0001104659-13-037502.txt : 20130506 0001104659-13-037502.hdr.sgml : 20130506 20130506124300 ACCESSION NUMBER: 0001104659-13-037502 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20130331 FILED AS OF DATE: 20130506 DATE AS OF CHANGE: 20130506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GTX INC /DE/ CENTRAL INDEX KEY: 0001260990 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 621715807 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-50549 FILM NUMBER: 13815203 BUSINESS ADDRESS: STREET 1: 175 TOYOTA PLAZA STREET 2: 7TH FLOOR CITY: MEMPHIS STATE: TN ZIP: 38103 BUSINESS PHONE: 901-523-9700 MAIL ADDRESS: STREET 1: 175 TOYOTA PLAZA STREET 2: 7TH FLOOR CITY: MEMPHIS STATE: TN ZIP: 38103 10-Q 1 a13-9081_110q.htm 10-Q

Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2013

 

OR

 

o         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from            to            

 

Commission file number: 000-50549

 

GTx, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

62-1715807

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

175 Toyota Plaza

7th Floor

Memphis, Tennessee

 

38103

(Address of principal executive offices)

 

(Zip Code)

 

(901) 523-9700

(Registrant’s telephone number, including area code)

 


 

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  x  No  o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x  No  o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer o

 

Accelerated filer x

 

 

 

Non-accelerated filer o

 

Smaller reporting company o

(Do not check if a smaller reporting company)

 

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o  No  x

 

As of May 2, 2013, 62,939,791 shares of the registrant’s Common Stock were outstanding.

 

 

 



Table of Contents

 

GTx, INC.

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2013

INDEX

 

 

PAGE

 

 

PART I — FINANCIAL INFORMATION

 

 

 

 

 

Item 1.

Financial Statements (unaudited)

 

 

 

 

 

 

 

Condensed Balance Sheets as of March 31, 2013 and December 31, 2012

3

 

 

 

 

 

 

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

4

 

 

 

 

 

 

Condensed Statements of Cash Flows for the Three Months Ended March 31, 2013 and 2012

5

 

 

 

 

 

 

Notes to Condensed Financial Statements

6

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

11

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

20

 

 

 

 

 

Item 4.

Controls and Procedures

20

 

 

 

 

PART II — OTHER INFORMATION

 

 

 

 

 

 

Item 1A.

Risk Factors

20

 

 

 

 

 

Item 6.

Exhibits

35

 

2



Table of Contents

 

PART I:  FINANCIAL INFORMATION

 

ITEM 1.                FINANCIAL STATEMENTS

 

GTx, Inc.
CONDENSED BALANCE SHEETS

(in thousands, except share data)

 

 

 

March 31,

 

December 31,

 

 

 

2013

 

2012

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

36,136

 

$

48,044

 

Short-term investments

 

6,085

 

8,045

 

Prepaid expenses and other current assets

 

1,375

 

726

 

Total current assets

 

43,596

 

56,815

 

Property and equipment, net

 

389

 

507

 

Intangible and other assets, net

 

713

 

452

 

Total assets

 

$

44,698

 

$

57,774

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

1,100

 

$

1,707

 

Accrued expenses and other current liabilities

 

7,049

 

7,788

 

Total current liabilities

 

8,149

 

9,495

 

Other long-term liabilities

 

488

 

578

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $0.001 par value: 120,000,000 shares authorized at both March 31, 2013 and December 31, 2012; 62,893,791 and 62,818,424 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively

 

63

 

63

 

Additional paid-in capital

 

461,829

 

460,887

 

Accumulated deficit

 

(425,831

)

(413,249

)

Total stockholders’ equity

 

36,061

 

47,701

 

Total liabilities and stockholders’ equity

 

$

44,698

 

$

57,774

 

 

The accompanying notes are an integral part of these financial statements.

 

3



Table of Contents

 

GTx, Inc.
CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

Research and development expenses

 

$

9,614

 

$

9,835

 

General and administrative expenses

 

3,023

 

2,588

 

Total expenses

 

12,637

 

12,423

 

Loss from operations

 

(12,637

)

(12,423

)

Other income, net

 

55

 

8

 

Loss from operations before income taxes

 

(12,582

)

(12,415

)

Income tax benefit

 

 

381

 

Net loss from continuing operations

 

(12,582

)

(12,034

)

 

 

 

 

 

 

Income from discontinued operations before income taxes

 

 

1,335

 

Income tax expense

 

 

(381

)

Net income from discontinued operations

 

 

954

 

 

 

 

 

 

 

Net loss

 

$

(12,582

)

$

(11,080

)

 

 

 

 

 

 

Net loss per share - basic and diluted:

 

 

 

 

 

Net loss from continuing operations

 

$

(0.20

)

$

(0.19

)

Net income from discontinued operations

 

 

0.01

 

Net loss per share

 

$

(0.20

)

$

(0.18

)

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

Basic and diluted

 

62,864,140

 

62,798,008

 

 

The accompanying notes are an integral part of these financial statements.

 

4



Table of Contents

 

GTx, Inc.
CONDENSED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2013

 

2012

 

Cash flows from operating activities:

 

 

 

 

 

Net loss

 

$

(12,582

)

$

(11,080

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

Depreciation and amortization

 

150

 

210

 

Share-based compensation

 

814

 

882

 

Directors’ deferred compensation

 

42

 

45

 

Changes in assets and liabilities:

 

 

 

 

 

Prepaid expenses and other assets

 

(913

)

(215

)

Accounts payable

 

(607

)

(282

)

Accrued expenses and other liabilities

 

(827

)

(70

)

Net cash used in operating activities

 

(13,923

)

(10,510

)

Cash flows from investing activities:

 

 

 

 

 

Purchase of property and equipment

 

(29

)

 

Purchase of short-term investments, held to maturity

 

(1,225

)

(1,960

)

Proceeds from maturities of short-term investments, held to maturity

 

3,185

 

4,610

 

Net cash provided by investing activities

 

1,931

 

2,650

 

Cash flows from financing activities:

 

 

 

 

 

Payments on capital lease and financed equipment obligations

 

(2

)

(23

)

Proceeds from exercise of employee stock options

 

86

 

47

 

Net cash provided by financing activities

 

84

 

24

 

Net decrease in cash and cash equivalents

 

(11,908

)

(7,836

)

Cash and cash equivalents, beginning of period

 

48,044

 

63,745

 

Cash and cash equivalents, end of period

 

$

36,136

 

$

55,909

 

 

The accompanying notes are an integral part of these financial statements.

 

5



Table of Contents

 

GTx, Inc.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

(unaudited)

 

1.              Business and Basis of Presentation

 

Business

 

GTx, Inc. (“GTx” or the “Company”), a Delaware corporation incorporated on September 24, 1997 and headquartered in Memphis, Tennessee, is a biopharmaceutical company dedicated to the discovery, development and commercialization of small molecules for the treatment of cancer, cancer supportive care, and other serious medical conditions.

 

The Company is developing selective androgen receptor modulators (“SARMs”), including enobosarm (GTx-024).  SARMs are a new class of drugs with the potential to prevent and treat muscle wasting in patients with cancer and other musculoskeletal wasting or muscle loss conditions, including chronic sarcopenia (age related muscle loss), as well as the potential to be used as a hormonal therapy for the treatment of advanced breast cancer.  The Company is conducting two fully enrolled pivotal Phase III clinical trials evaluating enobosarm 3mg for the prevention and treatment of muscle wasting in patients with advanced non-small cell lung cancer.  In April 2013, the Company announced that it is initiating a Phase II, open label study evaluating enobosarm 9mg for the treatment of androgen receptor positive and estrogen receptor positive metastatic breast cancer in women who have previously responded to hormonal therapy for the treatment of their advanced breast cancer.

 

Additionally, the Company is developing GTx-758 (Capesaris®), an oral nonsteroidal selective estrogen receptor alpha agonist, for secondary hormonal therapy in men with castration resistant prostate cancer, and, potentially, as a primary treatment for advanced prostate cancer used in combination with androgen deprivation therapy.  The Company initiated in the third quarter of 2012 a Phase II clinical trial to evaluate GTx-758 as secondary hormonal therapy in men with metastatic castration resistant prostate cancer.

 

Basis of Presentation

 

The accompanying unaudited condensed financial statements reflect, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of GTx’s financial position, results of operations and cash flows for each period presented in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted from the accompanying condensed financial statements.  These interim condensed financial statements should be read in conjunction with the audited financial statements and related notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.  Operating results for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2013.

 

Use of Estimates

 

The preparation of condensed financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed financial statements, and the reported amounts of revenues and expenses during the reporting period.  Actual amounts and results could differ from those estimates.

 

Research and Development Expenses

 

Research and development expenses include, but are not limited to, the Company’s expenses for personnel, supplies, and facilities associated with research activities, screening and identification of product candidates, formulation and synthesis activities, manufacturing, preclinical studies, toxicology studies, clinical trials, regulatory

 

6



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GTx, Inc.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

(unaudited)

 

and medical affairs activities, quality assurance activities and license fees.  The Company expenses these costs in the period in which they are incurred. The Company estimates its liabilities for research and development expenses in order to match the recognition of expenses to the period in which the actual services are received. As such, accrued liabilities related to third party research and development activities are recognized based upon the Company’s estimate of services received and degree of completion of the services in accordance with the specific third party contract

 

Cash, Cash Equivalents and Short-term Investments

 

The Company considers highly liquid investments with initial maturities of three months or less to be cash equivalents.

 

At March 31, 2013 and December 31, 2012, short-term investments consisted of Federal Deposit Insurance Corporation insured certificates of deposit with original maturities of greater than three months and less than one year.  As the Company has the positive intent and ability to hold the certificates of deposit until maturity, these investments have been classified as held to maturity investments and are stated at cost, which approximates fair value.  The Company considers these to be Level 2 investments as the fair values of these investments are determined using third-party pricing sources, which generally utilize observable inputs, such as interest rates and maturities of similar assets.

 

Income Taxes

 

The Company has recognized the tax effect of discontinued operations of FARESTON® in the condensed statement of operations for the three months ended March 31, 2012 in accordance with the intra-period accounting rules.  An offsetting tax benefit was recorded in continuing operations as tax expense was recognized for discontinued operations.

 

The Company accounts for deferred taxes by recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized.  Accordingly, at March 31, 2013 and December 31, 2012, net of the valuation allowance, the net deferred tax assets were reduced to zero.  Income taxes are described more fully in Note 10 to the Company’s financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

 

Other Income, net

 

Other income, net consists of foreign currency transaction gains and losses associated with conducting clinical trials in foreign countries, interest earned on the Company’s cash, cash equivalents and short-term investments, interest expense, and other non-operating income or expense.

 

Discontinued Operations

 

Effective September 30, 2012, the Company entered into an asset purchase agreement (the “FARESTON® Purchase Agreement”) with Strakan International S.á r.l., an affiliate of ProStrakan Group plc (“ProStrakan”) pursuant to which the Company agreed to transfer, sell and assign to ProStrakan all of the Company’s rights and certain assets related to FARESTON®.  The Company has accounted for FARESTON® as a discontinued operation.  As a result, revenue, cost of goods sold, and operating expenses related to FARESTON® were excluded from the respective captions in the condensed statement of operations and were included in discontinued operations for the three months ended March 31, 2012.  See Note 4, Discontinued Operations, for further discussion.

 

7



Table of Contents

 

GTx, Inc.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

(unaudited)

 

FARESTON® Revenue Recognition

 

Revenue from product sales of FARESTON® for the three months ended March 31, 2012, which was included in income from discontinued operations before income taxes, was recognized less deductions for estimated sales discounts and sales returns.  Revenue from product sales was recognized when persuasive evidence of an arrangement existed, title passed, the price was fixed or determinable, and collectability was reasonably assured.  The Company accounted for rebates to certain governmental agencies as a reduction of product sales.  The Company allows customers to return product within a specified time period prior to and subsequent to the product’s labeled expiration date.  Although the Company sold its rights and certain assets related to FARESTON® effective September 30, 2012, the Company retained the liability for future product returns relating to sales of FARESTON® made by the Company prior to September 30, 2012.  Therefore, the Company estimates an accrual for product returns based on factors which include historical product returns and estimated product in the distribution channel which is expected to exceed its expiration date.  At March 31, 2013 and December 31, 2012, the Company’s accrual for product returns, was $1,045 and $1,189, respectively.   Of these amounts, $332 and $370 have been included in “Other long-term liabilities” in the condensed balance sheet at March 31, 2013 and December 31, 2012, respectively, and represents the portion of the Company’s product returns accrual estimated to be payable after one year.  See Note 4, Discontinued Operations, for further discussion.

 

Reclassification

 

Certain prior period results have been reclassified to conform to the current period presentation.

 

Subsequent Events

 

The Company has evaluated all events or transactions that occurred after March 31, 2013 up through the date the condensed financial statements were issued.  There were no material recognizable or nonrecognizable subsequent events during the period evaluated.

 

2.              Share-Based Compensation

 

Share-based payments include stock option grants under the Company’s stock option and equity incentive plans and deferred compensation arrangements for the Company’s non-employee directors.  The Company recognizes compensation expense for its share-based payments based on the fair value of the awards over the period during which an employee or non-employee director is required to provide service in exchange for the award.  The Company’s share-based compensation plans are described more fully in Note 3 to the Company’s financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

 

The following table summarizes share-based compensation expense included within the condensed statements of operations for the three months ended March 31, 2013 and 2012:

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2013

 

2012

 

Research and development expenses

 

$

342

 

$

519

 

General and administrative expenses

 

514

 

408

 

Total share-based compensation

 

$

856

 

$

927

 

 

Share-based compensation expense recorded as general and administrative expense for the three months ended March 31, 2013 and 2012 included share-based compensation expense related to deferred compensation arrangements for the Company’s non-employee directors of $42 and $45, respectively.

 

8



Table of Contents

 

GTx, Inc.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

(unaudited)

 

The Company uses the Black-Scholes-Merton option pricing valuation model to value stock options.  The expected life of options is determined by calculating the average of the vesting term and the contractual term of the options.  The expected price volatility is based on the Company’s historical stock price volatility.  The risk-free interest rate is determined using U.S. Treasury rates where the term is consistent with the expected life of the stock options.  Expected dividend yield is not considered as the Company has not made any dividend payments and has no plans of doing so in the foreseeable future.  The amount of share-based compensation expense recognized is reduced ratably over the vesting period by an estimate of the percentage of options granted that are expected to be forfeited or canceled before becoming fully vested.

 

The fair value of options granted was estimated using the following assumptions for the periods presented:

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2013

 

2012

 

Expected price volatility

 

74.4

%

69.1

%

Risk-free interest rate

 

1.1

%

1.2

%

Weighted average expected life in years

 

6.5 years

 

6.5 years

 

 

The following is a summary of stock option transactions for all of the Company’s stock option and equity incentive plans since the Company’s most recent fiscal year end:

 

 

 

Number of Shares

 

Weighted Average
Exercise Price Per
Share

 

Options outstanding at December 31, 2012

 

5,382,859

 

$

7.96

 

Options granted

 

1,345,150

 

4.20

 

Options forfeited or expired

 

(29,632

)

4.58

 

Options exercised

 

(29,700

)

2.90

 

Options outstanding at March 31, 2013

 

6,668,677

 

7.24

 

 

3.              Basic and Diluted Net Loss Per Share

 

Basic and diluted net loss per share attributable to common stockholders is calculated based on the weighted average number of common shares outstanding during the period.  Diluted net loss per share gives effect to the dilutive potential of common stock consisting of stock options.

 

Weighted average options outstanding to purchase shares of common stock of 6,680,423 and 5,933,153 for the three months ended March 31, 2013 and 2012, respectively, were excluded from the calculations of diluted loss per share as inclusion of the options would have had an anti-dilutive effect on the net loss per share for the periods.

 

4.              Discontinued Operations

 

On September 28, 2012, the Company entered into the FARESTON® Purchase Agreement with ProStrakan pursuant to which the Company agreed to transfer, sell and assign to ProStrakan all of the Company’s rights to FARESTON® and certain assets related thereto.  Effective September 30, 2012, the Company completed the sale of FARESTON® pursuant to the FARESTON® Purchase Agreement for a total cash purchase price of $21,671, including payment for purchased inventory.  The Company accounted for FARESTON® as a discontinued operation.  The FARESTON® operating income of $1,335 for the three months ended March 31, 2012 was reported as “net income from discontinued operations” in the condensed statement of operations and consisted of net product sales of $1,829 reduced by cost of product sales of $274 and FARESTON® operating expenses of $220.  The Company remains liable for product returns related to sales of FARESTON® made by the Company prior to September 30,

 

9



Table of Contents

 

GTx, Inc.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

(unaudited)

 

2012.  At March 31, 2013 and December 31, 2012, the Company’s accrual for product returns, was $1,045 and $1,189, respectively.

 

5.              University of Tennessee Research Foundation License Agreement

 

The Company and the University of Tennessee Research Foundation (“UTRF”) are parties to a consolidated, amended and restated license agreement (the “SARM License Agreement”) pursuant to which the Company was granted exclusive worldwide rights in all existing SARM technologies owned or controlled by UTRF, including all improvements thereto, and exclusive rights to future SARM technology that may be developed by certain scientists at the University of Tennessee or subsequently licensed to UTRF under certain existing inter-institutional agreements with The Ohio State University.  Under the SARM License Agreement, the Company is obligated to pay UTRF annual license maintenance fees, low single-digit royalties on net sales of products and mid single-digit royalties on sublicense revenues.

 

10



Table of Contents

 

ITEM 2.                                                MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion should be read in conjunction with the condensed financial statements and the notes thereto included in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

 

Forward-Looking Information

 

This Quarterly Report on Form 10-Q contains forward-looking statements.  The forward-looking statements are contained principally in the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.”  These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements.  Forward-looking statements include statements about:

 

·                  the anticipated progress of our research, development and clinical programs, including whether our ongoing clinical trials achieve clinically relevant results;

 

·                  the timing, scope and anticipated initiation, enrollment and completion of our ongoing clinical trials and any future clinical trials that we may conduct;

 

·                  the timing of regulatory submissions and the timing, scope and anticipated outcome of related regulatory actions;

 

·                  our ability to establish and maintain potential new collaborative arrangements for the development and commercialization of our product candidates;

 

·                  our ability to obtain and maintain regulatory approvals of our product candidates and any related restrictions, limitations, and/or warnings in the label of an approved product candidate;

 

·                  our ability to market, commercialize and achieve market acceptance for our product candidates;

 

·                  our ability to generate additional product candidates for clinical testing;

 

·                  our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others; and

 

·                  our estimates regarding the sufficiency of our cash resources, expenses, capital requirements and needs for additional financing, and our ability to obtain additional financing.

