CORTEX PHARMACEUTICALS INC/DE/ (Form: 10-Q, Received: 08/18/2011 16:01:53)

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

FOR THE QUARTERLY PERIOD ENDED June 30, 2011

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

FOR THE TRANSITION PERIOD FROM TO

Commission file number 1-16467

Cortex Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

Delaware

33-0303583

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

15241 Barranca Parkway, Irvine, California 92618

(Address of principal executive offices, including zip code)

(949) 727-3157

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name, former address and former fiscal year,

if changed since last report)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO ¨

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

78,858,197 shares of Common Stock as of August 8, 2011

CORTEX PHARMACEUTICALS, INC.

INDEX


		Page Number

	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements and Notes (Unaudited)

	Condensed Balance Sheets — June 30, 2011 and December 31, 2010		3

	Condensed Statements of Operations — Three months and six months ended June 30, 2011 and 2010		4

	Condensed Statements of Cash Flows — Six months ended June 30, 2011 and 2010		5

	Notes to Condensed Financial Statements		6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		25

Item 4.	Controls and Procedures		26

PART II. OTHER INFORMATION

Item 6.	Exhibits		27

SIGNATURES			28

Item 1A of Part II has been omitted based on the Company’s status as a “smaller reporting company.” Items 1 through 5 of Part II have been omitted because they are not applicable with respect to the current reporting period.

Page 2 of 28

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

Cortex Pharmaceuticals, Inc.

Condensed Balance Sheets


	*(Unaudited)* June 30, 2011			*(Note)* December 31, 2010
Assets
Current assets:
Cash and cash equivalents	$	1,419,530		$	1,037,549
Marketable securities		—			1,992,952
Restricted cash		52,586			155,736
Other current assets		61,364			89,807

Total current assets		1,533,480			3,276,044
Furniture, equipment and leasehold improvements, net		198,185			249,831
Other		41,373			41,373

	$	1,773,038		$	3,567,248

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	568,304		$	393,781
Accrued wages, salaries and related expenses		278,734			275,353
Unearned revenue		52,586			155,736
Advance for MCI project		321,770			319,761
Deferred rent		17,738			11,288

Total current liabilities		1,239,132			1,155,919
Deferred rent		—			8,063

Total liabilities		1,239,132			1,163,982

Stockholders’ equity:
Series B convertible preferred stock, $0.001 par value; $25,001 liquidation preference; shares authorized: 37,500; shares issued and outstanding: 37,500; shares issuable upon conversion: 3,679		21,703			21,703
Common stock, $0.001 par value; shares authorized: 205,000,000; shares issued and outstanding: 78,858,197 (June 30, 2011 and December 31, 2010)		78,858			78,858
Additional paid-in capital		120,859,599			120,816,472
Unrealized gain, available for sale marketable securities		—			473
Accumulated deficit		(120,426,254	)		(118,514,240	)

Total stockholders’ equity		533,906			2,403,266

	$	1,773,038		$	3,567,248

See accompanying notes.

Note: The balance sheet as of December 31, 2010 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements.

Page 3 of 28

Cortex Pharmaceuticals, Inc.

Condensed Statements of Operations

(Unaudited)


	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Revenues:
Sale of A MPAKINE ^® assets	$	—		$	—		$	—		$	9,000,000
License revenue		1,000,000			—			1,000,000			—
Grant revenue		85,027			—			110,327			—

Total revenues		1,085,027			—			1,110,327			9,000,000

Operating expenses:
Research and development		645,231			946,624			1,289,110			2,570,287
General and administrative		803,705			1,022,688			1,744,123			2,730,688

Total operating expenses		1,448,936			1,969,312			3,033,233			5,300,975

(Loss) income from operations		(363,909	)		(1,969,312	)		(1,922,906	)		3,699,025
Interest (expense) income, net		7,741			(485,153	)		10,892			(557,626	)

Net (loss) income	$	(356,168	)	$	(2,454,465	)	$	(1,912,014	)	$	3,141,399

Net (loss) income per share (A):
Basic and diluted	$	(0.00	)	$	(0.04	)	$	(0.02	)	$	0.05

Shares used in calculating per share amounts (A):
Basic		78,858,197			68,412,618			78,858,197			69,797,667

Diluted		78,858,197			68,412,618			78,858,197			78,002,866

(A)	See Note 1 to Notes to Condensed Financial Statements.

See accompanying notes.

Page 4 of 28

Cortex Pharmaceuticals, Inc.

Condensed Statements of Cash Flows

(Unaudited)


	Six months ended June 30,
	2011			2010
Cash flows from operating activities:
Net (loss) income	$	(1,912,014	)	$	3,141,399
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation expense		49,974			57,425
Stock option compensation expense		43,127			209,883
Amortization of beneficial conversion feature		—			223,880
Amortization of capitalized offering costs		—			57,698
Warrant issued upon conversion of promissory note		—			233,767
Changes in operating assets/liabilities:
Restricted cash		103,150			—
Accrued interest on marketable securities		2,519			6,299
Other current assets		28,443			(61,118	)
Other non-current assets		—			5,294
Accounts payable and accrued expenses		177,904			(450,448	)
Unearned revenue		(103,150	)		—
Accrued interest on convertible promissory note		—			35,500
Deferred rent		(1,613	)		8,063
Other		(9,139	)		10,504

Net cash (used in) provided by operating activities		(1,620,799	)		3,478,146

Cash flows from investing activities:
Purchases of marketable securities		—			(2,622,386	)
Proceeds from sales and maturities of marketable securities		1,990,000			—
Purchases of fixed assets		—			(55,780	)
Proceeds from sales of fixed assets		12,780			63,435

Net cash provided by (used in) investing activities		2,002,780			(2,614,731	)

Cash flows from financing activities:
Proceeds from issuance of convertible promissory note		—			1,500,000
Costs related to issuance of convertible promissory note		—			(27,781	)

Net cash provided by financing activities		—			1,472,219

Increase in cash and cash equivalents		381,981			2,335,634
Cash and cash equivalents, beginning of period		1,037,549			226,466

Cash and cash equivalents, end of period	$	1,419,530		$	2,562,100

Supplemental disclosure of non-cash financing activities:
Issuance of common stock upon conversion of promissory note	$	—		$	1,535,500

See accompanying notes.

Page 5 of 28

Cortex Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(Unaudited)

Note 1 — Basis of Presentation and Significant Accounting Principles

The accompanying unaudited interim condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six-month period ended June 30, 2011 are not necessarily indicative of the results that may be expected for the full fiscal year. For further information, refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

The Company has incurred net losses and cash outflows from operations of approximately $1,912,000 and $1,621,000, respectively, for the six months ended June 30, 2011 and expects to incur additional losses and negative cash flow from operations in fiscal 2011 and for several more years. Management believes the Company has adequate financial resources to conduct operations into the fourth quarter of 2011. This raises substantial doubt about the Company’s ability to continue as a going concern, which will be dependent on its ability to obtain additional financing and to generate sufficient cash flows to meet its obligations on a timely basis.

In August 2011, as part of its efforts to conserve its cash resources, the Company implemented a reduction of approximately 50% of its workforce. At the same time, the Company deferred payment of 50% of the base salary for each of its remaining employees until the Company secures sufficient capital.

The Company is exploring its strategic and financial alternatives, including, but not limited to, new collaborations for its A MPAKINE ^® program which would provide capital to the Company in exchange for exclusive or non-exclusive license or other rights to certain of the technologies and products that the Company is developing. Although the Company is presently engaged in discussions with a number of candidate companies, there can be no assurance that an agreement will arise from these discussions in a timely manner, or at all.

The Company will likely need to raise additional capital through the sale of debt or equity. If the Company is unable to obtain additional financing to fund operations beyond the fourth quarter of 2011, it will need to eliminate some or all of its activities, merge with another company, license or sell some or all of its assets to another company, or cease operations entirely. There can be no assurance that the Company will be able to obtain additional financing on favorable terms or at all, or that the Company will be able to merge with another Company or license or sell any or all of its assets.

Revenue Recognition

The Company recognizes revenue when all four of the following criteria are met: (i) pervasive evidence that an arrangement exists; (ii) delivery of the products and/or services has occurred; (iii) the fees earned can be readily determined; and (iv) collectibility of the fees is reasonably assured.

Amounts received for upfront technology license fees under multiple-element arrangements are deferred and recognized over the period of committed services or performance, if such arrangements require the Company’s on-going services or performance.

Page 6 of 28

The Company records research grant revenues as the expenses related to the grant projects are incurred. Amounts received under research grants are nonrefundable, regardless of the success of the underlying research, to the extent that such amounts are expended in accordance with the approved grant project.

Employee Stock Options and Stock-based Compensation

The Company’s 2006 Stock Incentive Plan (the “2006 Plan”) provides for a variety of equity vehicles to allow flexibility in implementing equity awards, including incentive stock options, nonqualified stock options, restricted stock grants, stock appreciation rights, stock payment awards, restricted stock units and dividend equivalents to qualified employees, officers, directors, consultants and other service providers. The exercise price of stock options offered under the 2006 Plan must be at least 100% of the fair market value of the common stock on the date of grant. If the person to whom an incentive stock option is granted is a 10% stockholder of the Company on the date of grant, the exercise price per share shall not be less than 110% of the fair market value on the date of grant. Options granted generally vest over a three-year period, although options granted to officers may include more accelerated vesting. Options generally expire ten years from the date of grant, but options granted to consultants may expire five years from the date of grant.

The Company recognizes expense in its financial statements for all share-based payments to employees, including grants of employee stock options, based on their fair values over the service period.

There were no options granted during the three months ended June 30, 2011 and 2010. For options granted during the six months ended June 30, 2011 and 2010, the fair value of each option award was estimated using the Black-Scholes option pricing model and the following assumptions:


	Six months ended June 30,
	2011			2010
Weighted average risk-free interest rate		2.8	%		3.2	%
Dividend yield		0	%		0	%
Volatility factor of the expected market price of the Company’s common stock		107	%		108	%
Weighted average life		7.0 years			6.9 years

Expected volatility is based on the historical volatility of the Company’s stock. The Company also uses historical data to estimate the expected term of options granted and employee termination rates. The risk-free rate for periods within the estimated life of the options is based on the U.S. Treasury yield curve in effect at the time of grant.

The weighted-average grant-date fair value per share of options granted during the six months ended June 30, 2011 and 2010 was $0.11 and $0.14, respectively.

Page 7 of 28

A summary of option activity for the six months ended June 30, 2011 is as follows:


	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Balance, December 31, 2010		12,141,640		$	1.39
Granted		180,000		$	0.13
Exercised		—			—
Forfeited		—			—
Expired		(464,884	)	$	2.00

Balance, June 30, 2011		11,856,756		$	1.35		5.3 years		—
Vested and expected to vest, June 30, 2011		11,528,436		$	1.38		5.2 years		—
Exercisable, June 30, 2011		9,496,095		$	1.63		4.5 years		—

As of June 30, 2011, there was approximately $93,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements. That non-cash cost is expected to be recognized over a weighted-average period of less than one year.

Stock options and warrants issued as compensation for services to be provided to the Company by non-employees are accounted for based upon the fair value of the services provided or the estimated fair value of the option or warrant, whichever can be more clearly determined. The Company recognizes this expense over the period in which the services are provided. This expense is a non-cash charge and has no impact on the Company’s available cash or working capital.

There were no stock option exercises during the six months ended June 30, 2011 or 2010. The Company issues new shares to satisfy stock option exercises.

Consistent with December 31, 2010, as of June 30, 2011 warrants to purchase up to 24,126,952 shares of the Company’s common stock were outstanding at a weighted-average exercise price of $0.74 per share.

Net (Loss) Income per Share

For the three months ended June 30, 2011 and 2010 and the six months ended June 30, 2011, the effect of potentially issuable shares of common stock was not included in the calculation of diluted loss per share given that the effect would be anti-dilutive.

For the six months ended June 30, 2010, the following table reconciles the numerators and denominators of the basic and diluted income per share computations.

Page 8 of 28


	For the Six Months Ended June 30, 2010
	Income (Numerator)		Shares (Denominator)		Per-Share Amount
Basic Earnings per Share:
Income applicable to common stock	$	3,141,399		69,797,667	$	0.05
Effect of Dilutive Securities:
Convertible promissory note		550,845		8,194,875
Options to purchase common stock		—		10,324

Diluted Earnings per Share:
Income applicable to common stock + assumed conversions	$	3,692,244		78,002,866	$	0.05

In calculating diluted earnings per share, amounts added to the numerator represent charges recorded for a convertible promissory note (see Note 4), including non-cash charges related to the beneficial conversion feature within the promissory note and the allocated fair value of warrants issued upon such note’s conversion.

