þ
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QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
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¨
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TRANSACTION REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
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New
York
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11-0853640
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(State
or other Jurisdiction of
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(I.R.S.
Employer Identification No.)
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incorporation
or organization)
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616
N. North Court, Suite 120
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Palatine,
Illinois
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60067
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Large
accelerated filer o
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Accelerated
filer þ
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Non-accelerated
filer o
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Smaller
reporting company o
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Page
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PART
1 - FINANCIAL INFORMATION
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||
Item
1.
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Financial
Statements (Unaudited)
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Consolidated
Balance Sheets
September
30, 2009 and December 31, 2008
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1
|
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Consolidated
Statements of Operations
Nine
and three months ended September 30, 2009 and September 30,
2008
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2
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Consolidated
Statement of Changes in Stockholders’ Equity
Nine
months ended September 30, 2009
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3
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Consolidated
Statements of Cash Flows
Nine
months ended September 30, 2009 and September 30, 2008
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4
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Notes
to Consolidated Financial Statements
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5
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Item
2.
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Management's
Discussion and Analysis of Financial Condition and Results of
Operations
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10
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Item
4.
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Controls
and Procedures
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16
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PART
II - OTHER INFORMATION
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||
Item
6.
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Exhibits
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16
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Signatures
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17
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September 30,
2009
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December 31,
2008
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|||||||
Assets
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||||||||
Current
assets
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||||||||
Cash
and cash equivalents
|
$ | 32,729 | $ | 30,398 | ||||
Short
term investments
|
— | 5,039 | ||||||
Collaboration
revenue receivable
|
226 | 3,529 | ||||||
Prepaid
expense and other current assets
|
364 | 431 | ||||||
Deferred
income taxes
|
13 | 2,491 | ||||||
Total
current assets
|
33,332 | 41,888 | ||||||
Non-current
assets
|
||||||||
Property,
plant and equipment, net
|
1,187 | 1,073 | ||||||
Total
assets
|
$ | 34,519 | $ | 42,961 | ||||
Liabilities
and Stockholders’ Equity
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable
|
$ | — | $ | 382 | ||||
Accrued
expenses
|
906 | 883 | ||||||
Deferred
program fee revenue
|
1,943 | 4,632 | ||||||
Total
current liabilities
|
2,849 | 5,897 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders’
equity
|
||||||||
Common
stock - $.01 par value; 100,000 shares authorized; 42,966 and 42,723
shares issued and outstanding at September 30, 2009 and December 31, 2008,
respectively
|
430 | 427 | ||||||
Additional
paid-in capital
|
350,377 | 344,023 | ||||||
Accumulated
deficit
|
(319,137 | ) | (307,386 | ) | ||||
Total
stockholders’ equity
|
31,670 | 37,064 | ||||||
Total
liabilities and stockholders’ equity
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$ | 34,519 | $ | 42,961 |
Nine Months
Ended September 30
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Three Months
Ended September 30,
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|||||||||||||||
2009
|
2008
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2009
|
2008
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|||||||||||||
Revenue
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||||||||||||||||
Program
fee revenue
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$ | 2,688 | $ | 23,678 | $ | 583 | $ | 1,263 | ||||||||
Milestone
revenue
|
— | 5,000 | — | — | ||||||||||||
Collaboration
revenue
|
397 | 7,971 | 225 | 2,617 | ||||||||||||
Total
revenue
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3,085 | 36,649 | 808 | 3,880 | ||||||||||||
Operating
expenses
|
||||||||||||||||
Research
and development expenses
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3,828 | 10,859 | 1,494 | 3,693 | ||||||||||||
Marketing,
general and administrative expenses
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8,680 | 5,617 | 3,284 | 3,373 | ||||||||||||
Total
operating expenses
|
12,508 | 16,476 | 4,778 | 7,066 | ||||||||||||
Operating
(loss) income
|
(9,423 | ) | 20,173 | (3,970 | ) | (3,186 | ) | |||||||||
Other
income (expense)
|
||||||||||||||||
Interest,
net
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134 | 675 | 20 | 171 | ||||||||||||
Other
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(3 | ) | 1 | — | (17 | ) | ||||||||||
Total
other income
