POINT RICHMOND, Calif., Sept. 13, 2013 /PRNewswire/ -- Transcept Pharmaceuticals, Inc. (NASDAQ: TSPT) announced today that its Board of Directors has adopted a tax benefit preservation plan to help preserve the value of its net operating losses and other deferred tax benefits. As of December 31, 2012, Transcept had cumulative net operating loss carryforwards of approximately $78 million, which can be utilized in certain circumstances to offset future U.S. taxable income.
Adoption of the tax benefit preservation plan is among multiple actions the company is taking to ensure Transcept is positioned to achieve its strategic objectives. These actions also include continuing discussions with Purdue Pharma L.P., our U.S. marketing partner for Intermezzo, regarding strategies to maximize the performance and value of the product.
The tax benefit preservation plan was adopted to protect an important Transcept asset that may have meaningful value to all Transcept stockholders. The value of these tax benefits would be substantially limited if it were to experience an "ownership change" as defined under Section 382 of the Internal Revenue Code. In general, an ownership change would occur if stockholders that own (or are deemed to own) at least five percent or more of the outstanding Transcept common stock increased their cumulative ownership in Transcept by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. The tax benefit preservation plan reduces the likelihood that changes in the Transcept investor base would limit future use of its tax benefits, which would significantly impair the value of the benefits to all stockholders. Transcept believes that no ownership change as defined in Section 382 has occurred as of the date of this press release.
The Board of Directors adopted the tax benefit preservation plan after considering, among other matters, the estimated value of the tax benefits, the potential for diminution upon an ownership change and the risk of an ownership change occurring.