr. Finkelstein is determined according to his base salary as ofNovember 30, 2011, not including bonuses or any other compensation, or Base Salary, and the amount of Net Proceeds, as defined in the change in controlagreement, received in connection with the change in control. The amount of the severance may not exceed six months of Mr. Finkelstein’s Base Salary.Mr. Finkelstein will be required to execute a general release and waiver of all legal claims prior to receiving severance. Additionally, under the terms of theamended change in control agreement, upon the occurrence of a change in control of the Company, all outstanding stock options will become fully vested andexercisable upon the effectiveness of the change in control transaction. The compensation provided pursuant to the change in control agreement will be the onlyseverance benefits to which Mr. Finkelstein may be entitled upon termination of his employment with the Company.Mr. Finkelstein is eligible to receive options to purchase common stock under our equity incentive plans. The decision to grant any such options and theterms of such options are within the discretion of our board of directors or the compensation committee thereof. All vested options are exercisable for a period oftime following any termination of Mr. Finkelstein’s employment as may be set forth in the applicable benefit plan or in any option agreement betweenMr. Finkelstein and us.David R. Crockford. We entered into an employment agreement with Mr. Crockford in March 2005 for him to serve as our vice president of clinicaland regulatory affairs. Mr. Crockford’s employment agreement had an initial one-year term, which was automatically renewed for additional one-year periods.The agreement was amended and restated during 2008 and again in 2009. Immediately prior to November 30, 2011, Mr. Crockford’s base salary was$210,223.On November 30, 2011, the Company and Mr. Crockford amended his employment agreement to reduce Mr. Crockford’s salary effective as ofDecember 1, 2011. Pursuant to the amendment, Mr. Crockford’s annual base salary was reduced from $210,223 to $33,600 effective as of December 1,2011. In consideration for the salary reduction, on December 2, 2011, the Company granted to Mr. Crockford an option to purchase 91,991 shares of theCompany’s common stock. This option vested in full on December 31, 2011.In addition to the change in salary, Mr. Crockford’s amended employment agreement also changed the Company’s severance obligations. Pursuant to therevised severance obligations, Mr. Crockford’s severance was reduced from one year’s salary to two weeks’ salary, and he was not entitled to severance in theevent that his employment was terminated by the Company because the Company ceased operations as a result of financial losses, lack of funding, legaldecisions, administrative rulings, declaration of war, dissolution, national or local economic depression or crisis or any reasons beyond the control of theCompany.Effective as of January 1, 2012, the Company and Mr. Crockford entered into a letter agreement for temporary employment and terminated the previousemployment agreement, changing his status to that of a part-time temporary employee. In connection with this conversion, the Company paid Mr. Crockfordtwo weeks of severance based on his December 2011 salary (payment equal to $1,400) plus accrued vacation.Pursuant to his letter agreement, Mr. Crockford receives a salary at a rate of $96.01 per hour for work related to the May 2010 grant from the NationalInstitutes of Health’s National Heart Lung & Blood Institute, or the NIH Grant, all of which is expected to be funded from proceeds of the NIH Grant, and at arate of $50.00 per hour for all other work, subject to deductions and withholdings. Mr. Crockford’s typical work schedule is up to 20 hours per month fornon-grant work, with no guaranteed minimum number of hours. In accordance with the letter agreement, the employment termination date for Mr. Crockfordwas originally March 31, 2012, unless terminated prior to March 31, 2012 by Mr. Crockford or the Company. As a result of the receipt of funding inconnection with the Lee’s term sheet, the Company and Mr. Crockford extended the term of the letter agreement to June 30, 2012. Mr. Crockford was alsogranted an option to purchase 35,000 shares of the Company’s common stock at an exercise price of $0.16 per share, which option will vest in full onJune 30, 2012 subject to Mr. Crockford’s continued service.In addition to the letter agreement, the Company and Mr. Crockford also entered into a change in control agreement effective January 1, 2012, which wasamended on April 3, 2012. Pursuant to the change in control agreement, as amended, if a change in control of the Company is consummated and theemployment of Mr. Crockford is (i) within twelve months following such change in control (a) terminated by the Company for any reason, other than forcause or due to death or disability of Mr. Crockford or (b) terminated by Mr. Crockford by resignation for good reason, or (ii) terminated by the Company forany reason (other than for cause or due to death or disability of Mr. Crockford) in connection with or in anticipation of such change in control, thenMr. Crockford may be eligible to receive severance. The amount of severance due to Mr. Crockford is determined according to his Base Salary and the amountof Net Proceeds, as defined in the change in control agreement, received in connection with the change in control. The amount of the severance may not exceedsix months of Mr. Crockford’s Base Salary. Mr. Crockford will be required to execute a general release and waiver of all legal claims prior to receivingseverance. Additionally, under the terms of the amended change in control agreement, upon the occurrence of a change in control of the Company, alloutstanding stock options will become fully vested and exercisable upon the effectiveness of the change in control transaction. The compensation providedpursuant to the change in control agreement will be the only severance benefits to which Mr. Crockford may be entitled upon termination of his employmentwith the Company. 39Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsMr. Crockford is eligible to receive options to purchase common stock under our equity incentive plans. The decision to grant any such options and theterms of such options are within the discretion of our board of directors or the compensation committee thereof. All vested options are exercisable for a period oftime following any termination of Mr. Crockford’s employment as may be set forth in the applicable benefit plan or in any option agreement betweenMr. Crockford and us.Outstanding Equity Awards at December 31, 2011The following table shows certain information regarding outstanding equity awards at December 31, 2011 for the named executive officers, all of whichwere stock options granted under our Amended and Restated 2000 Stock Option and Incentive Plan or our 2010 Equity Incentive Plan. Name Number ofSharesUnderlyingUnexercisedOptions (#)Exercisable Number ofSharesUnderlyingUnexercisedOptions (#)Unexercisable OptionExercise Price($) OptionExpiration Date Note Mr. Finkelstein 500,000 — 0.33 1/1/2012 100,000 — 3.21 4/1/2015 125,000 — 2.34 3/15/2014 (1) 93,750 31,250 1.15 4/15/2015 (1) 114,748 — 0.57 4/10/2019 62,500 62,500 0.76 10/11/2016 (1) 31,250 93,750 0.27 07/14/2017 (1) — 125,000 0.22 8/3/2018 (1) 80,135 — 0.16 12/2/2018 Mr. Crockford 15,000 — 1.07 7/1/2013 125,000 — 0.86 1/1/2014 100,000 — 3.21 4/1/2015 25,000 — 3.82 5/25/2015 50,000 — 2.15 1/16/2014 (1) 75,000 — 2.34 3/15/2014 (1) 56,250 18,750 1.15 4/15/2015 (1) 24,625 73,875 0.27 07/14/2017 (1) — 98,500 0.22 08/3/2018 (1) 91,991 — 0.16 12/2/2018 Mr. Lyons — — — — (2) (1)This option vests in equal installments on the first four anniversaries of the grant date. In each case these options were granted seven years prior to thelisted expiration dates.(2)Mr. Lyons terminated his employment with us as of August 31, 2011 and, as of December 31, 2011, all unexercised stock options previously held byMr. Lyons had terminated. 40Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsPost-Employment CompensationWe do not maintain any plans providing for payment or other benefits at, following, or in connection with retirement other than a 401(k) plan madeavailable to all employees. In addition, we do not maintain any non-qualified deferred compensation plans.Director CompensationThe following table sets forth certain information for the fiscal year ended December 31, 2011 with respect to the compensation of our directors.Mr. Finkelstein’s compensation is disclosed in the Summary Compensation Table above, and he does not receive any additional compensation for his serviceas a director. Dr. Goldstein is an employee of our company and his compensation as an employee is set forth in the table below. He does not receive anyadditional compensation for his service as a director.Under our non-employee director compensation policy, as in effect during 2011, each non-employee director is eligible to receive an annual cash retainerof $13,905. The chairman of each of our audit committee and compensation committee is eligible to receive a supplemental annual cash retainer of $10,300.Mr. McNay currently serves as the chairman of the audit committee and Dr. Bowles currently serves as the chairman of the Compensation Committee.Directors are also eligible to receive $1,288 for each board meeting attended in person and $412 for each Board meeting attended by telephone. Additionally,members of each committee of the board of directors are eligible to receive $515 for each committee meeting attended, whether in person or by telephone.However, during November 2011, our Board of Directors elected to suspend the payment of cash retainers to non-employee directors to help the companypreserve capital.Additionally, non-employee directors receive a nonqualified stock option under our equity incentive plan to purchase 20,000 shares of common stockupon their re-election as a director at each annual meeting of stockholders. Newly elected or appointed non-employee directors receive a nonqualified stockoption to purchase 40,000 shares of common stock. All options granted to directors under this policy vest over four years, with 25% of the shares underlyingthe option vesting on the first through fourth anniversaries of the date of grant.In April 2012, in view of the Board’s November 2011 decision to temporarily cease paying cash compensation to non-employee directors for Board andcommittee service, the Board elected to make a one-time option grant to each the non-employee directors to compensate them for serving during the first half of2012. Each non-employee director was granted a stock option to purchase 50,000 shares of common stock at an exercise price of $0.16 per share, whichoption will vest in full on June 30, 2012 subject to the director’s continued service.We also reimburse directors for expenses incurred in attending meetings of the board and other events attended on our behalf and at our request.Director Compensation for Fiscal 2011 Name Fees Earnedor Paidin Cash($)(1) OptionAwards($)(2) All OtherCompensation($) Total($) Allan Goldstein, Ph.D. — 19,108 174,638(3) 193,746 R. Don Elsey 19,982 2,509 — 22,491 L. Thompson Bowles M.D., Ph.D. 30,282 2,509 — 32,791 Joseph McNay 28,530 2,509 — 31,039 Mauro Bove 15,655 2,509 — 18,164 41Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents (1)These amounts reflect the cash earned during 2011. As described above, during 2011, our Board of Directors elected to cease paying cash compensationto non-employee directors to help the company preserve capital. The amounts in the table above include the following amounts of accrued and unpaidcompensation as of December 31, 2011: $10,712 for Mr. Elsey; $15,862 for Dr. Bowles; $14,986 for Mr. McNay; and $8,291 for Mr. Bove. Eachdirector elected to forfeit such amounts in March 2012.