Shares issued upon conversion of the convertible promissory note have been included in the denominator of diluted earnings per shares using the “if converted” method. As a result, shares assumed issued are weighted for the period the convertible securities were outstanding prior to conversion, and common shares actually issued are weighted for the period the shares were outstanding after conversion.

Options to purchase up to 12,941,631 shares of the Company’s common stock at a weighted average price of $1.37 per share were outstanding as of June 30, 2010, but were excluded from the calculation of diluted income per share given that the options’ exercise price exceeded the average market price of the Company’s common stock. Similarly, warrants to purchase up to 24,268,952 shares of the Company’s common stock at a weighted average price of $0.75 per share were outstanding as of June 30, 2010 and were excluded from the calculation of diluted income per share given that the exercise price of the warrants exceeded the average market price of the Company’s common stock.

Comprehensive Income (Loss)

The Company presents unrealized gains and losses on its marketable securities, classified as “available for sale,” in its statement of stockholders’ equity and comprehensive income or loss on an annual basis and in a note in its quarterly reports. Other comprehensive income or loss consists of unrealized gains or losses on the Company’s marketable securities, which are comprised of securities of the U.S. government or its agencies, corporate bonds and other asset backed securities.

During the three months and six months ended June 30, 2011 and 2010, total comprehensive income or loss approximated the Company’s net income or loss for the respective period, given that the Company had no significant unrealized gains or losses on marketable securities for any of those periods.

In June 2011, the Financial Accounting Standards Board issued Accounting Standards Update No. 2011-05, “Presentation of Comprehensive Income” (ASU 2011-05). ASU 2011-05 requires comprehensive income to be reported in either a single statement or in two consecutive statements reporting net income and other comprehensive income. ASU 2011-05 eliminates the option to report other comprehensive income and its components in the statement of changes in stockholder’s equity.

Page 9 of 28

The Company has yet to determine which of the two approved methods it will use to report its other comprehensive income. The Company will be required to adopt ASU 2011-05 retroactively effective January 1, 2012 and such adoption is not expected to have a material impact on the Company’s financial position or its results of operations.

Note 2 — Option Agreement with Servier

On June 10, 2011, the Company entered into a new agreement with Servier to sell the Company’s remaining rights to the jointly discovered high impact A MPAKINE compound, CX1632 (S47445). Servier provided an immediate, non-refundable payment of $1,000,000 to the Company for the option to expand its rights to the compound. If Servier exercises the option to acquire sole ownership of the patent rights to CX1632 prior to October 31, 2011, it will pay the Company an additional $2,000,000, as well as certain royalties and milestone payments to the University of California, from whom the Company has licensed rights to the A MPAKINE technology.

During the option period, the Company and Servier remain joint owners of the patents and patent applications relating to CX1632. The Company currently has rights to develop and market CX1632 in all of North America and selected South American countries as well as Australia and New Zealand.

On or before October 31, 2011, Servier may exercise its option to acquire sole ownership of the global patent rights to CX1632, along with a sub-license of the Company’s rights to all indications licensed from the University of California for use with CX1632. Following the exercise of the option, the Company will not be entitled to any royalties or further payments from Servier’s development and commercialization of CX1632. However, the Company will retain all rights for the remaining A MPAKINE technology on a worldwide basis.

Note 3 — Transactions with Biovail

On March 25, 2010, the Company entered into an asset purchase agreement with Biovail Laboratories International SRL (“Biovail”). Pursuant to the asset purchase agreement, Biovail acquired the Company’s interests in CX717, CX1763, CX1942 and the injectable dosage form of CX1739, as well as certain of its other A MPAKINE compounds and related intellectual property for use in the field of respiratory depression or vaso-occlusive crises associated with sickle cell disease. In connection with the transaction, Biovail paid the Company $9,000,000 upon the execution of the asset purchase agreement in March 2010 and an additional $1,000,000 upon completion of the specified transfer plan in September 2010. In addition, the agreement provided the Company with the right to receive up to three milestone payments in an aggregate amount of up to $15,000,000 plus the reimbursement of certain related expenses, each conditioned upon the occurrence of particular events relating to the clinical development of certain assets that Biovail acquired. None of these events have occurred and accordingly, the Company did not record any milestone revenue related to the Biovail transaction.

As part of the transaction, Biovail licensed back to the Company certain exclusive and irrevocable rights to some acquired A MPAKINE compounds, other than CX717, an injectable dosage form of CX1739, CX1763 and CX1942, for use outside of the field of respiratory depression or vaso-occlusive crises associated with sickle cell disease. Accordingly, following the transaction with Biovail, the Company retained its rights to develop and commercialize the non-acquired A MPAKINE compounds as a potential treatment for neurological diseases and psychiatric disorders. Additionally, the Company retained its

Page 10 of 28

rights to develop and commercialize the A MPAKINE compounds as a potential treatment for sleep apnea disorders, including an oral dosage form of A MPAKINE CX1739.

In September 2010, Biovail’s parent corporation, Biovail Corporation, combined with Valeant Pharmaceuticals International in a merger transaction and the combined company was renamed “Valeant Pharmaceuticals International, Inc.” (“Valeant”). Following the merger, Valeant and Biovail conducted a strategic and financial review of its product pipeline and, as a result, in November 2010, Biovail announced its intent to exit from the respiratory depression project acquired from the Company in March 2010.

Following that announcement, the Company entered into discussions with Biovail regarding the future of the respiratory depression project. In March 2011, the Company entered into a new agreement with Biovail to reacquire the A MPAKINE compounds, patents and rights that Biovail acquired from the Company in March 2010. The new agreement includes an upfront payment by Cortex of $200,000 and potential future payments of up to $15,150,000 based upon the achievement of certain development and New Drug Application submission and approval milestones. Biovail is also eligible to receive additional payments of up to $15,000,000 based upon the Company’s net sales of an intravenous dosage form of the compounds for respiratory depression.

The Company has recorded the $200,000 upfront payment to reacquire the respiratory depression project from Biovail as research and development expense during the six months ended June 30, 2011.

At any time following the completion of Phase I clinical studies and prior to the end of Phase IIa clinical studies, Biovail retains an option to co-develop and co-market intravenous dosage forms of an A MPAKINE compound as a treatment for respiratory depression and vaso-occlusive crises associated with sickle cell disease. In such an event, the Company would be reimbursed for certain development expenses to date and Biovail would share in all such future development costs with the Company. If Biovail makes the co-marketing election, the Company would owe no further milestone payments to Biovail and the Company would be eligible to receive a royalty on net sales of the compound by Biovail or its affiliates and licensees.

Note 4 — Convertible Promissory Note

In January 2010, the Company completed a private placement of a convertible promissory note in the principal amount of $1,500,000 with a single accredited institutional investor, Samyang Optics Co., Ltd. (“Samyang”) of Korea. The promissory note accrued simple interest at the rate of 6% per annum and was convertible into unregistered shares of the Company’s common stock at Samyang’s election at any time on or after April 15, 2010 and on or before the January 15, 2011 maturity date.

In June 2010, the promissory note and the related accrued interest were converted by Samyang into a total of 10,445,579 unregistered shares of the Company’s common stock at an effective conversion price of $0.147 per share. The number of common shares issuable upon conversion of the promissory note was based upon the greater of: (i) $0.134 per share or (ii) an amount representing a 15% discount to the five-day volume weighted average closing price of the Company’s common stock immediately prior to the conversion date.

In connection with the conversion of the promissory note, the Company was obligated to issue to Samyang two-year warrants to purchase up to 4,081,633 additional unregistered shares of the Company’s common stock at an exercise price of $0.206 per share. The warrants include a call right, in favor of the

Page 11 of 28

Company, to the extent the weighted average closing price of the Company’s common stock exceeds $0.309 per share for each of ten consecutive trading days, subject to certain circumstances.

Page 12 of 28

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the Financial Statements and Notes relating thereto appearing elsewhere in this report and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” presented in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

Introductory Note

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and we intend that such forward looking statements be subject to the safe harbors created thereby. These forward-looking statements, which may be identified by words including “anticipates,” “believes,” “intends,” “estimates,” “expects,” “plans,” and similar expressions include, but are not limited to, statements regarding (i) future research plans, expenditures and results, (ii) potential collaborative arrangements, (iii) the potential utility of our proposed products and (iv) the need for, and availability of, additional financing.

The forward-looking statements included herein are based on current expectations, which involve a number of risks and uncertainties and assumptions regarding our business and technology. These assumptions involve judgments with respect to, among other things, future scientific, economic and competitive conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in forward-looking statements will be realized and actual results may differ materially. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives or plans will be achieved. We undertake no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events. Readers should carefully review the risk factors described in this and other documents that we file from time to time with the Securities and Exchange Commission, or the SEC, including, without limitation, Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and subsequent Current Reports on Form 8-K.

About Cortex Pharmaceuticals

We are engaged in the discovery and development of innovative pharmaceuticals for the treatment of psychiatric disorders, neurological diseases and sleep apnea. Our primary focus is to develop novel small molecules that positively modulate AMPA-type glutamate receptors, a complex of proteins involved in communication between nerve cells in the mammalian brain. We are developing a family of proprietary pharmaceuticals known as A MPAKINE ^® compounds, which enhance the activity of the AMPA receptor. We believe that A MPAKINE compounds hold promise for the treatment of

Page 13 of 28

neurological and psychiatric diseases and disorders that are known, or thought, to involve depressed functioning of pathways in the brain that use glutamate as a neurotransmitter. Our most advanced clinical compounds are CX717 and CX1739, both of which are in Phase II clinical development.

We previously reported statistically and clinically positive results with CX717 in the treatment of adult patients with Attention Deficit Hyperactivity Disorder, or ADHD, and in the prevention of respiratory depression induced by pain-relieving opiates.

Our A MPAKINE CX1739 is substantially more potent than CX717 in animal studies. CX1739 has successfully completed human Phase I clinical trials and recently completed testing in a Phase II pilot study in the United Kingdom for the treatment of sleep apnea. We believe that the results from the pilot study warrant pursuing a trial to test the response to CX1739 by patients with central sleep apnea, which is often seen in heart failure patients and in chronic opioid users.

Given the positive results previously demonstrated with CX717 in adults with ADHD, with additional financial resources we also plan to initiate a Phase II study with CX1739 as a potential treatment for ADHD.

We are aggressively pursuing patent protection of our technologies. We own or have exclusive rights (within our areas of product development) to more than 25 patent families comprising over 250 issued or allowed U.S. and foreign patents and over 200 additional U.S. patent applications and their international counterparts pending.

In November 2003, a method of use patent for A MPAKINE compounds in the treatment of memory and cognition issued to the University of California by the European Patent Office (“EPO”). Rights to that patent are included in our sublicense to the A MPAKINE technology from the University of California. Following its issuance, oppositions to the patent were filed by Eli Lilly and Company and GlaxoSmithKline. In January 2008, the EPO decided to revoke the patent citing, among other reasons, a filing technicality related to matter added to the original patent application. We subsequently filed a formal appeal of the EPO’s decision, which halted the revocation. The patent was scheduled to expire during 2013 and the legal process related to the appeal continued for most of its remaining life, until we withdrew our appeal in July 2011 and the revocation became effective. Given the patent’s limited life for commercial protection, we do not deem the EPO’s decision for this patent as material to the future of our A MPAKINE technology. The same patent has been issued in the U.S., and remains in force.

Most importantly, we own or have exclusive rights to a large portfolio of composition of matter patents or pending patent applications with much longer patent lives that we believe are fundamental and more critical to our commercial protection worldwide. We have filed several new patents for our A MPAKINE compounds that, if granted, will provide patent protection for our new compounds up to 2028. In April 2011, we announced the receipt of a notice of allowance from the U.S. Patent and Trademark Office (“PTO”) for the patent filed for our lead compound A MPAKINE CX1739 and approximately 80 additional compound structures.

Page 14 of 28

Furthermore, because patent rules and regulations, and burden of proof requirements differ substantially between the U.S. and Europe, specifically in regards to the revocation reason cited by the EPO above, we believe that the decision by the EPO is not likely to impact the patents that have issued in the U.S.

The A MPAKINE platform addresses large potential markets. Our business plan involves partnering with larger pharmaceutical companies for research, development, clinical testing, manufacturing and global marketing of A MPAKINE compounds for those indications that require sizable, expensive Phase III clinical trials and very large sales forces to achieve significant market penetration.

