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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the fiscal year ended: December 31, 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)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.0001 Par Value
Preferred Share Purchase Rights
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ___
As of March 2, 1998, the aggregate market value of the voting stock held
by non-affiliates of the Registrant was $213,839,063 (A) (based upon the closing
sales price of such stock as reported in the Nasdaq National Market on such
date).
As of March 2, 1998, the number of outstanding shares of the
Registrants' common stock was 23,817,382.
DOCUMENTS INCORPORATED BY REFERENCE:
Document Form 10-K
Reference -------- ---------
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(1) Portions of the Registrant's definitive proxy statement with respect to
the Registrant's 1998 Annual Meeting of Stockholders, to be filed with
the Securities and Exchange Commission
not later than 120 days after the close of the Registrant's fiscal year. III
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(A) Excludes 6,795,367 shares outstanding at March 1, 1998 of the Registrant's
Common Stock held by directors, officers, and holders of more than 5% of the
Company's Common Stock. Exclusion of shares held by any person should not be
construed to indicate that such person possesses the power, direct or indirect,
to direct or cause the direction of the management or policies of the
Registrant, or that such person is controlled by or under common control with
the Registrant.
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PART I
ITEM 1. BUSINESS
Except for the historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed below and in the sections
entitled "Additional Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations." INTEGRILIN(TM) and COR are
trademarks of the Company.
OVERVIEW
COR is focused on the discovery, development and commercialization of
novel pharmaceutical products to establish a new standard of care for the
treatment and prevention of severe cardiovascular diseases. The Company believes
its understanding of the molecular and cellular biology of these diseases has
created opportunities for new therapeutic approaches where current therapies are
inadequate. The Company has created a portfolio of cardiovascular product
candidates by combining its expertise with advanced drug discovery techniques.
The Company's lead product candidate, INTEGRILIN(TM), is a small
synthetic peptide that prevents platelet aggregation and is intended for
parenteral (injectable) administration in patients with certain acute
cardiovascular indications. INTEGRILIN is being developed for the treatment of
Acute Ischemic Coronary Syndromes ("AICS"), a leading cause of hospitalization
in the United States.
In August 1997, the Company announced the results of the 10,948 patient
PURSUIT Phase III clinical trial (the "PURSUIT trial"), which were presented by
clinical investigators at the European Society of Cardiology's annual meeting.
This trial included over 700 clinical sites in 28 countries, including 280
hospitals in the United States. The PURSUIT trial was designed to determine the
effect of INTEGRILIN as an adjunct to current medical and interventional
strategies in the treatment of unstable angina and non-Q-wave myocardial
infarction ("NQMI"), the major diseases of AICS.
In 1995, prior to completing the PURSUIT trial, COR studied INTEGRILIN
in the treatment of elective and urgent coronary angioplasty in the IMPACT II
trial. Based on the data from this trial, COR submitted a New Drug Application
("NDA") for INTEGRILIN as an adjunct to percutaneous transluminal coronary
angioplasty ("PTCA"). The application was reviewed by the Cardiovascular and
Renal Drugs Advisory Committee (the "Advisory Committee") of the Food and Drug
Administration ("FDA") in February 1997. Although the Advisory Committee stated
that the trial had shown positive results, it was determined by the FDA that the
trial, as a single study, was insufficient for approval of INTEGRILIN. In early
October 1997, based on the positive data from the PURSUIT trial, the Company
submitted an amendment to its NDA to seek marketing approval for unstable angina
and NQMI and coronary angioplasty.
In January 1998, the Advisory Committee met and recommended that
INTEGRILIN receive marketing approval for use in the setting of coronary
angioplasty. The recommended indication is essentially the same as the
indication originally considered by the Advisory Committee in February 1997. At
the January 1998 meeting, the Advisory Committee concluded that the PURSUIT
trial demonstrated a beneficial treatment effect for INTEGRILIN when used in the
setting of acute coronary syndromes. However, the Advisory Committee also
concluded that the PURSUIT trial alone was not a sufficient basis for approval
of INTEGRILIN in the treatment of acute coronary syndromes. The Company is
currently consulting with the FDA regarding its application for approval of
INTEGRILIN.
In addition to INTEGRILIN for acute care, the Company is conducting
Phase I clinical trials for an oral platelet aggregation inhibitor. The
potential indications for this chronic product candidate may later include the
prevention of AICS and stroke. COR has also identified the factor
Xa/prothrombinase complex as a target for parenteral and small molecule
inhibitors and currently has a lead compound for this target in preclinical
development. Additionally, COR is evaluating leads for its growth factor
inhibition program.
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BACKGROUND
Despite decades of extensive research and development and significant
advances in treatment, cardiovascular diseases are the leading cause of death in
the United States, resulting in approximately one million deaths annually from
heart attacks, strokes and related diseases. Coronary artery disease, the form
of cardiovascular disease responsible for the greatest number of deaths, affects
over 13 million people in the United States. Cerebrovascular disease, including
stroke, affects another approximately three million people in the United States
per year. Despite advances in cardiovascular medicine over the last decade, the
actual number of deaths attributable to coronary artery disease and
cerebrovascular disease continues to climb, related to the aging of the United
States population and the progression of these diseases from early precursor
conditions to more serious manifestations.
Atherosclerosis, or hardening of the arteries, contributes to a majority
of cardiovascular deaths. Atherosclerosis is a degenerative process that can
occur over decades in which vessels become increasingly less elastic and
progressively narrowed due to the formation of plaque (fatty substances) lining
the artery. This process is caused by aging as well as genetic predisposition
and is exacerbated by dietary and environmental factors. It is estimated that 32
million people in the United States have some form of atherosclerosis.
A significant consequence of atherosclerosis is ischemia, or the
impairment of a vessel's ability to supply oxygen to the heart, brain and other
organs. In advanced cases of atherosclerosis, ruptures may occur in the plaque
that has built up inside the vessel wall, increasing the tendency of the blood
to form a thrombus. A thrombus is a plug that forms in the artery at the site of
vascular injury to protect the blood vessel wall. It is composed primarily of an
aggregation of small cells known as platelets, stabilized by a clot composed of
the protein fibrin. This condition, known as arterial thrombosis, may completely
occlude an atherosclerotic artery, leading to acute myocardial infarction
("AMI") if the occlusion occurs in an artery supplying the heart, or stroke if
it occurs in an artery supplying the brain.
The extent of the occlusion caused by thrombosis in the arteries
supplying the heart determines the clinical manifestations of coronary
thrombosis. These manifestations may range from prolonged episodes of severe
chest pain or discomfort unresponsive to standard antianginal therapies
(unstable angina) to limited or extensive damage to heart muscle (AMI) to sudden
death. Collectively, this spectrum of conditions is referred to as acute
ischemic coronary syndromes (AICS). Likewise, thrombosis in the arteries
supplying the brain can lead to partial occlusion causing a transient reduction
in oxygen supply known as a transient ischemic attack ("TIA") or total arterial
occlusion resulting in stroke. It is known that less severe manifestations of
coronary and cerebral arterial thrombosis often rapidly evolve into more serious
conditions, making all thrombotic events life-threatening and necessitating
aggressive clinical management.
Thrombosis occurs not only in arteries, which supply oxygen-rich blood
to the heart and other organs, but also in veins, which return blood from organs
to the heart. A thrombus in a vein is composed primarily of a fibrin clot and,
to a lesser extent, an aggregation of platelets and entrapped red blood cells.
Unlike in the arterial circulation, the risks of thrombosis in the veins are not
generally related to occlusion of the vessel but to the breaking-off or
embolization of the thrombus from its attachment site. Venous emboli can travel
through the venous circulation to the heart and ultimately to the lungs where
they block blood supply to the lungs and cause death of lung tissue, known as
pulmonary embolism. In the United States, approximately 50,000 people die each
year due to pulmonary embolism. Patients at high risk of deep vein thrombosis
include those undergoing orthopedic surgery or any surgical procedure in which
the patient is anesthetized for longer than thirty minutes. Patients with
chronic conditions that place them at risk of deep vein thrombosis include those
with congestive heart failure in whom venous circulation tends to be sluggish,
cigarette smokers who may have damaged blood vessel walls, and trauma and burn
patients.
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BUSINESS STRATEGY
o Maintain Cardiovascular Disease Focus. Cardiovascular disease is the
leading cause of death in the United States. The Company believes that by
combining its extensive knowledge of the molecular and cellular biology of
cardiovascular diseases, together with advanced drug discovery techniques,
it can develop new therapeutics to address large, unmet market
opportunities.
o Maximize Value of Strategic Collaborations. The Company will continue to
seek out strategic collaborations that provide: (i) access to new and
strategic cardiovascular therapeutics and technologies, (ii) attractive
financial terms to offset internal development expenses, and (iii)
broadened and more efficient marketing, sales and distribution
capabilities.
o Build a Dedicated Sales Force to Effectively Address the Cardiovascular
Market. Due to the specialized and concentrated nature of the
cardiovascular market, the Company believes it can effectively address this
market with a dedicated sales force. The Company intends to build a
dedicated sales force to sell INTEGRILIN and other product candidates,
whether developed internally or in-licensed.
o Continue to Build Relationships with Leading Clinicians and Scientists. The
Company has conducted its clinical trials at premier academic and clinical
centers under the supervision of many of the world's leading cardiologists.
The Company builds strong relationships with prominent scientists and
clinical cardiologists by sponsoring and conducting research, providing for
increased exposure to its product candidates in the medical community.
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PROGRAMS AND PRODUCT CANDIDATES
The following table summarizes COR's primary programs and product
candidates. This table is qualified in its entirety by reference to the more
detailed descriptions appearing elsewhere in this Report.
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SELECTED PROGRAMS PRIMARY
AND PRODUCT CANDIDATES STATUS THERAPEUTIC INDICATIONS
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GP IIB-IIIA INHIBITOR PROGRAM
INTEGRILIN(1) Regulatory Review(2) Acute ischemic complications following
coronary angioplasty
Regulatory Review(2) Unstable angina/non-Q-wave MI
Phase II Acute myocardial infarction (ST segment
elevation)
Oral Phase I Prevention of acute ischemic coronary
syndromes and stroke
FACTOR XA INHIBITOR PROGRAM
Parenteral/Subcutaneous Preclinical Development Prevention and treatment of venous
thromboembolism
Oral Research Prevention and treatment of venous
thromboembolism
GROWTH FACTOR AND RECEPTOR ANTAGONIST
PROGRAM(3)
Parenteral Preclinical Development Restenosis; prevention of neo-
vascularization, e.g., diabetic retinopathy
Oral Research Restenosis; prevention of neo-
vascularization, e.g., diabetic retinopathy
THROMBIN RECEPTOR INHIBITOR PROGRAM(4) Research Acute and chronic ischemic coronary
syndromes, restenosis and stroke prevention
PLATELET ADP RECEPTOR PROGRAM Research Acute and chronic ischemic coronary
syndromes, restenosis and stroke prevention
MYOCARDIAL SIGNAL Research Congestive heart failure; ischemic coronary
TRANSDUCTION PROGRAM disease
INTEGRIN SIGNALING PROGRAM Research Multiple
(1) INTEGRILIN is subject to a collaborative agreement with Schering
Corporation and Schering-Plough Corporation. See "Collaborative
Agreements - Relationship with Schering."
(2) In January 1998, the FDA's Cardiovascular and Renal Drugs Advisory Panel
met and recommended INTEGRILIN for marketing approval for use in the
setting of coronary angioplasty. See "Arterial Thrombosis - INTEGRILIN
product candidate."
(3) This program is being pursued in collaboration with Kyowa Hakko Kogyo Co.,
Inc. See "Collaboration Agreements - Relationship with Kyowa Hakko."
(4) This program is being pursued in collaboration with Ortho Pharmaceutical
Corporation. See "Collaboration Agreements - Relationship with Ortho."
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ARTERIAL THROMBOSIS
Biology
Thrombosis in arteries is a complex process involving the coordinated
activities of: (i) receptors located on cells; (ii) proteins in the blood and
vessel walls that bind to these receptors; and (iii) enzymes that regulate
fibrin clot formation. Blood contains a variety of proteins and cells, including
small cells known as platelets, which are primarily responsible for the control
of bleeding. Platelets normally circulate in an inactivated state but, in
response to vascular injury, initiate a series of events to control bleeding.
Platelet activation can cause aggregation, the formation of large platelet
aggregates. The platelet receptor that mediates aggregation is glycoprotein GP
IIb-IIIa.
The Company believes that the antagonists directed at GP IIb-IIIa should
offer the most extensive inhibition of platelet aggregation and arterial
thrombus formation in the treatment of AICS and stroke. Vascular occlusion is a
major cause of cardiovascular mortality and presents clinically in the forms of
unstable angina, AMI, stroke and reocclusion following PTCA or thrombolysis. As
a result, a GP IIb-IIIa inhibitor administered intravenously for rapid
saturation of the platelet receptors may be effective in the treatment of these
life-threatening events.
Disease and Markets - Acute Care
Acute Ischemic Coronary Syndromes. AICS is a medical term encompassing
the diseases of unstable angina and AMI, which includes both ST segment
elevation MI (an EKG marker of significant injury to the heart) and NQMI.
Patients with AICS are currently treated with a variety of drug regimens and
medical procedures. The Company's programs and product candidates are designed
to improve the treatment of these patients in conjunction with existing
therapies and, to the extent possible, without limiting the other choices
available to the treating physician.
The acute ischemic syndromes of unstable angina and myocardial
infarction ("MI") represent a clinical continuum, sharing the common
pathophysiology of plaque fissure or rupture. Patients may present at the
emergency room of the hospital with different clinical features reflecting
differences in the pathophysiological state. Patients suffering from total
occlusion of a proximal coronary artery who are having an ST segment elevation
MI will typically develop a Q-wave MI. In contrast, patients with prolonged or
repeated shorter episodes of angina at rest, without ST segment elevation MI,
may be classified as NQMI. At the time of presentation in the hospital, the
latter two groups often cannot be distinguished. These diseases are described
below:
o Unstable Angina. Unstable angina is believed to be caused by
transient blockage of a coronary artery as a result of thrombosis
and/or spasm characterized by unpredictable episodes of chest pain,
particularly episodes that occur while the patient is at rest.
Patients presenting with unstable angina may or may not have been
symptomatic with a previous history of stable angina (chest pain
upon exertion). Unstable angina requires hospitalization as the
syndrome is often the precursor of AMI.
o Acute Myocardial Infarction (Heart Attack or AMI). Patients with
sustained blockage of a coronary artery as a result of thrombosis
have inadequate blood supply to the heart and damage to heart
tissue, causing AMI. In the United States, approximately 1.5 million
people suffer from AMIs annually, approximately 700,000 of whom are
hospitalized for treatment. AMI patients may be experiencing a
Q-wave MI or an NQMI as follows:
Myocardial Infarction with ST Segment Elevation. Patients
presenting with prolonged chest pain and ST segment elevation in
the electrocardiogram will typically evolve to having a Q-wave
MI if untreated. These patients are frequently treated with
thrombolytic therapy or primary angioplasty,
Non-Q-wave Myocardial Infarction. Patients presenting with
prolonged chest pain without ST segment elevation or development
of Q-waves in the electrocardiogram may still be experiencing an
MI. Some of the patients initially presenting with suspected
unstable angina will in retrospect be diagnosed as having had an
MI based upon analysis of myocardial enzymes. These patients are
not eligible for thrombolytic therapy.
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The primary objective of the treatment of unstable angina and NQMI
(collectively, "UA/NQMI") is the prevention of progression to AMI or death
through the restoration of blood flow through the coronary artery. Management
beyond initial stabilization often differs by medical institution. In most
institutions with catheterization laboratories, patients undergo coronary
angiography to assess the degree and location of blockages of the coronary
arteries. In institutions without catheterization laboratories, patients whose
vital signs and electrocardiograms have normalized may be discharged with
chronic antianginal medications for outpatient follow-up. Less stable patients
are transferred to tertiary institutions for catheterization. The utilization of
angioplasty and coronary artery bypass graft surgery procedures, as well as the
utilization of aspirin and heparin, for the treatment of patients experiencing
UA/NQMI varies from country to country, reflecting differences in local clinical
practice.
Acute Ischemic Complications of Angioplasty. In addition to the
angioplasties performed in unstable angina and AMI patients, angioplasties are
also performed electively on patients with coronary artery disease to improve
coronary blood flow, relieve angina and prevent subsequent acute events.
Angioplasty and other invasive medical procedures intended to treat
atherosclerotic patients create the risk of acute ischemic complications such as
abrupt closure (complete occlusion, typically within 24 hours of the procedure)
of the treated artery as a result of sudden thrombosis.
Thrombosis of Cerebrovascular Arteries. Thrombosis in cerebral arteries
that deliver blood to the brain has analogous consequences to vascular
occlusions in coronary arteries that feed the heart. Therapeutics developed to
treat these conditions may have implications for both acute and chronic care for
stroke patients.
o Transient Ischemic Attack. TIA is believed to be a thromboembolic
event resulting from atherosclerotic involvements of a cerebral
artery.
o Ischemic Stroke. TIA frequently precedes an ischemic stroke. Stroke
is an acute neurologic disease commonly caused by prolonged cerebral
artery occlusion, usually as a result of a thromboembolic event.
Stroke is the leading cause of serious disability in the United
States.
INTEGRILIN Product Candidate
Product Overview. The Company's first product candidate targeted for
commercialization is INTEGRILIN, a small synthetic peptide that prevents
platelet aggregation. The mechanism of action of INTEGRILIN is to block the
platelet receptor GP IIb-IIIa, thereby preventing the cross-linking of activated
platelets via fibrinogen bridges.
