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 quarter ended September 30, 2002
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: 2-89332
INTERFERON SCIENCES RESEARCH PARTNERS, LTD.
(Exact Name of Registrant as Specified in its Charter)
New Jersey 22-2502556
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
783 Jersey Avenue, New Brunswick, New Jersey 08901
(Address of principal executive offices) (Zip code)
(732) 249-3250
(Registrant's telephone number, including area code)
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 ___
INTERFERON SCIENCES RESEARCH PARTNERS, LTD.
TABLE OF CONTENTS
Part I. Financial Information:
Condensed Balance Sheets--September 30, 2002
and December 31, 2001.....................................................1
Condensed Statements of Operations--
Three Months and Nine Months Ended September 30, 2002 and 2001............2
Condensed Statements of Cash Flows -
Nine Months Ended September 30, 2002 and 2001.............................3
Notes to Condensed Financial Statements.....................................4
Management's Discussion and Analysis of Financial
Condition and Results of Operations.....................................5-6
Part II. Other Information....................................................7
Signatures ....................................................................8
INTERFERON SCIENCES RESEARCH PARTNERS, LTD.
PART I. FINANCIAL INFORMATION
KPMG LLP resigned as the Partnership's independent accountants on November 6,
2002. They were not engaged to and did not perform a review of this Quarterly
Report on Form 10-Q in accordance with Statement on Auditing Standards No. 71,
"Interim Financial Information", although such a review is required, as the
General Partner lacks sufficient funds to pay for this review.
CONDENSED BALANCE SHEETS
September 30, December 31,
2002 2001
(Unaudited)
------------ ------------
ASSETS
Total assets $ --- $ ---
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Partners' capital
Limited partners $ --- $ ---
General partner --- ---
------------ ------------
Total partners' capital --- ---
------------ ------------
Total liabilities and partners' capital $ --- $ ---
============ ============
The accompanying notes are an integral part of these condensed financial
statements.
INTERFERON SCIENCES RESEARCH PARTNERS, LTD.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ----------------
2002 2001 2002 2001
---- ---- ---- ----
Net income (loss) $ --- $ --- $ --- $ ---
===== ===== ===== =====
Net income (loss) -
Limited Partners $ --- $ --- $ --- $ ---
Net income (loss) -
General Partner --- --- --- ---
----- ----- ----- -----
Net income (loss) $ --- $ --- $ --- $ ---
===== ===== ===== =====
Net income (loss) Net income (loss)
per unit per unit
----------------- -----------------
Basic and diluted income
(loss) per unit - Limited
Partners (1038.7 units
outstanding) $ --- $ --- $ --- $ ---
===== ===== ===== =====
The accompanying notes are an integral part of these condensed financial
statements.
INTERFERON SCIENCES RESEARCH PARTNERS, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
-------------------
2002 2001
---- ----
Net change in cash $ --- $ ---
--------- ----------
Cash at beginning of period $ --- $ ---
--------- ----------
Cash at end of period $ --- $ ---
--------- ----------
The accompanying notes are an integral part of these condensed financial
statements.
INTERFERON SCIENCES RESEARCH PARTNERS, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The financial information included herein is unaudited. Such information,
however, reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of the General Partner necessary for a
fair statement of the results for the interim periods. The results for interim
periods are not necessarily indicative of results to be expected for the year.
Note 2. Related Party Transactions
During 1984, the Partnership and Interferon Sciences, Inc. (ISI) entered
into several agreements including a Development Contract whereby substantially
all of the net proceeds of the 1984 sale of Partnership Units were paid to ISI
in periodic payments over the term of the Partnership's development program.
Such payments were used to fund research and development and clinical trials
necessary for obtaining regulatory approval with respect to a topical
formulation containing recombinant alpha interferon for the treatment of herpes
genitalis (Alferon(R) Gel). Through 1986, the Partnership paid ISI $4,555,000,
under this agreement. Through 1990, the General Partner, Interferon Sciences
Development Corporation (ISD), contributed $1,997,000, to the Partnership, which
used such funds to pay for additional research and development for the benefit
of the Partnership. Beginning in 1992, ISI commenced further development of
Alferon Gel using ISI's natural source multi-species alpha interferon (Alferon N
Gel) in place of recombinant interferon.
Note 3. Interferon Sciences Development Corporation and Interferon Sciences,
Inc.
