Chelsea Therapeutics International Ltd. (CHTP, Financial) filed Quarterly Report for the period ended 2009-03-31.
Chelsea Therapeutics is a biopharmaceutical development company that acquires and develops innovative products for the treatment of a variety of human diseases. Chelsea develops technologies that address important unmet medical needs or offer improved cost-effective alternatives to current methods of treatment. Chelsea concentrates its efforts on acquiring and developing technologies for the treatment of rheumatoid arthritis psoriasis cancer and other immunological disorders. Chelsea Therapeutics International Ltd. has a market cap of $72.5 million; its shares were traded at around $2.41 .
Other income and expense. During the quarter ended March 31, 2009, we recorded a gain of $0.09 million on the recovery of previously recorded impairment losses on ARS of $0.3 million that were redeemed at par. In addition, based on a fair value analysis, we recorded a gain on our ARS Rights with UBS of $0.2 million, reflecting the full funding of those ARS holdings at par value through the amended line of credit agreement. For the same period of 2008, we recorded an other-than-temporary loss on impairment of our investments in ARS of $1.6 million.
As of March 31, 2009, we had working capital of approximately $17.3 million, cash and cash equivalents of approximately $19.6 million, short-term investments with a fair value of approximately $8.0 million and investments classified as long-term under the terms of a settlement agreement of approximately $11.6 million. We have financed our operations primarily through sales of our stock and, to a much lesser extent, through the issuance of our common stock pursuant to option or warrant exercises. Cash on hand results primarily from previous financing activities and proceeds from our line of credit with UBS, offset by funds utilized for operating and investing activities.
At March 31, 2009, our short-term investments of $8.0 million and our long-term investments of $11.6 million consisted of the fair value of principal invested in certain ARS and the fair value of the ARS Rights. The ARS held by us are private placement securities with long-term nominal maturities for which the interest rates are reset through a dutch auction on 28 or 35 day cycles. Although the monthly auctions had historically provided a liquid market for these securities, in early 2008, with the liquidity issues in the global credit and capital markets, auctions for these, and similar, securities began to fail and by March 2008, market activity had essentially ceased. Our investments in these securities represent interests in collateralized debt obligations supported by pools of structured credit instruments consisting of student loans. None of the collateral for the ARS held by us includes mortgage, credit card or insurance securitizations. As of March 31, 2009, our ARS holdings had a par value of approximately $23.2 million and all but approximately $4.4 million were AAA/Aaa rated and insured by the Federal Family Education Loan Program (FFELP) and/or over-collateralized by more than 10%. Of the remaining $4.4 million, all were collateralized at 100% and, consistent with our investment policy, $0.75 million carried an A rating, $1.15 million carried an Aa3/AAA rating and the remainder carried AAA/Aaa ratings.
While BA announced a settlement with various regulatory agencies in October 2008, such settlement had no specific commitments to assist us in achieving liquidity in our ARS holdings at BA. It did indicate that BA would use its best efforts to provide liquidity to institutional investors and business customers with accounts valued at $15 million or more, though no specific guidance on how this was to be accomplished was given. In January 2009, we were able to successfully liquidate our holding in Mississippi Higher Ed ARS, with a par value of $2.5 million, on the secondary markets at 83% of its par value, or for $2.075 million. In addition, during the first quarter of 2009, we did received proceeds for partial redemptions, at par value, of certain of our ARS holdings of $0.3 million.
During the fourth quarter of 2008, we finalized the details of our settlement agreement with UBS under the published terms accepting the terms of the settlement agreement from UBS for ARS Rights (the ARS Rights) for our illiquid ARS holdings maintained at UBS as of February 13, 2008. The ARS Rights provide us with the ability to sell the ARS, along with the ARS Rights, to UBS at the par value of the ARS no earlier than June 30, 2010 and expire on July 2, 2012. UBS also agreed that an affiliate would provide us with a no net-cost line of credit for up to a portion of the market value (as determined by UBS) of our ARS holdings as of October 31, 2008. In November 2008, we finalized and submitted documents to UBS to initiate the line of credit account and received a wire transfer into our cash operating account in December 2008 of approximately $7.3 million and recorded a corresponding long-term liability. Subsequently, in March 2009, the line of credit was amended to provide us with a credit line of up to $11.575 million, including the $7.3 million outstanding at December 31, 2008, with our UBS ARS investments remaining pledged as collateral. In March 2009, we requested and received additional funding under the line of credit of approximately $4.3 million and have recorded a payable of $11.6 million as of March 31, 2009.Though the loan is payable on demand, if the UBS affiliate should exercise its right to demand repayment of any portion of the loan prior to the date we can exercise our ARS Rights, UBS and its affiliates would be required to arrange for alternative financing on terms and conditions substantially the same as those contained in the line of credit agreement. If alternative financing cannot be established, then UBS AG, or one of its affiliates, will purchase our pledged UBS ARS at par. As a result, the loan and any alternative financing will not be payable by us prior to the time that we are able to exercise our UBS ARS Rights in accordance with our agreement with UBS and is, accordingly, classified as a long-term liability as of March 31, 2009. We expect to repay the line of credit with the proceeds from the exercise of those ARS Rights. Proceeds of any sales of our UBS ARS will first be applied to repayment of the line of credit with the balance, if any, deposited into our account.
Read the The complete Report
Chelsea Therapeutics is a biopharmaceutical development company that acquires and develops innovative products for the treatment of a variety of human diseases. Chelsea develops technologies that address important unmet medical needs or offer improved cost-effective alternatives to current methods of treatment. Chelsea concentrates its efforts on acquiring and developing technologies for the treatment of rheumatoid arthritis psoriasis cancer and other immunological disorders. Chelsea Therapeutics International Ltd. has a market cap of $72.5 million; its shares were traded at around $2.41 .