INTEGRILIN was developed specifically to address the needs of patients
suffering from AICS (encompassing unstable angina, NQMI and ST segment elevation
MI), as well as complications following angioplasty and stroke. INTEGRILIN is
delivered by intravenous (injectable) administration in acute care settings. The
Company believes that clinical trials have demonstrated that INTEGRILIN is safe
and effective as a fast-acting, rapidly reversible antithrombotic.
In April 1995, the Company entered into a collaboration agreement with
Schering Corporation and Schering-Plough Corporation (together, "Schering") to
develop and commercialize INTEGRILIN on a worldwide basis. Schering has certain
rights to pursue regulatory approval of INTEGRILIN outside of the United States.
See "Collaboration Agreements - Schering."
INTEGRILIN has been studied in two randomized, double-blind, placebo
controlled Phase III clinical trials. The PURSUIT trial (adjunct therapy in the
treatment of unstable angina) and the IMPACT II trial (adjunct therapy in the
treatment of patients undergoing angioplasty). The two Phase III clinical trials
conducted to date for INTEGRILIN were conducted with respect to different
indications and with different doses of the drugs. As discussed below, the
Company believes that these trials produced positive results and, on that basis,
the Company is seeking regulatory approval of the drug in the United States.
PURSUIT Trial - Unstable Angina and Non-Q-Wave MI. The PURSUIT trial
enrolled 10,948 patients with UA/NQMI in over 700 clinical sites in 28
countries, including over 280 hospitals in the United States. The PURSUIT trial
was the largest clinical study ever conducted in patients with unstable angina
or NQMI. Importantly, the population studied represented a broad, global
distribution of patients and practice strategies, from small primary care
hospitals to large tertiary care referral-based institutions. The trial was
designed to allow patients to be managed
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in accordance with standard medical practice of the clinical site, thereby
allowing the study of INTEGRILIN in the context of different practice patterns
including the varied administration of concomitant drugs.
Patients were eligible to receive treatments for up to 72 hours. The
primary endpoint of death and MI was measured at 96 hours and seven days, as
well as at 30 days. The occurrence of such events was measured on the basis of
determinations by both the clinical investigators and the Clinical Events
Committee (the "CEC"). The CEC studied all available data, including enzyme
levels evidencing damage to heart muscle tissue that provided evidence of
"silent" heart attacks, some of which may not have been observed by the
investigators. On the basis of determinations by the CEC, the occurrence of
death or MI within 30 days in patients randomized to INTEGRILIN was 14.2%
compared to a rate in the placebo group of 15.7% (p = 0.04). On the basis of
determinations by the individual clinical investigators, the INTEGRILIN group
experienced such events at a rate of 8.0% compared to the placebo rate of 10.0%
(p = 0.0007). The absolute reduction of death or myocardial infarction per 1,000
patients was demonstrated at both 96 hours (p = 0.011) and at seven days (p =
0.016) and maintained to 30 days post-randomization.
The statistical results varied considerably by geographic region. In the
United States and Canada, which experienced the highest rate of coronary
interventions and CABG and concomitant use of heparin and aspirin, the rate of
death or MI in the INTEGRILIN group was reduced to 11.7% from 15.0% in the
placebo group (p = 0.003). In Western Europe, the trends were also favorable for
INTEGRILIN, although less dramatic. In Eastern Europe and Latin America
(including Mexico), the trends as determined by the CEC were unfavorable, but
the reports by the clinical investigators in these regions remained positive and
were almost as favorable for the drug as the investigator reports in the rest of
the world. The Company believes that these regional variations reflect
differences in patient population, laboratory procedures and clinical practice,
including the use of concomitant medications and the application of
interventional strategies.
There was a significant increase in both major and minor bleeding in the
INTEGRILIN-treated patients. The incidence of major bleeding in those patients
receiving drug was 10.6% and the incidence in the placebo group was 9.1% (p =
0.01). The occurrence of stroke and thrombocytopenia, a life-threatening
condition associated with very low platelet counts, was essentially the same in
the placebo and the study group and there was no additional risk incurred by
INTEGRILIN-treated patients undergoing CABG surgery. Based in part on these
results, the Company believes that the overall safety profile of INTEGRILIN in
the PURSUIT trial was favorable.
IMPACT II - Adjunct Therapy in Coronary Angioplasty. In 1995, the
Company completed IMPACT II, a Phase III clinical trial designed to evaluate the
safety and efficacy of INTEGRILIN in reducing the acute complications of both
elective and urgent coronary angioplasty. This study enrolled 4,010 patients at
82 hospitals in the United States. The trial evaluated two different infusion
rates with a common bolus of INTEGRILIN.
Based on an analysis of all patients who received INTEGRILIN or placebo,
INTEGRILIN at the lower infusion rate reduced the composite endpoint of death,
MI and emergency revascularization by 31% at 24 hours (p = 0.006) and 22% at 30
days (p = 0.035), although the effect was less pronounced at the higher infusion
rate. The reduction in the clinical endpoint at all time points was primarily
due to a reduction in the clinically more serious components of the endpoint:
death and MI. The benefit of the reduction in death and MI was sustained and
similar at six months. The safety data related to INTEGRILIN were favorable.
Acute Myocardial Infarction - ST segment elevation MI. The Company
continues to conduct Phase II clinical trials of INTEGRILIN in the setting of
acute myocardial infarction-ST segment elevation MI with different
thrombolytics.
Regulatory Status. In 1995, prior to completing the PURSUIT trial, COR
studied INTEGRILIN in the treatment of elective and urgent coronary angioplasty
in the IMPACT II trial. Based on the data from this trial, COR submitted an NDA
for INTEGRILIN as an adjunct to PTCA. The application was reviewed by the
Advisory Committee in February 1997. Although the Advisory Committee stated that
the trial had shown positive results, it was determined by the FDA that the
trial, as a single study, was insufficient for approval of INTEGRILIN. In early
October 1997, based on the positive data from the PURSUIT trial, the Company
submitted an amendment to its NDA to seek marketing approval for unstable angina
and NQMI and coronary angioplasty.
In January 1998, the Advisory Committee met and recommended that
INTEGRILIN receive marketing approval for use in the setting of coronary
angioplasty. The recommended indication is essentially the same as the
indication originally considered by the Advisory Committee in February 1997. At
the January 1998 meeting, the Advisory Committee concluded that the PURSUIT
trial demonstrated a beneficial treatment effect for INTEGRILIN
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when used in the setting of acute coronary syndromes. However, the Advisory
Committee also concluded that the PURSUIT trial alone was not a sufficient basis
for approval of INTEGRILIN in the treatment of acute coronary syndromes. The
Company is currently consulting with the FDA regarding its application for
approval of INTEGRILIN.
In April 1996, Schering, the Company's worldwide partner for INTEGRILIN
in all indications, filed an application for marketing approval of INTEGRILIN in
Europe. This application was withdrawn in April 1997. In January 1998, Schering
submitted an application for marketing approval of INTEGRILIN in Europe for the
treatment of unstable angina and NQMI and as an adjunct to PTCA.
There is no assurance that INTEGRILIN will receive marketing approval
in any country on a timely basis or at all. Notwithstanding the recommendation
of the Advisory Committee, there is no assurance that marketing approval for
INTEGRILIN can be obtained on the basis of the clinical trials conducted to
date, can be obtained if additional trials are conducted, or if obtained will
not be substantially delayed. If INTEGRILIN is approved for marketing in one
indication, there is no assurance it will prove effective or be approved for
marketing in any other indication. The failure of the Company to obtain
marketing approval for INTEGRILIN or a significant delay in obtaining such
approval would have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, the indications for
which INTEGRILIN may be approved could have a material effect on the market
acceptance of INTEGRILIN. The failure of the Company to obtain approval for
indications with sufficient patient populations or for indications where
existing treatments are not available or are not optimal could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Disease and Markets - Chronic Care
There are over 32 million people in the United States with evidence of
atherosclerosis. Many of these patients are at risk of suffering an acute
ischemic coronary or cerebrovascular event and are therefore potential
candidates for preventative therapies.
Oral GP IIb-IIIa Inhibitor Product Candidate
Aspirin is commonly prescribed for long-term prophylaxis in patients who
are at risk for stroke or AMI or who have suffered a stroke or AMI. As a
relatively weak inhibitor of platelet function, this agent is not an optimal
therapeutic for reducing ischemic cardiovascular events. The Company believes
oral agents that block platelet aggregation by binding to the platelet receptor
GP IIb-IIIa may have substantial benefit.
The Company has identified multiple chemical classes of small molecule
GP IIb-IIIa inhibitors which include compounds that have been found to be orally
active in a variety of animal models. A product candidate was chosen by the
Company for preclinical development, and a sufficient quantity of this compound
has been synthesized to support the Company's initial clinical development
program. The Company filed an Investigational New Drug ("IND") application for
this compound in late 1996 and initiated Phase I clinical trials in February
1997. In addition to its clinical development program, the Company is continuing
its efforts to identify additional orally active GP IIb-IIIa inhibitor
compounds. If this compound is successfully developed and marketed, it will be
subject to a royalty payable to Lilly. See "Collaboration Agreements -
Relationship with Lilly."
VENOUS THROMBOSIS
Biology
The composition of a thrombus in a vein differs from that of a thrombus
in an artery. Arterial thrombosis occurs in rapidly flowing blood and tends to
be initiated by platelets. By contrast, a thrombus in a vein is composed
primarily of fibrin and red blood cells in addition to platelets. Fibrin is
generated by thrombin synthesized as a result of restricted blood flow through
veins.
The Company is pursuing several approaches for the treatment of venous
thrombosis. These approaches are designed to inhibit thrombin synthesis or to
inhibit other elements of the coagulation process that lead to thrombin
generation. The Company's programs in this area focus on identifying agents to
inhibit the activity of the prothrombinase complex, the enzyme responsible for
production of thrombin. Interrupting the activity of this complex may arrest
coagulation, thrombosis and other potentially pathological conditions caused by
thrombin. One of the critical components of the prothrombinase complex, factor
Xa, is the enzyme responsible for converting
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prothrombin into active thrombin. The Company believes that compounds identified
through such approaches may also have applications in the treatment of acute
arterial thrombosis and restenosis and plans to evaluate certain of these
compounds for such applications.
Disease and Markets - Acute and Chronic Care
Deep Vein Thrombosis and Pulmonary Embolism. Over 270,000 hospitalized
patients in the United States are diagnosed with deep vein thrombosis and
pulmonary embolism annually. Thrombosis, primarily in the pelvic and leg veins,
can occur after surgery (particularly joint replacement surgery), injury,
immobilization or increased intra-abdominal pressure. Fragments of blood clots
from veins can embolize (or migrate) to pulmonary arteries, leading to impaired
oxygenation, acute right heart failure or pulmonary infarction. Left untreated,
approximately 25% of patients with pulmonary embolism die. Estimates for the
number of patients in the United States who are candidates for prophylaxis
against deep vein thrombosis and pulmonary embolism exceed two million annually.
Factor Xa Inhibitor Program
The Company has identified the factor Xa/prothrombinase complex as a
target for small molecule inhibitors. The prothrombinase complex catalyzes the
conversion of prothrombin to thrombin. The Company believes that this mechanism
of action, specific factor Xa blockade, offers the possibility for a safer and
potentially more efficacious approach to arterial and venous thrombosis than is
presently available with agents that inhibit both thrombin activity and
generation (heparin and low molecular weight heparin). COR scientists have
discovered multiple chemical classes of novel small molecule inhibitors with
high potency and specificity which have been shown to block both arterial and
venous thrombosis in various animal models. A lead compound that can be
administered either intravenously or subcutaneously is currently in preclinical
development at COR.
In addition, the Company is continuing research to identify orally
active factor Xa inhibitors and has identified potential lead candidates. The
development of either parenteral or orally active inhibitors in this class may
have application in both the venous and arterial markets and may offer
significant clinical advantages over presently available agents such as heparin
or coumadin.
RESTENOSIS
Biology
Interventional procedures such as angioplasty disrupt the endothelial
cell lining of an artery and further damage the arterial wall. This injury
exposes atherosclerotic plaque and healthy arterial tissue to the flowing blood,
causing thrombosis at the site of injury. Platelets that have adhered at this
site, as well as white cells that are attracted to the site of injury, secrete
growth factors that promote cell growth and injury healing. Smooth muscle cell
migration into the intima mediated by growth factors such as platelet-derived
growth factor ("PDGF") is thought to play an important role in the mutual
proliferation that follows vascular injury such as that induced by balloon
angioplasty. Restenosis is a complex process of mechanical factors including
vasoconstriction and remodeling of the arterial wall that can also contribute to
lumen narrowing. Restenosis can occur when smooth muscle cells migrate from the
inner layers of the cell wall to the injured surface of the artery and rapidly
proliferate, causing the artery to narrow.
Multiple growth factors induce the migration and/or proliferation of
smooth muscle cells. Experiments in animal models have demonstrated that three
such potential factors in mediating the growth and migration of smooth muscle
cells are PDGF, fibroblast growth factor ("FGF") and thrombin, and that
antibodies that block the action of PDGF and FGF can specifically inhibit the
vascular response to injury. Independent studies have demonstrated that the
growth-promoting effects of PDGF and FGF are mediated by receptors located on
smooth muscle cells. Studies have also demonstrated in animal models that
induced injury to arteries can significantly increase the number of PDGF
receptors on smooth muscle cells in the blood vessel wall. The Company has
exclusively licensed certain patent rights to PDGF and FGF receptors from the
Regents of the University of California, although there can be no assurance that
these licenses will provide effective protection against competitors. See
"Patents, Proprietary Rights and Licenses."
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Disease and Markets
Angioplasty procedures are generally successful in immediately
increasing blood flow, but may not have prolonged efficacy. Independent studies
indicate that up to 30% of coronary angioplasty patients suffer a significant
re-narrowing of the vessel within three to six months of the procedure.
Restenosis rates have declined recently with the rapid acceptance of coronary
stenting to accompany coronary angioplasty, perhaps by preventing the mechanical
factors that promote restenosis. Interventional cardiologists are expected to
continue to embrace this relatively new procedure. Since the occurrence of
restenosis is unpredictable, whether or not coronary stents are deployed, the
Company believes that if an effective treatment for restenosis were available,
it might be utilized on a prophylactic basis in substantially all coronary
angioplasty procedures. Moreover, coronary stenting is still complicated by the
occurrence of restenosis, particularly in smaller vessels. Recent studies have
suggested that the principal mechanism of restenosis in stented coronary
arteries is neointimal proliferation rather than remodeling and/or constriction
of the stented vessel.
Growth Factor Receptor Antagonist Program
The Company's growth factor inhibitor program is directed toward the
discovery of protein and small molecule inhibitors of certain growth factor
receptor inhibitors in the tyrosine kinase family. In November 1992, the Company
entered into a collaboration agreement with Kyowa Hakko Kogyo Co., Ltd. ("Kyowa
Hakko") focused on the discovery and development of small molecule
pharmaceuticals, primarily for the prevention of restenosis following
angioplasty. The collaboration targets certain growth factor receptors. This
collaborative research program has been extended through November 1998. The
Company and Kyowa Hakko have identified multiple classes of small molecule
agents that specifically block the tyrosine kinase activity of the target
receptors and are long acting and bioavailable. COR and Kyowa Hakko are
evaluating lead compounds in animal models and are pursuing the preclinical
development of a specific protein growth factor inhibitor. In 1996, the program
was expanded to include the development of certain identified protein factor
inhibitors. Potential clinical indications include restenosis, as well as the
prevention of neo-vascularization such as that seen in diabetic retinopathy. See
"Collaboration Agreements - Relationship with Kyowa Hakko."
Thrombin Receptor Inhibitor Program
The Company's thrombin receptor inhibitor program is directed toward the
discovery of agents for the treatment of arterial thrombosis and restenosis and
may also address certain non-cardiovascular diseases. Thrombin is an enzyme that
has multiple effects on cells and proteins within the vasculature and is the
most potent activator of platelets. Thrombin mediates cellular events through
interactions with at least one protease activated G protein-linked receptor
found on platelets, as well as on most vascular cells, including smooth muscle
and endothelial cells. In December 1993, the Company and Ortho Pharmaceutical
Corporation ("Ortho"), a subsidiary of Johnson & Johnson, entered into a
worldwide collaboration to research, develop and commercialize thrombin receptor
agonists and antagonists. In 1996, Ortho exercised its option to extend the
research term, which ends in December 1998. The Company and Ortho have
investigated a variety of approaches to identify compounds that agonize or
antagonize the thrombin receptor, have identified lead compounds and are
evaluating these compounds. The Company has an exclusive, worldwide license from
the Regents of the University of California to certain patent rights relating to
the thrombin receptor. See "Collaboration Agreements - Relationship with Ortho."
In addition to the collaboration with Ortho, the Company is
investigating a novel member of the class of protease-activated G protein-linked
receptors to which it has obtained exclusive worldwide rights. See "Patents,
Proprietary Rights and Licenses."
Platelet ADP Receptor Program
A specific receptor exists for ADP on the surface of platelets that
plays a key role in promoting platelet activation and aggregation. The Company
has successfully identified a lead compound of novel structure that specifically
binds to this receptor and blocks ADP-induced platelet aggregation. Chemical
modification of this compound is now underway in an attempt to develop oral,
long-acting inhibitors of this platelet activation pathway. Such a molecule
might provide a safe and effective means for preventing acute and chronic
arterial diseases.
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Myocardial Signal Transduction Program
The Company has initiated a research program directed toward the unmet
clinical needs of patients with heart failure. Heart failure is viewed as a
progressive disease typically initiated by a singular insult such as MI.
Thereafter, cardiac dilatation representing dysfunction of the remaining normal
myocardium ensues. COR is focusing on particular molecular targets in a specific
signaling pathway as a site for intervention. This program may also have
application in the treatment of acute and chronic coronary syndromes.