(2)These amounts reflect the aggregate total grant date fair values (computed in accordance with FASB ASC Topic 718) of options granted to directorsduring 2011. Options held by each Board member as of December 31, 2011, are as follows: Allan Goldstein, Ph.D. 974,077 R. Don Elsey 60,000 L. Thompson Bowles M.D., Ph.D. 194,843 Joseph McNay 168,024 Mauro Bove 267,155 (3)In addition to being Chairman of our Board of Directors, Dr. Goldstein also serves as our Chief Scientific Advisor. In this capacity, Dr. Goldsteinreceived a base salary of $174,638 for 2011 which reflects one month of a reduced salary. As of December 1, 2011, Dr. Goldstein’s annual salary hasbeen reduced from $187,460 to $33,600. In consideration for this salary reduction, on December 2, 2011, the Company granted to Dr. Goldstein anoption to purchase 80,135 shares of the Company’s common stock. These options vested in full on December 31, 2011.In addition to the changes in salary, Dr. Goldstein’s amended employment agreement also changed the Company’s severance obligations. Pursuant to therevised severance obligations, Dr. Goldstein’s severance was reduced from one year’s salary to two weeks’ salary, and Dr. Goldstein was not entitled toseverance in the event that his employment was terminated by the Company because the Company ceased operations as a result of financial losses, lackof funding, legal decisions, administrative rulings, declaration of war, dissolution, national or local economic depression or crisis or any reasonsbeyond the control of the Company.Effective January 1, 2012, the Company and Dr. Goldstein entered into a letter agreement for temporary employment and terminated Dr. Goldstein’sprevious employment agreement, changing his status to that of part-time temporary employee. In connection with this conversion, the Company paidDr. Goldstein two weeks of severance based on his December 2011 salary (payment equal to $1,400).Pursuant to this letter agreement, Dr. Goldstein receives a salary at a rate of $50.00 per hour, subject to deductions and withholdings. Dr. Goldstein’stypical work schedule is up to 32 hours per month, with no guaranteed minimum number of hours. In accordance with the letter agreement,Dr. Goldstein’s employment termination date was originally March 31, 2012, unless terminated prior to March 31, 2012 by Dr. Goldstein or theCompany. As a result of the receipt of funding in connection with the Lee’s term sheet, the Company and Dr. Goldstein extended the term of the letteragreement to June 30, 2012. Dr. Goldstein was also granted an option to purchase 35,000 shares of the Company’s common stock at an exercise price of$0.16 per share, which option will vest in full on June 30, 2012 subject to Dr. Goldstein’s continued service.In addition to the letter agreement, the Company and Dr. Goldstein also entered into a change in control agreement effective January 1, 2012, which wasamended on April 3, 2012. Pursuant to his change in control agreement, as amended, if a change in control of the Company is consummated and eitherthe employment of Dr. Goldstein is (i) within twelve months following such change in control (a) terminated by the Company for any reason, other thanfor cause or due to death or disability of Dr. Goldstein, or (b) terminated by Dr. Goldstein by resignation for good reason, or (ii) terminated by theCompany for any reason (other than for cause or due to death or disability of Dr. Goldstein) in connection with or in anticipation of such change incontrol, then Dr. Goldstein may be eligible to receive severance. The amount of severance due to Dr. Goldstein will be determined according to his BaseSalary and the amount of Net Proceeds, as defined in the change in control agreement, received in connection with the change in control. The amount ofthe severance may not exceed six months of his Base Salary. Dr. Goldstein will be required to execute a general release and waiver of all legal claims priorto receiving severance. Additionally, under the terms of the amended change in control agreement, upon the occurrence of a change in control of theCompany, all outstanding stock options will become fully vested and exercisable upon the effectiveness of the change in control transaction. Thecompensation provided pursuant to the change in control agreement will be the only severance benefits to which Dr. Goldstein may be entitled upontermination of his employment with the Company.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.The following table sets forth certain information regarding the ownership of our common stock as of March 15, 2012 by (i) each director; (ii) each ofthe named executive officers; (iii) all currently serving executive officers and directors as a group; and (iv) all those known by us to be beneficial owners ofmore than five percent of our common stock. The address for all directors and executive officers is c/o RegeneRx Biopharmaceuticals, Inc., 15245 ShadyGrove Road, Suite 470, Rockville, MD 20850. 42Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents Beneficial Ownership(1) Beneficial Owner Number of Shares Percent of Total 5% Stockholders: Entities affiliated with Sigma-Tau Finanziaria, S.p.A. Via Sudafrica, 20, Rome, Italy 00144 32,358,332(2) 38.6% Named Executive Officers and Other Directors: J.J. Finkelstein 2,067,271(3) 2.5% Allan L. Goldstein 1,771,048(4) 2.2% R. Don Elsey 10,000(7) * Joseph C. McNay 1,460,885(5) 1.8% Mauro Bove 220,905(6) * L. Thompson Bowles 148,593(7) * David R. Crockford 581,616(7) * C. Neil Lyons 30,000 * All directors and currently serving executive officers as a group (7 persons) 6,260,318(8) 7.5% *Less than one percent. This table is based upon information supplied by officers, directors and principal stockholders. Unless otherwise indicated in the footnotes to this tableand subject to community property laws where applicable, we believes that each of the stockholders named in this table has sole voting and investmentpower with respect to the shares indicated as beneficially owned. Applicable percentages are based on 81,390,618 shares of common stock outstandingon March 15, 2012, adjusted as required by rules promulgated by the Securities and Exchange Commission (the “SEC”). Consists of 984,615 shares of common stock held of record held by Sigma-Tau Finanziaria, S.p.A. (“Sigma-Tau”); 12,937,111 shares of commonstock held of record and 370,370 shares of common stock issuable upon exercise of warrants held by Defiante Farmaceutica S.A. (“Defiante”), asubsidiary of Sigma-Tau, that are exercisable within 60 days of March 15, 2012; 6,348,878 shares of common stock held of record and 518,518shares of common stock issuable upon exercise of warrants held by Taufin International S.A. (“Taufin”), an entity wholly owned by Taufin SPA,which is owned directly by the estate of Claudio Cavazza, who directly and indirectly owns 57% of Sigma-Tau, that are exercisable within 60 days ofMarch 15, 2012; and 9,711,407 shares of common stock held of record and 1,487,433 shares of common stock issuable upon exercise of warrantsheld by Sinaf S.A. (“Sinaf”), an indirect wholly-owned subsidiary of Aptafin S.p.A., which is owned by Paolo Cavazza and members of his family,that are exercisable within 60 days of March 15, 2012. Paolo Cavazza directly and indirectly owns 38% of Sigma-Tau. Consists of 1,377,638 shares of common stock held of record by Mr. Finkelstein and 51,000 shares of common stock held of record byMr. Finkelstein’s daughter over which Mr. Finkelstein shares voting and dispositive power. Also includes 638,633 shares of common stock issuableupon exercise of options exercisable within 60 days of March 15, 2012. Consists of 1,306,846 shares of common stock held of record by Dr. Goldstein and 464,202 shares of common stock issuable upon exercise of optionsexercisable within 60 days of March 15, 2012. Consists of 1,339,111 shares of common stock held of record by Mr. McNay and 121,774 shares of common stock issuable upon exercise of optionsexercisable within 60 days of March 15, 2012. Consists of shares of common stock issuable upon exercise of options exercisable within 60 days of March 15, 2012. Mr. Bove is an officer of Sigma-Tau, but he has no beneficial ownership over the reported securities as he has no voting or dispositive power with respect to the securities held by Sigma-Tau and its affiliates described in Note 2 above. Consists of shares of common stock issuable upon exercise of options exercisable within 60 days of March 15, 2012. Consists of 4,074,595 shares of common stock held of record and 2,185,723 shares of common stock issuable upon exercise of options exercisablewithin 60 days of March 15, 2012. 43(1)(2)(3)(4)(5)(6)(7)(8)Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsEquity Compensation Plan InformationThe following table provides information as of December 31, 2011 about the securities authorized for issuance to our employees, directors and othereligible participants under our equity compensation plans, consisting of the Amended and Restated 2000 Stock Option and Incentive Plan and the 2010 EquityIncentive Plan. Plan Category Number of securities tobe issued upon exerciseof outstanding options,warrants and rights(a) Weighted-average exerciseprice of outstanding options,warrants and rights(b) Number of securitiesremaining available forfuture issuance underequity compensation plans(excluding securitiesreflected in column (a))(c) Equity compensation plans approved by securityholders 5,374,599 $1.16 3,489,036 Equity compensation plans not approved by securityholders — — — Total 5,374,599 $1.16 3,489,036 Item 13. Certain Relationships and Related Transactions, and Director Independence.Related Party TransactionsThe following is a summary of transactions, and series of related transactions, since January 1, 2011 to which we have been or will be a participant, inwhich the amount involved exceeded or will exceed one percent of the average of our total assets at year end for the last two completed fiscal years and in whichany of our executive officers, directors or beneficial holders of more than five percent of our capital stock had or will have a direct or indirect material interest,or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest,other than executive and director compensation arrangements, including the employment, termination of employment and change of control arrangements,which are described in the section of this report entitled “Executive Compensation.”Sigma-TauOn January 7, 2011, we issued 925,926 shares of common stock to Defiante Farmaceutica S.A., or Defiante, a subsidiary of Sigma-Tau, as well as1,296,296 shares to Taufin International S.A., or Taufin and 1,296,297 shares to Sinaf S.A. or Sinaf, all at a purchase price of $0.27 per share in aprivate placement. We also issued warrants to each of Defiante, Taufin and Sinaf to purchase 370,370 shares, 518,518 shares and 518,519 shares of ourcommon stock, respectively, at an exercise price of $0.38 per share. The warrants are exercisable until January 7, 2016. We also entered into an agreementwith Defiante, Taufin and Sinaf to amend the terms of certain warrants held by them. Under the warrant amendment, all outstanding warrants held byDefiante, Taufin and Sinaf that were issued between March 2006 and December 2008, exercisable for an aggregate of 3,046,453 shares of common stock andwith exercise prices between $1.60 per share and $4.06 per share, were amended to reduce their exercise prices to $0.38 per share and to extend their expirationdates to December 31, 2011, as of which date the warrants expired unexercised. Taufin is a direct wholly-owned subsidiary of Taufin SPA. Taufin SPA isowned directly by the estate of Claudio Cavazza, which directly and indirectly owns 57% of Sigma-Tau. Sinaf is a direct wholly-owned subsidiary of AptafinS.p.A., or Aptafin. Aptafin is owned directly by Paolo Cavazza and members of his family, who directly and indirectly own 38% of Sigma-Tau.Lee’s PharmaceuticalsIn March 2012, we entered into a term sheet with Lee’s Pharmaceutical (HK) for the development of Tß4 in any pharmaceutical formulation in China,Hong Kong and Macau. At the time of the signing of the term sheet, we received a $200,000 payment from Lee’s. Upon execution of the definitive licenseagreement, we will receive an additional $200,000 payment from Lee’s. In accordance with the terms of the term sheet, we expect that the definitive licenseagreement will include aggregate potential milestone payments of up to $3.6 million and royalties ranging from low double digit to high single digit royalties oncommercial sales, if any. Lee’s will pay for all developmental costs associated with each product candidate. RegeneRx will provide Tb4 to Lee’s at no chargefor a Phase 2 ophthalmic clinical trial and will provide Tb4 to Lee’s for all other developmental and clinical work at a price equal to RegeneRx’s cost. The twocompanies will create a joint development committee to discuss and agree on the development of the licensed products and share information relating thereto.Both companies will also share all non-clinical and clinical data and other information related to development of the licensed product candidates. Lee’s is anaffiliate of Sigma Tau, which collectively with its affiliates is our largest stockholder, and Mr. Bove is a non-executive director of Lee’s. 44Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsDirector IndependenceUnder NYSE Amex listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” asaffirmatively determined by the board. Although our common stock is no longer listed on the NYSE Amex exchange, we have determined the independence ofour directors using the NYSE Amex definitions of independence. Our board consults with counsel to ensure that its determinations are consistent with relevantsecurities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of the NYSE Amex,as in effect from time to time.Consistent with these considerations, after review of all relevant identified transactions or relationships between each director, or any of his familymembers, and our company, our senior management and our independent auditors, our board has determined that the following four directors are independentdirectors within the meaning of the applicable NYSE Amex listing standards: Mr. Elsey, Mr. Bove, Mr. McNay and Dr. Bowles. In making thisdetermination, the board found that none of the these directors had a material or other disqualifying relationship with us. Mr. Finkelstein, our President andChief Executive Officer, and Dr. Goldstein our Chief Scientific Advisor, are not independent by virtue of their employment with us.In determining the independence of Mr. Bove, the board of directors took into account the significant ownership of our common stock by Sigma-Tauand its affiliates. The board of directors does not believe that any of the transactions with Sigma-Tau and its affiliates described in this report has interfered orwould reasonably be expected to interfere with Mr. Bove’s exercise of independent judgment in carrying out his responsibilities as a director of our company.Item 14. Principal Accounting Fees and Services.The following table represents aggregate fees billed to us for the fiscal years ended December 31, 2011 and 2010 by Reznick Group, P.C., ourindependent registered public accounting firm. All such fees described below were approved by the audit committee. 