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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934.
For the quarterly period ended June 30, 1995
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934.
For the transition period from _______________ to _______________
Commission File #0-14732
ADVANCED MAGNETICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-2742593
(State or other jurisdiction of (I.R.S. Employer Incorporation
organization) or Identification No.)
61 Mooney Street
Cambridge, MA 02138
(Address of principal executive offices)
Registrant's telephone number, including area code: (617) 497-2070
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 _____
At August 3, 1995, 6,745,992 shares of registrant's common stock (par
value, $.01) were outstanding.
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ADVANCED MAGNETICS, INC.
FORM 10-Q
QUARTER ENDED JUNE 30, 1995
PART I. FINANCIAL INFORMATION
Item 1 -- Financial Statements
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ADVANCED MAGNETICS, INC.
BALANCE SHEET
JUNE 30, 1995 AND SEPTEMBER 30, 1994
(Unaudited)
ASSETS June 30, September 30,
1995 1994
Current assets:
Cash and cash equivalents $ 3,477,318 $ 6,462,193
Marketable securities (Note B) 35,725,442 33,199,085
Accounts receivable 1,847,773 248,390
Recoverable income taxes 143,617 90,117
Prepaid expenses 338,381 112,846
Total current assets 41,532,531 40,112,631
Property, plant and equipment:
Land 360,000 360,000
Building 4,320,766 4,316,706
Laboratory equipment 6,763,656 5,598,456
Furniture and fixtures 514,082 324,453
11,958,504 10,599,615
Less--accumulated depreciation and
amortization 4,892,038 4,136,092
Net property, plant and equipment 7,066,466 6,463,523
Other assets 145,072 96,546
Total assets $ 48,744,069 $ 46,672,700
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 599,210 $ 273,385
Accrued expenses 610,114 947,840
Total current liabilities 1,209,324 1,221,225
Stockholders' equity:
Preferred stock, par value $.01
per share, authorized
2,000,000 shares; none issued --- ---
Common stock, par value $.01 per
share, authorized 15,000,000
shares; issued and outstanding
6,741,867 shares at June 30,
1995 and 6,712,572 shares at
September 30, 1994 67,419 67,126
Additional paid-in capital 45,009,586 44,660,834
Retained earnings 1,996,079 723,515
Unrealized gains on marketable
securities 461,661 ---
Total stockholders' equity 47,534,745 45,451,475
Total liabilities and
stockholders' equity $ 48,744,069 $ 46,672,700
The accompanying notes are an integral part of the financial statements.
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ADVANCED MAGNETICS, INC.
STATEMENT OF OPERATIONS
FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED
JUNE 30, 1995 AND 1994
(Unaudited)
Three-Month Period Nine-Month Period
Ended June 30, Ended June 30,
1995 1994 1995 1994
Revenues:
License fees $ --- $ 2,500,000 $ 5,000,000 $ 5,505,000
Royalties 38,366 --- 38,366 13,461
Product sales 1,276,172 25,665 2,120,457 226,215
Interest, dividends
and net gains and
losses on sales
of securities 575,172 535,896 1,695,827 1,422,048
Total revenues 1,889,710 3,061,561 8,854,650 7,166,724
Cost and expenses:
Cost of product sales 256,333 5,133 425,187 44,033
Research and
development
expenses 2,578,498 1,671,133 6,158,014 5,020,285
Credit for purchase
of in-process
research and
development (Note F) --- --- (380,000) ---
Selling, general and
administrative
expenses 511,506 576,243 1,299,926 1,520,566
Total costs and
expenses 3,346,337 2,252,509 7,503,127 6,584,884
Other income:
Gain on sale of in-
vitro product line
(Note C) --- --- --- 2,649,580
Income (loss) before
provision for
income taxes (1,456,627) 809,052 1,351,523 3,231,420
Provision (benefit)
for income taxes (178,500) (96,500) 196,500 5,500
Income (loss) before
cumulative effect
of accounting
change (1,278,127) 905,552 1,155,023 3,225,920
Cumulative effect of
accounting change
(Note B) --- --- 117,540 ---
Net income (loss) $(1,278,127)$ 905,552 $ 1,272,563 $ 3,225,920
Net income (loss) per
share before
cumulative effect
of accounting
change $ (0.19) $ 0.13 $ 0.17 $ 0.47
Cumulative effect of
accounting change --- --- 0.02 ---
Income (loss) per
share $ (0.19) $ 0.13 $ 0.19 $ 0.47
Weighted average number
of common and common
equivalent shares 6,895,251 6,840,411 6,851,389 6,851,370
The accompanying notes are an integral part of the financial statements.
