UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2001
OR
[ ] 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 0-19986
CELL GENESYS, INC.
(Exact name of Registrant as specified in its Charter)
| Delaware | 94-3061375 |
| (State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification Number) |
342 Lakeside Drive, Foster City, California 94404
(Address of Principal Executive Offices including Zip Code)
(650) 425-4400
(Registrant's Telephone Number, Including Area Code)
(Former name, former address and former fiscal year if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ]
As of July 31, 2001, the number of outstanding shares of the Registrant's Common Stock was 34,554,763.
CELL GENESYS, INC.
FORM 10-Q
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited):
- Condensed Consolidated Balance Sheets -- June 30, 2001 and December 31, 2000
- Condensed Consolidated Statements of Operations -- Three and Six Months ended June 30, 2001 and 2000
- Condensed Consolidated Statements of Cash Flows -- Six Months ended June 30, 2001 and 2001
- Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
Results of Operations
Liquidity and Capital Resources
Risk Factors
Item 3. Quantitative and Qualitative Disclosure about Market Risks
PART II. OTHER INFORMATION
Item 1: Litigation
Item 2: Changes in Securities and Use of Proceeds
Item 3: Defaults Upon Senior Securities
Item 4: Submission of Matters to a Vote of Security Holders
Item 5: Other Information
Item 6: Exhibits and Reports on Form 8-K
SIGNATURES
PART I -- FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CELL GENESYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
-------------------------
2001 2000
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ASSETS (unaudited)
Current assets:
Cash and cash equivalents including restricted cash of
$199 and $349 for 2001 and 2000, respectively............... $ 52,036 $ 21,747
Short-term investments...................................... 180,007 237,900
Investment in Abgenix common stock.......................... 402,936 528,858
Prepaid expenses and other current assets................... 1,420 482
----------- ------------
Total current assets................................ 636,399 788,987
Property and equipment, net................................... 13,581 4,439
Deposits and other assets..................................... 908 290
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$ 650,888 $ 793,716
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................ $ 1,079 $ 520
Accrued compensation and benefits........................... 1,761 1,323
Deferred revenue............................................ 6,604 5,503
Accrued legal expenses...................................... 385 492
Accrued clinical trial costs................................ 363 418
Other accrued liabilities................................... 1,527 599
Income tax payable.......................................... 7,461 24,820
Deferred tax liability...................................... 157,836 204,300
Current portion of property and equipment financing......... 680 1,027
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Total current liabilities........................... 177,696 239,002
Noncurrent portion of property and equipment financing........ 1,055 1,350
Commitments and contingencies
Minority interest in equity of subsidiary..................... 361 --
Redeemable convertible preferred stock........................ 17,185 17,185
Stockholders' equity:
Common stock................................................ 34 34
Additional paid-in capital.................................. 257,582 256,007
Accumulated comprehensive income, principally unrealized
gain on investment of Abgenix............................. 236,741 315,021
Accumulated deficit......................................... (39,766) (34,883)
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Total stockholders' equity.......................... 454,591 536,179
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$ 650,888 $ 793,716
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See accompanying notes.
CELL GENESYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data) (unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ---------------------
2001 2000 2001 2000
----------- ---------- ---------- ----------
Revenue under collaborative agreements........... $4,036 $4,985 $10,009 $9,585
----------- ---------- ---------- ----------
Operating expenses:
Research and development....................... 11,010 7,747 21,760 14,151
General and administrative .................... 2,839 1,574 5,514 3,230
----------- ---------- ---------- ----------
Total operating expenses......................... 13,849 9,321 27,274 17,381
Gain on sale of Abgenix stock.................... - - - 190,236
Interest and other income........................ 3,613 3,868 10,866 5,960
Interest expense................................. (73) (120) (127) (244)
----------- ---------- ---------- ----------
Net income (loss) before minority interest, income
tax and cumulative effect of change in account (6,273) (588) (6,526) 188,156
Income (loss) attributed to minority interest.... 27 - (1) -
----------- ---------- ---------- ----------
Income (loss) before income tax and cumulative
effect of accounting change................... (6,246) (588) (6,527) 188,156
Income tax benefit (provision)................... 1,568 154 1,631 (52,093)
----------- ---------- ---------- ----------
Income (loss) before cumulative effect of
change inc accounting......................... (4,678) (434) (4,896) 136,063
Cumulative effect of change in accounting
principle, net of tax......................... - - - (6,460)
----------- ---------- ---------- ----------
Net income (loss)................................ ($4,678) ($434) ($4,896) $129,603
----------- ---------- ---------- ----------
Basic income (loss) per common share before
cumulative effect of change in accounting..... ($0.14) ($0.01) ($0.14) $4.10
Cumulative effect of change in accounting principle - - - ($0.19)
----------- ---------- ---------- ----------
Basic net income (loss) per common share......... ($0.14) ($0.01) ($0.14) $3.90
=========== ========== ========== ==========
Diluted income (loss) per common share before
cumulative effect of change in accounting..... ($0.14) ($0.01) ($0.14) $3.69
Cumulative effect of change in accounting principle - - - (0.18)
----------- ---------- ---------- ----------
Diluted net income (loss) per common share....... ($0.14) ($0.01) ($0.14) $3.51
=========== ========== ========== ==========
Weighted average shares of common stock
outstanding - basic........................ 34,366 33,267 34,229 33,209
=========== ========== ========== ==========
Weighted average shares of common stock
outstanding - diluted...................... 34,366 33,267 34,229 36,880
=========== ========== ========== ==========
See accompanying notes.
