The following management's discussion and analysis of financial condition contains forward-looking statements which involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth elsewhere in this Quarterly Report on Form 10-Q. We assume no obligation to update forward-looking statements. You should read the following discussion in conjunction with our financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q.

As used in this Quarterly Report, the terms "we", "us", "our", and "OncoVista" mean OncoVista Innovative Therapies, Inc. and our subsidiaries, OncoVista, Inc. ("OncoVista") and AdnaGen A.G., unless otherwise indicated.

Overview

We are a biopharmaceutical company commercializing diagnostic tests for metastatic tumors, as well as developing targeted anticancer therapies by utilizing tumor-associated biomarkers. We have developed diagnostic kits for breast, colon, ovarian, and prostate cancers, and currently market diagnostic kits in Europe for the detection of circulating tumor cells ("CTCs") in patients with breast, colon and prostate cancer. Subject to availability of sufficient working capital and AdnaGen generating positive cash flow to support their operations within the next twelve months, we believe we are positioned to leverage our ownership in our diagnostics company, AdnaGen, to realize revenues from sales of AdnaGen's CE-marked diagnostic kits in Europe, while utilizing the diagnostic technology to guide and expedite our anticancer drug development efforts.

In addition, our proprietary diagnostic technology facilitates stratification of clinical trial patients, as well as quantifies and predicts the response of patients to treatment. We believe that the development of targeted approaches to the administration of anticancer agents should lead to improved outcomes and/or reduced toxicity.

In August 2009, with the exception of the CEO, the Company terminated the employment for all employees of OncoVista, Inc. The Company is currently attempting to raise additional capital to provide working capital. The Company has received and continues to receive cash advances from companies affiliated with the CEO to support continuing operations.

Development Programs

Our product pipeline is comprised of advanced (Phase II) and early (Phase I) clinical-stage compounds, late preclinical drug candidates and early preclinical leads. We are not committed to any single treatment modality or class of compound, but believe that successful treatment of cancer requires a tailored approach based upon individual patient disease characteristics.

Our most advanced drug candidate is OVI-237, a liposomal formulation of a thymidylate synthase (TS) inhibitor which has been administered in over 150 patients so far in various Phase I and Phase II trials. The drug was in-licensed in November 2007 and we finalized the protocol and selected clinical sites to conduct a Phase II Study of OVI-237 monotherapy and combination therapy with cisplatin for the treatment of metastatic breast cancer. Subject to the availability of sufficient working capital, we plan on initiating the trial in the first quarter of 2010, enrolling our first patients in the second quarter of 2010.

Our next most advanced product candidate is Cordycepin (OVI-123) which is in Phase I/II clinical trials for refractory leukemia patients who express the enzyme terminal deoxynucleotidyl transferase (TdT). We have received orphan drug designation from the FDA for Cordycepin which affords us seven years of market exclusivity once the drug is approved for marketing. We initiated a Phase I/II trial based on the "original" ADA-sensitive compound in the second quarter of 2008. The trial is on-going at two US centers, The Dana Farber Cancer Institute in Boston, Massachusetts and the Cancer Therapy Research Center at the University of Texas Health Sciences Center at San Antonio, Texas, and is designed to enroll up to 24 patients in the first stage and up to 20 patients in the second stage. As of September 30, 2009, we had enrolled five patients in this clinical trial. In August 2009, the Company placed the clinical trial on administrative hold until such time that additional capital can be raised.

We completed the GLP animal drug safety studies for our lead drug candidate from the L-nucleoside conjugate program (OVI-117). We have begun to compile the IND for submission to the FDA, which is a key step to conducting human clinical trials. Submission of the IND for review has been delayed until such time that the Company can raise additional capital.

We are also marketing kits in Europe for the detection of CTCs in breast, colon and prostate cancer patients. The kits are manufactured by AdnaGen and marketed through non-exclusive distribution agreements in Europe. We have also developed research products for the detection of steroid receptors (ER/PR) and cancer stem cells. We have developed the protocol for a pivotal trial in metastatic breast cancer to obtain approval to market the kit in the United States. We plan to continue to grow the market for AdnaGen diagnostic kits in the U.S. and Europe to provide revenue and cash flow to help support our drug development efforts.

We will continue to use our proprietary diagnostic technology to progress our anti-cancer drug portfolio providing better clinical outcomes by identifying and treating only those patients who express certain biomarkers. Additionally, we anticipate establishing partnerships with other drug companies to expedite their drug development efforts utilizing our biomarker analysis technology.

