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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 September 30, 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 No. 0-20111
ARONEX PHARMACEUTICALS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 76-0196535
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
8707 Technology Forest Place, The Woodlands, Texas 77381-1191
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (281) 367-1666
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.
Class Outstanding at September 30, 1998
Common Stock, $.001 par value 15,503,745 shares
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ARONEX PHARMACEUTICALS, INC.
Quarterly Period September 30, 1998
INDEX
Page
FACTORS AFFECTING FORWARD LOOKING STATEMENTS ..................................3
PART I. Financial Information
Item 1 Financial Statements .................................................3
Balance Sheets - December 31, 1997 and September 30, 1998
(unaudited).............................. .......................... 4
Statements of Operations:
Nine months Ended September 30, 1997 and
September 30, 1998 (unaudited) and for the Period
from Inception (June 13, 1986) through September 30, 1998
(unaudited) ....................................................... 5
Statements of Cash Flows:
Nine months Ended September 30, 1997 and
September 30, 1998 (unaudited) and for the Period
from Inception (June 13, 1986) through September 30, 1998
(unaudited) ....................................................... 6
Notes to Financial Statements - September 30, 1998................... 7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations................................ 9
PART II. Other Information
Item 6 Exhibits and Reports on Form 8-K.....................................12
SIGNATURES ............................................................13
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ARONEX PHARMACEUTICALS, INC.
(A development stage company)
FACTORS AFFECTING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The
words "anticipate," "believe," "expect," "estimate," "project" and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks, uncertainties and assumptions. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those anticipated,
believed, expected, estimated or projected. For additional discussion of such
risks, uncertainties and assumptions, see "Item 1. Business - Manufacturing," "-
Sales and Marketing," "Patents, Proprietary Rights and Licenses," "- Government
Regulation," "- Competition" and "- Additional Business Risks" included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997, and
"Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations" and "- Liquidity and Capital Resources" included elsewhere in
this report.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The following unaudited financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to those rules and regulations, although
the Company believes that the disclosures made herein are adequate to make the
information presented not misleading. These financial statements should be read
in conjunction with the financial statements for the year ended December 31,
1997 included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, filed pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
The information presented in the accompanying financial statements is
unaudited, but in the opinion of management, reflects all adjustments (which
include only normal recurring adjustments) necessary to present fairly such
information.
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ARONEX PHARMACEUTICALS, INC.
(A development stage company)
BALANCE SHEETS
(All amounts in thousands, except share data)
ASSETS
September 30,
December 31, 1998
1997 (Unaudited)
Current Assets:
Cash and cash equivalents............................................... $ 2,029 $ 3,791
Short-term investments.................................................. 17,783 10,936
Accounts receivable..................................................... 100 --
Prepaid expenses and other assets....................................... 474 384
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Total current assets............................................... 20,386 15,111
Long-term investments..................................................... 10,142 1,288
Furniture, equipment and leasehold improvements........................... 1,107 2,123
Deposits ............................................................... 490 --
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Total assets....................................................... $ 32,125 $ 18,522
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses................................... $ 1,977 $ 2,959
Accrued payroll......................................................... 554 933
Advance from Genzyme.................................................... 2,000 2,000
Current portion of notes payable........................................ 191 217
Current portion of obligations under capital leases..................... 18 13
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Total current liabilities.......................................... 4,740 6,122
Long-term obligations:
Notes payable, net of current portion................................... -- 1,047
Obligations under capital leases, net of current portion................ 6 --
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Total long-term obligations........................................ 6 1,047
Commitments and contingencies
Stockholder's equity
Preferred stock $.001 par value, 5,000,000 shares authorized,
none issued and outstanding........................................ -- --
Common stock $.001 par value, 30,000,000 shares
authorized, 15,459,166 and 15,503,745 shares
issued and outstanding, respectively............................... 15 15
Additional paid-in capital.............................................. 96,606 97,660
Common stock warrants................................................... 967 50
Treasury stock.......................................................... (11) (11)
Deferred compensation................................................... (907) (545)
Unrealized loss on investments.......................................... (87) (66)
Deficit accumulated during development stage ........................... (69,204) (85,750)
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Total stockholders' equity......................................... 27,379 11,353
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Total liabilities and stockholders' equity................................ $ 32,125 $ 18,522
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The accompanying notes are an integral part of these financial statements.