 

In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” and similar expressions intended to identify forward-looking statements.  Forward-looking statements reflect our current views with respect to future events, are based on assumptions and are subject to risks, uncertainties and other important factors.  We discuss many of these risks in this Quarterly Report on Form 10-Q in greater detail in the section entitled “Risk Factors” under Part II, Item 1A below.  Given these risks, uncertainties and other important factors, you should not place undue reliance on these forward-looking statements.  Also, forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report on Form 10-Q.  You should read this Quarterly Report on Form 10-Q and the documents that we incorporate by reference in and have filed as exhibits to this Quarterly Report on Form 10-Q, completely and with the understanding that our actual future results may be materially different from what we expect.  Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

 

11



Table of Contents

 

Overview

 

Business Overview

 

We are a biopharmaceutical company dedicated to the discovery, development and commercialization of small molecules for the treatment of cancer, cancer supportive care, and other serious medical conditions.

 

Business Highlights

 

We are developing selective androgen receptor modulators, or SARMs, a new class of drugs with the potential to prevent and treat muscle wasting in patients with cancer and other musculoskeletal wasting or muscle loss conditions, including chronic sarcopenia (age related muscle loss), as well as the potential to be used as a hormonal therapy for the treatment of advanced breast cancer.  Our lead SARM product candidate, enobosarm (GTx-024), has to date been evaluated in eight completed clinical trials enrolling approximately 600 subjects, including in a Phase Ib and two Phase II efficacy studies.  Enobosarm is the generic name given to the compound by the USAN Council and the World Health Organization and is the first compound to receive the SARM stem in its name, recognizing enobosarm as the first in this new class of compounds.

 

We are conducting the POWER 1 and POWER 2 (Prevention and treatment Of muscle Wasting in patients with cancER) pivotal Phase III clinical trials evaluating enobosarm 3mg for the prevention and treatment of muscle wasting in patients with advanced non-small cell lung cancer.  We are conducting these trials in clinical sites in the United States, Europe, Russia and South America.  Each of the pivotal Phase III placebo-controlled, double-blind clinical trials was fully enrolled during the fourth quarter of 2012, with approximately 325 patients in each clinical trial.  In each of these clinical trials, patients with Stage III or IV non-small cell lung cancer have been randomized to placebo or enobosarm 3 mg at the time they began first line chemotherapy.  The trials are evaluating as co-primary endpoints the effect of enobosarm versus placebo on total lean body mass (muscle) assessed by dual x-ray absorptiometry, or DXA, and on physical function assessed by the Stair Climb Test at three months. Durability of effect is being assessed as a secondary endpoint at five months in those patients who responded at Day 84.

 

In January 2013, the United States Food and Drug Administration, or FDA, designated enobosarm for the prevention and treatment of muscle wasting in patients with advanced non-small cell lung cancer as a fast track development program.  Fast track status is a process designed by the FDA to facilitate the development and expedite the review of new drug candidates that are intended to treat serious diseases and have the potential to fill an unmet medical need.  In April 2013, after a pre-specified safety review in subjects enrolled in the two Phase III clinical trials, the independent Data Safety Monitoring Board, or DSMB, determined that the trials could continue as planned.  This was the last review to be conducted by the DSMB until after the data is locked and unblinded for a final assessment of safety data from the two clinical trials.  We currently expect to announce topline data from these pivotal Phase III clinical trials during the third quarter of 2013.  Subject to obtaining positive data from these pivotal Phase III clinical trials and receiving marketing authorization from the appropriate regulatory authorities, we will consider either building a specialized sales and marketing organization to commercialize enobosarm in the United States and/or entering into strategic partnerships or collaborations for the development and commercialization of this product candidate.

 

SARMs also have the potential to be used as a hormonal therapy for the treatment of advanced breast cancer.  Nonselective steroidal androgens have been used to treat breast cancer; however, the unwanted virilizing side effects have limited their widespread clinical use. We believe that enobosarm, by targeting the androgen receptor in estrogen receptor positive breast cancer, has the potential to provide clinical benefit to women with advanced breast cancer by treating their disease while minimizing the unwanted masculinizing side effects associated with steroidal androgens.  In April 2013, we announced that we are initiating a Phase II, open label study evaluating enobosarm 9 mg for the treatment of androgen receptor positive and estrogen receptor positive metastatic breast cancer in women who have previously responded to hormonal therapy for the treatment of their advanced breast cancer.  This proof of concept study will enroll 20 women at approximately six clinical sites in the United States.  The women will receive 9 mg of enobosarm once a day until they show evidence of clinical progression or have completed 336 days of treatment. The primary endpoint is clinical benefit, which will be assessed at six months, and is defined as either those women receiving treatment who have demonstrated a complete response (disappearance of all targeted

 

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lesions), a partial response (at least a 30% decrease in the sum of the diameters of the targeted lesions) or stable disease (no disease progression from baseline).

 

Additionally, we are developing GTx-758 (Capesaris®), an oral nonsteroidal selective estrogen receptor alpha agonist, for secondary hormonal therapy in men with metastatic castration resistant prostate cancer, or CRPC, and, potentially, as a primary treatment for advanced prostate cancer used in combination with androgen deprivation therapy, or ADT.  We believe GTx-758 has the potential to reduce free testosterone without also causing certain estrogen deficiency side effects, such as bone loss, hot flashes and insulin resistance, which are common with current androgen deprivation therapies for prostate cancer.  We also believe that GTx-758 may be effective, in combination with ADT, as a primary treatment of advanced prostate cancer by reducing free testosterone to levels lower than those attainable with ADT alone and potentially reducing the estrogen deficiency side effects caused by the use of ADT.

 

In May 2012, we announced that the FDA had removed its full clinical hold on our Investigational New Drug, or IND, application for GTx-758.  The full clinical hold was placed on our three then ongoing Phase II clinical trials evaluating GTx-758 to treat men with advanced prostate cancer in February 2012 and resulted in the discontinuation of these trials.  The full clinical hold followed our reports to the FDA of venous thromboembolic events (blood clots), or VTEs, in subjects treated with GTx-758 at the doses being studied in those trials (1000 mg and higher per day).  Based upon feedback from the FDA in connection with the removal of the full clinical hold, we initiated in the third quarter of 2012 a Phase II clinical trial to evaluate the safety and efficacy of lower doses of GTx-758 as secondary hormonal therapy in men with metastatic CRPC.

 

GTx-758 has previously demonstrated the ability to increase the production of a protein called sex hormone binding globulin, or SHBG, in men with advanced prostate cancer and reduce free testosterone.  By reducing free testosterone, we believe serum prostate specific antigen, or PSA, will be reduced in men with CRPC.  The primary endpoint of the current Phase II open-label clinical trial is the proportion of subjects with a > 50% decline from baseline in serum PSA by day 90. Other key endpoints include serum SHBG, total and free testosterone levels and progression free survival in the study subjects.   In addition, the clinical study will evaluate the ability of GTx-758 to treat certain estrogen deficiency side effects associated with luteinizing hormone releasing hormone agonists such as hot flashes, bone loss, and insulin resistance.  The clinical trial requires subjects to continue receiving their ADT treatment, which will allow us to assess the safety and tolerability of GTx-758 in these subjects, including the incidence of VTEs.  The trial design provides for 75 total subjects, with three sequential dosing arms. The first 25 subjects in the Phase II clinical trial are being enrolled in the GTx-758 125 mg dosing arm.  Assuming that an acceptable incidence of VTEs has been observed when the last subject enrolled in the GTx-758 125 mg dose arm has completed one 30 day cycle of therapy and management decides to continue testing at the next higher dose, enrollment of the next 25 subjects will commence in the GTx-758 250 mg dosing arm.  Similarly, the GTx-758 500 mg dosing arm will commence enrollment of the final 25 subjects when the last subject enrolled in the 250 mg dose arm has completed one 30 day cycle of therapy, assuming an acceptable incidence of VTEs has been observed in both of the lower dosage arms and management decides to continue testing at the next higher dose.

 

Financial Highlights

 

Our net loss for the three months ended March 31, 2013 was $12.6 million.  We expect to incur significant net losses in 2013 and for the foreseeable future as we continue our clinical development and research and development activities and seek regulatory approval of our product candidates.  Currently, we have no ongoing collaborations for the development and commercialization of our product candidates, and, as a result of the sale of our rights and certain assets related to FARESTON® in the third quarter of 2012, we also currently have no source of revenue.  Our current product candidates, enobosarm and GTx-758, will require significant additional research and development and financial resources in order to obtain necessary regulatory approvals for these product candidates and to develop them into commercially viable products.  We expect that a substantial portion of our efforts and expenditures in the near term will be devoted to enobosarm, which is the subject of ongoing pivotal Phase III clinical trials.  Accordingly, our future prospects are substantially dependent on the successful development, regulatory approval and commercialization of enobosarm for the prevention and treatment of muscle wasting in patients with advanced non-small cell lung cancer.  However, we do not expect to obtain FDA approval or any other regulatory approvals to market any of our product candidates, including enobosarm, in the next twelve months, and it is possible that none of our product candidates will ever receive any regulatory approvals.

 

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At March 31, 2013, we had cash, cash equivalents and short-term investments of $42.2 million compared to $56.1 million at December 31, 2012.

 

As of the date of this Quarterly Report on Form 10-Q, we estimate that our current cash, cash equivalents, and short-term investments, together with interest thereon, will be sufficient to meet our projected operating requirements for at least the next twelve months.  We have based this estimate on our current business plan and assumptions that may prove to be wrong.  We could utilize our available capital resources sooner than we currently expect, and we could need additional funding sooner than currently anticipated.  In any event, to complete the development of and seek regulatory approval for enobosarm and GTx-758, we will need to obtain substantial additional funding.

 

Research and Development

 

Since our inception in 1997, we have been focused on drug discovery and development programs.  Research and development expenses include, but are not limited to, our expenses for personnel and supplies associated with our research activities, screening and identification of product candidates, formulation and synthesis activities, manufacturing, preclinical studies, toxicology studies, clinical trials, regulatory and medical affairs activities, quality assurance activities and license fees.

 

We expect that our research and development expenses for fiscal year 2013 will increase as compared to fiscal year 2012 and to be primarily focused on the following:

 

·                  the continued clinical development of enobosarm;

 

·                  the continued clinical development of GTx-758; and

 

·                  the continued preclinical development of other potential product candidates.

 

There is a risk that any drug discovery and development program may not produce revenue.  Moreover, because of the uncertainties inherent in drug discovery and development, including those factors described in Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, we may not be able to successfully develop and commercialize any of our product candidates.

 

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Product Candidates

 

The following table identifies the development phase and status for each of our clinical product candidates:

 

Product
Candidate/
Proposed Indication

 

Program

 

Clinical
Development
Phase

 

Status

 

 

 

 

 

 

 

Enobosarm

3mg

 

 

 

 

 

 

Prevention and treatment of muscle wasting in patients with advanced non-small cell lung cancer

 

SARM

 

Phase III

 

Fully enrolled and conducting the POWER 1 and POWER 2 pivotal Phase III clinical trials for the prevention and treatment of muscle wasting in patients with advanced non-small cell lung cancer.

 

 

 

 

 

 

 

Enobosarm

9mg

 

 

 

 

 

 

Androgen receptor positive and estrogen receptor positive advanced breast cancer

 

SARM

 

Phase II

 

Initiating a proof of concept, Phase II, open-label clinical trial of enobosarm for the treatment of androgen receptor positive and estrogen receptor positive metastatic breast cancer.

 

 

 

 

 

 

 

GTx-758

 

 

 

 

 

 

Secondary hormonal therapy in men with metastatic CRPC

 

Selective estrogen receptor alpha agonist

 

Phase II

 

Initiated a Phase II clinical trial in the third quarter of 2012 for secondary hormonal therapy in men with metastatic CRPC.

 

General and Administrative Expenses

 

Our general and administrative expenses consist primarily of salaries and other related costs for personnel serving executive, finance, legal, human resources, information technology, and investor relations functions.  General and administrative expenses also include facility costs, insurance costs, and professional fees for legal, accounting, and public relation services.

 

Critical Accounting Policies and Significant Judgments and Estimates

 

Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements.  The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed financial statements as well as the reported revenues and expenses during the reporting periods.  On an ongoing basis, we evaluate our estimates and judgments related to revenue recognition, income taxes, intangible assets, long-term service contracts and other contingencies.  We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.

 

While our significant accounting policies are more fully described in Note 2 to our financial statements appearing in our Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC, we believe that the following accounting policies are most critical to aid you in fully understanding and evaluating our reported financial results.

 

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Research and Development Expenses

 

Research and development expenses include, but are not limited to, our expenses for personnel, supplies, and facilities associated with research activities, screening and identification of product candidates, formulation and synthesis activities, manufacturing, preclinical studies, toxicology studies, clinical trials, regulatory and medical affairs activities, quality assurance activities and license fees.  We expense these costs in the period in which they are incurred.  We estimate our liabilities for research and development expenses in order to match the recognition of expenses to the period in which the actual services are received. As such, accrued liabilities related to third party research and development activities are recognized based upon our estimate of services received and degree of completion of the services in accordance with the specific third party contract.

 

Share-Based Compensation

 

We have stock option and equity incentive plans that provide for the purchase of our common stock by certain of our employees and non-employee directors.  We recognize compensation expense for our share-based payments based on the fair value of the awards on the grant date and recognize the expense over the period during which an employee or non-employee director is required to provide service in exchange for the award.

 

The determination of the fair value of share-based payment awards on the date of grant include the expected life of the award, the expected stock price volatility over the expected life of the awards, and risk-free interest rate.  We estimate the expected life of options by calculating the average of the vesting term and contractual term of the options.  We estimate the expected stock price volatility based on the historical volatility of our common stock.  The risk-free interest rate is determined using U.S. Treasury rates where the term is consistent with the expected life of the stock options.  Expected dividend yield is not considered as we have not made any dividend payments and have no plans of doing so in the foreseeable future.  The amount of share-based compensation expense recognized is reduced ratably over the vesting period by an estimate of the percentage of options granted that are expected to be forfeited or canceled before becoming fully vested.  This estimate is adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate.

 

The following table summarizes share-based compensation expense included within the condensed statements of operations for the three months ended March 31, 2013 and 2012:

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2013

 

2012

 

 

 

(in thousands)

 

Research and development expenses

 

$

342

 

$

519

 

General and administrative expenses

 

514

 

408

 

Total share-based compensation

 

$

856

 

$

927

 

 

Share-based compensation expense recorded in the condensed statement of operations as general and administrative expense for the three months ended March 31, 2013 and 2012 included share-based compensation expense related to deferred compensation arrangements for our non-employee directors of $42,000 and $45,000, respectively.  At March 31, 2013, the total compensation cost related to non-vested awards not yet recognized was approximately $6.9 million with a weighted average expense recognition period of 3.57 years.

 

Discontinued Operations

 

Effective September 30, 2012, we completed the sale of FARESTON® and accounted for FARESTON® as a discontinued operation.  As a result, revenue, cost of goods sold, and operating expenses relating to FARESTON® have been excluded from their respective captions in the condensed statements of operations and have been included in discontinued operations for the three months ended March 31, 2012.

 

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FARESTON® Revenue Recognition

 

Revenue from product sales of FARESTON® was recognized less deductions for estimated sales discounts and sales returns.  Revenue from product sales was recognized when persuasive evidence of an arrangement existed, title passed, the price was fixed or determinable, and collectability was reasonably assured.  We accounted for rebates to certain governmental agencies as a reduction of product sales.  We allow customers to return product within a specified time period prior to and subsequent to the product’s labeled expiration date.  Although we sold our rights and certain assets related to FARESTON® effective September 30, 2012, we retain the liability for future product returns relating to sales of FARESTON® by us prior to September 30, 2012.  Therefore, we estimate an accrual for product returns based on factors which include historical product returns and estimated product in the distribution channel which is expected to exceed its expiration date.  At March 31, 2013 and December 31, 2012, our accrual for product returns, was $1.0 million and $1.2 million, respectively.

 

Results of Operations

 

Three Months Ended March 31, 2013 and 2012

 

Research and Development Expenses

 

The following table identifies the research and development expenses for each of our clinical product candidates, as well as research and development expenses pertaining to our other research and development efforts, for each of the periods presented.  Research and development spending for past periods is not indicative of spending in future periods.

 

 

 

 

 

Three Months Ended
March 31,

 

Proposed Candidate / Proposed Indication

 

Program

 

2013

 

2012

 

 

 

 

 

(in thousands)

 

Enobosarm

3 mg

 

 

 

 

 

 

 

Prevention and treatment of muscle wasting in patients with advanced non-small cell lung cancer

 

SARM

 

$

6,301

 

$

4,930

 

 

 

 

 

 

 

 

 

Capesaris®

 

 

 

 

 

 

 

Secondary hormonal therapy in men with metastatic CRPC

 

Selective ER alpha agonist

 

1,714

 

3,111

 

 

 

 

 

 

 

 

 

Other research and development

 

 

 

1,599

 

1,794

 

 

 

 

 

 

 

 

 

Total research and development expenses

 

 

 

$

9,614

 

$

9,835

 

 

Research and development expenses decreased to $9.6 million for the three months ended March 31, 2013 from $9.8 million for the three months ended March 31, 2012.  Research and development expenses related to enobosarm increased as we continued to conduct the two pivotal Phase III POWER 1 and POWER 2 clinical trials.  This increase was offset by decreased expenses related to GTx-758.  Research and development expenses related to GTx-758 decreased during the three months ended March 31, 2013 as a result of our conducting only one Phase II clinical trial to evaluate GTx-758 as secondary hormonal therapy in men with metastatic CRPC as compared to the three months ended March 31, 2012 when we were conducting three Phase II clinical trials of GTx-758 to treat men with advanced prostate cancer, each of which trials were discontinued in February 2012.

 

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“Other research and development” expenses include the cost of personnel, supplies and facilities associated with preclinical and discovery research and development activities.

 

General and Administrative Expenses

 

General and administrative expenses increased 17% to $3.0 million for the three months ended March 31, 2013 from $2.6 million for the three months ended March 31, 2012 primarily due to increased legal services related to intellectual property and equity incentive plans.

 

Discontinued Operations

 

Income from discontinued operations before income taxes was $1.3 million for the three months ended March 31, 2012 and consisted of net product sales of FARESTON® of $1.8 million reduced by cost of FARESTON® product sales of $274,000 and FARESTON® operating expenses of $220,000.