Results of Operations

Three Months Ended September 30, 2009 and 2008

Revenue. Revenues were approximately $240,000 for the three months ended
September 30, 2009, an increase of $150,000, or 165%, compared to approximately
$90,000 for the three months ended September 30, 2008. Our revenues reflect
royalties earned from the sale of diagnostic kits, licensing and research and
development revenue. Revenues are summarized in the following table:

                             2009          2008
Diagnostic kits            $ 115,881     $ 81,089
Licensing                     12,662        9,226
Research and development     111,243            -
  Total revenues           $ 239,786     $ 90,315

The increase in revenue in the three months ended September 30, 2009 is primarily attributable to an increase in sales from diagnostic kits and research and development revenues. AdnaGen AG has executed several non-exclusive distribution agreements to sell kits in the European territory. During the three months ended September 30, 2009, we recorded $33,000 (€24,000) in revenue from the sale of diagnostic kits to Biomarkers.

Research and development. Research and development expenses decreased by approximately $240,000, or 35%, to approximately $446,000 for the three months ended September 30, 2009, as compared to approximately $686,000 for the three months ended September 30, 2008. The decrease in 2009 was primarily due to the scaling back of our research and development operations as a result of the unavailability of sufficient capital resources and AdnaGen's cash needs.

General and administrative. General and administrative expenses decreased by approximately $360,000, or 31%, to approximately $802,000 for the three months ended September 30, 2009 compared to approximately $1.2 million for the three months ended September 30, 2008. In 2009, the decrease was due primarily to reduced costs for legal and professional services, partially offset by an increase in stock compensation expense attributable to options granted during the period. Additionally, the decrease is a related to terminating the employment for all OncoVista, Inc. employees as a result of our inability to meet payroll during the quarter.

Other Income (Expense). Other income (expense) decreased approximately $24,000, or 28%, to expense of approximately $63,000 for the three months ended September 30, 2009 compared to expense of approximately $88,000 for the three months ended September 30, 2008. In 2009, the decrease was due primarily to an adjustment for the derivative liability related to the bridge round of debt financing completed in January 2009, partially offset by an increase in interest expense.

Net Income (Loss). As a result of the foregoing, our net loss decreased by approximately $774,000, or 42%, to approximately $1.1 million for the three months ended September 30, 2009 from a net loss of approximately $1.8 million for the three months ended September 30, 2008.

Nine months Ended September 30, 2009 and 2008

Revenue. Revenues were approximately $697,000 for the nine months ended September 30, 2009, an increase of $448,000, or 180% as compared to approximately $250,000 for the nine months ended September 30, 2008. Our revenues reflect royalties earned from the sale of diagnostic kits, licensing and research and development revenue. Revenues are summarized in the following table:

                             2009          2008
Diagnostic kits            $ 545,427     $ 215,322
Licensing                     30,444        34,243
Research and development     121,585             -
  Total revenues           $ 697,456     $ 249,565

The increase in revenue in the nine months ended September 30, 2009 is primarily attributable to an increase in sales from diagnostic kits and research and development revenues. AdnaGen AG has executed several non-exclusive distribution agreements to sell kits in the European territory. During the nine months ended September 30, 2009, we recorded $103,000 (€75,000) in revenue from the sale of diagnostic kits to Biomarkers.

Research and development. Research and development expenses decreased by approximately $881,000, or 33%, to approximately $1.8 million for the nine months ended September 30, 2009, as compared to approximately $2.7 million for the nine months ended September 30, 2008. The decrease in 2009 was primarily due to the scaling back of our research and development operations as a result of the unavailability of sufficient capital resources and AdnaGen's cash needs.

General and administrative. General and administrative expenses decreased by approximately $977,000, or 24%, to approximately $3.0 million for the nine months ended September 30, 2009, compared to approximately $4.0 million for the nine months ended September 30, 2008. In 2009, the decrease was due primarily to reduced costs for legal and professional services, partially offset by an increase in stock compensation expense attributable to options granted during the period. Additionally, the decrease is a related to terminating the employment for all OncoVista, Inc. employees as a result of our inability to meet payroll during the quarter.

Other Income (Expense). Other income (expense) decreased approximately $564,000, or 88%, to income of approximately $78,000 for the nine months ended September 30, 2009 from income of approximately $642,000 for the nine months ended September 30, 2008. In 2009, the decrease was due primarily to the recognition of a gain recorded in prior year related to the extinguishment of debt, partially offset by an the adjustment in the current year for the derivative liability related to the bridge round of debt financing that we completed in January 2009.

