Targacept Inc. (TRGT, Financial) filed Quarterly Report for the period ended 2010-03-31.
Targacept Inc. has a market cap of $620.89 million; its shares were traded at around $21.91 with and P/S ratio of 24.77. TRGT is in the portfolios of Jim Simons of Renaissance Technologies LLC.
As of March 31, 2010, we had received $44.4 million in aggregate upfront fees and milestone payments under our 2005 agreement with AstraZeneca and had recognized an additional $26.5 million in collaboration research and development revenue for research services that we provided in the preclinical research collaboration that we conducted with AstraZeneca under the agreement. As of March 31, 2010, we had also received $45.0 million in aggregate payments under our alliance agreement with GlaxoSmithKline. We initially deferred recognition of $41.5 million of the aggregate amounts received from AstraZeneca and GlaxoSmithKline and are recognizing these deferred amounts into revenue over the periods discussed in Note 2 and Note 5 to our unaudited financial statements included in this quarterly report. As of March 31, 2010, we had $23.3 million of the deferred amounts remaining to be recognized in future periods.
From time to time we seek and are awarded grants or work to be performed under grants awarded to third-party collaborators from which we derive revenue. As of March 31, 2010, we have been awarded two grants from The Michael J. Fox Foundation for Parkinsons Research, or MJFF. One of the grants is to fund preclinical research involving the use of compounds that modulate NNRs to address Levodopa-induced abnormal involuntary movements, known as dyskinesias, and we have received aggregate payments of $641,000 from MJFF for the one-year period that began in August 2009 in connection with this grant. The other grant is to fund research to identify NNR-related biomarkers relevant to Parkinsons disease, and we expect to receive an aggregate of $304,000 from MJFF over a one-year period that began in December 2009 in connection with this grant. In addition, as of March 31, 2010, we are a named subcontractor under a grant awarded to The California Institute of Technology by the National Institute on Drug Abuse, or NIDA, part of the National Institutes of Health, to fund research on innovative NNR-based approaches to the development of therapies for smoking cessation. We have received approximately $1.1 million in the aggregate over a five-year period that began in July 2006 in connection with the NIDA grant. Funding for awards under federal grant programs is subject to the availability of funds as determined annually in the federal appropriations process.
$626,000 of income tax expense primarily as a result of excess tax deductions for stock-based compensation. Exercises of stock options during the three months ended March 31, 2010 resulted in tax deductions for stock-based compensation in excess of expense recorded for such stock options under U.S. generally accepted accounting principles, or GAAP, resulting in an income tax benefit of $622,000. In accordance with GAAP, we recognized the income tax benefit related to the excess tax deductions as an increase to capital in excess of par value with an offsetting charge in the same amount to income tax expense. As of March 31, 2010, we had net operating loss carryforwards of $134.0 million for federal income tax purposes and $123.7 million for state income tax purposes. We also had research and development income tax credit carryforwards of $7.4 million for federal income tax purposes and $1.3 million for state income tax purposes as of March 31, 2010. The federal net operating loss carryforwards begin to expire in 2020. The state net operating loss carryforwards begin to expire in 2015. The federal and state research and development tax credits begin to expire in 2021. As a result of various factors, including the subjectivity of measurements used in the calculation of particular tax positions taken or that may in the future be taken in our tax returns and, with respect to state income tax, the uncertain statutory consequences of an administrative penalty of $6,000 that we were assessed in 2009 by the North Carolina Department of Environment and Natural Resources, it is uncertain whether or to what extent we will be eligible to use the tax credits.
development revenue. The increase in milestones and license fees from collaborations revenue reflected recognition of $17.9 million of the $200.0 million upfront payment received under our 2009 agreement with AstraZeneca, which we entered into in December 2009, a decrease of $2.5 million in aggregate payments received from GlaxoSmithKline upon achievement of milestone events under our alliance agreement and a decrease of $423,000 of license fees derived from our 2005 agreement with AstraZeneca as a result of the expiration of the term of the research collaboration in January 2010. The decrease in collaboration research and development revenue for the 2010 period resulted from the completion of the preclinical research collaboration under our 2005 agreement with AstraZeneca. We plan to recognize the remaining $181.7 million of the upfront payment received under our 2009 agreement with AstraZeneca on a straight-line basis over the estimated development period for TC-5214 to submission of a new drug application to the FDA and expect that such recognition will result in increased net operating revenues for future 2010 reporting periods as compared to the corresponding 2009 periods. As of March 31, 2010, we forecast the new drug application submission date for TC-5214 to be approximately September 30, 2012. We do not expect to record any collaboration research and development revenue derived from our 2005 agreement with AstraZeneca for 2010 or any future period.
These increases were partially offset by a decrease of $852,000 in costs incurred for third-party research and development services in connection with our preclinical programs to $255,000 for the 2010 period, from $1.1 million for the 2009 period. The reduced spending for the 2010 period in connection with our preclinical programs primarily resulted from the uncertainty surrounding the continuation of some of the therapeutic focus areas of our alliance with GlaxoSmithKline.
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Targacept Inc. has a market cap of $620.89 million; its shares were traded at around $21.91 with and P/S ratio of 24.77. TRGT is in the portfolios of Jim Simons of Renaissance Technologies LLC.