 

Liquidity and Capital Resources

 

At March 31, 2013, we had cash, cash equivalents and short-term investments of $42.2 million, compared to $56.1 million at December 31, 2012.  Net cash used in operating activities was $13.9 million and $10.5 million for the three months ended March 31, 2013 and 2012, respectively, and resulted primarily from funding our operations.

 

Net cash provided by investing activities was $1.9 million for the three months ended March 31, 2013 and resulted primarily from the maturities of short-term investments of $3.2 million offset by the purchase of short-term investments of $1.2 million.  Net cash provided by investing activities was $2.7 million for the three months ended March 31, 2012 and resulted from the maturities of short-term investments of $4.6 million partially offset by the purchase of short-term investments of $2.0 million.

 

Net cash provided by financing activities was $84,000 for the three months ended March 31, 2013 and reflects proceeds from the exercise of employee stock options partially offset by payments on capital lease obligations.  Net cash provided by financing activities was $24,000 for the three months ended March 31, 2012 and was provided primarily from proceeds from the exercise of employee stock options partially offset by payments on capital lease and financed equipment obligations.

 

As of the date of this Quarterly Report on Form 10-Q, we estimate that our current cash, cash equivalents, and short-term investments, together with interest thereon, will be sufficient to meet our projected operating requirements for at least the next twelve months.  We have based this estimate on our current business plan and assumptions that may prove to be wrong.  We could utilize our available capital resources sooner than we currently expect, and we could need additional funding sooner than currently anticipated.  In any event, to complete the development of and seek regulatory approval for enobosarm and GTx-758, we will need to obtain substantial additional funding.

 

Our estimate of the period of time through which our financial resources will be adequate to support our projected operating requirements is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed under Part II, Item 1A “Risk Factors” section of this Quarterly Report on Form 10-Q.  Because of the numerous risks and uncertainties associated with the development and potential commercialization of our product candidates and other research and development activities, including risks and uncertainties that could impact the rate of progress of our development and commercialization activities, we are unable to estimate with certainty the amounts of increased capital outlays and operating expenditures associated with our anticipated future clinical trials, other research and development activities, and potential commercialization activities.  Our future funding requirements will depend on many factors, including:

 

·                  the scope, rate of progress and cost of our clinical trials and other research and development activities, including our ongoing and any future clinical trials of enobosarm and GTx-758;

 

·                  the terms and timing of any potential collaborative, licensing and other arrangements that we may

 

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establish;

 

·                  the decision to initiate development of new potential medicines from our research and discovery activities;

 

·                  the amount and timing of any license fees, milestone payments and royalty payments from potential collaborators, if any;

 

·                  future clinical trial results;

 

·                  the cost and timing of regulatory filings and/or approvals to commercialize our product candidates and any related restrictions, limitations, and/or warnings in the label of an approved product candidate;

 

·                  the cost and timing of establishing medical education, sales, marketing and distribution capabilities;

 

·                  the cost of establishing clinical and commercial supplies of our product candidates and any products that we and/or any potential collaborators may develop;

 

·                  the effect of competing technological and market developments;

 

·                  the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights, and the cost of defending any other litigation claims; and

 

·                  the extent to which we acquire or invest in businesses, products and technologies, although we currently have no commitments or agreements relating to any of these types of transactions.

 

We do not currently have any commitments for future external funding nor do we currently have any sources of revenue.  Until we can generate a sufficient amount of product revenue, which we may never do, we expect to finance future cash needs through public or private equity offerings, debt financings or collaboration and licensing arrangements, or a combination of the above, as well as through interest income earned on the investment of our cash balances and short-term investments.  In June 2011, we announced a workforce reduction of approximately 15% in order to reduce our operating expenses relating to our discontinued toremifene development programs.  If we are unable to raise additional funds when needed, we may need to further reduce our expenditures, perhaps significantly, to preserve our cash.  Cost-cutting measures that we may take in the future may not be sufficient to enable us to meet our cash requirements, and they may negatively affect our business and growth prospects.   To the extent we raise additional funds by issuing equity securities, our stockholders may experience dilution, and debt financing, if available, may involve restrictive covenants.  Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders.  To the extent we raise additional funds through potential collaboration and licensing arrangements, it may be necessary to relinquish rights to some of our technologies or product candidates, or grant licenses on terms that are not favorable to us.  Our ability to raise additional funds and the terms upon which we are able to raise such funds may be adversely impacted by the outcomes of ongoing and potential clinical trials of enobosarm and GTx-758, uncertainty regarding our financial condition and/or current economic conditions, including the effects of, disruptions to and volatility in the credit and financial markets in the United States, the European Union and other regions of the world, including those resulting from or associated with rising government debt levels.  As a result of these and other factors, we cannot be certain that additional funding will be available on acceptable terms, or at all.  If adequate funds are not available when we need them, we may be required to delay, reduce the scope of or eliminate one or more of our research or development programs, including our SARM and selective ER alpha agonist programs, or conduct additional workforce or other expense reductions, any of which could have a material adverse effect on our business.

 

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ITEM 3.                                                QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

During the three months ended March 31, 2013, there were no material changes to our market risk disclosures as set forth in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2012.

 

ITEM 4.                                                CONTROLS AND PROCEDURES

 

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosures.

 

We have carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report.  Based on the evaluation of these disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective.

 

There were no changes in our internal control over financial reporting during the first quarter of 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II:  OTHER INFORMATION

 

ITEM 1A.                                       RISK FACTORS

 

We have identified the following additional risks and uncertainties that may have a material adverse effect on our business, financial condition or results of operations.  Investors should carefully consider the risks described below before making an investment decision.  Our business faces significant risks, and the risks described below may not be the only risks we face.  Additional risks not presently known to us or that we currently believe are immaterial may also significantly impair our business operations.  If any of these risks occur, our business, results of operations or financial condition could suffer, the market price of our common stock could decline and you could lose all or part of your investment in our common stock.

 

We have marked with an asterisk (*) those risks described below that reflect substantive changes from the risks described under Part I, Item 1A “Risk Factors” included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 5, 2013.

 

Risks Related to Our Financial Condition and Need for Additional Financing

 

We have incurred losses since inception, and we anticipate that we will incur continued losses for the foreseeable future.*

 

As of March 31, 2013, we had an accumulated deficit of $425.8 million. Our net loss for the three months ended March 31, 2013 was $12.6 million. We expect to incur significant net losses in 2013 and for the foreseeable future as we continue our clinical development and research and development activities and seek regulatory approval of our product candidates. These losses, among other things, have had and will continue to have an adverse effect on our stockholders’ equity and working capital.

 

Our current product candidates, enobosarm (GTx-024) and GTx-758 (Capesaris®), will require significant additional research and development and financial resources in order to obtain necessary regulatory approvals for

 

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these product candidates and to develop them into commercially viable products.  We expect that a substantial portion of our efforts and expenditures in the near term will be devoted to enobosarm, which is the subject of ongoing pivotal Phase III clinical trials.  Accordingly, our future prospects are substantially dependent on the successful development, regulatory approval and commercialization of enobosarm for the prevention and treatment of muscle wasting in patients with advanced non-small cell lung cancer.  However, we do not expect to obtain FDA approval or any other regulatory approvals to market any of our product candidates, including enobosarm, in the next twelve months, and it is possible that none of our product candidates will ever receive any regulatory approvals.

 

Because of the numerous risks and uncertainties associated with developing and commercializing small molecule drugs, we are unable to predict the extent of any future losses or when we will become profitable, if at all. We have financed our operations and internal growth primarily through public offerings and private placement of our common stock, as well as payments from our former collaborators.  We also previously recognized product revenue from the sale of FARESTON®, the rights to which we sold to a third party in the third quarter of 2012.  Currently, we have no ongoing collaborations for the development and commercialization of our product candidates, and as a result of the sale of our rights and certain assets related to FARESTON®, we also currently have no sources of revenue.  If we and/or any potential collaborators are unable to develop and commercialize any of our product candidates, if development is further delayed or is eliminated, or if sales revenue from any product candidate that receives marketing approval is insufficient, we may never become profitable and we will not be successful.

 

We will need to raise substantial additional capital and may be unable to raise capital when needed, which would force us to delay, reduce or eliminate our product development programs or commercialization efforts.

 

We will need to raise substantial additional capital to:

 

·                  fund our operations and conduct clinical trials;

 

·                  continue our research and development;

 

·                  seek regulatory approval for our product candidates; and

 

·                  commercialize our product candidates, if any such product candidates receive regulatory approval for commercial sale.

 

 

As of the date of this Quarterly Report on Form 10-Q, we estimate that our current cash, cash equivalents, and short-term investments, together with interest thereon, will be sufficient to meet our projected operating requirements for at least the next twelve months. We have based this estimate on our current business plan and assumptions that may prove to be wrong.  We could utilize our available capital resources sooner than we currently expect, and we could need additional funding sooner than currently anticipated.  In any event, to complete the development of and seek regulatory approval for enobosarm and GTx-758, we will need to obtain substantial additional funding.  Our future funding requirements will depend on many factors, including:

 

·                  the scope, rate of progress and cost of our clinical trials and other research and development activities, including our ongoing and any future clinical trials of enobosarm and GTx-758;

 

·                  the terms and timing of any potential collaborative, licensing and other arrangements that we may establish;

 

·                  the decision to initiate development of new potential medicines from our research and discovery activities;

 

·                  the amount and timing of any licensing fees, milestone payments and royalty payments from potential collaborators, if any;

 

·                  future clinical trial results;

 

·                  the cost and timing of regulatory filings and/or approvals to commercialize our product candidates and any related restrictions, limitations, and/or warnings in the label of an approved product candidate;

 

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·                  the cost and timing of establishing medical education, sales, marketing and distribution capabilities;

 

·                  the cost of establishing clinical and commercial supplies of our product candidates and any products that we and/or any potential collaborators may develop;

 

·                  the effect of competing technological and market developments;

 

·                  the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights, and the cost of defending any other litigation claims; and

 

·                  the extent to which we acquire or invest in businesses, products and technologies, although we currently have no commitments or agreements relating to any of these types of transactions.

 

We do not currently have any commitments for future external funding nor do we currently have any sources of revenue.  Until we can generate a sufficient amount of product revenue, which we may never do, we expect to finance future cash needs through public or private equity offerings, debt financings or collaboration and licensing arrangements, or a combination of the above, as well as through interest income earned on the investment of our cash balances and short-term investments.  In June 2011, we announced a workforce reduction of approximately 15% in order to reduce our operating expenses relating to our discontinued toremifene development programs.  If we are unable to raise additional funds when needed, we may need to further reduce our expenditures, perhaps significantly, to preserve our cash. Cost-cutting measures that we may take in the future may not be sufficient to enable us to meet our cash requirements, and they may negatively affect our business and growth prospects.

 

To the extent we raise additional funds by issuing equity securities, our stockholders may experience dilution, and debt financing, if available, may involve restrictive covenants. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. To the extent we raise additional funds through potential collaboration and licensing arrangements, it may be necessary to relinquish rights to some of our technologies or product candidates, or grant licenses on terms that are not favorable to us. Our ability to raise additional funds and the terms upon which we are able to raise such funds may be adversely impacted by the outcomes of ongoing and planned clinical trials of enobosarm and GTx-758, uncertainty regarding our financial condition and/or current economic conditions, including the effects of, disruptions to and volatility in the credit and financial markets in the United States, the European Union and other regions of the world, including those resulting from or associated with rising government debt levels. As a result of these and other factors, we cannot be certain that additional funding will be available on acceptable terms, or at all. If adequate funds are not available when we need them, we may be required to delay, reduce the scope of or eliminate one or more of our research or development programs, including our SARM and selective ER alpha agonist programs, or conduct additional workforce or other expense reductions, any of which could have a material adverse effect on our business.

 

Risks Related to Development of Product Candidates

 

We and any potential collaborators will not be able to commercialize our product candidates if our preclinical studies do not produce successful results or if our clinical trials do not adequately demonstrate safety and efficacy in humans.

 

Significant additional research and development and financial resources will be required to obtain necessary regulatory approvals for our product candidates and to develop them into commercially viable products.  Preclinical and clinical testing is expensive, can take many years to complete and has an uncertain outcome. Success in preclinical testing and early clinical trials does not ensure that later clinical trials will be successful, and interim results of a clinical trial do not necessarily predict final results. Typically, the failure rate for development candidates is high.  If a product candidate fails at any stage of development, we will not have the anticipated revenues from that product candidate to fund our operations, and we will not receive any return on our investment in that product candidate.  For example, we announced in May 2010 that toremifene 20 mg failed to meet its primary efficacy endpoint in our Phase III clinical trial of toremifene 20 mg for the prevention of prostate cancer in high risk men with high grade prostatic intraepithelial neoplasia, after we had incurred significant development costs.  Even if the results of a clinical trial are positive, the efficacy and/or safety results from the trial may be insufficient to support the submission of a new drug application, or NDA, to the FDA, or if submitted, the approval of the NDA by the FDA. For example, we received a Complete Response Letter in October 2009 from the FDA regarding our NDA for toremifene 80 mg to reduce fractures in men with prostate cancer on androgen deprivation therapy, or ADT,

 

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notifying us that the FDA would not approve the NDA.  We have since discontinued our toremifene development programs.

 

Significant delays in clinical testing could materially impact our product development costs.  We do not know whether potential clinical trials will begin on time, or whether ongoing clinical trials will need to be restructured or will be completed on schedule, if at all.  We or any potential collaborators may experience numerous unforeseen and/or adverse events during, or as a result of, preclinical testing and the clinical trial process that could delay or prevent our or our potential collaborators’ ability to commercialize our product candidates, including:

 

·                  regulators or institutional review boards may not authorize us or any potential collaborators to commence a clinical trial or conduct a clinical trial at a prospective trial site, or we may experience substantial delays in obtaining these authorizations;

 

·                  preclinical or clinical trials may produce negative or inconclusive results, which may require us or any potential collaborators to conduct additional preclinical or clinical testing or to abandon projects that we expect to be promising;

 

·                  even if preclinical or clinical trial results are positive, the FDA or foreign regulatory authorities could nonetheless require us to conduct unanticipated additional clinical trials;

 

·                  registration or enrollment in clinical trials may be slower than we anticipate, resulting in significant delays or study terminations;

 

·                  we or any potential collaborators may suspend or terminate clinical trials if the participating patients are being exposed to unacceptable health risks;

 

·                  regulators or institutional review boards may suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements; and

 

·                  our product candidates may not have the desired effects or may include undesirable side effects.

 

If any of these events were to occur and, as a result, we or any potential collaborators have significant delays in or termination of clinical trials, our costs could increase and our ability to generate revenue could be impaired, which would materially and adversely impact our business, financial condition and growth prospects.

 

If we or any potential collaborators observe serious or other adverse events during the time our product candidates are in development or after our products are approved and on the market, we or any potential collaborators may be required to perform lengthy additional clinical trials, may be required to cease further development of such product candidates, may be denied regulatory approval of such products, may be forced to change the labeling of such products or may be required to withdraw any such products from the market, any of which would hinder or preclude our ability to generate revenues.

 

In three Phase II clinical trials of GTx-758, which we discontinued in February 2012, we observed venous thromboembolic events, or blood clots, in subjects treated with GTx-758 at the doses being studied in the trials (1000 mg and higher per day) and reported those events to the FDA. There were two deaths in subjects treated with GTx-758 and two deaths in subjects treated with Lupron Depot®.  In February 2012, the FDA placed all of our then ongoing clinical studies of GTx-758 on full clinical hold and we suspended further enrollment into these studies and notified clinical sites to discontinue treatment of subjects with GTx-758.  In May 2012, the FDA notified us that it had removed the full clinical hold on GTx-758.  In the third quarter of 2012, we initiated a Phase II clinical trial to evaluate GTx-758, at doses lower than those which were previously being tested in our discontinued Phase II clinical trials, as secondary hormonal therapy in men with metastatic castration resistant prostate cancer, or CRPC.  Although our current Phase II clinical trial is evaluating GTx-758 at doses lower than those which were previously being tested in our discontinued Phase II clinical trials, we cannot be confident that we will not observe an unacceptable incidence of venous thromboembolic events or other adverse events in the current Phase II clinical trial. Our ability to develop GTx-758 as an effective secondary hormonal therapy for men with metastatic CRPC or, potentially, as a primary treatment for advanced prostate cancer used in combination with ADT is dependent on our ability to find an appropriate dose that is both effective and safe for these patient populations.  If an unacceptable incidence of venous thromboembolic events or other adverse events are observed in our current Phase II clinical trial of GTx-758, we may be required to abandon our development of GTx-758, in which case, we would not receive any

 

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return on our investment in that product candidate.

 

In our Phase II clinical trials for enobosarm for the treatment of muscle wasting in patients with cancer and healthy older males and postmenopausal females, we observed mild elevations of hepatic enzymes, which in certain circumstances may lead to liver failure, in a few patients in both the placebo and enobosarm treated groups.  Reductions in high-density lipoproteins have also been observed in subjects treated with enobosarm.  Lower levels of high-density lipoproteins could lead to increased risk of adverse cardiovascular events.

 

If the incidence of serious or other adverse events related to our product candidates increases in number or severity, if a regulatory authority believes that these or other events constitute an adverse effect caused by the drug, or if other effects are identified during clinical trials that we or any potential collaborators may conduct in the future or after any of our product candidates are approved and marketed:

 

·                  we or any potential collaborators may be required to conduct additional preclinical or clinical trials, make changes in the labeling of any such approved products, reformulate any such products, or implement changes to or obtain new approvals of our contractors’ manufacturing facilities;

 

·                  regulatory authorities may be unwilling to approve our product candidates or may withdraw approval of our products;

 

·                  we may experience a significant drop in the sales of the affected products;

 

·                  our reputation in the marketplace may suffer; and

 

·                  we may become the target of lawsuits, including class action suits.

 

Any of these events could prevent approval or harm sales of the affected product candidates or products, or could substantially increase the costs and expenses of commercializing and marketing any such products.

 

Risks Related to Our Dependence on Third Parties

 

If we do not establish collaborations for our product candidates or otherwise raise substantial additional capital, we will likely need to alter our development and any commercialization plans.