ISD, the General Partner, is a wholly owned subsidiary of ISI. From
September 1986 through October 1990, ISD's total capitalization was used to fund
Partnership expenses. ISD was totally dependent upon ISI for capital to be able
to fund the Partnership during this period and is totally dependent on ISI for
future capital. Beginning in 1992, ISI commenced development of ALFERON N Gel
using its own funds. ISI has had continuing losses from operations, has an
accumulated deficit, a working capital deficiency, and has limited liquid
resources which raise substantial doubt about its ability to continue as a going
concern and therefore there is substantial doubt about the Partnership's ability
to continue as a going concern.
The Partnership is dependent on the General Partner for on-going financial
support to cover incidental costs of retaining the Partnership. Such costs are
paid by ISI and, as they are de minimis, are not reflected on the accompanying
financial statements.
INTERFERON SCIENCES RESEARCH PARTNERS, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Financial Condition and Liquidity
As of September 30, 1986, the Partnership had exhausted all of its available
funds for the funding of research and development of Alferon Gel. The General
Partner agreed to contribute up to an additional $433,000, under certain
conditions, to continue the research. Such amount was based on the number of
units sold in the offering. Notwithstanding that commitment, from September 1986
to October 1990, the General Partner contributed $1,997,000 towards the cost of
such research. During May 1987, ISI filed a Product License Application with the
Food and Drug Administration (FDA) for approval to market Alferon Gel. This
filing was supplemented in 1989 with an updated clinical summary and a
comprehensive statistical analysis of the completed trials. At a meeting with
the FDA in February 1990, the FDA indicated that additional process development
and clinical trials would be necessary prior to approval of Alferon Gel. ISI
believed, at that time, that the costs to complete the required process
development and clinical trials would be substantial, and there could be no
assurance that the clinical trials would be successful. As a result of the above
events, in March 1992, ISI withdrew its FDA Product License Application for
Alferon Gel containing recombinant interferon.
The General Partner does not anticipate that the Partnership will receive
any revenues in 2002. In addition, the Partnership is not in a position to incur
additional expenses since it has exhausted all its available funds. The
independent auditors' report, dated February 20, 2002, on the Partnership's
financial statements as of and for the year ended December 31, 2001 contained an
explanatory paragraph indicating that ISI has suffered recurring losses from
operations, has an accumulated deficit and has limited liquid resources that
raise substantial doubt about the Partnership's ability to continue as a going
concern.
ISI does not presently intend to exploit ALFERON Gel (the Partnership
Product). ISI had focused its clinical efforts on ALFERON N Gel, a formulation
containing ISI's natural alpha interferon (interferon alfa-n3) which was
developed for the topical treatment of viral diseases and cancers affecting the
skin and mucosal tissues. A Phase 2 pilot clinical trial utilizing its
reformulated ALFERON N Gel has been completed for the treatment of cervical
dysplasia. Under the terms of the Partnership Agreement, a royalty may be
payable to the Partnership by reason of the commercial exploitation of ALFERON N
Gel to the extent that it utilizes any of the Partnership Technology, which
royalty will be adjusted based upon the proportional funding contributions to
the development of ALFERON N Gel by the Partnership and ISI. ISI currently does
not plan to continue the development of ALFERON N Gel. However, if ISI obtains
substantial additional financing in the future, or a sponsor can be secured, ISI
may exploit ALFERON N Gel for herpes genitalis that may entitle the Partnership
to a royalty in respect to a product that competes with the Partnership Product.
This royalty will be adjusted based upon the proportional funding contributions
to the development of ALFERON N Gel by the Partnership and ISI.
Results of Operations
The Partnership was inactive during the nine months ended September 30,
2002 and 2001, and has generated no revenue nor incurred any expense during
these periods. The Partnership is dependent on the General Partner for on-going
financial support to cover incidental costs of retaining the Partnership.
INTERFERON SCIENCES RESEARCH PARTNERS, LTD.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the
three months ended September 30, 2002.
INTERFERON SCIENCES RESEARCH PARTNERS, LTD.
September 30, 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
Interferon Sciences Research Partners, Ltd.,
A Limited Partnership
(Registrant)
By: Interferon Sciences Development
Corporation - General Partner
DATE: November 18, 2002 By: /s/ Samuel H. Ronel, Ph.D.
---------------------------
Samuel H. Ronel, Ph.D.
President
DATE: November 18, 2002 By: /s/ Donald W. Anderson
---------------------------
Donald W. Anderson
Controller