Integrin Signaling Program
The Company has initiated a research program to discover mechanisms of
integrin signal transduction. This effort is being conducted in collaboration
with investigators at the Scripps Research Foundation. Integrins play a key role
in modulating not only cell migration and shape but also growth and
differentiation, thus placing them at a central location in a variety of disease
processes. The Company believes that inhibitors of these integrin signaling
pathways may be useful for the treatment or prevention of a wide variety of
disorders including thrombosis, inflammation, atherosclerosis and tumor
metastasis.
Non-cardiovascular Research Applications
The Company's research has resulted in the identification of compounds
with potential non-cardiovascular applications. The Company believes certain of
its growth factor inhibitors may have applications in treating certain other
disorders which involve cell proliferation, such as cancer, glomerulonephritis,
and pulmonary fibrosis. The Company has identified other compounds with
potential applications in the areas of wound healing, tumor metastasis and
osteoporosis. The Company intends to pursue such opportunities and seek
collaboration partners to develop and commercialize any potential product
opportunities where appropriate.
DRUG DISCOVERY CAPABILITIES
To achieve its drug discovery objectives, the Company has established
advanced capabilities in several key technology areas:
Cardiovascular Biology
The Company's scientists and advisors have contributed to a number of
the key advances in the scientific understanding of thrombosis, restenosis and
heart failure. The Company has applied this expertise in its choice of specific
disease targets and in the creation of its drug discovery strategies. Thus far,
the Company's major focus has been on thrombosis, the process underlying the
syndromes of AMI, unstable angina and restenosis, the process of vascular smooth
muscle cell proliferation following PTCA or other vascular interventional
procedures. COR scientists have targeted several of the potential mechanisms
that regulate intravascular thrombosis or restenosis, including the platelet,
the coagulation factor cascade, and the vascular wall. COR's approach has been
to understand the pathophysiology of the disease process itself, and then to
identify and characterize molecular targets for which an agonist or antagonist
might have a positive therapeutic impact.
High Throughput Screening
The Company has applied its biological expertise to develop a variety of
novel molecular assays suitable for high throughput screening. For each high
throughput screening assay developed, numerous secondary assays for confirming
in vitro activity and specificity are also developed. The Company's screening
library consists of compounds either developed internally or purchased from
commercial and academic groups. The Company uses computer-based algorithms to
model molecular diversity in order to maximize the overall diversity of its
compound library. High throughput screening using multiple proprietary assays
against the Company's molecular targets is currently ongoing at the Company.
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Medicinal Chemistry
The Company has established small organic molecule synthesis
capabilities. These capabilities use both structure-based design principles and
traditional analog synthetic approaches directed at small molecules discovered
through screening of organic molecule libraries in COR's proprietary assays. The
Company also has a combinatorial chemistry program. The Company believes it has
developed particular expertise in the ability to develop small molecule organic
compounds that mimic the activity of peptide leads using structure-based design
approaches. This capability enables the Company to more effectively generate
compounds with appropriate pharmaceutical properties, such as oral
bioavailability and a prolonged half-life.
Animal Model Studies
The Company has established an important internal capability in the area
of animal models. The Company uses a variety of animal models, including
proprietary internally developed models that are relevant to the Company's
disease targets. In addition, the Company works closely with outside consultants
and laboratories in other areas, such as the development of knock-out and
transgenic models, and the evaluation of compounds in primate models. Using
internal and external capabilities, compounds with therapeutic potential can be
rapidly evaluated in multiple complementary models to assess their activity.
COLLABORATION AGREEMENTS
The Company evaluates, on an ongoing basis, potential collaborations
with other companies where such relationships may complement and expand the
Company's research, development, sales or marketing capabilities.
Relationship with Schering
In April 1995, the Company entered into a collaboration agreement with
Schering to develop and commercialize INTEGRILIN on a worldwide basis. Schering
paid the Company a $20 million licensing fee upon signing the agreement.
Schering has agreed to pay the Company additional milestone payments if
specified development goals are achieved.
Under the agreement, decisions regarding the ongoing development and
marketing of INTEGRILIN are generally subject to the oversight of a joint
Steering Committee with equal membership from the two companies, although
certain development decisions are allocated specifically to COR, and in those
markets where Schering has exclusive marketing rights, Schering has
decision-making authority with respect to marketing issues. Schering
participates in and shares the costs of developing INTEGRILIN. The parties work
closely with each other in connection with regulatory matters, although COR
retains primary responsibility for filings in the United States and Canada,
while Schering has primary responsibility for such filings elsewhere in the
world.
Both parties will have the right to co-promote INTEGRILIN in the United
States and Canada and share profits, if any, in these countries. In Europe,
Schering has the right to launch the product as an exclusive licensee on a
royalty-bearing basis for a period of time to be determined as provided in the
agreement. Following this initial period, COR has the right to co-promote the
product in Europe and share profits. In all co-promotion territories, the exact
profit-sharing ratio between the companies will depend on the amount of sales
effort contributed by each company. Outside of the United States, Canada and
Europe, Schering is the exclusive licensee on a royalty-bearing basis. As part
of this collaboration, Schering has granted an option to the Company to
co-promote in the United States an existing Schering cardiovascular product for
a limited period of time, as a mechanism to help defray the costs of developing
a new sales force and to help integrate the COR and Schering sales forces. Under
the terms of the agreement, both parties have certain rights to terminate for
breach. In addition, Schering has the right to terminate the agreement in the
event that an initial regulatory approval for INTEGRILIN is not received by
December 31, 2004 in at least one of the specified major countries.
Relationship with Ortho
In December 1993, the Company entered into a collaboration agreement
with Ortho, focusing on the joint discovery, development and commercialization
of novel pharmaceuticals that may result from collaborative research on the
thrombin receptor. The Company and Ortho each provided specified levels of
internal resources to the collaborative research over the initial three-year
research term. The research term extends until December 1998. In
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connection with the extension of the agreement, Ortho made a one time payment to
the Company of $2.4 million in 1996 for research to be performed during the
remaining term of the contract.
If products arise from this collaboration, Ortho will make development
milestone payments to the Company. In addition, the Company and Ortho may each
(i) participate in development of products under the collaboration and share
equally in the development costs on a worldwide basis, (ii) participate equally
in the commercialization of co-developed products (with the Company's rights of
commercialization to be limited to specified countries, including the major
countries of Europe, and in North America, Japan and Australia), and (iii) share
equally in profits or losses from any co-developed products in those countries
where the parties jointly commercialize the products. If either party decides
not to participate in the development of a product under the collaboration, or
does not participate in the commercialization of such product in one or more
countries, that party would receive royalties based on product sales.
In connection with the collaboration with Ortho, in January 1994, the
Company sold to Johnson & Johnson Development Corporation ("JJDC"), a subsidiary
of Johnson & Johnson, 533,333 shares of Common Stock at $15.00 per share, for an
aggregate purchase price of $8 million, in a private placement. In September
1996, Ortho exercised its option to extend the term of the agreement, and
pursuant to the terms of the original agreement, the Company sold JJDC an
additional 399,106 shares of Common Stock at $10.02 per share, for an aggregate
purchase price of $4 million, also in a private placement.
Relationship with Kyowa Hakko
In November 1992, the Company entered into a collaboration agreement
with Kyowa Hakko focused on the discovery and development of small molecule
pharmaceuticals, primarily for the prevention of restenosis following
angioplasty. The collaboration targets a defined class of growth factor
inhibitors. This collaborative research program has been extended through
November 1998. In December 1996, the collaboration was expanded to include the
development of certain identified protein growth factor inhibitors. Both
companies have committed significant internal resources to all phases of
research. The Company has exclusive development and marketing rights in the
United States for any products resulting from the collaboration, and Kyowa Hakko
has exclusive development and marketing rights in Asia for any such products.
The two companies have agreed to develop and commercialize jointly any such
products on a shared economic basis in the rest of the world. The agreement
further provides that Kyowa Hakko will have the exclusive right to develop and
commercialize small molecule products for indications related solely to a
single, defined non-cardiovascular disease indication outside of the United
States.
In addition, under the terms of the agreement, Kyowa Hakko has certain
rights to supply bulk material for the manufacture of any products resulting
from the collaboration, and the Company has agreed to purchase its requirements
for such material from Kyowa Hakko. If Kyowa Hakko is unable to provide the
Company with adequate supplies of any material, the Company is entitled to seek
alternate suppliers. However, there can be no assurance that alternative supply
arrangements can be established on a timely or commercially reasonable basis, if
at all.
Relationship with Lilly
Collaborative research under a collaboration agreement with Eli Lilly
and Company ("Lilly") ended by the terms of the agreement in April 1996. The
Company has the exclusive right to develop and commercialize certain compounds
which were the subject of the collaboration, subject to a royalty to Lilly. In
addition, the Company has the exclusive right to research, develop and
commercialize certain potential oral compounds which were the subject of the
collaboration, also subject to a royalty to Lilly. COR and Lilly have shared
rights with respect to all other compounds which were the subject of the
collaborative research.
Research Collaborations
The Company is actively engaged in collaborations with consultants at a
number of universities and medical centers in a number of areas. While the
Company believes its agreements with its ongoing collaborators provide
incentives to all parties, there can be no assurance that the relationships will
be successful. Although under its current arrangements the Company and its
collaborators will work exclusively with each other within a defined field for a
defined period, there can be no assurance that a collaborator or collaborators
will not terminate an agreement with the Company or pursue alternative products,
therapeutic approaches or technologies as a means of developing
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treatments for the diseases targeted by the Company. Even if a collaborator
continues its participation in its program with the Company, it may nevertheless
determine not to actively pursue the development or commercialization of any
particular product or product opportunity. In such event, the Company's ability
to pursue such potential products could be severely limited.
COMPETITION
Due to the incidence and severity of cardiovascular diseases, the market
for therapeutic products that address such diseases is large, and competition is
intense and expected to increase. The Company's most significant competitors are
major pharmaceutical companies and more established biotechnology companies,
which have significant resources and expertise in research and development,
manufacturing, testing, obtaining regulatory approvals and marketing. Emerging
pharmaceutical and biotechnology companies may also prove to be significant
competitors, particularly through collaboration arrangements with large
pharmaceutical companies. Many of these competitors have cardiovascular products
approved or in development, and operate large, well-funded cardiovascular
research and development programs. Furthermore, academic institutions,
governmental agencies, and other public and private research organizations
conduct research, seek patent protection and establish collaboration
arrangements for product and clinical development and marketing in the
cardiovascular disease field and other areas being targeted by the Company. In
addition, these companies and institutions compete with the Company in
recruiting and retaining highly qualified scientific and management personnel.
The Company is aware of products in research or development by its
competitors that address all of the diseases and disorders being targeted by the
Company, and any of these products may compete with potential products being
developed by the Company, depending upon the indication for which each such
product is approved. In particular, many of the Company's competitors have
programs specifically designed to develop parenteral and oral GP IIIb-IIa
inhibitors. One of these companies has a monoclonal antibody-based parenteral GP
IIb-IIIa inhibitor, abciximab, that has received regulatory approval, was
introduced in 1995 and is being developed by Centocor, Inc. and marketed by
Lilly. In addition, Merck & Co, Inc. ("Merck") has completed multiple phase III
trials of another parenteral GP IIb-IIIa antagonist, tirofiban, and has
announced its intention to seek marketing approval. Orally available GP IIb-IIIa
inhibitors are being developed by a number of pharmaceutical companies with
agents at various stages of development. The Company believes these compounds
are not likely to represent direct competition for injectable products as they
are being designed for chronic therapies, are expected to be dosed to have a
lesser anti-platelet effect and to be designed to have a long biological
half-life. There can be no assurance that these competitors will not succeed in
developing products or technologies that are more effective than those being
developed by the Company or that would render the Company's technology obsolete
or noncompetitive.
Any product which the Company succeeds in developing and for which it
gains regulatory approval must then compete for market acceptance and market
share. For certain of the Company's potential products, an important competitive
factor will be the timing of market introduction of competitive products.
Accordingly, important competitive factors will be the relative speed with which
companies can develop products, complete the clinical testing and approval
processes and supply commercial quantities of the product to the market. With
respect to clinical testing, competition may also delay progress by limiting the
number of clinical investigators and patients available to test the Company's
potential products.
In addition to the above factors, competition is based on product
efficacy, safety, the timing and scope of regulatory approvals, availability of
supply, marketing and sales capability, reimbursement coverage, price and patent
position.
MARKETING AND SALES STRATEGY
The Company's strategy is to market any products for which it obtains
approval either directly or through co-promotion arrangements or other licensing
arrangements with pharmaceutical or biotechnology companies. The Company's
products under development are targeted towards the acute care as well as the
chronic care markets. The Company intends to retain selected North American and
European marketing rights for products where appropriate.
COR and Schering will launch, market and co-promote INTEGRILIN in the
United States and Canada, if approved. Schering has the right to launch
INTEGRILIN in Europe and would pay the Company royalties for a specified initial
period, after which the Company would have the right to co-promote and share any
resulting profits.
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The primary target customer groups for INTEGRILIN will be interventional
cardiologists, clinical cardiologists and emergency room physicians. In
addition, hospital pharmacy directors and formulary members will be important,
as well as nurses and non-medical audiences who affect buying decisions. COR
intends to hire its own marketing and sales organization for the launch of
INTEGRILIN in the United States and Canada. Educational, advertising and
promotional programs will supplement the direct sales force selling effort. See
"- Collaboration Agreements - Relationship with Schering."
The Company has not developed a specific commercialization plan with
respect to other potential products. Implementation will depend in large part on
the market potential of any product candidates, as well as on the Company's
financial resources. The Company may establish co-promotion, corporate partner
or other arrangements for the marketing and sale of certain of its products and
in certain geographic markets. There can be no assurance that the Company will
be successful in establishing such arrangements, or that these arrangements will
result in the successful marketing and sales of the Company's products, if any.
Sales of the Company's products in development will be dependent in part
on the availability of reimbursement from third-party payors, such as government
and private insurance plans. The Company plans to meet with administrators of
these plans to discuss the potential medical benefits and cost-effectiveness of
its products. The Company believes this approach may assist in obtaining
reimbursement authorization for its products from these third-party payors.
There can be no assurance that the Company will be able to establish its own
marketing and sales force for INTEGRILIN or its other potential products, or
that any such sales force, if established, would be successful.
PROCESS DEVELOPMENT AND MANUFACTURING
The Company currently does not have the capacity to manufacture its
potential products, is dependent on contract manufacturers or collaboration
partners for the production of its potential products for preclinical research
and clinical trial purposes and expects to be dependent on such manufacturers or
collaboration partners for commercial production. The Company has no experience
in manufacturing pharmaceutical or other products or in conducting manufacturing
testing programs required to obtain FDA and other regulatory approvals. The
Company has no manufacturing facilities for either the commercial production of
bulk drug substances or the manufacture of final dosage forms.
The Company relies primarily on third parties for the manufacture of
INTEGRILIN and other product candidates for preclinical and clinical purposes.
Production of INTEGRILIN, both for any future clinical trials and for possible
commercialization, will also be done through contract manufacturers. There can
be no assurance that the arrangements with third-party manufacturers will be
successful.
In connection with the commercialization of its potential products,
the Company may establish multiple third-party manufacturing sources on
commercially reasonable terms for its products. There can be no assurance that
the Company will be able to establish such sources on commercially reasonable
terms, or, if such sources are established, that the sources will be successful.
In the event that the Company is unable to obtain contract manufacturing, or
obtain such manufacturing on commercially acceptable terms, it may not be able
to commercialize its products as planned. The Company's dependence upon third
parties for the manufacture of its potential products may adversely affect the
Company's profit margins, if any, and its ability to develop and manufacture
products on a timely and competitive basis.
The Company believes that material that has been produced by contract
manufacturers has been done in conformity with applicable regulatory
requirements. The Company has established a quality control program, including a
set of standard operating procedures, intended to ensure that the Company's
compounds are manufactured in accordance with Current Good Manufacturing
Practices ("CGMP"), the requirements of the California State Board of Pharmacy
and other applicable regulations. Any contract manufacturers that the Company
may use must adhere to CGMP. If these facilities cannot pass a pre-approval
plant inspection, the likelihood of the FDA's pre-market approval of INTEGRILIN
will be adversely affected. Certain material manufacturing changes that may
occur after approval are also subject to FDA review and approval. There can be
no assurance that the FDA or other regulatory agencies will approve the
processes or the facilities by which any of the Company's products may be
manufactured. In addition, if the facilities cannot pass regular post-approval
FDA inspections, manufacturing and distribution may be disrupted, recalls of
distributed products may be necessary, and other sanctions could be applied,
which would have a material adverse effect on the Company's business, financial
condition and results of operations. See "-Government Regulation."
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The Company believes the contracted supply of INTEGRILIN is sufficient
to conduct future clinical trials and initial commercial launch as currently
planned. The Company is working with its vendors on capacity forecasts and
planning, with the objective of assuring adequate supply. The Company has
established long-term supply arrangements with a bulk product supplier and with
a supplier for the filling and final packaging of INTEGRILIN. In addition, the
Company has qualified a second manufacturer of bulk product and has transferred
the necessary process technology to that manufacturer. The Company's
manufacturing plans include the addition of capacity both with its existing
suppliers and with secondary manufacturers of bulk and finished product. There
can be no assurance that agreements with alternative contract manufacturers can
be reached if required, on a timely basis, or at all. The Company may need
expanded capacity to meet market demand, if any. If this were to occur there is
no assurance that such capacity could be expanded in a timely manner, or at all.
The Company believes that all of its existing compounds can be produced
using established manufacturing methods, including cell culture, fermentation or
traditional pharmaceutical synthesis. The manufacture of the Company's compounds
is based in part on technology that the Company believes to be proprietary.