 

Our strategy includes selectively partnering or collaborating with leading pharmaceutical and biotechnology companies to assist us in furthering development and potential commercialization of our product candidates.  We face significant competition in seeking appropriate collaborators, and collaborations are complex and time consuming to negotiate and document. We may not be successful in entering into new collaborations with third parties on acceptable terms, or at all. In addition, we are unable to predict when, if ever, we will enter into any additional collaborative arrangements because of the numerous risks and uncertainties associated with establishing such arrangements. If we are unable to negotiate new collaborations, we may have to curtail the development of a particular product candidate, reduce, delay, or terminate its development or one or more of our other development programs, delay its potential commercialization or reduce the scope of our sales or marketing activities or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we will need to raise substantial additional capital, which may not be available to us on acceptable terms, or at all. If we do not have sufficient funds, we will not be able to bring our product candidates to market and generate product revenues.

 

Any collaborative arrangements that we establish in the future may not be successful or we may otherwise not realize the anticipated benefits from these collaborations.  In addition, any future collaboration arrangements may place the development and commercialization of our product candidates outside our control, may require us to relinquish important rights or may otherwise be on terms unfavorable to us.

 

We have in the past established and intend to continue to establish collaborations with third parties to develop and commercialize some of our current and future product candidates, and these collaborations may not be successful or we may otherwise not realize the anticipated benefits from these collaborations. For example, in March 2011, we and Ipsen Biopharm Limited, or Ipsen, mutually agreed to terminate our collaboration for the development and commercialization of our toremifene-based product candidate, and, as a result, we will not receive any additional milestone payments from Ipsen on account of our collaboration with Ipsen. As of the date of this report,

 

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we have no ongoing collaborations for the development and commercialization of our product candidates.  In the future, we may not be able to locate third-party collaborators to develop and market our product candidates, and we may lack the capital and resources necessary to develop our product candidates alone.

 

Dependence on collaborative arrangements subjects us to a number of risks, including:

 

·                  we may not be able to control the amount and timing of resources that our potential collaborators may devote to our product candidates;

 

·                  potential collaborations may experience financial difficulties or changes in business focus;

 

·                  we may be required to relinquish important rights such as marketing and distribution rights;

 

·                  should a collaborator fail to develop or commercialize one of our compounds or product candidates, we may not receive any future milestone payments and will not receive any royalties for the compound or product candidate;

 

·                  business combinations or significant changes in a collaborator’s business strategy may also adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement;

 

·                  under certain circumstances, a collaborator could move forward with a competing product candidate developed either independently or in collaboration with others, including our competitors; and

 

·                  collaborative arrangements are often terminated or allowed to expire, which could delay the development and may increase the cost of developing our product candidates.

 

If third parties do not manufacture our product candidates in sufficient quantities, in the required timeframe, at an acceptable cost, and with appropriate quality control, clinical development and commercialization of our product candidates would be delayed.

 

We do not currently own or operate manufacturing facilities, and we rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our product candidates. Our current and anticipated future dependence upon others for the manufacture of our product candidates may adversely affect our future profit margins, if any, and our ability to develop product candidates and commercialize any product candidates on a timely and competitive basis.

 

We rely on third-party vendors for the manufacture of enobosarm drug substance.  If our supply of enobosarm becomes unusable or if the contract manufacturers that we are currently utilizing to meet our supply needs for enobosarm or any future SARM product candidates prove incapable or unwilling to continue to meet our supply needs, we could experience a delay in conducting any additional clinical trials of enobosarm or any future SARM product candidates. In addition, we rely on third-party contractors for the manufacture of GTx-758 drug substance. We may not be able to maintain or renew our existing or any other third-party manufacturing arrangements on acceptable terms, if at all. If our suppliers fail to meet our requirements for GTx-758, enobosarm or any future product candidates for any reason, we would be required to obtain alternate suppliers. Any inability to obtain alternate suppliers, including an inability to obtain approval from the FDA of an alternate supplier, would delay or prevent the clinical development and commercialization of these product candidates.

 

Use of third-party manufacturers may increase the risk that we will not have adequate supplies of our product candidates or products.

 

Reliance on third-party manufacturers entails risks, to which we would not be subject if we manufactured product candidates or products ourselves, including:

 

·                  reliance on the third party for regulatory compliance and quality assurance;

 

·                  the possible breach of the manufacturing agreement by the third party because of factors beyond our control;

 

·                  the possible termination or non-renewal of the agreement by the third party, based on its own business priorities, at a time that is costly or inconvenient for us; and

 

·                  drug product supplies not meeting the requisite requirements for clinical trial use.

 

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If we are not able to obtain adequate supplies of our product candidates, it will be more difficult for us to develop our product candidates and compete effectively. Our product candidates and any products that we and/or our potential collaborators may develop may compete with other product candidates and products for access to manufacturing facilities.

 

Our present or future manufacturing partners may not be able to comply with FDA-mandated current Good Manufacturing Practice regulations, other FDA regulatory requirements or similar regulatory requirements outside the United States. Failure of our third-party manufacturers or us to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, failure of regulatory authorities to grant marketing approval of our product candidates, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates.

 

If third parties on whom we rely do not perform as contractually required or expected, we may not be able to obtain regulatory approval for or successfully commercialize our product candidates.

 

We do not have the ability to independently conduct clinical trials for our product candidates, and we must rely on third parties, such as contract research organizations, medical institutions, clinical investigators and contract laboratories to conduct our clinical trials. In addition, we rely on third parties to assist with our preclinical development of product candidates. If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, if the third parties need to be replaced, or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our preclinical development activities or clinical trials may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates.

 

Risks Related to Our Intellectual Property

 

If we lose our license from the University of Tennessee Research Foundation, or UTRF, we may be unable to continue a substantial part of our business.

 

We have licensed intellectual property rights and technology from UTRF used in a substantial part of our business. This license agreement, under which we were granted rights to SARM compounds and technologies, may be terminated by UTRF if we are in breach of our obligations under, or fail to perform any terms of, the agreement and fail to cure that breach. If this agreement is terminated, then we may lose our rights to utilize the SARM technology and intellectual property covered by that agreement to market, distribute and sell licensed products, including enobosarm, which may prevent us from continuing a substantial part of our business and may result in a serious adverse effect on our financial condition, results of operations and any prospects for growth.

 

If some or all of our or our licensors’ patents expire or are invalidated or are found to be unenforceable, or if some or all of our patent applications do not result in issued patents or result in patents with narrow, overbroad, or unenforceable claims, or claims that are not supported in regard to written description or enablement by the specification, or if we are prevented from asserting that the claims of an issued patent cover a product of a third party, we may be subject to competition from third parties with products in the same class of products as our product candidates or products with the same active pharmaceutical ingredients as our product candidates.

 

Our commercial success will depend in part on obtaining and maintaining patent and trade secret protection for our product candidates, as well as the methods for treating patients in the product indications using these product candidates. We will be able to protect our product candidates and the methods for treating patients in the product indications using these product candidates from unauthorized use by third parties only to the extent that we or our exclusive licensors own or control such valid and enforceable patents or trade secrets.

 

Our rights to certain patents and patent applications relating to SARM compounds that we have licensed from UTRF are subject to the terms of UTRF’s inter-institutional agreements with The Ohio State University, or OSU, and our rights to future related improvements in some instances are subject to UTRF’s exercise of exclusive options under its agreements with OSU for such improvements.

 

Even if our product candidates and the methods for treating patients for prescribed indications using these

 

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product candidates are covered by valid and enforceable patents and have claims with sufficient scope, disclosure and support in the specification, the patents will provide protection only for a limited amount of time. Our and our licensors’ ability to obtain patents can be highly uncertain and involve complex and in some cases unsettled legal issues and factual questions. Furthermore, different countries have different procedures for obtaining patents, and patents issued in different countries provide different degrees of protection against the use of a patented invention by others. Therefore, if the issuance to us or our licensors, in a given country, of a patent covering an invention is not followed by the issuance, in other countries, of patents covering the same invention, or if any judicial interpretation of the validity, enforceability, or scope of the claims in, or the written description or enablement in, a patent issued in one country is not similar to the interpretation given to the corresponding patent issued in another country, our ability to protect our intellectual property in those countries may be limited. Changes in either patent laws or in interpretations of patent laws in the United States and other countries may materially diminish the value of our intellectual property or narrow the scope of our patent protection.  On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to United States patent law. These include provisions that affect the way patent applications will be prosecuted and may also affect patent defense and enforcement. The regulations and procedures to govern administration of the Leahy-Smith Act, and the substantive and procedural changes to patent law associated with the Leahy-Smith Act are being implemented in stages, beginning from September 16, 2011, and continuing through March 16, 2013.  For example, the Leahy-Smith Act has introduced procedures making it easier for third-parties to challenge issued patents, as well as to intervene in the prosecution of patent applications. In addition, the Leahy-Smith Act will change the United States from a “first-to-invent” jurisdiction to a “first-inventor-to-file” jurisdiction and will change the definition of what constitutes prior art for an application.  Finally, the Leahy-Smith Act contains new statutory provisions that still require the U.S. Patent and Trademark Office to issue new regulations for their implementation and it may take the courts years to interpret the provisions of the new statute.   Accordingly, it is too early to determine what effect or impact the Leahy-Smith Act will have on the operation of our business and the protection and enforcement of our intellectual property. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition.

 

Even if patents are issued to us or our licensors regarding our product candidates or methods of using them, those patents can be challenged by our competitors who can argue such patents are invalid or unenforceable, lack of utility, lack sufficient written description or enablement, or that the claims of the issued patents should be limited or narrowly construed. Patents also will not protect our product candidates if competitors devise ways of making or using these product candidates without legally infringing our patents. The Federal Food, Drug, and Cosmetic Act and FDA regulations and policies create a regulatory environment that encourages companies to challenge branded drug patents or to create non-infringing versions of a patented product in order to facilitate the approval of abbreviated new drug applications for generic substitutes. These same types of incentives encourage competitors to submit new drug applications that rely on literature and clinical data not prepared for or by the drug sponsor, providing another less burdensome pathway to approval.

 

We also rely on trade secrets to protect our technology, especially where we do not believe that patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. Our employees, consultants, contractors, outside scientific collaborators and other advisors may unintentionally or willfully disclose our confidential information to competitors, and confidentiality agreements may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. Enforcing a claim that a third party illegally obtained and is using our trade secrets is expensive and time-consuming, and the outcome is unpredictable. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how. Failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

 

If we infringe intellectual property rights of third parties, it may increase our costs or prevent us from being able to commercialize our product candidates.

 

There is a risk that we are infringing the proprietary rights of third parties because numerous United States and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields that are the focus of our drug discovery, development, and manufacture and process synthesis efforts. Others might have been the first to make the inventions covered by each of our or our licensors’ pending patent applications and issued patents and/or might have been the first to file patent applications for these inventions. In addition, because patent applications can take many years to issue, there may be currently pending applications, unknown to us or our

 

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licensors, which may later result in issued patents that cover the production, manufacture, synthesis, commercialization, formulation or use of our product candidates. In addition, the production, manufacture, synthesis, commercialization, formulation or use of our product candidates may infringe existing patents of which we are not aware. Defending ourselves against third-party claims, including litigation in particular, would be costly and time consuming and would divert management’s attention from our business, which could lead to delays in our development or commercialization efforts. If third parties are successful in their claims, we might have to pay substantial damages or take other actions that are adverse to our business.

 

As a result of intellectual property infringement claims, or to avoid potential claims, we might:

 

·                  be prohibited from selling or licensing any product that we and/or any potential collaborators may develop unless the patent holder licenses the patent to us, which the patent holder is not required to do;

 

·                  be required to pay substantial royalties or other amounts, or grant a cross license to our patents to another patent holder; or

 

·                  be required to redesign the formulation of a product candidate so that it does not infringe, which may not be possible or could require substantial funds and time.

 

Risks Related to Regulatory Approval of Our Product Candidates

 

If we or any potential collaborators are not able to obtain required regulatory approvals, we or such collaborators will not be able to commercialize our product candidates, and our ability to generate revenue will be materially impaired.

 

Our product candidates and the activities associated with their development and commercialization are subject to comprehensive regulation by the FDA, other regulatory agencies in the United States and by comparable authorities in other countries. Failure to obtain regulatory approval for a product candidate will prevent us or any potential collaborator from commercializing the product candidate. We have not received regulatory approval to market any of our product candidates in any jurisdiction, and we do not expect to obtain FDA or any other regulatory approvals to market any of our product candidates in the next twelve months, if at all. The process of obtaining regulatory approvals is expensive, often takes many years, if approval is obtained at all, and can vary substantially based upon the type, complexity and novelty of the product candidates involved.

 

Changes in the regulatory approval policy during the development period, changes in or the enactment of additional regulations or statutes, or changes in regulatory review for each submitted product application may cause delays in the approval or rejection of an application. For example, on July 9, 2012, Congress enacted the Food and Drug Administration Safety and Innovation Act (FDASIA) that, among other things, reauthorizes the Prescription Drug User Fee Act, or PDUFA, for an additional five years.  FDASIA incorporates new FDA performance goals that effectively extend by two months the time period in which the FDA is expected to review and approve certain NDAs.  Although the FDA has stated that it expects to meet PDUFA’s updated timing goals, it has in the past provided its managers discretion to miss them due to heightened agency workload or understaffing in the review divisions; accordingly, it remains unclear whether and to what extent the FDA will adhere to PDUFA timing goals in the future. If the FDA were to miss a PDUFA timing goal for one of our product candidates, the development and commercialization of the product candidate could be delayed. In addition, the Food and Drug Administration Amendments Act of 2007, or FDAAA, which was enacted in September 2007, expands the FDA’s authority to regulate drugs throughout the product life cycle, including enhanced authority to require post-approval studies and clinical trials. Other proposals have been made to impose additional requirements on drug approvals, further expand post-approval requirements and restrict sales and promotional activities. This legislation, and the additional proposals if enacted, may make it more difficult or burdensome for us or our potential collaborators to obtain approval of our product candidates. Even if the FDA approves a product candidate, the approval may impose significant restrictions on the indicated uses, conditions for use, labeling, advertising, promotion, marketing and/or production of such product, and may impose ongoing requirements for post-approval studies, including additional research and development and clinical trials. The approval may also impose risk evaluation mitigation strategies, or REMS, on a product if the FDA believes there is a reason to monitor the safety of the drug in the market place. REMS may include requirements for additional training for health care professionals, safety communication efforts and limits on channels of distribution, among other things. The sponsor would be required to evaluate and monitor the various REMS activities and adjust them if need be. The FDA also may impose various civil or criminal

 

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sanctions for failure to comply with regulatory requirements, including withdrawal of product approval.

 

Furthermore, the approval procedure and the time required to obtain approval varies among countries and can involve additional testing beyond that required by the FDA. Approval by one regulatory authority does not ensure approval by regulatory authorities in other jurisdictions.

 

The FDA has substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other studies. For example, in October 2009, we received a Complete Response Letter from the FDA regarding our NDA for toremifene 80 mg to reduce fractures in men with prostate cancer on ADT notifying us that the FDA would not approve our NDA as a result of certain clinical deficiencies identified in the Complete Response Letter. We have since discontinued our toremifene 80 mg development program, as well as our other toremifene-based products and terminated our license and supply agreement with Orion for toremifene products. While we have met with the FDA to discuss the development program and required endpoints to obtain approval of enobosarm, there can be no assurance that the FDA will ultimately determine that data from our current pivotal Phase III clinical trials of enobosarm will be sufficient for approval of this product candidate. Additionally, there can be no assurance that the FDA will determine that the data from our ongoing clinical trial or future clinical trials of GTx-758 will be sufficient for approval of this product candidate in any indication.  For example, we may observe an unacceptable incidence of adverse events in our ongoing, planned or potential clinical trials of enobosarm or GTx-758, which could require us to abandon the development of the affected product candidate.

 

In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit, or prevent regulatory approval of a product candidate.  Even if we submit an application to the FDA for marketing approval of a product candidate, it may not result in marketing approval from the FDA.

 

We do not expect to receive regulatory approval for the commercial sale of any of our product candidates that are in development in the next twelve months, if at all. The inability to obtain FDA approval or approval from comparable authorities in other countries for our product candidates would prevent us or any potential collaborators from commercializing these product candidates in the United States or other countries. See the section entitled “Business — Government Regulation” under Part 1, Item 1 of our Annual Report on Form 10-K, filed with the SEC on March 5, 2013, for additional information regarding risks associated with marketing approval, as well as risks related to potential post-approval requirements.

 

The “fast track” designation for development of any of our product candidates may not lead to a faster development or regulatory review or approval process and it does not increase the likelihood the product candidate will receive regulatory approval.

 

If a product candidate is intended for the treatment of a serious or life-threatening condition and the product candidate demonstrates the potential to address unmet medical needs for this condition, the drug sponsor may apply for FDA “fast track” designation for a particular indication.  Marketing applications filed by sponsors of product candidates in the fast track process may qualify for priority review under the policies and procedures offered by the FDA, but the fast track designation does not assure any such review. Although we have obtained a fast track designation from the FDA for enobosarm for the prevention and treatment of muscle wasting in patients with advanced non-small cell lung cancer, receipt of fast track designation may not result in a faster development process, review or approval compared to drugs considered for approval under conventional FDA procedures. In addition, the FDA may withdraw our fast track designation at any time. If we lose our fast track designation, the approval process may be delayed. In addition, our fast track designation does not guarantee that we will be able to take advantage of the expedited review procedures and does not increase the likelihood that enobosarm will receive any regulatory approvals.

 

Risks Related to Commercialization

 

The commercial success of any products that we and/or any potential collaborators may develop will depend upon the market and the degree of market acceptance among physicians, patients, health care payors and the medical community.

 

Any products that we and/or any potential collaborators may develop may not gain market acceptance

 

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among physicians, patients, health care payors and the medical community. If these products do not achieve an adequate level of acceptance, we may not generate material product revenues or receive royalties to the extent we currently anticipate, and we may not become profitable. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including:

 

·                  efficacy and safety results in clinical trials;

 

·                  the prevalence and severity of any side effects;

 

·                  potential advantages over alternative treatments;

 

·                  whether the products we commercialize remain a preferred course of treatment;

 

·                  the ability to offer our product candidates for sale at competitive prices;

 

·                  relative convenience and ease of administration;

 

·                  the strength of marketing and distribution support; and

 

·                  sufficient third-party coverage or reimbursement.

 

If we are unable to establish sales and marketing capabilities or establish and maintain agreements with third parties to market and sell our product candidates, we may be unable to generate product revenue from such candidates.

 

We have limited experience as a company in the sales, marketing and distribution of pharmaceutical products.  In the event one of our product candidates is approved, we will need to establish sales and marketing capabilities or establish and maintain agreements with third parties to market and sell our product candidates. We may be unable to build our own sales and marketing capabilities, and there are risks involved with entering into arrangements with third parties to perform these services, which could delay the commercialization of any of our product candidates if approved for commercial sale. In addition, to the extent that we enter into arrangements with third parties to perform sales, marketing and distribution services, our product revenues are likely to be lower than if we market and sell any products that we develop ourselves.

