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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, 1997.
[ ] 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
0-19290
COR THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-3060271
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
256 East Grand Avenue, South San Francisco, California 94080
(Address of principal executive offices and zip code)
(650) 244-6800
(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
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock $.0001 par value 20,145,254
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Outstanding at July 25, 1997
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COR THERAPEUTICS, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
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Item 1. Financial Statements and Notes
Condensed Balance Sheets - June 30, 1997
and December 31, 1996 3
Statements of Operations - for the three and six months
ended June 30, 1997 and 1996 4
Statements of Cash Flows - for the six months
ended June 30, 1997 and 1996 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
COR(TM) and INTEGRILIN(TM) are trademarks of the Company.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements and Notes
COR THERAPEUTICS, INC.
CONDENSED BALANCE SHEETS
(in thousands)
ASSETS
June 30, December 31,
1997 1996
--------- ---------
(unaudited)
Current assets:
Cash and cash equivalents $ 7,144 $ 2,615
Short-term investments 31,374 50,519
Contract receivables 5,941 7,644
Other current assets 4,535 3,420
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Total current assets 48,994 64,198
Property and equipment, net 5,818 7,047
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$ 54,812 $ 71,245
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,028 $ 1,398
Accrued compensation 1,702 1,495
Accrued development costs 4,870 7,830
Deferred revenue 3,781 2,900
Other accrued liabilities 1,641 994
Long-term debt--current portion 865 1,157
Capital lease obligations--current portion 1,711 1,664
--------- ---------
Total current liabilities 17,598 17,438
Long-term debt--noncurrent portion 316 644
Capital lease obligations--noncurrent portion 2,574 2,721
Stockholders' equity 179,019 178,500
Accumulated deficit (144,695) (128,058)
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Total stockholders' equity 34,324 50,442
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$ 54,812 $ 71,245
========= =========
See accompanying notes.
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COR THERAPEUTICS, INC.
STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- -------
Contract revenues $ 6,580 $ 4,793 $12,905 $ 7,324
Expenses:
Research & development 13,813 12,909 25,846 26,050
Marketing, general &
administrative 2,091 1,911 4,596 3,723
-------- -------- -------- -------
Total expenses 15,904 14,820 30,442 29,773
-------- -------- -------- -------
Loss from operations (9,324) (10,027) (17,537) (22,449)
Interest income 539 854 1,248 1,980
Interest expense (177) (191) (348) (385)
-------- -------- -------- -------
Net loss $ (8,962) $ (9,364) $(16,637) $(20,854)
======== ======== ======= ========
Net loss per share $ (0.45) $ (0.48) $ (0.83) $ (1.07)
======== ======== ======= ========
Shares used in net loss per share 20,086 19,523 20,063 19,505
======== ======== ======= ========
See accompanying notes.
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COR THERAPEUTICS, INC.
STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
(in thousands)
(Unaudited)
Six Months Ended
June 30,
----------------------
1997 1996
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Cash flows from operating activities:
Net loss $(16,637) $(20,854)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 1,840 2,105
Amortization of deferred compensation 92 77
Changes in assets and liabilities:
Contract receivables 1,703 598
Other current assets (1,115) 816
Accounts payable 1,630 (260)
Accrued compensation 335 (159)
Accrued development costs (2,960) (744)
Deferred revenue 881 -
Other accrued liabilities 647 (763)
-------- --------
Total adjustments 3,053 1,670
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Net cash used in operating activities (13,584) (19,184)
-------- --------
Cash flows from investing activities:
Purchases of short-term investments (17,569) (15,369)
Sales of short-term investments 33,669 25,726
Maturities of short term investments 3,000 7,500
Additions to property and equipment (611) (1,903)
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Net cash provided by investing activities 18,489 15,954
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Cash flows from financing activities:
Principal payments on long-term debt (620) (642)
Proceeds from capital lease obligations 701 1,167
Principal payments under capital lease obligations (801) (420)
Issuance of common stock 344 368
-------- --------
Net cash (used in) provided by financing activities (376) 473
-------- --------
Net increase (decrease) in cash and cash equivalents 4,529 (2,757)
Cash and cash equivalents at the beginning of the period 2,615 5,463
-------- --------
Cash and cash equivalents at the end of the period $ 7,144 $ 2,706
======== ========
See accompanying notes.