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ARONEX PHARMACEUTICALS, INC.
(A development stage company)
STATEMENTS OF OPERATIONS
(All amounts in thousands, except loss per share data)
(Unaudited)
Period
from
Inception
(June 13,
1986)
Nine Months Ended Three Months Ended through
September 30, September 30, Sept. 30,
1997 1998 1997 1998 1998
---------- ---------- --------- ---------- ----------
Revenues:
Interest income....................... $ 1,632 $ 1,013 $ 510 $ 265 $ 6,594
Research and development
grants and contracts............. 591 329 275 136 5,379
---------- ---------- --------- ---------- ----------
Total revenues........................... 2,223 1,342 785 401 11,973
---------- ---------- --------- ---------- ----------
Expenses:
Research and development.............. 9,864 15,399 3,213 5,532 68,534
Purchase of in-process
research and development......... 3,000 -- 3,000 -- 11,625
General and administrative............ 1,477 2,448 546 901 16,252
Interest expense and other............ 160 41 10 27 1,312
---------- ---------- --------- ---------- ----------
Total expenses............... 14,501 17,888 6,769 6,460 97,723
---------- ---------- --------- ---------- ----------
Net loss ............................. $ (12,278) $ (16,546) $ (5,984) $ (6,059) $ (85,750)
========== ========== ========= ========== ==========
Basic and diluted loss per share......... $ (0.83) $ (1.07) $ (0.40) $ (0.39)
Weighted average shares used in
Computing basic and diluted loss per
share............................ 14,714 15,475 14,848 15,497
The accompanying notes are an integral part of these financial statements.
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ARONEX PHARMACEUTICALS, INC.
(A development stage company)
STATEMENTS OF CASH FLOWS
(All amounts in thousands)
(Unaudited)
Period from
Inception
(June 13, 1986)
Nine Months Ended through
September 30, September 30,
1997 1998 1998
----------------- ------------------ ----------------
Cash flows from operating activities:
Net loss................................................ $ (12,278) $ (16,546) $ (85,750)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities-
Depreciation and amortization.................... 652 521 4,547
Loss (gain) on disposal of assets................ 107 (2) 198
Compensation expense related to stock and
stock options................................. 400 432 3,668
Charge for purchase of in-process research
and development.............................. 3,000 -- 11,547
Unrealized gain (loss) on investment............. (31) 21 (66)
Acquisition costs, net of cash received.......... -- -- (270)
Loss in affiliate................................ -- -- 500
Accrued interest payable converted to stock...... -- -- 97
Changes in assets and liabilities:
Decrease (increase) in prepaid expenses and
other assets................................. (45) 90 (199)
Decrease (increase) in accounts receivable....... (88) 100 --
Increase (decrease) in accounts payable
and accrued expenses.......................... 211 1,361 3,819
Increase (decrease) in deferred revenue.......... -- -- (353)
------------ ------------ ------------
Net cash used in operating activities............... (8,072) (14,023) (62,262)
Cash flows from investing activities:
Net sales (purchases) of investments.................... 6,392 15,701 (6,489)
Purchase of furniture, equipment and leasehold
improvements........................................ (280) (1,545) (5,666)
Proceeds from sale of assets............................ 34 9 63
Decrease (increase) in other assets..................... (336) 490 --
Investment in affiliate................................. -- -- (500)
------------ ------------ ------------
Net cash provided by (used in) financing activities. 5,810 14,655 (12,592)
Cash flows from financing activities:
Proceeds from notes payable and capital leases.......... -- 1,369 6,041
Repayment of notes payable and principal payments
under capital lease obligations..................... (237) (307) (2,765)
Purchase of treasury stock.............................. -- -- (11)
Proceeds from issuance of stock......................... 241 68 75,380
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Net cash provided by (used in) financing activities. 4 1,130 78,645
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Net increase (decrease) in cash and cash equivalents.... (2,258) 1,762 3,791
Cash and cash equivalents at beginning of period........ 4,179 2,029 --
------------ ------------ ------------
Cash and cash equivalents at end of period.............. $ 1,921 $ 3,791 $ 3,791
============ ============ ============
Supplemental disclosures of cash flow information:
Cash paid during the period for interest............ $ 52 $ 41 $ 826
Supplemental schedule of noncash financing activities:
Conversion of notes payable and accrued interest to
common stock..................................... $ -- $ -- $ 3,043
The accompanying notes are an integral part of these financial statements.