 

If we and/or any potential collaborators are unable to obtain reimbursement or experience a reduction in reimbursement from third-party payors for products we sell, our revenues and prospects for profitability will suffer.

 

Sales of products developed by us and/or any potential collaborators are dependent on the availability and extent of reimbursement from third-party payors. Changes in the reimbursement policies of these third-party payors that reduce reimbursements for any products that we and/or any potential collaborators may develop and sell could negatively impact our future operating and financial results.

 

Medicare coverage and reimbursement of prescription drugs exists under Medicare Part D for oral drug products capable of self-administration by patients.  Our oral drug product candidates would likely be covered by Medicare Part D (if covered by Medicare at all).  In March 2010, the United States Congress enacted the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act. This health care reform legislation will increase the number of individuals who receive health insurance coverage and will close a gap in drug coverage under Medicare Part D. The legislation, however, also implemented cost containment and other measures that could adversely affect revenues from sales of product candidates, including an increase in drug rebates manufacturers must pay under Medicaid for brand name prescription drugs and extension of these rebates to Medicaid managed care.

 

Pharmaceutical manufacturers and importers of brand name prescription drugs are assessed a fee based on our proportionate share of sales of brand name prescription drugs to certain government programs, including Medicare and Medicaid, made in the preceding year if such sales exceed a defined threshold.  Since 2011, manufacturers have been required to provide a 50% discount on brand name prescription drugs sold to beneficiaries who fall within a gap that exists in the Medicare Part D prescription drug program (commonly known as the “donut hole”).

 

The health care reform legislation has been subject to political and judicial challenge.  In 2012, the Supreme Court considered the constitutionality of certain provisions of the law.  The court upheld as constitutional the

 

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mandate for individuals to obtain health insurance but held that the provision allowing the federal government to withhold certain Medicaid funds to states that do not expand state Medicaid programs was unconstitutional.  The impact of the court’s ruling remains uncertain.  Political and judicial challenges to the law may continue in the wake of the court’s ruling.

 

Economic pressure on state budgets may result in states increasingly seeking to achieve budget savings through mechanisms that limit coverage or payment for drugs.  State Medicaid programs are increasingly requesting manufacturers to pay supplemental rebates and requiring prior authorization for use of drugs where supplemental rebates are not provided.  Private health insurers and managed care plans are likely to continue challenging the prices charged for medical products and services, and many of these third-party payors may limit reimbursement for newly-approved health care products. In particular, third-party payors may limit the indications for which they will reimburse patients who use any products that we and/or any potential collaborators may develop or sell. These cost-control initiatives could decrease the price we might establish for products that we or any potential collaborators may develop or sell, which would result in lower product revenues or royalties payable to us.

 

Similar cost containment initiatives exist in countries outside of the United States, particularly in the countries of the European Union, where the pricing of prescription pharmaceuticals is subject to governmental control. In these countries, pricing negotiations with governmental authorities can extend well beyond the receipt of regulatory marketing approval for a product and may require us or any potential collaborators to conduct a clinical trial that compares the cost effectiveness of our product candidates or products to other available therapies. The conduct of such a clinical trial could be expensive and result in delays in our or a potential collaborators’ commercialization efforts. Third-party payors are challenging the prices charged for medical products and services, and many third-party payors limit reimbursement for newly-approved health care products. Recently budgetary pressures in many European Union countries are also causing governments to consider or implement various cost-containment measures, such as price freezes, increased price cuts and rebates.  If budget pressures continue, governments may implement additional cost containment measures.  Cost-control initiatives could decrease the price we might establish for products that we or any potential collaborators may develop or sell, which would result in lower product revenues or royalties payable to us.

 

Another development that could affect the pricing of drugs would be if the Secretary of Health and Human Services allowed drug reimportation into the United States. The Medicare Prescription Drug, Improvement and Modernization Act of 2003 gives discretion to the Secretary of Health and Human Services to allow drug reimportation into the United States under some circumstances from foreign countries, including from countries where the drugs are sold at a lower price than in the United States. If the circumstances were met and the Secretary exercised the discretion to allow for the direct reimportation of drugs, it could decrease the price we or any potential collaborators receive for any products that we and/or any potential collaborators may develop, negatively affecting our revenues and prospects for profitability.

 

Health care reform measures could hinder or prevent our product candidates’ commercial success.

 

Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting health care reform, as evidenced by the enactment in the United States of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act in 2010. Federal and state legislatures within the United States and foreign governments will likely continue to consider changes to existing health care legislation. These changes adopted by governments may adversely impact our business by lowering the price of health care products in the United States and elsewhere.

 

We operate in a highly regulated industry and new laws, regulations or judicial decisions, or new interpretations of existing laws, regulations or decisions, related to health care availability, method of delivery or payment for health care products and services, or sales, marketing and pricing practices could negatively impact our business, operations and financial condition.

 

If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of any products that we may develop.

 

We face an inherent risk of product liability exposure related to our prior commercial sales of FARESTON® and the testing of our product candidates in human clinical trials, and we will face an even greater risk if we commercially sell any product that we may develop. If we cannot successfully defend ourselves against claims that our product candidates or products caused injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

 

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·                  decreased demand for any product candidates or products;

 

·                  injury to our reputation;

 

·                  withdrawal of clinical trial participants;

 

·                  costs to defend the related litigation;

 

·                  substantial monetary awards to trial participants or patients;

 

·                  loss of revenue; and

 

·                  the inability to commercialize any products for which we obtain or hold marketing approvals.

 

We have product liability insurance that covers our clinical trials and any commercial products up to a $30 million annual aggregate limit. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost, and we may not be able to obtain insurance coverage that will be adequate to satisfy any liability that may arise.

 

If our competitors are better able to develop and market products than any products that we and/or any potential collaborators may develop, our commercial opportunity will be reduced or eliminated.*

 

We face competition from commercial pharmaceutical and biotechnology enterprises, as well as from academic institutions, government agencies and private and public research institutions. Our commercial opportunities will be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer side effects or are less expensive than any products that we and/or any potential collaborators may develop. Competition could result in reduced sales and pricing pressure on our product candidates, if approved, which in turn would reduce our ability to generate meaningful revenue and have a negative impact on our results of operations. In addition, significant delays in the development of our product candidates could allow our competitors to bring products to market before us and impair any ability to commercialize our product candidates.

 

Various products are currently marketed or used off-label for some of the diseases and conditions that we are targeting in our pipeline, and a number of companies are or may be developing new treatments. These product uses, as well as promotional efforts by competitors and/or clinical trial results of competitive products, could significantly diminish any ability to market and sell any products that we and/or any potential collaborators may develop.

 

With respect to our SARM program, there are other SARM product candidates in development that may compete with enobosarm and any future SARM product candidates, if approved for commercial sale, including SARMs in development from Ligand Pharmaceuticals Inc. and GlaxoSmithKline plc.  Pfizer Inc., Eli Lilly and Company and Amgen Inc. have myostatin inhibitors in development that may compete with enobosarm if approved for commercial sale. In addition, Cytokinetics, Inc. is developing a troponin activator with a muscle specific mechanism in Phase II studies, with a focus on neurological muscle diseases (amyotrophic lateral sclerosis and myasthenia gravis) and Novartis AG is developing a human monoclonal antibody for various muscle indications.  Moreover, there are other categories of drugs in development, including ghrelin receptor agonists, growth hormone, secretagogues, inflammatory modulators and other agents, that may have some muscle activity.  Helsinn Group is developing anamorelin, a ghrelin receptor agonist, in Phase III clinical trials for treatment of cancer cachexia in patients with non-small cell lung cancer.  Appetite stimulants such as Megace® (megestrol acetate) and dronabinol are used off-label for the treatment of weight loss and the treatment of loss of appetite in patients with cancer.

 

We are developing GTx-758 for secondary hormonal therapy in men with metastatic CRPC, and, potentially, as a primary treatment for advanced prostate cancer used in combination with androgen deprivation therapy.  There are various products approved or under clinical development to treat men with advanced prostate cancer who have metastatic CRPC which may compete with GTx-758.  Dendreon Corporation markets and sells Provenge®, an autologous cellular immunotherapy, for the treatment of asymptomatic or minimally symptomatic metastatic castrate resistant prostate cancer.  Medivation, Inc. has received approval for Xtandi®, an oral androgen receptor antagonist, for the treatment of metastatic castration-resistant prostate cancer in men previously treated with docetaxel. Medivation continues to develop Xtandi® for men with metastatic CRPC prior to receiving chemotherapy.  Zytiga®, sold by Johnson & Johnson, has been approved for the treatment of metastatic CRPC prior in patients who have received prior chemotherapy and recently received approval for the treatment of metastatic castrate resistant prostate

 

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cancer prior to chemotherapy.  Millennium: The Takeda Oncology Company is developing TAK-700 for the treatment of men with metastatic castrate resistant prostate cancer prior to chemotherapy and post docetaxel.  GTx-758 is being developed as a treatment for this same patient population prior to the initiation of chemotherapy.  Aragon Pharmaceuticals has developed a second generation anti-androgen (ARN-509) that is currently being evaluated in Phase II studies in men with progressive, advanced prostate cancer.

 

Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies and technology licenses complementary to our programs or advantageous to our business.

 

Risks Related to Employees and Growth

 

If we fail to attract and keep senior management and key scientific personnel, we may be unable to successfully develop or commercialize our product candidates.

 

Our success depends on our continued ability to attract, retain and motivate highly qualified management, clinical and scientific personnel and on our ability to develop and maintain important relationships with leading academic institutions, clinicians and scientists. If we are not able to attract and keep senior management and key scientific personnel, particularly Dr. Mitchell S. Steiner, we may not be able to successfully develop or commercialize our product candidates. All of our employees are at-will employees and can terminate their employment at any time. We do not carry “key person” insurance covering members of senior management, other than $22.5 million of insurance covering Dr. Steiner.

 

In December 2009, we announced a reduction of approximately 26% of our workforce in order to reduce our operating expenses in connection with the receipt of the Complete Response Letter regarding our NDA for toremifene 80 mg.  We also announced a reduction of approximately 15% of our workforce in June 2011 in connection with our decision to discontinue the development of toremifene 80 mg and toremifene 20 mg. These and any future workforce reductions may negatively affect our ability to retain or attract talented employees.

 

We will need to hire additional employees in order to commercialize our product candidates in the future. Any inability to manage future growth could harm our ability to commercialize our product candidates, increase our costs and adversely impact our ability to compete effectively.

 

In order to commercialize our product candidates in the future, we may need to hire experienced sales and marketing personnel to sell and market those product candidates we decide to commercialize, and we will need to expand the number of our managerial, operational, financial and other employees to support commercialization. Competition exists for qualified personnel in the biotechnology field.

 

Future growth will impose significant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate additional employees. Our future financial performance and our ability to commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively.

 

Risks Related to Our Common Stock

 

Market volatility may cause our stock price and the value of your investment to decline.

 

The market prices for securities of biotechnology companies in general have been highly volatile and may continue to be so in the future. The following factors, in addition to other risk factors described in this section, may have a significant impact on the market price of our common stock:

 

·                  delays in the initiation, enrollment or completion of our ongoing clinical trials of enobosarm and GTx-758, or negative, inconclusive or mixed results reported in any of our ongoing clinical trials of

 

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enobosarm and GTx-758;

 

·                  reports of unacceptable incidences of adverse events observed in any of our ongoing clinical trials of enobosarm and GTx-758;

 

·                  our ability to enter into new collaborative arrangements with respect to our product candidates;

 

·                  the terms and timing of any future collaborative, licensing or other arrangements that we may establish;

 

·                  our ability to raise additional capital to carry through with our clinical development plans and current and future operations and the terms of any related financing arrangements;

 

·                  the timing of achievement of, or failure to achieve, our and any potential collaborators’ clinical, regulatory and other milestones, such as the commencement of clinical development, the completion of a clinical trial or the receipt of regulatory approval;

 

·                  announcement of FDA approval or non-approval of our product candidates or delays in or adverse events during the FDA review process;

 

·                  actions taken by regulatory agencies with respect to our product candidates or products, our clinical trials or our sales and marketing activities, including regulatory actions requiring or leading to restrictions, limitations and/or warnings in the label of an approved product candidate;

 

·                  the commercial success of any product approved by the FDA or its foreign counterparts;

 

·                  introductions or announcements of technological innovations or new products by us, our potential collaborators, or our competitors, and the timing of these introductions or announcements;

 

·                  market conditions for equity investments in general, or the biotechnology or pharmaceutical industries in particular;

 

·                  regulatory developments in the United States and foreign countries;

 

·                  changes in the structure or reimbursement policies of health care payment systems;

 

·                  any intellectual property infringement lawsuit involving us;

 

·                  actual or anticipated fluctuations in our results of operations;

 

·                  changes in financial estimates or recommendations by securities analysts;

 

·                  hedging or arbitrage trading activity that may develop regarding our common stock;

 

·                  sales of large blocks of our common stock;

 

·                  sales of our common stock by our executive officers, directors and significant stockholders;

 

·                  changes in accounting principles; and

 

·                  the loss of any of our key scientific or management personnel.

 

The stock markets in general, and the markets for biotechnology stocks in particular, have experienced significant volatility that has often been unrelated to the operating performance of particular companies. The financial markets continue to face significant uncertainty, resulting in a decline in investor confidence and concerns about the proper functioning of the securities markets, which decline in general investor confidence has resulted in depressed stock prices for many companies notwithstanding the lack of a fundamental change in their underlying business models or prospects. These broad market fluctuations may adversely affect the trading price of our common stock.

 

In the past, class action litigation has often been instituted against companies whose securities have experienced periods of volatility in market price. Any such litigation brought against us could result in substantial costs, which would hurt our financial condition and results of operations and divert management’s attention and resources, which could result in delays of our clinical trials or commercialization efforts.

 

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Our executive officers, directors and largest stockholders have the ability to control all matters submitted to stockholders for approval.*

 

As of March 31, 2013, our executive officers, directors and holders of 5% or more of our outstanding common stock beneficially owned approximately 63% of our outstanding common stock, and our executive officers and directors alone beneficially owned approximately 38% of our outstanding common stock. As a result, these stockholders, acting together, may or will have the ability to control all matters requiring approval by our stockholders, including the election of directors and the approval of mergers or other business combination transactions. The interests of this group of stockholders may not always coincide with our interests or the interests of other stockholders.

 

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

 

Provisions in our certificate of incorporation and our bylaws may delay or prevent an acquisition of us or a change in our management. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our Board of Directors. Because our Board of Directors is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our stockholders to replace current members of our management team. These provisions include:

 

·                a classified Board of Directors;

 

·                a prohibition on actions by our stockholders by written consent;

 

·                the ability of our Board of Directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our Board of Directors; and

 

·                limitations on the removal of directors.

 

Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. Finally, these provisions establish advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted upon at stockholder meetings. These provisions would apply even if the offer may be considered beneficial by some stockholders.

 

If there are substantial sales of our common stock, the market price of our common stock could drop substantially, even if our business is doing well.*

 

For the 12-month period ended March 31, 2013, the average daily trading volume of our common stock on The NASDAQ Global Market was 148,675 shares. As a result, future sales of a substantial number of shares of our common stock in the public market, or the perception that such sales may occur, could adversely affect the then-prevailing market price of our common stock. As of March 31, 2013, we had 62,893,791 shares of common stock outstanding.

 

Moreover, J.R. Hyde, III, our largest stockholder, and certain of his affiliates, have rights, subject to some conditions, to require us to file registration statements covering the approximately 7.9 million shares of common stock held in the aggregate which are subject to registration rights or to include these shares in registration statements that we may file for ourselves or other stockholders. If Mr. Hyde or his affiliates or any of our other significant stockholders were to sell large blocks of shares in a short period of time, the market price of our common stock could drop substantially.

 

ITEM 6.                                                EXHIBITS

 

The exhibits listed on the accompanying Exhibit Index are filed or incorporated by reference (as stated therein) as part of this Quarterly Report on Form 10-Q.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

GTx, Inc.

 

 

 

Date: May 6, 2013

By:

/s/ Mitchell S. Steiner

 

 

Mitchell S. Steiner, Chief Executive Officer

 

 

and Vice-Chairman of the Board of Directors

 

 

(Principal Executive Officer)

 

 

 

 

 

 

Date: May 6, 2013

By:

/s/ Mark E. Mosteller

 

 

Mark E. Mosteller, Vice President

 

 

and Chief Financial Officer

 

 

(Principal Financial and Accounting Officer)

 

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EXHIBIT INDEX

 

Exhibit

 

 

 

Incorporation By Reference

Number

 

Exhibit Description

 

Form

 

SEC File No.

 

Exhibit

 

Filing Date

 

 

 

 

 

 

 

 

 

 

 

2.1

 

Asset Purchase Agreement dated as of September 28, 2012 between the Registrant and Strakan International S.à r.l.

 

8-K

 

000-50549

 

2.1

 

10/03/2012

 

 

 

 

 

 

 

 

 

 

 

3.1

 

Restated Certificate of Incorporation of GTx, Inc.

 

S-3

 

333-127175

 

4.1

 

08/04/2005

 

 

 

 

 

 

 

 

 

 

 

3.2

 

Certificate of Amendment of Restated Certificate of Incorporation of GTx, Inc.

 

8-K

 

000-50549

 

3.2

 

05/06/2011

 

 

 

 

 

 

 

 

 

 

 

3.3

 

Amended and Restated Bylaws of GTx, Inc.

 

8-K

 

000-50549

 

3.2

 

07/26/2007

 

 

 

 

 

 

 

 

 

 

 

4.1

 

Reference is made to Exhibits 3.1, 3.2 and 3.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.2

 

Specimen of Common Stock Certificate

 

S-1

 

333-109700

 

4.2

 

12/22/2003

 

 

 

 

 

 

 

 

 

 

 

4.3

 

Amended and Restated Registration Rights Agreement between Registrant and Oracle Partners, L.P. dated August 7, 2003

 

S-1

 

333-109700

 

4.3

 

10/15/2003

 

 

 

 

 

 

 

 

 

 

 

4.4

 

Amended and Restated Registration Rights Agreement between Registrant and J. R. Hyde, III dated August 7, 2003

 

S-1

 

333-109700

 

4.4

 

10/15/2003

 

 

 

 

 

 

 

 

 

 

 

4.5

 

Consent, Waiver and Amendment between the Registrant and Oracle Partners, L.P., Oracle Investment Management, Inc. and Oracle Institutional Partners, L.P. dated November 29, 2007

 

S-3

 

333-148321

 

4.5

 

12/26/2007

 

 

 

 

 

 

 

 

 

 

 

4.6

 

Consent, Waiver and Amendment between Registrant and J. R. Hyde, III and Pittco Associates, L.P. dated December 3, 2007

 

S-3

 

333-148321

 

4.6

 

12/26/2007

 

 

 

 

 

 

 

 

 

 

 

10.1

 

Amended and Restated Employment Agreement dated February 14, 2013, between Registrant and Mitchell S. Steiner, M.D.

