Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
ALSE > SEC Filings for ALSE > Form 10-Q on 17-May-2013All Recent SEC Filings

Show all filings for ALSERES PHARMACEUTICALS INC /DE | Request a Trial to NEW EDGAR Online Pro

Form 10-Q for ALSERES PHARMACEUTICALS INC /DE


17-May-2013

Quarterly Report


Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations

Our management's discussion and analysis of our financial condition and results of operations include the identification of certain trends and other statements that may predict or anticipate future business or financial results that are subject to important factors that could cause our actual results to differ materially from those indicated. Carefully review the risks outlined in other documents that we file from time to time with the SEC.

Overview

Description of Company

We are a biotechnology company focused on diagnostic products primarily for disorders in the central nervous system, or CNS. Our clinical product candidate is called Altropane and based on the following proprietary technology platform:

Molecular imaging program focused on the diagnosis of i) Parkinsonian Syndromes, or PS, including Parkinson's Disease, or PD, and ii) Dementia with Lewy Bodies, or DLB;

During the second half of 2011 and throughout 2012, severe resource constraints forced us to terminate all on-going pre-clinical research efforts and to focus our minimal resources on identifying a suitable development partner for our Altropane product candidate. All other development programs were terminated and, wherever possible, in-licensed technology was returned to our licensing partners.

Product Development - Molecular Imaging Program

Altropane Molecular Imaging Agent

The Altropane molecular imaging agent is intended to be used for the differential diagnosis of PS, including PD, and non-PS in patients with an upper extremity tremor. The Altropane molecular imaging agent is a radio labeled imaging agent that contains the radioactive element iodine isotope 123 I and binds with extremely high affinity and specificity to the dopamine transporter, or DAT. The DAT is a protein that is on the surface membrane of specialized neurons in the brain that produce dopamine, a key neurotransmitter. We believe that the amount of Altropane taken up by the brain is directly proportional to the number of DATs that are present in any given area of the brain. Since DATs are on the membrane of dopamine-producing neurons, death of these neurons results in decreased numbers of DATs. Therefore, PD, which is caused by a decreased number of dopamine producing cells, is associated with a marked decrease in the number of DATs. As a result, when Altropane is administered to patients with PD, its binding is substantially diminished as compared to patients without PD. This decrease in Altropane binding in patients with PD is the theoretical basis for using Altropane imaging as a diagnostic test for PS, including PD.

Altropane is administered by intravenous injection. Since Altropane contains radioactive 123 I, it can be used as a nuclear imaging agent that can be detected using a specialized nuclear medicine instrument known as a Single Photon Emission Computed Tomography, or SPECT, camera.


Table of Contents

The strength of the SPECT signal generated by Altropane is proportional to the number of DATs present and produces images that distinguish PS and non-PS patients. SPECT cameras are widely available in both community and academic medical centers. The scanning procedure using Altropane takes less than one hour to complete. Results of these tests are usually available the same day as the scanning procedure.

On July 31, 2012 we signed an agreement with Navidea Biopharmaceuticals, Inc. to sublicense [ 123 I]-E-IACFT Injection (CFT), also called Altropane .The terms of the Navidea license agreement call for Navidea to assume full responsibility for the development and commercialization of Altropane on a worldwide basis. We have licensed worldwide exclusive rights to develop Altropane from Harvard University and its affiliated hospitals, which we refer to as Harvard and its Affiliates, including the Massachusetts General Hospital. The license agreement provides for milestone payments and royalties based on product sales that are consistent with industry averages for such products. The Company's deliverables under the Sublicense Agreement with Navidea include granting a license of rights and transferring technology ("know-how") related to Altropane and an affirmative obligation to ensure that the Harvard agreement remains in full force and effect. Under the terms of the Amended and Restated License Agreement with Harvard, the Company's deliverables included (i) the use of reasonable efforts to effect introduction of the licensed products into the commercial market as soon as practicable, consistent with sound and reasonable business practices and judgment and (ii) until expiration of the agreement, the Company shall endeavor to keep Altropane reasonably available to the public.

