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 o
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Accelerated
filer þ
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Non-accelerated
filer o
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Smaller
reporting company o
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Page
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||
PART
1 - FINANCIAL INFORMATION
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||
Item
1.
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Financial
Statements (Unaudited)
|
|
Consolidated
Balance Sheets
September
30, 2009 and December 31, 2008
|
1
|
|
Consolidated
Statements of Operations
Nine
and three months ended September 30, 2009 and September 30,
2008
|
2
|
|
Consolidated
Statement of Changes in Stockholders’ Equity
Nine
months ended September 30, 2009
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3
|
|
Consolidated
Statements of Cash Flows
Nine
months ended September 30, 2009 and September 30, 2008
|
4
|
|
Notes
to Consolidated Financial Statements
|
5
|
|
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
10
|
Item
4.
|
Controls
and Procedures
|
16
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PART
II - OTHER INFORMATION
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||
Item
6.
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Exhibits
|
16
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Signatures
|
17
|
September 30,
2009
|
December 31,
2008
|
|||||||
Assets
|
||||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
$ | 32,729 | $ | 30,398 | ||||
Short
term investments
|
— | 5,039 | ||||||
Collaboration
revenue receivable
|
226 | 3,529 | ||||||
Prepaid
expense and other current assets
|
364 | 431 | ||||||
Deferred
income taxes
|
13 | 2,491 | ||||||
Total
current assets
|
33,332 | 41,888 | ||||||
Non-current
assets
|
||||||||
Property,
plant and equipment, net
|
1,187 | 1,073 | ||||||
Total
assets
|
$ | 34,519 | $ | 42,961 | ||||
Liabilities
and Stockholders’ Equity
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable
|
$ | — | $ | 382 | ||||
Accrued
expenses
|
906 | 883 | ||||||
Deferred
program fee revenue
|
1,943 | 4,632 | ||||||
Total
current liabilities
|
2,849 | 5,897 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders’
equity
|
||||||||
Common
stock - $.01 par value; 100,000 shares authorized; 42,966 and 42,723
shares issued and outstanding at September 30, 2009 and December 31, 2008,
respectively
|
430 | 427 | ||||||
Additional
paid-in capital
|
350,377 | 344,023 | ||||||
Accumulated
deficit
|
(319,137 | ) | (307,386 | ) | ||||
Total
stockholders’ equity
|
31,670 | 37,064 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 34,519 | $ | 42,961 |
Nine Months
Ended September 30
|
Three Months
Ended September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Revenue
|
||||||||||||||||
Program
fee revenue
|
$ | 2,688 | $ | 23,678 | $ | 583 | $ | 1,263 | ||||||||
Milestone
revenue
|
— | 5,000 | — | — | ||||||||||||
Collaboration
revenue
|
397 | 7,971 | 225 | 2,617 | ||||||||||||
Total
revenue
|
3,085 | 36,649 | 808 | 3,880 | ||||||||||||
Operating
expenses
|
||||||||||||||||
Research
and development expenses
|
3,828 | 10,859 | 1,494 | 3,693 | ||||||||||||
Marketing,
general and administrative expenses
|
8,680 | 5,617 | 3,284 | 3,373 | ||||||||||||
Total
operating expenses
|
12,508 | 16,476 | 4,778 | 7,066 | ||||||||||||
Operating
(loss) income
|
(9,423 | ) | 20,173 | (3,970 | ) | (3,186 | ) | |||||||||
Other
income (expense)
|
||||||||||||||||
Interest,
net
|
134 | 675 | 20 | 171 | ||||||||||||
Other
|
(3 | ) | 1 | — | (17 | ) | ||||||||||
Total
other income
|
131 | 676 | 20 | 154 | ||||||||||||
(Loss)
income before income tax
|
(9,292 | ) | 20,849 | (3,950 | ) | (3,032 | ) | |||||||||
Income
tax expense (benefit)
|
2,459 | 3,382 | 4 | (6,180 | ) | |||||||||||
Net
(loss) income
|
$ | (11,751 | ) | $ | 17,467 | $ | (3,954 | ) | $ | 3,148 | ||||||
(Loss)
earnings per share
|