 

10-K

 

000-50549

 

10.19

 

03/05/2013

 

 

 

 

 

 

 

 

 

 

 

10.2

 

Amended and Restated Employment Agreement dated February 14, 2013, between Registrant and Marc S. Hanover

 

10-K

 

000-50549

 

10.20

 

03/05/2013

 

 

 

 

 

 

 

 

 

 

 

10.3

 

Amended and Restated Employment Agreement dated February 14, 2013, between Registrant and Mark E. Mosteller

 

10-K

 

000-50549

 

10.21

 

03/05/2013

 

 

 

 

 

 

 

 

 

 

 

10.4

 

Amended and Restated Employment Agreement dated February 14, 2013, between Registrant and Henry P. Doggrell

 

10-K

 

000-50549

 

10.22

 

03/05/2013

 

 

 

 

 

 

 

 

 

 

 

10.5

 

Amended and Restated Employment Agreement dated February 14, 2013 between Registrant and James T. Dalton

 

10-K

 

000-50549

 

10.23

 

03/05/2013

 

 

 

 

 

 

 

 

 

 

 

10.6

 

2013 Compensation Information for Registrant’s Executive Officers

 

10-K

 

000-50549

 

10.26

 

03/05/2013

 

 

 

 

 

 

 

 

 

 

 

10.7

 

GTx, Inc. Directors’ Deferred Compensation Plan, as amended and restated effective February 14, 2013

 

10-K

 

000-50549

 

10.28

 

03/05/2013

 

 

 

 

 

 

 

 

 

 

 

10.8

 

Non-Employee Director Compensation Policy of GTx, Inc., effective February 14, 2013

 

10-K

 

000-50549

 

10.30

 

03/05/2013

 

 

 

 

 

 

 

 

 

 

 

31.1+

 

Certification of Chief Executive Officer, as required by Rule 13a-14(a) or Rule 15d-14(a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31.2+

 

Certification of Chief Financial Officer, as required by Rule 13a-14(a) or Rule 15d-14(a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32.1+

 

Certification of Chief Executive Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350)(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32.2+

 

Certification of Chief Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350)(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101.INS+

 

XBRL Instance Document(2)

 

 

 

 

 

 

 

 

 

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101.SCH+

 

XBRL Taxonomy Extension Schema Document(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101.CAL+

 

XBRL Taxonomy Extension Calculation Linkbase Document(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101.DEF+

 

XBRL Taxonomy Extension Definition Linkbase Document(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101.LAB+

 

XBRL Taxonomy Extension Labels Linkbase Document(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101.PRE+

 

XBRL Taxonomy Extension Presentation Linkbase Document(2)

 

 

 

 

 

 

 

 

 


+                 Filed herewith

 

(1)      This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

 

(2)         Pursuant to applicable securities laws and regulations, the Registrant is deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and is not subject to liability under any anti-fraud provisions of the federal securities laws as long as the Registrant has made a good faith attempt to comply with the submission requirements and promptly amends the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. These interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections.

 

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EX-31.1 2 a13-9081_1ex31d1.htm EX-31.1

EXHIBIT 31.1

 

CHIEF EXECUTIVE OFFICER CERTIFICATION

 

I, Mitchell S. Steiner, certify that:

 

1.              I have reviewed this Quarterly Report on Form 10-Q of GTx, Inc.;

 

2.              Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.              Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.              The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.              The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 6, 2013

 

 

 

/s/ Mitchell S. Steiner

 

Mitchell S. Steiner, M.D., F.A.C.S.

 

Chief Executive Officer and

 

Vice-Chairman of the Board of Directors

 

 


EX-31.2 3 a13-9081_1ex31d2.htm EX-31.2

EXHIBIT 31.2

 

CHIEF FINANCIAL OFFICER CERTIFICATION

 

I, Mark E. Mosteller, certify that:

 

1.              I have reviewed this Quarterly Report on Form 10-Q of GTx, Inc.;

 

2.              Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.              Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.              The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.              The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 6, 2013

 

 

 

/s/ Mark E. Mosteller

 

Mark E. Mosteller, CPA

 

Vice President and Chief Financial Officer

 

 


EX-32.1 4 a13-9081_1ex32d1.htm EX-32.1

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

18 U. S. C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of GTx, Inc. (the “Company”) on Form 10-Q for the three months ended March 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mitchell S. Steiner, Chief Executive Officer of the Company certify, pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

 

1.              The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.              The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: May 6, 2013

 

/s/ Mitchell S. Steiner

 

Mitchell S. Steiner, M.D., F.A.C.S.

 

Chief Executive Officer and

 

Vice-Chairman of the Board of Directors

 

 

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934 (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

 


EX-32.2 5 a13-9081_1ex32d2.htm EX-32.2

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO

18 U. S. C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of GTx, Inc. (the “Company”) on Form 10-Q for the three months ended March 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark E. Mosteller, Chief Financial Officer of the Company certify, pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

 

1.              The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.              The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: May 6, 2013

 

/s/ Mark E. Mosteller

 

Mark E. Mosteller, CPA

 

Vice President and Chief Financial Officer

 

 

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934 (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

 


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Deferred Revenue Equity Premium Deferred revenue related to equity premium Represents deferred revenue related to equity premium that represents the difference between the purchase price and the closing price of the company's common stock on the date the stock was purchased. Represents the maximum statutory amount of pre-tax compensation an employee, equal to or older than the specified age in the current calendar year, can contribute annually to the defined contribution plan. Defined Contribution Plan, Maximum Annual Contribution Per Employee who is Equal to and Older than Specified Age in Current Calendar Year Maximum annual contribution per employee who is equal to specified age and older in the current calendar year Defined Contribution Plan, Maximum Annual Contribution Per Employee who is under Specified Age in Current Calendar Year Maximum annual contribution per employee who is under the specified age in the current calendar year Represents the maximum statutory amount of pre-tax compensation an employee, under the defined specified age in the current calendar year, can contribute annually to the defined contribution plan. Defined Contribution Plan, Specified Age for Current Calendar Year to Determine Employee Contribution Age specified for current calendar year to determine employee's contribution Represents the age specified under the plan for the current calendar year to determine the maximum allowable employee contribution to the plan. Directors Deferred Compensation Directors' deferred compensation Value of stock deferred under the Company's Directors' Deferred Compensation Plan. Directors Deferred Compensation Plan Directors Deferred Compensation Plan Disclosure [Text Block] Directors' Deferred Compensation Plan The entire disclosure for the Directors' Deferred Compensation Plan. Disposal Group Including Discontinued Operation Accounts Receivable, Net Accounts receivable, net For the disposal group, including a component of the entity (discontinued operation), the aggregate of amounts due from customers or clients for goods or services that have been delivered or sold in the normal course of business. Disposal Group Including Discontinued Operation Prepaid Expenses and Other Assets Prepaid expenses and other assets For the disposal group, including a component of the entity (discontinued operation), the total of the amounts paid in advance for capitalized costs that will be expensed with the passage of time or the occurrence of a triggering event, and will be charged against earnings within one year or the normal operating cycle, if longer, and the aggregate carrying amount of assets, as of the balance sheet date, not otherwise specified. Current Fiscal Year End Date Disposal Group Including Discontinued Operations Accrued and Other Current Liabilities Accrued expenses and other current liabilities For the disposal group, the sum of the carrying value of the current portion of obligations incurred ad payable pertaining to costs that are statutory in nature, are incurred on contractual obligations, or accumulate over time and for which invoices have not yet been received or will not be rendered, and the aggregate carrying amount of other current liabilities not separately disclosed in the balance sheet. Document and Entity Information [Abstract] Employees [Member] Employees Represents information pertaining to employees of the entity. Exercise Price Range from Dollars 15.64 to 20.40 [Member] $15.64 - $20.40 Represents the range of exercise price of vested stock options from 15.64 dollars to 20.40 dollars. $2.65 - $4.20 Represents the range of exercise price from 2.65 dollars to 4.20 dollars. Exercise Price Range from Dollars 2.65 to 4.20 [Member] Exercise Price Range from Dollars 5.17 to 15.59 [Member] $5.17 - $15.59 Represents the range of exercise price of vested stock options from 5.17 dollars to 15.59 dollars. Exercise Price Range from Dollars 2.65 to 3.36 [Member] $2.65 - $3.36 Represents the range of exercise price of vested stock options from 2.65 dollars to 3.36 dollars. Exercise Price Range from Dollars 3.44 to 11.58 [Member] $3.44 - $11.58 Represents the range of exercise price from 3.44 dollars to 11.58 dollars. Exercise Price Range from Dollars 12.15 to 20.40 [Member] $12.15 - $20.40 Represents the range of exercise price of vested stock options from 12.15 dollars to 20.40 dollars. FARESTON, a product approved for the treatment of metastatic breast cancer in postmenopausal women. Fareston [Member] FARESTON Financial Advisory Fee Related to Discontinued Operations Financial advisory fee Financial advisory fee related to discontinued operations. Document Period End Date Former Merck Collaboration and License Agreement [Member] Former Merck Collaboration Agreement Represents information pertaining to the former Merck Collaboration and License Agreement. Intangible and Other Assets Sum of the carrying amounts of all intangible assets, net of accumulated amortization and impairment, if any, and the aggregate carrying among of other noncurrent assets not separately disclosed in the balance sheet. Intangible and other assets, net Former Ipsen Collaboration and License Agreement [Member] Former Ipsen Collaboration Agreement Represents information pertaining to the former Ipsen Collaboration and License Agreement. Issuance of Common Stock under Deferred Compensation Arrangements Shares Shares Issuance of common stock under deferred compensation arrangements (in shares) Number of shares issued under the Company's Directors' Deferred Compensation Plan. Laboratory and Office Equipment [Member] Laboratory and office equipment Represents tangible personal property used in an office setting and in laboratories. License Fee and Expense Reimbursement License fee and expense reimbursement License and expense reimbursement received under collaborative arrangements. License Fees License fee Represents the amount paid towards license fees by the entity. Merck and Co Inc [Member] Merck Represents information pertaining to Merck and Co., Inc. Net Assets or Liabilities of Disposal Group Including Discontinued Operations Net assets (liabilities) For the disposal group, including a component of the entity (discontinued operation), carrying value of total assets less total liabilities. Entity [Domain] Operating Income Related to Discontinued Operations [Table Text Block] Operating income related to discontinued operations Tabular disclosure of operating income reported in discontinued operations. Operating Loss Carryforwards Deductions Related to Exercise of Stock Options, Domestic and State Deductions related to the exercise of stock options Tax deductions related to stock option exercises that represent an excess tax benefit and have not been included in the gross deferred tax asset reported for net federal and state operating loss carryforwards. Former Orion Corporation License and Supply Agreement [Member] Former Orion Corporation License and Supply Agreement Represents the former license and supply agreement with Orion Corporation to develop and commercialize toremifene-based products. Other Expense (Income) Net [Policy Text Block] Other Income, net Disclosure of the components of Other (Expense) Income, Net. Other Transaction Expenses Related to Discontinued Operations Other transaction expenses Other transaction expenses related to discontinued operations. Patent Costs [Policy Text Block] Patent Costs Disclosure of accounting policy for patent costs, which includes legal expenses. Represents the period over which cost reimbursements for research and development activities are received by the entity. Period for Receipt of Reimbursement Revenue Period over which cost reimbursements for research and development activities are received by the entity Period of Option Granted to Underwriter to Purchase Additional Shares to Cover over Allotments Period of option granted to underwriter to purchase additional shares to cover over-allotments Represents the period of time the underwriter was granted an option by the entity to purchase additional shares of common stock for covering any over-allotments. Public Offering Underwriter [Member] Represents information pertaining to entities that serve as underwriters for public offerings of stock. Underwriters Purchase Commitment [Abstract] Purchase Commitments 401(k) Plan Retirement Savings Plan Disclosure [Text Block] 401(k) Plan The entire disclosure for the retirement savings plan. Schedule of accrued expenses and other current liabilities Schedule of Accrued Expenses and Other Current Liabilities [Table Text Block] Tabular disclosure of the carrying value as of the balance sheet date of accrued expenses and other current liabilities. Tabular disclosure of future minimum lease payments as of the date of the latest balance sheet presented, in aggregate and for each of the five years succeeding fiscal years, for equipment financing and capital leases. Schedule of Future Minimum Lease Payments for Equipment Financing and Capital Leases [Table Text Block] Schedule of annual minimum payments under financing and capital lease arrangements Schedule of property and equipment, net Tabular disclosure of net property, plant and equipment as of the balance sheet date by asset class less accumulated depreciation. Schedule of Property, Plant and Equipment Components [Table Text Block] Number of terminated non-executive officers Represents the number of non-executive officers terminated as part of a workforce reduction for whom stock options were modified upon termination. Share Based Compensation Arrangement by Share Based Payment Award option Modification Number of Employees Affected Share Based Compensation Arrangement by Share Based Payment Award, Period Available to Exercise Vested Options after End of Employment Period available to exercise all vested options after end of employment relationship Represents the period available to exercise all vested options after end of employment relationship, except in the case of voluntary retirement, disability or death. Share Based Compensation Arrangement by Share Based Payment Award, Reversal of Previously Recognized Share Based Compensation Expense for Nonvested Stock Options Reversal of previously recognized share-based compensation expense for non-vested stock options canceled in conjunction with the total workforce reduction Represents the reversal of previously recognized share-based compensation expense for non-vested stock options cancelled in conjunction with the total workforce reduction. Term of option from the grant date Share Based Compensation Arrangements by Share Based Payment Award, options Expiration Term Option term The period of time from the grant date until the time at which the share-based option award expires. Shares for which purchase options are granted to underwriter to cover over-allotments Shares for Which Purchase Options are Granted to Underwriter to Cover over Allotments Represents the number of shares for which purchase options were granted to underwriter to cover any over-allotments. Short Term Investment [Policy Text Block] Short-term Investments Disclosure of accounting policy for short term investments in financial assets, including marketable securities (debt and equity securities with readily determinable fair values), investments accounted for under the equity method and cost method, securities borrowed and loaned, and repurchase and resale agreements. Tax credits Tax Credits Carryforwards [Abstract] Toremifene 20 Mg [Member] Toremifene 20 mg Represents information pertaining to toremifene 20 mg. Toremifene 80 mg Represents information pertaining to toremifene 80 mg. Toremifene 80 Mg [Member] Share-based compensation expense related to discontinued operations Represents the expense recognized during the period arising from equity-based compensation arrangements (for example, shares of stock, unit, stock options or other equity instruments) with employees, directors and certain consultants qualifying for treatment as employees reported in discontinued operations. Discontinued Operation Allocated Share Based Compensation Expense Tax Credit Carryforward Increase Amount Research and Development Research and development tax credit Represents the amount of research and development tax credit for the current period, available to reduce future taxable income under enacted tax laws. Tax Credit Carryforward Increase (Decrease) Amount Research and Development Decrease in research and development credit Represents a decrease in the research and development tax credit due to change in assumptions during the period. Deferred Tax Assets (Liabilities) Other Net Amount before allocation of valuation allowances of deferred tax assets attributable to deductible temporary differences, net of deferred tax liabilities attributable to taxable temporary differences, not separately disclosed. Other, net Deferred Tax Assets (Liabilities) Net before Allocation of Variance Allowance Total deferred tax assets, net Amount before allocation of valuation allowances of deferred tax assets attributable to deductible temporary differences, net of deferred tax liabilities attributable to taxable temporary differences. Proceeds from Divestiture of Businesses Net of Cash Expenses Proceeds from the sale of FARESTON, net of cash expenses The cash inflow during the period from the sale of a portion of the company's business less related cash expenses. Federal and State [Member] Federal and state Tax departments of both the federal government and the state government entitled to levy and collect income taxes from the entity. Significant Accounting Policies Entity Well-known Seasoned Issuer Entity Voluntary Filers Entity Current Reporting Status Entity Filer Category Entity Public Float Entity Registrant Name Entity Central Index Key Entity Common Stock, Shares Outstanding FARESTON sale proceeds receivable Accounts and Other Receivables, Net, Current Document Fiscal Year Focus Document Fiscal Period Focus Legal Entity [Axis] Document Type Accounts receivable, net Accounts Receivable, Net, Current Accounts payable Accounts Payable, Current Less: accumulated depreciation Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment Additional paid-in capital Additional Paid in Capital, Common Stock Additional Paid-in Capital Additional Paid-in Capital [Member] Adjustments to reconcile net loss to net cash used in operating activities: Adjustments, Noncash Items, to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract] Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition Share-based compensation Total share-based compensation Allocated Share-based Compensation Expense Weighted average options outstanding to purchase shares of common stock excluded from calculation of diluted net loss per share Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount Current assets: Assets, Current [Abstract] ASSETS Assets [Abstract] Total assets Assets of Disposal Group, Including Discontinued Operation Total current assets Assets, Current Total assets Assets Basis of Accounting, Policy [Policy Text Block] Basis of Presentation Capital Leases, Future Minimum Payments Due in Two Years 2014 Capital Leases, Balance Sheet, Assets by Major Class, Net Property and equipment financed or acquired through capital lease Capital Leases, Future Minimum Payments Due Total Capital Leases, Lessee Balance Sheet, Assets by Major Class, Accumulated Depreciation Accumulated amortization Capital Leases, Future Minimum Payments Due, Next Twelve Months 2013 Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] Capital Leases Future Minimum Payments Due Capital Leases, Balance Sheet, Assets by Major Class, Net [Abstract] Capital leased assets disclosure Cash and cash equivalents Cash and Cash Equivalents, at Carrying Value Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period Cash and Cash Equivalents, Policy [Policy Text Block] Cash and Cash Equivalents Net decrease in cash and cash equivalents Cash and Cash Equivalents, Period Increase (Decrease) Collaboration and License Agreements disclosures Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] University of Tennessee Research Foundation License Agreement Collaborative Arrangement Disclosure [Text Block] Collaborative Arrangements and Non-collaborative Arrangement Transactions [Domain] Collaborative Arrangements and Non-collaborative Arrangements [Axis] Commitments and Contingencies Commitments and Contingencies Disclosure [Text Block] Commitments and Contingencies Commitments and contingencies Commitments and Contingencies. Common Stock Common Stock [Member] Common stock, shares outstanding Common Stock, Shares, Outstanding Common stock, shares outstanding Balances (in shares) Balances (in shares) Common stock, $0.001 par value: 120,000,000 shares authorized at both March 31, 2013 and December 31, 2012; 62,893,791 and 62,818,424 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively Common Stock, Value, Issued Common stock, shares issued Common Stock, Shares, Issued Common stock, par value (in dollars per share) Common Stock, Par or Stated Value Per Share Par value per share (in dollars per share) Common stock, shares authorized Common Stock, Shares Authorized Common stock shares authorized Comprehensive Income, Policy [Policy Text Block] Comprehensive (Loss) Income Concentration of Risk Concentration Risk, Credit Risk, Policy [Policy Text Block] Depreciation and amortization Deferred Tax Assets, Property, Plant and Equipment Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] Directors' Deferred Compensation Plan Shares of common stock credited to individual director stock accounts under the Directors' Deferred Compensation Plan Deferred Compensation Arrangement with Individual, Common Stock Reserved for Future Issuance Title of Individual [Axis] Share-based compensation expense related to deferred compensation arrangements for non-employee directors Deferred Compensation Arrangement with Individual, Compensation Expense Directors' deferred compensation Deferred revenue related to upfront license fee Deferred Revenue Deferred Tax Assets, Net Net deferred tax assets and liabilities Net deferred tax assets Deferred Tax Assets, Net, Classification [Abstract] Deferred income tax assets, net: Deferred Tax Assets, Deferred Income Deferred revenue Net federal and state operating loss carryforwards Deferred Tax Assets, Operating Loss Carryforwards Research and development credits Deferred Tax Assets, Tax Credit Carryforwards, Research Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Share-based Compensation Cost Share-based compensation Deferred Tax Assets, Operating Loss Carryforwards, Components [Abstract] Operating loss carryforwards Deferred Tax Assets, Valuation Allowance Valuation allowance Net deferred income tax liabilities Deferred Tax Liabilities, Net, Current Company's matching contribution to the plan Defined Contribution Plan, Cost Recognized Depreciation and amortization Depreciation, Depletion and Amortization Depreciation and amortization expense Depreciation and amortization expense Depreciation Non-employee Directors Director [Member] Share-Based Compensation Disclosure of Compensation Related Costs, Share-based Payments [Text Block] Share-Based Compensation Discontinued Operation, Tax Effect of Discontinued Operation Income tax expense Gain on sale of FARESTON Discontinued Operation, Gain (Loss) from Disposal of Discontinued Operation, before Income Tax Gain on sale of FARESTON Discontinued Operation, Income (Loss) from Discontinued Operation, before Income Tax Income from discontinued operations before income taxes Discontinued Operations, Policy [Policy Text Block] Discontinued Operations Discontinued Operations Product sales, net Disposal Group, Including Discontinued Operation, Revenue Operating income disclosures related to discontinued operations Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] FARESTON operating income Disposal Group, Including Discontinued Operation, Operating Income (Loss) Discontinued Operations Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] Disposal Group, Including Discontinued Operation, Unclassified Balance Sheet Disclosures [Abstract] Liabilities related to discontinued operations Assets and liabilities related to discontinued operations Operating expenses Disposal Group, Including Discontinued Operation, Operating Expense Accounts payable Disposal Group, Including Discontinued Operation, Accounts Payable Other long-term liabilities Disposal Group, Including Discontinued Operation, Other Noncurrent Liabilities Cost of product sales Disposal Group, Including Discontinued Operation, Costs of Goods Sold Disposal Groups, Including Discontinued Operations, Name [Domain] Inventory Disposal Group, Including Discontinued Operation, Inventory Domestic Tax Authority [Member] Federal Basic and Diluted Net (Loss) Income Per Share Earnings Per Share, Basic and Diluted, Other Disclosures [Abstract] Net loss per share (in dollars per share) Earnings Per Share, Basic and Diluted Basic and Diluted Net Loss Per Share Earnings Per Share [Text Block] Basic and Diluted Net (Loss) Income Per Share Earnings Per Share, Policy [Policy Text Block] Net (loss) income per share - basic and diluted: Basic and Diluted Net Loss Per Share Net loss per share - basic and diluted: Employee-related Liabilities, Current Employee compensation Weighted average expense recognition period related to non-vested options not yet recognized Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition Share-based compensation expense Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] Employee Service Share-based Compensation, Allocation of Recognized Period Costs, Report Line [Domain] Compensation cost related to non-vested options not yet recognized Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Stock Options Common and Preferred Stock Equity Component [Domain] Fair Value of Financial Instruments Fair Value of Financial Instruments, Policy [Policy Text Block] Financing [Domain] Financing [Axis] One-time up-front fee Finite-Lived License Agreements, Gross Finite-Lived Intangible Assets, Major Class Name [Domain] Intangible Assets, Net Finite-Lived Intangible Assets [Line Items] Finite-Lived Intangible Assets by Major Class [Axis] Intangible asset, net Finite-Lived Intangible Assets, Net Furniture and fixtures Furniture and Fixtures [Member] General and administrative expenses General and Administrative Expense General and administrative expenses General and Administrative Expense [Member] Short-term investments Held-to-maturity Securities, Current Impairment of intangible assets Impairment of Intangible Assets, Finite-lived Impairment charge Impairment of Long-Lived Assets Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block] Loss from operations before income taxes Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest (Loss) income from operations before income taxes CONDENSED STATEMENTS OF OPERATIONS Income Statement Location [Axis] Income Taxes Income Tax Disclosure [Text Block] Income Taxes Net income from discontinued operations (in dollars per share) Income (Loss) from Discontinued Operations, Net of Tax, Per Basic and Diluted Share Net income from discontinued operations (in dollars per share) Income Tax Authority [Axis] Net loss from continuing operations Income (Loss) from Continuing Operations Attributable to Parent Net (loss) income from continuing operations Income (Loss) from Continuing Operations, Per Basic and Diluted Share Net loss from continuing operations (in dollars per share) Discontinued Operations disclosures Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] Income Tax Authority [Domain] Income Statement Location [Domain] Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Table] Disposal Group Name [Axis] Income Tax Expense (Benefit) Income tax benefit Income Taxes Income Tax, Policy [Policy Text Block] Net income from discontinued operations Income (Loss) from Discontinued 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Improvements [Member] Total current liabilities Liabilities, Current Current liabilities: Liabilities, Current [Abstract] LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities and Equity [Abstract] Total liabilities and stockholders' equity Liabilities and Equity Upfront licensing fee received License and Services Revenue Contract termination fee Loss on Contract Termination Maximum Maximum [Member] Up to Minimum Minimum [Member] Cash flows from financing activities: Net Cash Provided by (Used in) Financing Activities [Abstract] Net cash provided by investing activities Net Cash Provided by (Used in) Investing Activities Net cash provided by financing activities Net Cash Provided by (Used in) Financing Activities Cash flows from investing activities: Net Cash Provided by (Used in) Investing Activities [Abstract] Cash flows from operating activities: Net Cash Provided by (Used in) Operating Activities [Abstract] Net loss Net Income (Loss) Attributable to Parent Net loss Net income (loss) Net cash used in operating activities Net Cash Provided by (Used in) Operating Activities Noninterest Expense Directors Fees Non-employee director fee expense Number of business segments Number of Operating Segments Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] Operating Lease Commitments Expenses: Operating Expenses [Abstract] Total expenses Operating Expenses Operating Loss Carryforwards [Table] Operating Loss Carryforwards Net operating loss carryforwards Loss from operations Operating Income (Loss) Loss from operations Operating Leases, Future Minimum Payments, Due in Three Years 2015 Operating Leases, Future Minimum Payments, Due in Two Years 2014 Operating Leases, Future Minimum Payments Due, Next Twelve Months 2013 Operating Loss Carryforwards [Line Items] Operating loss carryforwards Operating Leases, Future Minimum Payments Due Total Business and Basis of Presentation Business and Basis of Presentation Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block] Other income, net Other Nonoperating Income (Expense) Other long-term liabilities Other Liabilities, Noncurrent Other Nonoperating Income (Expense) [Abstract] Other (Expense) Income, Net Purchase of property and equipment Payments to Acquire Property, Plant, and Equipment Purchase of short-term investments, held to maturity Payments to Acquire Held-to-maturity Securities Preferred stock shares authorized Preferred Stock, Shares Authorized Par value per share (in dollars per share) Preferred Stock, Par or Stated Value Per Share Prepaid expenses and other current assets Prepaid Expense and Other Assets, Current Reclassification Reclassification, Policy [Policy Text Block] Private placement Private Placement [Member] Proceeds from the sale of rights and certain assets related to FARESTON Proceeds from Divestiture of Businesses Proceeds from issuance of common stock Proceeds from Issuance of Common Stock Net cash proceeds from public offering after deducting underwriting discounts and commissions and other offering expenses Common stock sold under the collaboration agreement Proceeds from Maturities, Prepayments and Calls of Held-to-maturity Securities Proceeds from maturities of short-term investments, held to maturity Proceeds from exercise of employee stock options Proceeds from Stock Options Exercised Estimated useful lives Property, Plant and Equipment, Useful Life Property, Plant and Equipment, Type [Domain] Property and Equipment, Net Property and Equipment Property, Plant and Equipment, Policy [Policy Text Block] Property and equipment, net Property, Plant and Equipment, Net Property and Equipment, Net Property and Equipment Property, Plant and Equipment [Line Items] Property and Equipment, gross Property, Plant and Equipment, Gross Schedule of estimated useful lives of property and equipment Property, Plant and Equipment [Table Text Block] Property, Plant and Equipment, Type [Axis] 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Deficit Retained Earnings [Member] FARESTON Revenue Recognition Revenue Recognition, Sales of Goods [Policy Text Block] Income from grants Revenue from Grants Collaboration Revenue Recognition Revenue Recognition, Multiple-deliverable Arrangements, Description [Policy Text Block] Revenues: Revenues [Abstract] Options Outstanding, Weighted Average Exercise Price (in dollars per share) Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Exercise Price Options Exercisable, Weighted Average Exercise Price (in dollars per share) Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Exercise Price Options exercisable, aggregate intrinsic value (in dollars) Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value Vested and expected to vest options, weighted average remaining contractual term Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term Weighted average expected life in years Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term Options exercisable, weighted average remaining contractual term Options outstanding, weighted average remaining contractual term Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term Options Outstanding, Weighted Average Remaining Contractual Life Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term Schedule of Capitalization, Equity [Table] Schedule of Capitalization, Equity [Line Items] Common Stock Summary of stock option transactions Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] Schedule of assumptions used to estimate fair value of options Schedule of Finite-Lived Intangible Assets [Table] Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] Schedule of annual minimum payments under operating lease arrangements Schedule of Quarterly Financial Information [Table Text Block] Summary of the quarterly results of operations Schedule of Deferred Tax Assets and Liabilities [Table Text Block] Schedule of principal components of the Company's net deferred income tax assets and liabilities Schedule of Collaborative Arrangements and Non-collaborative Arrangement Transactions [Table] Schedule of Deferred Compensation Arrangement with Individual, Share-based Payments [Table] Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs, by Report Line [Axis] Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table] Summary of share-based compensation expense Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block] Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block] Schedule of stock option activity by exercise price range Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table] Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Table] Schedule of Property, Plant and Equipment [Table] Share-based compensation Share-based Compensation. Weighted Average Exercise Price Per Share Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] Option vesting period Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period Share-based compensation Share-based Compensation Arrangement by Share-based Payment Award [Line Items] Share price (in dollars per share) Share Price Options granted (in dollars per share) Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price Options exercised (in dollars per share) Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price Options forfeited or expired (in dollars per share) Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price Risk-free interest rate 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allowance disclosure Weighted average shares outstanding: Weighted Average Number of Shares Outstanding, Diluted [Abstract] Weighted Average Number of Shares Outstanding, Basic and Diluted Basic and diluted (in shares) University of Tennessee Research Foundation License Agreement EX-101.PRE 11 gtxi-20130331_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT XML 12 report.css IDEA: XBRL DOCUMENT /* Updated 2009-11-04 */ /* v2.2.0.24 */ /* DefRef Styles */ ..report table.authRefData{ background-color: #def; border: 2px solid #2F4497; font-size: 1em; position: absolute; } ..report table.authRefData a { display: block; font-weight: bold; } ..report table.authRefData p { margin-top: 0px; } ..report table.authRefData .hide { background-color: #2F4497; padding: 1px 3px 0px 0px; text-align: right; } ..report table.authRefData .hide a:hover { background-color: #2F4497; } ..report table.authRefData .body { height: 150px; overflow: auto; width: 400px; } ..report table.authRefData 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Discontinued Operations
3 Months Ended
Mar. 31, 2013
Discontinued Operations  
Discontinued Operations

