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This excerpt taken from the ACOR 10-K filed Feb 26, 2010. Liquidity and Capital Resources We have incurred annual operating losses since inception and, as of December 31, 2009, we had an accumulated deficit of approximately $428.3 million. We have financed our operations primarily through public offerings of our common stock, private placements of our securities, our financing arrangement with PRF, our collaboration with Biogen and to a lesser extent, from loans and government grants. Financing Arrangements In January 1997, Elan International Services, Ltd. (EIS) loaned us an aggregate of $7.5 million pursuant to two convertible promissory notes to partly fund our research and development activities. On December 23, 2005, Elan transferred these promissory notes to funds affiliated with Saints Capital. As of December 31, 2009, $5.0 million of these promissory notes were outstanding. In January 2005, we entered into a $6.0 million senior secured term loan which was repaid during the three-month period ended March 31, 2008. On December 23, 2005, we entered into a revenue interest assignment agreement with PRF, a dedicated healthcare investment fund, pursuant to which we assigned to PRF the right to a portion of our net revenues (as defined in the agreement) from Zanaflex Capsules, Zanaflex tablets and any future Zanaflex products. To secure our obligations to PRF, we also granted PRF a security interest in substantially all of our assets related to Zanaflex. Our agreement with PRF covers all Zanaflex net revenues generated from October 1, 2005 through and including December 31, 2015, unless the agreement terminates earlier. In November 2006, we entered into an amendment to the revenue interest assignment agreement with PRF. Under the terms of the amendment, PRF paid us $5.0 million in November 2006 and an additional $5.0 million in February 2007 since our net revenues during the fiscal year 2006 exceeded $25.0 million. Under the terms of the amendment, 72 we are required to pay PRF $5.0 million on December 1, 2009 and an additional $5.0 million on December 1, 2010. The December 1, 2009 payment was made. Under the agreement and the amendment, PRF is entitled to the following portion of Zanaflex net revenues:
Notwithstanding the foregoing, once PRF has received and retained payments under the agreement that are at least 2.1 times the aggregate amount PRF has paid us under the agreement, PRF will only be entitled to 1% of Zanaflex net revenues. In connection with the transaction, we recorded a liability as of December 31, 2009, referred to as the revenue interest liability, of approximately $11.8 million. We impute interest expense associated with this liability using the effective interest rate method and record a corresponding accrued interest liability. The effective interest rate is calculated based on the rate that would enable the debt to be repaid in full over the life of the arrangement. The interest rate on this liability may vary during the term of the agreement depending on a number of factors, including the level of Zanaflex sales. We currently estimate that the imputed interest rate associated with this liability will be approximately 5.7%. Payments made to PRF as a result of Zanaflex sales levels will reduce the accrued interest liability and the principal amount of the revenue interest liability. Upon the occurrence of certain events, including if we experience a change of control, undergo certain bankruptcy events, transfer any of our interests in Zanaflex (other than pursuant to a license agreement, development, commercialization, co-promotion, collaboration, partnering or similar agreement), transfer all or substantially all of our assets, or breach certain of the covenants, representations or warranties we make under the agreement, PRF may (i) require us to repurchase the rights we sold them at the "put/call price" in effect on the date such right is exercised or (ii) foreclose on the Zanaflex assets that secure our obligations to PRF. Except in the case of certain bankruptcy events, if PRF exercises its right, which we refer to as PRF's put option, to cause us to repurchase the rights we assigned to it, PRF may not foreclose unless we fail to pay the put/call price as required. If we experience a change of control we have the right, which we refer to as our call option, to repurchase the rights we sold to PRF at the "put/call price" in effect on the date such right is exercised. The put/call price on a given date is the greater of (i) all payments made by PRF to us as of such date, less all payments received by PRF from us as of such date, and (ii) an amount that would generate an internal rate of return to PRF of 25% on all payments made by PRF to us as of such date, taking into account the amount and timing of all payments received by PRF from us as of such date. We have determined that PRF's put option and our call option meet the criteria to be considered an embedded derivative and should be accounted for as such. Therefore, we recorded a net liability of $637,500 as of December 31, 2009 related to the put/call option to reflect its current estimated fair value. This liability is revalued on a semi-annual basis to reflect any changes in the fair value and any gain or loss resulting from the revaluation is recorded in earnings. During any period during which PRF has the right to receive 15% of Zanaflex net revenues (as defined in the agreement), then 8% of the first $30.0 million in payments from Zanaflex sales we receive from wholesalers will be distributed to PRF on a daily basis. Following the end of each 73 fiscal quarter, if the aggregate amount actually received by PRF during such quarter exceeds the amount of net revenues PRF was entitled to receive, PRF will remit such excess to us. If the amount of net revenues PRF was entitled to receive during such quarter exceeds the aggregate amount actually received by PRF during such quarter, we will remit such excess to PRF. Investment Activities At December 31, 2009, cash and cash equivalents and short-term investments were approximately $272.0 million, as compared to $246.0 million at December 31, 2008. Our cash and cash equivalents consist of highly liquid investments with original maturities of three months or less at date of purchase and consist of time deposits and investments in a Treasury money market fund and high-quality government bonds. Also, we maintain cash balances with financial institutions in excess of insured limits. We do not anticipate any losses with respect to such cash balances. As of December 31, 2009, our cash and cash equivalents were $47.3 million, as compared to $29.6 million as of December 31, 2008. Our short-term investments consist of US Treasury bonds with original maturities greater than three months and less than one year. The balance of these investments was $224.8 million as of December 31, 2009, as compared to $216.4 million as of December 31, 2008. Net Cash Provided by (Used in) Operations Net cash provided by (used in) operations was $38.6 million and $49.2 million for the years ended December 31, 2009 and 2008, respectively. Cash provided by operations for the year ended December 31, 2009 was primarily attributable to an increase in deferred license revenue of $105.3 million, a non-cash share-based compensation expense of $12.3 million, an increase in Zanaflex Capsules deferred product revenues of $5.1 million, amortization of the discount on short-term