Intellect Neurosciences CORRESP Correspondence with SEC

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Attention:  Mary Mast, Staff Accountant Division of Corporate Finance Telephone Number: (202)551-3613 Fax Number: (202)772-9217

Re:  Intellect Neurosciences, Inc. Form 10-KSB for the Year Ended June 30, 2008 File No. 333-128226

VIA EDGAR AND FACSIMILE

July 6, 2009

Dear Ms. Mast:

On behalf of Intellect Neurosciences, Inc. (the “Company”), we are providing the following responses to the comments from the Staff (the “Staff”) of the Securities and Exchange Commission that you communicated by telephone on June 17, 2009 to Mr. Elliot Maza, President and Chief Financial Officer of the Company.

Form 10-KSB for the year ended June 30, 2008

STAFF COMMENT 1 : Please tell us why the calculations for each quarter are not readily available.

COMPANY RESPONSE: In response to the Staff’s request regarding the availability of the calculation of gain on derivative instruments for each quarter, the Company provides the following supplemental information:   The Company performs the calculation of gain or loss on derivative instruments each quarter in preparation of its required financial filings. These calculations are readily available. However, the calculations are displayed in a chain of documentation that is readily understood by Company management and the Company’s independent auditors but could be difficult for an outsider to follow. The reason for the difficulty is that the Company has issued on various dates many derivative instruments, which remain outstanding. The Company performs a separate calculation for each instrument. (In the case where identical instruments have been issued to different holders on the same date, one calculation is performed for such instruments). Each calculation requires a separate model and spreadsheet. We attempted to clarify for the Staff the mechanics of our calculation method by providing to the Staff in our correspondence dated May 22, 2009 detailed calculations underlying the loss on derivatives for a single quarter of fiscal 2008 in a manner that we believed would be easy for the Staff to follow. The process of gathering the calculation information and assembling it in an easily comprehended manner proved to be a laborious process that strained the resources of the Company’s small accounting department. Accordingly, we requested that the Staff accept our detailed calculations underlying the loss on derivatives for the fourth quarter of fiscal 2008 as a sufficient response to the Staff’s comment. We offered to provide similar support for other quarters of fiscal 2008 if the Staff determined that it required such additional information. Calculations for the quarter ending September 30, 2007, which included a gain on derivative instruments of $32,836,439, are attached to this letter.

STAFF COMMENT 2 : The calculation you provided only presents a small portion of what made up the net gain on derivatives in 2008. Please provide the Staff with more information so that it can ascertain the accuracy of the $33 million net gain.

COMPANY RESPONSE: In response to the Staff’s request regarding additional information related to the calculation of the gain on derivative instruments, the Company is providing hereby calculations and analysis, including a calculation of the total net gain from changes in fair value of the derivatives, for the quarter ending September 30, 2007 (Q1 of fiscal year end 6/30/2008). These calculations are attached hereto as Exhibit A (with supporting Schedules S-17 through S-24 ) and submitted hereby to the Staff as supplemental materials.

STAFF COMMENT 3 : Your disclosure in Note 9 states that you issued 4,593,091 shares of Old Series B Preferred Stock in 2006 that included warrants to purchase 0.5 shares of common stock, which would equal 2,296,545 warrants. However, your disclosure in Note 9 states that 3,046,754 warrants were issued and that number is used in Schedule F2. Please tell us how the 3,046,754 warrants were derived.

COMPANY RESPONSE: In response to the Staff’s request regarding the disclosure in Note 9 related to the number of warrants issued in connection with the Old Series B Preferred Stock, the Company confirms that 3,046,754, rather than 2,296,545 warrants were issued, and remain outstanding, in connection with the Old Series B Preferred Stock. Also, the Company confirms that the issuance of Old Series B Preferred Stock included warrants to purchase 0.5 shares of common stock, which would equal 2,296,545 warrants. We neglected to clarify the disclosure in Note 9 to inform the reader that the largest of the Series B Preferred investors received an additional 750,210 warrants above the amount of warrants that he would have otherwise been entitled to in connection with the sale of the Old Series B Preferred stock. We will reflect that fact in future filings.