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COR THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS
1. Summary of significant accounting policies
COR Therapeutics, Inc. (the "Company") was incorporated in Delaware on February
4, 1988. The Company is focused on the discovery, development and
commercialization of novel pharmaceutical products for the treatment and
prevention of severe cardiovascular diseases.
Interim financial information
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions for Form 10-Q and Article 10 of Regulation
S-X. In the Company's opinion, the financial statements include all adjustments,
consisting only of normal recurring adjustments, which the Company considers
necessary to fairly state the Company's financial position and the results of
operations and cash flows. The balance sheet at December 31, 1996 has been
derived from the audited financial statements at that date but does not include
all of the information and notes required by generally accepted accounting
principles for complete financial statements. The accompanying financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996. The results of the Company's operations for any interim
period are not necessarily indicative of the results of the Company's operations
for any other interim period or for a full fiscal year.
2. Earnings (loss) per share
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings per Share, which is required to be adopted in the Company's
financial statements for the period ending December 31, 1997. At that time, the
Company will be required to change the method currently used to compute earnings
per share in order to exclude the dilutive effect of stock options. The impact
of Statement 128 is expected to result in no change to the Company's primary net
loss per share for the three and six months ended June 30, 1997 and 1996, as the
antidilutive effect of stock options has been excluded from the current
computation. The impact of Statement 128 on the calculation of the Company's
fully-diluted earnings (loss) per share for these quarters is not expected to be
material.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
In addition to the historical information contained herein, this document
includes forward-looking statements which involve risks and uncertainties.
Actual results of the Company's activities may differ significantly from the
potential results discussed in such forward-looking statements. Risk factors
that might cause such differences include, but are not limited to, those factors
identified below and under the caption "Risk Factors" in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996. The Company's business
is subject to significant risks including, but not limited to, the success of
its research and development efforts, the lengthy and expensive regulatory
process, competition from other products and the acquisition and enforcement of
patents important to the Company's business. Even if the Company's products
appear promising at various stages of development, they may not reach the market
or a number of reasons. Such reasons include, but are not limited
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to, the possibilities that the potential products will be found ineffective
during clinical trials, fail to receive necessary regulatory approvals, be
difficult to manufacture on a large scale, be uneconomical to market or be
precluded from commercialization by proprietary rights of third parties.
Additional expenses, delays and losses of opportunities that may arise out of
these and other risks could have a material adverse impact on the Company's
business, financial condition and results of operations.
Since its inception, the Company has focused on the discovery and development of
novel pharmaceutical products for the treatment and prevention of severe
cardiovascular diseases. The Company has not generated any product revenues. The
Company has been unprofitable since inception and has incurred a cumulative net
loss of $144,695,000 during the period from inception to June 30, 1997. The
Company's principal sources of working capital have been primarily public equity
financings and proceeds from collaboration research and development agreements,
as well as private equity financings, grant revenues, interest income and
property and equipment financings.
The Company's most advanced product in clinical development is INTEGRILIN(TM)
(eptifibitide). The Company submitted a New Drug Application ("NDA") to the
United States Food and Drug Administration (the "FDA") seeking approval to
market INTEGRILIN(TM) for use in helping to prevent acute cardiac ischemic
complications in patients undergoing percutaneous transluminal coronary
angioplasty ("PTCA"). INTEGRILIN(TM) was studied in this setting in IMPACT II, a
large, multi-center Phase III clinical trial. In February 1997, the FDA's
Cardiovascular and Renal Drugs Advisory Committee (the "Committee") considered
the Company's filing in PTCA. The Committee concluded that the IMPACT II trial
of INTEGRILIN(TM) had shown positive results as an adjunct therapy in helping to
prevent acute cardiac ischemic complications in patients undergoing PTCA.
