Arrowhead Research Corp. (ARWR, Financial) filed Quarterly Report for the period ended 2009-12-31.
Arrowhead Research Corp. has a market cap of $39 million; its shares were traded at around $0.62 with and P/S ratio of 10.2.
Since inception in May 2003, the Company has incurred significant losses. Cash and cash equivalents increased during the quarter by $1.8 million to $3.8 million at December 31, 2009 from $2.0 million at September 30, 2009. The Company invests available cash in certificates of deposit, U.S. government obligations and high grade commercial paper. The Companys investment objectives are primarily to preserve capital and liquidity and secondarily to obtain investment income.
On December 11, 2009, the Company executed definitive agreements for a private placement offering (the Offering) with a selected group of accredited investors. Pursuant to the Offering, the Company sold an aggregate of approximately 5.2 million units (the Units) consisting of one share of the Companys Common Stock and a warrant to purchase an additional share of Common Stock, exercisable at $0.509 per share. The Unit price was $0.634 per unit. The warrants become exercisable on June 12, 2010 and remain exercisable until December 11, 2014, unless redeemed earlier as permitted. The warrants may be redeemed for nominal consideration if the Companys Common Stock trades above $1.20 for at least 30 trading days in any 60-trading day period after December 11, 2010. The Offering generated gross proceeds of approximately $3.2 million before estimated expenses of $25,000. The Companys strategic plan includes focusing on near term revenue opportunities, conserving cash and seeking sources of new capital. To execute this plan, the Company will seek to accomplish one or more of the following on favorable terms: the out-license of technology, sale of a subsidiary, sale of non-core assets, scaling down development efforts, funded joint development or partnership arrangements and sale of securities. The likelihood that any of these events will occur is uncertain, especially in light of the lack of liquidity in the current capital and credit markets. Until such time as one or more of these goals is accomplished, the Company has scaled back the activities at its Subsidiaries.
The Company generated revenues of $148,068, and $701,723 during the three months ended December 31, 2009 and 2008, respectively. Revenue for the three months ended December 31, 2009 consists primarily of Unidym sales of CNTs and inks, and revenue for the three months ended December 31, 2008 consists of $450,000 from license fees from Unidym technology, $85,233 in grants to Unidym to fund research and $166,490 from the sales and delivery of carbon nanotubes by Unidym. Revenues from sales of carbon nanotubes are expected to decline in 2010 as Unidym depletes its inventories and transfers its bulk carbon nanotube production to a third party in exchange for payments based on the third party sales. Unidym is anticipating modest revenue from film sales in fiscal 2010.
Patent expense was $1,000 during the three months ended December 31, 2009 as compared to $292,000 during the three months ended December 31, 2008. Patent expense decreased significantly due to limited patenting activities in the current quarter. Patent expense during the three months ended December 31, 2008 primarily related to patent costs at Calando of $162,000 prior to the license agreements to Cerulean, and $130,000 at Unidym for patent costs related to Nanoconduction which were not repeated. The Company expects to continue to invest in patent protection as the Company extends and maintains protection for its current portfolios and files new patent applications as its product applications are improved. The cost will vary depending on the needs of the Company.
Travel expense includes recurring expenses related to travel by Company personnel to and from Company locations in Pasadena and Northern California. Travel expense is also incurred as the Company pursues business initiatives and collaborations throughout the world with other companies and for marketing, investor relations, fund raising and public relations purposes. During the three months ended December 31, 2009, travel expense was $50,000, compared to $208,000 during the three months ended December 31, 2008. The decrease of $158,000 is primarily due to a reduction of travel expenses at Unidym. Travel expense fluctuates from year to year depending on current projects.
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Arrowhead Research Corp. has a market cap of $39 million; its shares were traded at around $0.62 with and P/S ratio of 10.2.
