Optimer Pharmaceuticals, Inc. has a market cap of $468 million; its shares were traded at around $9.72 with and P/S ratio of 3.2.
Highlight of Business Operations:Inventory is stated at the lower of cost or market. Cost is determined in a manner which approximates the first-in, first-out (FIFO) method. We capitalize inventory produced in preparation for product launches upon FDA approval when costs are expected to be recoverable through the commercialization of the product. We reserve for potentially excess, dated or obsolete inventories based on an analysis of inventory on hand compared to forecasts of future sales. As of September 30, 2012, inventories consisted of $11.6 million in raw materials, $0.5 million in work in process and $1.7 million in finished goods. During the third quarter, we reserved $0.5 million of our inventory cost.
Total revenues for the three months ended September 30, 2012 and 2011 were $17.9 million and $11.1 million, respectively, an increase of $6.8 million. The increase was due to higher product sales compared to the same period in the prior year. In addition, we recorded contract revenue from APEL consisting of royalties on product sales in APEL territories and from the sale of bulk pharmaceutical product to collaboration partners.
Cost of Product Sales. Cost of product sales for the three months ended September 30, 2012 and 2011 was $1.4 million and $0.6 million, respectively. The increase of $0.8 million was due to higher product sales.
Total revenues for the nine months ended September 30, 2012 and 2011 were $82.0 million and $80.4 million, respectively, an increase of $1.6 million. The increase was primarily due to higher product sales compared to the same period in the prior year, offset by a decrease in contract revenue. In April 2012, we received a $20.0 million up-front license payment from Astellas Japan and a 10.0 million Euro milestone payment from APEL in association with the first commercial sale of DIFICLIR in an APEL territory. In the first quarter of 2011, we received a $69.2 million up-front license payment from APEL.
In February 2007, we repurchased the rights to develop and commercialize DIFICID in North America and Israel from Par under a prospective buy-back agreement. We paid Par a one-time $5.0 million milestone payment in June 2010 for the successful completion of the second pivotal Phase 3 trial for DIFICID. We are obligated to pay Par a 5% royalty on net sales by us, our affiliates or our licensees of DIFICID in North America and Israel and are obligated to pay a 1.5% royalty on net sales by us or our affiliates of fidaxomicin in the rest of the world. In addition, in the event we license our right to market fidaxomicin in the rest of the world, we will be required to pay Par a 6.25% royalty on net revenues received related to fidaxomicin. We are obligated to pay each of these royalties, on a country-by-country basis, for seven years, commencing on the applicable commercial launch in each such country. For the nine months ended September 30, 2012, we paid an aggregate of $6.6 million in royalties to Par.
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