View Filing Data

Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Jun. 30, 2011	Jul. 18, 2011
Document And Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Entity Registrant Name	PAIN THERAPEUTICS INC
Entity Central Index Key	0001069530
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		44,630,712

Condensed Balance Sheets - USD ($)
$ in Thousands

Jun. 30, 2011

Dec. 31, 2010

^[1]

Current assets

Cash and cash equivalents

$ 62,830

$ 4,798

Marketable securities

38,211

86,428

Receivables

908

7,114

Other current assets

144

Total current assets

101,964

98,484

Non-current assets

Property and equipment, net

192

285

Other assets

437

426

Total assets

102,593

99,195

Current liabilities

Accounts payable

604

1,107

Accrued development expense

576

258

Deferred program fee revenue - current portion

10,897

Accrued compensation and benefits

632

1,712

Other accrued liabilities

109

Total current liabilities

12,818

14,071

Non-current liabilities

Deferred program fee revenue - non-current portion

46,312

51,760

Other liabilities

432

431

Total liabilities

59,562

66,262

Commitments and contingencies

Stockholders' equity

Preferred stock

Common stock

Additional paid-in-capital

173,591

161,957

Accumulated other comprehensive income

394

525

Accumulated deficit

(130,999)

(129,592)

Total stockholders' equity

43,031

32,933

Total liabilities and stockholders' equity

$ 102,593

$ 99,195

[1]	Derived from the Company's audited financial statements as of December 31, 2010, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Condensed Statements Of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Revenue
Program fee revenue	$ 2,724	$ 2,524	$ 5,448	$ 5,048
Collaboration revenue	28	132	540	857
Total revenue	2,752	2,656	5,988	5,905
Operating expenses
Research and development	2,392	2,248	4,571	5,376
General and administrative	1,788	1,663	3,324	3,148
Total operating expenses	4,180	3,911	7,895	8,524
Operating loss	(1,428)	(1,255)	(1,907)	(2,619)
Interest income	228	451	500	795
Net loss	$ (1,200)	$ (804)	$ (1,407)	$ (1,824)
Net loss per share
Basic and diluted	$ (0.03)	$ (0.02)	$ (0.03)	$ (0.04)
Weighted-average shares used in computing net loss per share
Basic and diluted	44,190	42,663	43,660	42,537

Condensed Statements Of Cash Flows - USD ($)
$ in Thousands

6 Months Ended

Jun. 30, 2011

Jun. 30, 2010

Cash flows provided by (used in) operating activities:

Net loss

$ (1,407)

$ (1,824)

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

Non-cash stock based compensation

2,726

2,767

Depreciation and amortization

119

Non-cash net interest income

686

775

Program fee revenue

(5,448)

(5,048)

Changes in operating assets and liabilities:

Receivables

6,275

Other current assets

2,694

Other assets

(11)

1,583

Accounts payable

(503)

(692)

Accrued development expense

318

(113)

Other accrued liabilities

(361)

Accrued compensation and benefits

(1,080)

(134)

Net cash provided by (used in) operating activities

1,722

(234)

Cash flows provided by investing activities:

Purchases of marketable securities

(31,854)

Maturities of marketable securities

47,400

61,702

Net cash provided by investing activities

47,400

29,848

Cash flows provided by financing activities:

Proceeds from exercise of common stock options

8,910

1,365

Net cash provided by financing activities

8,910

1,365

Net increase in cash and cash equivalents

58,032

30,979

Cash and cash equivalents at beginning of the period

4,798

^[1]

35,794

Cash and cash equivalents at end of the period

$ 62,830

$ 66,773

[1]	Derived from the Company's audited financial statements as of December 31, 2010, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission.

General

6 Months Ended

Jun. 30, 2011

General

General

Note 1. General

We are a biopharmaceutical company that develops novel drugs. Our lead drug candidate is called REMOXY^® (oxycodone) Extended-Release Capsules, CII. REMOXY is a strong painkiller with a unique formulation designed to reduce potential risks of unintended use. REMOXY and three other abuse-resistant painkillers are being developed pursuant to our collaboration and license agreements with King Pharmaceuticals, Inc., a wholly-owned subsidiary of Pfizer, Inc., or the King Agreements.

Although we were profitable in the past based on program fee revenue, milestone revenue and interest income, in the course of our development activities, we have sustained significant cumulative operating losses. As we continue to incur losses, we may need additional financing and there are no assurances that additional financing will be available on favorable terms, or at all.

We have prepared the accompanying unaudited condensed financial statements of Pain Therapeutics, Inc. in accordance with generally accepted accounting principles for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2011 are not necessarily indicative of the results that may be expected for any other interim period or for the year 2011.