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131 | 676 | 20 | 154 | ||||||||||||
(Loss)
income before income tax
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(9,292 | ) | 20,849 | (3,950 | ) | (3,032 | ) | |||||||||
Income
tax expense (benefit)
|
2,459 | 3,382 | 4 | (6,180 | ) | |||||||||||
Net
(loss) income
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$ | (11,751 | ) | $ | 17,467 | $ | (3,954 | ) | $ | 3,148 | ||||||
(Loss)
earnings per share
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||||||||||||||||
Basic
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$ | (0.26 | ) | $ | 0.38 | $ | (0.09 | ) | $ | 0.07 | ||||||
Diluted
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$ | (0.26 | ) | $ | 0.35 | $ | (0.09 | ) | $ | 0.06 | ||||||
Weighted
average shares used in computation
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||||||||||||||||
Basic
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45,839 | 45,670 | 45,992 | 45,680 | ||||||||||||
Diluted
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45,839 | 49,529 | 45,992 | 49,409 |
Common
Stock
Shares
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Common
Stock
Amount
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Additional
Paid-in
Capital
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Accumulated
Deficit
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Total
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||||||||||||||||
Balance
at December 31, 2008
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42,723 | $ | 427 | $ | 344,023 | $ | (307,386 | ) | $ | 37,064 | ||||||||||
Net
loss
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— | — | — | (11,751 | ) | (11,751 | ) | |||||||||||||
Stock-based
compensation
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— | — | 6,529 | — | 6,529 | |||||||||||||||
Exercise
of warrants
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193 | 2 | (2 | ) | — | — | ||||||||||||||
Exercise
of options
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50 | 1 | (173 | ) | — | (172 | ) | |||||||||||||
Balance
at September 30, 2009
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42,966 | $ | 430 | $ | 350,377 | $ | (319,137 | ) | $ | 31,670 |
2009
|
2008
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|||||||
Cash
flows from operating activities
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||||||||
Net
(loss) income
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$ | (11,751 | ) | $ | 17,467 | |||
Adjustments
to reconcile net (loss) income to net cash (used in) provided by operating
activities
|
||||||||
Depreciation
and amortization
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96 | 108 | ||||||
Deferred
income taxes
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2,479 | 3,334 | ||||||
Non-cash
share-based compensation expense
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6,529 | 2,367 | ||||||
Loss
(gain) on asset disposals
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3 | (1 | ) | |||||
Impairment
reserve against fixed assets
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— | (29 | ) | |||||
Changes
in assets and liabilities
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||||||||
Collaboration
revenue receivable
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3,304 | 361 | ||||||
Prepaid
expenses and other current assets
|
91 | 1 | ||||||
Accounts
payable
|
(382 | ) | — | |||||
Accrued
expenses
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(176 | ) | 1,750 | |||||
Deferred
program fee revenue
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(2,688 | ) | (20,679 | ) | ||||
Net
cash (used in) provided by operating activities
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(2,495 | ) | 4,679 | |||||
Cash
flows from investing activities
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||||||||
Purchase
of investments
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— | (5,039 | ) | |||||
Investment
maturities
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5,039 | — | ||||||
Capital
expenditures
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(213 | ) | (135 | ) | ||||
Proceeds
from asset disposals
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— | 1 | ||||||
Net
cash provided by (used in) investing activities
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4,826 | (5,173 | ) | |||||
Cash
flows from financing activities – proceeds from warrant
exercise
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— | 20 | ||||||
Increase
in cash and cash equivalents
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2,331 | (474 | ) | |||||
Cash
and cash equivalents at beginning of period
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30,398 | 31,368 | ||||||
Cash
and cash equivalents at end of period
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$ | 32,729 | $ | 30,894 | ||||
Cash
paid during the period for interest
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$ | — | $ | — | ||||
Cash
paid during the period for income taxes
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$ | 102 | $ | 47 |
1.
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Warrants
to purchase 391,000 shares of common stock were exercised at an exercise
price of $3.40 per share in a series of cashless exercise transactions
resulting in the issuance of 193,000 shares of common
stock.
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2.
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Options
to purchase 100,000 shares of common stock were exercised at an exercise
price of $1.30 per share in a cashless exercise transaction and after
withholding shares for statutory payroll taxes calculated at $173,000, the
transaction resulted in the issuance of 50,000 shares of common
stock.
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1.
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The
disposal of fixed assets with $52,000 net book value resulted in a $29,000
reduction in the impairment allowance recognized favorably in the
statement of operations.
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2.
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A
$5,022,000 valuation allowance against deferred income tax assets was
removed which resulted in an equal amount recorded as a benefit against
current income tax expense.
