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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 September 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)
(415) 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 23,747,436
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Outstanding at November 4, 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 - September 30, 1997
and December 31, 1996 3
Statements of Operations - for the three and nine months
ended September 30, 1997 and 1996 4
Statements of Cash Flows - for the nine months
ended September 30, 1997 and 1996 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
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
September 30, December 31,
1997 1996
--------- ---------
(unaudited)
Current assets:
Cash and cash equivalents $ 5,668 $ 2,615
Short-term investments 20,913 50,519
Contract receivables 6,556 7,644
Other current assets 2,971 3,420
--------- ---------
Total current assets 36,108 64,198
Property and equipment, net 5,005 7,047
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$ 41,113 $ 71,245
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,726 $ 1,398
Accrued compensation 1,985 1,495
Accrued development costs 4,410 7,830
Deferred revenue 1,486 2,900
Other accrued liabilities 1,489 994
Long-term debt--current portion 714 1,157
Capital lease obligations--current portion 1,716 1,664
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Total current liabilities 14,526 17,438
Long-term debt--noncurrent portion 144 644
Capital lease obligations--noncurrent portion 2,177 2,721
Stockholders' equity 179,822 178,500
Accumulated deficit (155,556) (128,058)
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Total stockholders' equity 24,266 50,442
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$ 41,113 $ 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 Nine Months Ended
September 30, September 30,
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
Contract revenues $ 2,911 $ 6,543 $ 15,816 $ 13,867
Expenses:
Research & development 11,417 11,068 37,256 37,118
Marketing, general &
administrative 2,644 1,893 7,246 5,616
-------- -------- -------- --------
Total expenses 14,061 12,961 44,502 42,734
-------- -------- -------- --------
Loss from operations (11,150) (6,418) (28,686) (28,867)
Interest income 437 728 1,684 2,708
Interest expense (148) (197) (496) (582)
-------- -------- -------- --------
Net loss $(10,861) $ (5,887) $(27,498) $(26,741)
======== ======== ======== ========
Net loss per share $ (0.54) $ (0.30) $ (1.37) $ (1.37)
======== ======== ======== ========
Shares used in net loss per share 20,171 19,558 20,099 19,515
======== ======== ======== ========
See accompanying notes.
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COR THERAPEUTICS, INC.
STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
(in thousands)
(Unaudited)
Nine Months Ended
September 30,
--------------------
1997 1996
-------- --------
Cash flows from operating activities:
Net loss $(27,498) $(26,741)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 2,723 3,172
Amortization of deferred compensation 186 117
Changes in assets and liabilities:
Contract receivables 1,088 (975)
Other current assets 449 2,767
Accounts payable 1,328 (618)
Accrued compensation 971 (7)
Accrued development costs (3,420) (2,155)
Deferred revenue (1,414) --
Other accrued liabilities 495 (837)
-------- --------
Total adjustments 2,406 1,464
-------- --------
Net cash used in operating activities (25,092) (25,277)
-------- --------
Cash flows from investing activities:
Purchases of short-term investments (18,546) (25,239)
Sales of short-term investments 40,612 36,273
Maturities of short-term investments 7,500 18,400
Additions to property and equipment (681) (2,199)
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Net cash provided by investing activities 28,885 27,235
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Cash flows from financing activities:
Principal payments on long-term debt (943) (977)
Proceeds from capital lease obligations 701 1,167
Principal payments under capital lease obligations (1,193) (768)
Issuance of common stock 695 535
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Net cash used in financing activities (740) (43)
-------- --------
Net increase in cash and cash equivalents 3,053 1,915
Cash and cash equivalents at the beginning of the period 2,615 5,463
-------- --------
Cash and cash equivalents at the end of the period $ 5,668 $ 7,378
======== ========
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 nine months ended September 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 per share for these quarters is not expected to be
material.
3. SUBSEQUENT EVENT
In October 1997, the Company completed a public offering of 3,335,000 newly
issued shares of common stock, including 435,000 shares issued upon exercise of
the underwriters' over-allotment option, at a price of $19.00 per share.
Proceeds to the Company after underwriting discounts and commissions were
approximately $59,200,000.