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ARONEX PHARMACEUTICALS, INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
1. Organization and Basis of Presentation
Aronex Pharmaceuticals, Inc. ("Aronex Pharmaceuticals" or the
"Company") was incorporated in Delaware on June 13, 1986 and merged with Triplex
Pharmaceutical Corporation ("Triplex") and Oncologix, Inc. ("Oncologix")
effective September 11, 1995 ("Merger"). Aronex Pharmaceuticals is a development
stage company which has devoted substantially all of its efforts to research and
product development and has not yet generated any significant revenues, nor is
there any assurance of significant future revenues. In addition, the Company
expects to continue to incur losses for the foreseeable future and there can be
no assurance that the Company will complete the transition from a development
stage company to successful operations. The research and development activities
engaged in by the Company involve a high degree of risk and uncertainty. The
ability of the Company to successfully develop, manufacture and market its
proprietary products is dependent upon many factors. These factors include, but
are not limited to, the need for additional financing, attracting and retaining
key personnel and consultants, and successfully developing manufacturing, sales
and marketing operations. The Company's ability to develop these operations may
be impacted by uncertainties related to patents and proprietary technologies,
technological change and obsolescence, product development, competition,
government regulations and approvals, health care reform, third party
reimbursement and product liability exposure. Additionally, the Company is
reliant upon collaborative arrangements for research, contractual agreements
with corporate partners, and its exclusive license agreements with M.D. Anderson
Cancer Center ("MD Anderson"). Further, during the period required to develop
its products, the Company will require additional funds which may not be
available to it. The Company expects that its existing cash resources will be
sufficient to fund its cash requirements through early 1999. Accordingly, there
can be no assurance of the Company's future success.
The balance sheet at September 30, 1998 and the related statements of
operations and cash flows for the nine month periods ending September 30, 1998
and 1997 and the period from inception (June 13, 1986) through September 30,
1998 are unaudited. These interim financial statements should be read in
conjunction with the December 31, 1997 financial statements and related notes.
The unaudited interim financial statements reflect all adjustments which are, in
the opinion of management, necessary for a fair statement of results for the
interim periods presented and all such adjustments are of a normal recurring
nature. Interim results are not necessarily indicative of results for a full
year.
2. Accounting Policies
The Company has adopted Statement of Financial Accounting Standards No.
130 ("SFAS 130"), Reporting Comprehensive Income. SFAS 130 requires the
reporting of comprehensive income in addition to net income from operations.
Comprehensive income is a more inclusive financial reporting methodology that
includes disclosure of certain financial information that historically has not
been recognized in the calculation of net income. Comprehensive income (loss)
was $(12,278,000) and $(16,525,000) for the nine months ended September 30, 1997
and 1998, respectively.
3. Cash, Cash Equivalents and Investments
Cash and cash equivalents include money market accounts and investments
with an original maturity of less than three months. At September 30, 1998, all
short-term investments are held to maturity securities consisting of high-grade
commercial paper and U. S. Government backed securities with a carrying value of
$10,936,000, which approximates fair market value and cost. At September 30,
1998 all long-term investments are available for sale securities which are U.S.
mortgage backed securities with various maturity dates over the next several
years that have
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ARONEX PHARMACEUTICALS, INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
an amortized cost of $1,354,000, a fair market value of $1,288,000 and a gross
unrealized loss of $66,000 at September 30, 1998. The Company currently has no
trading securities.