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3.
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Deferred
income tax assets of $8,356,000 were used to offset an equal amount of
current income taxes payable.
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·
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intravenous
injection of dissolved tablets or
capsules;
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·
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nasal
snorting of crushed tablets or capsules;
and
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·
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intentional
swallowing of excess quantities of tablets or
capsules.
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Sept 30,
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Dec 31,
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|||||||
2009
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2008
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|||||||
Payroll,
bonus, payroll taxes and employee benefits
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$ | 405 | $ | 77 | ||||
Legal
services
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35 | 35 | ||||||
Audit
and tax professional services
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99 | 89 | ||||||
State
franchise taxes
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30 | 144 | ||||||
Property
taxes
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22 | 39 | ||||||
State
income taxes
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— | 94 | ||||||
Clinical,
regulatory, trademark, and patent services
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43 | 217 | ||||||
Other
fees and services
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272 | 188 | ||||||
$ | 906 | $ | 883 |
2009
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||||
Dividend
yield
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0.00%
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|||
Risk-free
interest rate
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1.30%
to 1.50%
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|||
Volatility
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102%
to 108%
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|||
Forfeitures
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0.00%
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|||
Expected
life of RSU award
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3.4
years
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|||
Grant
date fair value
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$ 5.69 to $7.10
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2009
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||||
Dividend
yield
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0.0%
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|||
Risk-free
interest rate
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2.4%
to 3.1%
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|||
Average
volatility
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124%
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|||
Forfeitures
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0.0%
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|||
Expected
life of option
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10
years
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|||
Weighted
average grant date fair value
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$ 6.06
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Nine Months Ended
September 30,
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Three Months Ended
September 30,
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|||||||||||||||
(in thousands, except per share
data)
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2009
|
2008
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2009
|
2008
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||||||||||||
Basic
earnings (loss) per share
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||||||||||||||||
Numerator:
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||||||||||||||||
Net income
(loss) allocable to common shareholder
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$ | (11,751 | ) | $ | 17,467 | $ | (3,954 | ) | $ | 3,148 | ||||||
Denominator:
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||||||||||||||||
Common
shares (weighted)
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42,841 | 42,717 | 42,958 | 42,723 | ||||||||||||
Vested
RSUs (weighted)
|
2,998 | 2,953 | 3,034 | 2,957 | ||||||||||||
Weighted
average shares used in computing basic earnings (loss) per share allocable
to common shareholder
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45,839 | 45,670 | 45,992 | 45,680 | ||||||||||||
Basic earnings
(loss) per share allocable to common shareholder
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$ | (0.26 | ) | $ | 0.38 | $ | (0.09 | ) | $ | 0.07 | ||||||
Diluted
earnings (loss) per share
|
||||||||||||||||
Denominator:
|
||||||||||||||||
Common
shares (weighted)
|
42,841 | 42,717 | 42,958 | 42,723 | ||||||||||||
Vested
RSUs (weighted)
|
2,998 | 2,953 | 3,034 | 2,957 | ||||||||||||
Common
stock options
|
— | 1,461 | — | 1,438 | ||||||||||||
Common
stock warrants
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— | 2,398 | — | 2,291 | ||||||||||||
Weighted
average shares used in computing diluted earnings (loss) per share
allocable to common shareholder
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45,839 | 49,529 | 45,992 | 49,409 | ||||||||||||
Diluted
earnings (loss) per share allocable to common shareholder
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$ | (0.26 | ) | $ | 0.35 | $ | (0.09 | ) | $ | 0.06 | ||||||
Excluded
potentially dilutive securities:
|
||||||||||||||||
Common
shares issuable (see #1 below):
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||||||||||||||||
Nonvested
RSUs
|
270 | 37 | 270 | 37 | ||||||||||||
Common
stock options (vested and nonvested)
|
4,164 | 1,173 | 4,164 | 1,173 | ||||||||||||
Common
stock warrants
|
3,517 | — | 3,517 | — | ||||||||||||
Total
excluded dilutive common stock equivalents
|
7,951 | 1,210 | 7,951 | 1,210 |
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·
|
intravenous
injection of dissolved tablets or
capsules;
|
|
·
|
nasal
snorting of crushed tablets or capsules;
and
|
|
·
|
intentional
swallowing of excess quantities of tablets or
capsules.
