The company receives revenues in three categories: collaboration, program fees, and milestones. All of these payments are coming from King in a joint-venture development program for Remoxy, as well as two other earlier stage candidates who's indications are not yet known. Collaboration revenues are reimbursements from King for R&D expenses. Program fee revenues are a pro-rated accounting of a $150 million up-front payment from King at the outset of the collaboration in 2005. They amount to about $3.6 million in revenue a quarter, and will be recorded through 2014, but do not provide ongoing free cash flow. Finally, milestone payments are one-time payments from King for reaching a critical milestone, such as submission to the FDA, which PTIE received a $20 million payment for in the middle of last year.

Remoxy is a very important drug for King, potentially representing anywhere from $500 million to $1 billion in annual sales. Oxycontin is a widely used pain management drug, and at over $2.5 billion in sales in 2008, one of the top 10 selling pharmaceuticals in the world. However, due to its euphoric effects, it is also a very popular recreational drug. The standard long-release delivery method of Oxycontin is easily tampered with by recreational users, who break open the capsule to prevent the long-release method and to maximize the desired effect. The ease of tampering can also lead to accidental overdoses from those using the drug for pain, as any breaking of the capsule can lead to accidental overdose. Remoxy is designed to prevent these kinds of uses of oxycodone, the active ingredient.

Pain Therapeutics stands to collect a large financial windfall if Remoxy becomes commercially successful.