CELL GENESYS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
Six Months Ended June 30
--------------------------
2001 2000
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)..................................... $ (4,896) $ 129,603
Adjustments to reconcile net income (loss) to net
cash used by operating activities:
Depreciation and amortization...................... 1,573 1,163
Gain on disposal of property and equipment......... -- (24)
Changes to:
Prepaid expenses and other assets.................. (1,556) 450
Accounts payable................................... 559 (316)
Accrued compensation and benefits.................. 438 (1,007)
Deferred revenue................................... 1,101 7,344
Accrued legal expenses............................. (107) (496)
Accrued acquisition and related costs.............. -- (168)
Other accrued liabilities.......................... 624 (566)
Accrued tax provision.............................. (13,659) 36,786
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Net cash provided by (used in)
operating activities........................ (15,923) 172,769
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of short-term investments................... (243,766) (115,736)
Maturities of short-term investments.................. 20,433 9,846
Sales of short-term investments....................... 278,966 2,994
Minority interest in equity of subsidiary............. 361 --
Adjustment in accumulated other comprehensive
income from sale of Abgenix shares................. -- 3,502
Proceeds from disposal of property and equipment...... -- 24
Capital expenditures.................................. (10,715) (873)
Exercise of Abgenix warrants.......................... -- (730)
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Net cash provided by (used in)
investing activities........................ 45,279 (100,973)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of convertible
preferred stock..................................... -- 8,750
Proceeds from issuances of common stock............... 1,575 7,009
Payments under property and equipment
financing obligations............................... (642) (2,854)
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Net cash provided by financing activities..... 933 12,905
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Net increase in cash and cash equivalents............... 30,289 84,701
Cash and cash equivalents at beginning of period........ 21,747 5,300
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Cash and cash equivalents at end of period.............. $ 52,036 $ 90,001
============ ===========
See accompanying notes
Cell Genesys, Inc.
Notes To Condensed Consolidated Financial Statements
1. Organization and Summary of Significant Accounting Policies
Organization and basis of presentation
Cell Genesys, Inc. ("Cell Genesys" or the "Company"), a Delaware corporation, is focused on the development and commercialization of cancer vaccines and gene therapies to treat cancer and other major, life-threatening diseases.
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended June 30, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001.
The balance sheet at December 31, 2000 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Report on Form 10-K for the year ended December 31, 2000.
Use of Estimates
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Concentration of Risk
Cash and cash equivalents, short-term investments, and accounts receivables are financial instruments, which potentially subject the company to concentrations of credit risk. The Company maintains and invests excess cash in money market funds and repurchase agreements which bear minimal risk. The Company has not experienced any significant credit losses and does not generally require collateral on receivables.
Comprehensive income (loss)
Cell Genesys recognized total comprehensive income of $185 million, including change in unrealized gain in investment of Abgenix, Inc. ("Abgenix") of $190.8 million, for the three months ended June 30, 2001, compared to total comprehensive income of $245.9 million for the same period in the prior year. For the six months period ended June 30, 2001, total comprehensive loss was $133.3 million, including change in unrealized loss in investment of Abgenix of $128.4 million, compared to total comprehensive income of $280.5 million a year ago.
Revenue recognition
Research payments under collaborative arrangements and grants are recognized as revenue based on research expenses incurred as provided for under the terms of the arrangements.
The Company recognizes revenue from non-refundable license fees over the research and development period of the agreement. This is based on the adoption of the SEC Staff Accounting Bulletin No. 101 ("SAB 101") -Revenue Recognition in Financial Statements.The Company adopted SAB 101 during the first quarter of 2000 and has reflected the cumulative effect of this accounting change as a single line item in the statement of operations.
Incentive milestone payments under collaborative agreements are recognized as revenue upon achievement of the incentive milestone events, which represent the culmination of the earnings process because the Company has no future performance obligations related to the payment. Incentive milestone payments are triggered either by the results of our research efforts or by events external to Cell Genesys, such as regulatory approval to market a product or the achievement of specified sales levels by a marketing partner.
Amounts received in advance are recorded as deferred revenue until the related revenue is recognized.
Accounting for derivative financial instruments and for hedging activities
As of January 1, 2001 the Company adopted the Statement of Financial Accounting Standards No. 133 ("SFAS 133,") "Accounting for Derivative Instruments and Hedging Activities", as amended in June 2000 by Statement of Financial Accounting Standards No. 138 ("SFAS 138,") "Accounting for Certain Derivative Instruments and Certain Hedging Activities", which requires companies to recognize all derivatives as either assets or liabilities in the balance sheet and measure such instruments at fair value. The adoption of these statements did not have a material impact on the Company's consolidated financial statements.
2.Investment in Abgenix
Since 1996, the Company has maintained an investment in Abgenix. In December 1997 and January 1998, Abgenix completed private placements of securities reducing Cell Genesys' percentage ownership from approximately 100 percent to approximately 54 percent.
On July 2, 1998, Abgenix completed an initial public offering ("IPO"), reducing Cell Genesys' percentage ownership to approximately 40 percent. Prior to the IPO, Abgenix was a consolidated subsidiary, and its financial results were presented accordingly. From July 2, 1998 through November 19, 1999, the Company's investment in Abgenix was accounted for under the equity method of accounting as a result of the reduced ownership position. On March 4, 1999, Abgenix completed the sale of an additional 3.0 million shares of common stock in a public offering which further reduced the Company's ownership percentage in Abgenix to approximately 22 percent. The difference between the cost of the investment (the carrying value of the net assets less the equity in loss of Abgenix immediately prior to the public offering) and the amount of the underlying equity in net assets of Abgenix immediately following each of the public offerings was accounted for in accordance with APB Opinion No. 18. "The Equity Method of Accounting for Investment in Common Stock" and Staff Accounting Bulletin No. 51 "Accounting for Sales of Stock by a Subsidiary". Accordingly, the Company recognized $9.8 million as a contribution to stockholders' equity upon completion of the Abgenix March 1999 public offering.
On November 19, 1999, Abgenix completed a private placement of 1.8 million shares of its common stock, and Cell Genesys' ownership was further reduced to approximately 19 percent. Accordingly, the Company no longer accounts for Abgenix's losses under the equity method of accounting. The Company's investment in Abgenix is now treated as available-for-sale securities and accounted for in accordance with SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities".
During 2000, the Company sold shares of Abgenix common stock resulting in $243.9 million in net proceeds. As of June 30, 2001, the Company retains approximately 8.9 million shares, or 10.5 percent, ownership in Abgenix. Based on Abgenix's common stock's market value of $45 per share as of June 30, 2001, the total carrying amount of the Company's investment in Abgenix was $402.9 million.