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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 and in the Company's
Registration Statement on Form S-3, No. 333-35103, filed with the Security and
Exchange Commission on September 8, 1997, as amended. The Company's business is
subject to significant risks including, but not limited to, the success of its
research and development efforts, including market acceptance of INTEGRILIN(TM),
lack of marketing and sales experience, the lengthy and expensive regulatory
process, intense competition, uncertainties related to clinical trials, 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 for a number of reasons. Such reasons include, but
are not limited 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 an accumulated
deficit of $155,556,000 during the period from inception to September 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). In April 1996, COR filed a New Drug Application ("NDA") with 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"). In February 1997, the FDA's Cardiovascular and Renal Drugs
Advisory Committee (the "Committee") considered the Company's IMPACT II trial of
INTEGRILIN(TM) in PTCA and concluded that while such trial had shown positive
results, those results were not sufficient to grant approval for marketing. The
Company subsequently received a "not approvable" letter from the FDA identifying
clinical and technical issues that need to be resolved before approval of
INTEGRILIN(TM) can be granted, including the FDA's conclusion that these results
were not sufficient to grant approval for marketing on the basis of the IMPACT
II trial alone. The FDA generally requires two positive clinical trial prior to
the approval of a new drug. The Company's original NDA remains open, and in
early October 1997, the Company submitted an amendment addressing the issues
cited by the FDA.
In August 1997, the Company announced the results of the PURSUIT Phase III
clinical trial (the "PURSUIT trial"), which was designed to determine the effect
of INTEGRILIN(TM) in the treatment of unstable angina and non-Q-wave myocardial
infarction ("NQMI"). Based on positive results from the PURSUIT trial, the
Company also amended its NDA submission in early October 1997 to seek FDA
approval of INTEGRILIN(TM) for the treatment of unstable angina and NQMI.
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COR THERAPEUTICS, INC.
In April 1997, Schering-Plough ("Schering"), the Company's partner for the
world-wide development of INTEGRILIN(TM), withdrew its application 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). The Company has been advised that Schering will resubmit its
application for European marketing approval on the basis of the data from the
PURSUIT trial. The timing of that resubmission is uncertain.
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. The Company and
Ortho have extended the collaboration agreement until December 1998.
Collaborative research under a collaboration agreement with Eli Lilly and
Company ("Lilly") ended in April 1996, and in late 1996 the Company 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 decreased for the three months ended September 30, 1997, as
compared to the corresponding period in 1996, primarily due to the timing of
recognition of contract revenues under the Company's collaborative agreements
with Schering and Ortho. Revenues increased for the nine months ended September
30, 1997, as compared to the corresponding period in 1996, primarily due to
receipt of a milestone payment of $3,000,000 in the three months ended March 31,
1997 relating to the completion of enrollment in the PURSUIT trial, as well as
the timing of recognition of contract revenues.
Research and development expenses increased 3% and less than 1% for the three
and nine months ended September 30, 1997, respectively, as compared to the
corresponding periods in 1996. The Company expects research and development
expenses 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).
Marketing, general and administrative expenses increased 40% and 29% for the
three and nine months ended September 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 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 40% and 38% for the three and nine months ended
September 30, 1997, respectively, as compared to the corresponding periods in
1996, primarily due to lower cash balances. Interest expense decreased 25% and
15% for the three and nine months ended September 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.
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COR THERAPEUTICS, INC.
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 $26,581,000 at September 30,
1997. In October 1997, the Company issued 3,335,000 shares of Common Stock in an
underwritten public offering, resulting in proceeds of approximately $59,200,000
to the Company. 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, where 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 $25,773,000 for the nine months ended September 30, 1997, from
$27,476,000 for the corresponding period in 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 that its
cash requirements may increase in future years, due to costs related to the
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 1999.
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 Company pursues in clinical
studies, the timing and costs of obtaining 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 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 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
September 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: November 13, 1997
COR THERAPEUTICS, INC.
By: /s/ VAUGHN M. KAILIAN By: /s/ LAURA A. BREGE
------------------------------- -------------------------------
Vaughn M. Kailian Laura A. Brege
President and Chief Executive Officer Vice President, Finance and
Chief Financial Officer
By: /s/ PETER S. RODDY
-------------------------------
Peter S. Roddy
Director, Finance and Controller
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INDEX TO EXHIBITS
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Exhibit
Number Description
- ----------- ----------
27.1 Financial Data Schedule