investments of $4.9 million, depreciation and amortization of $2.8 million, an increase in accounts payable, accrued expenses, and other current liabilities of $2.2 million, an increase in Zanaflex tablets deferred product revenues of $1.3 million and a loss on our put/call liability related to the Zanaflex revenue interest liability of $300,000. Cash provided by operations for the year ended December 31, 2009 was partially offset by a net loss of $83.9 million, an increase in non current portion of deferred cost of license revenue of $6.7 million, an increase in prepaid expenses and other current assets of $3.3 million, an increase in accounts receivable of $1.1 million, and an increase in inventory of $620,000. Cash used in operations for the year ended December 31, 2008 was primarily attributable to a net loss of $74.3 million, amortization of the discount on short-term investments of $3.1 million, an increase in prepaid expenses and other current assets of $1.3 million, an increase in inventory held by others of $598,000, and an increase in accounts receivable of $357,000. Cash used in operations for the year ended December 31, 2008 was partially offset by an increase in accounts payable, accrued expenses, and other current liabilities of $8.8 million, a non-cash share-based compensation expense of $9.8 million, depreciation and amortization of $3.5 million, a non-cash expense for the acquisition of NRI assets of $2.7 million, an increase in Zanaflex Capsules deferred product revenue of $2.5 million and a decrease in inventory of $3.3 million. Net Cash Used in Investing Net cash used in investing activities for the year ended December 31, 2009 was $16.4 million, primarily due to $310.4 million in purchases of short-term investments, purchases of intangible assets of $1.3 million, and purchases of property and equipment of $1.1 million, offset by $296.4 million in proceeds from maturities and sales of short-term investments. 74 Net Cash Used In Financing Net cash used in financing activities for the year ended December 31, 2009 was $4.6 million, primarily due to $7.1 million in repayments to PRF which was partially offset by $2.5 million in net proceeds from the issuance of common stock and exercise of stock options. Future Capital Needs Our future capital requirements will depend on a number of factors, including the amount of revenue generated from sales of Ampyra and Zanaflex Capsules, the continued progress of our preclinical programs, the timing and outcome of regulatory approvals, the amount and timing of milestone or other payments made under collaborative agreements, the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims and other intellectual property rights and the licensing or acquisition of new products or technologies. We expect to incur losses from operations as we continue to support and expand our sales and marketing infrastructure for the commercialization of Ampyra, promote Zanaflex Capsules, continue our clinical development and advance our preclinical programs. At December 31, 2009, we had $272.1 million in cash, cash equivalents and short-term investments. To the extent our capital resources are insufficient to meet future operating requirements we will need to raise additional capital, reduce planned expenditures, or incur indebtedness to fund its operations. We may be unable to obtain additional debt or equity financing on acceptable terms, if at all. If adequate funds are not available, we may be required to curtail our sales and marketing efforts, delay, reduce the scope of or eliminate some of our research and development programs or obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to certain product candidates that we might otherwise seek to develop or commercialize independently. This excerpt taken from the ACOR 10-Q filed May 11, 2009. Liquidity and Capital Resources We have incurred annual operating losses since inception and, as of March 31, 2009, we had an accumulated deficit of approximately $363.1 million. We have financed our operations primarily through private placements of our securities, public offerings of our common stock, and, to a lesser extent, from loans, government grants and our financing arrangement with PRF. Financing Arrangements In January 1997, Elan International Services, Ltd. (EIS) loaned us an aggregate of $7.5 million pursuant to two convertible promissory notes to partly fund our research and development activities. On December 23, 2005, EIS transferred these promissory notes to funds affiliated with Saints Capital. As of March 31, 2009, $5.0 million of these promissory notes were outstanding. On December 23, 2005, we entered into a revenue interest assignment agreement with PRF, a dedicated healthcare investment fund, pursuant to which we assigned to PRF the right to a portion of our net revenues (as defined in the agreement) from Zanaflex Capsules, Zanaflex tablets and any future Zanaflex products. To secure our obligations to PRF, we also granted PRF a security interest in substantially all of our assets related to Zanaflex. Our agreement with PRF covers all Zanaflex net revenues generated from October 1, 2005 through and including December 31, 2015, unless the agreement terminates earlier. In November 2006, we entered into an amendment to the revenue interest assignment agreement with PRF. Under the terms of the amendment, PRF paid us $5.0 million in November 2006 and an additional $5.0 million in February 2007 as our net revenues during the fiscal year 2006 exceeded $25.0 million. Under the terms of the amendment, we are required to pay PRF $5.0 million on December 1, 2009 and an additional $5.0 million on December 1, 2010. Under the agreement and the amendment, PRF is entitled to the following portion of Zanaflex net revenues:
17 Notwithstanding the foregoing, once PRF has received and retained payments under the agreement that are at least 2.1 times the aggregate amount PRF has paid us under the agreement, PRF will only be entitled to 1% of Zanaflex net revenues. In connection with the transaction, we have a liability recorded, referred to as the revenue interest liability, of approximately $19.2 million in accordance with EITF 88-18, Sales of Future Revenues. We impute interest expense associated with this liability using the effective interest rate method and record a corresponding accrued interest liability. The effective interest rate is calculated based on the rate that would enable the debt to be repaid in full over the life of the arrangement. The interest rate on this liability may vary during the term of the agreement depending on a number of factors, including the level of Zanaflex sales. We currently estimate that the imputed interest rate associated with this liability will be approximately 6.1%. Payments made to PRF as a result of Zanaflex sales levels reduce the accrued interest liability and the principal amount of the revenue interest liability. Investment Activities At March 31, 2009, cash and cash equivalents and short-term investments were approximately $226.0 million, as compared to $246.0 million at December 31, 2008. As of March 2009, our cash and cash equivalents consist of highly liquid investments with original maturities of three months or less at date of purchase and consist of time deposits and investments in a Treasury money market fund and high-quality government bonds. Also, we maintain cash balances with financial institutions in excess of insured limits. We do not anticipate any losses with