UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-15609
AGOURON PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0061928
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
10350 NORTH TORREY PINES ROAD, LA JOLLA, CALIFORNIA 92037-1020
(Address and zip code of principal executive offices)
(619) 622-3000
(Registrant's telephone number, including area code)
NONE
(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 such reports), and (2) has been subject
to such filing requirements for the past 90 days:
Yes __X__ No ____
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: Approximately 7,315,000
shares of the Company's Common Stock, no par value, were outstanding as of
April 12, 1995.
AGOURON PHARMACEUTICALS, INC.
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Balance Sheet - 3
March 31, 1995 and June 30, 1994
Statement of Operations - Three and Nine 4
Months Ended March 31, 1995 and 1994
Statement of Cash Flows- 5
Nine Months Ended March 31, 1995 and 1994
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of 7
Financial Condition and Results of Operations
Part II. Other Information
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
Signature 9
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AGOURON PHARMACEUTICALS, INC.
BALANCE SHEET
(Dollars in Thousands)
March 31, June 30,
1995 1994
--------- --------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 7,055 $ 2,104
Short-term investments 20,196 27,757
Accounts receivable 495 328
Other current assets 777 891
--------- ---------
Total current assets 28,523 31,080
Property and equipment, net of accumulated
depreciation and amortization of $10,708
and $8,817 6,006 6,098
--------- ---------
$ 34,529 $ 37,178
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,306 $ 1,514
Accrued liabilities 720 519
Deferred revenue 8,718 6,818
Current portion of long-term debt 958 1,190
--------- ---------
Total current liabilities 14,702 10,041
--------- ---------
Long-term liabilities:
Long-term debt, less current portion 713 992
Accrued rent 1,302 1,293
--------- ---------
Total long-term liabilities 2,015 2,285
--------- ---------
Stockholders' equity:
Common stock, no par value, 75,000,000 shares
authorized, 7,304,910 and 7,278,488 shares
issued and outstanding 75,680 75,435
Accumulated deficit (57,868) (50,583)
--------- ---------
Total stockholders' equity 17,812 24,852
--------- ---------
$ 34,529 $ 37,178
========= =========
See accompanying notes to financial statements.
AGOURON PHARMACEUTICALS, INC.
STATEMENT OF OPERATIONS
(Unaudited)
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
March 31, March 31,
---------------------- ----------------------
1995 1994 1995 1994
--------- --------- --------- ---------
Revenues:
Contract $ 6,949 $ 3,819 $ 19,285 $ 9,995
Interest 336 338 978 1,026
--------- --------- --------- ---------
7,285 4,157 20,263 11,021
--------- --------- --------- ---------
Costs and expenses:
Research and development 9,330 5,949 24,352 17,961
General and administrative 1,162 832 3,027 1,872
Interest 63 46 169 150
--------- --------- --------- ---------
10,555 6,827 27,548 19,983
--------- --------- --------- ---------
Net loss $ (3,270) $ (2,670) $ (7,285) $ (8,962)
========= ========= ========= =========
Net loss per common share $ (.45) $ (.37) $ (1.00) $ (1.24)
========= ========= ========= =========
Shares used in computing net loss
per common share 7,300,000 7,242,000 7,286,000 7,232,000
========= ========= ========= =========
See accompanying notes to financial statements.
AGOURON PHARMACEUTICALS, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
Nine Months Ended
March 31,
----------------------
1995 1994
--------- ---------
Cash flows from operating activities:
Cash received from contracts $ 21,018 $ 19,054
Cash paid to suppliers, employees and
service providers (22,405) (17,857)
Interest received 978 1,026
Interest paid (169) (150)
--------- ---------
Net cash provided (used) by operating
activities (578) 2,073
--------- ---------
Cash flows from investing activities:
Net (increase) decrease in short-term
investments 7,561 (228)
Expenditures for property and equipment (1,749) (970)
--------- ---------
Net cash provided (used) by investing
activities 5,812 (1,198)
--------- ---------
Cash flows from financing activities:
Net proceeds from issuance of common stock 245 427
Principal payments under equipment leases (460) (405)
Increase (decrease) in long-term debt, net (68) (235)
--------- ---------
Net cash provided (used) by financing
activities (283) (213)
--------- ---------
Net increase (decrease) in cash and cash equivalents 4,951 662
Cash and cash equivalents at beginning of period 2,104 7,783
--------- ---------
Cash and cash equivalents at end of period $ 7,055 $ 8,445
========= =========
Reconciliation of net loss to net cash provided
(used) by operating activities:
Net loss $ (7,285) $ (8,962)
Depreciation and amortization 1,858 1,672
Net (increase) decrease in accounts
receivable and other current assets (53) (1,054)
Net increase (decrease) in accounts payable,
accrued liabilities, deferred revenue
and accrued rent 4,902 10,382
Options granted for services provided -- 35
--------- ---------
Net cash provided (used) by operating
activities $ (578) $ 2,073
========= =========
See accompanying notes to financial statements.
