þ
|
QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
|
¨
|
TRANSACTION REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
|
New
York
|
11-0853640
|
|
(State
or other Jurisdiction of
|
(I.R.S.
Employer Identification No.)
|
|
incorporation
or organization)
|
||
616
N. North Court, Suite 120
|
||
Palatine,
Illinois
|
60067
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Large
accelerated filer o
|
Accelerated
filer þ
|
|
Non-accelerated
filer o
|
Smaller
reporting company o
|
Page
No.
|
|||
PART
1. FINANCIAL INFORMATION
|
|||
Item
1.
|
Financial
Statements (Unaudited)
|
||
Consolidated
Balance Sheets
June 30, 2009 and December 31, 2008 |
1
|
||
Consolidated
Statements of Operations
Six and three months ended June 30, 2009 and June 30, 2008 |
2
|
||
Consolidated
Statement of Stockholders’ Equity
Six
months ended June 30, 2009
|
3
|
||
Consolidated
Statements of Cash Flows
Six months ended June 30, 2009 and June 30, 2008 |
4
|
||
Notes
to Consolidated Financial Statements
|
5
|
||
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
9
|
|
Item
4.
|
Controls
and Procedures
|
14
|
|
PART
II. OTHER INFORMATION
|
|||
Item
4
|
Submission
of Matters to a Vote of Security Holders
|
15
|
|
Item
6.
|
Exhibits
|
15
|
|
Signatures
|
16
|
June 30,
2009
|
December 31,
2008
|
|||||||
Assets
|
||||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
$ | 35,082 | $ | 30,398 | ||||
Short
term investments
|
— | 5,039 | ||||||
Collaboration
revenue receivable
|
61 | 3,529 | ||||||
Prepaid
expense and other current assets
|
505 | 431 | ||||||
Deferred
income taxes
|
13 | 2,491 | ||||||
Total
current assets
|
35,661 | 41,888 | ||||||
Non-current
assets
|
||||||||
Property,
plant and equipment, net
|
1,096 | 1,073 | ||||||
Total
assets
|
$ | 36,757 | $ | 42,961 | ||||
Liabilities
and Stockholders’ Equity
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable
|
$ | — | $ | 382 | ||||
Accrued
expenses
|
1,281 | 883 | ||||||
Deferred
program fee revenue
|
2,527 | 4,632 | ||||||
Total
current liabilities
|
3,808 | 5,897 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders’
equity
|
||||||||
Common
stock - $.01 par value; 100,000 shares authorized; 42,953 and 42,723
shares issued and outstanding at June 30, 2009 and December 31, 2008,
respectively
|
430 | 427 | ||||||
Additional
paid-in capital
|
347,702 | 344,023 | ||||||
Accumulated
deficit
|
(315,183 | ) | (307,386 | ) | ||||
Total
stockholders’ equity
|
32,949 | 37,064 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 36,757 | $ | 42,961 |
Six
Months
Ended
June 30
|
Three
Months
Ended
June 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Revenue
|
||||||||||||||||
Program
fee revenue
|
$ | 2,105 | $ | 22,415 | $ | 842 | $ | 8,708 | ||||||||
Milestone
revenue
|
— | 5,000 | — | 5,000 | ||||||||||||
Collaboration
revenue
|
172 | 5,354 | 55 | 1,977 | ||||||||||||
Total
revenue
|
2,277 | 32,769 | 897 | 15,685 | ||||||||||||
Operating
expenses
|
||||||||||||||||
Research
and development expenses
|
2,334 | 7,166 | 1,205 | 3,084 | ||||||||||||
Marketing,
general and administrative expenses
|
5,396 | 2,244 | 2,948 | 1,374 | ||||||||||||
Total
operating expenses
|
7,730 | 9,410 | 4,153 | 4,458 | ||||||||||||
Operating
(loss) income
|
(5,453 | ) | 23,359 | (3,256 | ) | 11,227 | ||||||||||
Other
income (expense)
|
||||||||||||||||
Interest
income, net
|
114 | 504 | 45 | 207 | ||||||||||||
Other
|
(3 | ) | 18 | (3 | ) | 18 | ||||||||||
Total
other income
|
111 | 522 | 42 | 225 | ||||||||||||
(Loss)
income before income tax
|
(5,342 | ) | 23,881 | (3,214 | ) | 11,452 | ||||||||||
Income
