The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those which are not within our control.
Background of Our Company
We are a pharmaceutical development company that is seeking to discover, develop and ultimately commercialize innovative therapeutics for patients with certain cancers and non-cancerous proliferation disorders. We also have explored and expect to continue to explore acquiring or licensing other innovative pre-clinical and clinical stage therapeutics addressing unmet needs and orphan indications for the treatment of cancer and other diseases.
Our current primary focus is on the development of therapies initially for
prostate and lung cancers in
SUBA-Itraconazole was developed and is licensed to us by our majority
stockholder Mayne Pharma under a supply and license agreement, originally dated
We were founded under the name "
Critical Accounting Policies and Estimates
Estimates
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Revenue Recognition
We currently have no ongoing source of revenues. Any miscellaneous income is recognized when earned. Deferred revenue represents cash received for royalties in advance of being earned. Such payments are reflected as deferred revenue until recognized under our revenue recognition policy. Deferred revenue would be classified as current if management believes we will be able to recognize the deferred amount as revenue within twelve months of the balance sheet date. Deferred revenue will be recognized when the product is sold and the royalty is earned. Since all deferred revenue on our balance sheet is related to the BCCNS product which is yet to be approved by FDA, we have determined that 100% of the advances of the royalty received by Mayne Pharma should be classified as non-current.
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Cash and Cash Equivalents
We consider all highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents. At times, we may
maintain cash balances in excess of
Research and Development Expenses
Research and development costs are expensed in the period in which they are incurred and include the expenses paid to third parties who conduct research and development activities on our behalf as well as purchased in-process research and development.
Stock-Based Compensation
We account for stock-based awards to employees and non-employees using
In applying the Black-Scholes option pricing model for options issued in
Income taxes
Deferred tax assets and liabilities are recognized for future tax consequences
attributed to differences between the consolidated financial statement carrying
amounts of existing assets and liabilities and their respective tax bases and
are measured using enacted tax rates that are expected to apply to the
differences in the periods that they are expected to reverse. We have evaluated
the guidance relating to accounting for uncertainty in income taxes and
determined that we had no uncertain income tax positions that could have a
significant effect on the consolidated financial statements for the years ended
Recent accounting pronouncements
We have considered all other recent accounting pronouncements that are issued, but not effective, and we do not believe that they will have a significant impact on the Company's results of operations or financial position.
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Results of Operations
For the Year Ended
Research and Development Expenses. We recognized
General and Administrative Expenses. We recognized
Interest Income. We recognized interest income during the year ended
Liquidity and Capital Resources
We are presently developing and conducting our clinical and regulatory business
plans and are exploring the potential acquisition or license of additional
product candidates. Our current cash on hand, approximately
Our plan, if conditions allow, is to finance our research and development, commercialization and distribution efforts, any acquisitions or investments and our working capital needs primarily through:
• proceeds from public and private financings and, potentially, from other strategic transactions (including potential royalty-related financing transactions) although our attempts over the last year to secure such financing have not been successful, due to, among other factors, our ongoing litigations and the lack of market liquidity for our common stock; • royalty revenue from Mayne Pharma from sales of SUBA-Itraconazole BCCNS upon approval by FDA (after earned royalties have been applied to any royalties advanced under the Supply and License Agreement, although it is uncertain if and when such FDA approval will be obtained); • proceeds from the exercise of outstanding warrants previously issued in private financings (including, potentially, warrants held by our majority shareholder, Mayne Pharma); • potential partnerships with other pharmaceutical companies to assist in the supply, manufacturing and distribution of our products for which we would expect to receive milestone and royalty payments; • potential licensing and joint venture arrangements with third parties, including other pharmaceutical companies where we would receive funding based on out-licensing our product; and • seeking government or private foundation grants which would be awarded to us to further develop our current and future anti-cancer therapies. 55
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However, there is a significant risk that none of these plans will be implemented in a manner necessary to sustain us for an extended period of time and we will be unable to obtain additional financing when needed on commercially reasonable terms, if at all. In particular, we are presently subject to the Action and the Class Action (see the "Legal Proceedings" section of this Report for further information). The existence of the Action and the Class Action and the uncertainty surrounding the outcomes has impeded our ability to secure additional funding and may continue to do so for so long as the outcome of the Action is uncertain.
If adequate funds are not available to us when needed, we may be required to significantly reduce or refocus operations or to obtain funds through arrangements that may require us to relinquish rights to technologies or potential markets, any of which could have a material adverse effect on us. In addition, our inability to secure additional funding in the near future could cause our business to fail or become bankrupt or force us to wind down or discontinue operations.
Contractual Obligations and Commercial Commitments
There are no non-cancellable contractual obligations as of
Off Balance Sheet Arrangements
We are not a party to any off-balance sheet arrangements.
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