Contract manufacturers may utilize their own technology, the technology of the
Company or that of third parties. Successful technology transfer is needed to
ensure success with potential secondary suppliers. There can be no assurance
that such manufacturers will abide by any limitations or confidentiality
restrictions in licenses with the Company. In addition, any such manufacturer
may develop process technology related to the manufacture of the Company's
compounds that such manufacturer owns either independently or jointly with the
Company. This would increase the Company's reliance on such manufacturer or
require the Company to obtain a license from such manufacturer in order to have
its products manufactured. There can be no assurance that any such license would
be available on terms acceptable to the Company, if at all.
For the Company's potential products which are at an early stage of
development, the Company expects that it will need to improve or modify its
existing process technologies and manufacturing capabilities. The Company cannot
quantify the time or expense that may ultimately be required to improve or
modify its existing process technologies, but it is possible that such time or
expense could be substantial. Moreover, there can be no assurance that the
Company will be able to implement any of these improvements or modifications
successfully.
PATENTS, PROPRIETARY RIGHTS AND LICENSES
The Company's policy is to file patent applications to protect
technology, inventions and improvements that are important to the development of
its business. The Company also relies upon trade secrets, know-how, continuing
technological innovations and licensing opportunities to develop and maintain
its competitive position. The Company plans to prosecute and defend its patent
applications aggressively, including any patents that may issue, as well as its
proprietary technology. The Company has filed, or has licensed exclusively, a
series of related patent applications with respect to each of its product
candidates in development.
The Company's success will depend in part on its ability to obtain
patent protection for its product candidates both in the United States and in
other countries. The Company has patents or has filed applications for patents
covering many of its products, including INTEGRILIN, and processes, various
aspects of the Company's platelet aggregation inhibitor, growth factor receptor
and venous thrombosis programs, as well as other programs. Many of the patents
or applications include composition of matter claims relating to a number of the
Company's compounds.
The patent positions of pharmaceutical and biotechnology firms,
including the Company, are uncertain and involve complex legal and factual
questions. In addition, the coverage claimed in a patent application can be
significantly reduced before the patent is issued. Consequently, the Company
does not know whether any of its applications will result in the issuance of
patents or, whether any of its issued patents will provide significant
proprietary protection or will be circumvented or invalidated. Since patent
applications in the United States are maintained in secrecy until patents issue,
and since publication of discoveries in the scientific or patent literature
often lags behind actual discoveries, the Company cannot be certain that it was
the first creator of inventions covered by its pending patent applications or
that it was the first to file patent applications for such inventions. Moreover,
the Company may have to participate in interference proceedings declared by the
United States Patent and Trademark Office ("USPTO") or, with respect to foreign
patents and patent applications, with foreign regulatory agencies, to determine
priority of invention, which could result in substantial cost to the Company,
even if the eventual outcome is favorable to the Company. In October 1997, a
patent opposition was filed in Europe by another company, against
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the claims of a patent granted to the Company in Europe covering broad, generic
claims for INTEGRILIN, as well as numerous related compounds that are not part
of the Company's core technology. The opposition asserts that all claims of the
patent are unpatentable. The Company believes that the opposition is without
merit and intends to vigorously defend its patent. However, there can be no
assurance that this patent opposition will not result in an unfavorable outcome.
An unfavorable outcome could have a material adverse effect on the Company's
business, financial condition and results of operations. There can be no
assurance that any additional patents, if issued to the Company, would be held
valid by a court of competent jurisdiction in the event of a challenge. An
adverse outcome could subject the Company to significant liabilities to third
parties, require disputed rights to be licensed from third parties or require
the Company to cease using such technology.
The development of therapeutic products for cardiovascular applications
is intensely competitive. A number of pharmaceutical companies, biotechnology
companies, universities and research institutions have filed patent applications
or received patents in this field. Some of these applications are competitive
with the Company's applications, or conflict in certain respects with claims
made under applications that cover one or more of the Company's programs. Such
conflict could result in a significant reduction of the coverage of the
Company's patents, if issued, which could materially adversely affect the
Company's prospects. In addition, if patents are issued to other companies that
contain competitive or conflicting claims and such claims are ultimately
determined to be valid, no assurance can be given that the Company would be able
to obtain licenses to these patents at a reasonable cost, or develop or obtain
alternative technology.
The Company also relies upon trade secret protection for its
confidential and proprietary information. No assurance can be given that others
will not independently develop substantially equivalent proprietary information
and techniques or otherwise gain access to the Company's trade secrets or
disclose such technology, or that the Company can meaningfully protect its trade
secrets.
It is the Company's policy to require its employees, consultants,
outside scientific collaborators, sponsored researchers and other advisors to
execute confidentiality agreements upon the commencement of employment or
consulting relationships with the Company. These agreements provide that all
confidential information developed or made known to the individual during the
course of the individual's relationship with the Company is to be kept
confidential and not disclosed to third parties except in specific
circumstances. In the case of employees, the agreements provide that all
inventions conceived by the individual shall be the exclusive property of the
Company. There can be no assurance, however, that these agreements will provide
meaningful protection or adequate remedies for the Company's trade secrets in
the event of unauthorized use or disclosure of such information.
The Company has obtained licenses from a number of universities,
companies and research institutions to technologies, processes and compounds
that it believes may be important to the development of its products. These
agreements require the Company to pay license maintenance fees and. upon
commercial introduction of certain products, pay royalties. These include an
exclusive license agreement with the Regents of the University of California
that may be canceled or converted to a non-exclusive license if specified
milestones are not achieved. There can be no assurance that any of these
licenses will provide effective protection against the Company's competitors.
GOVERNMENT REGULATION
The production and marketing of the Company's products and its ongoing
research and development activities are subject to extensive regulation by
numerous government authorities in the United States and other countries. Prior
to marketing in the United States, any product developed by the Company must
undergo rigorous preclinical testing and clinical trails and an extensive
regulatory approval process implemented by the FDA under the Food, Drug and
Cosmetic Act (the "FDC Act"). Satisfaction of such regulatory requirements,
which includes demonstrating that the product is both safe and effective,
typically takes several years or more depending upon the type, complexity and
novelty of the product, and requires the expenditure of substantial resources.
Preclinical studies must be conducted in compliance with Good Laboratory
Procedures ("GLP") regulations. Clinical testing must meet requirements for
Institutional Review Board ("IRB") oversight and informed consent, as well as
FDA prior review, oversight and Good Clinical Practice ("GCP") regulations. The
Company has limited experience in conducting and managing the clinical trials
necessary to obtain regulatory approval. Furthermore, the Company or the FDA may
suspend clinical trials at any time if either believes that the subjects
participating in such trials are being exposed to unacceptable health risks.
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The steps ordinarily required before a drug may be marketed in the
United States include (a) preclinical testing and clinical trials; (b) the
submission to the FDA of an IND application which must become effective before
clinical trials may commence; (c) adequate and well-controlled clinical trials
to establish the safety and efficacy of the drug; (d) the submission to the FDA
of an NDA; and (e) FDA approval of the applications, including approval of all
product labeling.
Preclinical testing includes laboratory evaluation of product chemistry,
formulation and stability, as well as animal studies to assess the potential
safety and efficacy of each product. The results of the preclinical tests are
submitted to the FDA as part of an IND and are reviewed by the FDA before the
commencement of clinical trials. Unless the FDA objects to an IND, the IND will
become effective 30 days following its receipt by the FDA. There can be no
assurance that submission of an IND will result in FDA authorization to commence
clinical trials or that the lack of an objection means that the FDA will
ultimately approve an application for marketing approval.
Before receiving FDA approval to market a product in accordance with the
above procedures, the Company will have to demonstrate that the product is safe
and effective. Data obtained from preclinical testing and clinical trials are
susceptible to varying interpretations that could delay, limit or prevent
regulatory approvals. In addition, delays or rejections may be encountered based
upon additional Government regulation from future legislation or administrative
action or changes in FDA policy during the period of product development,
clinical trials and FDA regulatory review. Similar delays may also be
encountered in foreign countries. There can be no assurance that even after such
time and expenditures, regulatory approval will be obtained for any products
developed by the Company. If regulatory approval of a product is granted, such
approval will be limited to those specific segments of the population for which
the product is effective, as demonstrated through clinical trials. Furthermore,
approval may entail ongoing requirements for post-marketing studies. There can
be no assurance that any product developed by the Company alone or in
conjunction with others will prove to be safe and efficacious in clinical trials
and will meet all of the applicable regulatory requirements needed to receive or
maintain marketing approval.
Outside the United States, the Company's ability to market a product is
contingent upon receiving marketing authorization from the appropriate
regulatory authorities. The requirements governing the conduct of clinical
trials, marketing authorization, pricing and reimbursement vary widely from
country to country. At present, foreign marketing authorizations are applied for
at a national level, although within the European Union (the "EU"), procedures
are available to companies wishing to market a product in more than one EU
member state. If the regulatory authorities are satisfied that adequate evidence
of safety, quality and efficacy has been presented, a marketing authorization
will be granted. This foreign regulatory approval process includes all of the
risks associated with FDA approval set forth above.
In addition, among the conditions for FDA approval of a pharmaceutical
product is the requirement that the manufacturer's (either the Company's own or
a third-party manufacturer's) quality control and manufacturing procedures
conform to CGMP which must be followed at all times. The FDA enforces CGMP
requirements through periodic unannounced inspections. There can be no assurance
that the FDA will determine that the facilities and manufacturing procedures of
the Company or any third-party manufacturer of the Company's products candidates
will conform to CGMP requirements. Additionally, the Company or its third-party
manufacturers must pass a pre-approval inspection of manufacturing facilities by
the FDA before obtaining marketing approval. Failure to comply with applicable
regulatory requirements may result in penalties such as restrictions on a
product's marketing or withdrawal of a product from the market.
The FDA's policies may change and additional governmental regulations
may be promulgated which could prevent or delay regulatory approval of the
Company's potential products. The Company is unable to predict the likelihood of
adverse governmental regulation that might arise from future legislation or
administrative action, either in the United States or abroad. Furthermore, the
Company or the FDA may suspend clinical trials at any time if it believes that
the subjects participating in such trials are being exposed to unacceptable
health risks. There can be no assurance that the Company will not encounter
problems in clinical trials that will cause the Company or the FDA to delay or
suspend clinical trials.
PHARMACEUTICAL PRICING AND REIMBURSEMENT
In both domestic and foreign markets, sales of the Company's proposed
products will depend in part upon the availability of reimbursement from
third-party payors, such as government health administration authorities,
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managed care providers, private health insurers and other organizations. In
addition, other third-party payors are increasingly challenging the price and
cost effectiveness of medical products and services. Significant uncertainty
exists as to the reimbursement status of newly approved health care products. In
many major markets outside the United States, pricing approval is required
before sales can commence. There can be no assurance as to what price can be
obtained or whether government-approved prices, once established, may not be
reduced in subsequent years. There can be no assurance that the Company's
potential products will be considered cost effective or that adequate
third-party reimbursement will be available to enable the Company to maintain
price levels sufficient to realize an appropriate return on its investment in
product development. Legislation and regulations affecting the pricing of
pharmaceuticals may change before the Company's proposed products are approved
for marketing. Adoption of such legislation could further limit reimbursement
for medical products. If adequate coverage and reimbursement levels are not
provided by the government and third-party payors for the Company's potential
products, the market acceptance of these products would be adversely affected,
which would have a material adverse effect on the Company's business, financial
condition and results of operations.
INSURANCE
The testing, marketing and sale of human pharmaceuticals expose the
Company to significant and unpredictable risks of product liability claims in
the event that the use of its technology or products is alleged to have resulted
in adverse effects. Such risks will exist even with respect to any products that
receive regulatory approval for commercial sale. While the Company has obtained
liability insurance for its clinical trials for INTEGRILIN and other product
candidates in clinical trials, there can be no assurance that it will be
sufficient to satisfy any liability that may arise. There can be no assurance
that adequate insurance coverage will be available in the future at acceptable
cost, if at all, or that a product liability claim would not adversely affect
the business or financial condition of the Company.
EMPLOYEES
As of March 2, 1998, the Company had 182 full-time employees, of whom
121 were in research and development and 61 were in marketing, general and
administrative areas.
All employees are located at the Company's facility in South San
Francisco, California. None of the Company's employees is represented by a
collective bargaining agreement. The Company considers its employee relations to
be good. The Company's policy is to enter into confidentiality agreements with
its employees and consultants.
ADDITIONAL RISK FACTORS
Stockholders or investors in shares of the Company's Common Stock should
carefully consider the following additional risk factors, in addition to other
information in this Report.
UNCERTAINTY RELATED TO REGULATORY APPROVAL OF INTEGRILIN
In order to commercialize any of its products under development, the
Company must demonstrate with substantial evidence through clinical trials and
to the FDA's satisfaction that INTEGRILIN is safe and effective for use in the
indications for which approval is requested. In 1995, prior to completing the
PURSUIT trial, COR studied INTEGRILIN in the treatment of elective and urgent
coronary angioplasty in the IMPACT II trial. Based on the data from this trial,
COR submitted an NDA for INTEGRILIN as an adjunct to PTCA". The application was
reviewed by the Advisory Committee in February 1997. Although the Advisory
Committee stated that the trial had shown positive results, it was determined by
the FDA that the trial, as a single study, was insufficient for approval of
INTEGRILIN. In early October 1997, based on the positive data from the PURSUIT
trial, the Company submitted an amendment to its NDA to seek marketing approval
for unstable angina and NQMI and coronary angioplasty.
In January 1998, the Advisory Committee met and recommended that
INTEGRILIN receive marketing approval for use in the setting of coronary
angioplasty. The recommended indication is essentially the same as the
indication originally considered by the Advisory Committee in February 1997. At
the January 1998 meeting, the
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Advisory Committee concluded that the PURSUIT trial demonstrated a beneficial
treatment effect for INTEGRILIN when used in the setting of acute coronary
syndromes. However, the Advisory Committee also concluded that the PURSUIT trial
alone was not a sufficient basis for approval of INTEGRILIN in the treatment of
acute coronary syndromes. The Company is currently consulting with the FDA
regarding its application for approval of INTEGRILIN.
In April 1996, Schering, the Company's worldwide partner for INTEGRILIN
in all indications, filed an application for marketing approval of INTEGRILIN in
Europe. This application was withdrawn in April 1997. In January 1998, Schering
submitted an application for marketing approval of INTEGRILIN in Europe for the
treatment of unstable angina and NQMI and as an adjunct to PTCA.
There is no assurance that INTEGRILIN will receive marketing approval
in any country on a timely basis or at all. Notwithstanding the recommendation
of the Advisory Committee, there is no assurance that marketing approval for
INTEGRILIN can be obtained on the basis of the clinical trials conducted to
date, can be obtained if additional trials are conducted, or if obtained will
not be substantially delayed. If INTEGRILIN is approved for marketing in one
indication, there is no assurance it will prove effective or be approved for
marketing in any other indication. The failure of the Company to obtain
marketing approval for INTEGRILIN or a significant delay in obtaining such
approval would have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, the indications for
which INTEGRILIN may be approved could have a material effect on the market
acceptance of INTEGRILIN. The failure of the Company to obtain approval for
indications with sufficient patient populations or for indications where
existing treatments are not available or are not optimal could have a material
adverse effect on the Company's business, financial condition and results of
operations.
NO ASSURANCE OF MARKET ACCEPTANCE OF INTEGRILIN
Even if the requisite regulatory approvals for INTEGRILIN are obtained,
there is no assurance that such product would be accepted in the United States
or foreign markets. A number of factors may affect the rate and overall market
acceptance of INTEGRILIN, including the perception by physicians and other
members of the health care community of the safety and efficacy of INTEGRILIN on
an absolute basis or in comparison to other drugs, the price of INTEGRILIN
relative to other drugs or competing treatment modalities, the availability of
third-party reimbursement, and the effectiveness of the sales and marketing
efforts by the Company and Schering relative to the sales and marketing efforts
of competitors. In addition, side effects or unfavorable publicity concerning
INTEGRILIN or comparable drugs on the market could have an adverse effect on the
Company's ability to obtain physician, patient or third-party payor acceptance.
INTEGRILIN is a small synthetic peptide that blocks the platelet
receptor GP IIb-IIIa to inhibit platelet aggregation. INTEGRILIN may compete
with abciximab, a monoclonal antibody GP IIb-IIIa inhibitor developed by
Centocor, Inc. and marketed by Lilly for use in angioplasty, the same indication
for which the Advisory Committee recommended approval of INTEGRILIN, which was
introduced to the market in the United States and Europe in 1995. The extent of
such competition will depend upon indications for which each agent is ultimately
approved and other indications for which physicians may prescribe these agents.
In addition, other companies also have GP IIb-IIIa inhibitors under development,
including Merck, which completed multiple Phase III trials of its own GP
IIb-IIIa inhibitor and has announced its intention to seek marketing approval of
such product. There can be no assurance that INTEGRILIN, if approved by the FDA,
will obtain market acceptance for any indication.
LACK OF MARKETING AND SALES EXPERIENCE
The Company currently does not have marketing, sales or distribution
experience. The Company's strategy is to market and sell INTEGRILIN directly in
the United States and Canada. Therefore, the Company must develop a substantial
sales force with technical expertise. The Company does not have any experience
in developing, training or managing a sales force. The Company will incur
substantial additional expenses in developing, training and managing such an
organization. There can be no assurance that the Company will be able to build
such a sales force for INTEGRILIN, that the cost of establishing such a sales
force will not exceed any product revenues, or that the Company's direct
marketing and sales efforts will be successful. In addition, the Company
competes with many other companies that currently have extensive and well-funded
marketing and sales operations. There can be no assurance that the Company's
marketing and sales efforts will compete successfully against such other
companies. See "Marketing and Sales Strategy."
