Back to GetFilings.com

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Form 10-Q

Commission File Number 000-29959

Pain Therapeutics, Inc.

416 Browning Way, South San Francisco, CA 94080

(650) 624-8200

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

      Indicate the number of shares outstanding of each of issuer’s classes of common stock, as of the latest practicable date.

Table of Contents

PAIN THERAPEUTICS, INC.

TABLE OF CONTENTS

1

Table of Contents

PART I.     FINANCIAL INFORMATION

Item 1.     Financial Statements

PAIN THERAPEUTICS, INC.

See accompanying notes to condensed financial statements.

2

Table of Contents

PAIN THERAPEUTICS, INC.

CONDENSED STATEMENTS OF OPERATIONS

See accompanying notes to condensed financial statements.

3

Table of Contents

PAIN THERAPEUTICS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

See accompanying notes to condensed financial statements.

4

Table of Contents

PAIN THERAPEUTICS, INC.

Note 1.     General

      Pain Therapeutics, Inc. is a development stage enterprise and was incorporated on May 4, 1998. Since our inception in May 1998, we have licensed proprietary technology from Albert Einstein College of Medicine and have devoted substantially all of our resources to the development of a new generation of opioid painkillers with improved clinical benefits, which are based on the acquired technology. In the course of our development activities, we have sustained operating losses and expect such losses to continue through the next several years. We expect our current cash and cash equivalents will be sufficient to meet our planned working capital and capital expenditure requirements for at least the next twelve months. There are no assurances that additional financing will be available on favorable terms, or at all.

      Our development activities involve inherent risks. These risks include, among others, dependence on key personnel and determination of patentability and protection of our products and processes. In addition, we have product candidates that have not yet obtained Food and Drug Administration approval. Successful future operations depend on our ability to conduct clinical trials and obtain regulatory approval for these products.

      We currently have four opioid painkillers in various stages of Phase II clinical trials, including our two lead product candidates MorViva^TM and OxyTrex^TM. We have completed multiple pharmacokinetic, Phase I or Phase II studies for MorViva^TM or OxyTrex^TM. We continue to design and conduct clinical trials to demonstrate the safety and efficacy of these two drug candidates. We are developing PTI-701, PTI-601 and the use of low-dose antagonist alone on a very limited basis at the present time. We have announced a pilot program directed at the treatment of irritable bowel syndrome (IBS) with low-dose opioid antagonist.

      We have prepared the accompanying unaudited condensed financial statements in accordance with generally accepted accounting principles for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2002 are not necessarily indicative of the results that may be expected for the year ended December 31, 2002. Certain prior year balances have been reclassified for comparative purposes.

      These unaudited condensed financial statements and notes should be read in conjunction with the audited financial statements and notes to those financial statements for the year ended December 31, 2001 included in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission.

      The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires that management 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 amount of expenses incurred during the reporting period. Actual results could differ from those reported amounts.

Note 2.     Net Loss Per Share

      Basic net loss per share is computed on the basis of the weighted-average number of shares outstanding for the reporting period. The Company has computed its weighted-average shares outstanding for all periods presented excluding those common shares issued and outstanding that remain subject to the Company’s repurchase rights. Diluted net loss per share is computed on the basis of the weighted-average number of common shares plus dilutive potential common shares outstanding using the treasury-stock method. Potential dilutive common shares consist of common shares issued and outstanding subject to the Company’s repurchase rights, outstanding stock options and outstanding warrants. All potential dilutive common shares

5

Table of Contents

NOTES TO CONDENSED FINANCIAL STATEMENTS — (Continued)

were excluded from the calculation of diluted net loss per share because the representative share increments would be anti-dilutive.

Note 3.     1998 Stock Plan

      In accordance with the provisions of the 1998 Stock Plan, effective January 1, 2002, the number of shares of common stock authorized for issuance under the 1998 Stock Plan was increased from 6,000,000 to 7,000,000 shares.

6

Table of Contents

Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

      This discussion and analysis should be read in conjunction with our unaudited condensed financial statements and accompanying notes included in this report and the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2001 as filed with the Securities and Exchange Commission. Operating results are not necessarily indicative of results that may occur in future periods.

      The following discussion contains forward-looking statements based upon current expectations that are within the meaning of the Private Securities Reform Act of 1995. It is the Company’s intent that such statements be protected by the safe harbor created thereby. Our actual results and the timing of events may differ significantly from the results discussed in the forward-looking statements. Examples of such forward-looking statements include, but are not limited to: statements about our future operating losses and anticipated operating and capital expenditures; statements about the potential benefits of our product candidates; statements relating to the timing, breadth, status or anticipated results of the clinical development of our product candidates; statements relating to the protection of our intellectual property; statements about expected future sources of revenue; statements about potential competitors or competitive products; statements about future market acceptance of our products; statements about expenses increasing substantially or fluctuating; statements about future expectations regarding trade secrets, technological innovations, licensing agreements and outsourcing of certain business functions; statements about future non-cash charges related to option grants; statements about anticipated hiring; statements about the sufficiency of our current resources to fund our operations over the next twelve months; statements about increasing cash requirements; statements about future negative operating cash flows; statements about fluctuations in our operating results; and statements about development of our internal systems and infrastructure. Such forward-looking statements involve risks and uncertainties, including, but not limited to, those risks and uncertainties relating to difficulties or delays in development, testing, regulatory approval, production and marketing of the Company’s product candidates, unexpected adverse side effects or inadequate therapeutic efficacy of the Company’s drug candidates that could slow or prevent product approval (including the risk that current and past results of clinical trials are not indicative of future results of clinical trials); the uncertainty of patent protection for the Company’s intellectual property or trade secrets or potential infringement of the intellectual property rights or trade secrets of third parties; and the Company’s ability to obtain additional financing if necessary. In addition such statements are subject to the risks and uncertainties discussed in the “Risk Factors” section and elsewhere in this document.

Overview

      Pain Therapeutics, Inc. is developing a new generation of opioid painkillers with improved clinical benefits. We believe our drugs will offer enhanced pain relief and reduced tolerance/physical dependence or addiction potential compared to existing opioid painkillers. We conduct our research and development programs through a combination of internal and collaborative programs. Our management relies on arrangements with universities, contract research organizations and clinical research sites for a significant portion of our product development efforts.

      We currently have four opioid painkillers in various stages of Phase II clinical trials, including our two lead product candidates, MorViva^TM and OxyTrex^TM, and two other product candidates, PTI-701 and PTI-601:

	•	MorVivaTM is the brand name for our product previously known as PTI-501 (injectable version) and PTI-555 (oral version), which we are developing to treat patients with severe pain in an acute setting.
	•	OxyTrexTM is the brand name for our product previously known as PTI-801 which we are developing to treat patients with moderate to severe pain in a chronic setting.
	•	PTI-701 is our next generation version of hydrocodone, which we are developing to treat patients with acute moderate to severe pain in an acute setting.
	•	PTI-601 is our next generation version of tramadol, which we are developing to treat patients with moderate pain in an acute setting.

7

Table of Contents

      Based on the results of multiple pharmacokinetic, Phase I or Phase II studies completed for MorViva^TM or OxyTrex^TM, we continue to design and conduct clinical trials to demonstrate the safety and efficacy of these two drug candidates in different clinical settings of pain. We are currently developing PTI-701 and PTI-601 on a very limited basis in order to focus our financial resources on MorViva^TM and OxyTrex