Adolor Corp. (ADLR) filed Quarterly Report for the period ended 2009-09-30.
Adolor Corporation is a biopharmaceutical company specializing in the discovery development and commercialization of novel prescription pain management products. Entereg is Adolor's lead product candidate under development for the management of the gastrointestinal side effects associated with opioid use. Adolor and GlaxoSmithKline are collaborating in the worldwide development and commercialization of Entereg in multiple indications. Adolor also has a number of discovery research programs focused on the identification of novel compounds for the treatment of pain. By applying its knowledge and expertise in pain management along with ingenuity Adolor is seeking to make a positive difference for patients caregivers and the medical community. Adolor Corp. has a market cap of $68.5 million; its shares were traded at around $1.48 with and P/S ratio of 1.5. Adolor Corp. had an annual average earning growth of 1% over the past 5 years.
Highlight of Business Operations:
For the nine months ended September 30, 2009, our total net revenues and net loss were $24.4 million and $40.9 million, respectively. Net shipments of ENTEREG for the three and nine months ended September 30, 2009 were $4.0 million and $8.9 million, respectively, of which we recognized $3.3 million and $7.2 million, respectively, as net product sales under our revenue recognition policy. We will need net sales of ENTEREG to increase significantly beyond current levels before we will be able to achieve profitability and positive cash flow from operations. Ultimately, we may never generate sufficient revenues from ENTEREG for us to reach profitability, generate positive cash flow or sustain, on an ongoing basis, our current or projected levels of operations.
Cash, cash equivalents and short-term investments were $94.4 million at September 30, 2009 and $131.9 million at December 31, 2008, representing 91% of our total assets. We invest excess cash predominantly in U.S. Treasury obligations. Our working capital, which is calculated as current assets less current liabilities, was $75.5 million at September 30, 2009 compared to $112.3 million at December 31, 2008. The decrease in cash, cash equivalents, short-term investments and working capital was primarily from the use of cash to fund our operations, offset partially by $9.3 million received from Glaxo as a result of the modification of certain payment provisions under our collaboration agreement.
Net cash used in operating activities of $34.0 million and $18.1 million for the nine months ended September 30, 2009 and 2008, respectively, resulted primarily from research and development expenditures associated with our product candidates and selling, general and administrative expenses, offset by payments received under the Glaxo and Pfizer collaboration agreements. For the nine months ended September 30, 2009 and 2008, we received net payments of $13.4 million and $26.4 million, respectively, under such collaboration agreements. Of the $13.4 million received during the nine months ended September 30, 2009, $9.3 million was related to the acceleration of payments owed by Glaxo to the Company under the terms of Amendment No. 4 of the Glaxo collaboration agreement. The $26.4 million received during the nine months ended September 30, 2008 included a $20.0 million milestone payment related to the FDA’s approval of ENTEREG. In addition, we received $8.1 million of cash related to net shipments of ENTEREG during the nine months ended September 30, 2009.
Net shipments of ENTEREG were $4.0 million and $0.6 million for the three months ended September 30, 2009 and 2008, respectively, and were $8.9 million and $0.6 million for the nine months ended September 30, 2009 and 2008, respectively. We recognized net product sales of $3.3 million and $0.2 million under our revenue recognition policy during the three months ended September 30, 2009 and 2008, respectively, and $7.2 million and $0.2 million for the nine months ended September 30, 2009 and 2008, respectively. The increase in 2009 compared to 2008 was due to an increase in the number of ordering and reordering hospitals period-over-period. Since launch, approximately 625 hospitals have reordered ENTEREG. We have a customer deposit balance of $1.2 million at September 30, 2009. Customer deposits represent net shipments made for which payment has been received from Glaxo, but which have not yet been recognized as product sales revenue.
Contract revenues are derived from our collaboration agreements with Glaxo and Pfizer and include milestone payments, cost reimbursement, amortization of up-front license fees and other revenue. Contract revenues were $5.3 million and $7.7 million for the three months ended September 30, 2009 and 2008, respectively, and were $17.2 million and $40.9 million for the nine months ended September 30, 2009 and 2008, respectively. Contract revenues for the nine months ended September 30, 2008 included a $20.0 million milestone payment received from Glaxo in conjunction with the FDA approval of ENTEREG. Contract revenues from Pfizer for the three and nine months ended September 30, 2009 decreased in 2009 due to a decrease in delta program costs, which resulted in lower cost reimbursement, as well as reduced amortization of deferred licensing fees due to extensions of the estimated performance period in the third quarter of 2008 and the first quarter of 2009. These decreases were partially offset by increased revenue that was recognized related to $9.3 million of payments received from Glaxo during the nine months ended September 30, 2009 under the terms of Amendment No. 4 to the collaboration agreement. Of the $9.3 million received, $8.4 million was received in the first quarter of 2009 and is being recognized as revenue on a straight-line basis over the estimated remaining performance period under the collaboration agreement, which extends to March 2016. The remaining $0.9 million was received and recognized as revenue in the second quarter of 2009.
As a result of our June 2009 restructuring, we recorded a charge of $4.1 million for the nine months ended September 30, 2009. The reduction in expense of $0.1 million for the three months ended September 30, 2009 resulted from an increase in the estimated salvage value of certain impaired assets affected by the restructuring. The charge for the nine months ended September 30, 2009 consisted of $2.2 million of employee severance- and benefit-related costs and a $1.9 million non-cash impairment charge primarily related to leasehold improvements and laboratory equipment used for activities which were eliminated pursuant to our restructuring. There was no restructuring charge for the three or nine months ended September 30, 2008.
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