13
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period
ended March 31, 1998
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 1-6247
ALZA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 77-0142070
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
950 Page Mill Road
P.O. Box 10950
Palo Alto, California 94303-0802
(Address of principal executive offices)
Registrant's telephone number, including area code (650) 494-5000
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 such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )
Number of shares outstanding of each of the registrant's classes
of common stock as of April 30, 1998:
Common Stock, $.01 par value - 86,420,910 shares
ALZA CORPORATION
FORM 10-Q for the Quarter Ended
March 31, 1998
INDEX
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Statement of Income 3
Condensed Consolidated Balance Sheet 4
Condensed Consolidated Statement of Cash Flows 5
Notes to Financial Statements 6-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-14
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 15
Part II. Other Information
Item 1. Legal Proceedings 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
Exhibits
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ALZA CORPORATION
Condensed Consolidated Statement of Operations (unaudited)
(In millions, except per share amounts)
Quarter Ended
March 31,
1998 1997
________________________________________________________________
Revenues:
Net sales $ 54.4 $ 27.5
Royalties, fees and other 50.0 44.2
Research and development 26.3 33.8
________________________________________________________________
Total revenues 130.7 105.5
Expenses:
Costs of products shipped 29.4 19.7
Research and development 34.2 35.0
Selling, general and
administrative 16.2 11.6
________________________________________________________________
Total expenses 79.8 66.3
________________________________________________________________
Operating income 50.9 39.2
Interest expense 14.1 13.7
Interest and other income (6.5) (16.9)
________________________________________________________________
Net interest and other
expense (income) 7.6 (3.2)
________________________________________________________________
Income before
income taxes 43.3 42.4
Provision for income taxes 15.0 16.1
________________________________________________________________
Net income $ 28.3 $ 26.3
================================================================
Earnings per share
Basic $ 0.33 $ 0.31
=================================================================
Diluted $ 0.32 $ 0.30
================================================================
See accompanying notes.
ALZA Corporation
Condensed Consolidated Balance Sheet (unaudited)
(In millions)
March 31, December 31,
1998 1997
________________________________________________________________
ASSETS
Current assets:
Cash and cash equivalents $ 82.6 $ 65.0
Short-term investments 99.5 109.2
Receivables, net 125.2 119.2
Inventories, at cost:
Raw materials 9.0 16.5
Work in process 11.0 8.5
Finished goods 14.0 12.8
________________________________________________________________
Total inventories 34.0 37.8
Prepaid expenses and other
current assets 28.4 26.8
________________________________________________________________
Total current assets 369.7 358.0
Property, plant and equipment 431.9 401.8
Less accumulated depreciation
and amortization (99.8) (91.4)
________________________________________________________________
Net property, plant and equipment 332.1 310.4
Investments in long-term securities 363.5 361.6
Other assets 338.1 339.2
________________________________________________________________
Total assets $ 1,403.4 $ 1,369.2
================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 27.2 $ 56.9
Accrued liabilities 52.2 45.9
Other current liabilities 5.2 1.8
________________________________________________________________
Total current liabilities 84.6 104.6
5% convertible subordinated debentures 500.0 500.0
5 1/4% zero coupon convertible
subordinated debentures 407.8 402.6
Other long-term liabilities 64.2 60.8
Stockholders' equity:
Common stock and additional
paid-in capital 399.8 382.4
Accumulated other comprehensive
income (4.9) (4.8)
Retained earnings (deficit) (48.1) (76.4)
________________________________________________________________
Total stockholders' equity 346.8 301.2
________________________________________________________________
Total liabilities and
stockholders' equity $ 1,403.4 $ 1,369.2
================================================================
See accompanying notes.