Brain Diagnostic Centers Opportunity

We are presently conducting a preliminary feasibility assessment for a new business focused on organizing and operating a US network of Brain Diagnostic Centers concentrating on neurodegenerative conditions. The centers will provide screening, diagnosis and on-going monitoring of both pre-symptomatic and symptomatic patients affected by neurodegenerative brain disorders. The centers will take advantage of currently available in-vitro diagnostics as well as imaging diagnostics to identify patients who are "at risk" of developing degenerative brain disorders. We are working, on a confidential basis, with industry participants to assess possible support for the development of the potential new business including capital and human resources.

The number of Americans living with neurodegenerative movement disorders such as Parkinson's disease (PD), and dementias like Alzheimer's (AD) and Dementia with Lewy Bodies (DLB), is expected to grow from 20 million in 2010 to 30 million by 2030. By 2050, that number is expected to grow to 40 million. Unchecked and without accounting for loss of productivity, the annual cost of care for patients with these diseases will grow from $200 billion today to $500 billion by 2030.

Today, PD, AD and DLB are diagnosed post-symptomatically. By the time diagnosable clinical symptoms appear, the disease is in an advanced stage. The disease has already progressed well beyond the point that current therapies have been shown to have disease modifying effects. Drugs in development are routinely tested in patients with advanced stage disease, where the drugs are least likely to have the disease modifying or arresting affect desired. What is needed are:

Early detection, definitive diagnostics and therapeutic drug monitoring tools; and

Comprehensive, longitudinal data to enable disease modifying treatments for early stage degenerative brain diseases

At present our work on this opportunity is preliminary and is focused on identifying an initial location for a pilot site intended to demonstrate the proof of concept for the centers and accessing potential sources of capital. We can provide no assurance that this business will ever be launched or that the capital and human resources necessary to launch and grow the new business will be available on acceptable terms if at all.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements which have been prepared by us in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Our estimates include those related to marketable securities, research contracts and the fair value and classification of financial instruments. We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Results of Operations for the Three Months Ended March 31, 2013 and 2012

For the three months ended March 31, 2013, the Company recognized revenue of $18,432 compared to $250,000 for the three months ended march 31, 2012. The 2013 revenue reflects the current period ratable recognition of the $1,321,000 upfront sublicense fee received from Navidea Biopharmaceuticals effective July 31, 2012. Revenue will be recognized ratably from the date the sublicense agreement became effective (July 31, 2012) through the expected life of the U.S. patent for Altropane (June 30, 2030). The 2012 revenue reflects the recognition of 50% of the initial option fee paid by Navidea to the Company in January 2012.

Effective July 31, 2012, the Company entered into an exclusive, worldwide sublicense agreement with Navidea for the research, development and commercialization of [123 I]-E-IACFT Injection (CFT), also called Altropane . CFT is an Iodine-123 radiolabeled imaging agent which is being developed as an aid in the diagnosis of Parkinson's disease and movement disorders. Under the terms of the sublicense agreement, Navidea has agreed to use its best commercial efforts to develop and launch Altropane in accordance with an agreed to development plan for the product. Navidea will be responsible for conducting and funding all future development,


Table of Contents

regulatory filings, manufacturing and global commercialization of Altropane. The Company will have no further cost obligations related to Altropane. In connection with the execution of the agreement Navidea made a one-time sublicense execution payment to the Company of $175,000. In addition, the Company was issued 300,000 shares of Navidea common stock ("NAVB") which had a market value of $1,146,000 based on the NYSE closing price of $3.82 per share on July 31, 2012.

Our net loss was $297,855 for the three months ended March 31, 2013 compared to a net loss of $319,300 for the three months ended March 31, 2012. The net loss for the three months ended March 31, 2013 resulted from operating expenses of approximately $440,000 and interest expense of approximately $111,000 partially offset by a $405,000 gain resulting from the settlement of our lawsuit with Children's Hospital. The net loss of $319,300 for the three months ended March 31, 2012 was attributable to operating expenses of approximately $467,000 and interest expense of approximately $103,000 partially offset by recognition of $250,000 of revenue.