tax expense
|
2,455 | 9,562 | 3,306 | 4,582 | ||||||||||||
Net
(loss) income
|
$ | (7,797 | ) | $ | 14,319 | $ | (6,520 | ) | $ | 6,870 | ||||||
(Loss)
earnings per share
|
||||||||||||||||
Basic
|
$ | (0.17 | ) | $ | 0.31 | $ | (0.14 | ) | $ | 0.15 | ||||||
Diluted
|
$ | (0.17 | ) | $ | 0.28 | $ | (0.14 | ) | $ | 0.13 | ||||||
Weighted
average shares used in computation
|
||||||||||||||||
Basic
|
45,762 | 45,665 | 45,813 | 45,673 | ||||||||||||
Diluted
|
45,762 | 51,319 | 45,813 | 51,327 |
Common
Stock
$0.01 Par
Value -
Shares
|
Common
Stock
$0.01 Par
Value -
Amount
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Total
|
||||||||||||||||
Balance at December 31,
2008
|
42,723 | $ | 427 | $ | 344,023 | $ | (307,386 | ) | $ | 37,064 | ||||||||||
Net
loss
|
— | — | — | (7,797 | ) | (7,797 | ) | |||||||||||||
Stock-based
compensation
|
— | — | 3,854 | — | 3,854 | |||||||||||||||
Exercise
of warrants
|
180 | 2 | (2 | ) | — | — | ||||||||||||||
Exercise
of option
|
50 | 1 | (173 | ) | — | (172 | ) | |||||||||||||
Balance at June 30, 2009
|
42,953 | $ | 430 | $ | 347,702 | $ | (315,183 | ) | $ | 32,949 |
2009
|
2008
|
|||||||
Cash
flows from operating activities
|
||||||||
Net
(loss) income
|
$ | (7,797 | ) | $ | 14,319 | |||
Adjustments
to reconcile net (loss) income to net cash (used in) provided by operating
activities
|
||||||||
Depreciation
and amortization
|
64 | 72 | ||||||
Deferred
income taxes
|
2,479 | 9,562 | ||||||
Non-cash
stock compensation expense
|
3,854 | 885 | ||||||
Loss
(gain) on asset disposals
|
3 | (1 | ) | |||||
Impairment
reserve against fixed assets
|
— | (17 | ) | |||||
Changes
in assets and liabilities
|
||||||||
Collaboration
revenue receivable
|
3,468 | 1,000 | ||||||
Prepaid
expenses and other current assets
|
(78 | ) | — | |||||
Accounts
payable
|
(382 | ) | — | |||||
Accrued
expenses
|
227 | 262 | ||||||
Deferred
program fee revenue
|
(2,105 | ) | (19,416 | ) | ||||
Net
cash (used in) provided by operating activities
|
(267 | ) | 6,666 | |||||
Cash
flows from investing activities
|
||||||||
Purchase
of investments
|
— | (5,000 | ) | |||||
Investment
maturities
|
5,039 | — | ||||||
Capital
expenditures
|
(89 | ) | (131 | ) | ||||
Proceeds
from asset disposals
|
— | 1 | ||||||
Net
cash provided by (used in) investing activities
|
4,950 | (5,130 | ) | |||||
Cash
flows from financing activities – proceeds from warrant
exercise
|
— | 20 | ||||||
Increase
in cash and cash equivalents
|
4,683 | 1,556 | ||||||
Cash
and cash equivalents at beginning of period
|
30,398 | 31,368 | ||||||
Cash
and cash equivalents at end of period
|
$ | 35,082 | $ | 32,924 | ||||
Cash
paid during the period for interest
|
$ | — | $ | 2 | ||||
Cash
paid during the period for income taxes
|
$ | 86 | $ | — |
1.
|
Warrants
to purchase 361,000 shares of common stock were exercised at exercise
price of $3.40 per share in a series of cashless exercise transactions
resulting in the issuance of 180,000 shares of common
stock.
|
2.
|
Options
to purchase 100,000 shares of common stock were exercised at exercise
price of $1.30 per share in a cashless exercise transaction and after
withholding shares for $173,000 statutory payroll taxes, 50,000 shares of
common stock were issued.
|
1.
|
The
disposal of fixed assets with $51,000 net book value resulted in a $17,000
reduction in the impairment allowance recognized favorably in the
statement of operations.
|
|
·
|
intravenous
injection of dissolved tablets or
capsules;
|
|
·
|
nasal
snorting of crushed tablets or capsules;
and
|
|
·
|
intentional
swallowing of excess quantities of tablets or
capsules.