4. Federal Income Taxes
At December 31, 1997, the Company had net operating loss ("NOL")
carryforwards for federal income tax purposes of approximately $79.0 million.
The Tax Reform Act of 1986 provided a limitation on the use of NOL and tax
credit carryforwards following certain ownership changes that could limit the
Company's ability to utilize these NOLs and tax credits. Accordingly, the
Company's ability to utilize its NOLs and tax credit carryforwards to reduce
future taxable income and tax liabilities may be limited. As a result of the
Merger with Triplex and Oncologix, a change in control as defined by federal
income tax law occurred, causing the use of these carryforwards to be limited
and possibly eliminated. Additionally because United States tax laws limit the
time during which NOLs and the tax credit carryforwards may be applied against
future taxable income and tax liabilities, the Company may not be able to take
full advantage of its NOLs and tax credit carryforwards for federal income tax
purposes. The carryforwards will begin to expire in 2001 if not otherwise used.
Due to the possibility of not reaching a level of profitability that will allow
for the utilization of the Company's deferred tax assets, a valuation allowance
has been established to offset these tax assets. The Company has not made any
income tax payments since inception.
- 8-
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
Since its inception in 1986, Aronex Pharmaceuticals, Inc. ("Aronex
Pharmaceuticals" or the "Company") has primarily devoted its resources to fund
research, drug discovery and development. The Company has been unprofitable to
date and expects to incur substantial operating losses for the next several
years as it expends its resources for product research and development,
preclinical and clinical testing and regulatory compliance. The Company has
sustained losses of approximately $85.8 million through September 30, 1998. The
Company has financed its research and development activities and operations
primarily through public and private offerings of securities. The Company's
operating results have fluctuated significantly during each quarter, and the
Company anticipates that such fluctuations, largely attributable to varying
commitments and expenditures for clinical trials and research and development,
will continue for the next several years.
Results of Operations
Three and Nine Month Periods Ended September 30, 1998 and 1997
Revenues from research and development grants and contracts decreased
51% to $136,000 for the three months ended September 30, 1998 from $275,000 for
the three months ended September 30, 1997. Research and development grants and
contracts decreased 44% to $329,000 for the nine months ended September 30, 1998
from $591,000 for the same period in 1997. For the nine months ended September
30, 1997, research and development revenue was composed of (i) $150,000 in
revenue from the initiation of a license agreement with F. Hoffman-La Roche Ltd.
("Roche", formerly Boehringer Mannheim GmbH); (ii) $166,000 in development
revenue from Targeted Genetics, Incorporated ("Targeted") and (iii) $250,000 in
the third quarter of 1997 from a new licensing agreement with Genzyme
Corporation ("Genzyme") relating to gene therapy. The three-year agreement with
Targeted ended in the second quarter of 1997. The majority ($304,000) of
research and development revenue for the nine months ended September 30, 1998
resulted from a Small Business Innovative Grant Research ("SBIR") grant relating
to Zintevir(R).
Interest income decreased 48% to $265,000 for the three months ended
September 30, 1998 from $510,000 for the three months ended September 30, 1997.
Interest income decreased 38% to $1,013,000 for the nine months ended September
30, 1998 from $1,632,000 for the same period in 1997. This decrease in interest
income resulted from a decrease in funds available for investment in 1998
compared to the same period in 1997.
Research and development expenses increased 72% to $5,532,000 for the
three months ended September 30, 1998 from $3,213,000 for the three months ended
September 30,1997. Research and development expenses increased 56% to
$15,399,000 for the nine months ended September 30, 1998 from $9,864,000 for the
same period in 1997. The increases in research and development expenses resulted
primarily from (i) increases of $1,628,000 and $4,438,000 in clinical
investigation costs for the three and nine months ended September 30, 1998,
respectively. The majority of which related to clinical trials of the Company's
NYOTRAN(TM) and ATRAGEN(R) products and (ii) increases of $626,000 and
$1,252,000 in medical affairs and regulatory salaries and payroll costs for the
three and nine months ended September 30, 1998, respectively, as the number of
personnel in these departments increased significantly from the same periods in
1997.
