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NAVB Oldtimers Lounge
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Re: LS Tax Liability Question...-appears LS sale tax liabilities fully accrued and $6.4mm tax cost was at a minimum 60% offset against loss carry forwards for state and federal... Extrapolation suggest taxes to be paid on LS sale are definitely under $2.5mm out of $6.4mm and potentially no more than $2mm or possibly less based changes in MC costs from quarter to quarter plus unknowns of bonus and interest liabilities Liquidity and Capital Resources Accounts payable decreased
to $1.2 million at September 30, 2017 from $5.2 million at December 31,
2016, primarily driven by net decreased payables due to legal and
professional services, NAV4694, regulatory and operations vendors.
Accrued liabilities and other current liabilities decreased to
$2.5 million at September 30, 2017 from $7.9 million at December 31,
2016, primarily driven by decreased accruals for interest, NAV4694,
bonuses and Macrophage Therapeutics costs, offset by increased accruals
for taxes and Manocept development costs. Our payable and accrual
balances will continue to fluctuate but will likely decrease overall as
we continue to decrease our level of development activity related to
NAV4694, offset by planned increases in development activity related to
the Manocept platform. 3rd
2nd Outlook
Our operating expenses in recent years have been focused primarily on support of Tc 99m tilmanocept, our Manocept platform, and NAV4694 and NAV5001 product development. We incurred approximately $1.8 million and $4.1 million in total on research and development activities during the six-month periods ended June 30, 2017 and 2016, respectively. Of the total amounts we spent on research and development during those periods, excluding costs related to our internal research and development headcount and our general and administrative staff which we do not currently allocate among the various development programs that we have underway, we incurred out-of-pocket charges by program as follows:
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On March 3, 2017, the Company completed the sale to Cardinal Health 414 of its assets used, held for use, or intended to be used in operating its business of developing, manufacturing and commercializing a product used for lymphatic mapping, lymph node biopsy, and the diagnosis of metastatic spread to lymph nodes for staging of cancer, including the Company’s radioactive diagnostic agent marketed under the Lymphoseek® trademark for current approved indications by the FDA and similar indications approved by the FDA in the future, in Canada, Mexico and the United States.
In exchange for the Acquired Assets, Cardinal Health 414 (i) made a cash payment to the Company at closing of approximately $80.6 million after adjustments based on inventory being transferred and an advance of $3 million of guaranteed earnout payments as part of the CRG settlement, (ii) assumed certain liabilities of the Company associated with the Product as specified in the Purchase Agreement, and (iii) agreed to make periodic earnout payments (to consist of contingent payments and milestone payments which, if paid, will be treated as additional purchase price) to the Company based on net sales derived from the purchased Product subject, in each case, to Cardinal Health 414’s right to off-set. In no event will the sum of all earnout payments, as further described in the Purchase Agreement, exceed $230 million over a period of ten years, of which $20.1 million are guaranteed payments of $6.7 million per year for each of the three years immediately after closing of the Asset Sale. At the closing of the Asset Sale, $3 million of such earnout payments were advanced by Cardinal Health 414 to the Company, and paid to CRG as part of the Deposit Amount paid to CRG. This advance is to be applied to the third year of guaranteed payments.
We recorded a net gain on the sale of the Business of $86.9 million for the nine months ended September 30, 2017, including $16.5 in guaranteed consideration, which was discounted to the present value of future cash flows. The proceeds were offset by $3.3 million in estimated fair value of warrants issued to Cardinal Health 414, $2.0 million in legal and other fees related to the sale, $800,000 in net balance sheet dispositions and write-offs, and $6.4 million in estimated taxes. 3rd qtr
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Due to the uncertainty surrounding the realization of the deferred tax assets in future tax returns, all of the deferred tax assets have been fully offset by a valuation allowance at September 30, 2017 and December 31, 2016.
Current accounting standards include guidance on the accounting for uncertainty in income taxes recognized in the financial statements. Such standards also prescribe a recognition threshold and measurement model for the financial statement recognition of a tax position taken, or expected to be taken, and provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company believes that the ultimate deductibility of all tax positions is highly certain, although there is uncertainty about the timing of such deductibility. As a result, no liability for uncertain tax positions was recorded as of September 30, 2017 or December 31, 2016 and we do not expect any significant changes in the next twelve months. Should we need to accrue interest or penalties on uncertain tax positions, we would recognize the interest as interest expense and the penalties as a selling, general and administrative expense. As of September 30, 2017, tax years 2013-2016 remained subject to examination by federal and state tax authorities.
Benefit from income taxes was $789,000 for the three-month period ended September 30, 2017, representing an effective tax rate of 34%, as compared to $0 for the three-month period ended September 30, 2016, representing an effective tax rate of 0%. The increase in the effective rate for the period ended September 30, 2017 compared with the same period in 2016 is primarily due to the gain on sale of our Lymphoseek product.
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As of September 30, 2017, we had approximately $127.7 million of federal and $16.2 million of state net operating loss carryforwards. 2nd qtr.
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Due to the uncertainty surrounding the realization of the deferred tax assets in future tax returns, all of the deferred tax assets have been fully offset by a valuation allowance at March 31, 2017 and December 31, 2016.
Current accounting standards include guidance on the accounting for uncertainty in income taxes recognized in the financial statements. Such standards also prescribe a recognition threshold and measurement model for the financial statement recognition of a tax position taken, or expected to be taken, and provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company believes that the ultimate deductibility of all tax positions is highly certain, although there is uncertainty about the timing of such deductibility. As a result, no liability for uncertain tax positions was recorded as of June 30, 2017 or December 31, 2016 and we do not expect any significant changes in the next twelve months. Should we need to accrue interest or penalties on uncertain tax positions, we would recognize the interest as interest expense and the penalties as a selling, general and administrative expense. As of June 30, 2017, tax years 2013-2016 remained subject to examination by federal and state tax authorities.
Benefit from income taxes was $1.6 million for the three-month period ended June 30, 2017, representing an effective tax rate of 34.0%, as compared to $0 for the three-month period ended June 30, 2016, representing an effective tax rate of 0%. The increase in the effective rate for the period ended June 30, 2017 compared with the same period in 2016 is primarily due to the gain on sale of our Lymphoseek product. As of June 30, 2017, we had approximately $128.8 million of federal and $16.3 million of state net operating loss carryforwards. |
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