We have evaluated subsequent events through the date of the filing this Form 10-Q with the Securities and Exchange Commission. No material subsequent events have occurred that require recognition or disclosure in these financial statements.

- Definition

The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure.

+ References

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+ Details

Significant Accounting Policies

6 Months Ended

Jun. 30, 2011

Significant Accounting Policies

Significant Accounting Policies

Note 2. Significant Accounting Policies

Use of Estimates

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

Revenue Recognition and Deferred Program Fee Revenue

Revenue is recognized when there is persuasive evidence that an arrangement exists, delivery has occurred, the price is fixed and determinable, and collection is reasonably assured.

We recognize program fee revenue, collaboration revenue and milestone revenue in connection with the King Agreements. Program fee revenue is derived from program fee payments, including the upfront $150.0 million payment we received in 2005 and the $5.0 million payment we received in 2010. These payments are recognized from receipt ratably over our estimate of the development period through the fourth of four drug candidates expected to be developed. We currently estimate the development period for all four drug candidates to end by September 30, 2016. We periodically review the estimated development period and change it if appropriate based upon our latest expectations. Deferred program fee revenue represents the amount of the upfront program fee payments that have not yet been recognized as revenue.

Collaboration revenue from reimbursement of development expenses are generally recognized after expenses have been incurred and when King has completed its review of the expenses invoiced to them.

We recognize milestone payments as revenue when we achieve the underlying developmental milestone as the milestone payments are not dependent upon any other future activities or achievement of any other future milestones and the achievement of each of the developmental milestones were substantively at risk and contingent at the effective date of the collaboration. Substantial effort is involved in achieving each of the developmental milestones. These milestones represent the culmination of discrete earnings processes and the amount of each milestone payment is reasonable in relation with the level of effort associated with the achievement of the milestone. Each milestone payment is non-refundable and non-creditable when made. The ongoing research and development services we provide are priced at fair value based upon the reimbursement of expenses we incur.

Cash, Cash Equivalents and Concentration of Credit Risk

We consider all highly liquid financial instruments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents consist of cash maintained at two financial institutions and in money market funds. We believe the financial risks associated with these instruments are minimal. We have not experienced material losses from our investments in these securities.

Marketable Securities and Fair Value Measurements

We invest in interest-bearing marketable securities, generally consisting of corporate and government securities. We may elect to sell these investments before they mature. Therefore, we hold these investments as "available for sale" and include these investments in our balance sheets as current assets, even though the contractual maturity of a particular investment may be beyond one year. We report our marketable securities at fair value, which may include unrealized gains and losses. Our unrealized gains and losses on investments are recorded as a separate component of stockholders' equity as accumulated other comprehensive income or loss. We recognize all realized gains and losses on sales of our marketable securities in interest income in the accompanying statement of operations on a specific identification basis. Our marketable securities are maintained at two financial institutions and are governed by our investment policy as approved by our Board of Directors.

To date we have not recorded any impairment charges on marketable securities related to other-than-temporary declines in market value. We would recognize an impairment charge when the decline in the estimated fair value of a marketable security below the amortized cost is determined to be other-than-temporary. We consider various factors in determining whether to recognize an impairment charge, including the duration of time and the severity to which the fair value has been less than our amortized cost, any adverse changes in the investees' financial condition and our intent to sell or whether it is more likely than not that we would be required to sell the marketable security before its anticipated recovery.

We measure our cash equivalents and marketable securities at fair value on a recurring basis and have significant observable inputs where there are identical or comparable assets in the market to use in establishing our fair value measurements. We use significant observable inputs that include but are not limited to benchmark yields, reported trades, broker/dealer quotes and issuer spreads. We consider available information regarding our cash, cash equivalents, money market funds and U.S. government obligations to be Level 1 inputs. Generally, the types of instruments we invest in are not traded on a market such as the NASDAQ Global Market, which we would consider to be Level 1 inputs. We generally consider available information regarding our other marketable securities to be Level 2 inputs. We do not have any investments that would require inputs considered to be Level 3. We use the bid price to establish fair value.

Stock-based Compensation

We recognize expense in the statement of operations for the fair value of all share-based payments, including grants of employee stock options and other share based awards. For stock options, we use the Black-Scholes option valuation model and the single-option award approach and straight-line attribution method. Using this approach, the compensation cost is amortized on a straight-line basis over the vesting period of each respective stock option, generally four years. We estimate forfeitures and adjust this estimate periodically based on the extent to which future actual forfeitures differ, or are expected to differ, from such estimates.