In-process research and development costs of $3.0 million incurred in
the third quarter of 1997 related to a non-cash research and development charge
incurred in connection with the issuance of Common Stock under the contingent
rights issued in the Triplex merger. The Company issued an aggregate of 686,472
shares of Common Stock with an aggregate value of $3.0 million. The issuance of
such shares under the contingent rights was required because equity milestone
payments of $5.0 million were not received from Genzyme relating to ATRAGEN on
or before September 11, 1997.
- 9-
General and administrative expenses increased 65% to $901,000 for the
three months ended September 30, 1998 from $546,000 for the three months ended
September 30, 1997. General and administrative expenses increased 65% to
$2,448,000 for the nine months ended September 30, 1998 from $1,477,000 for the
same period in 1997. The increases in general and administrative expenses
resulted primarily from (i) increases of $95,000 and $601,000 in salaries and
payroll costs; (ii) increases of $58,000 and $119,000 in business travel
relating mainly to business development activities; (iii) increases of $31,000
and $64,000 in investor and public relations expenses and (iv) the addition of
$134,000 and $159,000 in marketing expenses, relating mainly to ATRAGEN, for the
three and nine month periods ended September 30, 1998, respectively. Several new
positions have been added since the first quarter of 1997 and a Chief Executive
Officer was added in the fourth quarter of 1997. Additionally, the Company's
President, who resigned in January 1998, is entitled to certain severance
payments in accordance with a termination and severance agreement with the
Company. These severance payments, which continue through January 1999, were
recorded as compensation expense in the first quarter of 1998.
Interest expense and other increased 170% to $27,000 for the three
months ended September 30, 1998 from $10,000 for the three months ended
September 30, 1997. This increase in interest expense and other resulted from
the increase in indebtedness incurred to fund leasehold improvements and the
acquisition of laboratory equipment late in the second quarter of 1998. Interest
expense and other decreased 74% to $41,000 for the nine months ended September
30, 1998 from $160,000 for the same period in 1997. This decrease in interest
expense and other resulted primarily from a loss of $107,000 in the quarter
ended June 30, 1997 from the disposition of equipment and leasehold improvements
that had been used in research activities eliminated in early 1997 and a
decrease in interest expense for the first half of 1998 resulting from a
reduction in the amount of capital lease obligations and indebtedness used to
fund the acquisition of laboratory equipment.
Net loss increased 1% to $6,059,000 for the three months ended
September 30, 1998 from $5,984,000 for the three months ended September 30,
1997. Net loss increased 35% to $16,546,000 for the nine months ended September
30, 1998 from $12,278,000 for the same period in 1997. The increases in net loss
resulted primarily from increases in research and development expenses.
Liquidity and Capital Resources
Since its inception, the Company's primary source of cash has been from
financing activities, which have consisted primarily of sales of equity
securities. The Company has raised an aggregate of approximately $75 million
from the sale of equity securities from its inception through September 30,
1998. In July 1992, the Company raised net proceeds of approximately $10.7
million in the initial public offering of its Common Stock. In September 1993,
the Company entered into a collaborative agreement with Genzyme relating to the
development and commercialization of ATRAGEN(R), in connection with which the
Company received net proceeds of approximately $4.5 million from the sale of
Common Stock to Genzyme. In November 1993 and May 1997, the Company raised net
proceeds of approximately $11.5 and $32.1 million, respectively, in public
offerings of Common Stock. From October 1995 through September 30, 1998, the
Company received aggregate net proceeds of approximately $6.5 million from the
exercise of certain warrants issued in its 1995 merger with Oncologix, Inc. From
October 1995 through September 30, 1998, the Company also received an aggregate
net proceeds of approximately $6.5 million cash from the exercise of certain
warrants issued in its 1995 merger with Oncologix. From its inception until
September 30, 1998, the Company also received an aggregate of $5.4 million cash
from collaborative arrangements and SBIR grants.