2

STAFF COMMENT 4 : Please tell us what events led to the significant decrease in stock price from $3.25 at June 30, 2007 to $0.57 at September 30, 2007.

COMPANY RESPONSE: In response to the Staff’s request regarding the events that led to the significant decrease in our stock price during the third calendar quarter of 2007, the Company provides the following supplemental information:

Set forth below is a table listing the closing stock price of ILNS for the last trading day in each month of the quarter:

June 29, 2007: $3.25

July 31, 2007: $2.00

August 31, 2007: $1.04

September 30, 2007: $0.57

It is difficult to respond with certainty regarding the reason for the steady decline in stock price or point to any single factor as the primary reason for such decline.  However, we would suggest that the Company’s declining cash balance and continued default on an increasing number of promissory notes were major factors contributing to the steady decline shown above.

In particular, Note 1 to the financial statements contained in Form 10-QSB for the three month period ending March 31, 2007, filed with the SEC on May 21, 2007, contained the following disclosure:

“We have limited capital resources and operations to date have been funded with the proceeds from private equity and debt financings and income earned on investments. The Company has incurred losses of approximately $10.7 million and $1.7 million for the three-months ended March 31, 2007 and March 31, 2006, respectively, and has an accumulated deficit at March 31, 2007 of $31.7 million. We anticipate that our existing capital resources will not enable us to continue operations past June of 2007, or earlier if unforeseen events or circumstances arise that negatively affect our liquidity. We are also currently past due on certain convertible promissory notes. These conditions raise substantial doubt about our ability to continue as a going concern. If we fail to raise additional capital or obtain substantial cash inflows from potential partners prior to July 2007, we may be forced to cease operations. We are currently seeking additional funding through equity and/or debt financing and are in discussions with investment bankers concerning our financing options. If additional capital is raised through the sale of equity or convertible debt securities, the issuance of such securities would result in dilution to our existing stockholders. We cannot assure you that financing will be available on favorable terms or at all.”

3

We would suggest to the Staff that the foregoing disclosure contributed to a growing sense of concern among investors regarding the Company’s ability to sustain operations as succeeding months beyond June 2007 passed without an announcement from the Company that it successfully completed a financing transaction that would permit it to repay the debt that was in default and continue operations. In addition, the deteriorating biotech company financing conditions, overall credit tightening and continued default of our outstanding notes may have further led investors to believe that the Company’s financing options were becoming even more limited as time passed. As a result of the constant selling and downward pressure on the stock, a negative momentum was created from which the stock price failed to recover.

STAFF COMMENT 5 : Please tell us why in Schedule S-3 you are using 4,593,091 shares of Series B Preferred Stock. You state in Note 9 on page F-21 that 4,593,091 shares of common stock were exchanged for 459,309 shares of new Series B Preferred.

COMPANY RESPONSE: In response to the Staff’s request regarding our calculation shown in Schedule S-3 that includes 4,593,091, rather than 459,309 shares of Series B Preferred Stock, the Company confirms that 459,309 shares of Series B Preferred Stock are outstanding and that Schedule S-3 should show 459,309 as the relevant number for the gain calculation. However, the calculation remains accurate because each share of new Series B Preferred Stock issued by Intellect Neurosciences, Inc. post the reverse merger is convertible into the same number of common shares (and at the same conversion price) as the old Series B Preferred Stock issued by Intellect USA prior to the reverse merger. The 4,593,091 shares of old Series B Preferred Stock issued by Intellect USA were convertible into 2,624,623 common shares (4,593,091/1.75=2,624,623). Similarly, the 459,091 shares of New Series B Preferred Stock issued by Intellect Neurosciences, Inc. are convertible into 2,624,623 shares of common stock. Each share of New Series B Preferred Stock is convertible into 10, rather than 1, shares of common stock (459,309/1.75=262,463 X 10=2,624,623). We continue to use the 4,593,091 number in our internal calculations for continuity, consistency and convenience because the number of the common stock equivalents remains the same.