respect to such cash balances. As of March 31, 2009, our cash and cash equivalents were $36.1 million, as compared to $29.6 million as of December 31, 2008. Our short-term investments consist of US Treasury bonds and commercial paper securities with original maturities greater than three months and less than one year. The balance of these investments was $189.9 million as of March 31, 2009, as compared to $216.4 million as of December 31, 2008. Net Cash Used in Operations Net cash used in operations was $19.5 million and $9.7 million for the three-month period ended March 31, 2009 and 2008, respectively. Cash used in operations for the three-month period ended March 31, 2009 was primarily attributable to a net loss of $18.7 million, a decrease in accounts payable, accrued expenses, and other current liabilities of $5.8 million, and an increase in prepaid expenses and other current assets of $1.3 million. Cash used in operations for the three-month period ended March 31, 2009, was partially offset by a non-cash share-based compensation expense of $2.7 million, a decrease in inventory held by the Company of $1.4 million, an increase in Zanaflex Capsules deferred product revenues of $880,000, depreciation and amortization of $681,000, and amortization of net premiums and discounts on short-term investments of $364,000. Cash used in operations for the three-month period ended March 31, 2008 was primarily attributable to a net loss of $16.4 million, amortization of net premiums and discounts on short-term investments of $690,000, a decrease in accounts payable, accrued expenses, and other current liabilities of $597,000, and an increase in prepaid expenses and other current assets of $179,000. Cash used in operations for the three-month period ended March 31, 2008, was partially offset by a non-cash expense for the acquisition of NRI assets of $2.7 million, a non-cash share-based compensation expense of $1.9 million, an increase in Zanaflex Capsules deferred product revenues of $1.7 million, a decrease in inventory held by the Company of $1.1 million, and depreciation and amortization of $836,000. Net Cash Used in/Provided by Investing Net cash provided by investing activities for the three-month period ended March 31, 2009 was $25.3 million, primarily due to $103.9 million in proceeds from maturities of short-term investments 18 which was offset by $78.3 million in purchases of short-term investments and $272,000 in purchases of property and equipment. Net Cash Provided by Financing Net cash provided by financing activities for the three-month period ended March 31, 2009 was $694,000 due to $952,000 in proceeds from option exercises which was offset by $258,000 in repayments to PRF. Future Capital Needs Our future capital requirements will depend on a number of factors, including the amount of revenue generated from sales of Zanaflex Capsules, revenue from Fampridine-SR, if approved, the continued progress of our research and development activities, the timing and outcome of regulatory approvals, the amount and timing of milestone or other payments made under collaborative agreements, the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims and other intellectual property rights and the acquisition of licenses to new products or compounds. We expect to incur losses from operations for at least the next several years as we continue to support our sales and marketing infrastructure for the commercialization of Zanaflex Capsules, increase our efforts to support pre-launch activities for Fampridine-SR and its commercialization, if approved, and continue our clinical development and advance our preclinical programs. We believe our year-end 2009 cash, cash equivalents and investment balances will be in excess of $150.0 million and that our current financial resources and sources of liquidity will be sufficient to fund operations and meet financial obligations through 2010 based on our current projected revenue and spending levels. To the extent our capital resources are insufficient to meet future operating requirements we will need to raise additional capital, reduce planned expenditures, or incur indebtedness to fund our operations. We may be unable to obtain additional debt or equity financing on acceptable terms, if at all. If adequate funds are not available, we may be required to curtail our sales and marketing efforts, delay, reduce the scope of or eliminate some of our research and development programs or obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to certain product candidates that we might otherwise seek to develop or commercialize independently. These excerpts taken from the ACOR 10-K filed Mar 2, 2009. Liquidity and Capital Resources We have incurred annual operating losses since inception and, as of December 31, 2008, we had an accumulated deficit of approximately $344.4 million. We have financed our operations primarily through public offerings of our common stock, private placements of our securities, our financing arrangement with PRF and, to a lesser extent, from loans and government grants. We completed a follow-on public offering in February 2008 in which approximately 3.7 million shares of our common stock were sold, resulting in proceeds of approximately $74.6 million, net of issuance costs. We completed a follow-on public offering in August 2008 in which approximately 4.6 million shares of our common stock were sold, resulting in proceeds of approximately $126.6 million, net of issuance costs. Financing Arrangements In January 1997, Elan International Services, Ltd. (EIS) loaned us an aggregate of $7.5 million pursuant to two convertible promissory notes to partly fund our research and development activities. On December 23, 2005, Elan transferred these promissory notes to funds affiliated with Saints Capital. As of December 31, 2008, $5.0 million of these promissory notes were outstanding. In January 2005, we entered into a $6.0 million senior secured term loan which was repaid during the three-month period ended March 31, 2008. On December 23, 2005, we entered into a revenue interest assignment agreement with PRF, a dedicated healthcare investment fund, pursuant to which we assigned to PRF the right to a portion of our net revenues (as defined in the agreement) from Zanaflex Capsules, Zanaflex tablets and any future Zanaflex products. To secure our obligations to PRF, we also granted PRF a security interest in substantially all of our assets related to Zanaflex. Our agreement with PRF covers all Zanaflex net revenues generated from October 1, 2005 through and including December 31, 2015, unless the agreement terminates earlier. In November 2006, we entered into an amendment to the revenue interest assignment agreement with PRF. Under the terms of the amendment, PRF paid us $5.0 million in November 2006 and an additional $5.0 million in February 2007 since our net revenues during the fiscal year 2006 exceeded $25.0 million. Under the terms of the amendment, we are required to pay PRF $5.0 million on December 1, 2009 and an additional $5.0 million on December 1, 2010. Under the agreement and the amendment, PRF is entitled to the following portion of Zanaflex net revenues:
76 Notwithstanding the foregoing, once PRF has received and retained payments under the agreement that are at least 2.1 times the aggregate amount PRF has paid us under the agreement, PRF will only be entitled to 1% of Zanaflex net revenues. In connection with the transaction, we recorded a liability as of December 31, 2008, referred to as the revenue interest liability, of approximately $18.7 million in accordance with EITF 88-18, Sales of Future Revenues. We impute interest expense associated with this liability using the effective interest rate method and record a corresponding accrued interest liability. The effective interest rate is calculated based on the rate that would enable the debt to be repaid in full over the life of the arrangement. The interest rate on this liability may vary during the term of the agreement depending on a number of factors, including the level of Zanaflex sales. We currently estimate that the imputed interest rate associated with this liability will be approximately 6.2%. Payments made to PRF as a result of Zanaflex sales levels will reduce the accrued interest liability and the principal amount of the revenue interest liability. Upon the occurrence of certain events, including if we experience a change of control, undergo certain bankruptcy events, transfer any of our interests in Zanaflex (other than pursuant to a license agreement, development, commercialization, co-promotion, collaboration, partnering or similar agreement), transfer all or substantially all of our assets, or breach certain of the covenants, representations or warranties we make under the agreement, PRF may (i) require us to repurchase the rights we sold them at the "put/call price" in effect on the date such right is exercised or (ii) foreclose on the Zanaflex assets that secure our obligations to PRF. Except in the case of certain bankruptcy events, if PRF exercises its right, which we refer to as PRF's put option, to cause us to repurchase the rights we assigned to it, PRF may not foreclose unless we fail to pay the put/call price as required. If we experience a change of control we have the right, which we refer to as our call option, to repurchase the rights we sold to PRF at the "put/call price" in effect on the date such right is exercised. The put/call price on a given date is the greater of (i) all payments made by PRF to us as of such date, less all payments received by PRF from us as of such date, and (ii) an amount that would generate an internal rate of return to PRF of 25% on all payments made by PRF to us as of such date, taking into account the amount and timing of all payments received by PRF from us as of such date. We have determined that PRF's put option and our call option meet the criteria to be considered an embedded derivative and should be accounted for as such. Therefore, we recorded a net liability of $337,500 as of December 31, 2008 related to the put/call option to reflect its current estimated fair value, in accordance with SFAS No. 133, Accounting for Derivatives Instruments and Hedging Activities. This liability is revalued on a semi-annual basis to reflect any changes in the fair value and any gain or loss resulting from the revaluation is recorded in earnings. During any period during which PRF has the right to receive 15% of Zanaflex net revenues (as defined in the agreement), then 8% of the first $30.0 million in payments from Zanaflex sales we receive from wholesalers will be distributed to PRF on a daily basis. Following the end of each fiscal quarter, if the aggregate amount actually received by PRF during such quarter exceeds the amount of net revenues PRF was entitled to receive, PRF will remit such excess to us. If the amount of net revenues PRF was entitled to receive during such quarter exceeds the aggregate amount actually received by PRF during such quarter, we will remit such excess to PRF. Investment Activities At December 31, 2008, cash and cash equivalents and short-term investments were approximately $246.0 million, as compared to $95.1 million at December 31, 2007. Our cash and cash equivalents consist of highly liquid investments with original maturities of three months or less at date of purchase and consist of time deposits and investments in a Treasury money market fund and high-quality government bonds. Also, we maintain cash balances with financial institutions in excess of insured limits. We do not anticipate any losses with respect to such cash balances. As of December 31, 2008, our cash and cash equivalents were $29.6 million, as compared to 77 $16.8 million as of December 31, 2007. Our short-term investments consist of US Treasury bonds, and commercial paper securities with original maturities greater than three months and less than one year. The balance of these investments was $216.4 million as of December 31, 2008, as compared to $78.3 million as of December 31, 2007. Net Cash Used in Operations Net cash used in operations was $49.2 million and $25.7 million for the years ended December 31, 2008 and 2007, respectively. Cash used in operations for the year ended December 31, 2008 was primarily attributable to a net loss of $74.3 million, amortization of the discount on short-term investments of $3.1 million, an increase in prepaid expenses and other current assets of $1.3 million, an increase in inventory held by others of $598,000, and an increase in accounts receivable of $357,000. Cash used in operations for the year ended December 31, 2008 was partially offset by an increase in accounts payable, accrued expenses, and other current liabilities of $8.8 million, a non-cash share-based compensation expense of $9.8 million, depreciation and amortization of $3.5 million, a non-cash expense for the acquisition of NRI assets of $2.7 million, an increase in Zanaflex Capsules deferred product revenue of $2.5 million and a decrease in inventory of $3.3 million. Cash used in operations for the year ended December 31, 2007 was primarily attributable to a net loss of $38.0 million, amortization of the discount on short-term investments of $3.0 million, a decrease in Zanaflex tablets deferred product revenue of $1.2 million and an increase in prepaid expenses and other current assets of $970,000. Cash used in operations for the year ended December 31, 2007 was partially offset by a non-cash share-based compensation expense of $7.8 million, an increase in accounts payable, accrued expenses, and other current liabilities of $4.6 million, depreciation and amortization of $2.3 million, and an increase in Zanaflex Capsules deferred product revenue of $2.6 million. Net Cash Used in Investing Net cash used in investing activities for the year ended December 31, 2008 was $141.3 million, primarily due to $326.0 million in purchases of short-term investments, a $5.0 million payment for the purchase of intangible assets due to the final Elan Zanaflex milestone, and purchases of property and equipment of $1.8 million, offset by $191.6 million in proceeds from maturities and sales of short-term investments. Net Cash Provided by Financing Net cash provided by financing activities for the year ended December 31, 2008 was $203.2 million, primarily due to $205.1 million in net proceeds from the issuance of common stock and exercise of stock options which was partially offset by $1.6 million in repayments to PRF and $188,000 for notes payable. Future Capital Needs Our future capital requirements will depend on a number of factors, including the amount of revenue generated from sales of Zanaflex Capsules, revenue from Fampridine-SR, if approved, the continued progress of our research and development activities, the timing and outcome of regulatory approvals, the amount and timing of milestone or other payments made under collaborative agreements, the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims and other intellectual property rights and the acquisition of licenses to new products or compounds. We expect to incur losses from operations for at least the next several years as we continue to support our sales and marketing infrastructure for the commercialization of Zanaflex Capsules, increase our efforts to support pre-launch activities for 78 Fampridine-SR and its commercialization, if approved, and continue our clinical development and advance our preclinical programs. We believe our year-end 2009 cash, cash equivalents and investment balances will be in excess of $150.0 million and that our current financial resources and sources of liquidity will be sufficient to fund operations and meet financial obligations through 2010 based on our current projected revenue and spending levels. To the extent our capital resources are insufficient to meet future operating requirements we will need to raise additional capital, reduce planned expenditures, or incur indebtedness to fund its operations. We may be unable to obtain additional debt or equity financing on acceptable terms, if at all. If adequate funds are not available, we may be required to curtail our sales and marketing efforts, delay, reduce the scope of or eliminate some of our research and development programs or obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to certain product candidates that we might otherwise seek to develop or commercialize independently. Liquidity and Capital Resources We have incurred annual operating losses since inception and, as of December 31, 2008, we had an accumulated deficit of We We Financing Arrangements In January 1997, Elan International Services, Ltd. (EIS) loaned us an aggregate of $7.5 million pursuant to two On Under
76 Notwithstanding Upon During Investment Activities At December 31, 2008, cash and cash equivalents and short-term investments were approximately $246.0 million, 77 $16.8 million Net Cash Used in Operations Net cash used in operations was $49.2 million and $25.7 million for the years ended December 31, 2008 and 2007, Net Cash Used in Investing Net cash used in investing activities for the year ended December 31, 2008 was $141.3 million, primarily due to Net Cash Provided by Financing Net cash provided by financing activities for the year ended December 31, 2008 was $203.2 million, primarily due to Future Capital Needs Our future capital requirements will depend on a number of factors, including the amount of revenue generated from sales of Zanaflex 78 Fampridine-SR We This excerpt taken from the ACOR 10-Q filed Nov 10, 2008. Liquidity and Capital Resources We have incurred annual operating losses since inception and, as of September 30, 2008, we had an accumulated deficit of approximately $324.1 million. We have financed our operations primarily through public offerings of our common stock, private placements of our securities and, to a lesser extent, from loans, government grants and our financing arrangement with PRF. We completed a follow-on public offering in July 2007 in which approximately 4.2 million shares of our common stock were sold, resulting in proceeds to us of approximately $72.2 million, net of issuance costs. We completed a follow-on public offering in February 2008 in which approximately 3.7 million shares of our common stock were sold, resulting in proceeds to us of approximately $74.6 million, net of issuance costs. We completed a follow-on public offering in August 2008 in which approximately 4.6 million shares of our common stock were sold, resulting in proceeds of approximately $126.6 million, net of issuance costs. Financing Arrangements In January 1997, Elan International Services, Ltd. (EIS) loaned us an aggregate of $7.5 million pursuant to two convertible promissory notes to partly fund our research and development activities. On December 23, 2005, Elan transferred these promissory notes to funds affiliated with Saints Capital. As of September 30, 2008, $5.0 million of these promissory notes were outstanding. In January 2005, we entered into a $6.0 million senior secured term loan, which is collateralized by all of our personal property and fixtures, other than the property that secures our revenue interests assignment arrangement with PRF, which has been repaid during the three-month period ended March 31, 2008. On December 23, 2005, we entered into a revenue interests assignment agreement with PRF, a dedicated healthcare investment fund, pursuant to which we assigned to PRF the right to a portion of our net revenues (as defined in the agreement) from Zanaflex Capsules, Zanaflex tablets and any future Zanaflex products. To secure our obligations to PRF, we also granted PRF a security interest in substantially all of our assets related to Zanaflex. Our agreement with PRF covers all Zanaflex net revenues generated from October 1, 2005 through and including December 31, 2015, unless the agreement terminates earlier. In November 2006, we entered into an amendment to the revenue interest assignment agreement with PRF. Under the terms of the amendment, PRF paid us $5.0 million in November 2006 and an additional $5.0 million in February 2007 as our net revenues during the fiscal year 2006 exceeded $25.0 million. Under the terms of the amendment, we are required to pay PRF $5.0 million on December 1, 2009 and an additional $5.0 million on December 1, 2010. Under the agreement and the amendment, PRF is entitled to the following portion of Zanaflex net revenues:
19
Notwithstanding the foregoing, once PRF has received and retained payments under the agreement that are at least 2.1 times the aggregate amount PRF has paid us under the agreement, PRF will only be entitled to 1% of Zanaflex net revenues. In connection with the transaction, we have a liability recorded, referred to as the revenue interest liability, of approximately $19.2 million in accordance with EITF 88-18, Sales of Future Revenues. We impute interest expense associated with this liability using the effective interest rate method and record a corresponding accrued interest liability. The effective interest rate is calculated based on the rate that would enable the debt to be repaid in full over the life of the arrangement. The interest rate on this liability may vary during the term of the agreement depending on a number of factors, including the level of Zanaflex sales. We currently estimate that the imputed interest rate associated with this liability will be approximately 5.9%. Payments made to PRF as a result of Zanaflex sales levels reduce the accrued interest liability and the principal amount of the revenue interest liability. Investment Activities At September 30, 2008, cash and cash equivalents and short-term investments were approximately $263.2 million, as compared to $95.1 million at December 31, 2007. As of September 30 2008, our cash and cash equivalents consist of highly liquid investments in a Treasury money market fund. Our cash and cash equivalents were $79.8 million as of September 30, 2008, as compared to $16.8 million as of December 31, 2007. Our short-term investments consist of US Treasuries, commercial paper and corporate debt securities with remaining maturities from one month to less than one year. The balance of these investments was $183.4 million as of September 30, 2008, as compared to $78.3 million as of December 31, 2007. Net Cash Used in Operations Net cash used in operations was $32.2 million and $15.8 million for the nine-month periods ended