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UNCERTAINTIES RELATED TO CLINICAL TRIALS
Before obtaining required regulatory approvals for the commercial sale
of any of the Company's potential products under development, the Company must
demonstrate through preclinical testing and clinical trials and, to the FDA's
satisfaction, that each product is safe and effective for use in indications for
which approval is requested. The results from preclinical testing and early
clinical trials may not be predictive of results obtained in large clinical
trials. Companies in the pharmaceutical and biotechnology industries have
suffered significant setbacks in various stages of clinical trials, even in
advanced clinical trials after promising results had been obtained in earlier
trials.
The development of safe and effective products is highly uncertain and
subject to numerous risks. Product candidates that may appear to be promising in
development may not reach the market for a number of reasons. Product candidates
may be found ineffective or cause harmful side effects during clinical trials,
may take longer to progress through clinical trials than had been anticipated,
may fail to receive necessary regulatory approvals, may prove impracticable to
manufacture in commercial quantities at reasonable cost and with acceptable
quality or may fail to achieve market acceptance. Completion of research,
preclinical testing and clinical trials may take several years, and the length
of time varies substantially with the type, complexity, novelty and intended use
of the product. In addition, data obtained from preclinical and clinical
activities are susceptible to varying interpretations, which could delay, limit
or prevent regulatory approval. Delays or rejections may be encountered based
upon many factors, including changes in regulatory policy during the period of
product development. No assurance can be given that any of the Company's
development programs will be successfully completed, that any regulatory
applications to conduct clinical trials will be approved by the FDA or other
regulatory authorities or that clinical trials will commence as planned.
All of the Company's potential products are subject to extensive
regulation and will require approval from the FDA and other regulatory agencies
prior to commercial sale. The cost to the Company of conducting clinical trials
for any potential product can vary dramatically based on a number of factors,
including the order and timing of clinical indications pursued and the extent of
development and financial support, if any, from corporate partners. Because of
the intense competition in the cardiovascular market, the Company may have
difficulty obtaining sufficient patient populations or clinician support to
conduct its clinical trials as planned and may have to expend substantial
additional funds to obtain access to such resources, or delay or modify its
plans significantly. See "Competition" and "Government Regulation."
NEED FOR FUTURE FUNDING; UNCERTAINTY OF ACCESS TO CAPITAL
The Company's operations to date have consumed substantial and
increasing amounts of cash. The negative cash flow from operations is expected
to continue in the foreseeable future. The development of the Company's
technology and proposed products will require a commitment of substantial funds
to conduct the costly and time-consuming research, preclinical testing and
clinical trials necessary to develop and optimize such technology and proposed
products, to establish manufacturing, marketing and sales capabilities and to
bring any such products to market. The Company's future capital requirements
will depend upon many factors, including continued scientific progress in the
research and development of the Company's technology and drug programs, the size
and complexity of these programs, the ability of the Company to establish and
maintain collaborative arrangements, progress with preclinical testing and
clinical trials, the time and costs involved in obtaining regulatory approvals,
the cost involved in preparing, filing, prosecuting, maintaining and enforcing
patent claims or trade secrets, and product commercialization activities.
The Company anticipates that its existing capital resources and interest
earned thereon will enable it to maintain its current and planned operations at
least through 1999. The Company will seek additional funding through
collaboration arrangements and public or private financings, including equity
financings. No assurance can be given that such additional funding will be
available on favorable terms, if at all. In such event, the Company may need to
delay or curtail its research and development activities to a significant
extent. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources."
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UNCERTAINTY OF FUTURE PROFITABILITY; ACCUMULATED DEFICIT
The Company had an accumulated deficit as of December 31, 1997 of
$161,550,000. The Company expects to incur operating losses for the next several
years. These losses may increase as the Company expands its research and
development and commercialization activities, and such losses may fluctuate
significantly from quarter to quarter. There can be no assurance that the
Company will ever successfully develop, receive regulatory approval for,
commercialize, manufacture, market or sell any product or achieve or sustain
significant revenues from product sales or profitable operations.
DEPENDENCE ON COLLABORATIVE RELATIONSHIPS
The Company has established collaboration arrangements with Schering,
Ortho and Kyowa Hakko. While the Company believes its agreements with these
companies provide incentives to all parties, there can be no assurance that the
relationships will be successful or will result in products. Although under its
current arrangements, the Company and its collaborators will work exclusively
with each other within a defined field for a defined period, there can be no
assurance that a collaborator or collaborators will not terminate its agreement
with the Company or pursue alternative products, therapeutic approaches or
technologies as a means of developing treatments for the diseases targeted by
the Company or a collaboration. For these or other reasons, such as a change in
a collaborator's strategic direction, even if a collaborator continues its
contributions to the arrangement, it may nevertheless determine not to actively
pursue the development or commercialization of any resulting products. In such
event, the Company's ability to pursue such potential products could be severely
limited.
Under the Company's agreement with Schering, the parties have agreed to
jointly develop and market INTEGRILIN. Schering is obligated, among other
things, to fund a significant portion of the clinical development of INTEGRILIN
and to be primarily responsible for regulatory filings outside the United States
and Canada. In addition, Schering is responsible for worldwide distribution,
co-promotion in the United States and Canada and all marketing and sales efforts
in the rest of the world, except to the extent COR exercises its co-promotion
rights in Europe. The Company recognized $19,290,000, $18,635,000 and
$11,750,000 in contract revenue from its collaboration with Schering,
representing substantially all of the Company's contract revenues in the years
ended 1997, 1996 and 1995, respectively. In addition, Schering has agreed to pay
the Company additional milestone payments if specified development milestones
are achieved. If Schering were to breach or terminate its agreement with the
Company, fail to pay milestone payments or its share of collaborative costs, or
otherwise fail to conduct its collaborative activities in a timely manner, the
Company would be required to devote substantial additional resources to the
development and commercialization of INTEGRILIN or seek to obtain capabilities
or funding through alternative sources, which would result in a significant
delay of these activities.
The Company evaluates, on an ongoing basis, potential collaboration
agreements with other companies. Any such arrangements may limit the Company's
flexibility in pursuing alternatives for the commercialization of its products.
There can be no assurance that the Company will establish any additional
collaboration arrangements or that, if established, such relationships will be
successful. See "Collaboration Agreements."
RISK OF PRODUCT LIABILITY; UNCERTAINTY OF AVAILABILITY OF INSURANCE
The testing, marketing and sale of human pharmaceutical products expose
the Company to significant and unpredictable risks of product liability claims
in the event that the use of its technology or products is alleged to have
resulted in adverse effects. Such risks will exist even with respect to any
products that receive regulatory approval for commercial sale. While the Company
has obtained liability insurance for its products in clinical trials, there can
be no assurance that it will be sufficient to satisfy any liability that may
arise. There can be no assurance that adequate insurance coverage will be
available in the future at acceptable cost, if at all, or that a product
liability claim would not adversely affect the business or financial condition
of the Company.
VOLATILITY OF COMMON STOCK PRICE
The market prices for securities of pharmaceutical and biotechnology
companies, including the Company, have historically been highly volatile. The
market has from time to time experienced significant price and volume
fluctuations that are unrelated to the operating performance of particular
companies. Factors such as fluctuations in the Company's operating results,
announcements of technological innovations or new therapeutic products by the
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Company or its competitors, announcements regarding collaborative agreements,
governmental regulation, clinical trial results, developments in patent or other
proprietary rights, public concern as to the safety of drugs developed by the
Company or others, comments made by securities analysts and general market
conditions may have a significant effect on the market price of the Common
Stock. In particular, the realization of any of the risks described in this
Report could have a significant and adverse impact on the market price. See
"Price Range of Common Stock."
NEED TO ATTRACT AND RETAIN KEY EMPLOYEES AND CONSULTANTS
The Company is highly dependent on the principal members of its
scientific and management staff. In addition, the Company relies on consultants
to assist the Company in formulating its research and development strategy.
Attracting and retaining qualified personnel and consultants will be critical to
the Company's success. To pursue its product development and marketing plans,
the Company will be required to hire additional qualified scientific personnel
to perform research and development, as well as personnel with expertise in
conducting clinical trials, government regulation, manufacturing, marketing and
sales. Expansion in the areas of product development, marketing and sales is
also expected to require the addition of management personnel and the
development of additional expertise by existing management personnel. The
Company faces competition for qualified individuals with numerous pharmaceutical
and biotechnology companies, universities and other research institutions. There
can be no assurance that the Company will be able to attract and retain such
individuals.
In addition, a portion of the Company's research and development is
conducted under sponsored research programs with several universities and
research institutions. The Company depends on the availability of a principal
investigator for each such program and the Company cannot assure that these
individuals or their research staffs will be available to conduct research and
development for the Company. In addition, the Company's academic collaborators
are not employees of the Company. As a result, the Company has limited control
over their activities and can expect that only limited amounts of their time
will be dedicated to Company activities. The Company's academic collaborators
may have relationships with other commercial entities, some of which could
compete with the Company.
RISKS ASSOCIATED WITH HAZARDOUS MATERIALS
The Company's research and development involves the controlled use of
hazardous materials, chemicals and various radioactive substances. Although the
Company believes that its safety procedures for handling and disposing of such
materials comply with the standards prescribed by state and federal regulations,
the risk of accidental contamination or injury from these materials cannot be
completely eliminated. In the event of such an accident, the Company could be
held liable for any damages that result and any such liability could exceed the
resources of the Company and could have a material adverse effect on the
Company's business, financial condition and results of operations.
ANTI-TAKEOVER EFFECTS OF DELAWARE LAW AND CERTAIN CHARTER PROVISIONS
The Company's Board of Directors has the authority to issue up to
5,000,000 shares of Preferred Stock and to determine the price, rights,
preferences and privileges of those shares without any further vote or action by
the Company's stockholders. The rights of the holders of Common Stock will be
subject to, and may be adversely affected by, the rights of the holders of any
Preferred Stock that may be issued in the future. While the Company has no
present intention to issue shares of Preferred Stock, such issuance, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire a majority of the outstanding voting stock of the
Company. In addition, the Company is subject to the anti-takeover provisions of
Section 203 of the Delaware General Corporation Law, which prohibits the Company
from engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is approved in
a prescribed manner. The application of Section 203 could have the effect of
delaying or preventing a change of control of the Company. The Company's
Restated Certificate of Incorporation (the "Restated Certificate") provides for
staggered terms for the members of the Board of Directors. In January 1995, the
Company's Board of Directors adopted a Preferred Share Purchase Rights Plan,
commonly referred to as a "poison pill." In addition, the Company's Restated
Certificate does not permit cumulative voting. The Restated Certificate also
includes a "Fair Price Provision" that requires the approval of the holders of
66 2/3% of the Company's voting
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stock as a condition to a merger or certain other business transactions with, or
proposed by a holder of 15% or more of the Company's voting stock, except where
disinterested Board or stockholder approval is obtained or certain minimum price
criteria and other procedural requirements are met. These provisions, and other
provisions of the Restated Certificate, the Company's bylaws and Delaware
corporate law, may have the effect of deterring hostile takeovers or delaying or
preventing changes in control or management of the Company, including
transactions in which stockholders might otherwise receive a premium for their
shares over then current market prices.
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EXECUTIVE OFFICERS OF THE COMPANY
The names of the Company's executive officers as of March 2, 1998 and
certain information about them is set forth below:
Name Age Position
---- --- --------
Vaughn M. Kailian......................53 President, Chief Executive
Officer and Director
Laura A. Brege.........................40 Senior Vice President, Finance
and Chief Financial Officer
R. Lee Douglas, Jr.....................46 Vice President, Corporate
Development and Secretary
Charles J. Homcy, M.D..................49 Executive Vice President,
Research and Development and
Director
Mark D. Perrin.........................41 Executive Vice President,
Commercial Operations
Vaughn M. Kailian has served as President, Chief Executive Officer and a
director of the Company since March 1990. From 1967 to 1990, Mr. Kailian was
employed by Marion Merrell Dow, Inc., a pharmaceutical company, and its
predecessor companies, in various general management, product development,
marketing and sales positions. Mr. Kailian served as Corporate Vice President of
Global Commercial Development, Marion Merrell Dow, Inc.; President and General
Manager, Merrell Dow USA; Vice President, Marketing and Sales, Merrell Dow USA;
and Vice President, Marketing and Sales of Merrell Dow, Europe, Africa. Mr.
Kailian holds a B.A. from Tufts University. Mr. Kailian also serves as a
director of Amylin Pharmaceuticals and Axys Pharmaceutical Corporation.
Laura A. Brege has served as Senior Vice President, Finance and Chief
Financial Officer of the Company since January 1998 and as Vice President,
Finance and Chief Financial Officer of the Company since January 1992. During
1991, Mrs. Brege was Vice President, Finance and Chief Financial Officer of
Computer Aided Service, Inc., a manufacturer and marketer of computer systems.
From 1988 to 1990, she was Vice President, Finance and Chief Financial Officer
of Flextronics, Inc., an electronics manufacturer. From 1982 to 1988, Mrs. Brege
held various financial positions at The Cooper Companies, Inc., a multinational
pharmaceutical and medical products company, last serving as Treasurer. She
holds a B.S. from Ohio University and an M.B.A. from the University of Chicago.
R. Lee Douglas, Jr. has served as Vice President, Corporate Development
of the Company since March 1990, Chief Financial Officer from June 1990 to
December 1991 and as Treasurer from March 1988 to May 1991. He became Secretary
to the Company in May 1991. From the Company's inception until March 1990, Mr.
Douglas served as President and a director of the Company. He holds a B.A. from
the University of North Carolina at Charlotte and two masters degrees from
Harvard University, including an M.B.A.
Charles J. Homcy, M.D. has served as a Director of the Company since
January 1998 and as Executive Vice President, Research and Development of the
Company since March 1995. From 1994 until he joined the Company, Dr. Homcy was
President of the Medical Research Division of American Cyanamid Company-Lederle
Laboratories, a pharmaceutical company (now a division of Wyeth-Ayerst
Laboratories). From 1990 until 1994. Dr. Homcy was Executive Director of the
Cardiovascular and Central Nervous System Research Section at Lederle
Laboratories, a pharmaceutical company. From 1991 to 1995, Dr. Homcy also served
as an attending physician at The Presbyterian Hospital, College of Physicians
and Surgeons, at Columbia University in New York. From 1979 to 1990, he was an
attending physician at Massachusetts General Hospital and an Associate Professor
of Medicine at Harvard Medical School. He received his B.A. and M.D. degrees
from the Johns Hopkins University in Baltimore.
Mark D. Perrin joined the Company as Executive Vice President,
Commercial Operations in November 1995. From 1992 until he joined the Company,
Mr. Perrin was Vice President, Marketing and Sales, of Burroughs Wellcome
Company, a pharmaceutical company. From 1979 to 1992, Mr. Perrin held various
sales and marketing positions at American Cyanamid Company-Lederle Laboratories,
a pharmaceutical company (now a division of Wyeth-Ayerst Laboratories), last
serving as Vice President and General Manager of Lederle Pharmaceuticals. He
received his B.S. from Fordham University and a Masters of Management from
Northwestern University.
25
27
ITEM 2. PROPERTIES
The Company leases and occupies facilities consisting of approximately
100,000 square feet of laboratory and office space located in South San
Francisco, California. The Company's lease expires in 1999 and contains
provisions for one five-year renewal option. The Company expects it will require
additional laboratory and office space as it expands its operations. The Company
believes that additional space will be available on commercially acceptable
terms.
The Company currently has no production facilities.
ITEM 3. LEGAL PROCEEDINGS
In October 1997, a patent opposition was filed in Europe by another
company, against the claims of a patent granted to the Company in Europe
covering broad, generic claims for INTEGRILIN, as well as numerous related
compounds that are not part of the Company's core technology. The opposition
asserts that all claims of the patent are unpatentable. The Company believes
that the opposition is without merit and intends to vigorously defend its
patent. However, there can be no assurance that this patent opposition will not
result in an unfavorable outcome. An unfavorable outcome may have a material
adverse effect on the Company's business, financial condition and results of
operations.
On January 30, 1998, a securities class action lawsuit was filed in the
Federal District Court in the Northern District of California, captioned Leff v.
COR Therapeutics, Inc. and Vaughn M. Kailian, against the Company and its Chief
Executive Officer. The lawsuit was brought on behalf of a putative class of
investors in the Company's securities and alleges violations of Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, as amended. Specifically, the
complaint alleges that the Company engaged in material misrepresentations and
omissions concerning the Company's business and products and that the price of
the Company's Common Stock was unlawfully inflated as a proximate result of such
alleged misrepresentations and omissions. The Company and Mr. Kailian believe
the complaint is without merit and intend to vigorously defend against this
action. However, there can be no assurance that this action will not result in
an unfavorable outcome. An unfavorable outcome may have a material adverse
effect on the Company's business, financial condition and results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
26
28
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on the Nasdaq National Market under
the symbol "CORR." The following table sets forth, for the calendar periods
indicated, the high and low sale prices per share of the Company's Common Stock
on the Nasdaq National Market. These prices represent quotations among dealers
without adjustments for retail markups, markdowns or commissions.
HIGH LOW
------ -----
1996
First Quarter.................................. $12.50 $8.38
Second Quarter................................. 11.88 8.50
Third Quarter.................................. 11.50 7.00
Fourth Quarter................................. 11.63 8.75
1997
First Quarter.................................. 13.88 8.38
Second Quarter................................. 11.00 7.38
Third Quarter.................................. 17.50 8.38
Fourth Quarter................................. 26.13 16.50
As of March 2, 1998, there were approximately 350 holders of record of
the Company's Common Stock. On March 2, 1998, the last reported sale price on
the Nasdaq National Market for the Company's Common Stock was $12.56 per share.
DIVIDEND POLICY
The Company has not paid any dividends since its inception and does not
intend to pay any dividends on its Common Stock in the foreseeable future.
RECENT SALES OF UNREGISTERED SECURITIES
None in fourth quarter or the current year.
