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þ
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QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
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¨
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TRANSACTION REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
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New
York
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11-0853640
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(State
or other Jurisdiction of
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(I.R.S.
Employer Identification No.)
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incorporation
or organization)
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616
N. North Court, Suite 120
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Palatine,
Illinois
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60067
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Large
accelerated filer ¨
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Accelerated
filer þ
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Non-accelerated
filer ¨
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Smaller
reporting company ¨
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Page No.
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PART
1. FINANCIAL INFORMATION
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Item
1.
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Financial
Statements (Unaudited)
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1
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Consolidated
Balance Sheets
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September
30, 2010 and December 31, 2009
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1
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Consolidated
Statements of Operations
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Nine
and three months ended September 30, 2010 and September 30,
2009
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2
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Consolidated
Statement of Stockholders’ Equity
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Nine
months ended September 30, 2010
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3
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Consolidated
Statements of Cash Flows
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Nine
months ended September 30, 2010 and September 30, 2009
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4
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Notes
to Consolidated Financial Statements
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5
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Item
2.
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Management's
Discussion and Analysis of Financial Condition and Results of
Operations
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10
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Item
4.
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Controls
and Procedures
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16
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PART
II. OTHER INFORMATION
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Item
1.
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Legal
Proceedings
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16
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Item
6.
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Exhibits
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16
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Signatures
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17
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September 30,
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December 31,
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|||||||
2010
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2009
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|||||||
Assets
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||||||||
Current
assets
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||||||||
Cash
and cash equivalents
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$ | 25,872 | $ | 30,174 | ||||
Collaboration
revenue receivable
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55 | 357 | ||||||
Prepaid
insurance
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336 | 193 | ||||||
Prepaid
expenses and other current assets
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51 | 33 | ||||||
Total
current assets
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26,314 | 30,757 | ||||||
Property,
plant and equipment, net
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1,077 | 1,160 | ||||||
Total
assets
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$ | 27,391 | $ | 31,917 | ||||
Liabilities
and Stockholders’ Equity
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||||||||
Current
liabilities
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||||||||
Deferred
program fee revenue
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$ | 700 | $ | 1,555 | ||||
Accrued
expenses
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622 | 452 | ||||||
Total
current liabilities
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1,322 | 2,007 | ||||||
Commitments
and contingencies (Note 9)
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||||||||
Stockholders’
equity
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||||||||
Common
stock - $.01 par value; 100,000 shares authorized; 43,894 and 43,728
shares issued and outstanding at September 30, 2010 and December 31,
2009
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439 | 437 | ||||||
Additional
paid-in capital
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358,631 | 352,694 | ||||||
Accumulated
deficit
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(333,001 | ) | (323,221 | ) | ||||
Total
stockholders’ equity
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26,069 | 29,910 | ||||||
Total
liabilities and stockholders’ equity
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$ | 27,391 | $ | 31,917 |
Nine Months
Ended September 30,
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Three Months
Ended September 30,
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|||||||||||||||
2010
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2009
