MDVN » Topics » Liquidity and Capital Resources

This excerpt taken from the MDVN 10-Q filed Nov 10, 2008.

Liquidity and Capital Resources

We have incurred cumulative net losses of $114.7 million through September 30, 2008, and we expect to incur substantial and increasing additional losses in the future as we expand our research and development activities. We have not generated any revenue from operations to date and do not expect to generate product revenue for several years, if ever. All of our operations to date have been funded through the sale of our debt and equity securities, and the $225 million up-front payment we received from Pfizer on October 27, 2008. We had cash and cash equivalents of $20.4 million and $43.3 million as of September 30, 2008 and December 31, 2007, respectively, available to fund operations. In addition, at September 30, 2008, the remaining capacity under our committed equity line of credit with Azimuth was $78.8 million. We may draw on that remaining capacity at our discretion during the term of the facility, which expires on April 1, 2009. We obtained our equity line of credit from Azimuth pursuant to a Common Stock Purchase Agreement dated September 7, 2007. Subject to the conditions set forth in that agreement, Azimuth is committed to purchase up to $100 million of our common stock pursuant to draw down notices that we may give to Azimuth from time to time at our discretion until April 1, 2009. The price of shares sold is determined by reference to the volume weighted average price of our common stock on the Nasdaq Global Market during a ten trading day pricing period at the time of each draw down notice, less a discount of 4.65 to 6.15 percent.

On September 3, 2008, the Company announced that it had entered into a Collaboration Agreement with Pfizer Inc., or Pfizer, which became effective in October 2008. Under the terms of the agreement the Company and Pfizer will jointly develop and commercialize Dimebon, the Company’s investigational drug for the treatment of Alzheimer’s disease and Huntington’s disease. On October 27, 2008, the Company received an up-front cash payment of $225 million pursuant to the Collaboration Agreement with Pfizer. These funds have been fully invested in short-term U.S. Treasury securities and in money market funds consisting solely of short-term U.S. Treasury securities. The Company also is eligible to receive payments of up to $500 million upon the attainment of development and regulatory milestones plus additional milestone payments upon the achievement of certain net sales levels for the product. The Company and Pfizer will share the costs and expenses of developing and commercializing Dimebon for the United States market on a 60% Pfizer/40% Company basis, and will share profits (or losses) resulting from the commercialization of Dimebon in the United States in the same proportions. Outside the United States, Pfizer will bear all development and commercialization costs and will pay the Company tiered royalties on the aggregate net sales of Dimebon.

Based upon our current expectations, we believe our existing capital resources, including the $225 million up-front cash payment from Pfizer, will be sufficient to fund our currently planned operations beyond 2009.

Net cash used in operating activities for the nine months ended September 30, 2008 and 2007 was $38.3 million and $14.7 million, respectively. The increase of $23.6 million in net cash used in operations was primarily attributable to a higher net loss in 2008, partially offset by non-cash stock-based compensation expense and an increase in accounts payable, accrued expenses and other current liabilities arising in the ordinary course of business as a result of the Company’s increasing research and development activities.

Net cash used in investing activities for the nine months ended September 30, 2008 was $0.2 million, compared to net cash provided by investing activities of $41.6 million in the nine months ended September 30, 2007. The $41.8 million decrease in net cash provided by investing activities in the nine months ended September 30, 2008 compared to the prior year period was due primarily to decreases in maturities of short-term investments.

Net cash provided by financing activities for the nine months ended September 30, 2008 and 2007 was $15.6 million and $0 million, respectively. The increase was due to our sale in 2008 of 1,129,518 shares of our common stock in a registered direct offering, raising gross proceeds of approximately $15 million, and $0.6 million in proceeds from the issuance of common stock related to the exercise of employee stock options.

This excerpt taken from the MDVN 10-Q filed Aug 11, 2008.

Liquidity and Capital Resources

We have incurred cumulative net losses of $94.3 million through June 30, 2008, and we expect to incur substantial and increasing additional losses in the future as we expand our research and development activities. We have not generated any revenue from operations to date and do not expect to generate product revenue for several years, if ever. All of our operations to date have been funded through the sale of our debt and equity securities. We had cash and cash equivalents of $33.4 million and $43.3 million as of June 30, 2008 and December 31, 2007, respectively, available to fund operations. In addition, at June 30, 2008, the remaining capacity under our committed equity line of credit with Azimuth was $78.8 million. We may draw on that remaining capacity at our discretion during the term of the facility, which expires on April 1, 2009. We obtained our equity line of credit from Azimuth pursuant to a Common Stock Purchase Agreement dated September 7, 2007. Subject to the conditions set forth in that agreement, Azimuth is committed to purchase up to $100 million of our common stock pursuant to draw down notices that we may give to Azimuth from time to time at our discretion until April 1, 2009. The price of shares sold is determined by reference to the volume weighted average price of our common stock on the Nasdaq Global Market during a ten trading day pricing period at the time of each draw down notice, less a discount of 4.65 to 6.15 percent.