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ADVANCED MAGNETICS, INC.
STATEMENT OF CASH FLOWS
FOR THE NINE-MONTH PERIODS ENDED
JUNE 30, 1995 AND 1994
(Unaudited)
Nine-Month Periods Ended
June 30,
1995 1994
Cash flows from operating activities:
Cash received from customers $ 5,961,705 $ 5,712,442
Cash paid to suppliers and employees (6,984,616) (6,381,265)
Dividends and interest received 1,255,921 846,451
Income taxes paid (250,000) (205,067)
Income tax refund --- 622,849
Net realized gains (losses) on sales of
securities (2,428) 169,696
Net cash provided by (used in)
operating activities (19,418) 765,106
Cash flows from investing activities:
Proceeds from sales of securities 750,000 5,959,534
Proceeds from U.S. Treasury Notes
maturing 2,987,638 ---
Purchase of securities (5,644,725) (24,629,610)
Capital expenditures (1,358,889) (680,874)
(Increase) in other assets (48,526) (46,296)
Net cash (used in) investing
activities (3,314,502) (19,397,246)
Cash flows from financing activities:
Proceeds from issuances of common stock 349,045 462,280
Purchase of treasury stock --- (316,589)
Net cash provided by financing
activities 349,045 145,691
Net (decrease) in cash and cash
equivalents (2,984,875) (18,486,449)
Cash and cash equivalents at beginning
of the period 6,462,193 25,837,909
Cash and cash equivalents at end of the
period $ 3,477,318 $ 7,351,460
The accompanying notes are an integral part of the financial statements.
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ADVANCED MAGNETICS, INC.
RECONCILIATION OF NET INCOME
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
FOR THE NINE-MONTH PERIODS ENDED
JUNE 30, 1995 AND 1994
(Unaudited)
Nine-Month Periods
Ended June 30,
1995 1994
Net income $ 1,272,563 $ 3,225,920
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Cumulative effect of accounting change (117,540) ---
Credit for purchase of in-process
research and development (380,000) ---
Depreciation and amortization 755,946 627,321
Amortization of U.S. Treasury Notes
Discount (40,070) ---
(Increase) in accounts receivable (1,599,383) (438,135)
(Increase) decrease in prepaid expenses (225,535) 313,449
(Decrease) increase in accounts payable
and accrued expenses 368,101 (313,869)
Gain on sale of in-vitro product line --- (2,649,580)
(Increase) in recoverable income taxes (53,500) ---
Total adjustments (1,291,981) (2,460,814)
Net cash provided by (used in) operating
activities $ (19,418) $ 765,106
The accompanying notes are an integral part of the financial statements.
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ADVANCED MAGNETICS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
A. Summary of Accounting Policies.
The balance sheet of Advanced Magnetics, Inc. (the "Company") as
of June 30, 1995 and the statement of operations and cash flows for
the quarter then ended are unaudited and in the opinion of management,
all adjustments necessary for a fair presentation of such financial
statements have been recorded. Such adjustments consisted only of
normal recurring items.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The year-end
balance sheet data was derived from audited financial statements, but
does not include disclosures required by generally accepted accounting
principles. It is suggested that these interim financial statements
be read in conjunction with the Company's most recent Form 10-K and
Annual Report as of September 30, 1994.
B. Marketable Securities.
The cost and market value of the marketable securities portfolio
are as follows:
June 30, 1995 September 30,
1994
Cost $ 35,263,781 $ 33,316,625
Market $ 35,725,442 $ 33,199,085
The Company adopted Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity
Securities", in its first fiscal quarter ended December 31, 1994.
Prior period financial statements have not been restated. The
Company's current portfolio consists of securities classified as
available-for-sales securities at fair market value. At June 30,
1995, net unrealized gains on marketable securities amounted to
$461,661 and were recorded as a separate component of equity. The
Company recorded a $117,540 unrealized loss on market value of
securities in the fiscal year ended September 30, 1994. In the first
fiscal quarter ended December 31, 1994, the Company recorded a
cumulative effect of the accounting change of $117,540 including the
reversal of the reserve for the carrying value of marketable
securities. At June 30, 1995, 71% of the Company's portfolio was
invested in U. S. Treasury Notes, 6% in corporate bonds, 17% in
preferred stocks and 6% in common stocks.