The Company acknowledges that the Company is responsible for the adequacy and accuracy of the disclosure in the filing, that Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing, and that the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Please do not hesitate to call Elliot Maza at 212-448-9300 with any questions or further comments you may have regarding this filing or if you wish to discuss the responses above.

Sincerely,

INTELLECT NEUROSCIENCES, INC.

/s/ Elliot Maza

Elliot Maza

President and Chief Financial Officer

4

EXHIBIT A

Gain on Derivative Instruments FYE 6-30-08

	Derivative Liability Balance June 30, 2007		(Gain)/Loss recorded for quarter ending Sept 30, 2007			Supporting Schedule	(Gain)/Loss recorded for quarter ending Dec 31, 2007			(Gain)/Loss recorded for quarter ending Mar 31, 2008			(Gain)/Loss recorded for quarter ending June 30, 2008			Initial Valuation of New Warrants Issued During the Year		Total Derivative Liability Balance June 30, 2008			Warrant  Liability June 30, 2008		Pref Stock Liability June 30, 2008
Note Warrant Liability		14,423,756		(14,001,445	)	S-17		(826,193	)		(148,648	)		572,764			1,383,529		1,403,763
Preferred Stock Warrant Liability		7,349,311		(6,525,555	)			(402,800	)		(71,545	)		248,383			-		597,794			2,001,557
Preferred Stock liability		14,927,546		(12,309,439	)			(872,688	)		(91,861	)		780,825			-		2,434,383					2,434,383
Total Derivative Liability (Gain)/Loss		36,700,613		(32,836,439	)	S-17		(2,101,681	)		(312,054	)		1,601,972			1,383,529		4,435,940			2,001,557		2,434,383
Quarterly Change in Derivative Liabilities				(32,836,439	)			(2,101,681	)		(312,054	)		1,601,972					(33,648,202	)
																		Change for the Year
Cumualtive Change in Derivative Liability		23,242,752		(9,593,687	)			(11,695,368	)		(12,007,422	)		(10,405,450	)
Stock price for Black Scholes calculation		3.25		0.57				0.38			0.36			0.53
Summary Reconciliation
Deivative Liability Balance - June 30, 2007			$	36,700,613
Valuation of new Warrants issued during the year				1,383,529
Changes in derivative liability during the year				(33,648,202	)
Deivative Liability Balance - June 30, 2008			$	4,435,940

5

Schedule S-17

Breakdown of Total Derivative (Gain)/Loss for the Quarter ended September 30, 2007

Preferred Stock Warrant Liability	(6,525,555	)	From S-18
Preferred Stock Liability	(12,309,439	)	From S-19	(Includes $45 booking error)
Note Warrant Liability
Sandgrain	(954,099	)	From S-20
Tiegman	(30,642	)	From S-21
Extension	(159,885	)	From S-22
Q4 07	(5,013,766	)	From S-23
Original Bridenotes	(7,843,053	)	From S-24
Total Note Warrant Liability	(14,001,444	)	To Exhibit A
Total Derivative (Gain)/Loss for the Quarter	(32,836,439	)	To Exhibit A