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2010
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2009
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|||||||||||||
Revenue
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||||||||||||||||
Program
fee revenue
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$ | 855 | $ | 2,688 | $ | 233 | $ | 583 | ||||||||
Collaboration
revenue
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2,097 | 397 | 59 | 225 | ||||||||||||
Total
revenue
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2,952 | 3,085 | 292 | 808 | ||||||||||||
Operating
expense
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||||||||||||||||
Research
and development expense
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5,714 | 3,828 | 1,142 | 1,494 | ||||||||||||
Marketing,
general and administrative expense
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7,025 | 8,680 | 1,716 | 3,284 | ||||||||||||
Total
operating expense
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12,739 | 12,508 | 2,858 | 4,778 | ||||||||||||
Loss
from operations
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(9,787 | ) | (9,423 | ) | (2,566 | ) | (3,970 | ) | ||||||||
Other
income, net
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17 | 131 | 15 | 20 | ||||||||||||
Loss
before income tax
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(9,770 | ) | (9,292 | ) | (2,551 | ) | (3,950 | ) | ||||||||
Income
tax expense
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10 | 2,459 | 2 | 4 | ||||||||||||
Net
loss
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$ | (9,780 | ) | $ | (11,751 | ) | $ | (2,553 | ) | $ | (3,954 | ) | ||||
Loss
per share - basic and diluted
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$ | (0.21 | ) | $ | (0.26 | ) | $ | (0.05 | ) | $ | (0.09 | ) | ||||
Weighted
average shares – basic and diluted
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46,992 | 45,839 | 47,100 | 45,992 |
Common
Stock
$0.01 Par
Value -
Shares
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Common
Stock
$0.01 Par
Value -
Amount
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Additional
Paid-in
Capital
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Accumulated
Deficit
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Total
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||||||||||||||||
Balance
at December 31, 2009
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43,728 | $ | 437 | $ | 352,694 | $ | (323,221 | ) | $ | 29,910 | ||||||||||
Net
loss
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- | - | - | (9,780 | ) | (9,780 | ) | |||||||||||||
Share-based
compensation
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- | - | 5,547 | - | 5,547 | |||||||||||||||
Exercise
of warrants
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166 | 2 | 390 | - | 392 | |||||||||||||||
Balance
at September 30, 2010
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43,894 | $ | 439 | $ | 358,631 | $ | (333,001 | ) | $ | 26,069 |
2010
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2009
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|||||||
Cash
flows from operating activities
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Net
loss
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$ | (9,780 | ) | $ | (11,751 | ) | ||
Adjustments
to reconcile net loss to net cash used in operating
activities
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||||||||
Depreciation
and amortization
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101 | 96 | ||||||
Deferred
income taxes
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- | 2,479 | ||||||
Non-cash
share-based compensation expense
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5,547 | 6,529 | ||||||
Loss
on asset dispositions
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14 | 3 | ||||||
Changes
in assets and liabilities
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||||||||
Collaboration
revenue receivable
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302 | 3,304 | ||||||
Prepaid
expenses and other current assets
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(161 | ) | 91 | |||||
Accounts
payable
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- | (382 | ) | |||||
Accrued
expenses
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170 | (176 | ) | |||||
Deferred
program fee revenue
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(855 | ) | (2,688 | ) | ||||
Net
cash used in operating activities
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(4,662 | ) | (2,495 | ) | ||||
Cash
flows from investing activities
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||||||||
Capital
expenditures
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(32 | ) | (213 | ) | ||||
Investment
maturities
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- | 5,039 | ||||||
Net
cash (used in) provide by investing activities
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(32 | ) | 4,826 | |||||
Cash
flows from financing activities–proceeds from warrant
exercise
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392 | - | ||||||
(Decrease)
increase in cash and cash equivalents
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(4,302 | ) | 2,331 | |||||
Cash
and cash equivalents at beginning of period
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30,174 | 30,398 | ||||||
Cash
and cash equivalents at end of period
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$ | 25,872 | $ | 32,729 | ||||
Cash
paid during the period for income taxes
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$ | 15 | $ | 102 |
1.
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We
issued 14,000 shares of common stock after a cashless exercise of a
warrant to acquire 64,000 shares of
stock.
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1.
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We
issued 193,000 shares of common stock after a cashless exercise of
warrants to acquire 391,000 shares of
stock.
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2.
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We
issued 50,000 shares of common stock after a cashless exercise of an
employee stock option to acquire 100,000 shares of common stock and after
we withheld 50,000 shares from such exercise to pay $173,000 of minimum
statutory withholding payroll taxes.
