NeurogesX Inc. Reports Operating Results (10-Q)

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May 09, 2009
NeurogesX Inc. (NGSX, Financial) filed Quarterly Report for the period ended 2009-03-31.

NEUROGESX INC. is a biopharmaceutical company focused on developing and commercializing novel pain management therapies. Its initial focus is on chronic peripheral neuropathic pain including postherpetic neuralgia painful HIV-distal sensory polyneuropathy (HIV-DSP) and painful diabetic neuropathy. NeurogesX' late stage product portfolio is led by its product candidate NGX-4010 a dermal patch designed to manage pain associated with peripheral neuropathic pain conditions that the Company believes offers significant advantages over other pain therapies. NeurogesX Inc. has a market cap of $50.4 million; its shares were traded at around $2.87 .

Highlight of Business Operations:

We are a development stage company. To date, we have not generated any revenues and have funded our operations primarily by selling equity securities and establishing debt facilities. We have incurred significant losses since our inception. As of March 31, 2009, we had a deficit accumulated during the development stage of approximately $194.7 million, of which approximately $38.9 million represents non-cash charges for the accretion of redeemable convertible preferred stock. We had cash, cash equivalents and short-term investments totaling $18.8 million at March 31, 2009 and during the first quarter of 2009, we used cash of $4.5 million in operating activities and approximately $1.1 million in repayment of our notes payable. We expect to continue to incur annual operating losses over the next several years and those losses may increase as we continue our efforts to gain marketing approval for Qutenza in the United States and the European Union, prepare for potential commercialization if Qutenza is approved for marketing, and resume development of our product candidates. With respect to our notes payable, at March 31, 2009, the outstanding balance was approximately $2.0 million. This balance is scheduled to be fully repaid by January 2010.

$0.5 million decrease in employee related costs commensurate with our reduced clinical trial activity. Additionally, there was a $0.3 million decrease related to manufacturing costs in support of Qutenza due to the timing of our manufacturing development activities in support of our regulatory submissions. Additional decreases include a $0.3 million decrease in spending related to NGX-1998 and our earlier stage product candidates as we deferred further development until additional funding is obtained, a $0.3 million reduction in regulatory expenses associated with the preparation of our NDA in the first quarter of 2008 and support for our MAA, and a $0.1 million decrease in external quality assurance costs associated with clinical trial activity in the first quarter of 2008.

General and Administrative Expenses. General and administrative expenses decreased approximately $0.3 million, or 12%, to $2.2 million for the three months ended March 31, 2009 from $2.5 million for the same period in 2008. The year over year change was due to a $0.2 million decrease in certain pre-commercialization activities including marketing materials development as well as the timing of certain activities related to our reimbursement strategies, as well as a $0.1 million reduction in marketing employee related expenses.

Interest expense. Interest expense decreased approximately $0.1 million, or 51%, to $0.1 million for the three months ended March 31, 2009 from $0.2 million for the same period in 2008. This decrease was related to the reduction in the outstanding principal balance of notes payable as a result of the scheduled repayment of principal on those notes payable.

Since our inception through March 31, 2009, we have financed our operations primarily through private placements and a public offering of our equity securities and, to a lesser extent, through debt facilities. Through March 31, 2009, we have received approximately $158.7 million from the sale of our equity securities, net of issuance costs. On May 7, 2007, we completed an initial public offering of our common stock which resulted in net cash proceeds, after deducting total expenses including underwriting discounts and commissions and other-offering related expenses, of approximately $38.1 million. On December 28, 2007 we completed the first closing of a private placement of our common stock and warrants resulting in net cash proceeds of $21.5 million and on January 3, 2008, we completed the second and final closing of this private placement of our common stock and warrants resulting in additional net cash proceeds of $2.3 million.

At March 31, 2009, we had approximately $18.8 million in cash, cash equivalents and short-term investments and the balance of our notes payable totaled approximately $2.0 million. During the three months ended March 31, 2009, we used a total of approximately $4.5 million in operating activities and approximately $1.1 million in the repayment of notes payable. We currently anticipate that our quarterly cash uses will remain at approximately these levels until such time as we are able to secure additional funding to increase our investment in pre-commercialization activities and advance our development programs. As a result, we anticipate that our existing cash and investments will be sufficient to meet our projected operating requirements through at least December 31, 2009. Additionally, should we achieve market approval in the United States and if additional resources become available, we expect that our cash uses will increase to support additional pre-launch activities as well as launch related activities.

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