27
29
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Financial Statements and Notes thereto
included elsewhere in this Report. The statement of operations data for the
years ended December 31, 1995, 1996 and 1997, and the balance sheet data at
December 31, 1996 and 1997, are derived from the audited financial statements of
the Company included elsewhere in this Report. The statement of operations data
for the years ended December 31, 1993 and 1994, and the balance sheet data as of
December 31, 1993, 1994 and 1995, are derived from audited financial statements
not included herein. The Company has not declared or paid cash dividends on its
Common Stock since inception and does not intend to pay any cash dividends in
the foreseeable future.
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------
1993 1994 1995 1996 1997
--------- --------- --------- --------- ---------
(in thousands, except per share data)
STATEMENT OF OPERATIONS DATA:
Total revenues $ 2,545 $ 522 $ 31,850 $ 18,755 $ 22,190
Expenses:
Research and development 20,932 40,185 37,392 50,791 47,831
Marketing, general and administrative 4,453 4,589 6,029 7,303 10,067
--------- --------- --------- --------- ---------
Total expenses 25,385 44,774 43,421 58,094 57,898
--------- --------- --------- --------- ---------
Loss from operations (22,840) (44,252) (11,571) (39,339) (35,708)
Interest income, net 3,172 4,715 4,040 2,793 2,216
--------- --------- --------- --------- ---------
Net loss $ (19,668) $ (39,537) $ (7,531) $ (36,546) $ (33,492)
========= ========= ========= ========= =========
Net loss per share (basic and diluted) $ (1.27) $ (2.07) $ (0.39) $ (1.86) $ (1.60)
========= ========= ========= ========= =========
Shares used in computing net loss per share 15,480 19,091 19,360 19,636 20,952
DECEMBER 31,
-----------------------------------------------------------------
1993 1994 1995 1996 1997
--------- --------- --------- --------- ---------
(in thousands)
BALANCE SHEET DATA:
Cash, cash equivalents
and short-term investments $ 122,197 $ 94,432 $ 84,834 $ 53,134 $ 82,569
Total assets 130,356 106,367 100,906 71,245 95,385
Long-term obligations 3,108 4,669 4,574 3,365 2,817
Total liabilities 11,192 19,636 18,669 20,803 16,987
Accumulated deficit (44,444) (83,981) (91,512) (128,058) (161,550)
Stockholders' equity 119,164 86,731 82,237 50,442 78,398
28
30
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
In addition to the historical data contained herein, the following
discussion contains forward-looking statements that involve risk and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth elsewhere in this report.
OVERVIEW
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 $161,550,000 during the period from inception through
December 31, 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 lead product candidate, INTEGRILIN, is a small synthetic
peptide that prevents platelet aggregation and is intended for parenteral
(injectable) administration in patients with certain acute cardiovascular
indications. INTEGRILIN is being developed for the treatment of AICS, a leading
cause of hospitalization in the United States.
In August 1997, the Company announced the results of the 10,948 patient
PURSUIT trial, which were presented by clinical investigators at the European
Society of Cardiology's annual meeting. This trial included over 700 clinical
sites in 28 countries, including 280 hospitals in the United States. The PURSUIT
trial was designed to determine the effect of INTEGRILIN as an adjunct to
current medical and interventional strategies in the treatment of unstable
angina and NQMI, the major diseases of AICS.
In 1995, prior to completing the PURSUIT trial, COR studied INTEGRILIN
in the treatment of elective and urgent coronary angioplasty in the IMPACT II
trial. Based on the data from this trial, COR submitted an NDA for INTEGRILIN as
an adjunct to PTCA. The application was reviewed by the Advisory Committee in
February 1997. Although the Advisory Committee stated that the trial had shown
positive results, it was determined by the FDA that the trial, as a single
study, was insufficient for approval of INTEGRILIN. In early October 1997, based
on the positive data from the PURSUIT trial, the Company submitted an amendment
to its NDA to seek marketing approval for unstable angina and NQMI and coronary
angioplasty.
In January 1998, the Advisory Committee met and recommended that
INTEGRILIN receive marketing approval for use in the setting of coronary
angioplasty. The recommended indication is essentially the same as the
indication originally considered by the Advisory Committee in February 1997. At
the January 1998 meeting, the Advisory Committee concluded that the PURSUIT
trial demonstrated a beneficial treatment effect for INTEGRILIN when used in the
setting of acute coronary syndromes. However, the Advisory Committee also
concluded that the PURSUIT trial alone was not a sufficient basis for approval
of INTEGRILIN in the treatment of acute coronary syndromes. The Company is
currently consulting with the FDA regarding its application for approval of
INTEGRILIN.
In April 1996, Schering, the Company's worldwide partner for INTEGRILIN
in all indications, filed an application for marketing approval of INTEGRILIN in
Europe. This application was withdrawn in April 1997. In February 1998, Schering
submitted an application for marketing approval of INTEGRILIN in Europe for the
treatment of unstable angina and NQMI and as an adjunct to PTCA. In connection
with the filing and acceptance of the application, Schering paid the Company an
$8,000,000 milestone payment.
There is no assurance that INTEGRILIN will receive marketing approval
in any country on a timely basis or at all. Notwithstanding the recommendation
of the Advisory Committee, there is no assurance that marketing approval for
INTEGRILIN can be obtained on the basis of the clinical trials conducted to
date, can be obtained if additional trials are conducted, or if obtained will
not be substantially delayed. If INTEGRILIN is approved for marketing in one
indication, there is no assurance it will prove effective or be approved for
marketing in any other indication. The failure of the Company to obtain
marketing approval for INTEGRILIN or a significant delay in obtaining such
approval would have a material adverse effect on the Company's business,
29
31
financial condition and results of operations. In addition, the indications for
which INTEGRILIN may be approved could have a material effect on the market
acceptance of INTEGRILIN. The failure of the Company to obtain approval for
indications with sufficient patient populations or for indications where
existing treatments are not available or are not optimal could have a material
adverse effect on the Company's business, financial condition and results of
operations.
In addition to its collaboration agreement with Schering, the Company
has collaboration agreements with Ortho and Kyowa Hakko. Collaborative research
under an agreement with Lilly ended in April 1996, and in late 1996 the Company
and Lilly amended the agreement related to the transfer of certain rights and
aspects of the collaboration that continue after completion of the collaborative
research.
RESULTS OF OPERATIONS
Fiscal Years Ended December 31, 1997, 1996 and 1995
Contract revenues during the three years ended December 31, 1997
resulted primarily from research and development activities associated with the
agreement with Schering. Contract revenues increased to $22,190,000 in 1997 from
$18,755,000 in 1996 and $12,350,000 in 1995. Contract revenues in 1997 included
$8,000,000 in development-related milestone payments from Schering related to
completion of the PURSUIT trial. Contract revenues in 1997 also included
$2,400,000 associated with the agreement with Ortho. Contract revenues in 1996
and 1995 included safety-related milestone payments from Schering pertaining to
the conduct of clinical studies of INTEGRILIN of $9,000,000 and $6,000,000,
respectively. Revenues for 1995 included $19,500,000 of a license fee relating
to the agreement with Schering. Contract revenues fluctuate based on the timing
and performance requirements of the contracts. The Company expects contract
revenues to continue to fluctuate in the future.
Research and development expenses were $47,831,000 in 1997 compared to
$50,791,000 in 1996 and $37,392,000 in 1995. The decrease in 1997 compared to
1996 resulted from the timing of activities of the PURSUIT trial, offset in part
by higher staffing levels and increased research and development activities. The
increase in 1996 compared to 1995 resulted from the timing of activities of the
PURSUIT trial, as well as from higher staffing levels and increased research
activities. The Company expects that research and development expenses may
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.
Marketing, general and administrative expenses increased by 38% in 1997
compared to 1996, primarily due to pre-commercial activities associated with
INTEGRILIN, as well as increases in staffing and administrative expenses
associated with general corporate activities. Marketing, general and
administrative expenses increased by 21% in 1996 compared to 1995, primarily due
to increases in staffing and administrative expenses related to general
corporate activities. The Company expects marketing, general and administrative
costs to continue to increase significantly over the next several years.
Interest income decreased by 20% in 1997 compared to 1996 and by 27% in
1996 compared to 1995, primarily due to lower cash and investment balances in
1997 compared to 1996 and in 1996 compared to 1995. Interest expense decreased
by 18% in 1997 compared to 1996 and by 9% in 1996 compared to 1995, primarily
due to the overall decrease in the average balance of debt outstanding.
The Company incurred a net loss of $33,492,000 in 1997 and,
accordingly, no provision for federal or state income taxes was recorded. At
December 31, 1997, COR had federal net operating tax loss carryforwards of
approximately $153,200,000. The Company's ability to use its net operating loss
carryforwards may be subject to an annual limitation in future periods. The
Company believes, however, that this limitation will not have a material impact
on its future operating results.
LIQUIDITY AND CAPITAL RESOURCES
The Company had available cash, cash equivalents and short-term
investments of $82,569,000 at December 31, 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. At
December 31, 1997, the Company had approximately $1,757,000 available under an
equipment financing facility. The Company has funded its operations primarily
through 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.
30
32
Net cash used for operating activities and additions to capital
equipment decreased to $30,968,000 in 1997 from $35,413,000 in 1996, primarily
due to the timing of milestone and contract revenues related to the agreement
with Schering, partially offset by increased expenses. The Company anticipates
that its expenditures for operating activities and additions to capital
equipment will increase in future periods. The timing of these expenditures may
vary from period to period depending on the timing and phase of, and indications
pursued in, clinical trials of potential products, including INTEGRILIN. Cash
provided by financing activities of $60,443,000, $3,927,000, and $1,091,000 in
1997, 1996 and 1995, respectively, resulted primarily from the issuance of
common stock pursuant to a public equity financing in 1997, as well as from sale
of stock in connection with the collaboration agreement with Ortho and the net
effect of property and equipment financing.
The Company expects its cash requirements will increase in future years
due to costs related to continuation and expansion of research and development,
including clinical trials, and increased marketing, sales, general and
administrative activities. The Company anticipates that its existing capital
resources and interest thereon will enable it to maintain its operations at
least through 1999. However, the Company's capital 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 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 may be dependent on the establishment and maintenance of
collaboration 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. If such funds are unavailable, the Company may
need to delay or curtail its research and development activities to a
significant extent.
The Company's business is subject to significant risks including, but
not limited to, the success of its research and development activities, the
results of its clinical trials, the length and expense of seeking regulatory
approval, the costs of developing, training and managing a marketing and sales
force and the introduction of competitive products or treatment modalities. In
addition, the Company's product candidates may 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.
The Company is subject to certain litigation, as more fully described
under Part I, Item 3 "Legal Proceedings." The Company believes that such
litigation is without merit and intends to vigorously defend itself. While it is
not possible to predict with certainty the eventual outcome of these matters,
the Company believes that such legal proceedings will not have a material
adverse effect on the Company's business, financial condition, or results of
operations.
Until relatively recently, computer programs were written to record only
two digits of date-related information, making the programs unable to properly
distinguish between the year 2000 and the year 1900. Systems that cannot
properly distinguish such information may generate improper data. This condition
is commonly referred to as the Year 2000 Issue. The Year 2000 Issue may affect
systems of organizations with which the Company conducts business, including but
not limited to its corporate partners, suppliers and vendors. The Company is
addressing the Year 2000 Issue with such organizations. There can be no
assurance that the systems of other organizations on which the Company may rely
will adequately address the Year 2000 Issue, or that failure for other
organizations to address the Year 2000 Issue will not have a material adverse
affect on the Company's financial condition or results of operations. In
addition, the Company is continuing to review its own systems to identify and
address systems that may require upgrading or reprogramming to address the Year
2000 Issue. The Company believes that the Year 2000 Issue will not have a
material adverse effect on its business, financial condition or results of
operations. However, the nature of the Year 2000 Issue is complex, and there can
be no assurance that the Company will be able to address problems that may arise
from the Year 2000 Issue without incurring a material adverse effect on the
Company's business, financial condition or results of operations.
31
33
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors and Stockholders
COR Therapeutics, Inc.
We have audited the accompanying balance sheets of COR Therapeutics,
Inc. as of December 31, 1997 and 1996, and the related statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of COR Therapeutics,
Inc. at December 31, 1997 and 1996, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Palo Alto, California
January 19, 1998
32
34
COR THERAPEUTICS, INC.
BALANCE SHEETS
(in thousands, except share amounts)
ASSETS
December 31,
-------------------------
1997 1996
--------- ---------
Current assets:
Cash and cash equivalents $ 22,209 $ 2,615
Short-term investments 60,360 50,519
Contract receivables 422 7,644
Prepaid contract expenses 6,422 2,076
Other current assets 564 1,344
--------- ---------
Total current assets 89,977 64,198
Property and equipment, net 5,408 7,047
--------- ---------
$ 95,385 $ 71,245
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,446 $ 1,398
Accrued compensation 2,510 1,495
Accrued development costs 3,155 7,830
Deferred revenue 886 2,900
Other accrued liabilities 2,601 994
Long-term debt--current portion 873 1,157
Capital lease obligations--current portion 1,699 1,664
--------- ---------
Total current liabilities 14,170 17,438
Long-term debt--noncurrent portion 1,014 644
Capital lease obligations--noncurrent portion 1,803 2,721
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value; 5,000,000 shares authorized -- --
Common stock, $.0001 par value; 40,000,000 shares
authorized; shares issued and outstanding: 23,766,519 and
20,009,918 at December 31, 1997 and 1996, respectively 2 2
Additional paid-in capital 240,359 178,680
Deferred compensation (440) (249)
Unrealized gains on short-term investments 27 67
Accumulated deficit (161,550) (128,058)
--------- ---------
Total stockholders' equity 78,398 50,442
--------- ---------
$ 95,385 $ 71,245
========= =========
See accompanying notes.
33
35
COR THERAPEUTICS, INC.
STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
Year Ended December 31,
--------------------------------------
1997 1996 1995
-------- -------- --------
Revenues
License fee $ 500 $ -- $ 19,500
Contract revenues 21,690 18,755 12,350
-------- -------- --------
Total revenues 22,190 18,755 31,850
Expenses
Research and development 47,831 50,791 37,392
Marketing, general and administrative 10,067 7,303 6,029
-------- -------- --------
Total expenses 57,898 58,094 43,421
-------- -------- --------
Loss from operations (35,708) (39,339) (11,571)
Interest income 2,840 3,552 4,876
Interest expense (624) (759) (836)
-------- -------- --------
Net loss $(33,492) $(36,546) $ (7,531)
======== ======== ========
Basic and diluted net loss per common share $ (1.60) $ (1.86) $ (0.39)
======== ======== ========
Shares used in computing basic and diluted
net loss per common share 20,952 19,636 19,360
======== ======== ========
See accompanying notes.
34
36
COR THERAPEUTICS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE YEARS ENDED DECEMBER 31, 1997
(in thousands, except share amounts)
Unrealized
Additional Gains (Losses) Total
Common Paid-in Deferred On Short-term Accumulated Stockholders'
Stock Capital Compensation Investments Deficit Equity
--------- --------- --------- --------- --------- ---------
Balances at December 31, 1994 $ 2 $ 172,943 $ (353) $ (1,880) $ (83,981) $ 86,731
Issuance of 169,838 shares of common
stock upon exercise of stock options and
pursuant to the Employee Stock Purchase Plan -- 531 -- -- -- 531
Deferred compensation related to stock
awards of 23,292 shares of common
stock, net of amortization -- 254 (89) -- -- 165
Amortization of deferred compensation
related to grant of stock options -- -- 180 -- -- 180
Unrealized gains on available-for-sale
short-term investments -- -- -- 2,161 -- 2,161
Net loss -- -- -- -- (7,531) (7,531)
--------- --------- --------- --------- --------- ---------
Balances at December 31, 1995 2 173,728 (262) 281 (91,512) 82,237
Issuance of 156,876 shares of common
stock, net, upon exercise of stock options and
pursuant to the Employee Stock Purchase Plan -- 682 -- -- -- 682
Deferred compensation related to stock
awards of 25,678 shares of common
stock, net of cancellations and amortization -- 270 13 -- -- 283
Unrealized losses on available-for-sale
short-term investments -- -- -- (214) -- (214)
Issuance of 399,106 shares of common stock -- 4,000 -- -- -- 4,000
Net loss -- -- -- -- (36,546) (36,546)
--------- --------- --------- --------- --------- ---------
Balances at December 31, 1996 2 178,680 (249) 67 (128,058) 50,442
Issuance of 3,335,000 shares of common stock
in a public offering, net of
issuance costs of $4,459 -- 58,906 -- -- -- 58,906
Issuance of 393,305 shares of common
stock, net, upon exercise of stock options and
pursuant to the Employee Stock Purchase Plan -- 2,334 -- -- -- 2,334
Deferred compensation related to stock
awards of 28,296 shares of common
stock, and options for 18,000 shares,
net of cancellations and amortization -- 439 (191) -- -- 248
Unrealized losses on available-for-sale
short-term investments -- -- -- (40) (40)
Net loss -- -- -- -- (33,492) (33,492)
--------- --------- --------- --------- --------- ---------
Balances at December 31, 1997 $ 2 $ 240,359 $ (440) $ 27 $(161,550) $ 78,398
========= ========= ========= ========= ========= =========
See accompanying notes.
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37
COR THERAPEUTICS, INC.