- Investment in Ceregene
In January 2001, the Company created a new subsidiary, Ceregene, Inc. ("Ceregene"). The Company contributed $10 million cash and access to technology and patents in the Central Nervous System ("CNS") gene therapy area, in exchange for approximately 60 percent ownership of the new company. Ceregene's financial statements are consolidated into the operations of the Company.
4. Deferred tax liability
The Company records a deferred tax liability on the unrealized gain on the investment in Abgenix at an effective tax rate of 40 percent. The deferred tax liability is adjusted quarterly in accordance with the change in the valuation of the Company's investment in Abgenix. The calculation does not take into consideration any tax planning opportunities or for example, the Company's ability to utilize available net operating loss carryforwards or tax credits. As such, it does not necessarily reflect the actual amount of tax that would be paid if the Company's gain on its investment in Abgenix was realized.
5. Subsequent event
On August 2, 2001, the Company announced that it had signed a definitive agreement to acquire Calydon, Inc., a private company focused on the treatment of cancer using genetically engineered oncolytic viruses. In connection with the proposed acquisition, the Company will issue approximately 935,000 shares of the Company's common stock to Calydon shareholders, noteholders and management. Based on a 30 trading day trailing closing price average ending July 30, 2001, the value of these shares was approximately $17.4 million. The Company will also assume approximately $2.6 million of Calydon's liabilities. The transaction is expected to close during September 2001.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Statements made in this Item other than statements of historical fact, including statements about the Company's and its subsidiaries' clinical trials, research programs, product pipelines, current and potential corporate partnerships, licenses and intellectual property, the adequacy of capital reserves and anticipated operating results and cash expenditures, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. As such, they are subject to a number of uncertainties that could cause actual results to differ materially from the statements made, including risks associated with the success of research and product development programs, the issuance and validity of patents, the development and protection of proprietary technologies, the ability to raise capital, operating expense levels and the ability to establish and retain corporate partnerships. Reference is made to discussions about risks associated with product development programs, intellectual property and other risks which may affect the Company under "Risk Factors" below. The Company does not undertake any obligation to update forward-looking statements. The following should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2000.
Overview
Since its inception in April 1988, Cell Genesys, Inc. has focused its research and product development efforts on human disease therapies which are based on innovative gene modification technologies. The Company's strategic objective is to develop and commercialize cancer vaccines and gene therapies to treat cancer and other major, life-threatening diseases. Cell Genesys' current clinical programs include GVAX® cancer vaccines in Phase II studies for prostate cancer, Phase I/II studies for lung cancer and a Phase I/II study for multiple myeloma. The Company expects to initiate a Phase II trial for GVAX® pancreatic cancer vaccine and a Phase I/II trial for GVAX® leukemia vaccine in the second half of 2001. GVAX® vaccines for prostate cancer and lung cancer are being developed through a worldwide collaboration with the pharmaceutical division of Japan Tobacco Inc. In addition, Cell Genesys has preclinical programs which are evaluating potential gene therapies for cancer, hemophilia and cardiovascular disorders. In January 2001, Cell Genesys created a new majority-owned subsidiary, Ceregene Inc., which is focused on gene therapies for central nervous system disorders. The Company also has assets outside of its core business which can be used to help maintain financial strength while product candidates are under development. These assets include Cell Genesys' 10.5 percent equity ownership of Abgenix, Inc., (Nasdaq: ABGX) the Company's former subsidiary which is focused on the development and commercialization of antibody therapies.
During the second quarter of 2001, Cell Genesys announced multiple advancements from its clinical and preclinical programs, including the following:
- Reported interim clinical data at the American Society for Clinical Oncology (ASCO) meeting from a multicenter Phase I/II GVAX® lung cancer vaccine trial demonstrating objective evidence of antitumor activity, including a major response rate of 18 percent, which includes three complete and one partial response in 22 currently evaluable patients with advanced non small-cell lung cancer who have failed chemotherapy and/or radiation therapy. These data were chosen to be highlighted as one of 17 out of approximately 3,300 presentations at the ASCO meeting and one of 11 out of approximately 1,100 presentations at the American Society of Gene Therapy (ASGT) meeting.
- Announced that the Company initiated enrollment for a second multicenter Phase I/II clinical trial of GVAX® lung cancer vaccine in patients with advanced non small-cell lung cancer. This trial will evaluate an alternative product format with potential commercialization advantages and will be completed prior to the initiation of Phase III trials.
- Announced that the Company initiated a series of Phase I/II clinical trials of a new high-potency form of GVAX® prostate cancer vaccine following encouraging Phase II clinical data reported for its first generation product. The data demonstrated antitumor activity in patients with advanced prostate cancer who have failed hormone therapy.
- Reported positive preclinical data from studies of antiangiogenesis gene therapy conducted in collaboration with EntreMed, Inc. These data, reported at the ASGT meeting, demonstrate the feasibility of gene therapy as a strategy to inhibit tumor growth by delivering genes that block the growth of tumor blood vessels.
- Reported in the journal,Blood, that in preclinical studies of hemophilia gene therapy, the delivery of the factor IX gene, a blood clotting gene, into the liver demonstrated clear treatment advantages as compared to intramuscular injection.
Cell Genesys' financial resources enable it to aggressively pursue products within its portfolio and to potentially acquire product candidates or technologies that will enhance shareholder value. During 2000, Cell Genesys' financial position significantly increased as a result of the appreciation in value of the Company's holdings in Abgenix. Additionally, Cell Genesys participated in two Abgenix stock sales in 2000, raising approximately $243.9 million to strengthen the Company's cash position.
Cell Genesys' goal is to emphasize "off-the- shelf" products that enable cancer vaccines or gene therapies to be provided in out-patient settings. These potentially include both non patient- specific therapies, which could be vialed pharmaceuticals for direct administration, and patient-specific products, which could be manufactured as non-patient specific products and combined with the patient's cells during treatment.
Cancer vaccines currently are being evaluated by Cell Genesys in human clinical studies. These include studies of GVAX® cancer vaccines that are treatment vaccines designed to impart new disease-fighting capabilities to the patient's immune system in order to enhance an immune response against malignant cells. Based on encouraging results announced in the second quarter of 2001, Cell Genesys launched additional trials for both GVAX® lung cancer vaccine and GVAX® prostate cancer vaccine in preparation for Phase III trials which could be launched in 2002.