AGOURON PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Financial Statements
The balance sheet as of March 31, 1995 and the statements of operations and
cash flows for the three-month and nine-month periods ended March 31, 1995
and 1994 have been prepared by the Company and have not been audited. Such
financials, in the opinion of management, include all adjustments (consisting
only of normal, recurring accruals) necessary to present fairly the financial
position, results of operations and cash flows for all periods presented.
These financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's June 30, 1994 Annual
Report on Form 10-K. Interim operating results are not necessarily
indicative of operating results for the full year.
2. Short-term Investments
Included in short-term investments at March 31, 1995 and June 30, 1994 is
$233,000 and $246,000 of accrued interest receivable. Included in short-term
investments at March 31, 1995 is $400,000 which has been pledged as
collateral in conjunction with certain long-term debt obligations.
At March 31, 1995, the Company's short-term investments are generally
available for sale and are carried at amortized cost which approximates
market. These investments, consisting principally of United States
government securities (69%) and corporate obligations (26%), have average
maturities of less than one year.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Financial Condition
The Company relies principally on equity financings and corporate
collaborations to fund its operations and capital expenditures. At March 31,
1995, the Company had cash, cash equivalents and short-term investments of
approximately $27,251,000. Management believes that its present capital
resources, plus the committed and expected funding from certain existing
collaborative relationships, should be sufficient to meet its working capital
needs at least through fiscal 1996. The Company will require additional
long-term financing to meet the operating needs of fiscal 1997 and beyond.
The Company will consider various financing vehicles to meet such needs
including collaborative arrangements and public offerings or private
placements of Company common or preferred stock. If such vehicles are not
available, the Company may be required to delay or eliminate expenditures for
certain of its products or to license third parties to commercialize products
or technologies that the Company would otherwise seek to develop itself.
Results of Operations
The Company is engaged in the research and development of human
pharmaceuticals utilizing protein structure-based drug design. Such research
and development has been funded from the Company's equity-derived working
capital and through various collaborative arrangements. The Company's net
operating losses reflect primarily the result of its independent research and
continued increasing investment in clinical development activities
concentrated on the Company's lead compounds in cancer and AIDS. As product
sales may not begin prior to calendar 1998 and certain programs are expanding
their preclinical and clinical development activities, it is anticipated that
net operating losses will continue and possibly increase in the next several
years.
Compared to the three months ended March 31, 1994, the current period
revenues, costs and expenses and net loss have increased by approximately
75%, 55% and 22%. Compared to the nine months ended March 31, 1994, the
increase in current period revenues has exceeded the increase in operating
expenses resulting in a decrease in the net loss.
Contract revenues in the current three and nine-month periods have increased
compared to the year earlier periods due principally to additional
collaborative agreements with Japan Tobacco Inc. ("JT": an anti-viral
collaboration initiated in February 1994 and an anti-HIV collaboration
initiated in December 1994) and increased activities for research programs
with Syntex (U.S.A.) Inc. (now a subsidiary of Roche Holdings, Inc.). These
increases were partially offset by the absence of funding in the current-year
periods from Schering-Plough Corporation due to the completion of a
collaborative research program with Schering in April 1994.
Research and development costs and expenses have increased from prior periods
due generally to increasing average research and development staff levels
(approximately 24%) and staff-related expenditures, including occupancy, and
increasing preclinical and clinical activities associated with certain of the
Company's leading product development programs, including AG331 and AG337
(synthetic chemical compounds designed specifically to inactivate an enzyme
required for rapid proliferation of cancer cells) and AG1343 (a non-peptidic
synthetic molecule of low molecular weight designed to inhibit HIV protease--
an enzyme that plays an essential role in the replication cycle of HIV). The
increase in general and administrative costs in the current three and nine-
month periods is due chiefly to increasing average staff levels
(approximately 38%) and staff-related expenditures and certain administrative
costs associated with the JT collaborations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings:
The Company is involved in certain legal or administrative
proceedings generally incidental to its normal business
activities. While the outcome of any such proceedings cannot be
accurately predicted, the Company does not believe the ultimate
resolution of any such existing matters should have a material
adverse effect on its financial position.
Item 2. Changes in Securities:
None
Item 3. Defaults Upon Senior Securities:
None
Item 4. Submission of Matters to a Vote of Security Holders:
None
Item 5. Other Information:
None
Item 6. Exhibits and Reports on Form 8-K:
a. Exhibits:
27 Financial Data Schedule. (Exhibit 27 is submitted as an
exhibit only in the electronic format of this Quarterly
Report on Form 10-Q being submitted to the Securities and
Exchange Commission.)
b. Reports on Form 8-K:
None
SIGNATURE
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.
AGOURON PHARMACEUTICALS, INC.
Date: April 21, 1995 /s/ Steven S. Cowell
-------------------------------------------
Steven S. Cowell
Vice President, Finance and Chief Financial
Officer and Chief Accounting Officer