ALZA CORPORATION
Condensed Consolidated Statement of Cash Flows (unaudited)
(In millions)
Quarter Ended
March 31,
1998 1997
________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 28.3 $ 26.3
Non-cash adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 9.9 6.4
Amortization of product payments 2.6 0.3
Interest on 5 1/4% zero coupon convertible
subordinated debentures 5.2 5.0
(Increase) decrease in current assets (3.7) 2.1
Decrease in current liabilities (23.3) (2.9)
Other (0.6) 1.5
________________________________________________________________
Net cash provided by operating activities 18.4 38.7
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales and maturities of available-for-sale
securities 101.1 201.2
Purchases of available-for-sale securities (93.4) (189.3)
Capital expenditures (12.6) (4.4)
Other investing activities (10.4) 2.2
________________________________________________________________
Net cash (used in) provided by
investing activities (15.3) 9.7
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuances of common stock 17.4 5.3
Principal payments on long-term debt (2.9) (1.1)
________________________________________________________________
Net cash provided by financing activities 14.5 4.2
________________________________________________________________
Net increase in cash and cash equivalents 17.6 52.6
Cash and cash equivalents at
beginning of period 65.0 187.7
________________________________________________________________
Cash and cash equivalents at end of period $ 82.6 $ 240.3
================================================================
See accompanying notes.
ALZA CORPORATION
Notes to Condensed Consolidated Financial Statements (unaudited)
1. BASIS OF PRESENTATION
The information at March 31, 1998 and for the quarters ended
March 31, 1998 and 1997 is unaudited, and includes all
adjustments (consisting only of normal recurring adjustments)
that the management of ALZA Corporation ("ALZA") believes
necessary for fair presentation of the results for the periods
presented. Interim results are not necessarily indicative of
results for the full year. The condensed consolidated balance
sheet for December 31, 1997 was derived from the audited balance
sheet. The condensed consolidated financial statements should be
read in conjunction with the audited consolidated financial
statements and accompanying notes for the year ended
December 31, 1997 included in ALZA's 1997 Annual Report to
Stockholders.
Comprehensive Income
As of January 1, 1998, ALZA adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income"
("SFAS 130"), which establishes standards for reporting
comprehensive income and its components. Comprehensive income
includes net income plus other comprehensive income, which, for
ALZA, primarily comprises net unrealized gains or losses on
available-for-sale securities. Other comprehensive income was
not material for the quarters ended March 31, 1998 and 1997.
Total comprehensive income for the quarters ended March 31, 1998
and 1997 approximates net income for these periods. The adoption
of SFAS 130 had no impact on ALZA's results of operations or
financial condition.
Supplemental Disclosures of Cash Flow Information
In the first quarter of 1998, ALZA made a payment of $21.5
million to Janssen Pharmaceutica, Inc. ("Janssen") related to
the modification, effective as of December 31, 1997, of a
development and commercialization agreement for an E-TRANS-
trademark- fentanyl product for the treatment of acute pain.
ALZA recorded a nonrecurring charge for this item in the fourth
quarter of 1997, and the amount was included in accounts payable
at December 31, 1997.
Noncash Investing and Financing Quarter Ended March 31,
Activities (In millions) 1998 1997
_________________________________________________________________
Investment in low-income housing
in exchange for long-term debt $ 10.1 $ 6.6
Acquisition of building in lieu of
repayment of note receivable 17.5 -
Recently Issued Accounting Pronouncement
In June 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related
Information" ("SFAS 131"). SFAS 131 establishes standards for
annual and interim disclosures of operating segments, products
and services, geographic areas and major customers. SFAS 131 is
effective beginning with the 1998 fiscal year end financial
statements, and will be applied retroactively, for comparison
purposes, to the 1998 quarters in the 1999 quarterly disclosures.
ALZA is in the process of evaluating the disclosure requirements
of the new standard, the adoption of which will have no impact on
ALZA's results of operations or financial condition.
2. PER SHARE INFORMATION
Basic earnings per share is calculated by dividing net
income by the weighted average common shares outstanding for the
period. Diluted earnings per share is calculated by dividing net
income, as adjusted, by the weighted average common shares
outstanding for the period plus the dilutive effect of stock
options, warrants and convertible securities.
