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Repros Therapeutics Inc. Reports Operating Results (10-Q)

November 09, 2009 | About:
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10qk

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Repros Therapeutics Inc. (RPRX) filed Quarterly Report for the period ended 2009-09-30.

Zonagen Inc. is a biopharmaceutical company engaged in the development of products for the human reproductive system, including sexual dysfunction, vaccine adjuvants, products for fertility and female health as well as urological applications, specifically prostate cancer. Zonagen's products to treat sexual dysfunction all incorporate phentolamine mesylate, an alpha-adrenergic blocker, as the active agent. Zonagen's lead product, VASOMAX(R), is a rapidly disintegrating oral formulation of phentolamine for the treatment of male erectile dysfunction. Repros Therapeutics Inc. has a market cap of $16.12 million; its shares were traded at around $0.9667 with and P/S ratio of 37.23.

Highlight of Business Operations:

As of September 30, 2009, we had accumulated losses of $173.1 million, approximately $2.5 million in cash and cash equivalents, and our accounts payable and accrued expenses were approximately $12.2 million. As a result of the October 29, 2009 settlement agreement with certain of our creditors to issue them shares of our common stock and cash as payment in full for our then-outstanding liabilities with such creditors (as described below), subsequent to September 30, 2009, we have reduced the amount of our accounts payable and accrued expenses by approximately $8.9 million. Notwithstanding, the amount of cash on hand is not sufficient to continue to fund our ongoing clinical trials of Androxal®, complete all necessary activities relating to the suspension of our clinical trial program for Proellex®, and pay our accounts payable and accrued expenses as well as our normal corporate overhead and expenses.

On September 11, 2009, we completed a direct registered offering of 1.5 million shares of our common stock at a purchase price of $0.65 per share for aggregate proceeds after expenses of approximately $869,000. On October 13, 2009, we completed a direct registered offering of 3.5 million shares of our common stock at a purchase price of $1.27 per share for aggregate proceeds after expenses of approximately $4.1 million. Such registered direct offerings resulted in an aggregate of approximately $5.0 million net proceeds to us.

On October 29, 2009, we entered into a Master Settlement Agreement and Releases (the “Settlement Agreement”) with certain trade creditors, pursuant to which we agreed to issue up to an aggregate of 5,503,843 shares of our common stock, at $1.10 per share and pay up to an aggregate of approximately $2.85 million in cash to such creditors as payment in full for our then-outstanding liabilities of approximately $8.9 million and for the release of the claims held by and the dismissal of the litigation commenced by such creditors against the Company. Under the Settlement Agreement, we agreed to use our best efforts to prepare and file a registration statement to register such shares issued to the creditors, to use our best efforts to have such registration statement declared effective as soon as possible, and to maintain such registration statement until all such shares registered thereunder to the creditors have been sold or for a period of one year, whichever comes first. We also agreed to refrain from (i) filing any other registration statement for any primary public offering or other offering of our equity securities prior to filing such registration statement with the Securities and Exchange Commission and (ii) selling any shares for any primary public offering or other offering of our equity securities during the ten business days immediately following the effective date of such registration statement, in order to provide such creditors an opportunity to sell their shares issued under the Settlement Agreement.

On August 7, 2009, the Company received a letter from The NASDAQ Stock Market advising that the Company s market value was below the minimum $50,000,000 requirement for continued listing on the NASDAQ Global Market. The Company is provided 90 days, until November 5, 2009, to regain compliance, at which time we have been advised that the Company s securities will be delisted from such market unless the market value of the Company s securities listed on NASDAQ is $50,000,000 or more for a minimum of 10 consecutive business days. The letter also recited that the Company s total assets and total revenue fell below certain required thresholds under related rules and suggested that the Company consider applying for transfer of its securities to the NASDAQ Capital Market, which has substantially lower listing requirements. On September 15, 2009, the Company received a second letter from The NASDAQ Stock Market advising that, in addition to the deficiencies previously disclosed on August 7, 2009, the Company s market value of publicly held shares was below the minimum $15,000,000 requirement for continued listing on The NASDAQ Global Market by NASDAQ Listing Rule 5450(b)(2)(C) or 5450(b)(3)(C). The Company is provided 90 days, until December 14, 2009, to regain compliance, at which time we have been advised that the Company s securities will be delisted from such market unless the Company s market value of publicly held shares is $15,000,000 or more for a minimum of 10 consecutive business days. The Company is still required to regain compliance with the maintenance requirements set forth in the prior notice it received by November 5, 2009. The letter also suggested that the Company consider applying for transfer of its securities to The NASDAQ Capital Market, which has substantially lower listing requirements.

In addition, we have recently suspended dosing in the clinical trials of Proellex®, have not received regulatory approval for any of our product candidates, have not successfully earned any significant commercial revenues from any of our product candidates and may never launch either of our product candidates. If we cannot resume dosing in the clinical trials of Proellex® or do not successfully commercialize any of our product candidates, we will be unable to achieve our business objectives. In addition, the reported results of our clinical trials completed to date may not be indicative of results that will be achieved in later-stage clinical trials involving larger and more diverse patient populations. As of September 30, 2009, we had an accumulated deficit of approximately $173.1 million, accounts payable and accrued expenses of approximately $12.2 million and cash and cash equivalents of approximately $2.5 million. As a result of the October 29, 2009 settlement agreement with certain of our creditors to issue them shares of our common stock and cash as payment in full for our then-outstanding liabilities with such creditors (as described below), we have reduced the amount of our accounts payable and accrued expenses by approximately $8.9 million. Notwithstanding, there is a substantial doubt about our ability to continue as a going concern and we expect to continue to incur significant losses over the next several years, and we may never become profitable. Our financial statements do not include any adjustments that might result from the outcome of these uncertainties.

We capitalize the cost associated with building our patent library for Proellex® and Androxal®. As of September 30, 2009, other assets consist of capitalized patent and patent application costs in the amount of $1,109,000. Patent costs, which include legal and application costs related to the patent portfolio, are being amortized over 20 years, or the lesser of the legal or the estimated economic life of the patent. Amortization of patent costs was $13,000 and $7,000 for the three month period ended September 30, 2009 and 2008, respectively and was $39,000 and $15,000 for the nine month period ended September 30, 2009 and 2008, respectively. The entire $1,109,000 in capitalized patents and patent applications relates to Androxal®.

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