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In January 2010, we received a $200.0 million upfront payment under our 2009 agreement with AstraZeneca, which we recorded as deferred revenue and are recognizing into revenue on a straight-line basis over the estimated development period for TC-5214 to submission of a new drug application to the U.S. Food and Drug Administration, or FDA. We are eligible under our 2009 agreement with AstraZeneca to receive additional payments of over $1.0 billion if development, regulatory, first commercial sale and specified sales related milestone events for TC-5214 are achieved and stepped double-digit royalties on any future TC-5214 product sales. As of March 31, 2010, we had $181.7 million of the deferred portion of the upfront payment remaining to be recognized into revenue. Pursuant to the April 2010 amendment to our 2005 agreement with AstraZeneca, we received an $11.0 million payment from AstraZeneca in May 2010, which we expect to record as deferred revenue and recognize into revenue on a straight-line basis over the estimated period of our research and development obligations related to TC-5619.As of March 31, 2010, we had received $44.4 million in aggregate upfront fees and milestone payments under our 2005 agreement with AstraZeneca and had recognized an additional $26.5 million in collaboration research and development revenue for research services that we provided in the preclinical research collaboration that we conducted with AstraZeneca under the agreement. As of March 31, 2010, we had also received $45.0 million in aggregate payments under our alliance agreement with GlaxoSmithKline. We initially deferred recognition of $41.5 million of the aggregate amounts received from AstraZeneca and GlaxoSmithKline and are recognizing these deferred amounts into revenue over the periods discussed in Note 2 and Note 5 to our unaudited financial statements included in this quarterly report. As of March 31, 2010, we had $23.3 million of the deferred amounts remaining to be recognized in future periods.
From time to time we seek and are awarded grants or work to be performed under grants awarded to third-party collaborators from which we derive revenue. As of March 31, 2010, we have been awarded two grants from The Michael J. Fox Foundation for Parkinsons Research, or MJFF. One of the grants is to fund preclinical research involving the use of compounds that modulate NNRs to address Levodopa-induced abnormal involuntary movements, known as dyskinesias, and we have received aggregate payments of $641,000 from MJFF for the one-year period that began in August 2009 in connection with this grant. The other grant is to fund research to identify NNR-related biomarkers relevant to Parkinsons disease, and we expect to receive an aggregate of $304,000 from MJFF over a one-year period that began in December 2009 in connection with this grant. In addition, as of March 31, 2010, we are a named subcontractor under a grant awarded to The California Institute of Technology by the National Institute on Drug Abuse, or NIDA, part of the National Institutes of Health, to fund research on innovative NNR-based approaches to the development of therapies for smoking cessation. We have received approximately $1.1 million in the aggregate over a five-year period that began in July 2006 in connection with the NIDA grant. Funding for awards under federal grant programs is subject to the availability of funds as determined annually in the federal appropriations process.
$626,000 of income tax expense primarily as a result of excess tax deductions for stock-based compensation. Exercises of stock options during the three months ended March 31, 2010 resulted in tax deductions for stock-based compensation in excess of expense recorded for such stock options under U.S. generally accepted accounting principles, or GAAP, resulting in an income tax benefit of $622,000. In accordance with GAAP, we recognized the income tax benefit related to the excess tax deductions as an increase to capital in excess of par value with an offsetting charge in the same amount to income tax expense. As of March 31, 2010, we had net operating loss carryforwards of $134.0 million for federal income tax purposes and $123.7 million for state income tax purposes. We also had research and development income tax credit carryforwards of $7.4 million for federal income tax purposes and $1.3 million for state income tax purposes as of March 31, 2010. The federal net operating loss carryforwards begin to expire in 2020. The state net operating loss carryforwards begin to expire in 2015. The federal and state research and development tax credits begin to expire in 2021. As a result of various factors, including the subjectivity of measurements used in the calculation of particular tax positions taken or that may in the future be taken in our tax returns and, with respect to state income tax, the uncertain statutory consequences of an administrative penalty of $6,000 that we were assessed in 2009 by the North Carolina Department of Environment and Natural Resources, it is uncertain whether or to what extent we will be eligible to use the tax credits.
development revenue. The increase in milestones and license fees from collaborations revenue reflected recognition of $17.9 million of the $200.0 million upfront payment received under our 2009 agreement with AstraZeneca, which we entered into in December 2009, a decrease of $2.5 million in aggregate payments received from GlaxoSmithKline upon achievement of milestone events under our alliance agreement and a decrease of $423,000 of license fees derived from our 2005 agreement with AstraZeneca as a result of the expiration of the term of the research collaboration in January 2010. The decrease in collaboration research and development revenue for the 2010 period resulted from the completion of the preclinical research collaboration under our 2005 agreement with AstraZeneca. We plan to recognize the remaining $181.7 million of the upfront payment received under our 2009 agreement with AstraZeneca on a straight-line basis over the estimated development period for TC-5214 to submission of a new drug application to the FDA and expect that such recognition will result in increased net operating revenues for future 2010 reporting periods as compared to the corresponding 2009 periods. As of March 31, 2010, we forecast the new drug application submission date for TC-5214 to be approximately September 30, 2012. We do not expect to record any collaboration research and development revenue derived from our 2005 agreement with AstraZeneca for 2010 or any future period.
These increases were partially offset by a decrease of $852,000 in costs incurred for third-party research and development services in connection with our preclinical programs to $255,000 for the 2010 period, from $1.1 million for the 2009 period. The reduced spending for the 2010 period in connection with our preclinical programs primarily resulted from the uncertainty surrounding the continuation of some of the therapeutic focus areas of our alliance with GlaxoSmithKline.
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