##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 001-15281
 REPROS THERAPEUTICS INC.
  Delaware
(State or other
jurisdiction of 
incorporation or
organization)
    
    2408 Timberloch Place, Suite B-7
The Woodlands, Texas 77380
(Address of principal executive
offices and zip code)
    
    76-0233274
(IRS Employer
Identification No.)(281) 719-3400
(Registrants telephone number,
including area code)
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




---



##### 



REPROS THERAPEUTICS INC.
  INDEX
 PageFACTORS AFFECTING FORWARD-LOOKING STATEMENTS
    
    
    3PART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)
    
    
    4Unaudited Condensed Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007
    
    
    5Unaudited Condensed Consolidated Statements of Operations for the three-months and six-months ended June 30, 2008 and 2007 and from Inception (August 20, 1987) through June 30, 2008
    
    
    6Unaudited Condensed Consolidated Statements of Stockholders Equity for the six-months ended June 30, 2008
    
    
    7Unaudited Condensed Consolidated Statements of Cash Flows for the six-months ended June 30, 2008 and 2007 and from Inception (August 20, 1987) through June 30, 2008
    
    
    8Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    9Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4. Controls and Procedures
    
    
    24PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    25Item 1A. Risk Factors
    
    
    25Item 4. Submission of Matters to a Vote of Security Holders
    
    
    25Item 5. Other Information
    
    
    25Item 6. Exhibits
    
    
    25SIGNATURES
    
    
    26Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
  2




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FACTORS AFFECTING FORWARD-LOOKING STATEMENTS
 ® ®
 3




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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
  4




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REPROS THERAPEUTICS INC. AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
  June 30,
    
    
    December 31,2008
    
    
    2007(unaudited)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    12,803
    
    
    $
    1,779Marketable securities
    
    
    900
    
    
    
    24,124Prepaid expenses and other current assets
    
    
    776
    
    
    
    479Total current assets
    
    
    14,479
    
    
    
    26,382Fixed Assets,net
    
    
    38
    
    
    
    47Other assets,net
    
    
    1,414
    
    
    
    1,170Total assets
    
    $
    15,931
    
    
    $
    27,599LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesAccounts payable
    
    $
    1,816
    
    
    $
    2,281Accrued expenses
    
    
    2,430
    
    
    
    1,258Total current liabilities
    
    
    4,246
    
    
    
    3,539Commitments and contingenciesStockholders EquityUndesignated Preferred Stock, $.001 par value, 5,000,000
shares authorized, none issued and outstanding
    
    
    
    
    
    
    Common Stock, $.001 par value, 20,000,000 shares
authorized, 14,711,939 shares issued and
12,774,904 shares outstanding
    
    
    15
    
    
    
    15Additional paid-in capital
    
    
    152,424
    
    
    
    152,033Cost of treasury stock, 1,937,035 shares
    
    
    (5,948
    )
    
    
    (5,948
    )Deficit accumulated during the development stage
    
    
    (134,806
    )
    
    
    (122,040
    )Total stockholders equity
    
    
    11,685
    
    
    
    24,060Total liabilities and stockholders equity
    
    $
    15,931
    
    
    $
    27,599
  5




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REPROS THERAPEUTICS INC. AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 From Inception(August 20, 1987)throughThree Months Ended June 30,
    
    
    Six Months Ended June 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008RevenuesLicensing fees
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    28,755Product royalties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    627Research and development grants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,219Interest income
    
    
    91
    
    
    
    442
    
    
    
    359
    
    
    
    759
    
    
    
    16,219Gain on disposal of fixed assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102Other Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35Total revenues and other income
    
    
    91
    
    
    
    442
    
    
    
    359
    
    
    
    759
    
    
    
    46,957ExpensesResearch and development
    
    
    5,475
    
    
    
    3,207
    
    
    
    11,640
    
    
    
    6,235
    
    
    
    136,333General and administrative
    
    
    689
    
    
    
    609
    
    
    
    1,485
    
    
    
    1,549
    
    
    
    35,699Interest expense and amortization
of intangibles
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    388Total expenses
    
    
    6,164
    
    
    
    3,816
    
    
    
    13,125
    
    
    