However, because the Committee also decided that the results of the IMPACT II
trial alone were not sufficient to forego the FDA's customary requirement of two
positive clinical trials prior to the approval of a new drug, the Committee
recommended against approval of INTEGRILIN(TM) at this time.
In March 1997, the Company received an action letter from the FDA regarding the
NDA. The not-approvable letter identified clinical and technical issues that
need to be resolved, including the FDA's conclusion that IMPACT II was not
sufficiently robust as a single study to support approval. In its letter, the
FDA noted that a study in unstable angina is ongoing and that the data should be
provided which may add support to the findings of the IMPACT II study.
Enrollment in PURSUIT, a Phase III trial of INTEGRILIN(TM) for use in connection
with unstable angina/non-Q wave MI, was completed in January 1997. In March
1997, the Company notified the FDA of the Company's intention to file an
amendment addressing the issues cited. An amendment to the NDA would need to
include data from PURSUIT, which are expected to be available later in 1997. In
April 1997, the Company announced the withdrawal of the application made by its
worldwide partner for INTEGRILIN(TM), Schering-Plough ("Schering"), to the
European Agency for the Evaluation of Medicinal Products, the central regulatory
agency for several European countries, for European marketing approval of
INTEGRILIN(TM). There can be no assurance that INTEGRILIN(TM) or any of the
Company's other products in development will receive marketing approval in any
country on a timely basis or at all. If the Company is unable to demonstrate the
safety or efficacy of INTEGRILIN(TM) to the satisfaction of the FDA or other
regulatory authorities, the Company's business, financial condition and results
of operations would be materially adversely affected.
In addition to its collaboration agreement with Schering, the Company has
collaboration agreements with Ortho Pharmaceutical Corporation ("Ortho"), a
subsidiary of Johnson & Johnson, and Kyowa Hakko Kogyo Co., Ltd. In late 1996,
the Company and Ortho extended the collaboration agreement for one or two years.
Collaborative research under a collaboration agreement with Eli Lilly and
Company ("Lilly") ended in April 1996, and in late 1996 the Company
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and Lilly amended the agreement related to transfer of certain rights and
aspects of the collaboration that continue after completion of the collaborative
research.
RESULTS OF OPERATIONS
Total revenues increased for the three and six months ended June 30, 1997 from
the comparable periods of 1996, primarily due to receipt in the three months
ended March 31, 1997 of a milestone payment of $3,000,000 related to the
completion of enrollment in the PURSUIT trial, as well as the timing of
recognition of contract revenues under the Company's collaborative agreements
with Schering and Ortho.
Research and development expenses increased 7% for the three months ended June
30, 1997, as compared to the corresponding period in 1996, and decreased 1% for
the six months ended June 30, 1997, as compared to the corresponding period in
1996, primarily due to the timing of activity and expenses associated with the
PURSUIT trial. The Company expects research and development expenses to continue
to increase over the next several years, although the timing of certain of these
expenses may depend on the timing and phase of, and indications pursued in,
clinical trials of potential products, including INTEGRILIN(TM) (eptifibitide).
Marketing, general and administrative expenses increased 9% and 23% for the
three and six months ended June 30, 1997, respectively, as compared to the
corresponding periods in 1996, primarily due to pre-commercial activities
associated with INTEGRILIN(TM), as well as increases in staffing and
administrative expenses related to general corporate activities. The Company
expects marketing, general and administrative expenses to continue to increase
significantly over the next several years.
Interest income decreased by 37% for each of the three and six months ended June
30, 1997, as compared to the corresponding periods in 1996, primarily due to
lower cash and investment balances. Interest expense decreased 7% and 10% for
the three and six months ended June 30, 1997, respectively, as compared to the
corresponding periods in 1996, primarily due to the overall decrease in the
average balance of debt outstanding.