At the same time, subject to availability of sufficient financial resources, we plan to develop compounds internally for a selected set of indications, some of which will allow us to apply for orphan drug status. Such designation by the Food and Drug Administration, or the FDA, is usually applied to products where the number of patients in the United States in the given disease category is typically less than 200,000. These orphan drug indications typically require more modest investment in the development stages, follow a quicker regulatory path to approval, and involve a more concentrated and smaller sales force targeted at selected medical centers and a limited number of medical specialists in the United States and Europe.

In our licensing discussions, we seek to reserve rights that may be viewed as a natural expansion beyond some of the orphan drug uses to selected larger areas of therapy to thereby allow us to potentially further develop our compounds for such larger non-orphan drug indications. If we are successful in the pursuit of this operating strategy, we may be in a position to contain our costs over the next few years, to maintain our focus on the research and early development of novel pharmaceuticals (where we believe that we have the ability to compete) and eventually to participate more fully in the commercial development of A MPAKINE products in the United States.

Critical Accounting Policies and Management Estimates

The SEC defines critical accounting policies as those that are, in management’s view, most important to the portrayal of our financial condition and results of operations and most demanding of our judgment. Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities.

We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. This process forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Page 15 of 28

Revenue Recognition

We recognize revenue when all four of the following criteria are met: (i) pervasive evidence that an arrangement exists; (ii) delivery of the products and/or services has occurred; (iii) the fees earned can be readily determined; and (iv) collectibility of the fees is reasonably assured.

We record research grant revenues as the expenses related to the grant projects are incurred. Amounts received under research grants are nonrefundable, regardless of the success of the underlying research, to the extent that such amounts are expended in accordance with the approved grant project.

Employee Stock Options and Stock-Based Compensation

We measure our share-based compensation cost at the grant date based on the estimated fair value of the award and recognize it as expense over the vesting period. Determining the fair value of share-based awards at the grant date requires judgment in estimating the amount of share-based awards that are expected to forfeit. Additional key input assumptions used to estimate the fair value of share-based awards include the expected option term, the expected volatility of our stock over the option’s expected term, the risk-free interest rate over the option’s expected term and our expected annual dividend yield. If actual results differ significantly from these estimates, stock-based compensation expense and our results of operations could be materially impacted.

Stock options and warrants issued to our consultants and other non-employees as compensation for services to be provided to us are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined. We recognize this expense over the period the services are provided.

Convertible Debt and Equity Instruments

We review the features of our issued financing instruments to determine whether such instruments are appropriately measured and classified as either debt or equity in our financial statements. Generally, instruments that include a provision that may require settlement in cash are recorded as a liability.

The conversion features within our issued convertible instruments are valued separately from the preferred stock or debt securities. We allocate the proceeds received from a financing transaction that includes a convertible instrument to the convertible preferred stock or debt and any detachable instruments, such as warrants, on a relative fair value basis.

The value allocated to the convertible instrument is used to estimate an effective conversion price for the convertible preferred stock or debt, and to measure the intrinsic value, if any, of the conversion feature on the date that we issue the securities.

Page 16 of 28

The above listing is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for our judgment in their application. There are also areas in which our judgment in selecting any available alternative would not produce a materially different result.

Going Concern

Our independent registered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern, in its report for the fiscal year ended December 31, 2010, given that we do not have adequate working capital to finance our day-to-day operations for at least the following twelve month period. Our continued existence depends upon the success of our efforts to raise additional capital necessary to meet our obligations as they become due and to obtain sufficient capital to execute our business plan. We intend to obtain capital primarily through issuances of debt or equity or entering into collaborative arrangements with corporate partners. There can be no assurance that we will be successful in completing additional financing or collaboration transactions. If we cannot obtain adequate funding, we may be required to significantly curtail or even shut down our operations.

Results of Operations

General

In October 2000, we entered into a research collaboration agreement and a license agreement with Servier. The agreements allowed Servier to develop and commercialize select A MPAKINE compounds in defined territories of Europe, Asia the Middle East and certain South American countries as a treatment for (i) declines in cognitive performance associated with aging, (ii) neurodegenerative diseases and (iii) anxiety disorders.

In early December 2006, we terminated the research collaboration with Servier and as a result the worldwide rights for the A MPAKINE technology for the treatment of neurodegenerative diseases were returned to us, other than three compounds selected by Servier for commercialization in its territory. In November 2010, Servier selected a jointly discovered high impact A MPAKINE compound, CX1632 (S47445), to advance into Phase I clinical testing.

In June 2011, our agreements with Servier were amended and restated with an option agreement for the A MPAKINE CX1632. In exchange for an option to expand its rights to the compound, Servier provided us a non-refundable payment of $1,000,000.

During the option period, we and Servier remain joint owners of the patents and patent applications relating to CX1632.We currently have rights to develop and market CX1632 in all of North America and selected South American countries as well as Australia and New Zealand.

On or before October 31, 2011, Servier may exercise its option to acquire sole ownership of the global patent rights to CX1632, along with a sub-license of our rights to all indications licensed from

Page 17 of 28

the University of California for use with CX1632. If Servier exercises the option, it will pay us an additional $2,000,000, as well as certain royalties and milestone payments to the University of California. Following the exercise of the option, we will not be entitled to any royalties or further payments from Servier’s development and commercialization of CX1632. However, we will retain all rights for the remaining A MPAKINE technology on a worldwide basis.

In March 2010, we entered into an asset purchase agreement with Biovail Laboratories International SRL (“Biovail”). Pursuant to the asset purchase agreement, Biovail acquired our interests in CX717, CX1763, CX1942 and the injectable dosage form of CX1739, as well as certain of our other A MPAKINE compounds and related intellectual property for use in the field of respiratory depression or vaso-occlusive crises associated with sickle cell disease. In connection with the transaction, Biovail paid us $9,000,000 upon execution of the asset purchase agreement in March 2010 and an additional $1,000,000 upon completion of the specified transfer plan in September 2010. In addition, the agreement provided us with the right to receive up to three milestone payments in an aggregate amount of up to $15,000,000 plus the reimbursement of certain related expenses, each conditioned upon the occurrence of particular events relating to the clinical development of certain assets that Biovail acquired.

As part of the transaction, Biovail licensed back to us certain exclusive and irrevocable rights to some acquired A MPAKINE compounds, other than CX717, an injectable dosage form of CX1739, CX1763 and CX1942, for use outside of the field of respiratory depression or vaso-occlusive crises associated with sickle cell disease. Accordingly, following the transaction with Biovail, we retained rights for the majority of patented compounds in our A MPAKINE drug library, as well as all rights to the non-acquired A MPAKINE compounds for the treatment of neurological diseases and psychiatric disorders that have historically been a focus of our portfolio. Additionally, we retained our rights to develop and commercialize A MPAKINE compounds as a potential treatment for sleep apnea disorders, including an oral dosage form of CX1739.

In September 2010, Biovail’s parent corporation, Biovail Corporation, combined with Valeant Pharmaceuticals International in a merger transaction and the combined company was renamed “Valeant Pharmaceuticals International, Inc.” (“Valeant”). Following the merger, Valeant and Biovail conducted a strategic and financial review of the product pipeline and, as a result, in November 2010, Biovail announced its intent to exit from the respiratory depression project acquired from us in March 2010.

Following that announcement, we entered into discussions with Biovail regarding the future of the respiratory depression project. In March 2011, we entered into a new agreement with Biovail to reacquire the A MPAKINE compounds, patents and rights that Biovail acquired from us in March 2010. The new agreement included an upfront payment by us of $200,000 and potential future payments of up to $15,150,000 based upon the achievement of certain development and New Drug Application submission and approval milestones. Biovail is also eligible to receive additional payments of up to $15,000,000 based upon our net sales of an intravenous dosage form of the compounds for respiratory depression.

Page 18 of 28

In addition, at any time following the completion of Phase I clinical studies and prior to the end of Phase IIa clinical studies, Biovail retains an option to co-develop and co-market intravenous dosage forms of an A MPAKINE compound as a treatment for respiratory depression and vaso-occlusive crises associated with sickle cell disease. In such an event, we would be reimbursed for certain development expenses to date and Biovail would share in all such future development costs with us. If Biovail makes the co-marketing election, we would owe no further milestone payments to Biovail and we would be eligible to receive a royalty on net sales of the compound by Biovail or its affiliates and licensees.

From inception (February 10, 1987) through the fiscal quarter ended on June 30, 2011, we have sustained losses aggregating approximately $116,048,000. Continuing losses are anticipated over the next several years. During that time, our ongoing operating expenses will only be offset, if at all, by proceeds from research grants and by potential fees from Servier’s exercise of its option to expand its rights to A MPAKINE CX1632. Ongoing operating expenses may also be funded by payments under planned strategic alliances that we are seeking with other pharmaceutical companies for the clinical development, manufacturing and marketing of our products. The nature and timing of payments to us under other planned strategic alliances, if and when entered into, are likely to significantly affect our operations and financing activities and to produce substantial period-to-period fluctuations in reported financial results. Over the longer term, we will be dependent upon the successful introduction of a new product into the North American market from our internal development, as well as the successful commercial development of our products by our prospective partners to attain profitable operations from royalties or other product-based revenues.

Comparison of the Three Months and Six Months ended June 30, 2011 and 2010

For the three months ended June 30, 2011, our net loss of approximately $356,000 compares with a net loss of approximately $2,454,000 for the corresponding prior year period. For the six months ended June 30, 2011, our net loss of approximately $1,912,000 compares with our net income of approximately $3,141,000 for the corresponding prior year period, due primarily to revenues of $9,000,000 during the prior year period from the March 2010 transaction with Biovail, as detailed above.

License revenues for the three and six months ended June 30, 2011 represent the $1,000,000 received under our new option agreement with Servier (See Note 2). Grant revenues for the three and six months ended June 30, 2011 include amounts awarded by the Michael J. Fox Foundation for Parkinson’s Research. The related funding will allow us to test select A MPAKINE compounds for their ability to restore brain function in animal models of Parkinson’s disease.

Our research and development expenses for the three months ended June 30, 2011 decreased to approximately $645,000 from approximately $947,000 for the corresponding prior year quarter, or by 32%, with the most significant decrease due to timing of clinical development expenses.

Our clinical development expenses of approximately $45,000 for the quarter ended June 30, 2011 related to our lead A MPAKINE CX1739, including amounts for our recently completed Phase IIa proof of concept study with the compound in patients with sleep apnea. For the quarter ended June 30, 2010, clinical development expenses of approximately $228,000 included amounts for the sleep

Page 19 of 28

apnea study with CX1739, along with the close-out of our positron emission tomography (PET) scan study with CX717 in patients with Alzheimer’s disease. The CX717 study was closed following the sale of the compound to Biovail in March 2010. As noted above, we subsequently reacquired CX717 in March 2011.

Amounts incurred for our internal research and development costs, including indirect amounts allocated to research and development, and costs for retaining outside experts for consulting and research activities are deemed to benefit the entire A MPAKINE platform rather than specific A MPAKINE compounds.

For the quarter ended June 30, 2011 and 2010, our expenses for research and development personnel, outside experts and consultants approximated $277,000 and $285,000, respectively. For the same periods, costs for laboratory facility and supply expenses were approximately $95,000 and $123,000, respectively, and costs related to the access and protection of our A MPAKINE technology totaled approximately $233,000 and $280,000, respectively.

For the quarter ended June 30, 2011, our non-cash stock compensation charges for research and development amounted to a credit of approximately $5,000 compared to charges of approximately $31,000 for the corresponding prior year period, with the difference reflecting recovered amounts related to previously forfeited options.

For the six months ended June 30, 2011, our research and development expenses decreased to approximately $1,289,000 from approximately $2,570,000 for the corresponding prior year period, or by 50%, with the decrease primarily reflecting sublicensing fees of $910,000 during the prior year period related to the March 2010 transaction with Biovail. Expense for the 2011 period includes the $200,000 payment to reacquire the A MPAKINE rights and compounds from Biovail in March 2011, along with sublicensing fees of $53,000 related to the June 2011 transaction with Servier.

Other costs related to the access and protection of our A MPAKINE technology totaled approximately $296,000 and $399,000 for the six months ended June 30, 2011 and 2010, respectively, with the decrease reflecting the timing of fees for our patent filings. For the same periods, our expenses for research and development personnel, outside experts and consultants approximated $487,000 and $650,000, respectively, with most of the decrease due to a decrease in personnel-related expenses. Costs for laboratory facility and supply expenses were approximately $199,000 and $242,000 for the six months ended June 30, 2011 and 2010, respectively.

For the six months ended June 30, 2011, our non-cash stock compensation charges for research and development amounted to a credit of approximately $35,000 compared to charges of approximately $63,000 for the corresponding prior year period, with the difference reflecting recovered amounts related to previously forfeited options.