||||||||||||||||
Basic
|
$ | (0.26 | ) | $ | 0.38 | $ | (0.09 | ) | $ | 0.07 | ||||||
Diluted
|
$ | (0.26 | ) | $ | 0.35 | $ | (0.09 | ) | $ | 0.06 | ||||||
Weighted
average shares used in computation
|
||||||||||||||||
Basic
|
45,839 | 45,670 | 45,992 | 45,680 | ||||||||||||
Diluted
|
45,839 | 49,529 | 45,992 | 49,409 |
Common
Stock
Shares
|
Common
Stock
Amount
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Total
|
||||||||||||||||
Balance
at December 31, 2008
|
42,723 | $ | 427 | $ | 344,023 | $ | (307,386 | ) | $ | 37,064 | ||||||||||
Net
loss
|
— | — | — | (11,751 | ) | (11,751 | ) | |||||||||||||
Stock-based
compensation
|
— | — | 6,529 | — | 6,529 | |||||||||||||||
Exercise
of warrants
|
193 | 2 | (2 | ) | — | — | ||||||||||||||
Exercise
of options
|
50 | 1 | (173 | ) | — | (172 | ) | |||||||||||||
Balance
at September 30, 2009
|
42,966 | $ | 430 | $ | 350,377 | $ | (319,137 | ) | $ | 31,670 |
2009
|
2008
|
|||||||
Cash
flows from operating activities
|
||||||||
Net
(loss) income
|
$ | (11,751 | ) | $ | 17,467 | |||
Adjustments
to reconcile net (loss) income to net cash (used in) provided by operating
activities
|
||||||||
Depreciation
and amortization
|
96 | 108 | ||||||
Deferred
income taxes
|
2,479 | 3,334 | ||||||
Non-cash
share-based compensation expense
|
6,529 | 2,367 | ||||||
Loss
(gain) on asset disposals
|
3 | (1 | ) | |||||
Impairment
reserve against fixed assets
|
— | (29 | ) | |||||
Changes
in assets and liabilities
|
||||||||
Collaboration
revenue receivable
|
3,304 | 361 | ||||||
Prepaid
expenses and other current assets
|
91 | 1 | ||||||
Accounts
payable
|
(382 | ) | — | |||||
Accrued
expenses
|
(176 | ) | 1,750 | |||||
Deferred
program fee revenue
|
(2,688 | ) | (20,679 | ) | ||||
Net
cash (used in) provided by operating activities
|
(2,495 | ) | 4,679 | |||||
Cash
flows from investing activities
|
||||||||
Purchase
of investments
|
— | (5,039 | ) | |||||
Investment
maturities
|
5,039 | — | ||||||
Capital
expenditures
|
(213 | ) | (135 | ) | ||||
Proceeds
from asset disposals
|
— | 1 | ||||||
Net
cash provided by (used in) investing activities
|
4,826 | (5,173 | ) | |||||
Cash
flows from financing activities – proceeds from warrant
exercise
|
— | 20 | ||||||
Increase
in cash and cash equivalents
|
2,331 | (474 | ) | |||||
Cash
and cash equivalents at beginning of period
|
30,398 | 31,368 | ||||||
Cash
and cash equivalents at end of period
|
$ | 32,729 | $ | 30,894 | ||||
Cash
paid during the period for interest
|
$ | — | $ | — | ||||
Cash
paid during the period for income taxes
|
$ | 102 | $ | 47 |
1.
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Warrants
to purchase 391,000 shares of common stock were exercised at an exercise
price of $3.40 per share in a series of cashless exercise transactions
resulting in the issuance of 193,000 shares of common
stock.
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2.
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Options
to purchase 100,000 shares of common stock were exercised at an exercise
price of $1.30 per share in a cashless exercise transaction and after
withholding shares for statutory payroll taxes calculated at $173,000, the
transaction resulted in the issuance of 50,000 shares of common
stock.
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1.
|
The
disposal of fixed assets with $52,000 net book value resulted in a $29,000
reduction in the impairment allowance recognized favorably in the
statement of operations.
|
2.
|
A
$5,022,000 valuation allowance against deferred income tax assets was
removed which resulted in an equal amount recorded as a benefit against
current income tax expense.
|
3.
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Deferred
income tax assets of $8,356,000 were used to offset an equal amount of
current income taxes payable.
|
|
·
|
intravenous
injection of dissolved tablets or
capsules;
|
|
·
|
nasal
snorting of crushed tablets or capsules;
and
|
|
·
|
intentional
swallowing of excess quantities of tablets or
capsules.