6

Schedule S-18

Preferred Stock Warrant Liability (Gain) / Loss

Quarter Ended September 30, 2007

													Entry
													Account			Dr			Cr
													Unrealized Gain				-			(6,525,555	)
													Warrant Liability				(6,525,555	)		-
Black-Scholes Option Pricing Model
	30-Sep-07
	Longview 2.5 – Feb 2006			Longview 1.75 – May 2006			April '06 Pref Issues			May '06 Pref Issues			July '06 Pref Issues			Oct. '06 Pref Issues			Total
Stock price 9/30/07	$	0.5700		$	0.5700		$	0.5700		$	0.5700		$	0.5700		$	0.5700
Warrant Exercise price	$	1.75		$	1.75		$	1.75		$	1.75		$	1.75		$	1.75
Remaining term to expiration		3.36			3.62			3.55			3.62			3.78			4.03
Risk-free rate		4.26	%		4.26	%		4.26	%		4.26	%		4.26	%		4.26	%
Volatility		1.00			1.00			1.00			1.00			1.00			1.00
Dividend yield		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Option value	$	0.26		$	0.27		$	0.27		$	0.27		$	0.28		$	0.30
Black Scholes Option value	$	0.26		$	0.27		$	0.27		$	0.27		$	0.28		$	0.30
Warrants Outstanding		750,000			725,080			592,790			792,191			136,693			50,000			3,046,754
Value of Warrants Outstanding		194,085			198,704			160,237			217,095			38,779			14,857			823,756
Calculation date	9/30/2007			9/30/2007			9/30/2007			9/30/2007			9/30/2007			9/30/2007
Warrant expiration date	2/9/2011			5/12/2011			4/19/2011			5/12/2011			7/12/2011			10/9/2011
													Balance per G/L			6/30/2007				7,349,312
																Adjustment				(6,525,555	)
																To Schedule S-17
													Term to Maturity at
				Issue Date						Maturity Date			9/30/2007
				2/9/2006				1825		2/8/2011				3.3616
				4/19/2006				1825		4/18/2011				3.5507
				05/12/06				1825		5/11/2011				3.6137
				7/12/2006				1825		7/11/2011				3.7808
				10/9/2006				1825		10/8/2011				4.0247

7

Schedule S-19

Preferred Stock Liability (Gain)/Loss

Quarter ended September 30, 2007

Revaluation of the Series B Preferred Stock Liability

June 30, 2007 Balance		14,927,545.75
4,593,091 shares		4,593,091.00
Stock price at 9/30/2007	$	0.57
Fair value at 9/30/2007	$	2,618,061.87
Adjustment for Q1 2008		12,309,484	To Schedule S-17

Entry
Account	Dr		Cr
Unrealized Gain				12,309,483.88
Pref Stock Liability	$	12,309,483.88

8

Schedule S-20

Note Warrant Liability (Gain)/Loss

Quarter Ended September 30, 2007

Sandgrain Notes
Black-Scholes Option Pricing Model
	July 5, 2007 (Issue Date)			Sept. 30, 2007
Stock price	$	2.80		$	0.57		Initial Entry
Warrant Exercise price	$	1.75		$	1.75		Pre-paid Finance		1,116,251.07
Term	5.00			4.77			Warrant liability _Note			1,116,251
Risk-free rate	4.88		%	4.26		%
Volatility	1.00			1.00
Dividend yield	0.0		%	0.0%
							Revalue entry
							Warrant Liability_Note		954,099
Option value	$	2.30		$	0.33		Unrealized Gain			954,099
Sandgrain warrants outstanding	485,714.00			485,714.00
FMV	1,116,251			162,152		(954,099)	To S-17
Do not make any changes below this line but copy all rows (4-31) to add extra columns.								Time remaining at	Expiration	Years
								9/30/2007	7/5/2012	4.77
	1.437346119			0.671449248
	0.142001101			0.318427462
	0.676515866			0.817413509
	0.924697229			0.749024451
	2.589152242			0.426943937
	-0.798721859			-1.512583718
	0.289987681			0.127085742
	0.790069895			0.665251355
	0.212228296			0.065187787
	0.29098693			0.093101093