2011 2010 Audit fees $67,000 $77,453 Tax fees 11,000 22,053 Total Fees $78,000 $99,506 Tax fees include the preparation of our corporate federal and state income tax returns.Our audit committee has adopted a policy and procedures for the pre-approval of audit and non-audit services rendered by our independent registeredpublic accounting firm, Reznick Group, P.C. The policy generally pre-approves specified services in the defined categories of audit services, audit-relatedservices, and tax services up to specified amounts. Pre-approval may also be given as part of the audit committee’s approval of the scope of the engagement ofthe independent registered public accounting form or on an individual explicit case-by-case basis before the independent registered public accounting firm isengaged to provide each service. On a periodic basis, the independent registered public accounting firm reports to the audit committee on the status of actualcosts for approved services against the approved amounts.The audit committee has determined that the rendering of the services other than audit services by Reznick Group P.C. is compatible with maintainingthat firm’s independence. 45(1)(1)Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsPART IVItem 15. Exhibits, Financial Statement Schedules. Exhibit No. Description of Exhibit Reference* 3.1 Restated Certificate of Incorporation Exhibit 3.1 to Registration Statement on Form S-1 (File No. 333-166146) (filed April 16, 2010) 3.2 Certificate of Amendment to Restated Certificate of Incorporation Exhibit 3.2 to Registration Statement on Form S-1 (File No. 333-166146) (filed April 16, 2010) 3.3 Certificate of Amendment to Restated Certificate of Incorporation Exhibit 3.3 to Registration Statement on Form S-1 (File No. 333-166146) (filed April 16, 2010) 3.4 Certificate of Amendment of Restated Certificate of Incorporation Exhibit 3.4 to Registration Statement on Form S-8 (File No. 333-168252) (filed July 21, 2010) 3.5 Certificate of Designation of Series A Participating CumulativePreferred Stock Exhibit 3.4 to Registration Statement on Form S-1 (File No. 333-166146) (filed April 16, 2010) 3.6 Amended and Restated Bylaws Exhibit 3.4 to Quarterly Report on Form 10-Q (File No. 001-15070)for the quarter ended June 30, 2006 (filed August 14, 2006) 3.7 Amendment to Amended and Restated Bylaws Exhibit 3.6 to Registration Statement on Form S-8 (File No. 333-152250) (filed July 10, 2008) 4.1 Specimen Common Stock Certificate Exhibit 4.1 to Registration Statement on Form S-1 (File No. 333-166146) (filed April 16, 2010) 4.2 Specimen Rights Certificate Exhibit 4.2 to Registration Statement on Form S-1 (File No. 333-166146) (filed April 16, 2010) 4.3 Rights Agreement, dated April 29, 1994, between the Companyand American Stock Transfer & Trust Company, as Rights Agent Exhibit 4.3 to Registration Statement on Form S-1 (File No. 333-166146) (filed April 16, 2010) 46Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents 4.4 Amendment No. 1 to Rights Agreement, dated March 4, 2004, betweenthe Company and American Stock Transfer & Trust Company, asRights Agent Exhibit 4.4 to Registration Statement on Form S-1 (File No. 333-166146) (filed April 16, 2010) 4.5 Warrant Agreement, dated May 21, 2010, between the Company andAmerican Stock Transfer & Trust Company, as Warrant Agent Exhibit 4.1 to Current Report on Form 8-K (File No. 001-15070) (filedMay 21, 2010) 4.6 Form of Warrant Certificate Exhibit 4.6 to Amendment No. 1 to Registration Statement on Form S-1(File No. 333-166146) (filed May 17, 2010) 10.1 ^ Amended and Restated 2000 Stock Option and Incentive Plan, asamended Annex A to the Company’s Proxy Statement on Schedule 14A (File No.001-15070) (filed May 9, 2008) 10.2 ^ 2010 Equity Incentive Plan Exhibit 10.1 to Current Report on Form 8-K (File No. 001-15070) (filedJuly 20, 2010) 10.3 Form of Stock Option Grant Notice and Stock Option Agreementunder the 2010 Equity Incentive Plan Exhibit 10.2 to Current Report on Form 8-K (File No. 001-15070) (filedJuly 20, 2010) 10.4 Patent License Agreement — Exclusive, dated January 24, 2001,between the Company and the U.S. Public Health Service Exhibit 10.1 to Annual Report on Form 10-KSB for the year endedDecember 31, 2000 (File No. 001-15070) (filed April 2, 2001)** 10.5 Thymosin Beta 4 License and Supply Agreement, dated January 21,2004, between the Company and Defiante Farmaceutica S.A. Exhibit 10.10 to Registration Statement on Form SB-2 (File No. 333-113417) (filed March 9, 2004)** 10.6 ^ Second Amended and Restated Employment Agreement, dated March11, 2009, between the Company and Allan L. Goldstein, as amended Exhibit 10.4 to Amendment No. 1 to Annual Report on Form 10-K forthe year ended December 31, 2008 (File No. 001-15070) (filed April 30,2009) 10.7 ^ Second Amended and Restated Employment Agreement, dated March12, 2009, between the Company and J.J. Finkelstein, as amended Exhibit 10.5 to Annual Report on Form 10-K for the year endedDecember 31, 2008 (File No. 001-15070) (filed April 15, 2009) 10.8 ^ Second Amended and Restated Employment Agreement, dated March31, 2009, between the Company and C. Neil Lyons, as amended Exhibit 10.6 to Annual Report on Form 10-K for the year endedDecember 31, 2008 (File No. 001-15070) (filed April 15, 2009) 10.9 ^ Second Amended and Restated Employment Agreement, dated March31, 2009, between the Company and David Crockford Exhibit 10.7 to Annual Report on Form 10-K for the year endedDecember 31, 2008 (File No. 001-15070) (filed April 15, 2009) 47Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents10.10 ^ Second Amendment to the Amended and Restated EmploymentAgreement between the Company and J.J. Finkelstein, datedDecember 1, 2011. Exhibit 10.1 to Current Report on Form 8-K (File No. 001-15070) (filedDecember 6, 2011)10.11 ^ First Amendment to the Amended and Restated Employment Agreementbetween the Company and David Crockford, dated December 1, 2011. Exhibit 10.2 to Current Report on Form 8-K (File No. 001-15070) (filedDecember 6, 2011)10.12 ^ Second Amendment to the Amended and Restated EmploymentAgreement between the Company and Allan L. Goldstein, datedDecember 1, 2011. Exhibit 10.3 to Current Report on Form 8-K (File No. 001-15070) (filedDecember 6, 2011)10.13 ^ Letter Agreement between the Company and J.J. Finkelstein, datedJanuary 1, 2012. Exhibit 10.1 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 6, 2012)10.14 ^ Letter Agreement between the Company and David Crockford, datedJanuary 1, 2012. Exhibit 10.2 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 6, 2012)10.15 ^ Letter Agreement between the Company and Allan L. Goldstein, datedJanuary 1, 2012. Exhibit 10.5 to Current Report on Form 8-K (File No. 001-15070)(filed January 6, 2012)10.16 ^ Change in Control Agreement between the Company and J.J.Finkelstein, dated January 1, 2012. Exhibit 10.3 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 6, 2012)10.17 ^ Change in Control Agreement between the Company and DavidCrockford, dated January 1, 2012. Exhibit 10.4 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 6, 2012)10.18 ^ Change in Control Agreement between the Company and Allan L.Goldstein, dated January 1, 2012. Exhibit 10.6 to Current Report on Form 8-K (File No. 001-15070)(filed January 6, 2012)10.19 Lease, by and between the Company and The Realty Associates FundV, L.P., dated December 10, 2009 Exhibit 10.25 to Annual Report on Form 10-K for the year endedDecember 31, 2009 (File No. 001-15070) (filed March 31, 2010)10.20 Form of Warrant to Purchase Common Stock dated April 30, 2009 Exhibit 10.1 to Current Report on Form 8-K (File No. 001-15070) (filedApril 16, 2009)10.21 Securities Purchase Agreement, dated April 13, 2009 Exhibit 10.2 to Current Report on Form 8-K (File No. 001-15070) (filedApril 16, 2009)10.22 Form of Common Stock Purchase Warrant, dated October 5, 2009 Exhibit 4.1 to Current Report on Form 8-K (File No. 001-15070) (filedSeptember 30, 2009) 48Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents10.23 Securities Purchase Agreement, dated September 30, 2009 Exhibit 10.1 to Current Report on Form 8-K (File No. 001-15070) (filedSeptember 30, 2009)10.24 Form of Warrant, dated October 15, 2009 Exhibit 4.1 to Current Report on Form 8-K (File No. 001-15070) (filedOctober 5, 2009)10.25 Securities Purchase Agreement, dated September 30, 2009 Exhibit 10.1 to Current Report on Form 8-K (File No. 001-15070) (filedOctober 5, 2009)10.26 Representative’s Warrant to Purchase Common Stock, dated May 21,2010 Exhibit 4.3 to Current Report on Form 8-K (File No. 001-15070) (filedMay 21, 2010)10.27 Purchase Agreement, dated January 4, 2011 Exhibit 10.2 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 7, 2011)10.28 Registration Rights Agreement, dated January 4, 2011 Exhibit 10.3 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 7, 2011)10.29 Securities Purchase Agreement, dated January 5, 2011 Exhibit 10.1 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 7, 2011)10.30 Warrant to Purchase Common Stock, dated January 7, 2011, issued toLincoln Park Capital Exhibit 4.1 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 7, 2011)10.31 Securities Purchase Agreement, dated January 5, 2011, by and betweenthe Company and Defiante Farmaceutica S.A. Exhibit 10.4 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 7, 2011)10.32 Securities Purchase Agreement, dated January 5, 2011, by and betweenthe Company and Taufin International S.A. Exhibit 10.5 to Current Report on Form 8-K (File No. 001-15070)(filed January 7, 2011)10.33 Securities Purchase Agreement, dated January 5, 2011, by and betweenthe Company and Sinaf S.A. Exhibit 10.6 to Current Report on Form 8-K (File No. 001-15070)(filed January 7, 2011)10.34 Form of Warrant to Purchase Common Stock, dated January 7, 2011,issued to the Sigma-Tau Purchasers Exhibit 4.2 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 7, 2011)23.1 Consent of Reznick Group, P.C. Filed herewith24.1 Powers of Attorney Included on signature page 49Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents31.1 Certification of Principal Executive Officer pursuant to Rules 13a-14 and15d-14 promulgated under the Securities Exchange Act of 1934 Filed herewith31.2 Certification of Principal Financial Officer pursuant to Rules 13a-14 and15d-14 promulgated under the Securities Exchange Act of 1934 Filed herewith32.1 Certification of Principal Executive Officer and Principal FinancialOfficer pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002 Filed herewith*** *Except where noted, the exhibits referred to in this column have heretofore been filed with the Securities and Exchange Commission as exhibits to thedocuments indicated and are hereby incorporated by reference thereto. The Registration Statements referred to are Registration Statements of theCompany.**The registrant has been granted confidential treatment with respect to certain portions of this exhibit (indicated by asterisks), which have been filedseparately with the Securities and Exchange Commission.***This certification is being furnished solely to accompany this annual report pursuant to 18 U.S.C. Section 1350, is not being filed for purposes ofSection 18 of the Securities Exchange Act of 1934 and is not to be incorporated by reference into any filing of the registrant, whether made before or afterthe date hereof, regardless of any general incorporation language in such filing.^Compensatory plan, contract or arrangement. 50Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsSIGNATURESPursuant 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 itsbehalf by the undersigned, thereunto duly authorized. RegeneRx Biopharmaceuticals, Inc.(Registrant)Date: April 4, 2012 By: /s/ J.J. Finkelstein J.J. Finkelstein President and Chief Executive Officer 51Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsPOWER OF ATTORNEYPursuant to the requirements of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in thecapacities and on the dates indicated.In addition, each of the following persons hereby constitutes and appoints J.J. Finkelstein as his true and lawful attorney-in-fact and agent, with the fullpower of substitution, for him and in his name, to sign any and all amendments to this report, and to file the same, with all exhibits thereto and otherdocuments in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to doand perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might orcould do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to bedone by virtue hereof. Name Title Date/s/ Allan L. GoldsteinAllan L. Goldstein Chairman of the Board, Chief Scientific Advisor, and Director April 4, 2012/s/ J.J. FinkelsteinJ.J. Finkelstein President, Chief Executive Officer, and Director (Principal ExecutiveOfficer, Principal Financial Officer and Principal AccountingOfficer) April 4, 2012/s/ R. Don ElseyR. Don Elsey Director April 4, 2012/s/ Joseph C. McNayJoseph C. McNay Director April 4, 2012/s/ Mauro BoveMauro Bove Director April 4, 2012/s/ L. Thompson BowlesL. Thompson Bowles Director April 4, 2012 52Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsRegeneRx Biopharmaceuticals, Inc.Index to Financial Statements Page Report of Independent Registered Public Accounting Firm F-2 Balance Sheets F-3 Statements of Operations F-4 Statements of Changes in Stockholders’ Equity (Deficit) F-5 Statements of Cash Flows F-6 Notes to Financial Statements F-7 F-1Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMBoard of Directors and StockholdersRegeneRx Biopharmaceuticals, Inc.We have audited the accompanying balance sheets of RegeneRx Biopharmaceuticals, Inc. (the “Company”) as of December 31, 2011 and 2010, and the relatedstatements of operations, changes in stockholders’ equity (deficit), and cash flows for each of the two years in the period ended December 31, 2011. Thesefinancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based onour audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion.In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of RegeneRx Biopharmaceuticals, Inc. asof December 31, 2011 and 2010, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2011 inconformity with accounting principles generally accepted in the United States of America.The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1 tothe financial statements, the Company has experienced negative cash flows from operations since inception and is dependent upon future financing in order tomeet its planned operating activities. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’splans regarding these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of thisuncertainty./s/ REZNICK GROUP, P.C.Vienna, VirginiaApril 4, 2012 F-2Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsRegeneRx Biopharmaceuticals, Inc.Balance Sheets December 31, 2011 2010 ASSETS Current assets Cash and cash equivalents $116,092 $3,790,352 Grant receivable 214,450 10,703 Prepaid expenses and other current assets 24,603 384,806 Total current assets 355,145 4,185,861 Property and equipment, net of accumulated depreciation of $116,985 and $107,907 16,946 24,940 Other assets 11,503 17,255 Total assets $383,594 $4,228,056 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities Accounts payable $451,881 $185,643 Accrued expenses 358,778 430,996 Total current liabilities 810,659 616,639 Commitments — — Stockholders’ equity Preferred stock, $.001 par value per share, 1,000,000 shares authorized; no shares issued — — Common stock, par value $.001 per share, 200,000,000 shares authorized, 81,390,618 and 73,531,578issued and outstanding 81,391 73,532 Additional paid-in capital 95,023,912 93,063,201 Accumulated deficit (95,532,368) (89,525,316) Total stockholders’ equity (deficit) (427,065) 3,611,417 Total liabilities and stockholders’ equity (deficit) $383,594 $4,228,056 The accompanying notes are an integral part of these financial statements. F-3Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsRegeneRx Biopharmaceuticals, Inc.Statements of Operations Years ended December 31, 2011 2010 Sponsored research revenue $1,511,572 $849,539 Operating expenses Research and development 5,067,085 2,707,909 General and administrative 2,456,028 3,173,729 Total operating expenses 7,523,113 5,881,638 Loss from operations (6,011,541) (5,032,099) Interest and other income 4,489 8,187 Net loss $(6,007,052) $(5,023,912) Basic and diluted net loss per common share $(0.07) $(0.07) Weighted average number of common shares outstanding 80,135,099 68,444,011 The accompanying notes are an integral part of these financial statements. F-4Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsRegeneRx Biopharmaceuticals, Inc.Statements of Changes in Stockholders’ Equity (Deficit)Years ended December 31, 2011 and 2010 Common stock Additionalpaid-in capital Accumulateddeficit Totalstockholders’equity (deficit) Shares Amount Balance, December 31, 2009 60,406,828 $60,407 $88,144,347 $(84,501,404) $3,703,350 Issuance of common stock, net of offering costs of $923,524 13,124,750 13,125 4,444,499 — 4,457,624 Share-based compensation expense — — 474,355 — 474,355 Net loss — — — (5,023,912) (5,023,912) Balance, December 31, 2010 73,531,578 73,532 93,063,201 (89,525,316) 3,611,417 Issuance of common stock, net of offering costs of $51,400 7,859,040 7,859 1,738,957 — 1,746,816 Share-based compensation expense — — 221,754 — 221,754 Net loss — — — (6,007,052) (6,007,052) Balance, December 31, 2011 81,390,618 $81,391 $95,023,912 $(95,532,368) $(427,065) The accompanying notes are an integral part of these financial statements. F-5Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsRegeneRx Biopharmaceuticals, Inc.Statements of Cash Flows Years ended December 31, 2011 2010 Operating activities: Net loss $(6,007,052) $(5,023,912) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 9,078 9,736 Non-cash share-based compensation 221,754 474,355 Gain on settlement of accrued expenses — (141,016) Changes in operating assets and liabilities: Grant receivable (203,747) (10,703) Prepaid expenses and other current assets 360,203 (188,260) Other assets 5,752 5,693 Accounts payable 266,238 45,437 Accrued expenses (72,218) (168,186) Net cash used in operating activities (5,419,992) (4,996,856) Investing activities: Purchase of property and equipment (1,084) (26,184) Net cash used in investing activities (1,084) (26,184) Financing activities: Net proceeds from issuance of common stock 1,746,816 4,457,624 Net cash provided by financing activities 1,746,816 4,457,624 Net decrease in cash and cash equivalents (3,674,260) (565,416) Cash and cash equivalents at beginning of year 3,790,352 4,355,768 Cash and cash equivalents at end of year $116,092 $3,790,352 The accompanying notes are an integral part of these financial statements. F-6Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents1.ORGANIZATION AND BUSINESSOrganization and Nature of Operations. RegeneRx Biopharmaceuticals, Inc. (“RegeneRx”, the “Company”, “We”, “Us”, “Our”), a Delawarecorporation, was incorporated in 1982. We are focused on the discovery and development of novel molecules to accelerate tissue and organ repair. Ouroperations are confined to one business segment: the development and marketing of product candidates based on Thymosin Beta 4 (“Tb4”), an amino acidpeptide.Management Plans to Address Operating Conditions. On March 27, 2012, we entered into a term sheet with Lee’s Pharmaceutical (HK) Limited(“Lee’s”) for the license of Tß4 in any pharmaceutical formulation, including our RGN-259, RGN-352 and RGN-137 product candidates, in China, HongKong and Macau. Lee’s paid us $200,000 upon signing of the term sheet, and Lee’s will pay us an additional $200,000 upon signing of the definitive licenseagreement, which we expect to occur by May 31, 2012. Sigma-Tau Finanziaria S.P.A., an international pharmaceutical company, which together with itssubsidiaries and affiliates, collectively beneficially own approximately 39% of our common stock and represent our largest stockholder group, alsocollectively own approximately 28% of Lee’s. The receipt of the initial $200,000 will support our operations for thirty to sixty days. Receipt of the additional$200,000 from the signing of the definitive license agreement will provide funding of planned operations through the second quarter of 2012. We continue toevaluate potential strategic options, including the licensing of additional territorial rights to our proprietary clinical programs. Additionally, beginning in late2011, we began implementing significant cost-saving measures to conserve capital resources and maintain a minimal level of operations, while seekingadditional funding and/or complete a strategic transaction. To that end, in December 2011 we reduced the salaries of all of our employees to approximately$2,800 per month, and we granted stock options to them (in lieu of a portion of the cash salary adjustment) that vested at the end of the year. Beginning inJanuary 2012, all employees became part-time hourly employees with reduced work schedules. Additionally, in January 2012, we discontinued providingemployee health benefits and company-sponsored 401(k) matching contributions. The majority of our research and development staff’s efforts since this timehave been directed to work under a grant that we received from the National Institutes of Health (“NIH”).We have incurred net losses of $6.0 million and $5.0 million for the years ended December 31, 2011 and 2010, respectively. Since inception, andthrough December 31, 2011, we have an accumulated deficit of $95.5 million and we had cash and cash equivalents of $116,000 as of December 31, 2011.Currently, we are not enrolling patients in any of our clinical trials. We had intended to commence patient enrollment in a Phase 2 clinical trial of RGN-352 forAMI patients near the end of the first quarter of 2011, but this trial has been placed on clinical hold by the FDA pending resolution of certain manufacturingcompliance issues at our original contract manufacturer, which was responsible for formulating, filling and finishing RGN-352. We have put the AMI trial onhold pending access to sufficient capital resources to enable us to retain a new drug product manufacturer and are focusing our current efforts on thedevelopment of RGN-259 for ophthalmic indications.We have stopped enrolling and have closed a Phase 2 trial to evaluate RGN-137 in patients suffering from epidermolysis bullosa, or EB. We plan tohave the data analyzed once we have the financial resources. Given these objectives and as noted above, we project that our existing capital resources, coupledwith the expected $200,000 payment from Lee’s upon entry into the definitive license agreement, will fund our planned operating activities through the end ofJune 2012, without giving effect to any other financing sources, including any purchases under our committed equity facility with Lincoln Park Capital,which is subject to a number of conditions that limit our ability to draw against such facility (See Note 7).We anticipate incurring additional losses in the future as we continue to explore the potential clinical benefits of Tb4-based product candidates overmultiple indications. We will need substantial additional funds in order to initiate any further preclinical studies or clinical trials, and to fund our operationsbeyond June 2012. Accordingly, we have an immediate need for financing and are in the process of exploring various alternatives, including, withoutlimitation, a public or private placement of our securities, debt financing, corporate collaboration and licensing arrangements, or the sale of our company orcertain of our intellectual property rights.These factors raise substantial doubt about our ability to continue as a going concern. The accompanying financial statements have been preparedassuming that we will continue as a going concern. This basis of accounting contemplates the recovery of our assets and the satisfaction of our liabilities in thenormal course of business.Although we intend to continue to seek additional financing or a strategic partner, we may not be able to complete a financing or corporate transaction,either on favorable terms or at all. If we are unable to complete a financing or strategic transaction, we may not be able to continue as a going concern after ourfunds have been exhausted, and we could be required to significantly curtail or cease operations, file for bankruptcy or liquidate and dissolve. There can be noassurance that we will be able to obtain any sources of funding. The financial statements do not include any adjustments relating to the recoverability andclassification of recorded asset amounts and classification of liabilities that might be necessary should we be forced to take any such actions. F-7Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsIn addition to our current operational requirements, we expect to continue to expend substantial funds to complete our planned product developmentefforts. Additionally, we continually refine our operating strategy and evaluate alternative clinical uses of Tb4. However, substantial additional resources willbe needed before we will be able to achieve sustained profitability. Consequently, we continually evaluate alternative sources of financing such as the sharing ofdevelopment costs through strategic collaboration agreements. There can be no assurance that our financing efforts will be successful and, if we are not able toobtain sufficient levels of financing, we would delay certain clinical and/or research activities and our financial condition would be materially and adverselyaffected. Even if we are able to obtain sufficient funding, other factors including competition, dependence on third parties, uncertainty regarding patents,protection of proprietary rights, manufacturing of peptides, and technology obsolescence could have a significant impact on us and our operations.To achieve profitability we, and/or a partner, must successfully conduct pre-clinical studies and clinical trials, obtain required regulatory approvals andsuccessfully manufacture and market those pharmaceuticals we wish to commercialize. The time required to reach profitability is highly uncertain, and therecan be no assurance that we will be able to achieve sustained profitability, if at all. 