|
Sept 30,
|
Dec 31,
|
|||||||
2009
|
2008
|
|||||||
Payroll,
bonus, payroll taxes and employee benefits
|
$ | 405 | $ | 77 | ||||
Legal
services
|
35 | 35 | ||||||
Audit
and tax professional services
|
99 | 89 | ||||||
State
franchise taxes
|
30 | 144 | ||||||
Property
taxes
|
22 | 39 | ||||||
State
income taxes
|
— | 94 | ||||||
Clinical,
regulatory, trademark, and patent services
|
43 | 217 | ||||||
Other
fees and services
|
272 | 188 | ||||||
$ | 906 | $ | 883 |
2009
|
||||
Dividend
yield
|
0.00%
|
|||
Risk-free
interest rate
|
1.30%
to 1.50%
|
|||
Volatility
|
102%
to 108%
|
|||
Forfeitures
|
0.00%
|
|||
Expected
life of RSU award
|
3.4
years
|
|||
Grant
date fair value
|
$ 5.69 to $7.10
|
2009
|
||||
Dividend
yield
|
0.0%
|
|||
Risk-free
interest rate
|
2.4%
to 3.1%
|
|||
Average
volatility
|
124%
|
|||
Forfeitures
|
0.0%
|
|||
Expected
life of option
|
10
years
|
|||
Weighted
average grant date fair value
|
$ 6.06
|
Nine Months Ended
September 30,
|
Three Months Ended
September 30,
|
|||||||||||||||
(in thousands, except per share
data)
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Basic
earnings (loss) per share
|
||||||||||||||||
Numerator:
|
||||||||||||||||
Net income
(loss) allocable to common shareholder
|
$ | (11,751 | ) | $ | 17,467 | $ | (3,954 | ) | $ | 3,148 | ||||||
Denominator:
|
||||||||||||||||
Common
shares (weighted)
|
42,841 | 42,717 | 42,958 | 42,723 | ||||||||||||
Vested
RSUs (weighted)
|
2,998 | 2,953 | 3,034 | 2,957 | ||||||||||||
Weighted
average shares used in computing basic earnings (loss) per share allocable
to common shareholder
|
45,839 | 45,670 | 45,992 | 45,680 | ||||||||||||
Basic earnings
(loss) per share allocable to common shareholder
|
$ | (0.26 | ) | $ | 0.38 | $ | (0.09 | ) | $ | 0.07 | ||||||
Diluted
earnings (loss) per share
|
||||||||||||||||
Denominator:
|
||||||||||||||||
Common
shares (weighted)
|
42,841 | 42,717 | 42,958 | 42,723 | ||||||||||||
Vested
RSUs (weighted)
|
2,998 | 2,953 | 3,034 | 2,957 | ||||||||||||
Common
stock options
|
— | 1,461 | — | 1,438 | ||||||||||||
Common
stock warrants
|
— | 2,398 | — | 2,291 | ||||||||||||
Weighted
average shares used in computing diluted earnings (loss) per share
allocable to common shareholder
|
45,839 | 49,529 | 45,992 | 49,409 | ||||||||||||
Diluted
earnings (loss) per share allocable to common shareholder
|
$ | (0.26 | ) | $ | 0.35 | $ | (0.09 | ) | $ | 0.06 | ||||||
Excluded
potentially dilutive securities:
|
||||||||||||||||
Common
shares issuable (see #1 below):
|
||||||||||||||||
Nonvested
RSUs
|
270 | 37 | 270 | 37 | ||||||||||||
Common
stock options (vested and nonvested)
|
4,164 | 1,173 | 4,164 | 1,173 | ||||||||||||
Common
stock warrants
|
3,517 | — | 3,517 | — | ||||||||||||
Total
excluded dilutive common stock equivalents
|
7,951 | 1,210 | 7,951 | 1,210 |
|
·
|
intravenous
injection of dissolved tablets or
capsules;
|
|
·
|
nasal
snorting of crushed tablets or capsules;
and
|
|
·
|
intentional
swallowing of excess quantities of tablets or
capsules.