Clinical development expenses of $89,000 for the six months ended June 30, 2011 include amounts related to our Phase IIa proof of concept study with A MPAKINE CX1739 in sleep apnea. For the six months ended June 30, 2010, clinical development expenses of $306,000 included amounts for the sleep apnea study, along with amounts incurred for our earlier completed Phase II studies with

Page 20 of 28

A MPAKINE CX717. As stated above, CX717 was sold in our transaction that we completed with Biovail in March 2010 and subsequently reacquired by us in March 2011.

At this time, we are just beginning the clinical development of CX1739 and developing other preclinical backup candidates. Subject to the availability of sufficient finances, as the clinical development of CX1739 expands, our research and development costs are anticipated to increase significantly.

External preclinical and clinical expenses to date through June 30, 2011 for CX717 and CX1739 amounted to approximately $16,000,000 and $4,000,000, respectively.

Our general and administrative expenses for the three months ended June 30, 2011 decreased from approximately $1,023,000 to approximately $804,000, or by 21%, compared to the corresponding prior year period, with the decrease mostly reflecting an increased use of advisory consultants during the prior year period.

For the six months ended June 30, 2011, our general and administrative expenses decreased from approximately $2,731,000 to approximately $1,744,000, or by 36% compared to the six-month period ended June 30, 2010, primarily reflecting legal and investment banking fees during the prior year period related to the March 2010 transaction that we completed with Biovail.

For the three months ended June 30, 2011, our non-cash stock compensation charges within general and administrative expenses decreased from approximately $62,000 to approximately $34,000, or by 45%, relative to the corresponding prior year period. For the six months ended June 30, 2011, these charges decreased from approximately $146,000 to approximately $78,000, or by 47%, relative to the corresponding prior year period, with the decreases for both periods primarily due to the completed vesting schedules of earlier granted stock options.

For the three months ended June 30, 2011, net interest income of approximately $8,000 compares with net interest expense of approximately $485,000 for the prior year quarter. For the six months ended June 30, 2011, net interest income of approximately $11,000 compares with net interest expense of approximately $558,000 for the corresponding prior year period. Net interest expense for the prior year periods includes amounts accruing on our convertible promissory note issued to Samyang, along with amortization of capitalized offering costs and the beneficial conversion feature related to such convertible note transaction.

Accelerated amortization charges for the offering costs and the beneficial conversion feature were recorded upon Samyang’s conversion of the promissory note in June 2010, along with non-cash charges for the allocated value of warrants issued to Samyang upon the note’s conversion. See Note 4 of Notes to Condensed Financial Statements.

Page 21 of 28

Liquidity and Capital Resources

Sources and Uses of Cash

In connection with the new option agreement signed with Servier in June 2011 (see Note 2), we received a non-refundable payment from Servier of $1,000,000. If Servier elects to exercise its option to expand its rights to the jointly discovered A MPAKINE CX1632 on or before October 31, 2011, of which there can be no assurance, Servier has agreed to pay us an additional $2,000,000.

Pursuant to the terms of our transaction with Biovail in March 2010, Biovail paid us $10,000,000 during the year ended December 31, 2010, including $9,000,000 during the six months ended June 30, 2010. Additionally, the March 2010 transaction included rights to receive milestone payments and expense reimbursements from Biovail. However, pursuant to the terms of our March 2011 asset repurchase transaction with Biovail, we are no longer entitled to receive any future milestone payments or expense reimbursements from Biovail. Rather, as disclosed previously in this Quarterly Report on Form 10-Q, as a result of the March 2011 transaction we are obligated to make future payments to Biovail depending upon the occurrence of particular events relating to the clinical development of the repurchased assets.

We also may receive proceeds from the exercise of previously issued warrants to purchase shares of our common stock. The table below summarizes the warrants outstanding as of June 30, 2011 that were issued in connection with prior offerings and placements of our securities. None of the warrants are “in-the-money” as of June 30, 2011 and we can give no assurance that we will receive proceeds from the exercise of any of the outstanding warrants.


Date of Issuance	Exercise Price per Share		Number of Warrants Outstanding as of June 30, 2011	Expiration Date	Approximate Potential Proceeds, if Fully Exercised
January 2007 ⁽¹⁾		$1.66	2,996,927	January 21, 2012	$4,975,000
August 2007 ⁽¹⁾		$2.64	2,830,000	August 28, 2012	$7,471,000
August 2007 ⁽²⁾		$3.96	176,875	August 28, 2012	$700,000
April 2009 ⁽¹⁾		$0.27	6,941,176	October 17, 2012	$1,889,000
April 2009 ⁽²⁾		$0.26	433,824	October 17, 2012	$113,000
July 2009 ⁽¹⁾		$0.27	6,060,470	January 31, 2013	$1,636,000
July 2009 ⁽²⁾		$0.37	606,047	January 31, 2013	$222,000
June 2010 ⁽¹⁾⁽³⁾		$0.21	4,081,633	June 7, 2012	$841,000

⁽¹⁾	Represents warrants issued to the investor(s) in the related transaction.

⁽²⁾	Represents warrants issued to the placement agent(s) in the related transaction.

⁽³⁾	See Note 4 to the Financial Statements.

Warrants outstanding from the January 2007 transaction provide a call right in our favor to the extent that the closing price of our common stock exceeds $3.35 per share for 13 consecutive trading days, subject to certain circumstances.

Page 22 of 28

Similarly, subject to certain circumstances, the warrants issued to the investor in the April 2009 and July 2009 transactions provide a call right in our favor to the extent that the closing price of our common stock exceeds $0.68 per share and $0.54 per share, respectively, for 20 consecutive trading days. Warrants issued to the placement agent for the April 2009 and July 2009 transactions provide a call right in our favor to the extent that the closing price of our common stock exceeds $0.52 per share and $0.54 per share, respectively, for 20 consecutive trading days, subject to certain circumstances.

Warrants issued to Samyang in connection with the conversion of its promissory note in June 2010 provide a call right in our favor to the extent that the weighted average closing price of our common stock exceeds $0.309 per share for each of ten consecutive trading days, subject to certain circumstances.

Warrants detailed above with issuance dates between January 2007 and June 2009 may be settled by a cashless exercise. In such an event, the holder of the warrants would receive a number of unregistered shares representing the gain on exercise of such warrants, divided by the volume weighted average price of the Company’s common stock on the trading day immediately preceding such exercise.

As of June 30, 2011, we had cash and cash equivalents totaling approximately $1,420,000 and working capital of approximately $294,000. In comparison, as of December 31, 2010, we had cash, cash equivalents and marketable securities of approximately $3,031,000 and working capital of approximately $2,120,000. The decreases in cash and working capital reflect amounts required to fund our operations.

For the six months ended June 30, 2011, net cash used in operating activities was approximately $1,621,000, and included our net loss for the period of approximately $1,912,000, adjusted for non-cash expenses for depreciation and stock compensation approximating $93,000, and changes in operating assets and liabilities. Net cash provided by operating activities was approximately $3,478,000 for the six months ended June 30, 2010 and included our net income for the period of approximately $3,141,000, adjusted for non-cash expenses for depreciation, amortization and stock compensation approximating $783,000, and changes in operating assets and liabilities.

For the six months ended June 30, 2011, net cash provided by investing activities approximated $2,003,000 and primarily represented the proceeds from the maturity of marketable securities. Net cash used in investing activities for the six months ended June 30, 2010 approximated $2,615,000 and primarily represented the purchases of marketable securities, partially offset by the proceeds from the sale of fixed assets.

There was no cash provided by or used in financing activities for the six months ended June 30, 2011. Net cash provided by financing activities approximated $1,472,000 during the six months ended June 30, 2010 and resulted from our private placement of a convertible promissory note in January 2010.

Page 23 of 28

Commitments

We lease approximately 32,000 square feet of research laboratory, office and expansion space under an operating lease that expires May 31, 2012. The commitments under the lease agreement for the remaining six months of the year ending December 31, 2011 and the five months ending May 31, 2012 are approximately $299,000 and $249,000, respectively.

In addition to amounts reflected on the balance sheet as of June 30, 2011, our remaining commitments for preclinical and clinical studies amount to approximately $196,000.

In June 2000, we received approximately $247,000 from the Institute for the Study of Aging, or the Institute, a non-profit foundation supported by the Estee Lauder Trust. The advance partially offset our limited costs for our testing in patients with mild cognitive impairment that we conducted with our partner, Servier. Provided that we comply with the conditions of the funding agreement, including the restricted use of the amounts received, repayment of the advance has been extended until we enter an A MPAKINE compound into Phase III clinical trials for Alzheimer’s disease. Upon such potential clinical trials, repayment would include interest computed at a rate equal to one-half of the prime lending rate. In lieu of cash, in the event of repayment the Institute may elect to receive the balance of outstanding principal and accrued interest as shares of our common stock. The conversion price for such form of repayment shall initially equal $4.50 per share, subject to adjustment under certain circumstances.

Staffing

As of June 30, 2011, we had 11 full-time employees. Following our reduction in force in August 2011, we have six full-time employees and believe that our remaining number of employees will be sufficient to meet our personnel requirements. We do not anticipate significant increases in the number of our full-time employees within the coming year.

Outlook

We believe that we have adequate financial resources to conduct our operations into the fourth quarter of 2011. Our forecast of the period of time through which our financial resources will be adequate to support our operations is forward-looking information, and actual results could vary.

Our ongoing cash requirements will depend on numerous factors, particularly the progress of our clinical trials involving CX1739 and our ability to negotiate and complete collaborative agreements or out-licensing arrangements. In order to help fund our on-going operating cash requirements, we intend to seek new collaborations for our “low impact” and “high impact” A MPAKINE programs that include initial cash payments and on-going development support. We may also seek to raise additional funds and explore other strategic and financial alternatives, such as a merger or sale of assets transaction.

There are significant uncertainties as to our ability to access potential sources of capital. We may not be able to enter into any collaboration on terms acceptable to us, or at all, due to conditions in the pharmaceutical industry or in the economy in general. Competition for such arrangements is intense, with a large number of biopharmaceutical companies attempting to secure alliances with more established pharmaceutical companies. Although we have been engaged in discussions with

Page 24 of 28

candidate companies, there is no assurance that an agreement or agreements will arise from these discussions in a timely manner, or at all, or that revenues that may be generated thereby will offset operating expenses sufficiently to reduce our short-term funding requirements.

Even if we are successful in obtaining a collaboration for our A MPAKINE program, we may have to relinquish rights to technologies, product candidates or markets that we might otherwise seek to develop ourselves. These same risks apply to any attempt to out-license our compounds.

Similarly, due to market conditions and other possible limitations on equity offerings, we may not be able to sell additional securities or raise other funds on terms acceptable to us, if at all. Any additional equity financing, if available, would likely result in substantial dilution to existing stockholders.

Additional Risks and Uncertainties

Our proposed products are in the preclinical or early clinical stage of development and will require significant further research, development, clinical testing and regulatory clearances. They are subject to the risks of failure inherent in the development of products based on innovative technologies. These risks include, but are not limited to, the possibilities that any or all of the proposed products will be found to be ineffective or unsafe, or otherwise fail to receive necessary regulatory clearances; that the proposed products, although effective, will be uneconomical to market; that third parties may now or in the future hold proprietary rights that preclude us from marketing them; or that third parties will market superior or equivalent products. Accordingly, we are unable to predict whether our research and development activities will result in any commercially viable products or applications. Further, due to the extended testing and regulatory review process required before marketing clearance can be obtained, we do not expect to be able to commercialize any therapeutic drug for at least four years, either directly or through our current or prospective partners or licensees. There can be no assurance that our proposed products will prove to be safe or effective or receive regulatory approvals that are required for commercial sale.

Off-Balance Sheet Arrangements

We have not engaged in any “off-balance sheet arrangements” within the meaning of Item 303(a)(4)(ii) of Regulation S-K.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to certain market risks associated with interest rate fluctuations on our advance from the Institute for the Study of Aging, which is due when we enter an A MPAKINE compound into Phase III clinical testing as a potential treatment for Alzheimer’s disease. Potential repayment would include interest accruing at a rate equal to one-half of the prime lending rate. Changes in interest rates generally affect the fair value of such debt, but, based upon historical activity, such changes are not expected to have a material impact on earnings or cash flows. As of June 30, 2011, the principal and accrued interest of the advance amounted to approximately $322,000.

Page 25 of 28

We are not subject to significant risks from currency rate fluctuations as we typically conduct a limited number of transactions in foreign currencies. In addition, we do not utilize hedging contracts or similar instruments.