9

Schedule S-21

Note Warrant Liability (Gain)/Loss

Quarter Ended September 30, 2007

Tiegman Notes

Black-Scholes Option Pricing Model

	July 9th, 2007			Sept. 30, 2007
Stock price	$	2.58		$	0.57			Initial Entry
Warrant Exercise price	$	1.75		$	1.75			Interest Expense			36,458.40
Remaining Term		5.00			4.78			Warrant liability _Note					36,458.40
Risk-free rate		4.88	%		4.26	%
Volatility		1.00			1.00
Dividend yield		0.0	%		0.0	%
								Revalue entry
								Warrant Liability_Note			30,641.62
Option value	$	2.10		$	0.33			Unrealized Gain					30,641.62
Outstanding warrants for Tiegman (and Schwalbe)		17,400.00			17,400.00
FMV		36,458			5,817		(30,642)	To Schedule S-17
Do not make any changes below this line but copy all rows (4-31) to add extra columns.									Time remaining at	Expiration		Years
									9/30/2007	7/9/2012			4.78
		1.400750622			0.673228322
		0.149570162			0.318046805
		0.682133959			0.817018251
		0.919363634			0.749590688
		2.371958177			0.427266692
		-0.835317355			-1.513092788
		0.281445607			0.126987906
		0.782543015			0.665176415
		0.201770125			0.065123132
		0.276647696			0.092969139

10

Schedule S-21

Note Warrant Liability (Gain)/Loss

Quarter Ended September 30, 2007

Extension Warrants

Black-Scholes Option Pricing Model

	July 21, 2007			Sept. 30, 2007
Stock price	$	2.29		$	0.57			Initial Entry
Warrant Exercise price	$	1.75		$	1.75			Short term note payble			195,800.81
Remaining Term		5.00			4.81			Warrant liability _Note					195,800.81
Risk-free rate		4.88	%		4.26	%
Volatility		1.00			1.00
Dividend yield		0.0	%		0.0	%
								Revalue entry
								Warrant Liability_Note			159,884.63
Option value	$	1.83		$	0.34			Unrealized Gain					159,884.63
Extension warrants		107,003.00			107,003.00
FMV		195,801			35,916		(159,885)	To Schedule S-17
Do not make any changes below this line but copy all rows (4-31) to add extra columns.									Time remaining at	Expiration		Years
									9/30/2007	7/21/2012			4.81
		1.347425955			0.678547703
		0.160941089			0.316905383
		0.690489382			0.815838716
		0.911087513			0.751279679
		2.086390405			0.428229417
		-0.888642023			-1.514623517
		0.268801832			0.126693977
		0.771828541			0.664951179
		0.187095752			0.064929019
		0.256527614			0.092573641

11

Schedule S-23

Note Warrant Liability (Gain)/Loss

Quarter Ended September 30, 2007

Revaluation of Note Warrants issued in April, May and June 2007

Black-Scholes Option Pricing Model

							Entry
							Note warrant liability				5013765.76
							Unrealized gain							5013765.76
	April			May			June prior to trading			June 15, 2007			June 19, 2007			June 26, 2007			June 29, 2007
Stock price on 9/30/07	$	0.5700		$	0.5700		$	0.5700		$	0.5700		$	0.5700		$	0.5700		$	0.5700
Warrant Exercise price	$	1.7500		$	1.7500		$	1.7500		$	1.7500		$	1.7500		$	1.7500		$	1.7500
Remaining Term		4.55			4.67			4.69			4.71			4.72			4.74			4.75
Risk-free rate		4.26	%		4.26	%		4.26	%		4.26	%		4.26	%		4.26	%		4.26	%
Volatility		1.00			1.00			1.00			1.00			1.00			1.00			1.00
Dividend yield		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Warrant value	$	0.324		$	0.3290		$	0.3303		$	0.3312		$	0.3317		$	0.3326		$	0.3330
Warrants issued with Promissory Notes		157,285			1,574,286			305,714			71,429			28,571			57,143			14,286		2,208,714
Value of Warrants issued	$	50,920.72		$	518,008.30		$	100,982.00		$	23,657.36		$	9,477.16		$	19,004.95		$	4,756.69		726,807.18		Value at 9/30/2007
Time remaining at:	9/30/2007			9/30/2007			9/30/2007			9/30/2007			9/30/2007			9/30/2007			9/30/2007
Expiration:	4/18/2012			5/29/2012			6/8/2012			6/15/2012			6/19/2012			6/26/2012			6/29/2012
Years		4.55			4.67			4.69			4.71			4.72			4.74			4.75
																			Prior amt booked			434,242.08
																			Prior amt booked			5,306,330.86
																						5,740,572.94
																			Adjustment			(5,013,765.76	)	To Schedule S-17

Do not make any changes below this line but copy all rows (4-31) to add extra columns.