|
September 30,
|
Change
|
|||||||||||||||
($ in thousands):
|
2009
|
2008
|
Dollars
|
%
|
||||||||||||
Revenue
|
||||||||||||||||
Program
fee revenue
|
$ | 2,688 | $ | 23,678 | $ | (20,990 | ) | (89 | ) % | |||||||
Milestone
revenue
|
— | 5,000 | (5,000 | ) | (100 | ) | ||||||||||
Collaboration
revenue
|
397 | 7,971 | (7,574 | ) | (95 | ) | ||||||||||
Total
revenue
|
3,085 | 36,694 | (33,564 | ) | (92 | ) | ||||||||||
Operating
expenses
|
||||||||||||||||
Research
and development expenses
|
3,828 | 10,859 | (7,031 | ) | (65 | ) | ||||||||||
Marketing,
general and administrative expenses
|
8,680 | 5,617 | 3,063 | 55 | ||||||||||||
Total
operating expenses
|
12,508 | 16,476 | (3,968 | ) | (24 | ) | ||||||||||
Operating
(loss) income
|
(9,423 | ) | 20,173 | (29,596 | ) | (147 | ) | |||||||||
Other
income (expense)
|
||||||||||||||||
Interest,
net
|
134 | 675 | (541 | ) | (80 | ) | ||||||||||
Other
|
(3 | ) | 1 | (4 | ) | (400 | ) | |||||||||
Total
other income
|
131 | 676 | (545 | ) | (81 | ) | ||||||||||
(Loss)
income before income tax
|
(9,292 | ) | 20,849 | (30,141 | ) | (145 | ) | |||||||||
Income
tax expense
|
2,459 | 3,382 | (923 | ) | (27 | ) | ||||||||||
Net (loss) income
|
$ | (11,751 | ) | $ | 17,467 | $ | (29,218 | ) | (167 | ) % |
September 30,
|
Change
|
|||||||||||||||
($ in thousands):
|
2009
|
2008
|
Dollars
|
%
|
||||||||||||
Revenue
|
||||||||||||||||
Program
fee revenue
|
$ | 583 | $ | 1,263 | $ | (680 | ) | (54 | ) % | |||||||
Milestone
revenue
|
— | — | (5,000 | ) | (100 | ) | ||||||||||
Collaboration
revenue
|
225 | 2,617 | (2,392 | ) | (91 | ) | ||||||||||
Total
revenue
|
808 | 3,880 | (3,072 | ) | (79 | ) | ||||||||||
Operating
expenses
|
||||||||||||||||
Research
and development expenses
|
1,494 | 3,693 | (2,199 | ) | (60 | ) | ||||||||||
Marketing,
general and administrative expenses
|
3,284 | 3,373 | (89 | ) | (3 | ) | ||||||||||
Total
operating expenses
|
4,778 | 7,066 | (2,288 | ) | (32 | ) | ||||||||||
Operating
(loss) income
|
(3,970 | ) | (3,186 | ) | 784 | 25 | ||||||||||
Other
income (expense)
|
||||||||||||||||
Interest,
net
|
20 | 171 | (151 | ) | (88 | ) | ||||||||||
Other
|
— | (17 | ) | (17 | ) | (100 | ) | |||||||||
Total
other income
|
20 | 154 | (134 | ) | (87 | ) | ||||||||||
(Loss)
income before income tax
|
(3,950 | ) | (3,032 | ) | 918 | 30 | ||||||||||
Income
tax expense (benefit)
|
4 | (6,180 | ) | (6,184 | ) | (100 | ) | |||||||||
Net (loss) income
|
$ | (3,954 | ) | $ | 3,148 | $ | (7,102 | ) | (226 | ) % |
31.1
|
Certification
of Periodic Report by Chief Executive Officer pursuant to Rule 13a-14 and
15d-14 of the Securities Exchange Act of
1934.
|
31.2
|
Certification
of Periodic Report by Chief Financial Officer pursuant to Rule 13a-14 and
15d-14 of the Securities Exchange Act of
1934.
|
32.1
|
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.
|
October
26, 2009
|
ACURA
PHARMACEUTICALS, INC.
|
/s/ Andrew D. Reddick
|
|
Andrew
D. Reddick
|
|
President
& Chief Executive Officer
|
|
/s/ Peter A. Clemens
|
|
Peter
A. Clemens
|
|
Senior
VP & Chief Financial
Officer
|
|
1.
|
I
have reviewed this quarterly report on Form 10-Q of Acura Pharmaceuticals,
Inc.;
|
|
2.
|
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;
|
|
3.
|
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 – 15(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):
|
October
26, 2009
|
/s/ Andrew D. Reddick
|
Andrew
D. Reddick
|
|
Chief
Executive Officer
|
|
1.
|
I
have reviewed this quarterly report on Form 10-Q of Acura Pharmaceuticals,
Inc.;
|
|
2.
|
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;
|
|
3.
|
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):
|
October
26, 2009
|
/s/ Peter A. Clemens
|
Peter
A. Clemens
|
|
Chief
Financial Officer
|
|
(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.
|
October
26, 2009
|
/s/ Andrew D. Reddick
|
Andrew
D. Reddick
|
|
Chief
Executive Officer
|
|
/s/ Peter A. Clemens
|
|
Peter
A. Clemens
|
|
Chief
Financial Officer
|