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S-1
VITAE PHARMACEUTICALS, INC filed this Form S-1 on 08/12/2014
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Vitae Pharmaceuticals, Inc.

Notes to the Financial Statements (Continued)

For the Years Ended December 31, 2013 and 2012

10. Collaborative Research Agreements (Continued)

        At December 31, 2012, the $8,740,000 of accounts receivable related to a milestone of $8,000,000 and $740,000 of quarterly research funding earned under the BACE Agreement. The amount was collected in January 2013.

11b HSD1 Inhibitors

        In October 2007, the Company entered into a Research Collaboration and License Agreement with BI pursuant to which BI is responsible for the development and commercialization of 11b HSD1 inhibitors for diabetes (the "11b Agreement").

        The funded research period under the 11b Agreement for which the Company was required to provide research services ended in December 2009. For the years ended December 31, 2013 and 2012, the Company earned $0 and $7,000,000, respectively, for the achievement of substantive development milestones. The Company has earned $37,000,000 in development milestones since the inception of the 11b Agreement and is eligible to receive up to $278,000,000 in additional milestone payments based on the achievement of pre-specified events, including up to $48,000,000 in development milestones, up to $105,000,000 in regulatory milestones and up to $125,000,000 in commercialization milestones. The preceding milestones are payable upon the first occurrence of any product to meet the contractual requirements. The Company is also eligible to receive 50% of the aforementioned milestone payments for any subsequent products and for any additional indications of a product to achieve those milestones.

        The Company has the right, subject to the approval of the joint steering committee established pursuant to the 11b Agreement to develop and commercialize certain 11b HSD1 inhibitors for indications other than those considered part of metabolic syndrome or reduction of cardiovascular events.

11. Income Taxes

        Since its inception, the Company has never recorded a provision or benefit for federal or state income taxes.

        During March 2013, the Company sold $91,729 of Pennsylvania research and development tax credits. The Company received $84,391 in cash and the net amount was recorded in other income in the Statement of Operations for the year ended December 31, 2013.

        The Company adopted ASC 740-10, Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109, on January 1, 2009. The Company has analyzed tax positions in all jurisdictions where it is required to file an income tax return and has concluded that the Company does not have any material unrecognized tax benefits. As a result, there were no material effects on the Company's financial position or results of operations due to the implementation of ASC 740-10. As of December 31, 2013 and 2012, the Company has recognized a valuation allowance to the full extent of its deferred tax assets since the likelihood of realization of the benefit cannot be determined. The Company believes that any of its uncertain tax positions would not result in adjustments to its effective income tax rate because likely corresponding adjustments to deferred tax assets would be offset by adjustments to recorded valuation allowances. The Company has filed U.S. federal income tax returns as well as returns for various state jurisdictions. The Company's income taxes for 2004 and 2005 were previously audited by the Internal Revenue Service. Because of the Company's net operating loss position, all other income tax returns filed by the Company are subject to examination by taxing jurisdictions.

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