Transcept Pharmaceuticals Inc. Reports Operating Results (10-Q)
Transcept Pharmaceuticals Inc. formerly Novacea Inc. is a biopharmaceutical company focused on in-licensing developing and commercializing therapies for the treatment of cancer. The Company\'s product portfolio features two clinical-stage oncology product candidates with worldwide rights Asentar and AQ4N each of which is a potential treatment for certain types of cancer. The Company continues to be primarily involved in performing research and development activities hiring personnel licensing new products and raising capital to support and expand these activities. Its goal is to become a leading specialty pharmaceutical company addressing important therapeutic needs in psychiatry and sleep medicine. Transcept Pharmaceuticals Inc. has a market cap of $121.4 million; its shares were traded at around $9.26 with a P/E ratio of 1.7 and P/S ratio of 7.3. Highlight of Business Operations: General and administrative expenses increased 193% to $5.02 million for the three months ended June 30, 2009 from $1.71 million for the comparable period in 2008. The approximate $3.31 million increase for the three months ended June 30, 2009 as compared to June 30, 2008 consists of the following:
Research and development expenses decreased 30% to $4.47 million for the six months ended June 30, 2009 from $6.39 million for the six months ended June 30, 2008. The decrease of $1.92 million for the six months ended June 30, 2009 is primarily attributable to Intermezzo® development costs declining by $1.47 million as a result of the following:
General and administrative expenses increased 186% to $9.23 million for the six months ended June 30, 2009 from $3.22 million for the comparable period in 2008. The approximate $6.01 million increase for the six months ended June 30, 2009 as compared to June 30, 2008, respectively, consists of the following:
Interest expense decreased 61% to $171,000 for the six months ended June 30, 2009 from $442,000 for the comparable period in 2008. The $271,000 decrease for the six months ended June 30, 2009 was primarily attributable to lower average outstanding debt during the 2009 period as compared to the same period in the prior year. Additionally, the six months ended June 30, 2009 included $129,000 related to repayment in full of the Hercules debt, including a charge for early repayment, write off of remaining debt discount and loan fees.
From the period of our inception through the completion of the Merger, we financed our operations primarily through private placements of preferred stock, debt financing and interest income. Through June 30, 2009, we received net proceeds of $71.1 million from the sale of preferred stock. In January 2009, through the Merger, we acquired an additional $80.9 million in cash, cash equivalents and marketable securities. On August 4, 2009, we received a $25 million license fee from Purdue in connection with the effectiveness of the Collaboration Agreement. See the Overview at the beginning of Item 2. Managements Discussion and Analysis for further details of this agreement.
In April 2006, we entered into a $10.0 million venture debt facility agreement with Hercules Technology Growth Capital, Inc., or Hercules, and drew down $4.0 million in May 2006 and $6.0 million in December 2006, against which interest accrued at rates of 10.69% and 10.94%, respectively. Outstanding principal, accrued interest, and unpaid interest under the loan and security agreement became due and payable on certain change of control transactions. In conjunction with the Merger noted above and pursuant to an agreement with Hercules, on February 3, 2009 we repaid in full all amounts outstanding related to this loan.
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