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AspenBio Pharma Inc. Reports Operating Results (10-Q)

August 05, 2010 | About:
10qk

10qk

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AspenBio Pharma Inc. (APPY) filed Quarterly Report for the period ended 2010-06-30.

Aspenbio Pharma Inc. has a market cap of $25.6 million; its shares were traded at around $0.64 with and P/S ratio of 88.4.
This is the annual revenues and earnings per share of APPY over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of APPY.


Highlight of Business Operations:

Selling, general and administrative expenses in the six months ended June 30, 2010, totaled $4,002,000, which is a $1,176,000 or 42% increase as compared to the 2009 period. Hiring of additional management personnel to advance the AppyScore™ product in clinical trials and regulatory activities resulted in approximately $338,000 of additional expenses in the 2010 period. Approximately $514,000 in additional stock based compensation expense was recorded in 2010 over 2009 amounts. Included in the stock based compensation increase is $118,000 related to options granted to animal health advisors. Selling, general and administrative expenses also increased by $109,000 in insurance related costs primarily due to increased medical benefits costs and an increase in the Company s insurance limits.

Research and development expenses in the 2010 period totaled $3,355,000, which is a $303,000 or 8% decrease as compared to the 2009 period. Development efforts and advances on the appendicitis test, including product development advances, clinical trial and regulatory related activities comprised the primary expenses. Clinical trial and regulatory related expenses were approximately $569,000 higher in the six months ended June 30, 2010 primarily due to the AppyScore clinical trial that was completed earlier in 2010, which was not commenced until the second half of 2009. Development expenses incurred for advances on the cassette and reader program were approximately $443,000 lower in 2010 as compared to 2009, primarily due to lower development costs incurred from product development firms. Expenses incurred in connection with product and market related studies were approximately $250,000 lower in 2010 as compared to 2009. Hiring of additional scientific personnel to advance the AppyScore product in clinical trials and regulatory activities resulted in approximately $131,000 of additional expenses in the 2010 period. The development expenses on the single-chain animal health products decreased approximately $251,000.

Research and development expenses in the 2010 period totaled $1,311,000, which is a $931,000 or 42% decrease as compared to the 2009 period. Development efforts and advances on the appendicitis test, including product development advances, clinical trial and regulatory related activities comprised the primary expenses. Development expenses incurred for advances on the cassette and reader program were approximately $343,000 lower in 2010 as compared to 2009, primarily due to lower development costs incurred from product development firms. Expenses incurred in connection with product and market related studies were approximately $250,000 lower in 2010 as compared to 2009. Hiring of additional scientific personnel to advance the AppyScore product in clinical trials and regulatory activities resulted in approximately $21,000 of additional expenses in the 2010 period. The development expenses on the single-chain animal health products decreased approximately $243,000.

For financial reporting purposes, the up-front license fees received from this agreement, net of the amounts due to WU, have been recorded as deferred revenue and will be amortized over the term of the Novartis License Agreement. Milestone revenue is or will be recognized into income commencing with the date such milestones are achieved. During the six months ended June 30, 2010, milestones totaling $100,000 were achieved triggering the commencement of amortization of $100,000 of deferred revenue. As of June 30, 2010, deferred revenue of $746,062 has been classified as a current liability and $669,167, has been classified as a long-term liability. The current liability includes the remaining milestone revenue that is subject to achievement conditions and also includes the next twelve months portion of the amortizable milestone revenue. During each of the six month periods ended June 30, 2010 and 2009, $32,863 and $31,973 was recorded as the amortized license fee revenue arising from the Novartis License Agreement.

Net cash consumed by operating activities was $6,446,000 during the six months ended June 30, 2010. Cash was consumed by the loss of $7,294,000, less non-cash expenses relating to stock-based compensation totaling $1,320,000 and depreciation, amortization and other totaling $258,000. A decrease in accounts receivable of $26,000 resulting from lower base antigen sales levels provided cash. Inventory levels decreased by $64,000, from net sales activities associated with management s decision late in 2009 to substantially suspend the production of antigen products as a result of its strategic decision to focus available scientific resources on appendicitis and single-chain animal product development. Cash provided in operations was increased by the net decrease of $832,000 in accounts payable and accrued expenses, primarily due to the decrease in expenses related to the recent completion of the Company s AppyScore clinical trial.

Net cash consumed by operating activities was $4,989,000 during the six months ended June 30, 2009. Cash was consumed by the loss of $6,500,000, less non-cash expenses of $806,000 for stock-based compensation and $162,000 for depreciation and amortization and other non-cash items. Our base antigen business is generally fairly constant from year to year and therefore does not generally impact operating cash flows. As of June 30, 2009 inventories had increased by $78,000 due to receipt of a recent raw material supply order and prepaid expenses and other current assets generated cash of $598,000 primarily related to shared costs incurred under the Novartis License Agreement, payable by Novartis, in the amount of $369,000.

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