The following table sets forth the computation of ALZA's
basic and diluted earnings per share (in millions, except per
share amounts):
Quarter Ended March 31,
1998 1997
_________________________________________________________________
NUMERATOR
Basic
Net income $ 28.3 $ 26.3
=================================================================
Diluted
Net income $ 28.3 $ 26.3
Interest on 5 1/4% zero coupon
convertible subordinated
debentures, net of tax 3.5 3.2
_________________________________________________________________
Adjusted net income $ 31.8 $ 29.5
=================================================================
DENOMINATOR:
Basic
Weighted average shares 85.9 84.8
=================================================================
Diluted
Weighted average shares 85.9 84.8
Effect of dilutive securities:
Employee stock options 1.4 0.7
5 1/4% zero coupon convertible
subordinated debentures 12.3 12.3
_________________________________________________________________
Weighted average shares and
assumed conversions 99.6 97.8
=================================================================
Basic earnings per share $ 0.33 $ 0.31
=================================================================
Diluted earnings per share $ 0.32 $ 0.30
=================================================================
Options to purchase 120,400 shares of common stock were
excluded from the diluted earnings per share calculation for the
three months ended March 31, 1998 because the exercise price of
the options was greater than the average market price of the
common shares during the quarter, and therefore the effect of
including those options would have been anti-dilutive. ALZA's
outstanding 5% convertible subordinated debentures due 2006 were
not included in the diluted earnings per share calculation for
the periods presented, as their inclusion would have been anti-
dilutive.
3. CRESCENDO PHARMACEUTICALS CORPORATION
Under the Development Agreement between ALZA and Crescendo
Pharmaceuticals Corporation ("Crescendo"), ALZA recorded product
development revenues of $19.9 million for the quarter ended
March 31, 1998. As of March 31, 1998, disclosed products in
development with Crescendo were OROS-registered trademark-
oxybutynin, DUROS-trademark- leuprolide, OROS-registered
trademark- methylphenidate, E-TRANS-trademark- LHRH, E-TRANS-
trademark- Macroflux-trademark- insulin and
E-TRANS-trademark- fentanyl (chronic pain).
Under the Technology License Agreement between ALZA and
Crescendo, ALZA recorded technology fee revenue from Crescendo of
$3.0 million for the three months ended March 31, 1998.
ALZA has an option to acquire an exclusive, royalty-bearing
license to each product developed by Crescendo under the
Development Agreement. The option is exercisable on a product-by-
product, country-by-country, basis. Under Crescendo's Restated
Certificate of Incorporation, ALZA has the right to purchase all
(but not less than all) of the Class A Common Stock of Crescendo
at a price based upon a pre-established formula.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Notice Concerning Forward-Looking Statements
Some of the statements made in this Form 10-Q are forward-
looking in nature, including, without limitation, plans
concerning the commercialization of products, statements
concerning potential product sales, future costs of products
shipped (and gross margins), associated sales and marketing
expenses, plans concerning development of products and other
statements that are not historical facts. The occurrence of the
events described, and the achievement of the intended results,
are subject to various risk factors that could cause ALZA's
actual results to be materially different than those presented,
some or all of which are not predictable or within ALZA's
control. The significant risks related to ALZA's business are
described in ALZA's Annual Report on Form 10-K for the year ended
December 31, 1997.
RESULTS OF OPERATIONS
SUMMARY
Quarter Ended March 31,
(In millions, except per share amounts)1998 1997
_________________________________________________________________
Revenues $ 130.7 $ 105.5
_________________________________________________________________
Operating Income 50.9 39.2
_________________________________________________________________
Net Income 28.3 26.3
_________________________________________________________________
Earnings per Share (diluted) 0.32 0.30
_________________________________________________________________
For the quarter ended March 31, 1998, ALZA's net income and
operating income increased 8% and 30%, respectively, compared to
the same quarter of 1997. These increases were due primarily to
a significant increase in the sales of ALZA-marketed products,
reflecting sales of Elmiron-registered trademark- (pentosan
polysulfate sodium) and Mycelex-registered trademark-
(clotrimazole) Troche, which ALZA began marketing in the second
half of 1997, and increased sales of Ethyol-registered trademark-
(amifostine). ALZA's gross margin on net sales improved to 46%
for the first quarter of 1998, compared to 28% for the first
quarter of 1997, reflecting the increased sales of ALZA-marketed
products. Also contributing to higher income for the first
quarter of 1998 was a 13% increase in royalties, fees and other
revenues, reflecting an increase in licensing fees. These
increases were partially offset by a 22% decline in research and
development revenues and substantially lower interest income,
discussed below.