In vivo gene therapies are at the preclinical stage of development at Cell Genesys. Treatment strategies may target cells that typically cannot be removed from the body for external processing and therefore are modified within the body. Within vivo gene therapy, the treatment goals include stimulating targeted cells to produce a protein or other substance needed to normalize key biological processes, or otherwise inhibiting specific disease processes. The Company's preclinical research focuses on studies of gene therapies in animal models for cancer, hemophilia and cardiovascular disorders. Encouraging data from the Company's preclinical cancer program focusing on antiangiogenesis gene therapy were presented in collaboration with EntreMed, Inc., a Cell Genesys collaborator, at the ASGT meeting in June 2001. Cell Genesys expects to choose a product candidate from its preclinical cancer gene therapy program by the end of 2001 to advance to clinical trials. The Company's preclinical gene therapy program in Parkinson's disease is being pursued by Cell Genesys' majority-owned subsidiary, Ceregene, Inc., which was launched in January 2001. In April 2001, Ceregene announced that the first patient had been treated in a Phase I clinical study for Alzheimer's disease gene therapy.
Cell Genesys ended the second quarter of 2001 with approximately $232 million in cash, cash equivalents and short-term investments. The Company has maintained its financial position by relying on funding from various corporate collaborations and licensing agreements, as well as through strategic management of its resources. Revenues for the second quarter of 2001 were derived primarily from the above-mentioned GVAX® collaboration. The Company plans to continue to finance its operations, on an opportunistic basis, through corporate collaborations with established pharmaceutical and biotechnology companies, as well as the periodic sale of portions of its investment in Abgenix. This funding strategy is intended to allow the Company to develop its technologies as broadly as possible, to fund product development and to accelerate the commercialization of certain product opportunities. Such alliances are intended to provide financial resources for research and development and the establishment of manufacturing capabilities and marketing infrastructure for the commercialization of potential disease therapies.
Results of Operations
Revenue was $4.0 million and $10.0 million for the three and six months ended June 30, 2001, compared with $5.0 million and $9.6 million for the same prior year periods. The higher revenue recognized in the second quarter of the prior year was a result of an additional product development milestone recognized in that period.
Research and development expenses were $11.0 million and $21.8 million for the three and six months ended June 30, 2001, compared with $7.7 million and $14.1 million for the three and six months ended June 30, 2000. The increase in research and development costs is due to advancing clinical trial programs in the areas of pancreatic cancer, myeloma and leukemia and the development of the hemophilia program and is expected to continue to increase in the future. The rate of increase depends on a number of factors including progress in research and development and in clinical trials.
General and administrative expenses were $2.8 million and $5.5 million for the three and six months ended June 30, 2001, compared with $1.6 million and $3.2 million for the three and six months ended June 30, 2000. The increase resulted from additional headcount in administrative areas to support expanded preclinical and clinical programs.
Interest and other income decreased slightly to $3.6 million from $3.9 million at $844,000 and $841,000 for the three months ended June 30, 2001 and 2000, respectively. Interest income increased to $10.9 million from $6.0 million for the six month periods ended June 30, 2001 and 2000, respectively. The increase is a result of higher average cash balances during 2001 and $3.6 million realized gains earned from converting a portion of the investment portfolio from tax-free securities to taxable securities. The conversion was part of the Company's strategy to minimize future tax liabilities by offsetting operating losses and available tax net operating loss carryforwards against interest income and gain on future sales of Abgenix common stock. For the six months ended June 30, 2000 the Company realized a gain on sale of Abgenix stock in the amount of $190.2 million. The Company has not sold any Abgenix common stock during 2001. Interest expense decreased to $73,000 from $120,000 for the three months ended June 30, 2001 and 2000, respectively; due primarily to reduced debt.
Cell Genesys had a net loss of $4.7 million and $4.9 million for the three and six months ended June 30, 2001, compared to net loss of $434,000 for the three months ended June 30, 2000 and net income of $129.6 million for the six months ended June 30, 2000. The increased loss for the three month period was mainly due to increased research and development expenses in advancing preclinical and clinical programs this year. The Company realized a gain on the sale of Abgenix common stock during the first quarter of 2000. Ceregene's results are included in the reported net income and currently the interest income from cash investments is offsetting most of the operating costs.
The Company recorded a tax benefit for the three and six months ended June 30, 2001 of $1.6 million, which represents the estimated refund available from the carryback of current year's losses to offset taxable income in 2000. The tax provision recorded in the quarter ended June 30, 2000 was approximately $52 million, representing the estimated tax due, after utilization of available net operating losses and tax credits, on the gain on sale of Abgenix common stock in that quarter.
Net Income (Loss) Per Share
Basic earnings per share is calculated using income available to common share owners divided by the weighted average of common shares outstanding during the reporting period. Diluted earnings per share is similar to Basic EPS except that the weighted average common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares, such as preferred stock, warrants and options, had been issued. These potential additional share issuances are not included in diluted earnings per share in loss periods as their effect would be anti- dilutive. The treasury stock method is used to calculate dilutive shares, which reduces the gross number of dilutive shares by the number of shares purchasable from the proceeds of the warrants and option assumed to be exercised.
Commitments
Cell Genesys has begun construction of a multi-product Good Manufacturing Practices ("GMP") manufacturing facility for Phase III studies in Hayward, California in December of 2000. The Company's plan is to build out the 41,000 square foot leased facility to be fully validated and on-line by mid-2002. As of June 30, 2001, the Company had accumulated construction-in-progress costs of approximately $5.1 million. Future commitments for the purchase of equipment total $5.8 million as of July 31, 2001.
Liquidity and Capital Resources
Cell Genesys has financed its operations primarily through the sale of equity securities, funding under collaborative arrangements and equipment financing. As of June 30, 2001 the Company has received $181.6 million in net proceeds from the equity financings, $244 million in net proceeds from the sale of Abgenix common stock, $174.4 million under collaborative agreements and $28.2 million from property and equipment financings.
