DOV Pharmaceutical funding needs threaten going-concern status beyond Dec. 31

By Caroline Salls

Pittsburgh, Aug. 8 - DOV Pharmaceutical, Inc. said potential funding shortfalls threaten its ability to continue as a going concern, and the company many need to eliminate one or more product development programs, according to a 10-Q filed with the Securities and Exchange Commission.

According to the filing, although DOV estimates that it has enough capital to fund operations through Dec. 31, it will continue to have capital needs, and the company said it intends to seek additional capital in 2007 through public or private financing or collaborative agreements.

Specifically, the company said it may raise these additional funds through equity or debt financings, collaborative agreements with corporate partners or from other sources, including subleases or other uses of its Somerset, N.J., headquarters.

If adequate funds are not available to the company as needed, DOV said it will be forced to curtail significantly or eliminate at least temporarily one or more product development programs.

According to the 10-Q, DOV's future capital uses and requirements depend on its ability to sublease space in or reduce the overall costs arising from its headquarters in Somerset, N.J.; its progress with research and development; its ability to maintain and establish collaborations that finance research and development of its clinical candidates; the progress and success of clinical trials and preclinical studies for product candidates; the costs and timing of obtaining, enforcing and defending its patent and intellectual rights; and the costs and timing of regulatory approvals.

As of June 30, the company had $14.7 million in cash and cash equivalents and marketable securities, compared with $42.3 million at Dec. 31, 2006.

DOV said this decrease in cash balances resulted primarily from $17.8 million of cash used in completing an exchange offer and redeeming its remaining debentures and from $9.8 million in cash used in operations.

In addition, the company said net cash used in investing activities during the six months ended June 30 was $2.2 million, as compared to $46.8 million provided by investing activities during the same period in 2006.

The company said this fluctuation reflected the timing differences in investment purchases, sales and maturities and the fluctuations in its portfolio mix between cash equivalents and short-term investment holdings.

DOV said it expects similar fluctuations to continue in future periods.

DOV is a biopharmaceutical company based in Somerset, N.J.

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