NET SALES AND COSTS OF PRODUCTS SHIPPED
Net Sales
Quarter Ended March 31,
(Dollars in millions) 1998 1997
_________________________________________________________________
ALZA-marketed products
Ethyol-registered trademark- $ 8.1 $ 3.5
Elmiron-registered trademark- 7.0 -
Mycelex-registered trademark- Troche 5.9 -
Testoderm-registered trademark- line 2.0 1.2
Other 6.4 2.2
_________________________________________________________________
Total ALZA-marketed products 29.4 6.9
Contract manufacturing 25.0 20.6
_________________________________________________________________
Total net sales $ 54.4 $ 27.5
=================================================================
Percentage of total revenues 42% 26%
ALZA-marketed products as a percentage
of net sales 54% 25%
_________________________________________________________________
Net sales for the first quarter of 1998 increased 98%
compared to the first quarter of 1997, primarily reflecting the
significant increase in the sales of ALZA-marketed products, the
rights to several of which ALZA acquired in the second half of
1997. The U.S. rights to Mycelex Troche were acquired by ALZA in
July 1997, and the U.S. and Canadian rights to Elmiron were
acquired in October 1997. Sales of Elmiron were impacted by a
buy-in by wholesalers prior to a price increase late in the first
quarter of 1998. In addition, sales of Ethyol increased in the
first quarter of 1998 compared with the first quarter of 1997 due
in part to a buy-in by wholesalers prior to a price increase that
became effective at the end of the quarter. Net sales for the
first quarter of 1998 included initial sales of Testoderm-
registered trademark- TTS (testosterone), which was launched in
March 1998. The timing and quantities of orders for ALZA-
marketed products may vary from quarter to quarter due to factors
such as demand for the products, ordering patterns of
wholesalers, and introduction and sales of competing products.
Net sales from contract manufacturing increased for the
first quarter of 1998, compared to the first quarter of 1997,
primarily due to higher shipments of Duragesic-registered
trademark- (fentanyl) to Janssen, Nicoderm-registered trademark-
and NicoDerm-registered trademark- CQ-trademark- (nicotine) to
Hoechst Marion Roussel, Inc. and SmithKline Beecham p.l.c.
("SKB"), respectively, and Covera-HS-trademark- (verapamil) to
G.D. Searle & Co. The timing and quantities of orders for
products marketed by client companies are not within ALZA's
control. Net sales to client companies therefore can be expected
to fluctuate from period to period, sometimes significantly,
depending on the volume, mix and timing of orders of products
shipped to client companies, and in some quarters, due to the
shipment of launch quantities of products to the clients.
Costs of products shipped increased to $29.4 million for the
quarter ended March 31, 1998, compared to $19.7 million for the
corresponding quarter of 1997, reflecting the significant
increase in net sales.
Quarter Ended March 31,
1998 1997
_________________________________________________________________
Gross margin as a
percentage of net sales (1) 46% 28%
_________________________________________________________________
(1) Gross margin is net sales less costs of products shipped.
The increase in ALZA's gross margin in the first quarter of
1998, compared to the first quarter of 1997, was due to the
substantial increase in sales of ALZA-marketed products. ALZA
expects its gross margin, as a percentage of net sales, to
increase over the longer term, although quarter-to-quarter
fluctuations will continue to occur. Higher gross margins may be
achieved through continuing the proportionate increase in the
sales of ALZA-marketed products (as compared to sales from
contract manufacturing), increased utilization of capacity and
greater operating efficiencies.
