Transcept Pharmaceuticals reports revenue of $3.13M for first-quarter 2010

Transcept Pharmaceuticals, Inc. (Nasdaq: TSPT), a specialty pharmaceutical company focused on the development and commercialization of proprietary products that address important therapeutic needs in the field of neuroscience, today announced financial results for the three months ended March 31, 2010.

"We are making final preparations to start a study to measure the potential effects of Intermezzo® on highway driving ability the morning after dosing, and we currently estimate that we will resubmit the Intermezzo® NDA in the late fourth quarter of 2010," stated Glenn A. Oclassen, Transcept President and Chief Executive Officer.  "We remain committed to realizing the potential for Intermezzo® to be the first prescription sleep aid approved in the United States for use as-needed for the treatment of insomnia at the time a patient awakens and has difficulty returning to sleep. We are pleased to have established our regulatory path forward as a result of our recent discussions with the FDA."

Transcept reported cash, cash equivalents and marketable securities of $83.08 million at March 31, 2010, which it believes will be sufficient to address the anticipated activities relating to the resubmission of the Intermezzo® NDA.

First Quarter 2010 Financial Results

Transcept recorded $3.13 million of revenue for the three-month period ended March 31, 2010, related to recognition of a portion of the $25 million non-refundable license fee received from Purdue Pharmaceutical Products L.P. (Purdue) in connection with the collaboration agreement for commercialization of Intermezzo® in the United States. Transcept is recognizing the $25 million license fee over a 24-month period that commenced in August 2009. There was no revenue for the three-month period ended March 31, 2009.

Research and development expense for the quarter ended March 31, 2010 was approximately $2.36 million, compared to approximately $2.22 million for the same period in 2009. The increase is primarily attributable to expense associated with the manufacture of materials for the upcoming highway driving study and alternative packaging designs, partially offset by payroll related savings due to the reduction in force announced in August 2009. Research and development expense included non-cash stock compensation expense of approximately $98,000 for the quarter ended March 31, 2010 and approximately $49,000 for the quarter ended March 31, 2009.

General and administrative expense for the quarter ended March 31, 2010 was approximately $2.60 million, compared to approximately $4.21 million for the same period in 2009.  The decrease consists primarily of reductions in legal, professional and consulting fees, as more of these functions are being handled in-house as compared to the quarter ended March 31, 2009 following the completion of the reverse merger with Novacea on January 30, 2009. Marketing related expense also decreased as Purdue assumed these responsibilities in the latter half of 2009 in accordance with our Intermezzo® collaboration agreement.  General and administrative expense included non-cash stock compensation expense of approximately $339,000 for the quarter ended March 31, 2010, as compared to approximately $169,000 for the quarter ended March 31, 2009.

Merger related transaction costs of approximately $2.22 million were expensed during the first quarter of 2009.

Net loss for the quarter ended March 31, 2010 was approximately $1.84 million or $0.14 per share (basic and diluted), compared to a net loss of approximately $8.54 million or $0.95 per share (basic and diluted) for the quarter ended March 31, 2009. The weighted average shares used to calculate basic and diluted net loss per share were 13,391,629 and 9,003,067 for the quarters ended March 31, 2010 and March 31, 2009, respectively. At March 31, 2010, there were 13,395,663 common shares outstanding and 2,530,866 common shares underlying outstanding options and warrants and outstanding common shares subject to repurchase.

Intermezzo® Regulatory Summary

Transcept is seeking FDA approval of Intermezzo® (zolpidem tartrate sublingual tablet) for use as-needed for the treatment of insomnia when a middle of the night awakening is followed by difficulty returning to sleep.  In October 2009, Transcept received a Complete Response Letter from the FDA regarding the Intermezzo® New Drug Application (NDA) in which the FDA requested additional data demonstrating that Intermezzo® would not present an unacceptable risk of residual effects, with particular reference to next day driving ability. Based on communications with the FDA, Transcept has redesigned Intermezzo® packaging and patient instructions to minimize the potential for inadvertent dosing errors, and plans to conduct a pre-approval highway driving study to assess the potential of Intermezzo® to affect next morning driving ability.  Transcept currently expects to resubmit the Intermezzo® NDA in the late fourth quarter of 2010 and expects it to be subject to a six-month review by the FDA.