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESUse of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United Stated of America(“U.S. GAAP”) requires management to make certain estimates and assumptions that affect the reported earnings, financial position and various disclosures.Critical accounting policies involved in applying our accounting policies are those that require management to make assumptions about matters that are highlyuncertain at the time the accounting estimate was made and those for which different estimates reasonably could have been used for the current period. Criticalaccounting estimates are also those which are reasonably likely to change from period to period, and would have a material impact on the presentation of ourfinancial condition, changes in financial condition or results of operations. Our most critical accounting estimates relate to accounting policies for clinical trialaccruals and share-based arrangements. Management bases its estimates on historical experience and on various other assumptions that it believes arereasonable under the circumstances. Actual results could differ from these estimates.Cash and Cash Equivalents. Cash and cash equivalents consist of cash and highly-liquid investments with original maturities of three months or lesswhen acquired and are stated at cost that approximates their fair market value.Concentration of Credit Risk. Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily ofcash, and cash equivalents. We limit our exposure to credit loss by placing our cash and cash equivalents with high quality financial institutions and, inaccordance with our investment policy, in securities that are rated investment grade.Property and Equipment. Property and equipment consists of office furniture and equipment, and is stated at cost and depreciated over the estimateduseful lives of the assets (generally two to five years) using the straight-line method. Expenditures for maintenance and repairs which do not significantlyprolong the useful lives of the assets are charged to expense as incurred. Depreciation expense was $9,078 and $9,736 for the years ended December 31, 2011and 2010, respectively.Impairment of Long-lived Assets. When we record long-lived assets our policy is to regularly perform reviews to determine if and when the carryingvalue of our long-lived assets becomes impaired. During the two years ended December 31, 2011 we did not report qualifying long-lived assets and therefore noimpairment losses were recorded.Sponsored Research Revenues. We account for non-refundable grants as “Sponsored research revenues” in the accompanying statements of operations.Revenue from non-refundable grants is recognized when the following criteria are met; persuasive evidence of an arrangement exists, services have beenrendered and the underlying costs incurred, the contract price is fixed or determinable, and collectability is reasonably assured. For the year endedDecember 31, 2011, all of our revenues were received from one NIH grant. For the year ended December 31, 2010, all revenues were received from this NIHgrant and from awards under the Patient Protection and Affordable Care Act as part of an incentive for biotechnology companies.Research and Development. Research and development (“R&D”) costs are expensed as incurred and include all of the wholly-allocable costs associatedwith our various clinical programs passed through to us by our outsourced vendors. Those costs include: manufacturing Tb4; formulation of Tb4 into thevarious product candidates; stability for both Tb4 and the various formulations; pre-clinical toxicology; safety and pharmacokinetic studies; clinical trialmanagement; medical oversight; laboratory evaluations; statistical data analysis; regulatory compliance; quality assurance; and other related activities. R&Dincludes cash and non-cash compensation, employee benefits, travel and other miscellaneous costs of our internal R&D personnel, five persons in total, whoare wholly dedicated to R&D efforts. R&D also includes a pro-ration of our common infrastructure costs for office space and communications. F-8Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsCost of Preclinical Studies and Clinical Trials. We accrue estimated costs for preclinical studies based on estimates of work performed. We estimateexpenses incurred for clinical trials that are in process based on patient enrollment and based on clinical data collection and management. Costs based onclinical data collection and management are recognized based on estimates of unbilled goods and services received in the reporting period. We monitor theprogress of the trials and their related activities and adjust the accruals accordingly. Adjustments to accruals are charged to expense in the period in which thefacts that give rise to the adjustment become known. In the event of early termination of a clinical trial, we would accrue an amount based on estimates of theremaining non-cancelable obligations associated with winding down the clinical trial.Patent Costs. Costs related to filing and pursuing patent applications are recognized as general and administrative expenses as incurred sincerecoverability of such expenditures is uncertain.Income Taxes. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimatedfuture tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective taxbases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxableincome 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 intax rates is recognized in income in the period that includes the enactment date. We recognize the effect of income tax positions only if those positions are morelikely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized.Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Our policy for recording interest and penaltiesassociated with audits is that penalties and interest expense are recorded in “Income taxes” in our statements of operations.The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporarydifferences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planningstrategies in making that assessment. We recorded a full valuation allowance against all estimated net deferred tax assets at December 31, 2011 and 2010. Wehave significant net operating loss carryforwards to potentially reduce future federal and state taxable income, and research and experimentation tax creditcarryforwards available to potentially offset future federal and state income taxes. Use of our net operating loss and research and experimentation creditcarryforwards may be limited due to changes in our ownership as defined within Section 382 of the Internal Revenue Code.Net Loss Per Common Share. Net loss per common share for the years ended December 31, 2011 and 2010, respectively, is based on the weighted-average number of shares of common stock outstanding during the periods. Basic and diluted loss per share are identical for all periods presented aspotentially dilutive securities have been excluded from the calculation of the diluted net loss per common share because the inclusion of such securities wouldbe antidilutive. The potentially dilutive securities include 16,706,658 shares and 19,337,615 shares in 2011 and 2010, respectively, reserved for the exerciseof outstanding options and warrants.Share-Based Compensation. We measure share-based compensation expense based on the grant date fair value of the awards which is then recognizedover the period which service is required to be provided. We estimate the grant date fair value using the Black-Scholes option-pricing model (“Black-Scholes”).We recognized $221,754 and $474,355 in share-based compensation expense for the years ended December 31, 2011 and 2010, respectively.Fair Value of Financial Instruments. The carrying amounts of our financial instruments, as reflected in the accompanying balance sheets,approximate fair value. Financial instruments consist of cash and cash equivalents, and accounts payable.Recent Accounting Pronouncements.New pronouncements issued by the Financial Accounting Standards Board (“FASB”) or other authoritative accounting standards groups with futureeffective dates are either not applicable or not expected to have a significant effect on our financial position or results of operations. 3.FAIR VALUE MEASUREMENTSThe authoritative guidance for fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer aliability (an exit price) in the principal or the most advantageous market for the asset or liability in an orderly transaction between market participants on themeasurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and(iv) willing to transact. The guidance describes a fair value hierarchy based on the levels of inputs, of which the first two are considered observable and thelast unobservable, that may be used to measure fair value which are the following: F-9Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents • Level 1 — Quoted prices in active markets for identical assets and liabilities. • Level 2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities. • Level 3 — Unobservable inputs.At December 31, 2011 and 2010, we held no qualifying liabilities, and our only qualifying assets that required measurement under the foregoing fairvalue hierarchy were money market funds and U.S. Treasury Bills included in Cash and Cash Equivalents valued at $116,000 and $3.8 million,respectively, using Level 1 inputs. 4.LICENSES, INTELLECTUAL PROPERTY, AND RELATED PARTY TRANSACTIONSWe have an exclusive, worldwide licensing agreement with the National Institutes of Health (“NIH”) for all claims to Tb4 within their broadly-definedpatent application. In exchange for this exclusive worldwide license, we must make certain royalty and milestone payments to the NIH. Through December 31,2011 we have complied with these requirements. No assurance can be given as to whether or when a patent will be issued, or as to any claims that may beincluded or excluded within the patent. We have also filed numerous additional patent applications covering various compositions, uses, formulations andother components of Tb4, as well as to novel peptides resulting from our research efforts. Some of these patents have issued, while many patent applicationsare still pending. Minimum annual maintenance fees for each of the years ended December 31, 2011 and 2010 were $25,000, and are expected to amount toapproximately $25,000 annually in 2012 and thereafter.We have also entered into an agreement with a university under the terms of which we have received an exclusive license to technology and intellectualproperty. The agreement, which is generally cancelable by us, provided for the payment of a license issue fee and/or minimum annual payments. The initiallicense fee of $25,000 was paid in 2010 and no minimum fees were due for the year ended December 31, 2011. Beginning in 2012, minimum annualmaintenance fees are expected to amount to approximately $5,000 annually. In addition, the agreements provide for payments upon the achievement of certainmilestones in product development. The agreement also requires us to fund certain costs associated with the filing and prosecution of patent applications.All license fees are included in Research and Development in the accompanying statements of operations.We have entered into a License and Supply Agreement (the “Agreement”) with Defiante Farmaceutica S.A. (“Defiante”) a Portuguese company that is awholly owned subsidiary of Sigma-Tau, S.p.A., an international pharmaceutical company and an affiliate of Sigma-Tau Finanziaria S.p.A., who togetherwith its affiliates comprise our largest stockholder group (the “Sigma-Tau Group”). This Agreement grants to Defiante the exclusive right to use Tb4 toconduct research and development activities in Europe. Under the Agreement, we will receive fees and royalty payments based on a percentage of specifiedsales of Tb4-related products by Defiante. The term of the Agreement continues until the later of the expiration of any patents developed under the Agreement,the expiration of marketing rights, or December 31, 2016. 