At June 30, 2001, Cell Genesys' cash, cash equivalents and short-term investments totaled $232.0 million, compared to $259.6 million at December 31, 2000. The decrease was due primarily to the payment of the final estimated tax payment for 2000, cost of acquisition of the operating assets of Chiron's gene therapy business, cash used for capital expenditures on our planned GMP manufacturing facility and normal operating losses. At June 30, 2001, the Company held approximately 9.0 million shares of Abgenix common stock, which had a market value of approximately $402.9 million.
Cell Genesys anticipates that fiscal year 2001 cash usage will not exceed $30.0 million, net of sales of Abgenix stock, build-out costs of manufacturing facilities or any potential acquisition of a late stage product candidate. The Company's capital requirements depend on numerous factors, including: the progress of the Company's research and development programs; preclinical and clinical trials; clinical and commercial scale manufacturing requirements; the attraction of collaborative partners; the acquisition of new products or technologies; the cost of litigation; patent interference proceedings or other legal proceedings or their resolution. Nonetheless, progress in the Company's development programs and/or the increase in the number of programs will reduce the current cash resources and potentially create the need to raise further capital. Therefore, the Company may continue to consider financing alternatives, including the potential sale of additional shares of Abgenix stock.
While the Company believes that its current liquidity position will be sufficient to meet near future needs, it anticipates it will entertain the possibility of raising additional capital in advance of actual capital expenditures. Therefore, liquidity and volatility of capital markets play a significant role in the decision to raise capital. The type of financing available to the Company includes the sale of Abgenix securities and private or public placement of Cell Genesys equity securities. The Company's evaluation processes regularly consider the liquidity of capital markets, dilution, shareholder value and tax consequences of each type of financing on shareholders. Certain of the financing options available to the Company have some type of negative consequence to shareholders. Given the volatile nature of the capital markets, decisions to raise capital may require actions that would impose a slightly negative consequence in order to reduce or minimize a more significant negative consequence to shareholders.
Risk Factors
We may have a need for substantial additional funds.We will need substantial funds for existing and planned preclinical and clinical trials, to continue research and development activities, and to establish manufacturing and marketing capabilities for any products we may develop. At some point in the future, we may need to raise additional capital to fund our operations.
Our future capital requirements will depend on, and could increase as a result of, many factors, such as:
- continued scientific progress of research and development programs
- magnitude of such programs' expenses
- progress of preclinical and clinical testing
- time and costs involved in obtaining regulatory approvals
- costs involved in preparing, filing, prosecuting, maintaining, enforcing and defending patent claims
- competing technological and market developments
- changes in collaborative relationships with Japan Tobacco and others
- terms of any additional collaborative arrangements into which we may enter
- our ability to establish research, development and commercialization arrangements pertaining to products other than those covered by existing collaborative arrangements
- cost of establishing manufacturing facilities
- cost of commercialization activities
- demand for our products, if and when approved
- potential redemption obligations in connection with conversion of the Series B preferred stock
- our ability to realize the carrying value of the Abgenix stock due to its volatility
We expect to be able to raise additional funds through collaborative relationships, sales of some portion or all of our investment in Abgenix, additional equity or debt financings, or otherwise. Because of our long-term capital requirements, we may seek to access the public or private equity markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time. There can be no assurance that any such additional funding will be available to us, or, if available, that it will be on acceptable terms. If we raise additional funds by issuing equity securities, stockholders will incur immediate dilution. There can be no assurance that opportunities for in-licensing technologies or for third party collaborations will continue to be available to us on acceptable terms. If adequate funds are not available, we may be required to delay, reduce the scope of, or eliminate one or more of our research, development and clinical activities. Alternatively, we may need to seek funds through arrangements with collaborative partners or others that require us to relinquish rights to certain of our technologies or product candidates that we would otherwise seek to develop or commercialize ourselves. Either of these events could have a material adverse effect on our business, results of operations, financial condition or cash flow.
Our products are in developmental stage, are not approved for commercial sale and might not receive regulatory approval or become commercially viable.All of our potential cancer vaccine and gene therapy products are in research and development. We have not generated any revenues from the sale of products. We do not expect to generate any revenues from product sales for at least the next several years. Our products currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval, prior to commercial use. There can be no assurance that our research and development efforts will be successful or that any of our future products will ultimately be commercially successful. Even if developed, our products may not receive regulatory approval or be successfully introduced and marketed at prices that would permit us to operate profitably.
We have not been profitable in our operations (absent the gains on sales of Abgenix stock) and may not become profitable in the future.We have incurred an accumulated deficit since our inception. At June 30, 2001, our accumulated deficit was approximately $39.8 million, compared with $34.9 million at December 31, 2000. For the quarter ended June 30, 2001, we recorded a net loss of $4.7 million. We expect to incur substantial operating losses for at least the next several years due primarily to the expansion of research and development programs, including preclinical studies, clinical trials, manufacturing and to a lesser extent, from general and administrative expenses. We expect that losses will fluctuate from quarter to quarter and that these fluctuations may be substantial. We cannot guarantee that we will successfully develop, commercialize, manufacture or market any products. We cannot guarantee that we will ever achieve or sustain product revenues or profitability.
Our cancer vaccine and gene therapy programs depend on new and unproven technologies.Gene therapy is a new technology. Existing preclinical and clinical data on the safety and efficacy of gene therapy are limited. Data relating to our specific gene therapy approaches are also limited. Our GVAX® cancer vaccines are currently being tested in Phase I/II and Phase II human clinical trials to determine their safety and efficacy. None of our other products or therapies under development are in human clinical trials. The results of preclinical studies do not predict safety or efficacy in humans. Possible side effects of gene therapy may be serious and potentially life-threatening. Unacceptable side effects may be discovered during preclinical and clinical testing of our potential products or thereafter. There are many reasons that potential products that appear promising at an early stage of research or development do not result in commercially successful products. Although we are testing proposed products or therapies in human clinical trials, we cannot guarantee that we will be permitted to undertake human clinical trials for any of our other products. Also, the results of this testing might not demonstrate the safety or efficacy of these products. Even if clinical trials are successful, we might not obtain regulatory approval for any indication. Finally, even if our products proceed successfully through clinical trials and receive regulatory approval, there is no guarantee that an approved product can be produced in commercial quantities at reasonable cost or that such a product will be successfully marketed.