C. Sale of In-Vitro Product Line.
On October 15, 1993, the Company sold its in-vitro product line
to PerSeptive Biosystems, Inc. ("PerSeptive") for $4,156,674 in
PerSeptive's common stock, plus an earn out based on 1995 revenues.
The Company recognized a pre-tax gain of $2,649,580 on this sale in
the first fiscal quarter of 1994.
D. Income Taxes.
The Company accounts for income taxes in conformance with FAS 109
"Accounting for Income Taxes," which requires the asset and liability
approach for financial accounting and reporting for income taxes.
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The provision for income taxes for the fiscal nine-month periods
ended June 30, 1995 and 1994 was at a different rate than the U. S.
Statutory rate for the following reasons:
Nine-Month Periods
Ended June 30,
1995 1994
U. S. Statutory Tax Rate 34.0% 34.0%
State income taxes, net of
Federal benefit --- 0.4
Dividend Received Deduction (5.6) (8.5)
Amortization of Purchased
Technology (12.9) (19.7)
Alternative Minimum Tax 13.4 ---
Utilization of Net Operating
Loss (15.8) ---
Other 0.3 (5.8)
Effective Tax Rate 13.4% 0.4%
During the fiscal nine months ended June 30, 1995, the net change in
the valuation allowance was a decrease of approximately $498,000. The
decrease resulted from the realization of certain net operating loss
and purchase technology carryforwards. During the fiscal nine months
ended June 30, 1994, the net change in the valuation allowance was a
decrease of approximately $582,000. The decrease resulted from the
realization of certain operating loss and purchase technology
carryforwards which were offset against the gain realization upon sale
of the Company's in-vitro product line.
E. Legal Proceedings.
The Company and certain of its officers were sued in an action
in the United States District Court for the District of
Massachusetts on September 3, 1992. The plaintiff, a former
consultant to the Company, claims that he was incorrectly omitted as
an inventor or joint inventor on six of the Company's patents and on
pending applications, and seeks injunctive relief and unspecified
monetary damages. The plaintiff filed a related case in the
Superior Court of the Commonwealth of Massachusetts. The Superior
Court has dismissed some of the claims on summary judgment. While
the final outcome of these actions cannot be determined, the Company
believes that the plaintiff's claims are without merit and intends
to defend the actions vigorously.
F. Agreements.
On August 30, 1994, the Company signed an agreement with
Bristol-Myers Squibb Co. to reacquire the development and marketing
rights to AMI-227 previously licensed to Squibb Diagnostics, a
division of Bristol-Myers Squibb Co. ("Squibb"). As part of the
transaction, Bristol-Myers Squibb Co. returned to the Company a
warrant to purchase 600,000 shares of the Company's common stock,
valued at $240,000. The Company agreed to pay Bristol-Myers Squibb
Co. $1,000,000 in two cash payments, of which $500,000 was paid on
August 30, 1994 and $500,000 was to be paid upon acceptance of 1,200
vials of the AMI-227 suitable for worldwide preclinical and clinical
studies. Furthermore, the Company agreed to pay up to $2,750,000
for future royalties based on the Company's sales of AMI-227. In
connection with the purchase, the Company recorded a charge of
$760,000 in the fourth quarter of fiscal 1994 which represented the
value of the purchase of in-process research and development. In
the first quarter of fiscal 1995, the Company and Bristol-Myers
Squibb Co. agreed that the 1,200 vials of AMI-227 delivered to the
Company by Squibb were not acceptable. In addition, they agreed
that any future delivery of AMI-227 under the agreement will not be
required and that the Company will not be required to make the
$500,000 payment. Accordingly, the Company recorded a credit for
$380,000 to the purchase of in-process research and development and
adjusted the value of the warrant to purchase 600,000 shares of the
Company's common stock by $120,000 in the first quarter of fiscal
1995.
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On February 1, 1995, the Company entered into an agreement with
Berlex Laboratories, Inc. ("Berlex") granting Berlex a product
license and exclusive marketing rights to the Company's Feridex
I.V. (trademark) magnetic resonance imaging (MRI) contrast agent in
the United States and Canada. Under the terms of the agreement,
Berlex paid a $5,000,000 non-refundable license fee and will pay an
additional $5,000,000 license fee when the product has been approved for
commercial marketing in the United States by the U.S. Food and Drug
Administration (FDA). In addition, the Company will receive
payments for manufacturing the product and royalties on future
sales. The Company submitted a New Drug Application (NDA) for
Feridex I.V. to the FDA in February 1994 which was accepted for
filing in April 1994.