Net cash used in operating activities for the six months ended June 30, 2008 and 2007 was $24.8 million and $9.7 million, respectively. The increase of $15.1 million in net cash used in operations was primarily attributable to a higher net loss in 2008, partially offset by non-cash stock-based compensation expense and an increase in accounts payable, accrued expenses and other current liabilities arising in the ordinary course of business as a result of the Company’s increasing research and development activities.

Net cash used in investing activities for the six months ended June 30, 2008 was $0.1 million, compared to net cash provided by investing activities of $42.2 million in the six months ended June 30, 2007. The $42.3 million decrease in net cash provided by investing activities in the six months ended June 30, 2008 compared to the prior year period was due primarily to decreases in maturities of short-term investments.

Net cash provided by financing activities for the six months ended June 30, 2008 and 2007 was $15.1 million and $0.2 million, respectively. The increase was due to our sale in June 2008 of 1,129,518 shares of our common stock in a registered direct offering, raising gross proceeds of approximately $15 million.

We believe that our current cash and cash equivalent balances, together with the remaining capacity available under our existing committed equity line of credit, will be sufficient to meet our capital requirements through at least the next twelve months. However, we expect to require additional financing beyond our current cash and cash equivalent balances and the financing available under our committed equity line of credit to fund development of our product candidates until they receive marketing approval and become cash flow positive. Potential sources of additional financing available to us may include the sale of debt or equity securities in public or private financing transactions, as well as entering into co-development or co-commercialization transactions covering our product candidates. Our strategy is to consider all of these financing opportunities and to prioritize those which, in our judgment, are most attractive to us and our stockholders. However, the successful completion of any of these potential transactions is largely beyond our control, and there can be no assurance that we will be able to raise additional financing in a timely manner, on acceptable terms, or at all. If we are unable to raise additional financing, we will be unable to continue development of our product candidates.

This excerpt taken from the MDVN 10-Q filed May 9, 2008.

Liquidity and Capital Resources

We have incurred cumulative net losses of $75.7 million through March 31, 2008, and we expect to incur substantial and increasing additional losses in the future as we expand our research and development activities. We have not generated any revenue from operations to date, and do not expect to generate product revenue for several years, if ever. All of our operations to date have been funded through the sale of our debt and equity securities.

We had cash and cash equivalents of $32.9 million and $43.3 million as of March 31, 2008 and December 31, 2007, respectively, available to fund operations. In addition, at March 31, 2008 the remaining capacity under our committed equity line of credit with Azimuth Opportunity, Ltd. (Azimuth) was $78.8 million. We may draw on that remaining capacity at our discretion during the term of the facility, which expires on April 1, 2009. The Company obtained its equity line of credit from Azimuth pursuant to a Common Stock Purchase Agreement dated September 7, 2007. Subject to the conditions set forth in that agreement, Azimuth is committed to purchase up to $100 million of the Company’s common stock pursuant to draw down notices that the Company may give to Azimuth from time to time at the Company’s discretion until April 1, 2009. The price of shares sold is determined by reference to the volume weighted average price of the Company’s common stock on the Nasdaq Global Market during a ten trading day pricing period at the time of each draw down notice, less a discount of 4.65 to 6.15 percent.

Net cash used in operating activities for the three months ended March 31, 2008 and 2007 was $10.3 million and $4.5 million, respectively. The increase of $5.8 million in cash used in operations was primarily attributable to a higher net loss in 2008, partially offset by a $6.3 million increase in accounts payable, accrued expenses and other current liabilities, and by non-cash stock-based compensation expense of $2.1 million. The increases in current liabilities were driven by the increase in our net loss.

        Net cash used in investing activities for the three months ended March 31, 2008 was $0.1 million, compared to net cash provided by investing activities of $6.3 million in the three months ended March 31, 2007. The $6.4 million decrease in net cash provided by investing activities in the three months ended March 31, 2008 compared to the prior year period was due primarily to decreases in maturities of short-term investments.

Net cash provided by financing activities was $0.1 million for the three months ended March 31, 2008 and 2007, and primarily represents proceeds received from the issuance of common stock upon option exercises.

 

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We may require additional financing beyond that available under our committed equity line of credit to fund development of our product candidates through receipt of marketing approval. Potential sources of additional financing include the sale of debt or equity securities in public or private financing transactions, as well as entering into co-development or co-commercialization transactions covering our product candidates. Our strategy is to consider all of these financing opportunities and to prioritize those which, in our judgment, are most attractive to the Company and our stockholders. However, the successful completion of any of these potential transactions is largely beyond our control, and there can be no assurance that we will be able to raise additional financing in a timely manner, on acceptable terms, or at all. If we are unable to raise additional financing, we will be unable to continue development of our product candidates.

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