|
Jun
30,
|
Dec
31,
|
|||||||
2009
|
2008
|
|||||||
Payroll,
bonus, taxes and benefits
|
$ | 497 | $ | 77 | ||||
Legal
services
|
48 | 35 | ||||||
Audit
and tax professional services
|
67 | 89 | ||||||
State
franchise taxes
|
319 | 144 | ||||||
Property
taxes
|
46 | 39 | ||||||
State
income taxes
|
— | 94 | ||||||
Clinical,
regulatory, trademark, and patent services
|
50 | 217 | ||||||
Other
fees and services
|
254 | 188 | ||||||
$ | 1,281 | $ | 883 |
2009
|
|||
Dividend
yield
|
0.00%
|
||
Risk-free
interest rate
|
1.30%
to 1.50%
|
||
Volatility
|
102%
to 108%
|
||
Forfeitures
|
0.00%
|
||
Expected
life of RSU award
|
3.4
years
|
||
Grant
date fair value
|
$5.69
to $7.10
|
2009
|
|||
Dividend
yield
|
0.0%
|
||
Risk-free
interest rate
|
2.4%
to 3.1%
|
||
Average
volatility
|
124%
|
||
Forfeitures
|
0.0%
|
||
Expected
life of option
|
10
years
|
||
Weighted
average grant date fair value
|
$6.06
|
Six
Months Ended
June
30,
|
Three
Months Ended
June 30,
|
|||||||||||||||
(in
thousands, except per share data)
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Basic
earnings (loss) per share
|
||||||||||||||||
Numerator:
|
||||||||||||||||
Net income
(loss) allocable to common shareholder
|
$ | (7,797 | ) | $ | 14,319 | $ | (6,520 | ) | $ | 6,870 | ||||||
Denominator:
|
||||||||||||||||
Common
shares (weighted)
|
42,781 | 42,714 | 42,825 | 42,722 | ||||||||||||
Vested
RSUs (weighted)
|
2,981 | 2,951 | 2,988 | 2,951 | ||||||||||||
Weighted
average shares used in computing basic earnings (loss) per share
allocable to common shareholder
|
45,762 | 45,665 | 45,813 | 45,673 | ||||||||||||
Basic earnings
(loss) per share allocable to common shareholder
|
$ | (0.17 | ) | $ | 0.31 | $ | (0.14 | ) | $ | 0.15 | ||||||
Diluted
earnings (loss) per share
|
||||||||||||||||
Denominator:
|
||||||||||||||||
Common
shares (weighted)
|
42,781 | 42,714 | 42,825 | 42,722 | ||||||||||||
Vested
RSUs (weighted)
|
2,981 | 2,951 | 2,988 | 2,951 | ||||||||||||
Common
stock options
|
— | 1,746 | — | 1,746 | ||||||||||||
Common
stock warrants
|
— | 3,908 | — | 3,908 | ||||||||||||
Weighted
average shares used in computing diluted earnings (loss) per share
allocable to common shareholder
|
45,762 | 51,319 | 45,813 | 51,327 | ||||||||||||
Diluted
earnings (loss) per share allocable to common shareholder
|
$ | (0.17 | ) | $ | 0.28 | $ | (0.14 | ) | $ | 0.13 | ||||||
Excluded
potentially dilutive securities:
|
||||||||||||||||
Common
shares issuable (see #1 below):
|
||||||||||||||||
Nonvested
RSUs
|
319 | 45 | 319 | 45 | ||||||||||||
Common
stock options (vested and nonvested)
|
4,164 | 1,224 | 4,164 | 1,224 | ||||||||||||
Common
stock warrants
|
3,546 | 47 | 3,546 | 47 | ||||||||||||
Total
excluded dilutive common stock equivalents
|
8,029 | 1,316 | 8,029 | 1,316 |
|
·
|
intravenous
injection of dissolved tablets or
capsules;
|
|
·
|
nasal
snorting of crushed tablets or capsules;
and
|
|
·
|
intentional
swallowing of excess quantities of tablets or
capsules.