5.COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONSPrepaid expenses and other current assets are comprised of the following: December 31, 2011 2010 Prepaid research and development $— $245,498 Legal retainer — 100,000 Prepaid compensation — 24,960 Prepaid insurance 14,133 8,596 Other 10,470 5,573 $24,603 $384,806 F-10Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAccrued expenses are comprised of the following: December 31, 2011 2010 Accrued clinical research $167,595 $208,515 Accrued professional fees 48,543 128,847 Accrued vacation 46,579 48,096 Other 37,810 43,538 Accrued compensation — 2,000 Accrued severance 8,400 — Accrued board of directors’ fees 49,851 — $358,778 $430,996 6.EMPLOYEE BENEFIT PLANSWe have a defined contribution retirement plan that complies with Section 401(k) of the Internal Revenue Code (the “Code”). All employees of theCompany are eligible to participate in the plan. The Company matches 100% of each participant’s voluntary contributions, subject to a maximum Companycontribution of 4% of the participant’s compensation. The Company’s matching portion totaled $40,516 and $43,280 for the years ended December 31, 2011and 2010, respectively. Pursuant to changes in the employment status of all employees, we discontinued the matching contribution effective January 1, 2012. 7.STOCKHOLDERS’ EQUITYShareholders Rights Plan. Our Board of Directors adopted a Rights Agreement, dated April 29, 1994, as amended, that is intended to discourage anunsolicited change in control of the Company. In general, if an entity acquires more than a 25% ownership interest in the Company without the endorsement ofour Board of Directors, then our current stockholders (other than the acquiring entity) will be issued a significant number of new shares, the effect of whichwould dilute the ownership of the acquiring entity and could delay or prevent the change in control.Registration Rights Agreements. In connection with the sale of certain equity instruments, we have entered into Registration Rights Agreements.Generally, these Agreements required us to file registration statements with the Securities and Exchange Commission to register common shares to permit re-saleof common shares previously sold under an exemption from registration or to register common shares that may be issued on exercise of outstanding warrants.The Registration Rights Agreements usually require us to pay penalties for any failure or time delay in filing or maintaining the effectiveness of therequired registration statements. These penalties are usually expressed as a fixed percentage, per month, of the original amount we received on issuance of thecommon shares, options or warrants. While to date we have not incurred any penalties under these agreements, if a penalty is determined to be probable wewould recognize the amount as a contingent liability and not as a derivative instrument.Common Stock. During 2010, we sold an aggregate of 13,124,750 shares of our common stock and warrants to purchase an additional 5,249,900shares of our common stock in a public offering for net proceeds of approximately $4.5 million. These securities were sold as units, with each unit consistingof one share of common stock and a warrant to purchase 0.4 shares of our common stock. Each unit was sold at a public offering price of $0.41.Each warrant has a term of five years and represents the right to purchase one share of common stock at an exercise price of $0.56 per share. In theevent the closing sale price of our common stock is at least $1.78 per share for any 20 trading days within a period of 30 consecutive trading days, we maycall these warrants for redemption, at a redemption price of $0.01 per warrant, by providing at least 30 days notice to each warrant holder. The warrants werevalued using the Black-Scholes option-pricing model as of the closing date and accounted for in permanent equity. The estimated fair value of the warrants atthe date of issuance was approximately $725,000.In addition, the representative of the underwriters in the public offering was granted a warrant to purchase 805,000 shares of our common stock at anexercise price of $0.45 per share. This warrant is exercisable until May 17, 2015. The representative’s warrant also provides for one demand registration untilMay 17, 2015. The representative’s warrant was also valued using the Black-Scholes option-pricing model as of the closing date and accounted for as a costof the offering. The estimated fair value of the representative’s warrant at the date of issuance was approximately $112,000. F-11Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe public offering was made pursuant to a registration statement on Form S-1 (Registration No. 333-166146), which was declared effective by theSEC on May 17, 2010, and a final prospectus filed with the SEC on May 18, 2010.On January 5, 2011, we entered into a securities purchase agreement with Lincoln Park Capital Fund, LLC (“LPC”), as previously described infootnote 10, Subsequent Events, to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2010,pursuant to which we sold in a registered direct offering 1,851,852 shares of our common stock to LPC at a price per share of $0.27, for gross proceeds of$500,000 before offering expenses (the “Registered Offering”). As part of the Registered Offering, we also issued to LPC, for no additional consideration, awarrant to purchase 740,741 shares of common stock at an exercise price of $0.38 per share (the “LPC Warrant”). Subject to certain ownership limitations,the LPC Warrant is exercisable until January 7, 2016. The exercise price of the LPC Warrant is subject to adjustment in the case of stock splits, stockdividends, combinations of shares and similar recapitalization transactions.The Registered Offering was made pursuant to an S-3 shelf registration statement on (SEC File No. 333-150675), which was declared effective by theSEC on May 16, 2008, pursuant to a prospectus supplement filed with the SEC on January 7, 2011.The Registered Offering closed on January 7, 2011. No discounts or placement agent fees were payable in connection with the Registered Offering, andthe Company used the proceeds from the Registered Offering for preclinical and clinical development of the Company’s drug candidates and for generalcorporate purposes, including working capital.On January 5, 2011, we entered into three separate securities purchase agreements (each, a “Sigma-Tau Purchase Agreement” and together, the “Sigma-Tau Purchase Agreements”) with affiliates of Sigma-Tau Group, our largest stockholder (the “Sigma-Tau Purchasers”), with respect to the private placement(the “Private Placement”) of an aggregate of 3,518,519 shares of common stock (the “Sigma-Tau Shares”) at a price per share of $0.27, for gross proceeds of$950,000. No discounts or placement agent fees were payable in connection with the Private Placement, and we used the net proceeds of the Private Placementfor working capital and other general corporate purposes.In connection with the Private Placement, we also issued to the Sigma-Tau Purchasers warrants (the “Sigma-Tau Warrants”) to purchase an aggregate of1,407,407 additional shares of common stock at an exercise price of $0.38 per share. The Sigma-Tau Warrants are exercisable until January 7, 2016. Theexercise price of the Sigma-Tau Warrants is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similarrecapitalization transactions. The Private Placement closed on January 7, 2011.In connection with the Private Placement, on January 5, 2011, we and the Sigma-Tau Purchasers entered into an agreement (the “Warrant Amendment”)to amend the terms of certain outstanding warrants held by the holders of such warrants (the “Holders”). Under the Warrant Amendment, all outstandingwarrants held by the Holders that were issued between March 2006 and December 2008, exercisable for an aggregate of 3,046,453 shares of Common Stockand with exercise prices between $1.60 per share and $4.06 per share, were amended to reduce their exercise prices to $0.38 per share and to extend theirexpiration dates to December 31, 2011. The incremental fair value transferred to the Holders pursuant to the Warrant Amendment was not material. All of theamended warrants expired unexercised on December 31, 2011.On January 4, 2011, we and LPC also entered into a committed equity facility (the “LPC Equity Facility”), together with a Registration RightsAgreement (the “Registration Rights Agreement”), whereby we have the right to sell to LPC up to $11,000,000 of our common stock through October 2013 (anysuch shares sold being referred to as the “Purchase Shares”). Under the Registration Rights Agreement, we filed a registration statement related to thetransaction with the SEC covering the Purchase Shares and the Additional Commitment Shares (as defined below), which was declared by the SEC onFebruary 11, 2011. We will generally have the right, but not the obligation, over a 30-month period that began in April 2011, to direct LPC to periodicallypurchase the Purchase Shares in specific amounts under certain conditions. The purchase price for the Purchase Shares will be the lower of (i) the lowesttrading price on the date of sale or (ii) the arithmetic average of the three lowest closing sale prices for the common stock during the 12 consecutive businessdays ending on the business day immediately preceding the purchase date. In no event, however, will the Purchase Shares be sold to LPC at a price of lessthan $0.15 per share.In consideration for entering into the LPC Equity Facility, we issued to LPC 958,333 shares of common stock as an initial commitment fee (the “InitialCommitment Shares”) and are required to issue up to 958,333 shares of common stock as additional commitment shares on a pro rata basis (the “AdditionalCommitment Shares”) as we direct LPC to purchase our shares under the Equity Facility over the term of the agreement. The LPC Equity Facility may beterminated by us at any time at our discretion without any cost to us. The proceeds that may be received by us under the LPC Equity Facility are expected tobe used for preclinical and clinical development of our drug candidates and for general corporate purposes, including working capital.Under the LPC Equity Facility, we have agreed that, subject to certain exceptions, we will not, during the term of the LPC Equity Facility, effect or enterinto an agreement to effect any issuance of common stock or securities convertible into, exercisable for or exchangeable for common stock in a “Variable RateTransaction,” which means a transaction in which we: F-12Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents • issue or sell any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional sharesof common stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon and/or varies with the tradingprices of or quotations for the shares of common stock at any time after the initial issuance of such debt or equity securities, or (B) with aconversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security orupon the occurrence of specified or contingent events directly or indirectly related to our business or the market for the common stock; or • enter into any agreement, including, but not limited to, an equity line of credit, whereby we may sell securities at a future determined price.We have also agreed to indemnify LPC against certain losses resulting from our breach of any of our representations, warranties or covenants under theagreements with LPC.During 2011, we sold 1,500,000 shares of common stock to LPC as Purchase Shares for $348,200 in net proceeds. We also issued 30,336 AdditionalCommitment Shares in connection with this purchase. At December 31, 2011 additional sales to LPC were not available as our share price was less than$0.15 per share.Share-Based Compensation. We recognized $221,754 and $474,355 in stock-based compensation expense for the years ended December 31, 2011and 2010, respectively. Given