Item 4.

Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer, or the CEO, and Chief Financial Officer, or the CFO, as appropriate, to allow timely decisions regarding required disclosure.

We performed an evaluation, under the supervision and with the participation of our management, including the CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report, pursuant to Rules 13a-15(b) and 15d-15(b) under the Exchange Act. Based upon that evaluation, the CEO and CFO have concluded that our disclosure controls and procedures, as of the end of the period covered by this report, were effective in timely alerting them to material information required to be included in our periodic filings under the Exchange Act.

There has been no change in our internal control over financial reporting (as defined in Rules 13(a)-15(f) and 15(d)-15(f) under the Exchange Act) during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

Our management, including our CEO and CFO, does not expect that our disclosure controls and internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.

The design of any system of controls is also based in part upon certain assumptions about the 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, a control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may

Page 26 of 28

deteriorate. Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II. OTHER INFORMATION

Item 6.

Exhibits

Exhibits



10.125		Patent Assignment and Option and Amended and Restated Agreement, dated June 10, 2011, by and between the Company and Servier. (Portions of this Exhibit are omitted and were filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934)

31.1		Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.

31.2		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.

32		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.

101.INS		XBRL Instance Document.*

101.SCH		XBRL Taxonomy Extension Schema Document.*

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.*

101.LAB		XBRL Taxonomy Extension Label Linkbase Document.*

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.*

*	The XBRL information is being furnished and not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any registration statement under the Securities Act of 1933, as amended.

Page 27 of 28

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	CORTEX PHARMACEUTICALS, INC.

August 18, 2011	By:	/s/ M ARIA S. M ESSINGER
		Maria S. Messinger
		Vice President and Chief Financial Officer; Corporate Secretary (Authorized Signer and Chief Accounting Officer)

Page 28 of 28

Exhibit 10.125

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT MARKED WITH [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

EXECUTION COPY


		PATENT ASSIGNMENT AND OPTION AND AMENDED
		AND RESTATED AGREEMENT

This Agreement (the “Amended and Restated Agreement”) entered into as of June 10,

2011 (the “Effective Date”)

is made between:

CORTEX PHARMACEUTICALS, Inc

Having its principal office at

15241 Barranca Parkway

Irvine, California

USA

(hereinafter “Cortex”)

on one part,

AND

LES LABORATOIRES SERVIER

A corporation duly organized and registered under the laws of France

having its principal office at

22 Rue Garnier

92200 Neuilly Sur Seine

FRANCE

(hereinafter “LLS”)

on the other part,

Page 1 of 26

RECITALS

WHEREAS, Cortex and Adir et Compagnie have entered into a Licensing Agreement dated October 13, 2000, (the “Prior Agreement”) under which Cortex has granted to Adir et Compagnie certain license rights.

WHEREAS, Adir et Compagnie has been merged into its parent company Les Laboratoires Servier (“LLS”) on August 31 ^st , 2001.

WHEREAS, Cortex and LLS wish to restructure their relationship to terminate and supersede the Prior Agreement with this Amended and Restated Agreement so that (i) LLS will own all rights to the composition of matter patents for CX1632 (as described in more detail below), (ii) LLS will have a worldwide, royalty-bearing sublicense with respect to products containing CX1632 to the method of use patents licensed by Cortex from The Regents of the University of California, and (iii) LLS will have a worldwide, fully-paid license to Cortex Know-How with respect to products containing CX1632.

NOW THEREFORE IN CONSIDERATION of the premises and of the covenants herein contained, the parties hereto mutually agree as follows.

1. DEFINITIONS

For the purposes of this Amended and Restated Agreement, the terms defined in this Amended and Restated Agreement shall have the meanings specified below:

1.1 “ Affiliate ” shall mean any corporation or other entity which controls, is controlled by, or is under common control with a Party to this Amended and Restated Agreement. A corporation or other entity shall be regarded as in control of or controlled by another corporation or entity if it owns or directly or indirectly controls more than fifty percent (50%) of the voting stock or other ownership interest of the other corporation or entity, or if it possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the corporation or other entity or the power to elect or appoint fifty percent (50%) or more of the members of the governing body of the corporation or other entity. For the purposes of this Amended and Restated Agreement, any Affiliate of a Party during the pendency of the Prior Agreement shall be deemed to be an Affiliate hereunder.

1.2 “ Assigned Cortex Patent Rights ” shall mean all (a) rights of Cortex as a joint owner of the patents and patent applications relating to CX1632 as more fully described in Schedule 1 hereto, and all (b) continuations, continuations in part, divisionals and substitute applications with respect to any such patents and patent applications; (c) any patents issued based on or claiming priority to any such patents and patent applications; (d) any reissue, reexamination, renewal or extension (including any supplemental patent certificate) of any such patents and patent applications; and (e) any confirmation patent or registration patent or patent of addition based on any such patents and patent applications.

Page 2 of 26

1.3 “ Business Day ” shall mean a day other than a Saturday, Sunday or on which commercial banks in the city of Los Angeles, California or Paris, France are authorized or required by law to be closed.

1.4 “ Customer ” shall mean any Third Party, other than a sublicensee of LLS, to whom LLS supplies the Pharmaceutical Specialty.

1.5 “ Cortex Know-How ” shall mean all trade secrets, know-how, data, and other intellectual property or proprietary or confidential information of any kind, owned or controlled by Cortex or its Affiliates as of the date of the Effective Date, which is necessary or useful for the development, manufacture, use or sale of the Pharmaceutical Specialty. Cortex Know-How does not include any rights of a Third Party in-licensed to Cortex, other than the University License Rights.

1.6 “ CX1632 ” shall mean [***].

1.7 “ Field ” shall mean the use of CX1632 in humans.

1.8 “ First Commercial Sale ” of any Pharmaceutical Specialty shall mean the first sale for administration to human patients of such Pharmaceutical Specialty in a country after all required marketing approvals (including marketing authorization) by the applicable regulatory authorities in such country.

1.9 “ Net Sales ” with respect to any Pharmaceutical Specialty covered by at last one Valid Claim shall mean the invoiced sales of all such Pharmaceutical Specialties billed to Customers by LLS, its Affiliates, its sublicensees, its joint venture partners or its co-promoters, less the following items as applicable to such Pharmaceutical Specialty: (a) credits or allowances granted upon returns, rejections or recalls; (b) freight, shipping and insurance costs; (c) quantity and other trade or cash discounts, credits or allowances actually allowed and taken; (d) customs duties, taxes and surcharges and other governmental charges excluding VAT or income tax incurred in connection with exportation or importation; (e) bad debts directly related to the sale of Pharmaceutical Specialties, but not to exceed nine-tenths of one percent (0.9%) and (f) government mandated rebates and other type of refunds. The transfer of any Pharmaceutical Specialty by LLS or one of its Affiliates to another Affiliate or sub-licensee of LLS shall not be considered a sale; in such cases, Net Sales shall be determined based on the invoiced sales price by the Affiliate or sub-licensee to its Customer, less the deductions allowed under this Article.

1.10 “ Party ” shall mean Cortex or LLS.

1.11 “ Parties ” shall mean Cortex and LLS.

[***]: CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.

Page 3 of 26

1.12 “ Pharmaceutical Specialty ” shall mean any composition for administration to human subjects containing CX1632 as a pharmaceutically active ingredient for use in the Field.

1.13 “ Quarter ” means each calendar quarter commencing on January 1, April 1, July 1, and October 1.

1.14 “ Territory ” shall mean the world.

1.15 “ Third Party ” shall mean any entity other than Cortex or LLS and their respective Affiliates.

1.16 “ University ” shall mean The Regents of the University of California.

1.17 “ University License Rights ” shall mean the patent rights granted to Cortex under the University Licenses as listed on Schedule 2 .

1.18 “ University Licenses ” shall mean those License Agreements listed on Schedule 3 .

1.19 “ Valid Claim ” shall mean an issued and unexpired claim in a patent included in the University License Rights covering the use, marketing, or sale of the Pharmaceutical Specialty in the Territory.

2. LICENSE GRANTS, ASSIGNMENT OPTION

2.1 License of Cortex Know-How . Cortex hereby grants to LLS a perpetual, royalty-free, fully-paid up, exclusive (even as to Cortex) license (with the right to sublicense) to use the Cortex Know How inside the Field, including to develop, have developed, manufacture, have manufactured, use, commercialize, have commercialized, distribute and have distributed for sale and sell Pharmaceutical Specialties in the Territory limited specifically to use with CX1632 or combination products which include CX1632. LLS shall have no rights to the Cortex Know-How for use with any compound other than CX1632, other than in connection with a combination product containing CX1632 as an active pharmaceutical ingredient and other compound(s), which other compound(s) is not a modulator of the AMPA receptor.

2.2 Option To Sublicense University License Rights . Cortex hereby grants to LLS an option between the Effective Date and October 31, 2011 (the “Option Period”), exercisable upon written notice from LLS, to a royalty-bearing, exclusive (even as to Cortex) sublicense (with the right to further sublicense) to use the University License Rights inside the Field, including to further develop, have developed, manufacture, have manufactured, use, commercialize, have commercialized, distribute or have distributed for sale and sell Pharmaceutical Specialties in the Territory. Under such sublicense, LLS shall have no rights to the University License Rights for use with any compound other than CX1632, other than in connection with a combination product containing CX1632 as an active pharmaceutical ingredient and other compound(s), which other compound(s) is not covered by the University License Rights. LLS shall notify Cortex of any further sublicense of the rights granted under such sublicense to a non-Affiliate of LLS within

Page 4 of 26

thirty (30) days of entering into such sublicense. LLS acknowledges that its rights under such sublicense are subject to obligations and restrictions under the University Licenses, including without limitation, those imposed by 35 §§ USC 200-212.

2.3 Option For Assignment of Assigned Cortex Patent Rights . Cortex hereby grants to LLS an exclusive option during the Option Period , exercisable upon written notice from LLS, to acquire all right, title and interest in and to the Assigned Cortex Patent Rights. Within five days of receipt of written notice from LLS evidencing LLS’s desire to both sublicense University License Rights inside the Field and to purchase the Assigned Cortex Patent Rights, Cortex shall (i) invoice LLS in the amount of US $2,000,000 (the “ Purchase Price ”) in full consideration for the exercise of both options and the assignment of the Assigned Cortex Patent Rights, and (ii) deliver to LLS an executed recordable Assignment, in the form attached as Exhibit A . LLS shall pay the Purchase Price within [***] Business Days of receipt of the invoice. Cortex further agrees to, at any time, execute such other documents as reasonably requested by LLS to evidence and/or perfect LLS’s ownership of the Assigned Cortex Patent Rights. If Cortex does not, within fifteen (15) days of presentment or request from LLS, return such other documents requested by LLS to be executed by Cortex, then LLS is hereby granted a limited power of attorney to execute all such documents and perform all such acts on behalf of Cortex. This power of attorney is coupled with an interest and is irrevocable. Following the assignment set forth in this Section 2.3, LLS shall be responsible for all costs related to the prosecution, maintenance and defense of the Assigned Cortex Patent Rights.

2.4 Covenant Not to Sue . Cortex hereby waives (and shall cause its successors and assigns to waive,) any right, remedy or cause of action against LLS, its successors, assigns, licensees, and contractors, etc., for infringement of any patent rights claiming the composition of matter of CX1632 (and only to the extent of the composition of matter of CX1632 and not other compounds which may be covered by such patent rights) that it may have, in connection with the development, manufacture, use, commercialization, distribution and sale of Pharmaceutical Specialties in the Territory.

2.5 Non-Exercise of Option. In the event LLS does not concurrently exercise both options mentioned in Section 2,2 and 2.3, the rights granted to LLS as per the terms of Section 2.1 shall automatically terminate on October 31, 2011.

3. PAYMENTS

3.1 Initial Payment . Within [ *** ] Business Days following receipt of a valid invoice from Cortex (which may be provided to LLS on the Effective Date), LLS shall pay to Cortex US $1,000,000 as consideration for (i) the perpetual Know-How license set forth in Section 2.1, above, (ii) the option to the sublicense rights with respect to the University License Rights set forth in Section 2.2, above, and (iii) the option for the Assignment of Cortex Patent Rights as set forth in Section 2.3, above. Such amount shall be paid by

[***]: CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.

Page 5 of 26

wire transfer of immediately available funds to the account designated by Cortex. Such amount shall be non-refundable whether or not LLS exercises the option.