Net Income (Loss). As a result of the foregoing, our net loss decreased by approximately $1.7 million, or 30%, to approximately $4.1 million for the nine months ended September 30, 2009 from a net loss of approximately $5.8 million for the nine months ended September 30, 2008.

Going Concern

In our Annual Report on Form 10-K for the year ended December 31, 2008, the Report of the Independent Registered Public Accounting Firm includes an explanatory paragraph that describes substantial doubt about our ability to continue as a going concern. Our interim consolidated financial statements for the nine months ended September 30, 2009 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. We have a net loss of approximately $4.1 million and net cash used in operations of approximately $896,000 for the nine months ended September 30, 2009, a working capital deficit of approximately $7.0 million, an accumulated deficit of approximately $27.6 million and a total stockholders' deficit of approximately $10.9 million at September 30, 2009.

These conditions raise substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. We expect to continue to incur losses from operations in 2009.

Our ability to continue as a going concern depends on the success of management's plans to bridge such cash shortfalls in 2009 including the following:

· Aggressively seeking investment capital;

· Furthering the development of our product pipeline;

· Advancing scientific progress in our research and development;

· Continuing to monitor and implement cost control initiatives to conserve cash.

Liquidity and Capital Resources

At September 30, 2009, we had cash and cash equivalents of $72,000 compared to $91,000 at December 31, 2008. In order to preserve principal and maintain liquidity, our funds are primarily invested with the primary objective of capital preservation. Based on our current projections, we believe that our available resources and cash flow are insufficient to meet our anticipated operating cash needs in the foreseeable future. As such, we have received and continue to receive cash advances from companies affiliated with our CEO to support continuing operations.

Our ability to continue as a going concern is dependent on management's ability to first and foremost resolve its liquidity problems, principally by obtaining additional debt and/or equity financing, further implement its strategic plan, and generate additional revenues from collaborative agreements or sale of pharmaceutical products. These factors raise significant doubt about the Company's ability to continue as a going concern.

We can provide no assurance that additional funding will be available on terms acceptable to us, or at all. Accordingly, we may not be able to secure the funding which is required to expand research and development programs beyond their current levels or at levels that may be required in the future. If we cannot secure adequate financing, we may be required to delay, scale back or eliminate one or more of our research and development programs or to enter into license or other arrangements with third parties to commercialize products or technologies that we would otherwise seek to develop and commercialize ourselves. Our future capital requirements will depend upon many factors, including:

· capital needs of AdnaGen;

· continued scientific progress in our research and development programs;

· costs and timing of conducting clinical trials and seeking regulatory approvals and patent prosecutions;

· competing technological and market developments;

· our ability to establish additional collaborative relationships; and

· the effect of commercialization activities and facility expansions if and as required.

Accordingly, we will be required to issue equity or debt securities or enter into other financial arrangements, including relationships with corporate and other partners, in order to raise additional capital. Depending upon market conditions, we may not be successful in raising sufficient additional capital for our short or long-term requirements. In such event, our business, prospects, financial condition, and results of operations would be materially adversely affected.

To date, we have financed our operations principally through proceeds of offerings of securities exempt from the registration requirements of the Securities Act. In January 2009, we completed a bridge round of debt financing, whereby we issued secured promissory notes (the "Bridge Notes") in the aggregate principal amount of $750,000, in exchange for cash equal to the face amount of such Bridge Notes, to accredited investors. OncoVista has also loaned or advanced to AdnaGen approximately $973,000 (€667,000) during the past fifteen months to support their operations. We believe the ability to execute our strategy relies largely on the continued viability of AdnaGen. As such, we will likely continue to provide advances to AdnaGen until they attain revenue levels adequate to support their continued operations and, based on current projections, we expect that they will require at least $400,000 to $675,000 (€300,000 to €500,000) over the course of the next three to six months. We believe that our available resources and cash flow are insufficient to meet our anticipated operating cash needs in the foreseeable future.