our current estimates of future forfeitures, we expect to recognize the compensation cost related to non-vested options as ofDecember 31, 2011 of $210,000 over the weighted average remaining recognition period of 1.26 years.Stock Option and Incentive Plans. On July 14, 2010, at our Annual Meeting of Stockholders, our stockholders approved the 2010 Equity IncentivePlan (the “2010 Plan”). The terms of the 2010 Plan provide for the discretionary grant of incentive stock options, nonstatutory stock options, stockappreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, other stock awards and performance cash awards to ouremployees, directors and consultants. At inception of the 2010 Plan, 5,000,000 shares of our common stock were reserved for future issuance.We previously adopted an equity incentive plan, known as the Amended and Restated 2000 Stock Option and Incentive Plan (the “2000 Plan”). The 2000Plan has a term of ten years that expired in December 2010. All outstanding option awards granted under the 2000 Plan will continue to be subject to the termsand conditions as set forth in the agreements evidencing such option awards and the terms of the 2000 Plan. Shares remaining available for issuance under theshare reserve of the 2000 Plan will not be subject to future awards under the 2010 Plan, and shares subject to outstanding awards under the 2000 Plan that areterminated or forfeited in the future will not be subject to future awards under the 2010 Plan.The following summarizes share-based compensation expense for the years ended December 31, 2011 and 2010, which was allocated as follows: December 31, 2011 2010 Research and development $102,396 $206,427 General and administrative 119,358 267,928 $221,754 $474,355 F-13Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe following summarizes stock option activity for the years ended December 31, 2011 and 2010: Options outstanding Sharesavailable forgrant Number ofshares Exercise pricerange Weightedaverageexerciseprice December 31, 2009 1,550,888 4,914,112 $0.28 – 3.82 $1.53 Grants (672,500) 672,500 0.27 – 0.28 0.27 Exercises — — — — Newly authorized 5,000,000 — — — Cancellations (1,550,888) (237,749) 0.46 – 3.21 1.52 December 31, 2010 4,327,500 5,348,863 0.27 – 3.82 1.37 Grants (1,002,964) 1,002,964 0.16 – 0.22 0.19 Exercises — — — — Cancellations 164,500 (977,228) 0.22 – 3.10 1.31 December 31, 2011 3,489,036 5,374,599 $0.16 – 3.82 $1.16 Vested and expected to vest at December 31, 2011 5,113,498 Exercisable at December 31, 2011 4,007,224 The following summarizes information about stock options outstanding at December 31, 2011: Outstanding options Exercisable options Range of exercise prices Number ofsharesoutstanding Weighted-averageremainingcontractuallife (in years) Weighted-averageexerciseprice Number ofsharesexercisable Weighted-averageremainingcontractuallife (in years) Weighted-averageexerciseprice $0.16 – $0.86 3,152,099 4.4 $0.37 2,086,599 3.6 $0.39 $1.07 – $1.93 712,500 2.9 1.30 610,625 2.8 1.32 $2.02 – $2.68 710,000 2.3 2.27 510,000 2.4 2.31 $3.00 – $3.82 800,000 3.4 3.21 800,000 3.4 3.21 5,374,599 3.8 1.16 4,007,224 3.3 1.34 Intrinsic value of in-the-money options, using theDecember 31, 2011 closing price of $0.14 $— $— Determining the Fair Value of Options. We use the Black-Scholes valuation model to estimate the fair value of options granted. Black-Scholesconsiders a number of factors, including the market price and volatility of our common stock. We used the following forward-looking range of assumptions tovalue each stock option granted to employees, directors and consultants during the years ended December 31, 2011 and 2010: 2011 2010Dividend yield 0.0% 0.0%Risk free rate of return 0.91 - 1.54% 1.47 - 1.76%Expected life in years 3.5 - 4.75 4.75Volatility 70% 70%Forfeitures 2.61% 2.61% F-14Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsOur dividend yield assumption is based on the fact that we have never paid cash dividends and do not anticipate paying cash dividends in theforeseeable future. Our risk-free interest rate assumption is based on yields of U.S. Treasury notes in effect at the date of grant. Our expected life represents theperiod of time that options granted are expected to be outstanding and is calculated in accordance with the Securities and Exchange Commission (“SEC”)guidance provided in the SEC’s Staff Accounting Bulletin 107 (“SAB 107”), using a “simplified” method. The Company has used the simplified method andwill continue to use the simplified method as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate anexpected term. Our volatility assumption is based on reviews of the historical volatility of our common stock. We estimate forfeiture rates at the time of grantand adjust these estimates, if necessary, periodically based on the extent to which future actual forfeitures differ, or are expected to differ, from such estimates.Accordingly, we have estimated forfeiture percentages for the unvested portion of previously granted awards that remain outstanding at the date of adoptionand for awards granted subsequent to the date of adoption. Forfeitures are estimated based on the demographics of current option holders and standardprobabilities of employee turnover. Using Black-Scholes and these factors, the weighted average fair value of stock options granted to employees and directorswas $0.11 for the year ended December 31, 2011 and $0.16 for the year ended December 31, 2010.We do not record tax-related effects on stock-based compensation given our historical and anticipated operating experience and offsetting changes in ourvaluation allowance which fully reserves against potential deferred tax assets.Warrants to Purchase Common StockThe following table summarizes our warrant activity for 2011 and 2010: Warrants outstanding Number ofshares Exercise pricerange Weightedaverageexerciseprice December 31, 2009 7,933,852 $0.91 – 4.06 $2.01 Grants 6,054,900 0.45 – 0.56 0.55 Exercises — — — Cancellations — — — December 31, 2010 13,988,752 0.45 – 4.06 1.38 Grants 2,148,148 0.38 0.38 Exercises — — — Cancellations (4,804,841) 0.38 – 4.06 1.41 December 31, 2011 11,332,059 $0.38 - $1.12 $0.67 8.INCOME TAXESSignificant components of the Company’s deferred tax assets at December 31, 2011 and 2010 and related valuation reserves are presented below: December 31, 2011 2010 Deferred tax assets: Net operating loss carryforwards $17,307,000 $15,890,000 Research and development tax credit carryforward 2,145,000 1,836,000 Charitable contribution carryforward 4,000 37,000 Accrued vacation — 17,000 Accrued expenses 123,000 83,000 Amortization 13,000 4,000 Non-cash share based compensation 1,010,000 980,000 20,602,000 18,847,000 Less — valuation allowance (20,602,000) (18,847,000) Net deferred tax asset $— $— F-15Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsA full valuation allowance has been provided at December 31, 2011 and 2010 to reserve for deferred tax assets, as it appears more likely than not thatnet deferred tax assets will not be realized.At December 31, 2011, we had net operating loss carryforwards for income tax purposes of approximately $43.9 million, which are available to offsetfuture federal and state taxable income, if any, and, research and development tax credit carryforwards of approximately $2.1 million. The carryforwards, ifnot utilized, will expire in increments through 2031.The Code imposes substantial restrictions on the utilization of net operating losses and tax credits in the event of a corporation’s ownership change, asdefined in Section 382 of the Code. During 2009, the Company completed a preliminary study to compute any limits on the net operating losses and creditcarryforwards for purposes of Section 382. It was determined that the Company experienced a cumulative change in ownership, as defined by the regulations,in 2002. This change in ownership triggers an annual limitation on the Company’s ability to utilize certain U.S. federal and state net operating losscarryforwards and research tax credit carryforwards, resulting in the potential loss of approximately $9.8 million of net operating loss carryforwards and$0.2 million in research credit carryforwards. The Company has reduced the deferred tax assets associated with these carryforwards in its balance sheet atDecember 31, 2011 and 2010. While the Company has not formally updated the study conducted during 2009, it has less formally reviewed the equitytransactions executed during 2011 and 2010 and believes that the future utilization of net operating losses and tax credits presented above may be furthercompromised under the provisions of Section 382.The provision for income taxes on earnings subject to income taxes differs from the statutory Federal rate at December 31, 2011 and 2010, due to thefollowing: December 31, 2011 2010 Tax benefit at statutory rate $(2,042,000) $(1,700,000) State taxes (327,000) (274,000) Permanent M-1s 197,000 259,000 Limited/expired net operating loss carryforwards 726,000 2,881,000 Limited/expired research and development tax credit carryforward 34,000 59,000 Research and development tax credit carryforward (343,000) (185,000) Change in valuation allowance 1,755,000 (1,040,000) $— $— As discussed in Note 2, we recognize the effect of income tax positions only if those positions more likely than not of being sustained. At December 31,2011 and 2010, we had no gross unrecognized tax benefits. We do not expect any significant changes in unrecognized tax benefits over the next 12 months. Inaddition, we did not recognize any interest or penalties related to uncertain tax positions at December 31, 2011 and 2010.The 2002 through 2011 tax years generally remain subject to examination by federal and most state tax authorities. In addition, we would remain open toexamination for earlier years if we were to utilize net operating losses or tax credit carryforwards that originated prior to 2008. 9.COMMITMENTSLease. Our rent expense, related solely to office space, for 2011 and 2010 was $95,166 and $102,838, respectively. We are committed under an officespace lease that expires on January 31, 2013 that requires the following approximate annual lease payments: $98,000 and $8,000 for the years endingDecember 31, 2012 and 2013, respectively.Employment Continuity Agreements. We have entered into employment contracts with our executive officers which provide for severance if theexecutive is dismissed without cause or under certain circumstances after a change of control in our ownership. At December 31, 2011 these obligations, iftriggered, could amount to a maximum of approximately $350,000 in the aggregate. 10.SUBSEQUENT EVENTSDue to our current financial condition, beginning in late 2011, we began implementing significant cost-saving measures to conserve capital resourcesand maintain a minimal level of operations, while seeking additional funding and/or complete a strategic transaction. On January 1, 2012, all employeesbecame part-time hourly employees with reduced work schedules. Additionally, in January 2012, we discontinued providing employee health benefits andcompany-sponsored 401(k) matching contributions. In addition, we have entered into change in control agreements with our executive officers that provide forseverance if the executive is dismissed without cause or under certain circumstances after a change of control in our ownership. F-16Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsOn March 27, 2012, we entered into a term sheet with Lee’s Pharmaceutical (HK) Limited (“Lee’s”), for the license of Tß4 in any pharmaceuticalformulation, including our RGN-259, RGN-352 and RGN-137 product candidates, in China, Hong Kong and Macau. Lee’s paid us $200,000 upon signingof the term sheet, and Lee’s will pay us an additional $200,000 upon signing of the definitive license agreement, which we expect to occur by May 31, 2012. F-17Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsEXHIBIT INDEX Exhibit No. Description of Exhibit Reference*3.1 Restated Certificate of Incorporation Exhibit 3.1 to Registration Statement on Form S-1 (File No. 333-166146) (filed April 16, 2010)3.2 Certificate of Amendment to Restated Certificate of Incorporation Exhibit 3.2 to Registration Statement on Form S-1 (File No. 333-166146) (filed April 16, 2010)3.3 Certificate of Amendment to Restated Certificate of Incorporation Exhibit 3.3 to Registration Statement on Form S-1 (File No. 333-166146) (filed April 16, 2010)3.4 Certificate of Amendment of Restated Certificate of Incorporation Exhibit 3.4 to Registration Statement on Form S-8 (File No. 333-168252) (filed July 21, 2010)3.5 Certificate of Designation of Series A Participating CumulativePreferred Stock Exhibit 3.4 to Registration Statement on Form S-1 (File No. 333-166146) (filed April 16, 2010)3.6 Amended and Restated Bylaws Exhibit 3.4 to Quarterly Report on Form 10-Q (File No. 001-15070)for the quarter ended June 30, 2006 (filed August 14, 2006)3.7 Amendment to Amended