PROLOR BIOTECH INC. Reports Operating Results (10-K/A)

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Mar 23, 2012
PROLOR BIOTECH INC. (PBTH, Financial) filed Amended Annual Report for the period ended 2011-12-31.

Prolor Biotech has a market cap of $324 million; its shares were traded at around $6.25 .

Highlight of Business Operations:

Severance (income) expenses for the years ended December 31, 2011, 2010 and 2009 and the period from May 31, 2005 (inception date) through December 31, 2011 amounted to $22,800, $11,579, $(1,044), and $50,292, respectively.

Research and development grants received by the Company reduced research and development expenses by $1,581,097, $1,383,806, $484,912 and $4,964,694 for the years ended December 31, 2011, 2010 and 2009 and for the period from May 31, 2005 (inception date) through December 31, 2011, respectively. Research and development grants receivable as of December 31, 2011 was $134,933.

The Company has multiple research and development projects ongoing at any one time. The Company utilizes its internal resources, employees, and infrastructure across multiple projects and tracks time spent by employees on specific projects. The Company believes that significant investment in product development is a competitive necessity and plans to continue these investments in order to realize the potential of its product candidates. For the years ended December 31, 2011, 2010 and 2009 and for the period from May 31, 2005 (inception date) through December 31, 2011, the Company incurred gross research and development expenses in the aggregate of $13,003,024, $6,603,589, $6,040,235 and $34,707,162, respectively. The increase in research and development expenses in 2011 as compared to 2010 was primarily due to increased product manufacturing and clinical trial expenses, an increase in salaries, stock-based compensation and consultants’ fees, as well as materials used in the clinical trials. In addition, rent expenses increased due to the Company’s move to new premises. The increase in expenses in 2010 as compared to 2009 was primarily due to an increase in stock-based compensation and depreciation expenses.

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation expenses, for persons serving in the Company’s executive and administration functions. Other general and administrative expenses includes facility-related costs not otherwise included in research and development expenses, and professional fees for legal and accounting services, including those associated with reporting obligations applicable to public companies in the United States. The Company expects that its general and administrative expenses will increase as it adds additional personnel and advances its research and development programs. For the years ended December 31, 2011, 2010 and 2009 and for the period from May 31, 2005 (inception date) through December 31, 2011, the Company incurred general and administrative expenses of $3,425,400, $2,457,043, $1,901,952 and $17,101,969, respectively. The increase in 2011 compared to 2010 resulted primarily to an increase in stock-based compensation expenses. The increase in 2010 compared to 2009 resulted primarily from stock-based compensation and an increase in professional services and other fees.

The Company estimates the fair value of stock options granted using the Black-Scholes-Merton option-pricing model. For the years ended December 31, 2011, 2010 and 2009 and for the period from May 31, 2005 (inception date) through December 31, 2011, the Company’s stock-based compensation expenses were $1,920,926, $883,425, $728,341 and $10,000,136, respectively. The increase in stock-based compensation expenses for the year ended December 31, 2011 as compared to the year ended December 31, 2010 was primarily due to an increased option value used for the calculation of the stock-based compensation for 500,000 options that were granted at the end of 2010, as compared to a lower option value for the 550,000 options granted in January 2010. The increase in stock-based compensation expenses for the year ended December 31, 2010 as compared to the year ended December 31, 2009 was primarily due to 550,000 new options granted at the beginning of 2010 compared to 375,500 granted at the beginning of 2009, as well as a higher option value used for the calculation of stock-based compensation.

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