The results of the Company's operations for any interim period are not
necessarily indicative of the results of the Company's operations for any other
interim period or for a full fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of working capital have been primarily public
equity financings and proceeds from collaboration research and development
agreements, as well as private equity financings, grant revenues, interest
income and property and equipment financings. The Company had available cash,
cash equivalents and short-term investments of $38,518,000 at June 30, 1997.
Cash in excess of immediate requirements is invested according to the Company's
investment policy, which provides guidelines with regard to liquidity and return
and, wherever possible, seeks to minimize the potential effects of concentration
and credit risk.
Net cash used for operating activities and additions to capital equipment
decreased to $14,195,000 in the six months ended June 30, 1997, from $21,087,000
in the six months ended June 30, 1996, primarily due to the timing of
recognition of milestone and contract revenues related to the agreement with
Schering, partially offset by increased expenses. The Company expects its cash
requirements may increase in future years due to costs related to continuation
and expansion of research and development, including clinical trials, and
increased marketing, general and administrative activities. The Company
anticipates that its existing capital resources and interest earned thereon will
enable it to maintain its operations at least through 1998. However, the
Company's requirements may change depending on numerous factors, including, but
not limited to, the progress of the Company's research and development programs,
the scope and results of preclinical and clinical studies, the number and nature
of the indications the
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Company pursues in clinical studies, the timing of regulatory approvals,
technological advances, determinations as to the commercial potential of the
Company's products and the status of competitive products. In addition,
expenditures will be dependent on the status of existing and the establishment
of new, collaborative relationships with other companies, the availability of
financing and other factors. The Company will need to raise substantial
additional funds in the future, and there can be no assurance that such funds
will be available on favorable terms, if at all. In the event such funds are
not available, or are not available on favorable terms, the Company may
need to delay or curtail its research and development activities to a
significant extent, which would have a material adverse effect on the Company's
business, financial condition and results of operations.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders:
(a) The Company held its Annual Meeting of Stockholders on May 20, 1997
(b) The stockholders elected the Board's nominees for director by the
votes indicated:
Nominee Votes in Favor Votes Withheld
------- -------------- --------------
Vaughn M. Kailian 17,591,918 372,547
Shaun R. Coughlin 17,590,729 373,736
James T. Doluisio 17,592,027 372,438
Jerry T. Jackson 17,592,027 372,438
Ernest Mario 17,592,027 372,438
Robert R. Momsen 17,592,027 372,438
L. Hollingsworth Smith, Jr. 17,591,027 373,438
William H. Younger, Jr. 17,592,027 372,438
(c) The proposal to approve the Company's 1991 Equity Incentive Plan,
as amended, was approved with 11,719,526 affirmative votes,
6,201,907 negative votes, 43,032 abstentions and no broker
non-votes.
The proposal to approve the Company's 1991 Employee Stock Purchase
Plan, as amended, was approved with 14,731,145 affirmative votes,
3,212,155 negative votes, 21,165 abstentions and no broker
non-votes.
The proposal to ratify the selection of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending December
31, 1997 was approved with 17,905,216 affirmative votes, 25,971
negative votes, 33,278 abstentions and no broker non-votes.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports
There were no reports on Form 8-K filed for the quarter ended
June 30, 1997.
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COR THERAPEUTICS, INC.
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.
Date: August 6, 1997
COR THERAPEUTICS, INC.
By: /s/ VAUGHN M. KAILIAN By: /s/ LAURA A. BREGE
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Vaughn M. Kailian Laura A. Brege
President and Chief Executive Vice President, Finance and
Officer Chief Financial Officer
By: /s/ PETER S. RODDY
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Peter S. Roddy
Director, Finance and
Controller
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EXHIBIT INDEX
Exhibit
No. Description
- -------- -----------
27.1 Financial Data Schedule