3.2 Milestone Payments . In the event that LLS has knowledge that Cortex becomes obligated under the University Licenses to pay any milestone payment as a result of the actions of LLS, LLS shall promptly notify Cortex (but not more than thirty (30) days after achievement of such milestone event or its becoming aware of the obligation of the milestone, whichever is later) and Cortex shall provide to LLS a valid invoice for the relevant amount due (described below). Within [***] ([***]) Business Days following such valid invoice, LLS shall submit the amount due to the University to Cortex. Such milestone payments are as follows:

3.2.1 US $[***] upon entering Phase III clinical studies (i.e., the first dose of a patient in a Phase III clinical trial) or equivalent foreign regulatory benchmark.

3.2.2 US $[***] upon filing a New Drug Application with the U.S. Food and Drug Administration or upon submission of an equivalent foreign regulatory application.

3.2.3 US $[***] upon receiving market approval of New Drug Application from the U.S. Food and Drug Administration or equivalent foreign regulatory market approval.

3.3 Royalties on Net Sales . In consideration of any sublicenses granted to LLS pursuant to the option set forth in Section 2.2 hereof for the use of the University License Rights, LLS shall pay Cortex a running royalty of [***] percent ([***]%) on Net Sales, on a country by country basis, of Pharmaceutical Specialties. LLS’s obligation to pay royalties shall expire and any sublicenses granted by Cortex to LLS shall become fully paid on a country-by-country basis with respect to a patent upon the expiration of such patent included in the University Licenses, it being understood that royalty obligations shall continue in any country until the expiration of the last Valid Claim in such country.

3.3.1 Royalty Reports, Exchange Rates . During the term of this Amended and Restated Agreement, following the First Commercial Sale of a Pharmaceutical Specialty in each country by LLS, LLS shall furnish to Cortex written quarterly reports showing, on a country by country basis: (i) the gross sales of all Pharmaceutical Specialties sold by LLS and its Affiliates and its sublicensees during the reporting period and the calculation of Net Sales from such gross sales; (ii) the royalties and other payments payable in United States dollars which shall have accrued hereunder in respect of such sales; (iii) withholding taxes, if any, required by law to be deducted in respect of such sales, as applicable; (iv) the dates of the First Commercial Sales of any Pharmaceutical Specialties in each country by LLS and its Affiliates and its sublicensees during the reporting period; and (v) the exchange rates used in determining the amount of Euros and United States dollars, as applicable. All amounts payable will first be calculated in the currency of sale and then, other than for sales in the United States, converted into Euros using the monthly average of daily rates of exchange published by the European Central Bank for the monthly period covering such Net Sales, which consolidated amount shall

[***]: CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.

Page 6 of 26

be converted into United States dollars at the exchange rate reported in the Wall Street Journal for the last day of the reporting period to which the payment relates. Reports together with the royalty payable for the periods to which the reports relate shall be due on the [***] ([***]) day following the close of each Quarter. If no royalty is due for any royalty period hereunder, LLS shall so report. All reports delivered hereunder shall be deemed confidential information of LLS, and Cortex agrees to protect the confidentiality of such reports to the same extent and in at least the same manner as Cortex protects its own confidential or proprietary information. LLS shall keep complete and accurate records in sufficient detail to properly reflect all gross sales and Net Sales and to enable the royalties payable hereunder to be determined. Any disagreement as to the outcome of the audit referred to in this Section 3.3.1 shall be subject to the provisions of Section 8.6.

3.3.2 Audits . Upon the written request of Cortex at least ten (10) days prior to the requested access date, LLS shall permit an independent public accountant selected by Cortex and acceptable to LLS to have access during normal business hours of LLS to such of the records of LLS as may be reasonably necessary to verify the accuracy of the royalty reports hereunder in respect of any fiscal year ending not more than [***] ([***]) years prior to the date of such request. All such verifications shall be conducted at the expense of Cortex and shall occur not more than once in each calendar year. In the event such accountant concludes that additional royalties were owed during such period, Cortex shall provide LLS with a written report showing the calculation of the amounts due by LLS, and the additional royalty shall be paid within [***] ([***]) days of the date Cortex delivers to LLS such report. The fees charged by such accountant shall be paid by Cortex unless the audit discloses that the royalties payable by LLS for the audited period are more than [***] percent ([***]%) of the royalties actually paid for such period, in which case LLS shall pay the reasonable fees and expenses charged by the accountant. Any disagreement as to the outcome of the audit referred to in this Section 3.3.2 shall be subject to the provisions of Section 8.6.

3.3.3 Sublicense Terms . LLS shall include in each sublicense granted by it pursuant to this Amended and Restated Agreement a provision requiring the sublicensee to make reports to LLS, to keep and maintain records of sales made pursuant to such sublicense and to grant access to such records by Cortex’s independent accountant to the same extent required of LLS under this Amended and Restated Agreement. Upon the expiration of [***] ([***]) years following the end of any calendar year, the calculation of royalties payable with respect to such year shall be binding and conclusive upon Cortex; and LLS and its sublicensees shall be released from any liability or accountability with respect to royalties for such year.

Cortex agrees that all information subject to review under this Article 3.3. or under any sublicense agreement is confidential and that it shall cause its accountant to retain all such information in confidence.

[***]: CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.

Page 7 of 26

3.3.4 Royalty Payment Terms . Royalties shown to have accrued by each royalty report provided for under this Amended and Restated Agreement shall be due and payable from the date such royalty report is due. Payment of royalties in whole or in part may be made in advance of such due date. Royalties determined to be owing, and any overpayments to be credited, with respect to any prior quarter shall be added, or credited, as the case may be, together with interest thereon accruing under this Amended and Restated Agreement from the date of the report for the quarter for which such amounts are owing, to the next quarterly payment hereunder.

3.4 Option Exercise Payment . Upon exercise of both options, Cortex shall invoice Servier for the Purchase Price. Within [***] ([***]) Business Days of receipt, LLS shall pay the $2,000,000 Purchase Price as set forth in Section 2.3, above. Such amount shall be paid by wire transfer of immediately available funds to the account designated by Cortex.

3.5 Withholding of Taxes . Any withholding of taxes levied by tax authorities outside the United States on the payments hereunder shall be borne by Cortex and deducted by LLS from the sums otherwise payable by it hereunder for payment to the proper tax authorities on behalf of Cortex. LLS agrees to cooperate with Cortex in the event Cortex claims exemption from such withholding or seeks deductions under any double taxation or other similar treaty or agreement from time to time in force, such cooperation to consist of providing receipts of payment of such withheld tax or other documents reasonably available to LLS. If in the opinion of either Party the provisions of this Section 3.5 become unduly burdensome, the Parties agree to meet and discuss such other options as may be available to them.

3.6 Interest on Late Payments . Any payments by LLS that are not paid within a period of [***] ([***]) days (grace period) following the date such payments are due under this Amended and Restated Agreement shall bear interest, to the extent permitted by applicable law, at an annual rate equal to one (1) month LIBOR plus [***] percent ([***]%) per annum.

3.7 Assignment of Payments and Related Report to the University . Upon written notice from Cortex to LLS, Cortex may assign its rights to payments under Section 3.2, 3.3 and 3.5 to the University. In such event, (i) LLS shall make such payments directly to the University, (ii) LLS shall provide all reports due under Article 3 and Article 4 to the University, and (iii) Cortex shall use reasonable efforts to enable LLS to become a direct licensee of the University upon the terms and conditions set forth in this Amended and Restated Agreement.

4. PROGRESS REPORTS

4.1 Progress Reports . LLS shall prepare and deliver to Cortex semi-annual progress reports in sufficient detail to allow Cortex to meet its obligations to the University under the University Licenses. The reports shall be deemed confidential information of LLS,

[***]: CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.

Page 8 of 26

and Cortex agrees to protect the confidentiality of such reports to the same extent and in at least the same manner as Cortex protects its own confidential or proprietary information, and Cortex shall not use any information contained in such reports other than in order to fulfill its obligations under the University Licenses.

5. REPRESENTATIONS AND WARRANTIES, INTELLECTUAL PROPERTY MATTERS

5.1 Authorization . Each Party represents and warrants to the other that it has the legal right and power to enter into this Amended and Restated Agreement, to extend the rights and licenses granted or to be granted to the other in this Amended and Restated Agreement, and to fully perform its obligations hereunder, and that it has not made nor will it make any commitments to others in conflict with or in derogation of such rights or this Amended and Restated Agreement. Except as otherwise disclosed, each Party further represents to the other that it is not aware of any legal obstacles, including, patent rights of others, which could prevent it from carrying out its obligations under this Amended and Restated Agreement. The execution, delivery and performance of this Amended and Restated Agreement by and compliance with the terms of this Amended and Restated Agreement by either Party does not and will not conflict with or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of any benefit under, or to increased, additional or accelerated rights or entitlements of any Third Party under, any provision of (1) any formation, organizational or governance documents of a Party; (2) any material contract to which a Party is party or (3) any judgment or applicable law.

5.2 Cortex Intellectual Property Representations and Warranties .

5.2.1 Assigned Patent Rights, Cortex Know-How . Cortex represents and warrants that it is and shall during the entirety of the Option Period be the sole and exclusive owner of its right, title and interest in and to the Assigned Cortex Patent Rights (subject to LLS’s joint ownership thereof and subject to Cortex’s right to assign this Agreement in accordance with Section 8.2). Cortex represents and warrants that it is the sole and exclusive owner of all right, title and interest in and to the Cortex Know-How. Cortex represents and warrants that, as of the Effective Date and throughout the entire Option Period, the Assigned Cortex Patent Rights and the Cortex Know-How (to the extent licensed hereunder) are free of all encumbrances, including, without limitation, liens, licenses, judgments and/or security interests in the Field, and that all patents and patent applications included in the Assigned Cortex Patent Rights are in full force and effect as of the date hereof of this Amended and Restated Agreement and that none of the Assigned Cortex Patent Rights are the current subject of any interference or opposition proceeding. Cortex agrees, throughout the entirety of the Option Period, to diligently continue the prosecution and maintain in full force and effect and not encumber or allow any encumbrance on, the Assigned Cortex Patent Rights. Cortex acknowledges and agrees that the foregoing warranty and covenant is a material inducement for LLS to enter into this Agreement.

Page 9 of 26

5.2.2 Litigation . Cortex represents and warrants that as of the Effective Date there is no pending, or, to its knowledge, threatened, litigation that would or might adversely affect its right and ability to assign the Assigned Cortex Patent Rights and grant the licenses and sub-licenses and to perform its obligations, or LLS’s ability to exercise its rights, under this Amended and Restated Agreement.

5.3 Infringement by Third Parties .

5.3.1 Notices . Cortex and LLS agree to promptly notify the other in writing of any actual alleged or threatened infringement of the University License Rights and/or Cortex Know-How of which they become aware. Subject to the provisions of Sections 5.3.2 and 5.3.3, below, Cortex and LLS shall then confer and endeavor to reach agreement of who either of LLS or Cortex shall initiate action to prevent, end or prosecute any such infringement.

5.3.2 Infringement not Involving CX1632 . If the Parties do not agree, and the infringement does not also involve infringement of LLS’s rights in CX1632 composition of matter patents, then Cortex shall have the right to enforce such patent rights, and if Cortex does not proceed with enforcement activity within (i) [***] ([***]) days following the notice of alleged infringement or (ii) [***] ([***]) Business Days before the time limit, if any, set forth in the appropriate laws and regulations for the filing of such actions, whichever comes first, then LLS may commence litigation within an additional [***] ([***]) day period with respect to the alleged or threatened infringement at its own expense.

5.3.3 Infringement Involving CX1632 . If the infringement involves infringement of LLS’s rights in CX1632 composition of matter patents, LLS shall have the first right to proceed with enforcement activity. If LLS does not proceed with enforcement activity within (i) [***] ([***]) days following the notice of alleged infringement or (ii) [***] ([***]) Business Days before the time limit, if any, set forth in the appropriate laws and regulations for the filing of such actions, whichever comes first, then Cortex may commence litigation within an additional [***] ([***]) day period with respect to the alleged or threatened infringement at its own expense. In the event that LLS does not commence litigation, Cortex may do so.

5.3.4 Cooperation, University Rights, Settlement . In the event a Party brings an infringement action, the other Party shall cooperate fully, including, if required to bring such action, joining such action or the furnishing of a power of attorney. The rights of the Parties under this Article shall be subject to the rights of the University under the University Licenses. Neither Party shall have the right to settle any patent infringement litigation under this Article in a manner that diminishes the rights or interests of the other Party without the express written consent of such other Party, such consent not to be unreasonably withheld or delayed.

[***]: CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.

