Achillion Pharmaceuticals Inc. has a market cap of $96.3 million; its shares were traded at around $2.5 with and P/S ratio of 23.8. ACHN is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:We have devoted and are continuing to devote substantially all of our efforts toward product research and development. We have incurred losses of $204 million from inception through June 30, 2010. Our net losses were $12.0 million and $12.8 million for the six months ended June 30, 2010 and 2009, respectively. We have funded our operations primarily through:
To date, we have not generated revenue from the sale of any drugs. The majority of our revenue recognized to date has been derived from our collaboration with Gilead to develop compounds for use in treating chronic hepatitis C. During the six months ended June 30, 2010 and 2009, we recognized $117,000 and $(300,000), respectively, under this collaboration agreement.
Upon initiating our collaboration with Gilead, we received a payment of $10.0 million, which included an equity investment by Gilead determined to be worth approximately $2.0 million. The remaining $8.0 million is being accounted for as a nonrefundable up-front fee recognized under the proportionate performance model. Revenue under the proportionate performance model is recognized as our effort under the collaboration is incurred. Payments made by us to Gilead in connection with this collaboration are being recognized as a reduction of revenue. When our performance obligation is complete, we will recognize milestone payments, if any, when the corresponding milestone is achieved. We will recognize royalty payments, if any, upon product sales.
We have also recognized revenue under a Small Business Innovation Research, or SBIR, grant by the National Institutes of Health, or NIH, for the further study of a back-up series of compounds related to ACH-702 for the treatment of tuberculosis infection. During the three and six months ended June 30, 2010 and June 30, 2009, we recognized $144,000 and $0, respectively, of revenue under this grant.
Revenue. Revenue was $187,000 and $(7,000) for the three months ended June 30, 2010 and 2009, respectively, and $261,000 and $(300,000) for the six months ended June 30, 2010 and 2009, respectively. The increase in revenue in 2010 is due to lower external costs incurred by Gilead, under our collaboration, which are shared by us and recorded as a reduction in revenue, combined with the recognition of revenue related to our SBIR grant for the further study and characterization of our series of compounds related to ACH-702. During the three and six months ended June 30, 2009, external costs incurred by Gilead exceeded external costs incurred by us, resulting in a net payable from us to Gilead and negative revenue for the period.
Research and Development Expenses. Research and development expenses were $4.8 million and $4.4 million for the three months ended June 30, 2010 and 2009, respectively, and $8.8 million and $9.1 million for the six months ended June 30, 2010 and 2009, respectively. The increase for the three months ended June 30, 2010 was primarily due to increased expenses related to clinical testing of ACH-1625 and ACH-2684 preclinical studies, offset by decreased clinical trial costs related to elvucitabine. The decrease for the six months ended June 30, 2010 was primarily due to decreased facilities costs related to our reduction of leased laboratory and office space combined with lower intellectual property costs and lower costs resulting from our July 2009 reduction in workforce. We expect research and development expenses to increase during the remainder of the year as we continue clinical testing of ACH-1625, complete the necessary CMC activities for ACH-1095, complete IND-enabling preclinical testing for ACH-2684 and continue IND-enabling preclinical testing for ACH-2928. Research and development expenses for the three and six months ended June 30, 2010 and 2009 are comprised as follows:
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