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Catalyst Pharmaceutical Partners Inc. Reports Operating Results (10-Q)

August 07, 2009 | About:

Catalyst Pharmaceutical Partners Inc. (CPRX) filed Quarterly Report for the period ended 2009-06-30.

CATALYST PHARMACEUTICAL PARTNERS INC. is a biopharmaceutical company focused on the development and commercialization of prescription drugs for the treatment of addiction and obsessive compulsive disorders. The Company has obtained from Brookhaven National Laboratory an exclusive worldwide license for Brookhaven\'s patent portfolio in the US relating to the right to use vigabatrin to treat a wide variety of substance addictions and obsessive compulsive disorders. Catalyst has also been granted rights to Brookhaven\'s vigabatrin-related foreign patents or patents pending worldwide. The Company\'s initial product candidate based on vigabatrin is CPP-109. CPP-109 has been granted `Fast Track` status by the U.S. Food & Drug Administration for the treatment of cocaine addiction. This indicates that the FDA has recognized that CPP-109 is intended for the treatment of a serious or life-threatening condition for which there is no effective treatment and which demonstrates the potential Catalyst Pharmaceutical Partners Inc. has a market cap of $5.9 million; its shares were traded at around $0.42 .

Highlight of Business Operations:

Research and Development Expenses. Research and development expenses for the three and six months ended June 30, 2009 and 2008 were $1,376,253 and $1,902,144 and $3,698,885 and $2,986,503, respectively, including stock-based compensation expense in each of the three and six month periods of $48,440 and $99,532 and $120,140 and $274,088, respectively. Research and development expenses, in the aggregate, represented approximately 78% and 77%, and 77% and 71% of total operating costs and expenses, respectively, for the three and six months ended June 30, 2009 and 2008. The stock-based compensation is non-cash and relates to the expense of stock options awards and restricted stock unit awards to our employees, officers, directors and scientific advisors. Research and development expenses for the three months ended June 30, 2009 decreased from those in the same period in 2008, as clinical site expenses for the U.S. Phase II cocaine trial decreased as it neared completion. Expenses for research and development for the six month period ended June 30, 2009 grew compared to amounts expended in the same period in 2008 as we incurred expenses for services related to our Phase II clinical trial evaluating CPP-109 for use in the treatment of cocaine addiction and our proof-of-concept study evaluating CPP-109 for use in the treatment of methamphetamine addiction.

General and Administrative Expenses. General and administrative expenses for the three and six months ended June 30, 2009 and 2008 were $392,559 and $561,533 and $1,114,470 and $1,201,206, respectively, including stock-based compensation expense in each of the three and six months periods of $16,092 and $23,676 and $86,666 and $112,524, respectively. General and administrative expenses represented 22% and 23% and 23% and 29%, respectively, of total operating costs and expenses, for the three and six months ended June 30, 2009 and 2008. The decreases of $168,974 and $86,736 in general and administrative expenses for the three and six months ended June 30, 2009 when compared to the same periods in 2008 are due primarily to decreases in professional and consulting fees, printing costs, travel and entertainment and non-cash stock based compensation. General and administrative expenses include among other expenses, managements salaries and benefits, office expenses, legal and accounting fees and travel expenses for certain employees and consultants, directors and members of our Scientific Advisory Board. We expect general and administrative costs to remain relatively constant through the end of 2009 when compared to those costs incurred for the six months ended June 30, 2009.

Stock-Based Compensation. Total stock based compensation for the three and six months ended June 30, 2009 and 2008 was $64,532 and $123,208 and $206,806 and $386,612, respectively. The reduction in expense from the comparable period in 2008 is mostly due to a decrease in the amount of granted awards vesting immediately. As of June 30, 2009, we had outstanding stock options to purchase 2,781,149 shares of our common stock, of which options to purchase 2,667,557 shares were vested and options to purchase 113,592 shares were unvested. We also have granted restricted stock units to receive 55,484 shares of common stock as of June 30, 2009, of which 50,484 shares had vested at that date.

Since our inception, we have financed our operations primarily through the net proceeds of private placements, the IPO and the Shelf Offering. At June 30, 2009, we had cash and cash equivalents of $6.3 million and working capital of $5.9 million. At December 31, 2008, we had cash and cash equivalents of $11.8 million and working capital of $10.5 million. At June 30, 2009, substantially all of our cash and cash equivalents were deposited with one financial institution. We had cash balances at certain financial institutions in excess of federally insured limits throughout the quarter.

Net cash used in operating activities was $5,501,052 and $2,839,439, respectively, for the six months ended June 30, 2009 and 2008. During the six months ended June 30, 2009, net cash used in operating activities was primarily attributable to our net loss of $4,793,088 and decreases of $57,044 in accounts payable and $908,344 in accrued expenses and other liabilities. This was offset in part by $222,645 of non-cash expenses and decreases of $22,626 in prepaid expenses and deposits, and $12,153 in interest receivable. During the six months ended June 30, 2008, net cash used in operating activities was primarily attributable to our net loss of $3,961,487 and a decrease in accounts payable of $38,589. This was offset in part by $403,052 of non-cash expenses, and decreases of $39,542 in accrued interest receivable and $247,757 in prepaid expenses and deposits, and an increase of $470,286 in accrued expenses and other liabilities. Non-cash expenses include depreciation and stock-based compensation expense.

No cash was provided by (used in) financing activities for the six months ended June 30, 2009. Net cash used in financing activities for the six months ended June 30, 2008 was $19,004. Of these funds, $16,994 was used for the payment of shelf registration costs and $2,010 for the payment of employee withholding tax related to vesting of restricted stock units.

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