Page 10 of 26

5.4 Alleged Infringement by LLS . In case of any Third Party claims against LLS resulting from the use by LLS of the University License Rights or Cortex Know-How in accordance with this Amended and Restated Agreement, LLS agrees to promptly notify Cortex, and the Parties shall then confer and endeavor to reach an agreement on who either of LLS or Cortex shall defend LLS against such Third Party claim, provided, however, that LLS shall in any event have the right to defend any such Third Party claim. The foregoing shall be subject to the rights of the University under the University Licenses. It is understood and agreed that LLS shall not settle such Third Party claims which would have a negative impact on Cortex’s rights outside the Field without Cortex’s prior approval, which shall not be unreasonably withheld (it being understood that if Cortex withholds consent to a proposed settlement and LLS’s rights are prejudiced or LLS otherwise must pay any amount or settle any additional claim, then Cortex shall defend, indemnify and hold harmless LLS from all such reasonable related claims, costs and expenses).

5.5 Sufficiency . The Assigned Cortex Patent Rights, the Cortex Know-How and the University License Rights constitute all of the rights held by Cortex or its Affiliates as of the Effective Date (other than rights in-licensed from third parties other than the University) which are necessary or useful in connection with the making, using or selling of the Pharmaceutical Specialty.

5.6 Prosecution and Maintenance of University License Rights . LLS acknowledges that under the University Licenses, Cortex has the right to oversee and guide the prosecution and maintenance of the patent rights granted to Cortex in the University Licenses, at Cortex’s expense. Cortex agrees to keep LLS reasonably informed of the status of such patent rights. Cortex further agrees not to instruct the University to terminate or modify such patent rights in a manner adverse to LLS’s interests without informing LLS at least thirty (30) days prior to any deadline implementing such termination or modification. If LLS does not agree to such termination or modification, it may, at its expense, instruct Cortex to not undertake or permit such termination or modification.

5.7 Maintenance of Confidential Information . Cortex represents and warrants that it has taken all reasonable and necessary steps to protect the Cortex confidential information contained in the Assigned Cortex Patent Rights, Cortex Know-How and University License Rights.

5.8 Cortex License Representation and Warranties .

5.8.1 License Agreements . Cortex represents and warrants that as of the Effective Date all licenses with University for University License Rights are set forth in Schedule 2 (“University Licenses”), and that true and correct copies of such University Licenses have been provided to LLS.

5.8.2 Effectiveness, Maintenance . Cortex represents and warrants that as of the Effective Date all University Licenses are in full force and effect and neither Cortex, or to Cortex’s knowledge, the other party, is in breach thereof. During the term of this

Page 11 of 26

Amended and Restated Agreement, Cortex shall maintain and procure the maintenance of all such University Licenses in full force and effect as of the Effective Date as is necessary to provide LLS the rights initially granted and granted hereunder, including, without limitation, fulfilling all its obligations thereunder and refraining from any acts which may give rise to a termination of any University License. Cortex shall provide LLS with prompt written notice of any changes to or breaches of the University Licenses. In no event shall Cortex permit a modification, amendment or other change to any University Licenses which would adversely affect the rights or extend the obligations of LLS under such agreement as in effect as of the Effective Date. Nothing herein conflicts with any rights or obligations set forth in the University Licenses.

5.8.3 Exclusivity . Cortex represents and warrants that all such University Licenses identified on Schedule 3 as exclusive are exclusive to Cortex as is necessary to provide LLS the exclusive licenses for the Territory provided herein and, pursuant to the terms thereof.

6. INDEMNITY, INSURANCE

6.1 Indemnity

6.1.1 LLS Indemnity Obligations . In the absence of Cortex’s negligence, a breach of contract or warranty by Cortex or willful or tortious acts or omissions of Cortex, LLS agrees to defend, indemnify and hold Cortex, its Affiliates and their respective directors, officers, employees and agents harmless from all Third Party claims, losses, damages or expenses, but excluding consequential losses, including, without limitation, economic loss or loss of profit, arising as a result of: (a) actual or asserted violations of any applicable law or regulation by LLS, its Affiliates or sublicensees by virtue of which Pharmaceutical Specialties manufactured, distributed or sold by LLS, its Affiliates or sublicensees shall be alleged or determined to be adulterated, misbranded, mislabeled or otherwise not in compliance with any applicable law or regulation; (b) claims for bodily injury, death or property damage attributable to the development, manufacture, distribution, sale or use of Pharmaceutical Specialties by LLS, its Affiliates or sublicensees; (c) a recall of Pharmaceutical Specialties manufactured, distributed or sold by LLS, its Affiliates or sublicensees ordered by a governmental agency or required by a confirmed Pharmaceutical Specialty failure as reasonably determined by LLS; (d) the negligent, willful or tortious acts or omissions of LLS, its Affiliates and sublicensees and their respective employees and agents in connection with the development, use, sale or supply of the Pharmaceutical Specialty; or (e) any breach of LLS’s representations and warranties herein or other breach of the terms of this Amended and Restated Agreement.

6.1.2 Cortex Indemnity Obligations . Cortex agrees to defend, indemnify and hold LLS, its Affiliates and their respective directors, officers, employees and agents harmless from all Third Party claims, losses, damages or expenses arising as a result of: (a) the negligent, willful or tortious acts or omissions of Cortex, its Affiliates and their respective employees and agents; or (b) any breach of Cortex’s representations and warranties herein or other breach of the terms of this Amended and Restated Agreement.

Page 12 of 26

6.1.3 Procedure . A Party or any of its Affiliates or their respective employees or agents (the “Indemnitee”) that intends to claim indemnification under this Article agrees to promptly notify the other Party (the “Indemnitor”) of any loss, claim, damage, liability or action in respect of which the Indemnitee intends to claim such indemnification, and the Indemnitor shall assume the defense thereof with its counsel. The indemnity agreement in this Article 6 shall not apply to amounts paid in settlement of any loss, claim, damage, liability or action if such settlement is effected without the consent of the Indemnitor. The failure to deliver notice to the Indemnitor within a reasonable time after the commencement of any such action, if materially prejudicial to its ability to defend such action, shall relieve such Indemnitor of any liability to the Indemnitee under this Article 6, but the omission so to deliver notice to the Indemnitor will not relieve it of any liability that it may have to any Indemnitee otherwise than under this Article 6. The Indemnitee under this Article 6, its employees and agents, shall cooperate fully with the Indemnitor and its legal representatives in the investigation of any action, claim or liability covered by this indemnification.

6.2 Insurance . LLS shall maintain comprehensive general liability insurance against claims regarding the implementation and execution of this Agreement, including but not limited to the development, manufacture and sale of Pharmaceutical Specialties, in such amounts LLS customarily maintains with similar activities. LLS shall maintain such insurance during the term of this Agreement and thereafter for so long as it continues to manufacture or sell any Pharmaceutical Specialties. Upon Cortex’s request, LLS shall provide Cortex with the related insurance certificate.

7. TERM AND TERMINATION

7.1 Expiration of this Amended and Restated Agreement . Unless terminated earlier pursuant to Article 7.2, this Amended and Restated Agreement shall expire and the sublicenses granted by Cortex to LLS shall become fully paid on a country-by-country basis upon the expiration of the last Valid Claim included in the University Licenses in such country.

7.2 Termination of this Amended and Restated Agreement . This Amended and Restated Agreement may be terminated in the following circumstances:

7.2.1 Material Breach . By one Party upon written notice by reason of a material breach by the other Party that the breaching Party fails to remedy within [***] ([***]) days after written notice thereof by the non-breaching Party, provided however, that in the case that such breach is capable of cure but cannot be cured within such [***] ([***]) day period, such period shall be extended so long as the breaching Party continues to use diligent efforts to cure such breach, but in any case not beyond [***] ([***]) days. For the avoidance of doubt, Cortex’s right to terminate shall only apply to breaches by LLS of its obligations related to its payment obligations to Cortex and the sublicense of the University Licenses.

[***]: CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.

Page 13 of 26

7.2.2 By LLS in Part . By LLS, in its discretion, at any time on a country-by-country basis or a patent by patent basis upon delivery by LLS to Cortex of six (6) months prior notice.

7.2.3 By LLS in Whole . By (i) LLS, in its discretion, at any time in its entirety upon delivery by LLS to Cortex of six (6) months prior notice, or (ii) automatically by LLS’ failure to exercise the Option in Section 2.5.

7.2.4 Merger . By LLS, upon written notice to Cortex, in case of merger and/or acquisition of Cortex with or by a Third Party, provided that LLS provides notice thereof within thirty (30) days after being informed in writing by Cortex of such merger or acquisition.

7.3 Effect of Expiration or Termination of This Amended and Restated Agreement Generally .

7.3.1 Existing Obligations . Expiration pursuant to Section 7.1 or termination pursuant to Section 7.2 of this Amended and Restated Agreement for any reason shall not relieve the Parties of any obligation that accrued prior to such expiration or termination.

7.3.2 Survival . In case of termination by Cortex pursuant to Section 7.2.1, or in the case of termination by LLS pursuant to Sections 7.2.3 or 7.2.4 (including as a result of failure to exercise the options under Sections 2.2 and 2.3), the provisions of Article 3 (with respect only to payments and royalties accrued at the time of expiration or termination but not yet paid) and the provisions of Articles 5 and 6 and Sections 8.5 and 8.6 and 8.8 shall survive termination of this Amended and Restated Agreement. In the case of expiration pursuant to Section 7.1, the provisions of Section 2.1, Section 2.2, Section 2.4, Article 3 (with respect only to payments and royalties accrued at the time of expiration or termination but not yet paid) and Articles 5 and 6 and Sections 8.5 and 8.6 shall survive the expiration of this Amended and Restated Agreement.

7.4 Additional Rights to LLS in the Event of Cortex Bankruptcy . All licenses granted under this Amended and Restated Agreement are deemed to be, for purposes of Article 365(n) of the U.S. Bankruptcy Code, licenses of right to “intellectual property” as defined in Article 101 of such Code. The Parties agree that LLS may fully exercise all of its rights and elections under the Bankruptcy Code. The Parties further agree that, in the event LLS elects to retain its rights as a licensee under such Code, LLS shall be entitled to complete access to the Cortex Know-How and patents licensed to it hereunder and all embodiments of such Cortex Know-How and patents, for the purposes of exploitation of the licenses granted under this Amended and Restated Agreement. Such embodiments of the Cortex Know-How and patents shall be delivered to LLS not later than:

7.4.1 the commencement of bankruptcy proceedings against Cortex, upon written request, unless Cortex elects to perform its obligations under the Agreement, or

7.4.2 if not delivered under (a) above, upon the rejection of this Amended and Restated Agreement by or on behalf of the Cortex, upon written request.

Page 14 of 26

8. MISCELLANEOUS

8.1 Force Majeure . Neither Party shall be held liable or responsible to the other Party nor be deemed to have defaulted under or breached this Amended and Restated Agreement for failure or delay in fulfilling or performing any term of this Amended and Restated Agreement when such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party, including fire, floods, embargoes, war, acts of war (whether war is declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays in acting by any governmental authority or the other Party; provided, however, that the Party so affected shall use reasonable commercial efforts to avoid or remove such causes of nonperformance, and shall continue to perform hereunder with reasonable dispatch whenever such causes are removed. Either Party shall provide the other Party with prompt written notice of any delay or failure to perform that occurs by reason of force majeure. The Parties shall mutually seek a resolution of the delay or the failure to perform as noted above.

8.2 Assignment . This Amended and Restated Agreement may not be assigned or otherwise transferred by either Party without the prior written consent of the other Party, provided, however, that LLS may, without such consent, assign this Amended and Restated Agreement and its rights and obligations hereunder to its Affiliates and provided further, that Cortex may, without such consent, assign this Amended and Restated Agreement and its rights and obligations hereunder to its Affiliates, or in connection with the transfer or sale of all or substantially all of its business, or in the event of its merger or consolidation or similar transaction, subject to LLS’s right under Section 7.2.4. Any purported assignment in violation of the preceding sentences shall be void. Any permitted assignee shall assume all obligations of its assignor under this Amended and Restated Agreement in writing.

8.3 Severability . Each Party hereby agrees that it does not intend to violate any public policy, statutory or common laws, rules, regulations, treaty or decision of any government agency or executive body thereof of any country or community or association of countries. Should one or more provisions of this Amended and Restated Agreement be or become invalid, the Parties hereto shall substitute, by mutual consent, valid provisions for such invalid provisions which valid provisions in their economic effect are sufficiently similar to the invalid provisions that it can be reasonably assumed that the Parties would have entered into this Amended and Restated Agreement with such valid provisions. In case such valid provisions cannot be agreed upon, the invalidity of one or several provisions of this Amended and Restated Agreement shall not affect the validity of this Amended and Restated Agreement as a whole, unless the invalid provisions are of such essential importance to this Amended and Restated Agreement that it is to be reasonably assumed that the Parties would not have entered into this Amended and Restated Agreement without the invalid provisions.