On May 9, 1995, the Company entered into a Research and License
Agreement with the General Hospital Corporation, a not-for-profit
Massachusetts Corporation doing business as Massachusetts General
Hospital ("MGH"). The agreement covers organ-specific, receptor-
directed, ultrasmall superparamagnetic iron oxide for use as MRI
contrast agents. The target organ for the initial collaboration is
the pancreas. Minimum payment to MGH under the agreement is
$300,000 payable quarterly but payments could exceed this amount
depending on milestone achievements and product sales. In the
fiscal third quarter ended June 30, 1995, the Company recorded a
$75,000 quarterly research and development expense.
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Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Overview
Since its inception, Advanced Magnetics, Inc. (the "Company") has
focused its efforts on developing its core magnetic particle
technology, primarily to develop MRI contrast agents. Advanced
Magnetics has funded its operations with cash from license fees from
corporate partners, royalties, sales of its in-vitro products, fees
from contract research performed for third parties, the proceeds of
financings, and income earned on invested cash. The Company has
received substantial license fee revenues from licenses of both its
MRI contrast agent technology and its in-vitro clinical laboratory
technology. The Company has also received royalty revenues under
licenses of its in-vitro clinical laboratory technology.
A substantial portion of the Company's expenses consists of
research and development expenses. The Company expects its research
and development expenses to increase as it funds clinical trials and
associated toxicology and pharmacology studies and as it devotes
resources to developing additional contrast agents and new therapeutic
drugs.
The Company's revenues and operating results can vary
substantially from period to period. In particular, the timing of the
receipt by the Company of license fees has historically caused
substantial variations in operating results from period to period. In
addition, variations in revenues and expenses resulting from clinical
trials, additional license or corporate partnering arrangements,
timing of regulatory approvals and royalty payments may cause
significant future variations in period to period results.
Results of Operations for the quarter ended June 30, 1995 as
compared to the quarter ended June 30, 1994.
Revenues
Total revenues of the Company were $1,889,710 for the third
fiscal quarter ended June 30, 1995 compared to $3,061,561 in the third
fiscal quarter ended June 30, 1994. The Company's revenues consisted
primarily of direct sales of contrast agent products and investment
income. The decrease in revenues of $1,171,851 resulted primarily
from the absence of license fee revenues in the third fiscal quarter
ended June 30, 1995 compared to $2,500,000 in the third fiscal quarter
ended June 30, 1994, partially offset by an increase in direct product
sales of $1,276,172 compared to direct product sales of $25,665 in the
third fiscal quarter ended June 30, 1994.
The third fiscal quarter of 1994 included a non-refundable
license fee of $2,500,000 paid by Sterling Winthrop, Inc., a
subsidiary of Eastman Kodak Company ("Sterling"). The fee was a
milestone payment for the Company's filing of a New Drug Application
(NDA) with the FDA for the magnetic resonance liver imaging contrast
agent Feridex I.V. The Company terminated its marketing and
distribution agreement for the Feridex I.V. contrast agent with
Sterling on October 6, 1994.
Product sales for the third fiscal quarter ended June 30, 1995
were $1,276,172 compared to $25,665 for the third fiscal quarter ended
June 30, 1994. Product sales consisted primarily of $1,224,842 of
Feridex I.V. contrast agent sales to Guerbet S.A., under the name
Endorem (registered trademark). Product sales for the third fiscal
quarter ended June 30, 1994 were $25,665 resulting from the initial
product launch in December 1993 of Lumirem (registered trademark)
(ferumoxsil), the Company's gastrointestinal imaging contrast agent
in Europe.
Royalties revenues for the third fiscal quarter ended June 30,
1995 were $38,366 and were paid by Guerbet S.A. on European product
sales of the Feridex I.V. imaging contrast agent. There were no
royalties revenues for the third fiscal quarter ended June 30, 1994.
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Interest, dividends and net gains and losses on sales of
securities were $575,172 for the third fiscal quarter ended June 30,
1995 compared to $535,896 for the third fiscal quarter ended June 30,
1994. These amounts included an increase from interest and dividends
to $575,172 in the third fiscal quarter ended June 30, 1995 from
$522,844 in the third fiscal quarter ended June 30, 1994. The
increase was primarily a result of an increase in interest revenue
from the purchase of United States Treasury notes. There were no
sales of securities in the third fiscal quarter ended June 30, 1995.
In the third fiscal quarter ended June 30, 1994, there was a net gain
on sales of securities of $13,052.