4.              Discontinued Operations

 

On September 28, 2012, the Company entered into the FARESTON® Purchase Agreement with ProStrakan pursuant to which the Company agreed to transfer, sell and assign to ProStrakan all of the Company’s rights to FARESTON® and certain assets related thereto.  Effective September 30, 2012, the Company completed the sale of FARESTON® pursuant to the FARESTON® Purchase Agreement for a total cash purchase price of $21,671, including payment for purchased inventory.  The Company accounted for FARESTON® as a discontinued operation.  The FARESTON® operating income of $1,335 for the three months ended March 31, 2012 was reported as “net income from discontinued operations” in the condensed statement of operations and consisted of net product sales of $1,829 reduced by cost of product sales of $274 and FARESTON® operating expenses of $220.  The Company remains liable for product returns related to sales of FARESTON® made by the Company prior to September 30, 2012.  At March 31, 2013 and December 31, 2012, the Company’s accrual for product returns, was $1,045 and $1,189, respectively.

 

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Basic and Diluted Net Loss Per Share
3 Months Ended
Mar. 31, 2013
Basic and Diluted Net Loss Per Share  
Basic and Diluted Net Loss Per Share

3.              Basic and Diluted Net Loss Per Share

 

Basic and diluted net loss per share attributable to common stockholders is calculated based on the weighted average number of common shares outstanding during the period.  Diluted net loss per share gives effect to the dilutive potential of common stock consisting of stock options.

 

Weighted average options outstanding to purchase shares of common stock of 6,680,423 and 5,933,153 for the three months ended March 31, 2013 and 2012, respectively, were excluded from the calculations of diluted loss per share as inclusion of the options would have had an anti-dilutive effect on the net loss per share for the periods.

 

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CONDENSED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Current assets:    
Cash and cash equivalents $ 36,136 $ 48,044
Short-term investments 6,085 8,045
Prepaid expenses and other current assets 1,375 726
Total current assets 43,596 56,815
Property and equipment, net 389 507
Intangible and other assets, net 713 452
Total assets 44,698 57,774
Current liabilities:    
Accounts payable 1,100 1,707
Accrued expenses and other current liabilities 7,049 7,788
Total current liabilities 8,149 9,495
Other long-term liabilities 488 578
Commitments and contingencies      
Stockholders' equity:    
Common stock, $0.001 par value: 120,000,000 shares authorized at both March 31, 2013 and December 31, 2012; 62,893,791 and 62,818,424 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively 63 63
Additional paid-in capital 461,829 460,887
Accumulated deficit (425,831) (413,249)
Total stockholders' equity 36,061 47,701
Total liabilities and stockholders' equity $ 44,698 $ 57,774

XML 18 R6.htm IDEA: XBRL DOCUMENT v2.4.0.6
Business and Basis of Presentation
3 Months Ended
Mar. 31, 2013
Business and Basis of Presentation  
Business and Basis of Presentation

1.              Business and Basis of Presentation

 

Business

 

GTx, Inc. (“GTx” or the “Company”), a Delaware corporation incorporated on September 24, 1997 and headquartered in Memphis, Tennessee, is a biopharmaceutical company dedicated to the discovery, development and commercialization of small molecules for the treatment of cancer, cancer supportive care, and other serious medical conditions.

 

The Company is developing selective androgen receptor modulators (“SARMs”), including enobosarm (GTx-024).  SARMs are a new class of drugs with the potential to prevent and treat muscle wasting in patients with cancer and other musculoskeletal wasting or muscle loss conditions, including chronic sarcopenia (age related muscle loss), as well as the potential to be used as a hormonal therapy for the treatment of advanced breast cancer.  The Company is conducting two fully enrolled pivotal Phase III clinical trials evaluating enobosarm 3mg for the prevention and treatment of muscle wasting in patients with advanced non-small cell lung cancer.  In April 2013, the Company announced that it is initiating a Phase II, open label study evaluating enobosarm 9mg for the treatment of androgen receptor positive and estrogen receptor positive metastatic breast cancer in women who have previously responded to hormonal therapy for the treatment of their advanced breast cancer.

 

Additionally, the Company is developing GTx-758 (Capesaris®), an oral nonsteroidal selective estrogen receptor alpha agonist, for secondary hormonal therapy in men with castration resistant prostate cancer, and, potentially, as a primary treatment for advanced prostate cancer used in combination with androgen deprivation therapy.  The Company initiated in the third quarter of 2012 a Phase II clinical trial to evaluate GTx-758 as secondary hormonal therapy in men with metastatic castration resistant prostate cancer.

 

Basis ofPresentation

 

The accompanying unaudited condensed financial statements reflect, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of GTx’s financial position, results of operations and cash flows for each period presented in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted from the accompanying condensed financial statements.  These interim condensed financial statements should be read in conjunction with the audited financial statements and related notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.  Operating results for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2013.

 

Use of Estimates

 

The preparation of condensed financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed financial statements, and the reported amounts of revenues and expenses during the reporting period.  Actual amounts and results could differ from those estimates.

 

Research and Development Expenses

 

Research and development expenses include, but are not limited to, the Company’s expenses for personnel, supplies, and facilities associated with research activities, screening and identification of product candidates, formulation and synthesis activities, manufacturing, preclinical studies, toxicology studies, clinical trials, regulatory and medical affairs activities, quality assurance activities and license fees.  The Company expenses these costs in the period in which they are incurred. The Company estimates its liabilities for research and development expenses in order to match the recognition of expenses to the period in which the actual services are received. As such, accrued liabilities related to third party research and development activities are recognized based upon the Company’s estimate of services received and degree of completion of the services in accordance with the specific third party contract

 

Cash, Cash Equivalents and Short-term Investments

 

The Company considers highly liquid investments with initial maturities of three months or less to be cash equivalents.