ROYALTIES, FEES AND OTHER REVENUES
Quarter Ended March 31,
(Dollars in millions) 1998 1997
_________________________________________________________________
Royalties, fees and other revenues $ 50.0 $ 44.2
Percentage of total revenues 38% 42%
_________________________________________________________________
Royalties, fees and other revenues increased 13% for the
first quarter of 1998, compared to the corresponding quarter of
1997, resulting from an increase in licensing fees. Licensing
fees for the first quarter of 1998 included fees related to a
technology licensing agreement with Alkermes, Inc. for ALZA's
RingCap-trademark- and Dose Sipping technologies, and technology
fee revenue of $3.0 million from Crescendo.
Royalties on sales of Glucotrol XL-registered trademark-
(glipizide) by Pfizer Inc. ("Pfizer") and Duragesic by Janssen
increased for the first quarter of 1998, compared to the first
quarter of 1997, and were offset by decreased royalties on sales
of Procardia XL-registered trademark- (nifedipine) by Pfizer,
Transderm-Nitro-registered trademark- (nitroglycerin) by Novartis
Pharmaceuticals Corporation and NicoDerm CQ by SKB.
Sales of Procardia XL, as reported by Pfizer, decreased 19%
for the first quarter of 1998, compared to the same period in
1997. Several companies have filed Abbreviated New Drug
Applications with the U.S. Food and Drug Administration ("FDA")
requesting clearance to market generic sustained-release
nifedipine products. Pfizer is involved in litigation concerning
patent infringement and regulatory requirements, in which Pfizer
is seeking to enjoin the introduction of such generic nifedipine
products. It is not possible to predict the timing and amount of
the negative impact on sales of Procardia XL that could result
from competition from these or other potential sustained-release
nifedipine products.
During the next several years, ALZA intends to continue to
reduce its dependence on royalties and fees by further expanding
ALZA's sales and marketing activities and by directly marketing
and selling more products. However, there can be no assurance
that ALZA will be successful in undertaking this expansion, or
that any expanded sales and marketing activities will be
successful, due to factors such as the risks associated with
developing, clinically testing and obtaining regulatory clearance
of products for ALZA marketing, the difficulties and costs
associated with acquiring products from third parties for ALZA to
market, the length of the regulatory approval process, the
uncertainties surrounding the acceptance of new products by the
intended markets, the marketing of competitive products, the
risks relating to patents and proprietary rights and the current
health care cost containment environment in the United States.
ALZA expects that, in the near term, royalties on sales by
clients of currently marketed products will continue to be a
substantial contributor to net income.
RESEARCH AND DEVELOPMENT
Research and Development Revenues
Quarter Ended March 31,
(Dollars in millions) 1998 1997
_________________________________________________________________
Crescendo Pharmaceuticals Corporation $ 19.9 $ -
Therapeutic Discovery Corporation (1) - 23.4
Other clients 6.4 10.4
_________________________________________________________________
Total research and development
revenues $ 26.3 $ 33.8
=================================================================
Percentage of total revenues 20% 32%
_________________________________________________________________
(1) Purchased by ALZA in the third quarter of 1997.
Research and development revenues declined 22% in the first
quarter of 1998 compared to the first quarter of 1997, reflecting
a decrease in product development activities under agreements
with client companies.
Research and Development Expenses
Quarter Ended March 31,
(Dollars in millions) 1998 1997
_________________________________________________________________
Research and development expenses $ 34.2 $ 35.0
As a percentage of total revenues 26% 33%
_________________________________________________________________
Research and development expenses decreased 2% in the first
quarter of 1998, compared to the same period in 1997. This
decline reflects the lower level of development activity for
client companies, substantially offset by higher internal
research and development costs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Quarter Ended March 31,
(Dollars in millions) 1998 1997
_________________________________________________________________
Sales and marketing expenses $ 10.8 $ 6.0
General and administrative expenses 2.8 5.3
Amortization of product acquisition
payments 2.6 0.3
_________________________________________________________________
Total selling, general and
administrative expenses $ 16.2 $ 11.6
=================================================================
As a percentage of total revenues 12% 11%
_________________________________________________________________
Selling, general and administrative expenses increased 41%
in the first quarter of 1998, compared to the first quarter of
1997, as a result of expanded sales and marketing activities and
the added amortization of payments for product rights acquired in
the second half of 1997. The decline in general and
administrative expenses in the first quarter of 1998 compared
with the first quarter of 1997 was due to an increase in the cash
surrender value of life insurance policies, which reduced
expenses, and the allocation of certain computer system expenses
from general and administrative expenses to other expense
categories.