    7,784
    
    
    
    172,420Loss from continuing operations
    
    
    (6,073
    )
    
    
    (3,374
    )
    
    
    (12,766
    )
    
    
    (7,025
    )
    
    
    (125,463
    )Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,828
    )Gain on disposal of discontinued operation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    939Net loss before cumulative effect of
change in accounting principle
    
    
    (6,073
    )
    
    
    (3,374
    )
    
    
    (12,766
    )
    
    
    (7,025
    )
    
    
    (126,352
    )Cumulative effect of change in accounting
principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,454
    )Net loss
    
    $
    (6,073
    )
    
    $
    (3,374
    )
    
    $
    (12,766
    )
    
    $
    (7,025
    )
    
    $
    (134,806
    )Loss per share  basic and diluted:
    
    $
    (0.48
    )
    
    $
    (0.26
    )
    
    $
    (1.00
    )
    
    $
    (0.57
    )Weighted average shares used in loss per share calculation:Basic
    
    
    12,775
    
    
    
    12,775
    
    
    
    12,775
    
    
    
    12,268Diluted
    
    
    12,775
    
    
    
    12,775
    
    
    
    12,775
    
    
    
    12,268
  6




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REPROS THERAPEUTICS, INC. AND SUBSIDIARY
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 DeficitAccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    During the
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Treasury Stock
    
    
    Development
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Shares
    
    
    Amount
    
    
    Stage
    
    
    EquityBalance at December 31, 2007
    
    
    14,711,939
    
    
    $
    15
    
    
    $
    152,033
    
    
    
    1,937,035
    
    
    $
    (5,948
    )
    
    $
    (122,040
    )
    
    $
    24,060Stock based option compensation
    
    
    
    
    
    
    
    
    
    
    391
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    391Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,766
    )
    
    
    (12,766
    )Balance at June 30, 2008
    
    
    14,711,939
    
    
    $
    15
    
    
    $
    152,424
    
    
    
    1,937,035
    
    
    $
    (5,948
    )
    
    $
    (134,806
    )
    
    $
    11,685
  7




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REPROS THERAPEUTICS INC. AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 From Inception(August 20, 1987)throughSix Months Ended June 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008Cash Flows from Operating ActivitiesNet loss
    
    $
    (12,766
    )
    
    $
    (7,025
    )
    
    
    (134,806
    )Gain on disposal of discontinued operations
    
    
    
    
    
    
    
    
    
    
    (939
    )Gain on disposal of fixed assets
    
    
    
    
    
    
    
    
    
    
    (102
    )Adjustments to reconcile net loss to net cash
used in operating activities:Noncash financing costs
    
    
    
    
    
    
    
    
    
    
    316Noncash inventory impairment
    
    
    
    
    
    
    
    
    
    
    4,417Noncash patent impairment
    
    
    
    
    
    
    
    
    
    
    1,339Noncash decrease in accounts payable
    
    
    
    
    
    
    
    
    
    
    (1,308
    )Depreciation and amortization
    
    
    20
    
    
    
    16
    
    
    
    3,852Noncash stock-based
compensation
    
    
    391
    
    
    
    487
    
    
    
    4,877Common stock issued for agreement not to
compete
    
    
    
    
    
    
    
    
    
    
    200Series B Preferred Stock issued for consulting
services
    
    
    
    
    
    
    
    
    
    
    18Changes in operating assets and liabilities
(net effects of purchase of businesses in 1988 and 1994):Decrease (increase) in receivables
    
    
    
    
    
    
    
    
    
    
    (199
    )Decrease (increase) in inventory
    
    
    
    
    
    
    
    
    
    
    (4,447
    )Decrease (increase) in prepaid expenses and other
current assets
    
    
    (297
    )
    
    
    (330
    )
    
    
    (474
    )(Decrease) increase in accounts payable and
accrued expenses
    
    
    706
    
    
    
    (1,036
    )
    
    
    5,441Net cash used in operating activities
    
    
    (11,946
    )
    
    
    (7,888
    )
    
    
    (121,815
    )Cash Flows from Investing ActivitiesChange in trading marketable securities
    
    
    23,224
    
    
    
    (18,345
    )
    