Highlight of Business Operations:
Antifolates. From inception through March 31, 2009, we had spent approximately $25.1 million in research and development expenses on our portfolio of antifolates. We currently intend to seek a partner to assist us in the development of our antifolates after the recently announced completion of Phase II proof-of-concept studies for CH-1504 in rheumatoid arthritis and our Phase 1 dosing evaluation in CH-4051. We estimate that we will spend between $0.8 million and $2.7 million more for the trials related to the development of our antifolate compounds in 2009, depending on the availability of additional financial resources. Assuming regulatory approval for marketing, we currently estimate launch of this product and initial royalty revenue from it no sooner than 2012.Other income and expense. During the quarter ended March 31, 2009, we recorded a gain of $0.09 million on the recovery of previously recorded impairment losses on ARS of $0.3 million that were redeemed at par. In addition, based on a fair value analysis, we recorded a gain on our ARS Rights with UBS of $0.2 million, reflecting the full funding of those ARS holdings at par value through the amended line of credit agreement. For the same period of 2008, we recorded an other-than-temporary loss on impairment of our investments in ARS of $1.6 million.
As of March 31, 2009, we had working capital of approximately $17.3 million, cash and cash equivalents of approximately $19.6 million, short-term investments with a fair value of approximately $8.0 million and investments classified as long-term under the terms of a settlement agreement of approximately $11.6 million. We have financed our operations primarily through sales of our stock and, to a much lesser extent, through the issuance of our common stock pursuant to option or warrant exercises. Cash on hand results primarily from previous financing activities and proceeds from our line of credit with UBS, offset by funds utilized for operating and investing activities.
At March 31, 2009, our short-term investments of $8.0 million and our long-term investments of $11.6 million consisted of the fair value of principal invested in certain ARS and the fair value of the ARS Rights. The ARS held by us are private placement securities with long-term nominal maturities for which the interest rates are reset through a dutch auction on 28 or 35 day cycles. Although the monthly auctions had historically provided a liquid market for these securities, in early 2008, with the liquidity issues in the global credit and capital markets, auctions for these, and similar, securities began to fail and by March 2008, market activity had essentially ceased. Our investments in these securities represent interests in collateralized debt obligations supported by pools of structured credit instruments consisting of student loans. None of the collateral for the ARS held by us includes mortgage, credit card or insurance securitizations. As of March 31, 2009, our ARS holdings had a par value of approximately $23.2 million and all but approximately $4.4 million were AAA/Aaa rated and insured by the Federal Family Education Loan Program (FFELP) and/or over-collateralized by more than 10%. Of the remaining $4.4 million, all were collateralized at 100% and, consistent with our investment policy, $0.75 million carried an A rating, $1.15 million carried an Aa3/AAA rating and the remainder carried AAA/Aaa ratings.
While BA announced a settlement with various regulatory agencies in October 2008, such settlement had no specific commitments to assist us in achieving liquidity in our ARS holdings at BA. It did indicate that BA would use its best efforts to provide liquidity to institutional investors and business customers with accounts valued at $15 million or more, though no specific guidance on how this was to be accomplished was given. In January 2009, we were able to successfully liquidate our holding in Mississippi Higher Ed ARS, with a par value of $2.5 million, on the secondary markets at 83% of its par value, or for $2.075 million. In addition, during the first quarter of 2009, we did received proceeds for partial redemptions, at par value, of certain of our ARS holdings of $0.3 million.
During the fourth quarter of 2008, we finalized the details of our settlement agreement with UBS under the published terms accepting the terms of the settlement agreement from UBS for ARS Rights (the ARS Rights) for our illiquid ARS holdings maintained at UBS as of February 13, 2008. The ARS Rights provide us with the ability to sell the ARS, along with the ARS Rights, to UBS at the par value of the ARS no earlier than June 30, 2010 and expire on July 2, 2012. UBS also agreed that an affiliate would provide us with a no net-cost line of credit for up to a portion of the market value (as determined by UBS) of our ARS holdings as of October 31, 2008. In November 2008, we finalized and submitted documents to UBS to initiate the line of credit account and received a wire transfer into our cash operating account in December 2008 of approximately $7.3 million and recorded a corresponding long-term liability. Subsequently, in March 2009, the line of credit was amended to provide us with a credit line of up to $11.575 million, including the $7.3 million outstanding at December 31, 2008, with our UBS ARS investments remaining pledged as collateral. In March 2009, we requested and received additional funding under the line of credit of approximately $4.3 million and have recorded a payable of $11.6 million as of March 31, 2009.Though the loan is payable on demand, if the UBS affiliate should exercise its right to demand repayment of any portion of the loan prior to the date we can exercise our ARS Rights, UBS and its affiliates would be required to arrange for alternative financing on terms and conditions substantially the same as those contained in the line of credit agreement. If alternative financing cannot be established, then UBS AG, or one of its affiliates, will purchase our pledged UBS ARS at par. As a result, the loan and any alternative financing will not be payable by us prior to the time that we are able to exercise our UBS ARS Rights in accordance with our agreement with UBS and is, accordingly, classified as a long-term liability as of March 31, 2009. We expect to repay the line of credit with the proceeds from the exercise of those ARS Rights. Proceeds of any sales of our UBS ARS will first be applied to repayment of the line of credit with the balance, if any, deposited into our account.
Read the The complete Report