and Restated Bylaws Exhibit 3.6 to Registration Statement on Form S-8 (File No. 333-152250) (filed July 10, 2008)4.1 Specimen Common Stock Certificate Exhibit 4.1 to Registration Statement on Form S-1 (File No. 333-166146) (filed April 16, 2010)4.2 Specimen Rights Certificate Exhibit 4.2 to Registration Statement on Form S-1 (File No. 333-166146) (filed April 16, 2010)4.3 Rights Agreement, dated April 29, 1994, between the Companyand American Stock Transfer & Trust Company, as Rights Agent Exhibit 4.3 to Registration Statement on Form S-1 (File No. 333-166146) (filed April 16, 2010)Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents 4.4 Amendment No. 1 to Rights Agreement, dated March 4, 2004, betweenthe Company and American Stock Transfer & Trust Company, asRights Agent Exhibit 4.4 to Registration Statement on Form S-1 (File No. 333-166146) (filed April 16, 2010) 4.5 Warrant Agreement, dated May 21, 2010, between the Company andAmerican Stock Transfer & Trust Company, as Warrant Agent Exhibit 4.1 to Current Report on Form 8-K (File No. 001-15070) (filedMay 21, 2010) 4.6 Form of Warrant Certificate Exhibit 4.6 to Amendment No. 1 to Registration Statement on Form S-1(File No. 333-166146) (filed May 17, 2010) 10.1^ Amended and Restated 2000 Stock Option and Incentive Plan, asamended Annex A to the Company’s Proxy Statement on Schedule 14A (File No.001-15070) (filed May 9, 2008) 10.2^ 2010 Equity Incentive Plan Exhibit 10.1 to Current Report on Form 8-K (File No. 001-15070) (filedJuly 20, 2010)10.3 Form of Stock Option Grant Notice and Stock Option Agreementunder the 2010 Equity Incentive Plan Exhibit 10.2 to Current Report on Form 8-K (File No. 001-15070) (filedJuly 20, 2010)10.4 Patent License Agreement — Exclusive, dated January 24, 2001,between the Company and the U.S. Public Health Service Exhibit 10.1 to Annual Report on Form 10-KSB for the year endedDecember 31, 2000 (File No. 001-15070) (filed April 2, 2001)**10.5 Thymosin Beta 4 License and Supply Agreement, dated January 21,2004, between the Company and Defiante Farmaceutica S.A. Exhibit 10.10 to Registration Statement on Form SB-2 (File No. 333-113417) (filed March 9, 2004)** 10.6^ Second Amended and Restated Employment Agreement, dated March11, 2009, between the Company and Allan L. Goldstein, as amended Exhibit 10.4 to Amendment No. 1 to Annual Report on Form 10-K forthe year ended December 31, 2008 (File No. 001-15070) (filedApril 30, 2009) 10.7^ Second Amended and Restated Employment Agreement, dated March12, 2009, between the Company and J.J. Finkelstein, as amended Exhibit 10.5 to Annual Report on Form 10-K for the year endedDecember 31, 2008 (File No. 001-15070) (filed April 15, 2009) 10.8^ Second Amended and Restated Employment Agreement, dated March31, 2009, between the Company and C. Neil Lyons, as amended Exhibit 10.6 to Annual Report on Form 10-K for the year endedDecember 31, 2008 (File No. 001-15070) (filed April 15, 2009) 10.9^ Second Amended and Restated Employment Agreement, dated March31, 2009, between the Company and David Crockford Exhibit 10.7 to Annual Report on Form 10-K for the year endedDecember 31, 2008 (File No. 001-15070) (filed April 15, 2009)Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents 10.10^ Second Amendment to the Amended and Restated EmploymentAgreement between the Company and J.J. Finkelstein, datedDecember 1, 2011. Exhibit 10.1 to Current Report on Form 8-K (File No. 001-15070) (filedDecember 6, 2011) 10.11^ First Amendment to the Amended and Restated Employment Agreementbetween the Company and David Crockford, dated December 1, 2011. Exhibit 10.2 to Current Report on Form 8-K (File No. 001-15070) (filedDecember 6, 2011) 10.12^ Second Amendment to the Amended and Restated EmploymentAgreement between the Company and Allan L. Goldstein, datedDecember 1, 2011. Exhibit 10.3 to Current Report on Form 8-K (File No. 001-15070) (filedDecember 6, 2011) 10.13^ Letter Agreement between the Company and J.J. Finkelstein, datedJanuary 1, 2012. Exhibit 10.1 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 6, 2012) 10.14^ Letter Agreement between the Company and David Crockford, datedJanuary 1, 2012. Exhibit 10.2 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 6, 2012) 10.15^ Letter Agreement between the Company and Allan L. Goldstein, datedJanuary 1, 2012. Exhibit 10.5 to Current Report on Form 8-K (File No. 001-15070)(filed January 6, 2012) 10.16^ Change in Control Agreement between the Company and J.J. Finkelstein,dated January 1, 2012. Exhibit 10.3 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 6, 2012) 10.17^ Change in Control Agreement between the Company and DavidCrockford, dated January 1, 2012. Exhibit 10.4 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 6, 2012) 10.18^ Change in Control Agreement between the Company and Allan L.Goldstein, dated January 1, 2012. Exhibit 10.6 to Current Report on Form 8-K (File No. 001-15070)(filed January 6, 2012) 10.19 Lease, by and between the Company and The Realty Associates Fund V,L.P., dated December 10, 2009 Exhibit 10.25 to Annual Report on Form 10-K for the year endedDecember 31, 2009 (File No. 001-15070) (filed March 31, 2010) 10.20 Form of Warrant to Purchase Common Stock dated April 30, 2009 Exhibit 10.1 to Current Report on Form 8-K (File No. 001-15070) (filedApril 16, 2009) 10.21 Securities Purchase Agreement, dated April 13, 2009 Exhibit 10.2 to Current Report on Form 8-K (File No. 001-15070) (filedApril 16, 2009) 10.22 Form of Common Stock Purchase Warrant, dated October 5, 2009 Exhibit 4.1 to Current Report on Form 8-K (File No. 001-15070) (filedSeptember 30, 2009)Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents 10.23 Securities Purchase Agreement, dated September 30, 2009 Exhibit 10.1 to Current Report on Form 8-K (File No. 001-15070) (filedSeptember 30, 2009) 10.24 Form of Warrant, dated October 15, 2009 Exhibit 4.1 to Current Report on Form 8-K (File No. 001-15070) (filedOctober 5, 2009) 10.25 Securities Purchase Agreement, dated September 30, 2009 Exhibit 10.1 to Current Report on Form 8-K (File No. 001-15070) (filedOctober 5, 2009) 10.26 Representative’s Warrant to Purchase Common Stock, dated May 21,2010 Exhibit 4.3 to Current Report on Form 8-K (File No. 001-15070) (filedMay 21, 2010) 10.27 Purchase Agreement, dated January 4, 2011 Exhibit 10.2 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 7, 2011) 10.28 Registration Rights Agreement, dated January 4, 2011 Exhibit 10.3 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 7, 2011) 10.29 Securities Purchase Agreement, dated January 5, 2011 Exhibit 10.1 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 7, 2011) 10.30 Warrant to Purchase Common Stock, dated January 7, 2011, issuedto Lincoln Park Capital Exhibit 4.1 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 7, 2011) 10.31 Securities Purchase Agreement, dated January 5, 2011, by andbetween the Company and Defiante Farmaceutica S.A. Exhibit 10.4 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 7, 2011) 10.32 Securities Purchase Agreement, dated January 5, 2011, by andbetween the Company and Taufin International S.A. Exhibit 10.5 to Current Report on Form 8-K (File No. 001-15070)(filed January 7, 2011) 10.33 Securities Purchase Agreement, dated January 5, 2011, by andbetween the Company and Sinaf S.A. Exhibit 10.6 to Current Report on Form 8-K (File No. 001-15070)(filed January 7, 2011) 10.34 Form of Warrant to Purchase Common Stock, dated January 7, 2011,issued to the Sigma-Tau Purchasers Exhibit 4.2 to Current Report on Form 8-K (File No. 001-15070) (filedJanuary 7, 2011) 23.1 Consent of Reznick Group, P.C. Filed herewith 24.1 Powers of Attorney Included on signature pageSource: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents 31.1 Certification of Principal Executive Officer pursuant to Rules 13a-14 and15d-14 promulgated under the Securities Exchange Act of 1934 Filed herewith 31.2 Certification of Principal Financial Officer pursuant to Rules 13a-14 and15d-14 promulgated under the Securities Exchange Act of 1934 Filed herewith 32.1 Certification of Principal Executive Officer and Principal FinancialOfficer pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002 Filed herewith*** *Except where noted, the exhibits referred to in this column have heretofore been filed with the Securities and Exchange Commission as exhibits to thedocuments indicated and are hereby incorporated by reference thereto. The Registration Statements referred to are Registration Statements of theCompany.**The registrant has been granted confidential treatment with respect to certain portions of this exhibit (indicated by asterisks), which have been filedseparately with the Securities and Exchange Commission.***This certification is being furnished solely to accompany this annual report pursuant to 18 U.S.C. Section 1350, is are not being filed for purposes ofSection 18 of the Securities Exchange Act of 1934 and is not to be incorporated by reference into any filing of the registrant, whether made before or afterthe date hereof, regardless of any general incorporation language in such filing.^Compensatory plan, contract or arrangement.Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Registration Nos. 333-168252, 333-152250 and 333-111386) of RegeneRx Biopharmaceuticals, Inc. (the “Company”) of our report dated April 4, 2012, with respect to the financial statements of RegeneRxBiopharmaceuticals, Inc. (which report expresses an unqualified opinion and includes an explanatory paragraph relating to the existence of substantial doubtabout the Company’s ability to continue as a going concern), included in this Annual Report (Form 10-K) for the year ended December 31, 2011./s/ Reznick Group, P.C.Vienna, VirginiaApril 4, 2012Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 31.1CERTIFICATIONI, J.J. Finkelstein, certify that: 1.I have reviewed this annual report on Form 10-K of RegeneRx Biopharmaceuticals, 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 thestatements 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 thefinancial 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 inExchange 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, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes 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 theeffectiveness 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 recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, 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 theregistrant’s auditors and the audit committee of the 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 reasonablylikely 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 controlover financial reporting.Date: April 4, 2012 /s/ J.J. FinkelsteinJ.J. FinkelsteinPresident and Chief Executive Officer(Principal Executive Officer)Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 31.2CERTIFICATIONI, J.J. Finkelstein, certify that: 1.I have reviewed this annual report on Form 10-K of RegeneRx Biopharmaceuticals, 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 thestatements 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 thefinancial 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 inExchange 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, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes 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 theeffectiveness 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 recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, 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 theregistrant’s auditors and the audit committee of the 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 reasonablylikely 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 controlover financial reporting.Date: April 4, 2012 /s/ J.J. FinkelsteinJ.J. FinkelsteinPresident and Chief Executive Officer (Principal FinancialOfficer)Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of RegeneRx Biopharmaceuticals, Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2011, asfiled with the Securities and Exchange Commission on the date hereof (the “Report”), I, J.J. Finkelstein, Chief Executive Officer of the Company, certify,pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Companyas of and for the periods presented in this report.This certification accompanies this Report to which it relates, shall not be deemed “filed” with the Securities and Exchange Commission and is not to beincorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended(whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.Date: April 4, 2012 /s/ J.J. FinkelsteinJ.J. FinkelsteinPresident and Chief Executive Officer (Principal ExecutiveOfficer, Principal Financial Officer and Principal AccountingOfficer)Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Source: REGENERX BIOPHARMACEUTICALS INC, 10-K, April 04, 2012Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.

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