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Sept 30,
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Dec 31,
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|||||||
(in thousands)
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2010
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2009
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Payroll,
payroll taxes, bonus and benefits
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$ | 322 | $ | 89 | ||||
Legal
and accountant services
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155 | 160 | ||||||
State
franchise taxes
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- | 21 | ||||||
Property
taxes
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21 | 19 | ||||||
Clinical
and regulatory services
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33 | 75 | ||||||
Other
fees and services
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91 | 88 | ||||||
$ | 622 | $ | 452 |
Nine Months Ended
September 30,
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Three Months Ended
September 30,
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|||||||||||||||
2010
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2009
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2010
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2009
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Research and development
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||||||||||||||||
Stock
Options
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$ | 1,151 | $ | 1,204 | $ | 267 | $ | 498 | ||||||||
RSUs
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209 | 133 | 70 | 70 | ||||||||||||
1,360 | 1,337 | 337 | 568 | |||||||||||||
General
and administrative
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||||||||||||||||
Stock
Options
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3,674 | 4,687 | 691 | 1,853 | ||||||||||||
RSUs
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513 | 505 | 171 | 254 | ||||||||||||
4,187 | 5,192 | 862 | 2,107 | |||||||||||||
Total
share-based compensation expense
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$ | 5,547 | $ | 6,529 | $ | 1,199 | $ | 2,675 |
2010
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2009
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Dividend
yield
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0.0 | % | 0.0 | % | ||||
Average
risk-free interest rate
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3.85 | % | 2.77 | % | ||||
Average
volatility
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122 | % | 124 | % | ||||
Expected
forfeitures
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0.0 | % | 0.0 | % | ||||
Expected
holding period
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10 years
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10 years
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||||||
Weighted
average grant date fair value
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$ | 5.23 | $ | 6.06 |
Nine Months Ended
September 30,
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Three Months Ended
September 30,
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|||||||||||||||
(in thousands, except per share data)
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2010
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2009
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2010
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2009
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Basic
and diluted loss per share computation
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||||||||||||||||
Numerator:
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||||||||||||||||
Net
loss
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$ | (9,780 | ) | $ | (11,751 | ) | $ | (2,553 | ) | $ | (3,954 | ) | ||||
Denominator:
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||||||||||||||||
Common
shares (weighted)
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43,825 | 42,841 | 43,895 | 42,958 | ||||||||||||
Vested
RSUs (weighted)
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3,167 | 2,998 | 3,205 | 3,034 | ||||||||||||
Weighted
average number of shares outstanding
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46,992 | 45,839 | 47,100 | 45,992 | ||||||||||||
Basic
and diluted loss per common share
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$ | (0.21 | ) | $ | (0.26 | ) | $ | (0.05 | ) | $ | (0.09 | ) | ||||
Excluded
potentially dilutive securities:
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||||||||||||||||
Common
shares issuable (1):
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||||||||||||||||
Nonvested
RSUs
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88 | 270 | 88 | 270 | ||||||||||||
Common
stock options (vested and nonvested)
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3,713 | 4,164 | 3,713 | 4,164 | ||||||||||||
Common
stock warrants
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2,193 | 3,517 | 2,193 | 3,517 | ||||||||||||
Total
excluded dilutive common stock equivalents
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5,994 | 7,951 | 5,994 | 7,951 |
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·
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intravenous
injection of dissolved tablets or
capsules;
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·
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nasal
snorting of crushed tablets or capsules;
and/or
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·
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intentional
swallowing of excess quantities of tablets or
capsules.