Highlight of Business Operations:
At December 31, 2009, the Company had approximately $3.8 million in cash to fund operations. Arrowhead has historically financed its operations through the sale of securities of Arrowhead and its Subsidiaries. In fiscal 2009, the Company obtained $7.3 million in cash through equity and debt financing, including $2.5 million raised by Calando through the sale of senior unsecured convertible promissory notes, and $2.0 million raised by Unidym through the sale of newly issued shares of Series C-1 Preferred Stock. The Company obtained an additional $4.4 million from the sales of assets, products and license fees, including the sale by Unidym of its equity interest in Ensysce BioSciences Inc. for $700,000.Since inception in May 2003, the Company has incurred significant losses. Cash and cash equivalents increased during the quarter by $1.8 million to $3.8 million at December 31, 2009 from $2.0 million at September 30, 2009. The Company invests available cash in certificates of deposit, U.S. government obligations and high grade commercial paper. The Companys investment objectives are primarily to preserve capital and liquidity and secondarily to obtain investment income.
On December 11, 2009, the Company executed definitive agreements for a private placement offering (the Offering) with a selected group of accredited investors. Pursuant to the Offering, the Company sold an aggregate of approximately 5.2 million units (the Units) consisting of one share of the Companys Common Stock and a warrant to purchase an additional share of Common Stock, exercisable at $0.509 per share. The Unit price was $0.634 per unit. The warrants become exercisable on June 12, 2010 and remain exercisable until December 11, 2014, unless redeemed earlier as permitted. The warrants may be redeemed for nominal consideration if the Companys Common Stock trades above $1.20 for at least 30 trading days in any 60-trading day period after December 11, 2010. The Offering generated gross proceeds of approximately $3.2 million before estimated expenses of $25,000. The Companys strategic plan includes focusing on near term revenue opportunities, conserving cash and seeking sources of new capital. To execute this plan, the Company will seek to accomplish one or more of the following on favorable terms: the out-license of technology, sale of a subsidiary, sale of non-core assets, scaling down development efforts, funded joint development or partnership arrangements and sale of securities. The likelihood that any of these events will occur is uncertain, especially in light of the lack of liquidity in the current capital and credit markets. Until such time as one or more of these goals is accomplished, the Company has scaled back the activities at its Subsidiaries.
The Company generated revenues of $148,068, and $701,723 during the three months ended December 31, 2009 and 2008, respectively. Revenue for the three months ended December 31, 2009 consists primarily of Unidym sales of CNTs and inks, and revenue for the three months ended December 31, 2008 consists of $450,000 from license fees from Unidym technology, $85,233 in grants to Unidym to fund research and $166,490 from the sales and delivery of carbon nanotubes by Unidym. Revenues from sales of carbon nanotubes are expected to decline in 2010 as Unidym depletes its inventories and transfers its bulk carbon nanotube production to a third party in exchange for payments based on the third party sales. Unidym is anticipating modest revenue from film sales in fiscal 2010.
Patent expense was $1,000 during the three months ended December 31, 2009 as compared to $292,000 during the three months ended December 31, 2008. Patent expense decreased significantly due to limited patenting activities in the current quarter. Patent expense during the three months ended December 31, 2008 primarily related to patent costs at Calando of $162,000 prior to the license agreements to Cerulean, and $130,000 at Unidym for patent costs related to Nanoconduction which were not repeated. The Company expects to continue to invest in patent protection as the Company extends and maintains protection for its current portfolios and files new patent applications as its product applications are improved. The cost will vary depending on the needs of the Company.
Travel expense includes recurring expenses related to travel by Company personnel to and from Company locations in Pasadena and Northern California. Travel expense is also incurred as the Company pursues business initiatives and collaborations throughout the world with other companies and for marketing, investor relations, fund raising and public relations purposes. During the three months ended December 31, 2009, travel expense was $50,000, compared to $208,000 during the three months ended December 31, 2008. The decrease of $158,000 is primarily due to a reduction of travel expenses at Unidym. Travel expense fluctuates from year to year depending on current projects.
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