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The Company
12 Months Ended
Dec. 31, 2011
The Company [Abstract]  
The Company

1. The Company

Nature of Operations

NeurogesX, Inc. (the "Company") is a specialty pharmaceutical company focused on developing and commercializing a portfolio of novel non-opioid, pain management therapies to address unmet medical needs and improve patients' quality of life.

The Company's first commercial product, Qutenza, became commercially available in the United States and in certain European countries in the first half of 2010. Qutenza is a dermal delivery system designed to topically administer capsaicin to treat certain neuropathic pain conditions and was approved by the Food and Drug Administration, or FDA, in November 2009 for the management of neuropathic pain associated with postherpetic neuralgia, or PHN. Qutenza is also approved in the European Union for the treatment of peripheral neuropathic pain in non-diabetic adults. Qutenza is the first prescription strength capsaicin product approved in the United States.

The Company's most advanced drug candidate is NGX-1998. NGX-1998 is a topical liquid formulation of high concentration capsaicin that the Company is developing to treat neuropathic pain conditions. In November 2011, the Company announced positive top-line results from its Phase 2 clinical study of NGX-1998, in patients with PHN. The 12-week, multicenter, randomized, double-blinded, placebo-controlled clinical trial met its protocol-specified objectives, which include the primary endpoint of a percentage change from baseline, as compared to placebo in a patient-reported numeric pain rating scale, or NPRS, score during weeks two through eight of the trial. The Company believes that the Phase 2 data support moving forward to a NGX-1998 Phase 3 clinical trial. The Company plans to have an End-of-Phase 2 meeting with the FDA, which the Company believes could occur in the second half of 2012. The Company is presently examining a range of potential indications for NGX-1998, including but not limited to PHN, HIV associated peripheral neuropathy, or HIV-PN, painful diabetic neuropathy, or PDN, chemo-induced peripheral neuropathy, CIPN, and post-traumatic (e.g. surgical) pain, or PTP. The Company's decision as to which indications to pursue in Phase 3 clinical trials is expected to be based on a number of criteria including, but not limited to, its assessments of probability of clinical development success, market size and potential regulatory pathways to possible approval.

As a result of the opportunity, the Company believes exists with NGX-1998, in March 2012, the Company decided to focus its resources on the preparation for advancing NGX-1998 into a Phase 3 clinical trial. To do so, the Company significantly restructured its operations, including eliminating most of sales and marketing expenditures in support of Qutenza, while continuing to maintain product availability of Qutenza for patients and physicians. While the Company believes a market opportunity exists for Qutenza, it believes that the resources required to attain that potential are better utilized to speed the development of NGX-1998. The Company is evaluating a number of alternative commercialization strategies which include the potential to license Qutenza to a commercialization partner in the United States and in other territories of the world outside of the Astellas Territory.

In May 2009, Qutenza received a marketing authorization ("MA") in the European Union for the treatment of peripheral neuropathic pain in non-diabetic adults, either alone or in combination with other medicinal products for pain. In June 2009, the Company entered into a Distribution, Marketing and License Agreement (the "Astellas Agreement") with Astellas Pharma Europe Ltd. ("Astellas" or "Collaboration Partner"), under which Astellas was granted an exclusive license to commercialize Qutenza in the European Economic Area, which includes the 27 countries of the European Union, Iceland, Norway, and Liechtenstein as well as Switzerland, certain countries in Eastern Europe, the Middle East and Africa ("Licensed Territory"). Qutenza was made available on a country by country basis commencing in April 2010 and by year end was available in 21 European countries.

At December 31, 2011, the Company had $34.3 million in cash, cash equivalents and short-term investments. The Company anticipate that cash used in operating activities will decrease in 2012 as a result of the organization restructure that was announced on March 8, 2012. The Company anticipate that our existing cash and investments will be sufficient to meet its projected operating requirements through at least December 31, 2012.

To date, the Company has incurred recurring net losses and negative cash flows from operations, after excluding the upfront cash received from Astellas in 2009. Until the Company can generate significant cash from its operations, if ever, the Company expects to continue to fund its operations with existing cash resources generated from the proceeds of offerings of its equity securities and proceeds from one or more collaboration agreements, as well as potentially through royalty monetization, debt financing or the sale of other equity securities. However, the Company may not be successful in obtaining additional collaboration agreements, or in receiving milestone or royalty payments under those agreements. In addition, the Company cannot be sure that its existing cash and investment resources will be adequate or that additional financing will be available when needed or that, if available, financing will be obtained on terms favorable to the Company or its stockholders. Having insufficient funds may require the Company to delay or potentially eliminate some or all of its development programs, relinquish some or even all rights to product candidates at an earlier stage of development or negotiate less favorable terms than it would otherwise choose. Failure to obtain adequate financing also may adversely affect the launch of the Company's product candidates or its ability to continue in business. If the Company raises additional funds by issuing equity securities, substantial dilution to existing stockholders would likely result. If the Company raises additional funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations, as well as covenants and specific financial ratios that may restrict its ability to operate its business.

The Company was incorporated in California as Advanced Analgesics, Inc. on May 28, 1998 and changed its name to NeurogesX, Inc. in September 2000. In February 2007, the Company reincorporated into Delaware. The Company is located in San Mateo, California. All of the Company's assets are located within the United States.

Certain amounts in the prior years' consolidated financial statements have been reclassified to conform to the current-year presentation.

Recent Event

The Company's common stock is currently listed on the NASDAQ Global Market and to maintain its listing, it must meet certain financial requirements in accordance with the rules of Nasdaq. On October 18, 2011, the Company received a notification from Nasdaq that it failed to maintain the required minimum market value of listed securities level of $50.0 million for a 30 consecutive business day period. The Company has until April 16, 2012 in which to cure this non-compliance by meeting such requirement for a minimum of ten consecutive business days. On January 27, 2012, the Company received a notification from Nasdaq that it failed to maintain the required $1.00 minimum bid price for a 30 consecutive business day period. The Company has until July 28, 2012 in which to cure this non-compliance by meeting such requirement for a minimum of ten consecutive business days. Any potential delisting of the Company's common stock could adversely affect the liquidity of its common stock and its ability to raise additional capital. In addition, delisting from the NASDAQ Global Market would have triggered an event of default under the Company's loan agreement with Hercules Technology Growth Capital, Inc. ("Hercules"), which would have provided Hercules the option to accelerate repayment of amounts due under such agreement. As a result, in March 2012, the Company entered into an amendment to the Hercules warrant, in which it amended the covenant with respect to the requirement to maintain its listing on the NASDAQ Global Market to allow for the NASDAQ Capital Market and certain over the counter markets to be permissible alternative markets on which the Company can list its shares of common stock. Under the terms of the amendment, the number of shares underlying the warrant was increased to 1,950,000 and the exercise price per share of common stock was reduced to $0.50.

Principles of Consolidation

The accompanying financial statements include the accounts of the Company and its wholly-owned subsidiary, NeurogesX UK Limited, which was incorporated as of June 1, 2004. NeurogesX UK Limited was established for the purposes of conducting clinical trials in the UK and marketing approval submission. The subsidiary has no assets other than the initial formation capital totaling one Pound Sterling.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.