The Company's primary use of cash to date has been in operating
activities to fund research and development, including preclinical studies and
clinical trials, and general and administrative expenses. Cash of $14.0 million
and $8.1 million was used in operating activities during the first nine months
of 1998 and 1997, respectively. The Company had cash, cash-equivalents and
short-term and long-term investments of $16 million as of September 30, 1998,
consisting primarily of cash and money market accounts, United States government
securities and investment grade commercial paper.
-10-
The Company has experienced negative cash flows from operations since
its inception and has funded its activities to date primarily from equity
financings. The Company has expended, and will continue to require, substantial
funds to continue research and development, including preclinical studies and
clinical trials of its products, and to commence sales and marketing efforts if
FDA and other regulatory approvals are obtained. The Company expects that its
existing capital resources will be sufficient to fund its capital requirements
through early 1999. Thereafter, the Company will need to raise substantial
additional capital to fund its operations. The Company's capital requirements
will depend on many factors, including the problems, delays, expenses and
complications frequently encountered by development stage companies; the
progress of the Company's research, development and clinical trial programs; the
extent and terms of any future collaborative research, manufacturing, marketing
or other funding arrangements; the costs and timing of seeking regulatory
approvals of the Company's products; the Company's ability to obtain regulatory
approvals; the success of the Company's sales and marketing programs; costs of
filing, prosecuting and defending and enforcing any patent claims and other
intellectual property rights; and changes in economic, regulatory or competitive
conditions of the Company's planned business. Estimates about the adequacy of
funding for the Company's activities are based on certain assumptions, including
the assumption that testing and regulatory procedures relating to the Company's
products can be conducted at projected costs. There can be no assurance that
changes in the Company's research and development plans, acquisitions, or other
events will not result in accelerated or unexpected expenditures. To satisfy its
capital requirements, the Company may seek to raise additional funds in the
public or private capital markets. The Company's ability to raise additional
funds in the public or private markets will be adversely affected if the results
of its current or future clinical trials are not favorable. The Company may seek
additional funding through corporate collaborations and other financing
vehicles. There can be no assurance that any such funding will be available to
the Company on favorable terms or at all. If adequate funds are not available,
the Company may be required to curtail significantly one or more of its research
or development programs, or it may be required to obtain funds through
arrangements with future collaborative partners or others that may require the
Company to relinquish rights to some or all of its technologies or products. If
the Company is successful in obtaining additional financing, the terms of such
financing may have the effect of diluting or adversely affecting the holdings or
the rights of the holders of the Company's Common Stock.
Year 2000
Certain computer programs or computerized equipment do not have the
ability to accurately calculate, store or use a date subsequent to December 31,
1999. The erroneous date can be interpreted in a number of different ways;
typically the year 2000 is represented as the year 1900. This could result in a
system failure or miscalculations causing disruptions of operations, including,
among other things, a temporary inability to process transactions, send invoices
or engage in similar normal business.
The Company is in the process of assessing all financial and
operational systems and equipment to ensure year 2000 compliance, and plans to
complete the assessment by December 31, 1998. Based on reviews to date and
preliminary information, the Company does not anticipate that it will incur any
significant costs relating to the assessment and remediation of year 2000
issues. The Company believes that the potential impact, if any, of its systems
not being year 2000 compliant would not materially affect the Company's ability
to continue its research and development activities. However, there can be no
assurance that the Company, its business partners, vendors or customers will
successfully be able to identify and remedy all potential year 2000 problems or
that a system failure resulting from a failure to identify any such problems
would not have a material adverse effect on the Company.
- 11-
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11.1 Statement regarding computation of per share earnings.
27.1 Financial data schedule.
(b) Reports on Form 8-K
None
- 12-
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.
ARONEX PHARMACEUTICALS, INC.
Dated: November 16, 1998 By:/S/Geoffrey F. Cox
Geoffrey F. Cox, Ph.D.
Chief Executive Officer
Dated: November 16, 1998 By:/S/Terance A. Murnane
Terance A. Murnane
Controller
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