We rely heavily on the development and protection of our intellectual property portfolio. The patent positions of pharmaceutical and biotechnology firms, including Cell Genesys, are generally uncertain and involve complex legal and factual questions. Cell Genesys currently has approximately 295 issued or granted patents and more than 330 pending applications. Although we are prosecuting patent applications, we cannot be certain whether any given application will result in the issuance of a patent or, if any patent is issued, whether it will provide significant proprietary protection or will be invalidated. Also, patent applications in the United States are confidential until patents are issued. Publication of discoveries in scientific or patent literature tends to lag behind actual discoveries by several months. Accordingly, we cannot be sure that we were the first creator of inventions covered by pending patent applications or that we were the first to file patent applications for these inventions.
Our commercial success will also depend in part on not infringing the patents or proprietary rights of others and not breaching licenses granted to us. We will be required to obtain licenses to certain third party technology and genes necessary to conduct our business. Any failure to license any technology or genes required to commercialize our technologies or products at reasonable cost may have a material adverse effect on our business, results of operations or financial condition.
We may also have to engage in litigation, which could result in substantial cost to us, to enforce our patents, or to determine the scope and validity of other parties' proprietary rights. To determine the priority of inventions, the United States Patent and Trademark Office frequently declares interference proceedings. In Europe, other patents can be revoked through opposition proceedings. Such proceedings could result in an adverse decision as to the priority of our inventions.
We are currently involved in separate interference and/or opposition proceedings with regard to:
- gene activation technology
- ex vivo gene therapy
- certain retroviral vector technology
- chimeric receptor technology
While we believe our position in each proceeding is strong, the outcome of each proceeding cannot be predicted. An adverse result could have a material adverse effect on our intellectual property position in these areas. We may be involved in other interference and/or opposition proceedings in the future. We believe that there will continue to be significant litigation in the industry regarding patent and other intellectual property rights.
We also rely on unpatented trade secrets, know-how and continuing technological innovation to develop and to maintain our competitive position. Our competitors may independently develop similar or better proprietary information and techniques and disclose them publicly. Also, there can be no assurance that others will not gain access to our trade secrets, or that we can meaningfully protect our rights to our unpatented trade secrets.
We require our employees and consultants to execute a confidentiality agreement upon the commencement of an employment or consulting relationship with us. These agreements provide that all confidential information developed by or made known to an individual during the course of the employment or consulting relationship generally must be kept confidential. In the case of employees, the agreements provide that all inventions conceived by the employee while employed by us, relating to our business are our exclusive property. These agreements may not provide meaningful protection for our trade secrets in the event of unauthorized use or disclosure of such information.
The fields of cancer vaccines and gene therapy are highly competitive. Competition in the field of gene therapy from other biotechnology and pharmaceutical companies and from research and academic institutions is intense and expected to increase. In many instances, we compete with other commercial entities in acquiring products or technology from universities. There are numerous competitors working on products to treat each of the diseases for which we are seeking to develop therapeutic products. Some competitors are pursuing a product development strategy competitive with ours, particularly with respect to our cancer vaccine program. Certain of these competitive products are in more advanced stages of product development and clinical trials. Our competitors may develop technologies and products that are more effective than ours, or that would render our technology and products less competitive or obsolete.
Many of our competitors have greater financial resources and larger research and development staffs than we do. Some of these competitors have significantly greater experience than we do in developing products, in undertaking preclinical testing and human clinical trials of new pharmaceutical products, in obtaining United States Food and Drug Administration ("FDA") and other regulatory approvals of products, and in manufacturing and marketing such products. Accordingly, our competitors may obtain patent protection or FDA approval and commercialize products more rapidly than we do. There can be no assurance that we will be able to obtain certain biological materials necessary to support our research, development or manufacturing of any of our planned therapies. If we are permitted to commence commercial sales of products, we will also be competing with respect to marketing capabilities and manufacturing efficiency, areas in which we have limited or no experience. We expect to build additional clinical scale and commercial scale manufacturing facilities and/or use contract facilities to commercialize our products. We also expect to secure funding for these and other product development activities through our partners and future potential partners.
We expect that competition among products approved for sale will be based, among other things, on:
- product efficacy
- price
- safety
- reliability
- availability
- patent protection
- sales, marketing and distribution capabilities
Our competitive positions also depend upon our ability to attract and retain qualified personnel, obtain patent protection or otherwise develop proprietary products or processes and secure sufficient funding for the often lengthy period between product conception and commercial sales.
Our stock price has fluctuated in the past and is likely to continue to be volatile in the future.The stock prices of biopharmaceutical and biotechnology companies (including Cell Genesys) have historically been highly volatile. The market has from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. The following factors may affect our stock price:
- fluctuations in our financial results
- announcements of technological innovations or new therapeutic products by us or our competitors
- announcements of changes in governmental regulation affecting us or our competitors
- announcements of regulatory approval or disapproval of our or our competitors' products
- developments in patent or other proprietary rights affecting us or our competitors
- public concern as to the safety of products developed by us or other biotechnology and pharmaceutical companies
- general market conditions
- fluctuations in the price of Abgenix stock
- severe fluctuations in price and volume in the stock market in general which are unrelated to our operating performance
- issuance of common stock upon conversion of the Series B preferred stock
- future sales of such common stock or other shares of common stock by existing stockholders
- the perception that such issuances or sales could occur
Our business is subject to extensive regulation and any failure to obtain required regulatory approvals could prevent or delay the commercialization of our products.Regulation by governmental authorities in the United States and foreign countries is important in the manufacture and marketing of our proposed products and our research and development activities. All of our products will require regulatory approval by governmental agencies prior to commercialization. In particular, human therapeutic products must undergo rigorous preclinical and clinical testing and other premarket approval procedures by the FDA and similar authorities in foreign countries. Since our potential products involve the application of new technologies, regulatory approvals may take longer than for products produced using more conventional methods. Various federal and, in some cases, state laws also govern or influence the manufacturing, safety, labeling, storage, record keeping and marketing of these products. The lengthy process of seeking these approvals, and the subsequent compliance with applicable federal laws, requires significant expenditures. Any delay or failure by us or our collaborators or licensees to obtain regulatory approvals could hinder the marketing of our products and our ability to receive product or royalty revenue.