Costs and Expenses
The cost of product sales for the third fiscal quarter ended June
30, 1995 was $256,333 compared to $5,133 for the third fiscal quarter
ended June 30, 1994. The cost of product sales was 20% of sales for
both third quarters. The Company produced products for sale on a made-
to-order basis only. Research and development expenses for the third
fiscal quarter ended June 30, 1995 were $2,578,498, an increase of 54%
compared to $1,671,133 for the third fiscal quarter ended June 30,
1994. The increase in research and development expenses was primarily
due to expenditures for the Clinical Development Group in the
Company's Princeton, New Jersey office, human clinical trials for
certain of the Company's development stage products and a $200,000
milestone payment by the Company to Hafslund Nycomed A.S. of Oslo,
Norway under an agreement concerning certain patent rights within the
superparamagnetic subgroup of MRI contrast agent field. General and
administrative expenses for the third fiscal quarter ended June 30,
1995 were $511,506, a decrease of 11% compared to $576,243 for the
third fiscal quarter ended June 30, 1994. The decrease was primarily
due to a decrease in legal and consulting fees.
Earnings
For the reasons stated above, there was a net loss of $1,278,127,
or $(0.19) per share, for the third fiscal quarter ended June 30, 1995
compared to net income of $905,552, or $0.13 per share, for the third
fiscal quarter ended June 30, 1994.
Results of Operations for the Nine Months Ended June 30, 1995 as
Compared to the Nine Months Ended June 30, 1994
Revenues
Total revenues for the nine-month period ending June 30, 1995
increased 24% to $8,854,650 from $7,166,724 for the nine-month period
ended June 30, 1994.
License fee revenues for the fiscal nine-month period ended June
30, 1995 were $5,000,000 compared to $5,505,000 for the fiscal nine-
month period ended June 30, 1994. There was a $5,000,000 payment
received on February 1, 1995 from Berlex under an agreement granting
Berlex a product license and exclusive marketing rights to the
Company's Feridex I.V. MRI contrast agent in the United States and
Canada. License fee revenues for the fiscal nine-month period ended
June 30, 1994 included a non-refundable license fee of $3,000,000 paid
by Squibb Diagnostics and a non-refundable milestone license fee of
$2,500,000 paid by Sterling.
Product sales for the fiscal nine-month period ended June 30,
1995 were $2,120,457 compared to $226,215 for the fiscal nine-month
period ended June 30, 1994. Product sales included $2,013,868 of
Feridex I.V. contrast agent sales to Guerbet S.A., the Company's
European licensee. The product sales for the fiscal nine-month period
ended June 30, 1994 were primarily for the launch of Lumirem
(registered trademark) (ferumoxsil), the Company's gastrointestinal
imaging contrast agent in Europe by Guerbet S.A.
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Royalties revenues for the fiscal nine-month period ended June
30, 1995 were $38,366 compared to $13,461 for the fiscal nine-month
period ended June 30, 1994.
Interest, dividends and gains and losses on sales of securities
resulted in a gain of $1,695,827 in the fiscal nine-month period ended
June 30, 1995 compared to a gain of $1,422,048 in the fiscal nine-
month period ended June 30, 1994. These amounts include interest and
dividend revenues of $1,698,255 for the fiscal nine-month period ended
June 30, 1995 compared to $1,252,352 for the fiscal nine-month period
ended June 30, 1994. The increase was primarily a result of an
increase in interest revenue from the purchase of United States
Treasury notes. Net gains (losses) for the sales of marketable
securities was a loss of $(2,428) for the fiscal nine-month period
ended June 30, 1995 compared to a net gain of $169,696 for the fiscal
nine-month period ended June 30, 1994.
Costs and Expenses
The cost of product sales for the fiscal nine-month period
ended June 30, 1995 related primarily to the sale in Europe of
Endorem (ferumoxide), the Company's liver imaging contrast agent.
The cost of products sales for the fiscal nine-month period ended
June 30, 1994 related primarily to the sale in Europe of Lumirem
(ferumoxsil), the Company's gastrointestinal imaging contrast agent.
The cost of product sales for both nine-month periods was 20% of
sales. The Company produced products for sale on a made-to-order
basis only. Research and development expenses for the fiscal nine-
month period ended June 30, 1995 increased 23% to $6,158,014 from
$5,020,285 for the fiscal nine-month period ended June 30, 1994.