We have granted share-based awards that vest upon achievement of certain performance criteria, or Performance Awards. The value of these awards is the product of the number of shares of our common stock to be issued under the award multiplied by the fair market value of a share of our common stock on the date of grant. These awards include future performance conditions. We estimate an implicit service period for achieving these performance conditions. Performance Awards vest and common stock is issued on achieving performance conditions. We recognize stock-based compensation expense for Performance Awards when we conclude that achieving a performance condition is probable. We periodically review and update as appropriate our estimates of the implicit service periods and the likelihood of achieving the performance conditions.

Net Loss per Share

Basic net loss per share is computed on the basis of the weighted-average number of common shares outstanding for the reporting period. Diluted net loss per share is computed on the basis of the weighted-average number of common shares outstanding plus dilutive potential common shares outstanding using the treasury-stock method. Potential dilutive common shares consist of outstanding stock options, restricted stock units and warrants.

The numerators and denominators in the calculation of basic and diluted net loss per share were as follows (in thousands except per share data):

		00000000000		00000000000		00000000000		00000000000
	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Numerators:
Net loss	$	(1,200)	$	(804)	$	(1,407)	$	(1,824)

Denominators:
Weighted average shares used to compute basic and diluted net loss per share		44,190		42,663		43,660		42,537


Basic and diluted net loss per share	$	(0.03)	$	(0.02)	$	(0.03)	$	(0.04)

Options to purchase 5.1 million and 4.6 million and 9.6 million and 10.0 million common shares were excluded from the calculation of diluted loss per share for the three and six months ended June 30, 2011 and 2010, respectively because the effect of including these shares in this calculation would be anti-dilutive.

Income Taxes

We make estimates and judgments in determining the need for a provision for income taxes, including the estimation of our taxable income or loss for each full fiscal year. We have accumulated significant deferred tax assets. Deferred income taxes reflect the tax effects of net operating loss and tax credit carryovers and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of certain deferred tax assets is dependent upon future earnings. We are uncertain about the timing and amount of any future earnings. Accordingly, we offset these net deferred tax assets with a valuation allowance. We may in the future determine that more of our deferred tax assets will likely be realized, in which case we will reduce our valuation allowance in the quarter in which such determination is made. If the valuation allowance is reduced, we may recognize a benefit from income taxes in our statement of operations in that period. We classify interest recognized pursuant to our deferred tax assets as interest expense, when appropriate.

Cash, Cash Equivalents And Marketable Securities

6 Months Ended

Jun. 30, 2011

Cash, Cash Equivalents And Marketable Securities

Cash, Cash Equivalents And Marketable Securities

Note 3. Cash, Cash Equivalents and Marketable Securities

The following tables summarize our cash, cash equivalents and available-for-sale marketable securities as of June 30, 2011 and December 31, 2010 (in thousands):


	Cash, Cash Equivalents and Marketable Securities
	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value		Accrued Interest		Total Value
June 30, 2011
Cash and cash equivalents	$	7,312	$	-	$	-	$	7,312	$	-	$	7,312
Money market securities		55,517		-		-		55,517		-		55,517
Corporate securities		27,312		395		-		27,707		308		28,015
Certificates of deposit		10,133		-		-		10,133		64		10,197

	$	100,274	$	395	$	-	$	100,669	$	372	$	101,041

Reported as:
Cash and cash equivalents	$	62,830	$	-	$	-	$	62,830	$	-	$	62,830
Short term investments		37,444		395		-		37,839		372		38,211

	$	100,274	$	395	$	-	$	100,669	$	372	$	101,041

Maturities:
Matures in one year or less	$	90,260	$	189	$	-	$	90,449	$	289	$	90,738
Matures one to three years		10,014		206		-		10,220		83		10,303

	$	100,274	$	395	$	-	$	100,669	$	372	$	101,041

December 31, 2010
Cash and cash equivalents	$	4,798	$	-	$	-	$	4,798	$	-	$	4,798
Certificates of deposit		10,131		-		-		10,131		31		10,162
Corporate securities		75,063		525		-		75,588		678		76,266

	$	89,992	$	525	$	-	$	90,517	$	709	$	91,226

Reported as:
Cash and cash equivalents	$	4,798	$	-	$	-	$	4,798	$	-	$	4,798
Marketable securities		85,194		525		-		85,719		709		86,428

	$	89,992	$	525	$	-	$	90,517	$	709	$	91,226

Maturities:
Matures in one year or less	$	67,557	$	106	$	-	$	67,663		433	$	68,096
Matures one to three years		22,435		419		-		22,854		276		23,130

	$	89,992	$	525	$	-	$	90,517	$	709	$	91,226

We did not realize any gains or losses on our investments in securities during the first half of 2011 or 2010. To date we have not recorded any impairment charges on marketable securities related to other-than-temporary declines in market value.