September 30, 2008 and 2007, respectively. Cash used in operations for the nine-month period ended September 30, 2008 was primarily attributable to a net loss of $54.1 million, amortization of the discount on short-term investments of $2.4 million, an increase in inventory held by others of $416,000, a decrease in Zanaflex tablets deferred product revenues of $142,000, and a gain on our put/call liability of $50,000. Cash used in operations for the nine-month period ended September 30, 2008, was partially offset by an increase in accounts payable, accrued expenses, and other current liabilities of $7.6 million, a non-cash share-based compensation expense of $7.1 million, a decrease in inventory held by the Company of $2.8 million, a non-cash expense for the acquisition of NRI assets of $2.7 million, depreciation and amortization of $2.5 million, an increase in Zanaflex Capsules deferred product revenues of $1.7 million, a decrease in accounts receivable of $249,000, and a decrease in prepaid expenses and other current assets of $236,000. Net cash used by operations for the nine-month period ended September 30, 2007 was primarily attributable to a net loss of $24.2 million, amortization of the discount on short-term investments of $1.9 million, a decrease in Zanaflex tablets deferred product revenues of $1.3 million, an increase in prepaid expenses and other current assets of $1.1 million, an increase in inventory held by the Company of $774,000, and an increase in inventory held by others of $182,000. Cash used in operations for the nine-month period ended September 30, 2007, was partially offset by a non-cash stock compensation expense of $5.9 million, an increase in accounts payable, accrued expenses, and other current liabilities of $5.3 million, depreciation and amortization of $1.5 million, a decrease in accounts receivable of $583,000, and a decrease in Zanaflex Capsules deferred product revenue of $392,000. 20 Net Cash Used in Investing Net cash used in investing activities for the nine-month period ended September 30, 2008 was $107.9 million, primarily due to $229.5 million in purchases of short-term investments, a $5.0 million payment to Elan for the final Zanaflex milestone, and purchases of property and equipment of $737,000, partially offset by $127.3 million in proceeds from maturities of short-term investments. Net Cash Provided by Financing Net cash provided by financing activities for the nine-month period ended September 30, 2008 was $203.0 million, primarily due to $204.7 million in net proceeds from the issuance of common stock and option exercises, which was partially offset by $1.5 million in repayments to PRF and $188,000 for notes payable. Future Capital Needs Our future capital requirements will depend on a number of factors, including the amount of revenue generated from sales of Zanaflex Capsules, the continued progress of our research and development activities, the timing and outcome of regulatory approvals, the amount and timing of milestone or other payments made under collaborative agreements, the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims and other intellectual property rights and the acquisition of licenses to new products or compounds. We expect to incur losses from operations for at least the next several years as we continue to support our sales and marketing infrastructure and increase our marketing efforts to support the commercialization of Zanaflex Capsules, continue our clinical development and pre-launch planning for Fampridine-SR, and advance our preclinical programs. We believe that our current financial resources and sources of liquidity will be sufficient to fund operations and meet financial obligations into the fourth quarter of 2010 based on our current projected revenue and spending levels. To the extent our capital resources are insufficient to meet future operating requirements, we will need to raise additional capital, reduce planned expenditures, or incur indebtedness to fund our operations. We may be unable to obtain additional debt or equity financing on acceptable terms, if at all. If adequate funds are not available, we may be required to curtail our sales and marketing efforts, delay, reduce the scope of or eliminate some of our research and development programs or obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to certain product candidates that we might otherwise seek to develop or commercialize independently. This excerpt taken from the ACOR 10-Q filed Aug 5, 2008. Liquidity and Capital Resources We have incurred annual operating losses since inception and, as of June 30, 2008, we had an accumulated deficit of approximately $305.3 million. We have financed our operations primarily through private placements of our securities, public offerings of our common stock, and, to a lesser extent, from loans, government grants and our financing arrangement with PRF. We completed a follow-on public offering in July 2007 in which approximately 4.2 million shares of our common stock were sold, resulting in proceeds to us of approximately $72.2 million, net of issuance costs. We completed a follow-on public offering in February 2008 in which approximately 3.7 million shares of our common stock were sold, resulting in proceeds to us of approximately $74.6 million, net of issuance costs. Financing Arrangements In January 1997, Elan International Services, Ltd. (EIS) loaned us an aggregate of $7.5 million pursuant to two convertible promissory notes to partly fund our research and development activities. On December 23, 2005, Elan transferred these promissory notes to funds affiliated with Saints Capital. As of June 30, 2008, $5.0 million of these promissory notes were outstanding. In January 2005, we entered into a $6.0 million senior secured term loan, which is collateralized by all of our personal property and fixtures, other than the property that secures our revenue interests assignment arrangement with PRF, which has been repaid during the three-month period ended March 31, 2008. On December 23, 2005, we entered into a revenue interests assignment agreement with PRF, a dedicated healthcare investment fund, pursuant to which we assigned to PRF the right to a portion of our net revenues (as defined in the agreement) from Zanaflex Capsules, Zanaflex tablets and any future Zanaflex products. To secure our obligations to PRF, we also granted PRF a security interest in substantially all of our assets related to Zanaflex. Our agreement with PRF covers all Zanaflex net revenues generated from October 1, 2005 through and including December 31, 2015, unless the agreement terminates earlier. In November 2006, we entered into an amendment to the revenue interest assignment agreement with PRF. Under the terms of the amendment, PRF paid us $5.0 million in November 2006 and an additional $5.0 million in February 2007 as our net revenues during the fiscal year 2006 exceeded $25.0 million. Under the terms of the amendment, we are required to pay PRF $5.0 million on December 1, 2009 and an additional $5.0 million on December 1, 2010. Under
the agreement and the amendment, PRF is entitled to the following portion of Zanaflex net revenues:
19