    
    (1,091
    )Capital expenditures
    
    
    (2
    )
    
    
    (3
    )
    
    
    (2,369
    )Purchase of technology rights and other assets
    
    
    (252
    )
    
    
    (118
    )
    
    
    (3,453
    )Proceeds from sale of PP&E
    
    
    
    
    
    
    
    
    
    
    225Cash acquired in purchase of FTI
    
    
    
    
    
    
    
    
    
    
    3Proceeds from sale of subsidiary, less
$12,345 for operating losses during
1990 phase-out period
    
    
    
    
    
    
    
    
    
    
    138Proceeds from sale of the assets of FTI
    
    
    
    
    
    
    
    
    
    
    2,250Increase in net assets held for disposal
    
    
    
    
    
    
    
    
    
    
    (213
    )Net cash provided by (used in) investing activities
    
    
    22,970
    
    
    
    (18,466
    )
    
    
    (4,510
    )Cash Flows from Financing ActivitiesProceeds from issuance of common stock, net of
offering costs
    
    
    
    
    
    
    33,053
    
    
    
    135,457Exercise of stock options
    
    
    
    
    
    
    37
    
    
    
    363Proceeds from issuance of preferred stock
    
    
    
    
    
    
    
    
    
    
    23,688Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    (21,487
    )Proceeds from issuance of notes payable
    
    
    
    
    
    
    
    
    
    
    2,839Principal payments on notes payable
    
    
    
    
    
    
    
    
    
    
    (1,732
    )Net cash provided by financing activities
    
    
    
    
    
    
    33,090
    
    
    
    139,128Net increase (decrease) in cash and cash equivalents
    
    
    11,024
    
    
    
    6,736
    
    
    
    12,803Cash and cash equivalents at beginning of period
    
    
    1,779
    
    
    
    1,136
    
    
    
    Cash and cash equivalents at end of period
    
    $
    12,803
    
    
    $
    7,872
    
    
    $
    12,803
  8




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REPROS THERAPEUTICS INC. AND SUBSIDIARY
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2008
 NOTE 1  Organization, Operations and Liquidity
  ®
 ®
     9




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Recent Accounting Pronouncements
  10




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11




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NOTE 2  Marketable Securities
   Basis of Fair ValueMeasurement
    
    June 30, 2008
    
    December 31, 2007Money Market Securities
    
    Level 1
    
    $
    12,690
    
    
    $
    1,696Corporate Bonds
    
    Level 2
    
    
    900
    
    
    
    9,632Taxable Auction Securities
    
    Level 3
    
    
    
    
    
    
    6,400Certificates of Deposit
    
    Level 2
    
    
    
    
    
    
    4,503Medium and Short Term
Notes
    
    Level 2
    
    
    
    
    
    
    2,594Municipal Bonds
    
    Level 2
    
    
    
    
    
    
    995Total
    
    
    
    
    
    $
    13,590
    
    
    $
    25,820
   12




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Level 1
    
    Unadjusted quoted prices in active markets that are accessible
at the measurement date for identical, unrestricted assets or
liabilities;Level 2
    
    Quoted prices in markets that are not considered to be active or
financial instruments for which all significant inputs are
observable, either directly or indirectly;Level 3
    
    Prices or valuations that require inputs that are both
significant to the fair value measurement and unobservable.
       NOTE 3  Patents
  13




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NOTE 4  Accrued Expenses
  June 30, 2008
    
    
    December 31, 2007Research and development costs
    
    $
    2,160
    
    
    $
    955Payroll
    
    
    
    
    
    
    63Patent costs
    
    
    126
    
    
    
    51Other
    
    
    144
    
    
    
    189Total
    
    $
    2,430
    
    
    $
    1,258
 NOTE 5  Loss Per Share
   Three Months Ended June 30,
    
    Six Months Ended June 30,2008
    
    2007
    
    2008
    
    2007Net Loss
    
    $
    (6,073
    )
    
    $
    (3,374
    )
    
    $
    (12,766
    )
    
    $
    (7,025
    )Average common shares
outstanding
    
    
    12,775
    
    
    
    12,775
    
    
    
    12,775
    
    
    