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% Pseudoephedrine HCl extracted
from 100 x 30mg tablets
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||||||||||||
Product Tested
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Method 1
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Method 2
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Method 3
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|||||||||
Impede™
PSE Tablets
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0 | % | 0 | % | 0 | % | ||||||
Sudafed®
Tablets
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96 | % | 89 | % | 79 | % |
September 30,
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Increase (Decrease)
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|||||||||||||||
($ in thousands):
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2010
|
2009
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Dollars
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%
|
||||||||||||
Revenue
|
||||||||||||||||
Program
fee revenue
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$ | 855 | $ | 2,688 | $ | (1,883 | ) | (68 | )% | |||||||
Collaboration
revenue
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2,097 | 397 | 1,700 | 428 | ||||||||||||
Total
revenue
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2,952 | 3,085 | (133 | ) | (4 | ) | ||||||||||
Operating
expense
|
||||||||||||||||
Research
and development expense
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5,714 | 3,828 | 1,886 | 49 | ||||||||||||
Marketing,
general and administrative expense
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7,025 | 8,680 | (1,655 | ) | (19 | ) | ||||||||||
Total
operating expense
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12,739 | 12,508 | 231 | 2 | ||||||||||||
Loss
from operations
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(9,787 | ) | (9,423 | ) | 364 | 4 | ||||||||||
Other
income, net
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17 | 131 | (114 | ) | (87 | ) | ||||||||||
Loss
before income tax
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(9,770 | ) | (9,292 | ) | (478 | ) | 5 | |||||||||
Income
tax expense
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10 | 2,459 | (2,449 | ) | (100 | ) | ||||||||||
Net
loss
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$ | (9,780 | ) | $ | (11,751 | ) | $ | (1,971 | ) | (17 | )% |
September 30,
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Increase (Decrease)
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|||||||||||||||
($ in thousands):
|
2010
|
2009
|
Dollars
|
%
|
||||||||||||
Revenue
|
||||||||||||||||
Program
fee revenue
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$ | 233 | $ | 583 | $ | (350 | ) | (60 | )% | |||||||
Collaboration
revenue
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59 | 225 | (166 | ) | (74 | ) | ||||||||||
Total
revenue
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292 | 808 | (516 | ) | (64 | ) | ||||||||||
Operating
expense
|
||||||||||||||||
Research
and development expense
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1,142 | 1,494 | (352 | ) | (24 | ) | ||||||||||
Marketing,
general and administrative expense
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1,716 | 3,284 | (1,568 | ) | (48 | ) | ||||||||||
Total
operating expense
|
2,858 | 4,778 | (1,920 | ) | (40 | ) | ||||||||||
Loss
from operations
|
(2,566 | ) | (3,970 | ) | (1,404 | ) | (35 | ) | ||||||||
Other
income , net
|
15 | 20 | (5 | ) | (25 | ) | ||||||||||
Loss
before income tax
|
(2,551 | ) | (3,950 | ) | (1,399 | ) | (35 | ) | ||||||||
Income
tax expense
|
2 | 4 | (2 | ) | (50 | ) | ||||||||||
Net
loss
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$ | (2,553 | ) | $ | (3,954 | ) | $ | (1,401 | ) | (35 | )% |
31.1
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Certification
of Periodic Report by Chief Executive Officer pursuant to Rule 13a-14 and
15d-14 of the Securities Exchange Act of
1934.
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31.2
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Certification
of Periodic Report by Chief Financial Officer pursuant to Rule 13a-14 and
15d-14 of the Securities Exchange Act of
1934.
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32.1
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Certification
of Periodic Report by the Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of
2002.
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November
2, 2010
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ACURA
PHARMACEUTICALS, INC.
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/s/ Andrew D. Reddick
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Andrew
D. Reddick
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President
& Chief Executive Officer
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/s/ Peter A. Clemens
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Peter
A. Clemens
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Senior
VP & Chief Financial
Officer
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1.
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I
have reviewed this quarterly report on Form 10-Q of Acura Pharmaceuticals,
Inc.;
|
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2.
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Based
on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|
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3.
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Based
on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly
report;
|
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4.
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The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d – 15(f)) for the registrant and
have:
|
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5.
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The
registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
|
November
2, 2010
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/s/ Andrew D. Reddick
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Andrew
D. Reddick
|
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Chief
Executive Officer
|
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1.
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I
have reviewed this quarterly report on Form 10-Q of Acura Pharmaceuticals,
Inc.;
|
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2.
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Based
on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|
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3.
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Based
on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly
report;
|
|
4.
|
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-(f)) for the registrant and
have:
|
|
5.
|
The
registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
|
November
2, 2010
|
/s/ Peter A. Clemens
|
Peter
A. Clemens
|
|
Chief
Financial Officer
|
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(1)
|
The
Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934;
and
|
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
November
2, 2010
|
/s/ Andrew D. Reddick
|
Andrew
D. Reddick
|
|
Chief
Executive Officer
|
|
/s/ Peter A. Clemens
|
|
Peter
A. Clemens
|
|
Chief
Financial Officer
|