|
June 30,
|
Change
|
|||||||||||||||
($ in thousands):
|
2009
|
2008
|
Dollars
|
%
|
||||||||||||
Revenue
|
||||||||||||||||
Program
fee revenue
|
$ | 2,105 | $ | 22,415 | $ | (20,310 | ) | (91 | )% | |||||||
Milestone
revenue
|
— | 5,000 | (5,000 | ) | (100 | ) | ||||||||||
Collaboration
revenue
|
172 | 5,354 | (5,182 | ) | (97 | ) | ||||||||||
Total
revenue
|
2,277 | 32,769 | (15,704 | ) | (93 | ) | ||||||||||
Operating
expenses
|
||||||||||||||||
Research
and development expenses
|
2,334 | 7,166 | (4,832 | ) | (67 | ) | ||||||||||
Marketing,
general and administrative expenses
|
5,396 | 2,244 | 3,152 | 141 | ||||||||||||
Total
operating expenses
|
7,730 | 9,410 | (1,680 | ) | (18 | ) | ||||||||||
Operating
(loss) income
|
(5,453 | ) | 23,359 | (28,812 | ) | (123 | ) | |||||||||
Other
income (expense)
|
||||||||||||||||
Interest,
net
|
114 | 504 | (390 | ) | (77 | ) | ||||||||||
Other
|
(3 | ) | 18 | (21 | ) | (117 | ) | |||||||||
Total
other income
|
111 | 522 | (411 | ) | (79 | ) | ||||||||||
(Loss)
income before income tax
|
(5,342 | ) | 23,881 | (29,223 | ) | (122 | ) | |||||||||
Income
tax expense
|
2,455 | 9,562 | (7,107 | ) | (74 | ) | ||||||||||
Net
(loss) income
|
$ | (7,797 | ) | $ | 14,319 | $ | (36,330 | ) | (254 | )% |
June 30,
|
Change
|
|||||||||||||||
($ in thousands):
|
2009
|
2008
|
Dollars
|
%
|
||||||||||||
Revenue
|
||||||||||||||||
Program
fee revenue
|
$ | 842 | $ | 8,708 | $ | (7,866 | ) | (90 | )% | |||||||
Milestone
revenue
|
— | 5,000 | (5,000 | ) | (100 | ) | ||||||||||
Collaboration
revenue
|
55 | 1,977 | (1,922 | ) | (97 | ) | ||||||||||
Total
revenue
|
897 | 15,685 | (14,788 | ) | (94 | ) | ||||||||||
Operating
expenses
|
||||||||||||||||
Research
and development expenses
|
1,205 | 3,084 | (1,879 | ) | (61 | ) | ||||||||||
Marketing,
general and administrative expenses
|
2,948 | 1,374 | 1,574 | 115 | ||||||||||||
Total
operating expenses
|
4,153 | 4,458 | (305 | ) | (18 | ) | ||||||||||
Operating
(loss) income
|
(3,256 | ) | 11,227 | (14,483 | ) | (129 | ) | |||||||||
Other
income (expense)
|
||||||||||||||||
Interest,
net
|
45 | 207 | (162 | ) | (78 | ) | ||||||||||
Other
|
(3 | ) | 18 | (21 | ) | (117 | ) | |||||||||
Total
other income
|
42 | 225 | (183 | ) | (81 | ) | ||||||||||
(Loss)
income before income tax
|
(3,214 | ) | 11,452 | (14,666 | ) | (128 | ) | |||||||||
Income
tax expense
|
3,306 | 4,582 | (1,276 | ) | (28 | ) | ||||||||||
Net
(loss) income
|
$ | (6,520 | ) | $ | 6,870 | $ | (13,390 | ) | (195 | )% |
Payments due by period
|
||||||||||||||||||||
(in
thousands)
|
Total
|
Less than 1
year
|
1-3 years
|
3-5 years
|
More than 5
years
|
|||||||||||||||
Operating
leases
|
$ | 22 | $ | 15 | $ | 7 | $ | — | $ | — | ||||||||||
Clinical
studies
|
53 | 53 | — | — | — | |||||||||||||||
Employment
agreements
|
1,096 | 623 | 473 | — | — | |||||||||||||||
Total
|
$ | 1,171 | $ | 691 | $ | 480 | $ | — | $ | — |
Nominee
|
For
|
Withheld
|
|||||
Richard
J. Markham
|
33,945,666
|
129,418
|
|||||
Immanuel
Thangaraj
|
33,945,578
|
129,506
|
|||||
Bruce
F. Wesson
|
33,945,628
|
129,456
|
|||||
Andrew
D. Reddick
|
33,956,288
|
118,796
|
|||||
William
A. Sumner
|
33,954,078
|
121,006
|
|||||
William
G. Skelly
|
33,953,097
|
121,987
|
|||||
George
K. Ross
|
33,953,814
|
121,270
|
For
|
Against
|
Abstained
|
Not Voted
|
|||||||
33,483,497
|
1,791
|
142
|
9,257,102
|
For
|
Against
|
Abstained
|
Not Voted
|
|||||||
33,458,291
|
26,322
|
817
|
9,257,092
|
For
|
Against
|
Abstained
|
Not
Voted
|
|||||||
33,459,397
|
25,189
|
843
|
9,257,103
|
For
|
Against
|
Abstained
|
Not Voted
|
|||||||
33,952,489
|
122,465
|
130
|
8,667,448
|
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.
|
July
29, 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
|