 

At March 31, 2013 and December 31, 2012, short-term investments consisted of Federal Deposit Insurance Corporation insured certificates of deposit with original maturities of greater than three months and less than one year.  As the Company has the positive intent and ability to hold the certificates of deposit until maturity, these investments have been classified as held to maturity investments and are stated at cost, which approximates fair value.  The Company considers these to be Level 2 investments as the fair values of these investments are determined using third-party pricing sources, which generally utilize observable inputs, such as interest rates and maturities of similar assets.

 

Income Taxes

 

The Company has recognized the tax effect of discontinued operations of FARESTON® in the condensed statement of operations for the three months ended March 31, 2012 in accordance with the intra-period accounting rules.  An offsetting tax benefit was recorded in continuing operations as tax expense was recognized for discontinued operations.

 

The Company accounts for deferred taxes by recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized.  Accordingly, at March 31, 2013 and December 31, 2012, net of the valuation allowance, the net deferred tax assets were reduced to zero.  Income taxes are described more fully in Note 10 to the Company’s financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

 

Other Income, net

 

Other income, net consists of foreign currency transaction gains and losses associated with conducting clinical trials in foreign countries, interest earned on the Company’s cash, cash equivalents and short-term investments, interest expense, and other non-operating income or expense.

 

Discontinued Operations

 

Effective September 30, 2012, the Company entered into an asset purchase agreement (the “FARESTON® Purchase Agreement”) with Strakan International S.á r.l., an affiliate of ProStrakan Group plc (“ProStrakan”) pursuant to which the Company agreed to transfer, sell and assign to ProStrakan all of the Company’s rights and certain assets related to FARESTON®.  The Company has accounted for FARESTON® as a discontinued operation.  As a result, revenue, cost of goods sold, and operating expenses related to FARESTON® were excluded from the respective captions in the condensed statement of operations and were included in discontinued operations for the three months ended March 31, 2012.  See Note 4, Discontinued Operations, for further discussion.

 

FARESTON® Revenue Recognition

 

Revenue from product sales of FARESTON® for the three months ended March 31, 2012, which was included in income from discontinued operations before income taxes, was recognized less deductions for estimated sales discounts and sales returns.  Revenue from product sales was recognized when persuasive evidence of an arrangement existed, title passed, the price was fixed or determinable, and collectability was reasonably assured.  The Company accounted for rebates to certain governmental agencies as a reduction of product sales.  The Company allows customers to return product within a specified time period prior to and subsequent to the product’s labeled expiration date.  Although the Company sold its rights and certain assets related to FARESTON® effective September 30, 2012, the Company retained the liability for future product returns relating to sales of FARESTON® made by the Company prior to September 30, 2012.  Therefore, the Company estimates an accrual for product returns based on factors which include historical product returns and estimated product in the distribution channel which is expected to exceed its expiration date.  At March 31, 2013 and December 31, 2012, the Company’s accrual for product returns, was $1,045 and $1,189, respectively.   Of these amounts, $332 and $370 have been included in “Other long-term liabilities” in the condensed balance sheet at March 31, 2013 and December 31, 2012, respectively, and represents the portion of the Company’s product returns accrual estimated to be payable after one year.  See Note 4, Discontinued Operations, for further discussion.

 

Reclassification

 

Certain prior period results have been reclassified to conform to the current period presentation.

 

Subsequent Events

 

The Company has evaluated all events or transactions that occurred after March 31, 2013 up through the date the condensed financial statements were issued.  There were no material recognizable or nonrecognizable subsequent events during the period evaluated.

 

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XML 20 R7.htm IDEA: XBRL DOCUMENT v2.4.0.6
Share-Based Compensation
3 Months Ended
Mar. 31, 2013
Share-Based Compensation  
Share-Based Compensation

2.              Share-Based Compensation

 

Share-based payments include stock option grants under the Company’s stock option and equity incentive plans and deferred compensation arrangements for the Company’s non-employee directors.  The Company recognizes compensation expense for its share-based payments based on the fair value of the awards over the period during which an employee or non-employee director is required to provide service in exchange for the award.  The Company’s share-based compensation plans are described more fully in Note 3 to the Company’s financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

 

The following table summarizes share-based compensation expense included within the condensed statements of operations for the three months ended March 31, 2013 and 2012:

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2013

 

2012

 

Research and development expenses

 

$

342

 

$

519

 

General and administrative expenses

 

514

 

408

 

Total share-based compensation

 

$

856

 

$

927

 

 

Share-based compensation expense recorded as general and administrative expense for the three months ended March 31, 2013 and 2012 included share-based compensation expense related to deferred compensation arrangements for the Company’s non-employee directors of $42 and $45, respectively.

 

The Company uses the Black-Scholes-Merton option pricing valuation model to value stock options.  The expected life of options is determined by calculating the average of the vesting term and the contractual term of the options.  The expected price volatility is based on the Company’s historical stock price volatility.  The risk-free interest rate is determined using U.S. Treasury rates where the term is consistent with the expected life of the stock options.  Expected dividend yield is not considered as the Company has not made any dividend payments and has no plans of doing so in the foreseeable future.  The amount of share-based compensation expense recognized is reduced ratably over the vesting period by an estimate of the percentage of options granted that are expected to be forfeited or canceled before becoming fully vested.

 

The fair value of options granted was estimated using the following assumptions for the periods presented:

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2013

 

2012

 

Expected price volatility

 

74.4

%

69.1

%

Risk-free interest rate

 

1.1

%

1.2

%

Weighted average expected life in years

 

6.5 years

 

6.5 years

 

 

The following is a summary of stock option transactions for all of the Company’s stock option and equity incentive plans since the Company’s most recent fiscal year end:

 

 

 

Number of Shares

 

Weighted Average
Exercise Price Per
Share

 

Options outstanding at December 31, 2012

 

5,382,859

 

$

7.96

 

Options granted

 

1,345,150

 

4.20

 

Options forfeited or expired

 

(29,632

)

4.58

 

Options exercised

 

(29,700

)

2.90

 

Options outstanding at March 31, 2013

 

6,668,677

 

7.24

 

 

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CONDENSED BALANCE SHEETS (Parenthetical) (USD $)
Mar. 31, 2013
Dec. 31, 2012
CONDENSED BALANCE SHEETS    
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized 120,000,000 120,000,000
Common stock, shares issued 62,893,791 62,818,424
Common stock, shares outstanding 62,893,791 62,818,424
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Discontinued Operations (Details) (USD $)
In Thousands, unless otherwise specified
1 Months Ended 3 Months Ended
Sep. 30, 2012
Mar. 31, 2012
Mar. 31, 2013
Dec. 31, 2012
Liabilities related to discontinued operations        
Accrual for product returns     $ 1,045 $ 1,189
FARESTON
       
Discontinued Operations disclosures        
Proceeds from the sale of rights and certain assets related to FARESTON 21,671      
Operating income disclosures related to discontinued operations        
Product sales, net   1,829    
Cost of product sales   274    
Operating expenses   220    
FARESTON operating income   1,335    
Liabilities related to discontinued operations        
Accrual for product returns     $ 1,045 $ 1,189
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Document and Entity Information
3 Months Ended
Mar. 31, 2013
May 02, 2013
Document and Entity Information [Abstract]    
Entity Registrant Name GTX INC /DE/  
Entity Central Index Key 0001260990  
Document Type 10-Q  
Document Period End Date Mar. 31, 2013  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Current Reporting Status Yes  
Entity Filer Category Accelerated Filer  
Entity Common Stock, Shares Outstanding   62,939,791
Document Fiscal Year Focus 2013  
Document Fiscal Period Focus Q1  
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CONDENSED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Expenses:    
Research and development expenses $ 9,614 $ 9,835
General and administrative expenses 3,023 2,588
Total expenses 12,637 12,423
Loss from operations (12,637) (12,423)
Other income, net 55 8
Loss from operations before income taxes (12,582) (12,415)
Income tax benefit   381
Net loss from continuing operations (12,582) (12,034)
Income from discontinued operations before income taxes   1,335
Income tax expense   (381)
Net income from discontinued operations   954
Net loss $ (12,582) $ (11,080)
Net loss per share - basic and diluted:    
Net loss from continuing operations (in dollars per share) $ (0.20) $ (0.19)
Net income from discontinued operations (in dollars per share)   $ 0.01
Net loss per share (in dollars per share) $ (0.20) $ (0.18)
Weighted average shares outstanding:    
Basic and diluted (in shares) 62,864,140 62,798,008
XML 25 R12.htm IDEA: XBRL DOCUMENT v2.4.0.6
Share-Based Compensation (Tables)
3 Months Ended
Mar. 31, 2013
Share-Based Compensation  
Summary of share-based compensation expense

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2013

 

2012

 

Research and development expenses

 

$

342

 

$

519

 

General and administrative expenses

 

514

 

408

 

Total share-based compensation

 

$

856

 

$

927

 

 

Schedule of assumptions used to estimate fair value of options

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2013

 

2012

 

Expected price volatility

 

74.4

%

69.1

%

Risk-free interest rate

 

1.1

%

1.2

%

Weighted average expected life in years

 

6.5 years

 

6.5 years

 

 

Summary of stock option transactions

 

 

 

 

Number of Shares

 

Weighted Average
Exercise Price Per
Share

 

Options outstanding at December 31, 2012

 

5,382,859

 

$

7.96

 

Options granted

 

1,345,150

 

4.20

 

Options forfeited or expired

 

(29,632

)

4.58

 

Options exercised

 

(29,700

)

2.90

 

Options outstanding at March 31, 2013

 

6,668,677

 

7.24

 

 

XML 26 R11.htm IDEA: XBRL DOCUMENT v2.4.0.6
Business and Basis of Presentation (Policies)
3 Months Ended
Mar. 31, 2013
Business and Basis of Presentation  
Basis of Presentation

Basis ofPresentation

 

The accompanying unaudited condensed financial statements reflect, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of GTx’s financial position, results of operations and cash flows for each period presented in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted from the accompanying condensed financial statements.  These interim condensed financial statements should be read in conjunction with the audited financial statements and related notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.  Operating results for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2013.

 

Use of Estimates

Use of Estimates

 

The preparation of condensed financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed financial statements, and the reported amounts of revenues and expenses during the reporting period.  Actual amounts and results could differ from those estimates.

 

Research and Development Expenses

Research and Development Expenses

 

Research and development expenses include, but are not limited to, the Company’s expenses for personnel, supplies, and facilities associated with research activities, screening and identification of product candidates, formulation and synthesis activities, manufacturing, preclinical studies, toxicology studies, clinical trials, regulatory and medical affairs activities, quality assurance activities and license fees.  The Company expenses these costs in the period in which they are incurred. The Company estimates its liabilities for research and development expenses in order to match the recognition of expenses to the period in which the actual services are received. As such, accrued liabilities related to third party research and development activities are recognized based upon the Company’s estimate of services received and degree of completion of the services in accordance with the specific third party contract

 

Cash, Cash Equivalents and Short-term Investments

Cash, Cash Equivalents and Short-term Investments

 

The Company considers highly liquid investments with initial maturities of three months or less to be cash equivalents.

 

At March 31, 2013 and December 31, 2012, short-term investments consisted of Federal Deposit Insurance Corporation insured certificates of deposit with original maturities of greater than three months and less than one year.  As the Company has the positive intent and ability to hold the certificates of deposit until maturity, these investments have been classified as held to maturity investments and are stated at cost, which approximates fair value.  The Company considers these to be Level 2 investments as the fair values of these investments are determined using third-party pricing sources, which generally utilize observable inputs, such as interest rates and maturities of similar assets.

 

Income Taxes

Income Taxes

 

The Company has recognized the tax effect of discontinued operations of FARESTON® in the condensed statement of operations for the three months ended March 31, 2012 in accordance with the intra-period accounting rules.  An offsetting tax benefit was recorded in continuing operations as tax expense was recognized for discontinued operations.

 

The Company accounts for deferred taxes by recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized.  Accordingly, at March 31, 2013 and December 31, 2012, net of the valuation allowance, the net deferred tax assets were reduced to zero.  Income taxes are described more fully in Note 10 to the Company’s financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

 

Other Income, net

Other Income, net

 

Other income, net consists of foreign currency transaction gains and losses associated with conducting clinical trials in foreign countries, interest earned on the Company’s cash, cash equivalents and short-term investments, interest expense, and other non-operating income or expense.

 

Discontinued Operations

Discontinued Operations

 

Effective September 30, 2012, the Company entered into an asset purchase agreement (the “FARESTON® Purchase Agreement”) with Strakan International S.á r.l., an affiliate of ProStrakan Group plc (“ProStrakan”) pursuant to which the Company agreed to transfer, sell and assign to ProStrakan all of the Company’s rights and certain assets related to FARESTON®.  The Company has accounted for FARESTON® as a discontinued operation.  As a result, revenue, cost of goods sold, and operating expenses related to FARESTON® were excluded from the respective captions in the condensed statement of operations and were included in discontinued operations for the three months ended March 31, 2012.  See Note 4, Discontinued Operations, for further discussion.

 

FARESTON Revenue Recognition

 

 

FARESTON Revenue Recognition

 

Revenue from product sales of FARESTON® for the three months ended March 31, 2012, which was included in income from discontinued operations before income taxes, was recognized less deductions for estimated sales discounts and sales returns.  Revenue from product sales was recognized when persuasive evidence of an arrangement existed, title passed, the price was fixed or determinable, and collectability was reasonably assured.  The Company accounted for rebates to certain governmental agencies as a reduction of product sales.  The Company allows customers to return product within a specified time period prior to and subsequent to the product’s labeled expiration date.  Although the Company sold its rights and certain assets related to FARESTON® effective September 30, 2012, the Company retained the liability for future product returns relating to sales of FARESTON® made by the Company prior to September 30, 2012.  Therefore, the Company estimates an accrual for product returns based on factors which include historical product returns and estimated product in the distribution channel which is expected to exceed its expiration date.  At March 31, 2013 and December 31, 2012, the Company’s accrual for product returns, was $1,045 and $1,189, respectively.   Of these amounts, $332 and $370 have been included in “Other long-term liabilities” in the condensed balance sheet at March 31, 2013 and December 31, 2012, respectively, and represents the portion of the Company’s product returns accrual estimated to be payable after one year.  See Note 4, Discontinued Operations, for further discussion.

 

Reclassification

Reclassification

 

Certain prior period results have been reclassified to conform to the current period presentation.

 

Subsequent Events

Subsequent Events

 

The Company has evaluated all events or transactions that occurred after March 31, 2013 up through the date the condensed financial statements were issued.  There were no material recognizable or nonrecognizable subsequent events during the period evaluated.

 

XML 27 R15.htm IDEA: XBRL DOCUMENT v2.4.0.6
Share-Based Compensation (Details 2) (USD $)
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Fair value of options granted    
Expected price volatility (as a percent) 74.40% 69.10%
Risk-free interest rate (as a percent) 1.10% 1.20%
Weighted average expected life in years 6 years 6 months 6 years 6 months
Number of Shares    
Options outstanding at the beginning of the period (in shares) 5,382,859  
Options granted (in shares) 1,345,150  
Options forfeited or expired (in shares) (29,632)  
Options exercised (in shares) (29,700)  
Options outstanding at the end of the period (in shares) 6,668,677  
Weighted Average Exercise Price Per Share    
Options outstanding at the beginning of the period (in dollars per share) $ 7.96  
Options granted (in dollars per share) $ 4.20  
Options forfeited or expired (in dollars per share) $ 4.58  
Options exercised (in dollars per share) $ 2.90  
Options outstanding at the end of the period (in dollars per share) $ 7.24  
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Business and Basis of Presentation (Details) (USD $)
Mar. 31, 2013
Dec. 31, 2012
Business and Basis of Presentation    
Net deferred tax assets $ 0 $ 0
Accrual for product returns 1,045,000 1,189,000
Accrual for product returns included in other long term liabilities $ 332,000 $ 370,000
XML 29 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
Share-Based Compensation (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Share-based compensation expense    
Total share-based compensation $ 856 $ 927
Share-based compensation expense related to deferred compensation arrangements for non-employee directors 42 45
Research and development expenses
   
Share-based compensation expense    
Total share-based compensation 342 519
General and administrative expenses
   
Share-based compensation expense    
Total share-based compensation 514 408
Non-employee Directors | General and administrative expenses
   
Share-based compensation expense    
Share-based compensation expense related to deferred compensation arrangements for non-employee directors $ 42 $ 45
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Basic and Diluted Net Loss Per Share (Details)
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Basic and Diluted Net Loss Per Share    
Weighted average options outstanding to purchase shares of common stock excluded from calculation of diluted net loss per share 6,680,423 5,933,153
XML 31 R5.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONDENSED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Cash flows from operating activities:    
Net loss $ (12,582) $ (11,080)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 150 210
Share-based compensation 814 882
Directors' deferred compensation 42 45
Changes in assets and liabilities:    
Prepaid expenses and other assets (913) (215)
Accounts payable (607) (282)
Accrued expenses and other liabilities (827) (70)
Net cash used in operating activities (13,923) (10,510)
Cash flows from investing activities:    
Purchase of property and equipment (29)  
Purchase of short-term investments, held to maturity (1,225) (1,960)
Proceeds from maturities of short-term investments, held to maturity 3,185 4,610
Net cash provided by investing activities 1,931 2,650
Cash flows from financing activities:    
Payments on capital lease and financed equipment obligations (2) (23)
Proceeds from exercise of employee stock options 86 47
Net cash provided by financing activities 84 24
Net decrease in cash and cash equivalents (11,908) (7,836)
Cash and cash equivalents, beginning of period 48,044 63,745
Cash and cash equivalents, end of period $ 36,136 $ 55,909
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University of Tennessee Research Foundation License Agreement
3 Months Ended
Mar. 31, 2013
University of Tennessee Research Foundation License Agreement  
University of Tennessee Research Foundation License Agreement

5.              University of Tennessee Research Foundation License Agreement

 

The Company and the University of Tennessee Research Foundation (“UTRF”) are parties to a consolidated, amended and restated license agreement (the “SARM License Agreement”) pursuant to which the Company was granted exclusive worldwide rights in all existing SARM technologies owned or controlled by UTRF, including all improvements thereto, and exclusive rights to future SARM technology that may be developed by certain scientists at the University of Tennessee or subsequently licensed to UTRF under certain existing inter-institutional agreements with The Ohio State University.  Under the SARM License Agreement, the Company is obligated to pay UTRF annual license maintenance fees, low single-digit royalties on net sales of products and mid single-digit royalties on sublicense revenues.

 

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