In April 2009, we negotiated a contingent debt restructuring with three of our major creditors which if completed would result in exchanging approximately $6.2 million (€4.3 million) of debt and related accrued interest as of September 30, 2009, for an equity share of approximately 18% of AdnaGen. In addition, as part of the contingent restructuring, OncoVista agreed to forgive approximately $887,000 in receivables, advances, loans and related interest as of September 30, 2009, due from AdnaGen if completed. The debt restructuring is contingent on our raising a minimum of $2.9 million (€2.0 million) no later than July 30, 2009. In July 2009, the Company has received a verbal extension until December 2009 to raise the additional capital required under the debt restructuring agreement. The documents approving the extension are pending final approval and signature. Upon the completion of restructuring, we will own approximately 77% of AdnaGen.

Operating Activities. For the nine months ended September 30, 2009, net cash used in operating activities was approximately $896,000 compared to approximately $3.2 million for the nine months ended September 30, 2008. Cash used in operating activities decreased $2.3 million, or 72%, primarily due to a decrease in our net loss of approximately $1.7 million for the nine months ended September 30, 2009 to $4.1 million as compared to approximately $5.8 million for the nine months ended September 30, 2008. In addition to a decrease in our net loss, operating activities were impacted by an the adjustment in the current year for the derivative liability related to the bridge round of debt financing, partially offset by amortization of the debt discount related to the debt financing, compared to an adjustment for the recognition of a gain recorded in prior year related to the extinguishment of debt.

Investing Activities. For the nine months ended September 30, 2009, we used no cash in investing activities compared to $104,000 for the nine months September 30, 2008. Cash used in investing activities decreased $104,000, or 100%, primarily as a result of approximately $70,000 paid to acquire an additional interest in a subsidiary, as well as purchases of equipment in the prior year.

Financing Activities. Cash provided by financing activities was $893,000 for the nine months ended September 30, 2009 as compared to cash used in financing activities of approximately $188,000 for the nine months ended September 30, 2008. The increase was primarily due to proceeds from the completion of a bridge loan in January 2009 and a loan from a related party in the current quarter, compared to a loan repayment of $196,000, partially offset by $8,000 received from exercise of stock options in 2008.

Recent Accounting Pronouncements

In June 2009, FASB approved the FASB Accounting Standards Codification ("the Codification") as the single source of authoritative nongovernmental GAAP. All existing accounting standard documents, such as FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other related literature, excluding guidance from the Securities and Exchange Commission ("SEC"), have been superseded by the Codification. All other non-grandfathered, non-SEC accounting literature not included in the Codification has become nonauthoritative. The Codification did not change GAAP, but instead introduced a new structure that combines all authoritative standards into a comprehensive, topically organized online database. The Codification is effective for interim or annual periods ending after September 15, 2009, and impacts our consolidated financial statements as all future references to authoritative accounting literature will be referenced in accordance with the Codification. There have been no changes to the content of our consolidated financial statements or disclosures as a result of implementing the Codification during the quarter ended September 30, 2009. As a result of the our implementation of the Codification during the quarter ended September 30, 2009, previous references to new accounting standards and literature are no longer applicable.

In December 2007, the FASB issued ASC 805 (formerly - SFAS No. 141 (R)), "Business Combinations", which became effective for fiscal periods beginning after December 15, 2008. The standard changes the accounting for business combinations, including the measurement of acquirer shares issued in consideration for a business combination, the recognition of contingent consideration, the accounting for pre-acquisition gain and loss contingencies, the recognition of capitalized in-process research and development, the accounting for acquisition-related restructuring cost accruals, the treatment of acquisition related transaction costs, and the recognition of changes in the acquirer's income tax valuation allowance. The standard became effective for us on January 1, 2009. We will apply the provisions of ASC 805 to any future business combinations.

On January 1, 2009, we adopted ASC 810 (formerly - SFAS No. 160), "Consolidation" The standard changes the accounting for non-controlling (minority) interests in consolidated financial statements. In accordance with the standard, we changed the reporting of non-controlling interest on the face of the consolidated financial statements to separately classify non-controlling interests within the equity section of the consolidated balance sheets and to separately report the amounts attributable to controlling and non-controlling interests in the consolidated statements of operations, and comprehensive loss for all periods presented. There were no changes in our ownership interests in previously existing subsidiary or deconsolidation of the subsidiary during the nine-months ended September 30, 2009.

On January 1, 2009, we adopted ASC 815 (formerly - EITF Issue No. 07-5), "Derivatives and Hedging", which requires the application of a two-step approach in evaluating whether an equity-linked financial instrument (or embedded feature) is indexed to our own stock, including evaluation of the instrument's contingent exercise and settlement provisions. See Note 6 for the impact of the adoption of ASC 815 on our consolidated results of operations, cash flows and financial position.