STATEMENT OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
(in thousands)
Year Ended December 31,
--------------------------------------
1997 1996 1995
-------- -------- --------
Cash flows provided by (used in) operating activities:
Net loss $(33,492) $(36,546) $ (7,531)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 3,545 3,593 3,546
Amortization of deferred compensation 248 283 345
Changes in assets and liabilities:
Contract receivables 7,222 (3,270) (4,374)
Prepaid contract expenses (4,346) 936 (3,012)
Other current assets 780 (735) 2,411
Accounts payable 1,048 (157) 188
Accrued compensation 1,015 (433) 716
Accrued development costs (4,675) 2,071 (3,155)
Deferred revenue (2,014) 2,400 500
Other accrued liabilities 1,607 (992) 224
-------- -------- --------
Total adjustments 637 3,696 (2,611)
-------- -------- --------
Net cash used in operating activities (29,062) (32,850) (10,142)
-------- -------- --------
Cash flows provided by (used in) investing activities:
Purchases of short-term investments (68,965) (39,725) (81,594)
Sales of short-term investments 51,584 48,963 70,178
Maturities of short-term investments 7,500 19,400 26,000
Additions to property and equipment (1,906) (2,563) (2,708)
-------- -------- --------
Net cash provided by (used in) investing activities (11,787) 26,075 11,876
-------- -------- --------
Cash flows provided by (used in) financing activities:
Proceeds from long-term debt 1,243 -- --
Principal payments on long-term debt (1,157) (1,321) (1,199)
Proceeds from capital lease obligations 701 1,854 2,463
Principal payments under capital lease obligations (1,584) (1,288) (704)
Issuance of common stock 61,240 4,682 531
-------- -------- --------
Net cash provided by financing activities 60,443 3,927 1,091
-------- -------- --------
Net increase (decrease) in cash and cash equivalents 19,594 (2,848) 2,825
Cash and cash equivalents at beginning of the period 2,615 5,463 2,638
-------- -------- --------
Cash and cash equivalents at end of the period $ 22,209 $ 2,615 $ 5,463
======== ======== ========
Supplemental schedule of non-cash financing activities:
Cash paid during the period for interest $ 624 $ 759 $ 836
======== ======== ========
See accompanying notes.
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38
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COR Therapeutics, Inc. ("COR" or the "Company") was incorporated in
Delaware on February 4, 1988. The Company was organized to engage in the
discovery, development and commercialization of novel pharmaceutical products
for the treatment and prevention of severe cardiovascular diseases.
Cash, investments and credit risk
Cash and cash equivalents consist of cash held in U.S. banks, time
deposits and other highly liquid investments with maturities of 90 days or less.
Cash equivalents are readily convertible into cash and have insignificant
interest rate risk. The Company's investment policy stipulates that a
diversified portfolio be maintained and invested in a manner appropriate for the
Company's primary business operations. The policy defines investment objectives
to provide optimal investment return within constraints to optimize safety and
liquidity.
Securities available-for-sale
Management determines the appropriate classification of debt securities
at the time of purchase and reevaluates such designation as of each balance
sheet date. Debt securities have been classified as available-for-sale.
Available-for-sale securities are carried at fair value, with the unrealized
gains and losses reported in a separate component of stockholders' equity. The
amortized cost of debt securities in this category is adjusted for amortization
of premiums and accretion of discounts to maturity. Such amortization is
included in interest income. Realized gains and losses and declines in value
judged to be other than temporary on available-for-sale securities are included
in interest income. The cost of securities sold is based on the specific
identification method. Interest and dividends on securities classified as
available for sale are included in interest income.
Property and equipment
Property and equipment is stated at cost and depreciated over the
estimated useful lives of the assets, generally three to four years, using the
straight-line method. Assets under capitalized leases are amortized over the
shorter of the lease term or life of the asset. Property and equipment consists
of the following (in thousands):
December 31,
-----------------------
1997 1996
-------- --------
Machinery and equipment ...................... $ 12,127 $ 10,379
Office furniture and fixtures ................ 887 738
Leasehold improvements ....................... 9,762 9,753
-------- --------
22,776 20,870
Less accumulated depreciation and amortization (17,368) (13,823)
-------- --------
Property and equipment, net .................. $ 5,408 $ 7,047
======== ========
Revenues
Revenues consist of license fees and contract revenues. Contract
revenues, which include milestone payments and development-related revenues, are
recorded as earned based on the performance requirements of the contracts, while
related costs are expensed as incurred. Payments received in advance are
recorded as deferred revenue until earned.
Net loss per share
In 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings per Share ("Statement 128"). Statement 128 replaced the
calculation of primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants and convertible
securities. Basic and diluted net loss per share are computed using the
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weighted average number of shares of common stock outstanding. Potentially
dilutive securities, such as stock options, are excluded from the computation,
as their effect is antidilutive. All earnings per share amounts for all periods
presented have been restated, where appropriate, to conform to Statement 128.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Accounting for stock-based compensation
The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and related
Interpretations in accounting for its employee stock options because, as
discussed in Note 6 below, the alternative fair value accounting provided for
under Financial Accounting Standards Board Statement No. 123, "Accounting for
Stock-Based Compensation" ("Statement 123") requires use of option valuation
models that were not developed for use in valuing employee stock options. Under
APB 25, because the exercise price of the Company's stock options equals the
market price of the underlying stock on the date of grant, no compensation
expense is recognized.
Reclassification
The Company has reclassified certain prior year balances to conform to
current year presentation.
2. COLLABORATION AGREEMENTS
Collaboration agreement with Schering Corporation and Schering-Plough
Corporation
In April 1995, the Company entered into a collaboration agreement with
Schering Corporation and Schering-Plough Corporation (together, "Schering") to
develop and commercialize INTEGRILIN on a worldwide basis. Under the terms of
the agreement, COR received a one-time license fee of $20,000,000 in 1995. The
Company recorded $8,000,000 and $3,000,000 of development-related milestone
payments in 1997 and 1996, respectively. In addition, contract revenues in 1996
and 1995 included safety-related milestone payments pertaining to the conduct of
clinical studies of the INTEGRILIN product of $9,000,000 and $6,000,000,
respectively. Schering participates in and shares the costs of developing
INTEGRILIN. Both parties have the right to co-promote and share profits, if any,
in the United States and Canada. Schering has the right to launch INTEGRILIN in
Europe and would pay the Company royalties for a specified initial period, after
which the Company would have the right to co-promote and share profits, if any.
Schering also will assist the Company in developing, training and providing
experience for a United States cardiovascular sales force. Under the terms of
the agreement, both parties have certain rights to terminate. COR recognized
$19,290,000 in contract revenue in 1997, $18,635,00 in 1996 and $11,750,000 in
1995 under this agreement, representing 89%, 99% and 95% of total contract
revenues in 1997, 1996 and 1995, respectively.
Collaboration agreement with Ortho Pharmaceutical Corporation
In December 1993, the Company and Ortho Pharmaceutical Corporation
("Ortho"), a subsidiary of Johnson & Johnson, entered into a collaboration
agreement focusing on the joint development and commercialization of novel
pharmaceuticals that may result from certain collaboration research. The Company
and Ortho each provided a significant level of specified internal resources to
the collaboration research over the initial three-year research term. In 1996,
Ortho exercised its option to extend the research term, which ends in December
1998.
If products result from the research, Ortho will make development
milestone payments to the Company. Both the Company and Ortho may participate in
development of products under the collaboration, share equally in the
development costs, participate in the commercialization of co-developed products
and share equally in
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worldwide profits or losses from such co-developed products. If either party
decides not to participate in the development of a product under the
collaboration, that party would receive royalties based on product sales.
In October 1996, Ortho exercised its option to extend the term of the
agreement, and pursuant to the terms of the original agreement, the Company sold
Johnson & Johnson Development Corporation, a subsidiary of Johnson & Johnson,
399,106 shares of common stock at $10.02 per share for an aggregate purchase
price of $4,000,000, in a private placement. In connection with the extension of
the agreement, Ortho paid the Company $2,400,000 in 1996 for research to be
performed during the remaining term of the contract.
The Company recognized $2,400,000, $35,000 and $500,000 in revenues
under this agreement during the years ended December 31, 1997, 1996 and 1995,
respectively, representing approximately 11%, 1% and 2% of total revenue in
those years.
Collaboration agreement with Kyowa Hakko Kogyo Co., Ltd.
In 1992, the Company entered into a collaboration agreement with Kyowa
Hakko Kogyo Co., Ltd. ("Kyowa Hakko"), a Japanese pharmaceutical company. During
the research phase of the agreement, the Company and Kyowa Hakko have
collaborated on the discovery and development of potential leads and committed
significant internal resources to all phases of research. The companies have
also agreed to share specific future development and commercialization rights
and responsibilities. In September 1997, this agreement was extended through
November 1998.
Collaboration agreement with Eli Lilly and Company
Collaborative research under a collaboration agreement with Eli Lilly
and Company ("Lilly") ended by the terms of the agreement in April 1996. The
Company has the exclusive right to develop and commercialize certain compounds
which were the subject of the collaboration, subject to a royalty to Lilly. In
addition, the Company has the exclusive right to research, develop and
commercialize certain potential oral compounds which were the subject of the
collaboration, also subject to a royalty to Lilly. COR and Lilly have shared
rights with respect to all other compounds which were the subject of the
collaborative research.
3. FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amount reported in the balance
sheet for cash and cash equivalents approximates its fair value.
Short-term investments: Available-for-sale securities consist of
marketable debt securities and are carried at fair value, with the unrealized
gains and losses reported in a separate component of stockholders' equity. The
fair values are based on quoted market prices.
At December 31, 1997, available-for-sale securities, which include cash
equivalents with an amortized cost and estimated fair value of $22,701,000, were
as follows (in thousands):
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
-------- ---------- ---------- ----------
U.S. Government Securities $ 1,516 $ -- $ (1) $ 1,515
Corporate Debt Securities 81,026 30 (2) 81,054
-------- ---- ----- -------
$82,542 $ 30 $ (3) $82,569
======= ==== ===== =======
During the year ended December 31, 1997, the Company sold
available-for-sale investments with a fair value of $51,584,000, resulting in
gross realized gains of $38,000 and gross realized losses of $86,000.
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The amortized cost and estimated fair value of available-for-sale
securities held as available for sale at December 31, 1997, by contractual
maturity, were as follows (in thousands):
Amortized Estimated
Cost Fair Value
-------- ----------
Due in one year or less $78,004 $78,027
Due after one year through three years 4,538 4,542
------- -------
$82,542 $82,569
======= =======
At December 31, 1996, available-for-sale securities, which include cash
equivalents with an amortized cost and estimated fair value of $2,053,000, were
as follows (in thousands):
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
-------- ---------- ---------- ----------
U.S. Government Securities $29,411 $ 63 $ (12) $29,462
Corporate Debt Securities 23,094 38 (22) 23,110
-------- ----- ----- --------
$52,505 $101 $ (34) $52,572
======= ==== ====== =======
During the year ended December 31, 1996, the Company sold
available-for-sale investments with a fair value of $48,963,000, resulting in
gross realized gains of $38,000 and gross realized losses of $232,000.
Long and short-term debt: The carrying amounts of the Company's
borrowings under its secured debt agreements approximate their fair values,
which are estimated using a discounted cash flow analysis, based on the
Company's current incremental borrowing rates for similar types of borrowing
arrangements.
4. LONG-TERM DEBT
Long-term debt consists of various secured obligations relating to the
purchase of property and equipment. Such notes are secured by the underlying
property and equipment, bear interest at approximately 8.7% to 13.5% per annum
and are payable in monthly installments over 48 months.
At December 31, 1997, the aggregate long-term debt maturities were
$873,000, $251,000, $275,000 and $488,000 in 1998, 1999, 2000 and 2001,
respectively.
5. LEASE OBLIGATIONS AND CONTINGENCIES
The Company leases office and laboratory facilities and equipment. Rent
expense for operating leases was approximately $1,656,000 in 1997, $1,212,000 in
1996 and $1,012,000 in 1995. Future minimum lease payments under noncancelable
leases are as follows (in thousands):
Capital Operating
Leases Leases
------- -------
1998 $ 1,999 $ 1,588
1999 1,364 1,250
2000 537 -
2001 64 -
------- -------
Total minimum lease payments 3,964 $ 2,838
Less amount representing interest (462) =======
-------
Present value of future lease payments 3,502
Less current portion (1,699)
-------
Noncurrent portion of capital lease obligations $1,803
=======
At December 31, 1997 and 1996, the aggregate cost of property and
equipment under capital leases totaled $6,977,000 and $5,035,000, with
accumulated amortization of $5,336,000 and $2,777,000, respectively.
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The Company is subject to legal proceedings and claims that arise in
the ordinary course of its business. While management currently believes the
amount of ultimate liability, if any, with respect to these actions will not
materially affect the financial position, results of operations, or liquidity of
the Company, the ultimate outcome of any proceeding or claim is uncertain. Were
an unfavorable outcome to occur, the impact could be material to the Company's
business, financial position and results of operations.
6. STOCKHOLDERS' EQUITY
Stock option plans
During 1988, the Company adopted an Employee Stock Option Plan and a
Consultant Stock Option Plan (the "1988 Plans"). Under these Plans, incentive
and non-qualified options were granted to employees and consultants at exercise
prices not less than the fair market value of the Company's common stock on the
date of grant. All options granted under these Plans become exercisable pursuant
to the applicable terms of the grant.
In 1991, the Board of Directors terminated the 1988 Plans and adopted
the 1991 Equity Incentive Plan (the "1991 Plan") under which stock options and
stock awards may be granted to employees or consultants of the Company. Options
generally vest over 60 months and are exercisable to the extent vested. As of
December 31, 1997, options to purchase approximately 2,337,849 shares of common
stock were vested and exercisable under these plans, aggregating approximately
$22,205,000 (options to purchase 2,152,720 shares aggregating $18,199,000 at
December 31, 1996 and options to purchase 923,000 shares aggregating
approximately $11,805,000 at December 31, 1995) under these plans.
In 1994, the Board of Directors adopted the 1994 Non-Employee Directors'
Stock Option Plan (the "Directors' Plan"), which provides for the
non-discretionary grant of non-qualified options to those members of the Board
of Directors who are neither employees nor consultants to the Company. An
aggregate of 200,000 shares of common stock was authorized for issuance under
the Directors' Plan. Options granted under the Directors' Plan vest over a
period of 60 months. At December 31, 1997, 83,749 shares were vested and
exercisable (58,749 and 33,749 shares at December 31, 1996 and 1995,
respectively) and 75,000 remained available for future grant under the
Directors' Plan. No options were granted under this plan in 1996 or 1997.
Activity under these plans is as follows:
Options Outstanding
------------------------------------------------------
Shares Weighted
Available Average
for Number of Exercise Price Per
Grant Shares Price Share Aggregate
---------- --------- --------- ----------- ----------
Balance at December 31, 1994 713,389 2,603,429 $ 8.39 $.10-$16.25 $21,981,000
Stock awards (23,292) -- -- -- --
Additional shares authorized 500,000 -- -- -- --
Options granted (993,500) 993,500 12.27 9.19-15.38 12,190,000
Options forfeited 53,275 (73,226) 10.28 .30-15.88 (753,000)
Options exercised -- (110,612) 0.35 .10- 9.75 (41,000)
---------- --------- --------- ----------- ----------
Balance at December 31, 1995 249,872 3,413,091 9.68 .10-16.25 33,377,000
Stock awards (25,678) -- -- -- --
Additional shares authorized 1,500,000 -- -- -- --
Options granted (857,000) 857,000 9.22 8.56-11.38 7,901,000
Options forfeited 303,856 (303,856) 13.28 5.25-15.88 (4,072,000)
Options exercised -- (77,600) 0.41 .10- 8.25 (37,000)
---------- --------- --------- ----------- ----------
Balance at December 31, 1996 1,171,050 3,888,635 9.45 .10-16.25 37,169,000
Stock awards (28,296) -- -- -- --
Additional shares authorized 600,000 -- -- -- --
Options granted (1,046,750) 1,046,750 13.24 8.25-21.00 13,862,000
Options forfeited 217,932 (217,932) 11.34 8.25-16.66 (2,471,000)
Options exercised -- (304,922) 5.23 .10-15.88 (1,594,000)
---------- --------- --------- ----------- ----------
Balance at December 31, 1997 913,936 4,412,531 $10.64 $.10-$21.00 $46,966,000
========== ========= ========= =========== ===========
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The Company recorded $268,000, $270,000 and $254,000 in deferred
compensation for stock awards of 28,296, 25,678 and 23,292 shares of common
stock for the years ended December 31, 1997, 1996 and 1995, respectively. The
per share weighted average fair market value of these stock awards on the date
of grant was $9.00 in 1997, $8.56 in 1996 and $12.38 in 1995.
The following table summarizes information about stock options
outstanding at December 31, 1997:
Options Outstanding Options Exercisable
------------------------------------------------ -------------------------------
Weighted
Average
Number of Options Remaining Weighted Number of Options Weighted
Range of Outstanding as of Contractual Life Average Exercisable as Average
Exercise Prices December 31, 1997 (years) Exercise Price December 31, 1997 Exercise Price
----------------- ---------------- -------------- ----------------- --------------
$ 0.10 -- $ 8.56 1,011,999 4.78 $ 4.14 638,751 $ 1.56
9.06 -- 10.75 889,680 7.99 9.66 309,808 10.02
11.00 -- 12.38 1,163,600 6.51 11.96 801,776 12.00
12.50 -- 15.88 914,251 6.44 14.05 636,002 14.38
16.25 -- 21.00 433,001 9.52 17.18 35,261 16.52
--------- ---------
4,412,531 6.69 10.65 2,421,598 9.69
========= =========
The weighted-average fair values of options granted during the years ended
December 31, 1997, 1996 and 1995 were $13.57, $9.17 and $12.27 per share,
respectively.
Stock purchase plan
In 1991, the Board of Directors adopted the 1991 Employee Stock
Purchase Plan (the "SPP") providing for the issuance of up to 25,000 shares of
common stock pursuant to the SPP. Essentially all employees may participate and
contribute up to 15% of compensation to purchase common stock at 85% of its fair
market value at certain specified dates. During 1997, 1996, 1995 and 1993, an
additional 300,000, 300,000, 200,000 and 75,000 shares of common stock were
authorized, respectively, for issuance pursuant to the SPP. During the years
ended December 31, 1997, 1996 and 1995, 88,383 shares, 80,276 shares and 59,226
shares of common stock, respectively, were issued pursuant to the SPP, at prices
ranging between $7.28 and $12.75 per share.