|
September 30,
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Change
|
|||||||||||||||
($ in thousands):
|
2009
|
2008
|
Dollars
|
%
|
||||||||||||
Revenue
|
||||||||||||||||
Program
fee revenue
|
$ | 2,688 | $ | 23,678 | $ | (20,990 | ) | (89 | ) % | |||||||
Milestone
revenue
|
— | 5,000 | (5,000 | ) | (100 | ) | ||||||||||
Collaboration
revenue
|
397 | 7,971 | (7,574 | ) | (95 | ) | ||||||||||
Total
revenue
|
3,085 | 36,694 | (33,564 | ) | (92 | ) | ||||||||||
Operating
expenses
|
||||||||||||||||
Research
and development expenses
|
3,828 | 10,859 | (7,031 | ) | (65 | ) | ||||||||||
Marketing,
general and administrative expenses
|
8,680 | 5,617 | 3,063 | 55 | ||||||||||||
Total
operating expenses
|
12,508 | 16,476 | (3,968 | ) | (24 | ) | ||||||||||
Operating
(loss) income
|
(9,423 | ) | 20,173 | (29,596 | ) | (147 | ) | |||||||||
Other
income (expense)
|
||||||||||||||||
Interest,
net
|
134 | 675 | (541 | ) | (80 | ) | ||||||||||
Other
|
(3 | ) | 1 | (4 | ) | (400 | ) | |||||||||
Total
other income
|
131 | 676 | (545 | ) | (81 | ) | ||||||||||
(Loss)
income before income tax
|
(9,292 | ) | 20,849 | (30,141 | ) | (145 | ) | |||||||||
Income
tax expense
|
2,459 | 3,382 | (923 | ) | (27 | ) | ||||||||||
Net (loss) income
|
$ | (11,751 | ) | $ | 17,467 | $ | (29,218 | ) | (167 | ) % |
September 30,
|
Change
|
|||||||||||||||
($ in thousands):
|
2009
|
2008
|
Dollars
|
%
|
||||||||||||
Revenue
|
||||||||||||||||
Program
fee revenue
|
$ | 583 | $ | 1,263 | $ | (680 | ) | (54 | ) % | |||||||
Milestone
revenue
|
— | — | (5,000 | ) | (100 | ) | ||||||||||
Collaboration
revenue
|
225 | 2,617 | (2,392 | ) | (91 | ) | ||||||||||
Total
revenue
|
808 | 3,880 | (3,072 | ) | (79 | ) | ||||||||||
Operating
expenses
|
||||||||||||||||
Research
and development expenses
|
1,494 | 3,693 | (2,199 | ) | (60 | ) | ||||||||||
Marketing,
general and administrative expenses
|
3,284 | 3,373 | (89 | ) | (3 | ) | ||||||||||
Total
operating expenses
|
4,778 | 7,066 | (2,288 | ) | (32 | ) | ||||||||||
Operating
(loss) income
|
(3,970 | ) | (3,186 | ) | 784 | 25 | ||||||||||
Other
income (expense)
|
||||||||||||||||
Interest,
net
|
20 | 171 | (151 | ) | (88 | ) | ||||||||||
Other
|
— | (17 | ) | (17 | ) | (100 | ) | |||||||||
Total
other income
|
20 | 154 | (134 | ) | (87 | ) | ||||||||||
(Loss)
income before income tax
|
(3,950 | ) | (3,032 | ) | 918 | 30 | ||||||||||
Income
tax expense (benefit)
|
4 | (6,180 | ) | (6,184 | ) | (100 | ) | |||||||||
Net (loss) income
|
$ | (3,954 | ) | $ | 3,148 | $ | (7,102 | ) | (226 | ) % |
31.1
|
Certification
of Periodic Report by Chief Executive Officer pursuant to Rule 13a-14 and
15d-14 of the Securities Exchange Act of
1934.
|
31.2
|
Certification
of Periodic Report by Chief Financial Officer pursuant to Rule 13a-14 and
15d-14 of the Securities Exchange Act of
1934.
|
32.1
|
Certification
of Periodic Report by the Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of
2002.
|
October
26, 2009
|
ACURA
PHARMACEUTICALS, INC.
|
/s/ Andrew D. Reddick
|
|
Andrew
D. Reddick
|
|
President
& Chief Executive Officer
|
|
/s/ Peter A. Clemens
|
|
Peter
A. Clemens
|
|
Senior
VP & Chief Financial
Officer
|