	0.632161301		0.652722186		0.657676258		0.661130258		0.663098894		0.666535186		0.668004464
	0.326687086		0.322400196		0.321355413		0.320624333		0.320206684		0.319476005		0.319162943
	0.826240677		0.821597437		0.820486457		0.819713652		0.819273837		0.818507261		0.818179929
	0.736349511		0.743023242		0.744618028		0.745726856		0.746357711		0.74745691		0.747926136
	0.419719221		0.423523248		0.424432276		0.425064308		0.425423895		0.426050439		0.426317897
-1.501714201		-1.507313329		-1.508691829		-1.509659637		-1.510213709		-1.511185126		-1.511602137
	0.129184805		0.128101127		0.12783511		0.127648531		0.127541783		0.127354751		0.127274508
	0.666855492		0.666028201		0.665824837		0.665682135		0.665600466		0.665457329		0.665395901
	0.066580211		0.065860093		0.06568373		0.06556013		0.06548945		0.065365674		0.065312595
	0.095971118		0.094479925		0.094117013		0.093863192		0.093718236		0.093464716		0.093356127

12

Schedule S-24

Note Warrant Liability (Gain)/Loss

Quarter Ended September 30, 2007

Valuation of Warrants Issued in Conjunction with Promissory Notes

Black-Scholes Option Pricing Model

	Longview			Alpha - Aug 2005			Oct HCP			Alpha Nov 20 05			Sep-05			Jan-06			Dec-06			Dec-06				Q1 2007		Total
Stock price	$	0.5700		$	0.5700		$	0.5700		$	0.5700		$	0.5700		$	0.5700		$	0.5700		$	0.5700		$	0.5700		$	-
Warrant Exercise price	$	0.8750		$	0.8750		$	0.8750		$	0.8750		$	0.8750		$	0.8750		$	1.7500		$	1.7500		$	1.7500		$	-
Remaining Term		2.58			2.92			3.01			3.09			2.92			3.26			4.20			4.23			4.50			0.00
Risk-free rate		4.26	%		4.26	%		4.26	%		4.26	%		4.26	%		4.26	%		4.26	%		4.26	%		4.26	%		0.00	%
Volatility		1.00			1.00			1.00			1.00			1.00			1.00			1.00			1.00			1.00			0.00
Dividend yield		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Warrant value	$	0.291		$	0.3113		$	0.3161		$	0.3208		$	0.3114		$	0.3298		$	0.3063		$	0.3078		$	0.3212
Outstanding warrants		571,429			228,571			285,714			342,857			457,143			285,714			111,150			428,571			593,144			3,304,293
Value of Warrants  at 9/30/07	$	166,121.52		$	71,143.31		$	90,316.67		$	110,004.09		$	142,359.42		$	94,238.27		$	34,050.80		$	131,896.28		$	190,547.35		$	840,130.36
Time remaining at:	9/30/2007			9/30/2007			9/30/2007			9/30/2007			9/30/2007			9/30/2007			9/30/2007			9/30/2007			9/30/2007
Expiration:	4/30/2010			8/31/2010			10/1/2010			11/1/2010			9/1/2010			1/1/2011			12/12/2011			12/22/2011			3/30/2012
Years		2.58			2.92			3.01			3.09			2.92			3.26			4.20			4.23			4.50

$	8,683,183.69		June 30, 07 amount
	(7,843,053.33	)	Difference to Schdeule S-17

Journal entry
Note warrant liability	$	7,843,053.33
Unrealized gain			$	7,843,053.33

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