Notwithstanding the foregoing, once PRF has received and retained payments under the agreement that are at least 2.1 times the aggregate amount PRF has paid us under the agreement, PRF will only be entitled to 1% of Zanaflex net revenues. In connection with the transaction, we have a liability recorded, referred to as the revenue interest liability, of approximately $20.3 million in accordance with EITF 88-18, Sales of Future Revenues. We impute interest expense associated with this liability using the effective interest rate method and record a corresponding accrued interest liability. The effective interest rate is calculated based on the rate that would enable the debt to be repaid in full over the life of the arrangement. The interest rate on this liability may vary during the term of the agreement depending on a number of factors, including the level of Zanaflex sales. During the three-month period ended June 30, 2008, we recorded a $1.4 million out-of-period adjustment to the effective interest expense recognized related to the November 2006 amended revenue interests assignment agreement with PRF. This out-of-period adjustment will not increase the total interest expense associated with this agreement, but has converted its timing of recognition. We currently estimate that the imputed interest rate associated with this liability will be approximately 5.9%. Payments made to PRF as a result of Zanaflex sales levels are allocated between interest expense recognized and the reduction of the principal amount included in the revenue interest liability. Investment Activities At June 30, 2008, cash and cash equivalents and short-term investments were approximately $149.0 million, as compared to $95.1 million at December 31, 2007. As of June 2008, our cash and cash equivalents consist of highly liquid investments in a Treasury money market fund. Our cash and cash equivalents were $34.3 million as of June 30, 2008, as compared to $16.8 million as of December 31, 2007. Our short-term investments consist of US Treasuries, commercial paper and corporate debt securities with remaining maturities from one month to less than one year. The balance of these investments was $114.8 million as of June 30, 2008, as compared to $78.3 million as of December 31, 2007. Net Cash Used in Operations Net cash used in operations was $18.1 million and $10.9 million for the six-month period ended June 30, 2008 and 2007, respectively. Cash used in operations for the six-month period ended June 30, 2008 was primarily attributable to a net loss of $35.3 million, amortization of the discount on short-term investments of $1.5 million, an increase in accounts receivable of $692,000, an increase in inventory held by others of $340,000, and a gain on our put/call liability of $50,000. Cash used in operations for the six-month period ended June 30, 2008, was partially offset by an increase in accounts payable, accrued expenses, and other current liabilities of $6.4 million, a non-cash share-based compensation expense of $4.4 million, an increase in Zanaflex Capsules deferred product revenues of $2.9 million, a non-cash expense for the acquisition of NRI assets of $2.7 million, depreciation and amortization of $1.7 million, and a decrease in inventory held by the Company of $1.6 million. Net cash used by operations for the six-month period ended June 30, 2007 was primarily attributable to a net loss of $15.7 million, amortization of the discount on short-term investments of $818,000, and a decrease in Zanaflex tablets and Capsules deferred product revenues of $716,000 and $690,000, respectively. Cash used in operations for the six-month period ended June 30, 2007, was partially offset by a non-cash stock compensation expense of $4.1 million, an increase in accounts payable, accrued expenses, and other current liabilities of $1.0 million, depreciation and amortization of $871,000, a decrease in accounts receivable of $752,000, a decrease in inventory of $225,000, and a decrease in prepaid expenses and other current assets of $135,000. 20 Net Cash Used in/Provided by Investing Net cash used in investing activities for the six-month period ended June 30, 2008 was $40.8 million, primarily due to $95.4 million in net purchases of short-term investments and a $5 million payment to Elan for the final Zanaflex milestone, partially offset by $60.3 million in proceeds from maturities of short-term investments. Net Cash Used in/Provided by Financing Net cash provided by financing activities for the six-month period ended June 30, 2008 was $76.3 million, primarily due to $77.4 million in net proceeds from the issuance of common stock and option exercises which was partially offset by $886,000 in repayments to PRF and $188,000 in repayments for notes payable. Future Capital Needs Our future capital requirements will depend on a number of factors, including the amount of revenue generated from sales of Zanaflex Capsules, the continued progress of our research and development activities, the timing and outcome of regulatory approvals, the amount and timing of milestone or other payments made under collaborative agreements, the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims and other intellectual property rights and the acquisition of licenses to new products or compounds. We expect to incur losses from operations for at least the next several years as we continue to support our sales and marketing infrastructure and increase our marketing efforts to support the commercialization of Zanaflex Capsules, continue our clinical development and pre-launch planning for Fampridine-SR, and advance our preclinical programs. We believe that our current financial resources and sources of liquidity will be sufficient to fund operations and meet financial obligations into the fourth quarter of 2009 based on our current projected revenue and spending levels. To the extent our capital resources are insufficient to meet future operating requirements, we will need to raise additional capital, reduce planned expenditures, or incur indebtedness to fund our operations. We may be unable to obtain additional debt or equity financing on acceptable terms, if at all. If adequate funds are not available, we may be required to curtail our sales and marketing efforts, delay, reduce the scope of or eliminate some of our research and development programs or obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to certain product candidates that we might otherwise seek to develop or commercialize independently. This excerpt taken from the ACOR 10-Q filed May 9, 2008. Liquidity and Capital Resources We have incurred annual operating losses since inception and, as of March 31, 2008, we had an accumulated deficit of approximately $286.5 million. We have financed our operations primarily through private placements of our securities, public offerings of our common stock, and, to a lesser extent, from loans, government grants and our financing arrangement with PRF. We completed a follow-on public offering in July 2007 in which approximately 4.2 million shares of our common stock were sold, resulting in proceeds to us of approximately $72.2 million, net of issuance costs. We completed a follow-on public offering in February 2008 in which approximately 3.7 million shares of our common stock were sold, resulting in proceeds to us of approximately $74.6 million, net of issuance costs. Financing Arrangements In January 1997, Elan International Services, Ltd. (EIS) loaned us an aggregate of $7.5 million pursuant to two convertible promissory notes to partly fund our research and development activities. On December 23, 2005, Elan transferred these promissory notes to funds affiliated with Saints Capital. As of March 31, 2008, $5.0 million of these promissory notes were outstanding. In January 2005, we entered