Pain Therapeutics (PTIE) filed Quarterly Report for the period ended 2009-09-30.
Pain Therapeutics is developing a new generation of opioid painkillers.Opioids are drugs derived from the poppy plant. The company uses technology to reformulate opioid drugs such as morphine into new painkillers with improved clinical benefits. The company has four opioid painkillers in Phase II clinical trials. The company believes its drugs offer enhanced pain relief fewer adverse side effects and reduced tolerance and addiction compared to existing opioid painkillers. Pain Therapeutics has a market cap of $227 million; its shares were traded at around $5.38 with a P/E ratio of 19.2 and P/S ratio of 3.6.
Highlight of Business Operations:
All of our collaboration, contract and milestone revenues are recognized pursuant to our strategic alliance with King. In 2005, King made an upfront cash payment of $150.0 million to us. King has made milestone payments to us of $25.0 million related to clinical and regulatory milestones under the strategic alliance. We could also receive from King up to $125.0 million in additional milestone payments in the course of clinical development of the opioid painkillers under the strategic alliance. Subject to certain limitations, King is also obligated to fund development expenses incurred by us pursuant to the collaboration agreement. King is obligated to fund the commercialization expenses of, and has the exclusive right to market and sell, drugs developed in connection with the strategic alliance. King is obligated to pay us a 20% royalty on net sales of drugs developed in connection with the strategic alliance, except as to the first $1.0 billion in cumulative net sales of such drugs, for which the royalty is set at 15%.
In 2005, King paid us a $150.0 million upfront fee in connection with the closing of our strategic alliance with them. Program fee revenues recognized from this upfront fee were $3.6 million for each of the three months ended September 30, 2009 and 2008 and $10.8 million for each of the nine months ended September 30, 2009 and 2008. We expect to recognize the remainder of the program fee ratably over our estimate of the development period under the strategic alliance with King. We currently estimate the development period for all four expected drug candidates to extend through September 2014.
Collaboration revenues decreased to $0.2 million from $6.7 million in the three months ended September 30, 2009 and 2008, respectively, and to $6.1 million from $24.7 million in the nine months ended September 30, 2009 and 2008, respectively. These revenues are related to reimbursement of our development expenses incurred pursuant to the King strategic alliance. Collaboration revenues were lower in the three and nine month periods of 2009 as compared to the same periods of 2008 primarily because the reimbursable expenses we incurred pursuant to the strategic alliance with King were lower.
Research and development expenses decreased to $4.5 million in the three months ended September 30, 2009 from $12.9 million in the same period in 2008 and to $17.2 million in the nine months ended September 30, 2009 from $36.6 million in the same period in 2008. The decrease was primarily due to decreases in clinical and other development activities for Remoxy as well as the recent assumption by King of primary regulatory responsibility for Remoxy, partially offset by increased activities in metastatic melanoma, hemophilia and other projects. Research and development expenses included non-cash stock-based compensation expense of $1.0 million and $2.9 million in the three months ended September 30, 2009 and 2008, respectively and $3.0 million and $4.9 million in the nine months ended September 30, 2009 and 2008, respectively.
General and administrative expenses consist primarily of compensation and other general corporate expenses. General and administrative expenses decreased to $1.5 million in the three months ended September 30, 2009 from $3.6 million in the same period in 2008 and to $4.7 million in the nine months ended September 30, 2009 from $7.3 million in the same period in 2008. The decrease was primarily due to decreases in compensation and operating expenses. General and administrative expenses included non-cash stock-based compensation expense of $0.7 million and $2.3 million for the three months ended September 30, 2009 and 2008, respectively, and $1.9 million and $3.5 million for the nine months ended September 30, 2009 and 2008, respectively. We expect general and administrative expenses to increase over the next several years in connection with support of pre-commercialization and commercialization activities for our drug candidates. The increase may fluctuate from period to period due to the timing and scope of these activities and the results of clinical trials and preclinical studies.
Interest income decreased to $0.6 million for the three months ended September 30, 2009 from $1.4 million in the same period in 2008 and decreased to $1.2 million for the nine months ended September 30, 2009 from $5.2 million in the same period in 2008. The decreases in interest income are primarily due to decreases in prevailing interest rates on investments in marketable securities and, to a lesser extent, decreased average balances of marketable securities. We expect our interest income to decrease in the future as we use cash to fund our operations.
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