In responding to a new drug application, or a product license application, the FDA may grant marketing approvals, request additional information or further research, or deny the application if it determines that the application does not satisfy its regulatory approval criteria. Approvals may not be granted on a timely basis, if at all, or if granted may not cover all the clinical indications for which we are seeking approval. Also, an approval might contain significant limitations in the form of warnings, precautions or contraindications with respect to conditions of use.
In addition to laws and regulations enforced by the FDA, we are also subject to regulation under:
- Occupational Safety and Health Act
- Environmental Protection Act
- Toxic Substances Control Act
- Resource Conservation and Recovery Act
- Other present and potential future federal, state or local laws and regulations
Our manufacturing facilities are subject to licensing requirements of the California Department of Health Services. While not subject to license by the FDA, these facilities are subject to inspection by the FDA as well as by the California Department of Health Services. A separate license from the FDA is required for commercial manufacture of any product. Failure to maintain these licenses or to meet the inspection criteria of the FDA and the California Department of Health Services would disrupt our manufacturing processes and have a material adverse effect on our business, results of operations, financial condition and cash flow.
For marketing outside the United States, we are subject to foreign regulatory requirements governing human clinical trials and marketing approval for drugs and devices. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country. Failure to comply with these regulatory requirements or obtain required approvals could impair our ability to develop these markets and have a material adverse effect on our results of operations and financial condition.
Our product development activities involve the use of hazardous materials and we may incur significant costs as a result of the need to comply with environmental laws.Our research and development activities involve the controlled use of hazardous materials, chemicals, viruses and radioactive compounds. We are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these materials and waste products. Although we believe that our safety procedures for handling and disposing of these materials comply with the standards prescribed by applicable laws and regulations, we cannot completely eliminate the risk of accidental contamination or injury from these materials. In the event of an accident, we could be held liable for any damages that result, and any resulting liability could exceed our resources. We may also be required to incur significant costs to comply with environmental laws and regulations in the future.
We expect to depend on our strategic partners for the sales, marketing and distribution of our future products. We have no experience in sales, marketing or distribution of biopharmaceutical products. We expect to rely on sales and marketing expertise of potential corporate partners for our initial products. The decision to market future products directly or through corporate partners will be based on a number of factors, including:
- market size and concentration
- size and expertise of the partner's sales force in a particular market
- our overall strategic objectives
We may in the future be exposed to product liability claims and may be unable to obtain sufficient insurance coverage.Clinical trials or marketing of any of our potential products may expose us to liability claims resulting from the use of our products. These claims might be made by consumers, health care providers or by others selling our products. We currently maintain product liability insurance with respect to each of our clinical trials. There can be no assurance that we will be able to maintain insurance or that sufficient coverage can be acquired at a reasonable cost. An inability to maintain insurance at an acceptable cost, or at all, could prevent or inhibit the clinical testing or commercialization of our products or otherwise affect our financial condition. A product liability claim or recall could have a material adverse effect on our business, results of operations, financial condition and cash flow.
Sales of our future products will be influenced by the willingness of third-party payers to provide reimbursement. In both domestic and foreign markets, sales of our potential products will depend in part upon coverage and reimbursement from third-party payers, including:
- government agencies
- private health care insurers and other health care payers such as health maintenance organizations
- self-insured employee plans
- Blue Cross/Blue Shield and similar plans
There is considerable pressure to reduce the cost of biotechnology and pharmaceutical products. In particular, reimbursement from government agencies, insurers and large health organizations may become more restricted in the future. Our potential products represent a new mode of therapy and, while the cost-benefit ratio of the products may be favorable, we expect that the costs associated with our products will be substantial. There can be no assurance that our proposed products, if successfully developed, will be considered cost- effective by third-party payers. Insurance coverage might not be provided by third-party payers at all or without substantial delay. Even if such coverage is provided, the approved reimbursement might not provide sufficient funds to enable us to become profitable.
The pricing of our future products may be influenced in part by government controls.The continuing efforts of governmental and third-party payers to contain or reduce the costs of healthcare may impair future revenues and profitability of biotechnology companies. For example, in certain foreign markets, pricing or profitability of prescription pharmaceuticals is subject to government control. In the United States, there have been, and we expect that there will continue to be, a number of federal and state proposals to implement similar government control. While we cannot predict whether the government will adopt any such legislative or regulatory proposals, the announcement or adoption of these proposals could have a material adverse effect on our business, results of operations, financial condition and cash flow.
We depend on our key technical and management personnel and collaborative partners to advance our technology, and the loss of these personnel or partners could impair the development of our products.We rely and will continue to rely on our key management and scientific staff. The loss of key personnel or the failure to recruit necessary additional qualified personnel could have a material adverse effect on our business and results of operations. There is intense competition from other companies, research and academic institutions and other organizations for qualified personnel. There is no assurance that we will be able to continue to attract and retain the qualified personnel necessary for the development of our business. We will need to continue to recruit experts in the areas of clinical testing, manufacturing, marketing and distribution and develop additional expertise in our existing personnel. If we do not succeed in recruiting such personnel or developing such expertise, our business could suffer significantly.
We have clinical trial agreements with a number of public and private medical institutions relating to the conduct of human clinical trials for our GVAXâ cancer vaccine programs. The early termination of any of these clinical trial agreements would hinder the progress of our clinical trials including trials of our GVAXâ cancer vaccines. If any of these relationships are terminated, the clinical trials might not be completed and the results might not be evaluated.
- University of California, San Francisco
- Dana-Farber Partners Cancer Care
- The Johns Hopkins Medical Institutions
- US Oncology, Inc.
- University of Tokyo, IMSUT
- Providence Portland Medical Center
- AmericasDoctor.com, Inc.
- Emory University
- University of Michigan
- University of Pennsylvania
- Stanford University
We rely on the continued availability of outside scientific collaborators performing research. These relationships generally may be terminated at any time by the collaborator, typically by giving 30 days notice. These scientific collaborators are not our employees. As a result, we have limited control over their activities and can expect that only limited amounts of their time will be dedicated to our activities. Our agreements with these collaborators, as well as those with our scientific consultants, provide that any rights we obtain as a result of their research efforts will be subject to the rights of the research institutions in such work. In addition, some of these collaborators have consulting or other advisory arrangements with other entities that may potentially conflict with their obligations to us. For these reasons, there can be no assurance that inventions or processes discovered by our scientific collaborators or consultants will become our property.
