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

November 12, 2009 | About:
10qk

10qk

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Catalyst Pharmaceutical Partners Inc. (CPRX) filed Quarterly Report for the period ended 2009-09-30.

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 t Catalyst Pharmaceutical Partners Inc. has a market cap of $10.5 million; its shares were traded at around $0.75 .

Highlight of Business Operations:

Under our license agreement with Northwestern, we will be responsible for continued research and development of any resulting product candidates. We have the right to terminate the agreement in whole or in part after August 27, 2012, upon written notice. As of September 30, 2009, we have paid Northwestern University upfront payments aggregating $10,000 and we are obligated to pay certain additional fees, including $25,000 in upfront fees and $32,871 in expenses, and milestone payments in future years relating to our clinical development activities under this license or payable upon passage of time. We are also obligated to pay Northwestern royalties on any products resulting from the license agreement.

On October 6, 2009, we closed a registered direct public offering in which we sold 3,973,000 shares of our common stock for a price of $1.00 per share to four institutional investors. Rodman & Renshaw acted as the placement agent with respect to the offering and Merriman Curhan Ford acted as our financial advisor with respect to the offering. In connection with the offering, we paid Rodman & Renshaw a placement agent fee equal to 5% of the gross proceeds of the offering, and we paid Merriman Curhan Ford an advisory fee equal to 1% of the gross proceeds of the offering. The net proceeds of the offering were approximately $3.7 million, after deducting from the gross proceeds of the offering: (i) the 6% aggregate fees paid to Rodman & Renshaw and Merriman Curhan, and (ii) the estimated expenses of the offering.

Research and Development Expenses. Research and development expenses for the three and nine months ended September 30, 2009 and 2008 were $850,998 and $2,451,579 and $4,549,883 and $5,438,082, respectively, including stock-based compensation expense in each of the three and nine month periods of $42,642 and $54,476 and $162,782 and $328,564, respectively. Research and development expenses, in the aggregate, represented approximately 66% and 84%, and 75% and 77% of total operating costs and expenses, respectively, for the three and nine months ended September 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. Expenses for research and development for the three and nine month periods ended September 30, 2009 decreased compared to amounts expended in the same periods in 2008 as we incurred decreasing 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, as such studies were completed during the third quarter of 2009.

General and Administrative Expenses. General and administrative expenses for the three and nine months ended September 30, 2009 and 2008 were $441,316 and $463,199 and $1,555,786 and $1,664,405, respectively, including stock-based compensation expense in each of the three and nine months periods of $32,713 and $50,089 and $119,379 and $162,613, respectively. General and administrative expenses represented 34% and 16% and 25% and 23%, respectively, of total operating costs and expenses, for the three and nine months ended September 30, 2009 and 2008. The decreases of $21,883 and $108,619 in general and administrative expenses

Stock-Based Compensation. Total stock based compensation for the three and nine months ended September 30, 2009 and 2008 was $75,355 and $104,565 and $282,161 and $491,177, 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 September 30, 2009, we had outstanding stock options to purchase 2,794,482 shares of our common stock, of which options to purchase 2,718,834 shares were vested and options to purchase 75,648 shares were unvested. We also have granted restricted stock units to receive 55,484 shares of common stock as of September 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 two registered direct offerings under our shelf registration statement. At September 30, 2009, we had cash and cash equivalents of $4.9 million and working capital of $4.7 million. We also completed an offering of our securities on October 6, 2009 raising net proceeds of approximately $3.7 million and at September 30, 2009, on a pro forma basis after giving effect to our October 6, 2009 offering, we had cash and cash equivalents of $8.6 million and working capital of $8.4 million. At December 31, 2008, we had cash and cash equivalents of $11.8 million and working capital of $10.5 million. At September 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.

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