    12,268Basic and diluted loss per share
    
    $
    (0.48
    )
    
    $
    (0.26
    )
    
    $
    (1.00
    )
    
    $
    (0.57
    )
  NOTE 6  Commitments and Contingencies
  14




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Such statements reflect the Companys current views with respect to future events and
financial performance and are subject to certain risks, uncertainties and assumptions. Should one
or more of these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated in such forward-looking
statements. The following discussion of financial condition should be read in conjunction with the
accompanying consolidated financial statements and related notes.
 Overview
   Proellex®
 
    
    Phase 3 three-month short course treatment of symptomatic uterine fibroids
associated with anemia in women who may consider having a subsequent hysterectomy
    
    Phase 3 for the chronic treatment of symptomatic uterine fibroids
    
    Phase 2 for the treatment of symptomatic endometriosis
 Androxal®
 
    
    Phase 2b proof-of-concept trial in men with low testosterone levels wanting to
improve or maintain their fertility and/or sperm number and function
    
    Planned Phase 2b proof-of-concept trial to treat men with AIHH, with concomitant
plasma glucose elevations
 Proellex
  15




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
    
    initial results from 13 women who had endometrial biopsies post menses following
last dose of drug in a two drug cycle extension study showed that results of
assessments of the post menses tissues are that of a benign endometrium. While
previous end of drug cycle biopsies from these subjects all had histological
changes consistent with those induced by progesterone receptor modulators (Proellex
class of drugs), none of these post drug cessation biopsies reflected any of those
histological changes. These key findings indicate that the effects of Proellex on
the endometrium are present during drug exposure and are reversible upon cessation
of drug treatment;
    
    results from a pilot study of the potential for adverse cardiac events
associated with administration of doses of Proellex up to four times higher than
the intended marketed dose showed that despite up to a four fold increase in
Proellex plasma concentrations over seven days the QTc did not change; and
    
    initial macroscopic findings from a two-year rat carcinogenicity study and a
six-month mouse carcinogenicity study showed no potential for tumor induction as
compared to placebo.
 www.reprosrx.com www.sec.gov
   16




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Androxal
  ®
 ® ®
   17




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General
   18




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19




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Recent Accounting Pronouncements
    20




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Results of Operations
 Three-Month and Six-Month Periods Ended June 30, 2008 and 2007
 Revenues and Other Income
  21




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Research and Development Expenses
 General and Administrative Expenses
 Liquidity and Capital Resources
    22




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk.
 23




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Item 4. Controls and Procedures
 Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  24




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 4. Submission of Matters to a Vote of Security Holders
   For
    
    WithheldJoseph S. Podolski
    
    
    11,315,179
    
    
    
    60,869Louis Ploth, Jr.
    
    
    11,313,814
    
    
    
    62,234Daniel F. Cain
    
    
    11,313,529
    
    
    
    62,519Jean Fourcroy, M.D., Ph.D., M.P.H.
    
    
    11,307,496
    
    
    
    68,552Jeffrey R. Harder, J.D.
    
    
    11,150,535
    
    
    
    225,513Nola Masterson
    
    
    11,313,896
    
    
    
    62,152David Poorvin, Ph.D.
    
    
    11,313,896
    
    
    
    62,152
  For 11,352,148
    
    Against 21,058
    
    Abstain 2,842
 
 Item 5. Other Information
  
 Item 6. Exhibits
 31.1*
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).31.2*
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).32.1*
    
    Certification furnished pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).32.2*
    
    Certification furnished pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).
 
 *
    
    Filed herewith. 25




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SIGNATURES
  Date:  August 11, 2008
    REPROS THERAPEUTICS INC.By:
    /s/ Joseph S. PodolskiJoseph S. PodolskiPresident, Chief Executive Officer and Director
(Principal Executive Officer)  By:
    /s/ Louis Ploth, Jr.Louis Ploth, Jr.Vice President Business Development, Chief Financial Officer, Director and Secretary
(Principal Financial and Accounting Officer) 26




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Exhibit Index
 31.1*
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).31.2*
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).32.1*
    
    Certification furnished pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).32.2*
    
    Certification furnished pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).
 
 *
    
    Filed herewith.