NET INTEREST
Quarter Ended March 31,
(In millions) 1998 1997
_________________________________________________________________
Interest expense $ 14.1 $ 13.7
Interest and other income (6.5) (16.9)
_________________________________________________________________
Net interest expense (income) $ 7.6 $ (3.2)
_________________________________________________________________
Interest income declined in the first quarter of 1998,
compared to the first quarter of 1997, due to lower cash balances
as a result of the purchase of Therapeutic Discovery Corporation,
the formation of Crescendo and several product acquisitions, all
of which occurred in the second half of 1997. Interest expense
was higher in the first quarter of 1998 compared to the same
period of 1997, primarily due to accreted interest on ALZA's
outstanding 5 1/4% zero coupon convertible subordinated
debentures due in 2014.
Effective Tax Rate
ALZA's annual effective combined federal and state income
tax rate for 1998 is estimated to be 35%. The effective tax rate
for the year ended 1997 was 35%. For the first quarter of 1998,
the effective income tax rate was 35%, compared to 38% for the
first quarter of 1997.
LIQUIDITY AND CAPITAL RESOURCES
March 31, December 31,
(In millions) 1998 1997
_________________________________________________________________
Working capital $ 285.1 $ 253.4
Cash and investments 545.6 535.8
Total assets 1,403.4 1,369.2
Long-term debt 907.8 902.6
Quarter Ended March 31,
(In millions) 1998 1997
_________________________________________________________________
Net cash provided by
operating activities (1) $ 39.9 $ 38.7
Capital expenditures 12.6 4.4
_________________________________________________________________
(1) Excludes nonrecurring item in the first quarter of 1998 for
payment of $21.5 million to Janssen, included in accounts payable
at December 31, 1997.
ALZA's capital spending for the first quarter of 1998 was
$12.6 million for additions to facilities and equipment to
support its research, development and manufacturing activities,
compared to capital spending of $4.4 million in the same period
of 1997. While ALZA believes its current facilities and
equipment are sufficient to meet its current operating
requirements, ALZA is expanding its facilities and equipment to
support its medium-term and long-term requirements. Capital
expenditures during the remainder of 1998 are expected to
continue to increase over 1997 levels.
ALZA believes that its existing cash and investment balances
are adequate to fund its cash needs for 1998 and beyond. In
addition, should the need arise, ALZA believes it would be able
to borrow additional funds or otherwise raise additional capital.
ALZA may consider using its capital to make strategic investments
or to acquire or license technology or products. ALZA may also
enter into strategic alliances with third parties that could
provide access to additional capital.
Item 3. Quantitative and Qualitative Disclosures about Market
Risk
Not applicable to ALZA for this reporting period.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Product liability suits have been filed against Janssen and
ALZA from time to time relating to the Duragesic product.
Janssen is managing the defense of these suits in consultation
with ALZA under an agreement between the parties.
Historically, the cost of resolution of liability claims
against ALZA (including product liability claims) has not been
significant, and ALZA is not aware of any asserted or unasserted claims
pending against it, including the suits mentioned above, the
resolution of which would have a material adverse impact on the
operations or financial position of ALZA.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
ALZA CORPORATION
Date: May 13, 1998 By: /s/ E. Mario
Dr. Ernest Mario
Chairman and Chief
Executive Officer
Date: May 13, 1998 By: /s/ Bruce C. Cozadd
Bruce C. Cozadd
Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit
27 Financial Data Schedule