8.4 Notices and Invoices . Any invoice, consent, notice or report required or permitted to be given or made under this Amended and Restated Agreement by one of the Parties hereto to the other shall be in writing, in English, delivered personally or by

Page 15 of 26

facsimile (and promptly confirmed by personal delivery or courier) or courier, postage prepaid (where applicable), addressed to such other Party at its address indicated below, or to such other address as the addressee shall have last furnished in writing to the addressor and shall be effective upon receipt by the addressee. Notwithstanding the foregoing, each invoice shall be faxed in addition to another delivery method.


If to CORTEX:		CORTEX PHARMACEUTICALS, INC.
		15241 Barranca Parkway
		Irvine, California 92618-2201
		Attention: Chief Executive Officer
		Fax: 949/727-3657

If to LLS:		LES LABORATOIRES SERVIER
		22 Rue Garnier
		92200 Neuilly Sur Seine
		Attention: Director, Scientific Cooperation and Business Development Fax : + 33 1 55 72 39 00

8.5 Governing Law . This Amended and Restated Agreement shall be governed by, and construed in accordance with, the laws of the state of New York as though made and to be fully performed therein without regard to conflicts of laws principles thereof.

8.6 Arbitration . Any disputes arising between the Parties relating to, arising out of or in any way connected with this Amended and Restated Agreement or any term or condition hereof, or the performance by either Party of its obligations hereunder, whether before or after termination of this Amended and Restated Agreement, shall be promptly presented to the Chief Executive Officers of Cortex and LLS (or their designees) for resolution and if the Chief Executive Officers (or their designees) cannot promptly resolve such disputes, then such dispute shall be finally resolved by binding arbitration in accordance with the rules of arbitration of the International Chamber of Commerce (ICC) by one or more arbitrators appointed in accordance with such rules. Any such arbitration shall be held in New York, New York, and the language of such proceedings shall be English.

8.7 Affiliates . LLS shall have the right, in its sole discretion, to assign or delegate any of its rights or obligations hereunder, in whole or in part, to an Affiliate of LLS.

8.8 Confidentiality of this Amended and Restated Agreement . The terms and conditions of this Amended and Restated Agreement shall be held in confidence by the Parties to the same extent and in at least the same manner as such Party protects its own confidential or proprietary information. The Parties agree, however, that they may issue a press release (in a form mutually agreed by the Parties). In addition, Cortex shall be permitted to file a Current Report on Form 8-K with the U.S. Securities and Exchange Commission describing the content of this Amended and Restated Agreement and shall be permitted to publicly file this Amended and Restated Agreement with the U.S. Securities and Exchange Commission, in all cases consistent with its obligations under

Page 16 of 26

applicable securities laws and regulations, provided, however, that in connection with any required filing with applicable securities authorities, Cortex shall provide LLS with a copy of the proposed filing with the regulatory authority and afford LLS no less than [***] ([***]) days to review the proposed filing. The Parties shall work cooperatively in good faith, taking into consideration the other Party’s suggestions, regarding the text of the disclosure as well as information for which Cortex will seek to obtain confidential treatment.

8.9 Entire Agreement . This Amended and Restated Agreement, together with the Schedules hereto between the Parties contains the entire understanding of the Parties with respect to the subject matter hereof, and supersedes the Prior Agreement, which the Parties agree is hereby terminated and of no further force and effect (other than the provisions of such agreement which by its terms survive termination). In the event of any conflict or inconsistency between any provision of any Schedules hereto and any provision of this Amended and Restated Agreement, the provisions of this Amended and Restated Agreement shall prevail. All express or implied agreements and understandings, either oral or written, heretofore made are expressly merged in and made a part of this Amended and Restated Agreement. This Amended and Restated Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by both Parties hereto.

8.10 Headings . The captions to the Articles hereof and Schedules hereto are not a part of this Amended and Restated Agreement, but are merely guides or labels to assist in locating and reading the Articles hereof.

8.11 Independent Contractors . It is expressly agreed that Cortex and LLS shall be independent contractors and that the relationship between the two Parties shall not constitute a partnership, joint venture or agency. Neither Cortex nor LLS shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other, without the prior consent of the other Party to do so.

8.12 Waiver . The waiver by either Party hereto of any right hereunder or the failure to perform or of a breach by the other Party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by said other Party whether of a similar nature or otherwise.

8.13 Counterparts . This Amended and Restated Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[***]: CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.

Page 17 of 26

8.14 Warranty Limitation . EXCEPT AS EXPRESSLY STATED IN THIS AMENDED AND RESTATED AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY, AND EACH PARTY EXPRESSLY DISCLAIMS ALL DISCLAIMS, ALL IMPLIED WARRANTIES, INCLUDING WARRANTIES OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO ANY COMPOUNDS OR OTHER BIOLOGICAL OR CHEMICAL MATERIALS OR INFORMATION PROVIDED TO THE OTHER PARTY PURSUANT TO THIS AMENDED AND RESTATED AGREEMENT.

[Signature Page Follows]

Page 18 of 26

IN WITNESS WHEREOF, the Parties have executed this Amended and Restated Agreement as of the date first set forth above.


CORTEX PHARMACEUTICALS, INC.				LES LABORATOIRES SERVIER

/s/ Mark A. Varney				/s/ Christian Bazantay
Name: Mark Varney, Ph.D				Name: Christian BAZANTAY
Title: Chief Executive Officer				Title: Proxy

Page 19 of 26

SCHEDULE 1

ASSIGNED CORTEX PATENT RIGHTS

[***]

All patents or patent applications derived from the PCT patent application published on [***] under the number [***], based on [***] and [***] priority documents.

[***]: CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.

Page 20 of 26

SCHEDULE 2

UNIVERSITY LICENSE RIGHTS

[***]

[***]: CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.

Page 21 of 26

SCHEDULE 3

UNIVERSITY LICENSES


Agreement	Date	UC Case No.	Agmt. Control No.
License Agreement (Enhance Synaptic AMPA Receptor Response)	June 25, 1993	91-207	93-04-0412
Letter Agreement for Additional Neuropharmaceutical Uses and Modifications to 93-04-412 License Agreement	December 15, 1997	91-207 95-249 96-256 95-265 96-115 96-309	93-04-412
Letter [Amendment to add 98-163 - Rogers and Nilsson patent app.]	February 13, 1998	98-163	93-04-0412F
Amendment to License Agreement	October 11, 2002	91-207	93-04-0412
Amendment to License Agreement	May 28, 2003	91-207	93-04-0412O
Amendment to Exclusive License Agreement (NDA Milestone)	June 1, 2007		93-04-0412Q
Fourth Amendment to License Agreement	August 24, 2010	Added 2004-180 Deleted 2000 - 006 - 01 2000 -006-02 2000-006-05	93-04-0412
Fifth Amendment to License Agreement	March 15, 2011	Added 2000 - 006 - 01 2000 - 006 - 02 2000-006-05	93-04-0412
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]

[***]: CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.

Page 22 of 26

EXHIBIT A

FORM OF PATENT ASSIGNMENT

EXECUTION COPY

ASSIGNMENT

WHEREAS, CORTEX PHARMACEUTICALS, INC. , a Delaware corporation, hereinafter referred to as the Assignor, whose full post office address is: 15241 Barranca Parkway, Irvine, California, USA, 92618 , possesses the full right, title and interest for an invention entitled:

[***] hereinafter referred to as the “Invention”, as fully set forth and described in the patents and patent applications, hereinafter referred to as the “Applications”, identified in “Schedule A” attached hereto and any subsequent patent applications claiming priority thereto.

AND WHEREAS, LES LABORATOIRES SERVIER , a corporation duly organized and registered under the laws of France, hereinafter referred to as the Assignee, having its principal office at 22 Rue Garnier, 92200 Neuilly Sur Seine FRANCE: desires to acquire the entire right, title and interest in and to the aforementioned Invention.

NOW THEREFORE, in consideration of the sum of One Dollar ($1.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Assignor hereby confirms that it has sold, assigned, transferred and conveyed, and for greater certainty does hereby sell, assign, transfer and convey to the Assignee its successors, assigns, nominees or other legal representatives, the entire right, title and interest in the United States (US) and all other foreign countries throughout the world in and to the Invention, including any tangible materials embodied in or encompassed by the Invention and any trade secrets pertaining to the Invention, and any improvements thereon, together with its entire right title and interest in and to the Applications and any and all Letters Patent that may issue for the Invention, including any and all divisions, reissues, continuations, continuations-in-part, renewals, substitutes and extensions of the Applications, to the full end of the term for which each said Letters Patent may be granted, and including any right to claim priority based on the Applications, the same to be held and enjoyed as fully and completely as the same would have been held and enjoyed by the Assignor had this Assignment not been made. The aforesaid assignment includes the right in and to all income, royalties, damages and payments now or hereafter due or payable with respect to any Letters Patent which is or may be granted, and in and to all causes of action (either in law or in equity), and the right to sue, counterclaim, and recover for past, present and future infringement of the rights assigned or to be assigned under this Assignment.

[***]: CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.

Page 23 of 26

AND the Assignor hereby authorizes and requests the appropriate governmental officials to issue any and all such US or foreign Letters Patent under said Invention, or resulting from any of said applications thereof, to the Assignee, as the owner of the entire right, title and interest in and to the same.

AND the Assignor hereby represents, warrants and covenants that it has the full right to convey the entire interest herein assigned, that it has not executed and will not execute any instrument or assignment in conflict herewith, and that the rights assigned herein are not otherwise encumbered by any grant, license or right.

AND the Assignor, on behalf of itself and its executors and administrators, does hereby covenant and agree to do all such lawful acts and things and to execute without further consideration such further lawful assignments, documents, assurances, applications and other instruments as may reasonably be required or deemed necessary by the Assignee, its successors, assigns, nominees or other legal representatives, to secure and obtain the Invention and related rights, including any and all Letters Patent for the Invention, and vest the same in said Assignee, its successors, assigns, nominees or other legal representatives.

AND the Assignee does hereby confirm and accept this assignment.

Page 24 of 26

IN WITNESS WHEREOF the parties hereto have caused this Assignment to be executed by their duly authorized officers the day and year first here written.

DATED at this day of June, 2011.


Executed on behalf of Cortex Pharmaceuticals, Inc.

By:
Name:
Capacity:

On this day of , 2011, personally appeared before me the above named: being the , to me personally known, and known by me to be the same person described in and who executed the foregoing instrument, and acknowledged that they executed same, and were entitled to do so on this very day, in a right and binding matter, as their free act and deed and for the purposes set forth, on the day and year aforesaid.




Name:
A Notary Public in and for

DATED at this day of , 2011.


Executed on behalf of LES LABORATOIRES SERVIER

By:
Name: Christian BAZANTAY
Capacity:

On this day of , 2011, personally appeared before me the above named: being the , to me personally known, and known by me to be the same person described in and who executed the foregoing instrument, and acknowledged that he/she executed same, as his/her free act and deed and for the purposes set forth, on the day and year aforesaid.

Name:

A Notary Public in and for

Page 25 of 26

SCHEDULE “A”

TO ASSIGNMENT DATED

, 2011


Case Reference		Country		Type		Filing Date		Application Number		Status

Page 26 of 26

EXHIBIT 31.1

Certification of Chief Executive Officer Pursuant to

Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934

I, Mark A. Varney, Ph.D., certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Cortex Pharmaceuticals, Inc.;

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

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

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

(a)

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

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

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

(d)

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

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of 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 reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

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

EXHIBIT 31.2

Certification of Chief Financial Officer Pursuant to

Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934

I, Maria S. Messinger, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Cortex Pharmaceuticals, Inc.;

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

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

(a)

(b)

(c)

(d)

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

(a)

(b)

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

EXHIBIT 32

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b)

of the Securities Exchange Act of 1934

and 18 U.S.C. Section 1350

Mark A. Varney, Ph.D., President and Chief Executive Officer of Cortex Pharmaceuticals, Inc. (the “Company”), and Maria S. Messinger, Chief Financial Officer of the Company, each certifies, pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, that:

(1)	the Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2011 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 780(d)); and

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


Dated: August 18, 2011						/ S / M ARK A. V ARNEY
						Mark A. Varney, Ph.D.
						President and Chief Executive Officer

Dated: August 18, 2011						/ S / M ARIA S. M ESSINGER
						Maria S. Messinger
						Vice President, Chief Financial Officer and Secretary

This certification accompanies the Quarterly Report pursuant to Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company