into a $6.0 million senior secured term loan, which is collateralized by all of our personal property and fixtures, other than the property that secures our revenue interests assignment arrangement with PRF, which has been repaid in full as of March 31, 2008. On December 23, 2005, we entered into a revenue interests assignment agreement with PRF, a dedicated healthcare investment fund, pursuant to which we assigned to PRF the right to a portion of our net revenues (as defined in the agreement) from Zanaflex Capsules, Zanaflex tablets and any future Zanaflex products. To secure our obligations to PRF, we also granted PRF a security interest in substantially all of our assets related to Zanaflex. Our agreement with PRF covers all Zanaflex net revenues generated from October 1, 2005 through and including December 31, 2015, unless the agreement terminates earlier. In November 2006, we entered into an amendment to the revenue interest assignment agreement with PRF. Under the terms of the amendment, PRF paid us $5.0 million in November 2006 and an additional $5.0 million in February 2007 as our net revenues during the fiscal year 2006 exceeded $25.0 million. This milestone receivable was reflected in our 2006 financial statements. Under the terms of the amendment, we are required to pay PRF $5.0 million on December 1, 2009 and an additional $5.0 million on December 1, 2010. Under the agreement and the amendment, PRF is entitled to the following portion of Zanaflex net revenues:
17
Notwithstanding the foregoing, once PRF has received and retained payments under the agreement that are at least 2.1 times the aggregate amount PRF has paid us under the agreement, PRF will only be entitled to 1% of Zanaflex net revenues. In connection with the transaction, we have a liability recorded, referred to as the revenue interest liability, of approximately $19.6 million in accordance with EITF 88-18, Sales of Future Revenues. We impute interest expense associated with this liability using the effective interest rate method and record a corresponding accrued interest liability. The effective interest rate is calculated based on the rate that would enable the debt to be repaid in full over the life of the arrangement. The interest rate on this liability may vary during the term of the agreement depending on a number of factors, including the level of Zanaflex sales. We currently estimate that the imputed interest rate associated with this liability will be approximately 4.5%. Payments made to PRF as a result of Zanaflex sales levels reduce the accrued interest liability and the principal amount of the revenue interest liability. Investment Activities At March 31, 2008, cash and cash equivalents and short-term investments were approximately $160.3 million, as compared to $95.1 million at December 31, 2007. As of March 2008, our cash and cash equivalents consist of highly liquid investments in a Treasury money market fund. As of March 31, 2008, our cash and cash equivalents were $67.4 million, as compared to $16.8 million as of December 31, 2007. Our short-term investments consist of commercial paper and corporate debt securities with remaining maturities greater than three months and less than one year. The balance of these investments was $92.9 million as of March 31, 2008, as compared to $78.3 million as of December 31, 2007. Net Cash Used in Operations Net cash used in operations was $9.7 million and $6.9 million for the three-month period ended March 31, 2008 and 2007, respectively. Cash used in operations for the three-month period ended March 31, 2008 was primarily attributable to a net loss of $16.4 million, a decrease in inventory held by the Company of $1.1 million, amortization of the discount on short-term investments of $690,000, a decrease in accounts payable, accrued expenses, and other current liabilities of $597,000, and an increase in prepaid expenses and other current assets of $153,000. Cash used in operations for the three-month period ended March 31, 2008, was partially offset by a non-cash expense for the acquisition of NRI assets of $2.7 million, a non-cash share-based compensation expense of $1.9 million, an increase in Zanaflex Capsules deferred product revenues of $1.7 million, depreciation and amortization of $836,000, and a decrease of accounts receivable of $145,000. Net cash used in operations for the three-month period ended March 31, 2007 was primarily attributable to a net loss of $7.5 million, a decrease in accounts payable, accrued expenses, and other liabilities of $2.5 million, a decrease in Zanaflex Capsule deferred product revenue of $1.3 million, a decrease in tablet deferred product revenue of $509,000 and an increase in prepaid expenses and other current assets of $464,000. Cash used in operations for the three-month period ended March 31, 2007, was partially offset by a non-cash stock compensation expense of $2.2 million, a decrease in accounts receivable of $2.0 million due to decreased shipments and a decrease in inventory of $1.1 million. 18 Net Cash Used in/Provided by Investing Net cash used in investing activities for the three-month period ended March 31, 2008 was $13.9 million, primarily due to $49.9 million in net purchases of short-term investments, partially offset by $36.3 million in proceeds from maturities of short-term investments. Net Cash Used in/Provided by Financing Net cash provided by financing activities for the three-month period ended March 31, 2008 was $74.2 million, primarily due to $74.8 million in net proceeds from the issuance of common stock and option exercises which was partially offset by $440,000 in repayments to PRF and $188,000 for notes payable. Future Capital Needs Our future capital requirements will depend on a number of factors, including the amount of revenue generated from sales of Zanaflex Capsules, the continued progress of our research and development activities, the timing and outcome of regulatory approvals, the amount and timing of milestone or other payments made under collaborative agreements, the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims and other intellectual property rights and the acquisition of licenses to new products or compounds. We expect to incur losses from operations for at least the next several years as we continue to support our sales and marketing infrastructure and increase our marketing efforts to support the commercialization of Zanaflex Capsules, continue our clinical development and pre-launch planning for Fampridine-SR, and advance our preclinical programs. We believe that our current financial resources and sources of liquidity will be sufficient to fund operations and meet financial obligations into the third quarter of 2009 based on our current projected revenue and spending levels. To the extent our capital resources are insufficient to meet future operating requirements, we will need to raise additional capital, reduce planned expenditures, or incur indebtedness to fund our operations. We may be unable to obtain additional debt or equity financing on acceptable terms, if at all. If adequate funds are not available, we may be required to curtail our sales and marketing efforts, delay, reduce the scope of or eliminate some of our research and development programs or obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to certain product candidates that we might otherwise seek to develop or commercialize independently. | EXCERPTS ON THIS PAGE:
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