MiddleBrook Pharmaceuticals Inc. (MBRK) filed Quarterly Report for the period ended 2009-06-30.
Advancis is a pharmaceutical company focused on developing and commercializing pulsatile drug products that fulfill substantial unmet medical needs in the treatment of infectious disease. MiddleBrook Pharmaceuticals Inc. has a market cap of $96.9 million; its shares were traded at around $1.12 with and P/S ratio of 11.
Highlight of Business Operations:
As of June 30, 2009 and December 31, 2008, the liability for product returns was $1.7 million and $1.3 million, respectively, and was recorded within Other current liabilities on our condensed consolidated balance sheet. The increased liability balance is the result of increased sales in 2009 compared to 2008, associated with the launch of MOXATAG. We estimate the level of sales that will ultimately be returned pursuant to our return policy and record a related reserve at the time of sale. These amounts are deducted from our gross sales to determine our net revenues.
As of June 30, 2009 and December 31, 2008, reserves for chargebacks were approximately $337,000 and $97,000, respectively, and recorded as a reduction of gross accounts receivable. The reserves for Medicaid rebates were approximately $173,000 and $67,000, respectively, for the same periods and were recorded within Other current liabilities. The increases in the reserve balances compared to prior year end are driven by the launch of MOXATAG during the first quarter of 2009, combined with the timing of payment and deductions taken against the reserves.
We account for income taxes by the liability method. Under this method, deferred income taxes are recognized for tax consequences in future years based on differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end, which are determined by reference to enacted laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are provided if it is more likely than not that some or all of the deferred tax assets will not be realized. As required by SFAS 109, “Accounting for Income Taxes,” or SFAS 109, income tax expense or benefit for the year is allocated among continuing operations, discontinued operations, extraordinary items, other comprehensive income, and items charged or credited directly to shareholders equity. Pursuant to this intraperiod allocation requirement, for the three- and six-month periods ending June 30, 2009, $10,000 of tax benefit and $122,000 of tax expense, respectively, has been allocated to the loss from continuing operations, and $10,000 of tax benefit and $122,000 of tax benefit, respectively, has been allocated to unrealized gains that were recorded in other comprehensive income due to SFAS 115, “Accounting for Certain Investments in Debt and Equity Securities,” and SFAS 133. We did not record any tax provision or benefit for the three- or six-month periods ended June 30, 2008. We have provided a valuation allowance for the full amount of our net deferred tax assets because realization of any future benefit from deductible temporary differences and net operating loss carry forwards cannot be sufficiently assured at December 31, 2008 and June 30, 2009.
Revenues. We recorded revenues from net product sales of $2.1 million and $2.5 million during the three-month periods ended June 30, 2009 and 2008, respectively.
Cost of product sales decreased from $374,000 in 2008 to $279,000 in 2009, primarily as the result of lower sales during the comparable period. Consignment and royalty payments we owed to Kef and Lex based on sales of all KEFLEX non-PULSYS products during the second quarter of 2008 were eliminated in the condensed consolidated statement of operations in accordance with FIN 46R.
Research and Development Expenses. Research and development expenses decreased $2.1 million, or approximately 58%, to $1.5 million for the three months ended June 30, 2009, from $3.6 million for the three months ended June 30, 2008.
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