Research and development expenses were $0 during the three months ended March 31, 2013 compared to $20,694 during the three months ended March 31, 2012. For the remainder of 2013, we will incur minimal expenses related to pre-existing commitments. Under the terms of the sublicense agreement with Navidea, the Company will no longer have any further cost obligations related to Altropane. Navidea will use its best commercial efforts to develop and launch Altropane in accordance with an agreed to development plan for the product. Navidea will be responsible for conducting and funding all future development, regulatory filings, manufacturing and global commercialization of Altropane.

General and administrative expenses were $439,680 during the three months ended March 31, 2013 compared to $446,362 during the three months ended March 31, 2012. The decrease of $6,682 for the three months ended March 31, 2013 was principally attributable to reduction in rent expense due to renegotiation of terms with our landlord in 2013.

Interest expense of $110,867 was incurred during the three months ended March 31, 2013 compared to $103,397 during the three months ended March 31, 2012.

Liquidity and Capital Resources

As of March 31, 2013, we had experienced total net losses since inception of approximately $198,991,000, stockholders' deficit of approximately $26,798,000 and a net working capital deficit of approximately $9,255,000. For the foreseeable future, we expect to experience continuing operating losses and negative cash flows from operations as we execute our current business plan. The cash and cash equivalents available at March 31, 2013 will not provide sufficient working capital to meet our anticipated expenditures for the next twelve months. From January 2013 through March 2013 we liquidated 235,000 shares of our NAVB common stock for total proceeds of $726,934. We used these proceeds to settle our lawsuit with Children's Hospital and to meet our day-to-day obligations and continue to comply with our regulatory reporting requirements. As of March 31, 2013 we held 50,000 shares of NAVB common stock which we liquidated in April 2013 for total proceeds of $134,683. We believe that the approximately $110,000 in cash and cash equivalents available as of May 1, 2013 may enable us to meet our anticipated cash expenditures through May 2013.

Operating Activities

Net cash used for operating activities was $700,601 for the three months ended March 31, 2013 compared to $13,644 for the three months ended March 31, 2012. Net cash used for operating activities for the three months ended March 31, 2013 reflects our curtailment of operations pending additional funding, the reduction in accrued interest expense associated with the debt reduction agreements signed in the fourth quarter of 2011 and the settlement of our Children's Hospital lawsuit

Investing Activities

Cash was provided by investing activities for the three months ended March 31, 2013 totaled $726,934 resulting from the sale of our Navidea common stock compared to $0 for the three months ended March 31, 2012.

Financing Activities

Financing activities provided cash of $50,000 for the three months ended March 31, 2013 compared to $0 for the three months ended March 31, 2012. Cash provided by financing activities for the three months ended March 31, 2013 reflects the proceeds of advances from Robert Gipson.

To date, we have dedicated most of our financial resources to the research and development of our product candidates, general and administrative expenses (including costs related to obtaining and protecting patents). Since inception, we have primarily satisfied our working capital requirements from the sale of our securities through private placements. These private placements have included the sale and issuance of preferred stock, common stock, promissory notes and convertible debentures.

In order to continue as a going concern, we will need to raise additional capital through one or more of the following: a debt financing, an equity offering, or a collaboration, merger, acquisition or other transaction with one or more pharmaceutical or biotechnology companies. We are currently engaged in fundraising efforts. There can be no assurance that we will be successful in our fundraising efforts or that additional funds will be available on acceptable terms, if at all. We also cannot be sure that we will be able to obtain additional credit from, or effect additional sales of debt or equity securities to certain of our existing investors in which case we may need to cease operations or reduce, cease or delay one or more of our research or development programs and/or adjust our current business plan and in any such event may not be able to continue as a going concern.


Table of Contents

  Add ALSE to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for ALSE - All Recent SEC Filings
Sign Up for a Free Trial to the NEW EDGAR Online Pro
Detailed SEC, Financial, Ownership and Offering Data on over 12,000 U.S. Public Companies.
Actionable and easy-to-use with searching, alerting, downloading and more.
Request a Trial Sign Up Now


Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.