The following table presents our assets measured at fair value on a recurring basis (in thousands):

		$101,041		$101,041		$101,041		$101,041
	Level 1		Level 2		Level 3		Total
June 30, 2011
Cash and cash equivalents	$	7,312	$	-	$	-	$	7,312
Money market securities		55,517		-		-		55,517
Corporate securities		-		28,015		-		28,015
Certificates of deposit		10,197		-		-		10,197

	$	73,026	$	28,015	$	-	$	101,041


	Level 1		Level 2		Level 3		Total
December 31, 2010
Cash and cash equivalents	$	4,798	$	-	$	-	$	4,798
Corporate securities		-		76,266		-		76,266
Certificates of deposit		10,162		-		-		10,162

	$	14,960	$	76,266	$	-	$	91,226

Comprehensive Loss

6 Months Ended

Jun. 30, 2011

Comprehensive Loss

Comprehensive Loss

Note 4. Comprehensive Loss

Comprehensive loss is the sum of net loss and other comprehensive income (loss), as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Net loss	$	(1,200)	$	(804)	$	(1,407)	$	(1,824)
Other comprehensive income (loss)		(74)		(191)		(131)		126

Comprehensive loss	$	(1,274)	$	(995)	$	(1,538)	$	(1,698)

Other comprehensive income (loss) consists of net unrealized holding gains and losses on available-for-sale securities.

- Definition

The entire disclosure for comprehensive income. Includes, but is not limited to, the following: 1) the amount of income tax expense or benefit allocated to each component of other comprehensive income, including reclassification adjustments, 2) the reclassification adjustments for each classification of other comprehensive income and 3) the ending accumulated balances for each component of comprehensive income. Components of comprehensive income include: (1) foreign currency translation adjustments; (2) gains (losses) on foreign currency transactions that are designated as, and are effective as, economic hedges of a net investment in a foreign entity; (3) gains (losses) on intercompany foreign currency transactions that are of a long-term-investment nature, when the entities to the transaction are consolidated, combined, or accounted for by the equity method in the reporting enterprise's financial statements; (4) change in the market value of a futures contract that qualifies as a hedge of an asset reported at fair value; (5) unrealized holding gains (losses) on available-for-sale securities and that resulting from transfers of debt securities from the held-to-maturity category to the available-for-sale category; (6) a net loss recognized as an additional pension liability not yet recognized as net periodic pension cost; and (7) the net gain (loss) and net prior service cost or credit for pension plans and other postretirement benefit plans.

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+ Details

Stock-Based Compensation

6 Months Ended

Jun. 30, 2011

Stock-Based Compensation

Stock-Based Compensation

Note 5. Stock-Based Compensation

Our non-cash stock-based compensation expense is as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Research and development	$	769	$	716	$	1,500	$	1,559
General and administrative		654		633		1,226		1,208

	$	1,423	$	1,349	$	2,726	$	2,767

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64, 65, A240
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 93-6
-Paragraph 53
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 14

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 50
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666

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-Name Accounting Standards Codification
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901

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-Name Accounting Standards Codification
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-Topic 718
-SubTopic 40
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929

+ Details

Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes

Income Taxes

Note 6. Income Taxes

We did not provide for income taxes in 2011 because we have projected a tax loss for the full year 2011. Interest expense and penalties related to unrecognized tax benefits were immaterial for 2011 and 2010.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph h
-Article 4

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 136, 172
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 43, 44, 45, 46, 47, 48, 49
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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-Name Accounting Standards Codification
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-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(h))
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-Topic 740
-SubTopic 10
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-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319

+ Details

Commitments

6 Months Ended

Jun. 30, 2011

Commitments

Commitments

Note 7. Commitments

We conduct our product research and development programs through a combination of internal and collaborative programs that include, among others, arrangements with universities, contract research organizations and clinical research sites. We have contractual arrangements with these organizations, however these contracts are cancelable on thirty days notice and our obligations under these contracts are largely based on services performed.

We currently lease approximately 36,400 square feet of office space pursuant to non-cancelable operating leases that will expire in 2012. Future minimum lease payments are as follows for the years ended December 31, (in thousands):


	2011		2012		Total

Future minimum lease payments	$	667	$	373	$	1,040

Recently Issued Accounting Pronouncements

6 Months Ended

Jun. 30, 2011

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

Note 8. Recently Issued Accounting Pronouncements

We reviewed recently issued accounting pronouncements and have adopted or plan to adopt those that are applicable to us. We do not expect the adoption of these pronouncements to have a material impact on our financial position, results of operations or cash flows.