Cell Genesys stockholders may be diluted by the exercise of outstanding stock options, the conversion of outstanding Series B redeemable convertible preferred stock, or other issuances of our common stock.Substantially all the outstanding shares of Cell Genesys common stock are eligible for sale in the public market. Conversion of the Series B preferred stock or exercise of outstanding stock options would result in issuance of additional shares of common stock, diluting existing investors. The number of shares of common stock issued, and therefore the dilution of existing investors, would increase as a result of either (i) an event triggering the antidilution rights of any outstanding shares of Series B preferred stock, or (ii) a decline in the market price of the Company's common stock immediately prior to conversion of the Series B preferred stock.
The holders of the Series B preferred stock may choose at any time to convert their shares into common stock. In that event, the number of shares of common stock issued would be based on the lower of:
- a fixed conversion price of $11.02 per share for the 694 remaining shares from the original issue of $20 million face value preferred stock, and $14.53 per share for the 875 shares issued January 2000 from call options or,
- the average of certain trading prices during the 10 trading days preceding such date of conversion (the "Floating Conversion Price").
As of June 30, 2001, the market price of Cell Genesys common stock traded above the two fixed conversion price of $11.02 and $14.53. Consequently, the conversion rate for the shares is based on the fixed conversion price. As the market price declines below the fixed conversion rate, the greater the decline in the market price, the greater the number of shares issuable upon conversion of the Series B preferred stock.
Following the issuance of the new preferred shares in 2000, no further call options remain outstanding.
Our operations are vulnerable to interruption of fire, earthquake, power loss, telecommunications failure and other events beyond our control. We do not have a detailed disaster recovery plan. Our facilities in the State of California are currently subject to electrical blackouts as a consequence of a shortage of available electrical power. In the event these blackouts continue to increase in severity, they could disrupt the operations of our affected facilities. In addition, we do not carry sufficient business interruption insurance to compensate us for losses that may occur and any losses or damages incurred by us could have a material adverse effect on our business.
Our stock price is greatly influenced by the market price of Abgenix stock, which has been highly volatile.Our retained ownership of approximately 9.0 million Abgenix shares represents a very material portion of the total assets on our balance sheet. Abgenix stock prices have proven to be highly volatile. Movements in the price of Abgenix stock, up or down, exert strong corresponding influences on the market price of our stock.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
In the normal course of business, the financial position of the Company is subject to a variety of risks, including market risk associated with interest rate movements. The Company regularly assesses these risks and has established policies and business practices to protect against these and other exposures. As a result, the Company does not anticipate material potential losses in these areas. As mentioned under risk factors, the Company is subject to risk associated with its retained ownership in Abgenix shares.
The Company has not entered into any financial instruments that would give rise to foreign currency exchange risk, commodity pricing risk and equity pricing risk.
The following table provides information about the Company's financial instruments that are sensitive to changes in interest rates. For investment securities and debt obligations, the table presents principal cash flows and related weighted-average interest rates by expected maturity dates. Additionally, the Company has assumed its available for sale securities, comprised of corporate notes and commercial paper, are similar enough to aggregate those securities for presentation purposes. The average interest rate was calculated using the weighted average fixed rates under all contracts with Wells Fargo Bank, Sterling Capital Management, JP Morgan H & Q, Transamerica Business Credit Corporation and FINOVA Credit Corporation.
The Company does not currently hold any derivative financial instruments or has entered into hedging transactions or activities.
(in thousands)
Fair Value
2005 June 30,
2001 2002 2003 2004 Thereafter Total 2001
--------- --------- --------- --------- --------- --------- ---------
Total Investments
Securities.................. $ 40,821 $ 174,921 $ -- $ -- $ -- $ 215,742 $ 215,999
Average Interest Rate....... 5.16% 4.72% -- -- -- 4.58%
Long-term Debt, including
Current Portion............. $ 343 $ 639 $ 493 $ 260 $ -- $ 1,735 $ 1,735
Average Interest Rate....... 10.94% 10.50% 9.92% 9.92% -- 10.32%
Interes
Part II. OTHER INFORMATION
Item 1. Litigation
None
Item 4. Submission of Matters to a Vote of Security Holders
On June 7, 2001 during the annual stockholders' meeting, a quorum of stockholders of the Company approved the following proposals:
- Election of Directors.
- Proposal to approve the adoption of the 2001 Director Option Plan and to reserve a total of 300,000 shares for issuance thereunder.
- Proposal to ratify the appointment of Ernst & Young LLP as independent auditors for the 2001 fiscal year.
The following table shows the results of the voting on these matters.
The following table shows the results of the voting on these matters.
(i)Director For Withheld
David W. Carter 30,753,677 111,714
Nancy M. Crowell 30,716,365 149,026
James M. Gower 30,710,119 155,272
John T. Potts Jr., M.D. 30,704,425 160,966
Stephen A. Sherwin, M.D. 30,055,250 810,141
Eugene L. Step 30,734,560 130,831
Inder M. Verma, Ph.D. 30,753,651 111,740
(ii)For Against Abstain
28,889,232 1,877,746 98,413
(iii)For Against Abstain
30,712,256 119,980 33,155
Item 6. Exhibits and Reports On Form 8-K
a) Exhibits
Amendment of operating lease in San Diego
- Reports on Form 8-K
None
CELL GENESYS, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized in Foster City, California,
on August 14, 2001:
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By: |
/s/ Matthew J. Pfeffer
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Matthew J. Pfeffer
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Vice President and
Chief Financial Officer
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(Principal Accounting and Financial Officer)
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INDEX TO EXHIBITS
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Exhibit Number
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Description
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10.1
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Lease agreement dated June 21, 2001, between Alexandria Real Estate Equities, Inc.,
and Cell Genesys, Inc. on 11055 Roselle Street, San Diego.
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10.2
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Lease agreement dated June 21, 2001, between Alexandria Real Estate Equities, Inc.,
and Cell Genesys, Inc. on 11075 Roselle Street, San Diego.
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