Pro forma valuation of options
The Company has elected to follow APB 25 and related Interpretations
in accounting for its employee stock options (see Note 1). Under APB 25, because
the exercise price of the Company's stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.
Pro forma information regarding net loss and loss per share is required
by Statement 123, and has been determined as if the Company had accounted for
its employee stock options granted after December 31, 1994 under the fair value
method of that Statement. The fair value of these options was estimated at the
date of grant using the Black-Scholes option pricing model with the following
weighted-average assumptions for 1997, 1996 and 1995, respectively: risk-free
interest rates of 6.21%, 6.06% and 6.63%; no dividends paid; volatility factors
of the expected market price of the Company's common stock of 0.69, 0.73 and
0.79; and a weighted-average expected life of the option of 5 years. The effects
of applying Statement 123 for the recognition of compensation expense and
provision of pro forma disclosures in 1997, 1996 and 1995 are not likely to be
representative of the effects on reported and pro forma net income in future
years.
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The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing model does not necessarily provide a reliable
single measure of the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the option's vesting period. The Company's
pro forma information follows (in thousands except for the basic net loss per
share information):
1997 1996 1995
----------- ----------- ----------
Pro forma net loss $ (39,677) $ (40,967) $ (10,585)
=========== =========== ==========
Pro forma basic net loss per share $ (1.89) $ (2.09) $ (0.55)
=========== =========== ==========
Common shares reserved for future issuance
As of December 31, 1997, 5,586,486 shares of common stock were reserved
for future issuance under the stock option and stock purchase plans.
7. INCOME TAXES
At December 31, 1997, the Company had available net loss carryforwards
for federal income tax purposes of approximately $153,200,000. The tax loss
carryforwards, if not utilized to offset taxable income in future periods,
expire between the years 2003 and 2012.
Significant components of the Company's deferred tax assets and
liabilities for federal income taxes as of December 31, 1997, 1996 and 1995,
were as follows (in thousands):
Deferred tax assets:
1997 1996 1995
-------- -------- --------
Net operating loss carryforwards $ 52,700 $ 40,800 $ 30,200
Capitalized research and development 8,600 6,900 5,600
Research and development credits
(expiring between 2003 and 2012) 5,300 5,700 4,600
Other, net 2,200 4,500 4,400
-------- -------- --------
Net deferred tax assets 68,800 57,900 44,800
Valuation allowance for deferred tax assets (68,800) (57,900) (44,800)
-------- -------- --------
Deferred tax assets $ -- $ -- $ --
======== ======== ========
The valuation allowance for deferred tax assets increased by $5,400,000 during
the year ended December 31, 1995.
Because of "change of ownership" provisions of the Tax Reform Act of
1986, the Company's net operating loss and credit carryforwards may be subject
to an annual limitation regarding utilization against taxable income in future
periods.
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8. EVENTS SUBSEQUENT TO THE DATE OF THE INDEPENDENT AUDITORS' REPORT (UNAUDITED)
On January 30, 1998, a securities class action lawsuit was filed in the
Federal District Court in the Northern District of California, captioned Leff v.
COR Therapeutics, Inc. and Vaughn M. Kailian, against the Company and its Chief
Executive Officer. The lawsuit was brought on behalf of a putative class of
investors in the Company's securities and alleges violations of Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, as amended. Specifically, the
complaint alleges that the Company engaged in material misrepresentations and
omissions concerning the Company's business and products and that the price of
the Company's common stock was unlawfully inflated as a proximate result of such
alleged misrepresentations and omissions. The Company and Mr. Kailian believe
the complaint is without merit and intend to vigorously defend against this
action. However, there can be no assurance that this action will not result in
an unfavorable outcome. An unfavorable outcome may have a material adverse
effect on the Company's business, financial position and results of operations.
On February 27, 1998 the Company adopted the 1998 Non-Officer Equity
Incentive Plan (the "1998 Plan"), with 300,000 shares of common stock authorized
for issuance under the plan. The 1998 Plan provides for the grant of
non-statutory stock options at fair market value to employees of or consultants
to the Company who are neither officers nor directors of the Company. The
Company currently uses the 1998 Plan for its employees in its commercial group.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
IDENTIFICATION OF DIRECTORS
The information required by this Item concerning the Company's
directors is incorporated by reference from the sections captioned "Proposal 1:
Election of Directors" contained in the Company's Definitive Proxy Statement
related to the Annual Meeting of Stockholders to be held May 19, 1998, to be
filed by the Company with the Securities and Exchange Commission (the "Proxy
Statement"). William Younger, Jr. resigned from the Board of Directors
effective March 20, 1998.
IDENTIFICATION OF EXECUTIVE OFFICERS
The information required by this Item concerning the Company's executive
officers is set forth in Part I of this Report.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The information required by this Item is incorporated by reference from
the section captioned "Compliance with Section 16(a) of the Securities Exchange
Act of 1934" contained in the Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference from
the section captioned "Executive Compensation" contained in the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference from
the section captioned "Security Ownership of Certain Beneficial Owners and
Management" contained in the Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference from
the sections captioned "Certain Transactions" and "Executive Compensation"
contained in the Proxy Statement.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) 1. INDEX TO FINANCIAL STATEMENTS
Page in
Form 10-K
Report of Ernst & Young LLP, Independent Auditors 32
Balance Sheets at December 31, 1997 and 1996 33
Statement of Operations for the years ended
December 31, 1997, 1996 and 1995 34
Statement of Stockholders' Equity for the years ended
December 31, 1997, 1996 and 1995 35
Statement of Cash Flows for the years ended
December 31, 1997, 1996 and 1995 36
Notes to Financial Statements 37
2. All schedules are omitted because they are not applicable, or not
required, or because the required information is included in the
financial statements or notes thereto.
3. EXHIBITS
Number
------------
3.1(9) Restated Certificate of Incorporation of the Registrant.
3.2(2) By-laws of the Registrant.
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2(2) Information, Registration Rights and Right of First Refusal
Agreement among the Registrant and other parties named
therein, as amended as of May 15, 1991.
4.3(2) Side by Side Agreement among the Registrant and the other
parties named therein.
4.4(8) Registrant's Preferred Share Purchase Rights Agreement between the
Registrant and Chemical Trust Company of California, dated as of
January 23, 1995.
* 10.1(2) Form of Indemnification Agreement between the Registrant and its
directors, executive officers, and officers.
* 10.2(2) Registrant's 1988 Employee Stock Option Plan and related agreements.
* 10.3(2) Registrant's 1988 Consultant Stock Option Plan and related agreements.
* 10.4(2) Research, Option and License Agreement between the Registrant and Eli
Lilly and Company, dated May 1, 1991.
* 10.5(2) Lease Agreement between the Registrant and NC Land Associates Limited
Partnership, dated September 23, 1988, as amended August 30, 1989 and
Lease Rider, dated September 23, 1988.
++ 10.6(1) Forms of option agreements used under the Registrant's 1991 Equity
Incentive Plan.
++ 10.7(3) Form of offering document used under the Registrant's 1991 Employee
Stock Purchase Plan.
++ 10.8(4) Consulting Agreement between the Registrant and Lloyd Hollingsworth
Smith, Jr., dated January 1, 1993.
++ 10.9(4) Collaboration Research Agreement between the Registrant and Kyowa Hakko
Kyogo, Co., Ltd., dated November 30, 1992.
++ 10.10(5) Collaboration Agreement between Eli Lilly and Company and the
Registrant, dated May 28, 1993.
* 10.11(6) Collaboration Agreement between Ortho Pharmaceutical Corporation and
the Registrant, dated December 21, 1993.
10.12(10) Registrant's 1994 Non-employee Directors' Stock Option Plan, as
amended.
10.13(7) Consulting Agreement between the Registrant and
Shaun R. Coughlin, dated March 17, 1988, as amended
effective September 28, 1994.
10.14(10) Registrant's 1991 Stock Purchase Plan, as amended.
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Number
- -----------
10.15(10) Registrant's 1991 Equity Incentive Plan, as amended.
10.16(8) Collaboration Agreement between Schering-Plough Corporation, Schering
Corporation and the Registrant, dated April 10, 1995.
10.17(9) Amendment No. 4 to Collaboration Agreement between the Registrant and
Kyowa Hakko Kogyo, Co., Ltd., dated November 10, 1995.
10.18(10) Amendment No. 1 to Collaboration Agreement between Ortho Pharmaceutical
Corporation and the Registrant, dated September 27, 1996.
10.19(10) Amendment No. 1 to Collaboration Agreement between Eli Lilly and
Company and the Registrant, dated November, 1996.
10.20(i)(10) Amendment No. 1 to Collaboration Agreement between the Registrant and
Kyowa Hakko Kogyo Co., Ltd, dated May 9, 1994.
10.20(ii)(10) Amendment No. 2 to Collaboration Agreement between the
Registrant and Kyowa Hakko Kogyo Co., Ltd, dated July 13, 1995.
10.20(iii)(10) Amendment No. 3 to Collaboration Agreement between the
Registrant and Kyowa Hakko Kogyo Co., Ltd, dated August 1, 1995.
10.20(iv)(10) Amendment No. 5 to Collaboration Agreement between the
Registrant and Kyowa Hakko Kogyo Co., Ltd, dated December 17, 1996.
10.21(10) Description of Registrant's 1996 Incentive Pay Plan.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
24.1 Power of Attorney, Reference is made to the signature page.
27.1 Financial Data Schedule
- -------------------------------------------------------------------------------
* Indicates management contracts or compensatory plans or arrangements
filed pursuant to Item 601(b)(10) of Regulation S-K.
++ Confidential treatment granted.
(1) Filed as an exhibit to the Registrant's Registration Statement on Form
S-8 (Reg. No. 33-42912) and incorporated herein by reference.
(2) Filed as an exhibit to the Registrant's Registration Statement on Form
S-1 (Reg. No. 33-40627) or amendments thereto and incorporated herein by
reference.
(3) Filed as an exhibit to the Registrant's Registration Statement on Form
S-1 (Reg. No. 33-43181) or amendments thereto and incorporated herein by
reference.
(4) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the period ended December 31, 1992 and incorporated by reference herein.
(5) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q
for the period ended June 30, 1993 and incorporated by reference herein.
(6) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the period ended December 31, 1993 and incorporated by reference herein.
(7) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the period ended December 31, 1994 and incorporated by reference herein.
(8) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q
for the period ended June 30, 1995 and incorporated by reference herein.
(9) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the period ended December 31, 1995 and incorporated by reference herein.
(10) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the period ended December 31, 1996 and incorporated by reference herein.
(B) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed for the quarter ended December
31, 1997.
47
49
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of South San
Francisco, County of San Mateo, State of California, on the 23rd day of March,
1998.
COR THERAPEUTICS, INC.
By /s/ PETER S. RODDY
---------------------------------
Peter S. Roddy
Director, Finance and Controller
(Principal Accounting Officer)
POWER OF ATTORNEY
KNOW BY ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Peter S. Roddy and Laura A. Brege, and
each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution for him, and in his name in any and all capacities, to
sign any and all amendments to this report, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and any of them, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- -----
/s/ VAUGHN M. KAILIAN
- ---------------------------------- President, Chief Executive Officer
Vaughn M. Kailian and Director (Principal Executive Officer) March 23, 1998
/s/ LAURA A. BREGE
- ---------------------------------- Senior Vice President, Finance and Chief Financial
Laura A. Brege Officer (Principal Financial Officer) March 23, 1998
/s/ PETER S. RODDY
- ---------------------------------- Director, Finance and Controller
Peter S. Roddy (Principal Accounting Officer) March 23, 1998
48
50
POWER OF ATTORNEY (CONTINUED)
SIGNATURE TITLE DATE
--------- ----- -----
/s/ SHAUN R. COUGHLIN
- ---------------------------------- Director March 23, 1998
Shaun R. Coughlin
/s/ JAMES T. DOLUISIO
- ---------------------------------- Director March 23, 1998
James T. Doluisio
/s/ CHARLES J. HOMCY
- ---------------------------------- Executive Vice President, Research March 23, 1998
Charles J. Homcy and Development and Director
/s/ JERRY T. JACKSON
- ---------------------------------- Director March 23, 1998
Jerry T. Jackson
/s/ ERNEST MARIO
- ---------------------------------- Director March 23, 1998
Ernest Mario
/s/ ROBERT R. MOMSEN
- ---------------------------------- Director March 23, 1998
Robert R. Momsen
/s/ LLOYD HOLLINGSWORTH SMITH, JR.
- ---------------------------------- Director March 23, 1998
Lloyd Hollingsworth Smith, Jr.
/s/ WILLIAM H. YOUNGER, JR.
- ---------------------------------- Director March 23, 1998
William H. Younger, Jr.
49
51
EXHIBIT INDEX
Number
----------------
3.1(9) Restated Certificate of Incorporation of the Registrant.
3.2(2) By-laws of the Registrant.
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2(2) Information, Registration Rights and Right of First Refusal
Agreement among the Registrant and other parties named
therein, as amended as of May 15, 1991.
4.3(2) Side by Side Agreement among the Registrant and the other
parties named therein.
4.4(8) Registrant's Preferred Share Purchase Rights Agreement between the
Registrant and Chemical Trust Company of California, dated as of
January 23, 1995.
* 10.1(2) Form of Indemnification Agreement between the Registrant and its
directors, executive officers, and officers.
* 10.2(2) Registrant's 1988 Employee Stock Option Plan and related agreements.
* 10.3(2) Registrant's 1988 Consultant Stock Option Plan and related agreements.
* 10.4(2) Research, Option and License Agreement between the Registrant and Eli
Lilly and Company, dated May 1, 1991.
* 10.5(2) Lease Agreement between the Registrant and NC Land Associates Limited
Partnership, dated September 23, 1988, as amended August 30, 1989 and
Lease Rider, dated September 23, 1988.
++ 10.6(1) Forms of option agreements used under the Registrant's 1991 Equity
Incentive Plan.
++ 10.7(3) Form of offering document used under the Registrant's 1991 Employee
Stock Purchase Plan.
++ 10.8(4) Consulting Agreement between the Registrant and Lloyd Hollingsworth
Smith, Jr., dated January 1, 1993.
++ 10.9(4) Collaboration Research Agreement between the Registrant and Kyowa Hakko
Kyogo, Co., Ltd., dated November 30, 1992.
++ 10.10(5) Collaboration Agreement between Eli Lilly and Company and the
Registrant, dated May 28, 1993.
* 10.11(6) Collaboration Agreement between Ortho Pharmaceutical Corporation and
the Registrant, dated December 21, 1993.
10.12(10) Registrant's 1994 Non-employee Directors' Stock Option Plan, as
amended.
10.13(7) Consulting Agreement between the Registrant and
Shaun R. Coughlin, dated March 17, 1988, as amended
effective September 28, 1994.
10.14(10) Registrant's 1991 Stock Purchase Plan, as amended.
52
Number
- -----------
10.15(10) Registrant's 1991 Equity Incentive Plan, as amended.
10.16(8) Collaboration Agreement between Schering-Plough Corporation, Schering
Corporation and the Registrant, dated April 10, 1995.
10.17(9) Amendment No. 4 to Collaboration Agreement between the Registrant and
Kyowa Hakko Kogyo, Co., Ltd., dated November 10, 1995.
10.18(10) Amendment No. 1 to Collaboration Agreement between Ortho Pharmaceutical
Corporation and the Registrant, dated September 27, 1996.
10.19(10) Amendment No. 1 to Collaboration Agreement between Eli Lilly and
Company and the Registrant, dated November, 1996.
10.20(i)(10) Amendment No. 1 to Collaboration Agreement between the Registrant and
Kyowa Hakko Kogyo Co., Ltd, dated May 9, 1994.
10.20(ii)(10) Amendment No. 2 to Collaboration Agreement between the
Registrant and Kyowa Hakko Kogyo Co., Ltd, dated July 13, 1995.
10.20(iii)(10) Amendment No. 3 to Collaboration Agreement between the
Registrant and Kyowa Hakko Kogyo Co., Ltd, dated August 1, 1995.
10.20(iv)(10) Amendment No. 5 to Collaboration Agreement between the
Registrant and Kyowa Hakko Kogyo Co., Ltd, dated December 17, 1996.
10.21(10) Description of Registrant's 1996 Incentive Pay Plan.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
24.1 Power of Attorney, Reference is made to the signature page.
27.1 Financial Data Schedule
- -------------------------------------------------------------------------------
* Indicates management contracts or compensatory plans or arrangements
filed pursuant to Item 601(b)(10) of Regulation S-K.
++ Confidential treatment granted.
(1) Filed as an exhibit to the Registrant's Registration Statement on Form
S-8 (Reg. No. 33-42912) and incorporated herein by reference.
(2) Filed as an exhibit to the Registrant's Registration Statement on Form
S-1 (Reg. No. 33-40627) or amendments thereto and incorporated herein by
reference.
(3) Filed as an exhibit to the Registrant's Registration Statement on Form
S-1 (Reg. No. 33-43181) or amendments thereto and incorporated herein by
reference.
(4) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the period ended December 31, 1992 and incorporated by reference herein.
(5) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q
for the period ended June 30, 1993 and incorporated by reference herein.
(6) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the period ended December 31, 1993 and incorporated by reference herein.
(7) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the period ended December 31, 1994 and incorporated by reference herein.
(8) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q
for the period ended June 30, 1995 and incorporated by reference herein.
(9) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the period ended December 31, 1995 and incorporated by reference herein.
(10) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the period ended December 31, 1996 and incorporated by reference herein.
(B) REPORTS ON FORM 8-K