Question-and-Answer Session
Operator
(Operator Instructions). Our first question comes from Gregg Gilbert with Bank of America and Merrill Lynch. Your line is open.
Gregg Gilbert - Bank of America-Merrill Lynch
Thank you. Good morning guys. Peter, so that we can focus on your operating metrics more clearly, can you walk us through how the Retigabine arrangement with flow through Alliance revenues as well as SG&A and R&D in '09 so we can peel back those effects?
Peter Blott
Okay. Gregg, essentially as I've said, we put the $125 million of upfront payments on our balance sheet and then released that as we complete our participatory obligations essentially over the next year or a couple of years. That would get released as the credit would go either against our operating expenses to the extent that we are spending money less than that $125 million on R&D. And that was capped at $100 million maximum although we anticipate spending less than that.
The difference between the amounts that we forecast spending on the R&D collaboration, on Retigabine and the 125 million will be released to Alliance revenue. That was $4.4 million in the quarter and essentially will depend upon our forecast of how much our share of the collaboration expenses will be less than the 125 million.
Gregg Gilbert - Bank of America-Merrill Lynch
Can you tell us what's baked in your cash EPS goal in terms of benefit from the Retigabine deal?
Peter Blott
We're not giving detailed guidance on individual lines within our pay, including that Alliance revenue line. But I think it's a very good approximation to say that the estimates require you to predict the fourth quarter of 2008 has the same accounting treatment as the quarters in 2009 would have, so that would be the best starting point for the amounts going forward. So, essentially 4.4 million in a year, 4.4 million a quarter will continue throughout the year.
Gregg Gilbert - Bank of America-Merrill Lynch
But then isn't that positive?
Peter Blott
That would be as Alliance revenue.
Gregg Gilbert - Bank of America-Merrill Lynch
Correct.
Peter Blott
And then essentially predicting a zero when the R&D expense on the SG&A expenses in that I can say Retigabine collaboration.
Gregg Gilbert - Bank of America-Merrill Lynch
So on the last call I believe you indicated your guidance included a $50 million R&D spent. Can tell us what that is now and how much of that is R&D that is not involved with the Retigabine arrangement? In other word, what sort of the real ongoing R&D especially in light of your decision to kill Diastat nasal spray?
- To read the full transcript on Seeking Alpha, click here »