The increase in research and development expenses was primarily due
to expenditures for the newly formed Clinical Development Group in
the Company's Princeton, New Jersey office, human clinical trials
for several of the Company's development stage products and a
$200,000 milestone payment by the Company to Hafslund Nycomed S.A.
of Oslo, Norway. In the first fiscal quarter, the Company and
Bristol-Myers Squibb Co. agreed that the 1,200 vials of AMI-227
delivered were not acceptable. In addition, they agreed that any
future delivery of AMI-227 under the agreement will not be required
and that the Company will not be required to make the $500,000
payment. Accordingly, the Company recorded a credit for $380,000 to
the purchase of in-process research and development as well as a
$120,000 adjustment to the value of the warrant to purchase 600,000
shares of the Company's common stock. General and administrative
expenses for the fiscal nine-month period ended June 30, 1995 of
$1,299,926 decreased 15% from $1,520,566 for the fiscal nine-month
period ended June 30, 1994. The decrease was primarily due to a
decrease in legal and consulting fees.
Other
In the fiscal nine-month period ended June 30, 1994, the
Company recognized a pre-tax gain of $2,649,580 from the sale of its
in-vitro product line to PerSeptive Biosystems, Inc. on October 15,
1993.
The company adopted Statement of Financial Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities",
in the first quarter of fiscal 1995. As a result, the Company
recorded a cumulative effect for the accounting change of $117,540.
Income before the cumulative effect was $1,155,023.
Income Taxes
The income tax provision for the fiscal nine-month period ended
June 30, 1995 was $196,500 or 13.4% of income before taxes. The
income tax provision for the fiscal nine-month period ended June 30,
1994 was $5,500 (Note D).
Earnings
For the reasons stated above, net income for the fiscal nine-
month period ended June 30, 1995 was $1,272,563, or $0.19 per share,
compared to net income of $3,225,920, or $0.47 per share, for the
fiscal nine-month period ended June 30, 1994.
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Liquidity and Capital Resources
At June 30, 1995, the Company's cash and cash equivalents
totaled $3,477,318, representing a decrease of $2,984,875 from cash
and cash equivalents at September 30, 1994. Additionally, the
Company had marketable securities of $35,725,442 at June 30, 1995
compared to $33,199,085 at September 30, 1994. Cash used in
operating activities was $19,418 for the fiscal nine-month period
ended June 30, 1995 compared to $765,106 cash provided by operating
activities for the fiscal nine-month period ended June 30, 1994.
Cash used in investing activities was $3,314,502 for the fiscal nine-
month period ended June 30, 1995 compared to $19,397,246 for the
fiscal nine-month period ended June 30, 1994. Cash used in
investing activities for the fiscal nine-month period ended June 30,
1995 includes the purchase of United States Treasury notes at a cost
of $4,003,516. Cash used in investing activities for the fiscal
nine-month period ended June 30, 1994 included the purchase of
United States Treasury notes at a cost of $22,290,547. Cash
provided by financing activities for the fiscal nine-month period
ended June 30, 1995 was $349,045 which resulted from issuance of
common stock under employee stock option and purchase plans. Cash
used by financing activities for the fiscal nine-month period ended
June 30, 1994 was $145,691.
Capital expenditures for the fiscal nine-month period ended
June 30, 1995 were $1,358,889 compared to $680,874 in the fiscal
nine-month period ended June 30, 1994. The increase in capital
expenditures for the fiscal nine-month period ended June 30, 1995
was primarily attributable to an upgrade in the Company's magnetic
resonance imaging equipment and for the expenses associated with the
newly formed Clinical Development Group in the Company's Princeton,
New Jersey office. The Company has not planned any near term
additional acquisitions or major equipment expenditures and believes
its available cash and cash equivalents and marketable securities
are sufficient to meet its anticipated needs through fiscal 1996.
The Company expects that its expenditures for research and
development for the 1995 fiscal year will increase significantly
compared to the fiscal year ended September 30, 1994. The expected
increase in research and development expenses is due to the newly
formed Clinical Development Group responsible for human clinical
trials for the Company's development stage products and the funding
for the development of additional contrast agents and antiviral
therapeutics for treatment of hepatitis.
Management believes that the Company's current operations are
not materially impacted by the effects of inflation.
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PART II. OTHER INFORMATION
Item 6. Exhibits
Statement Recomputation of Per Share Earnings is filed as Part
II, Exhibit 11, of this report.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
ADVANCED MAGNETICS, INC.
Date August 9, 1995 By /s/ Jerome Goldstein
Jerome Goldstein, President,
Treasurer and Chairman of the
Board of Directors
Date August 9, 1995 By /s/ Anthony P. Annese
Anthony P. Annese, Vice
President and Principal
Accounting Officer
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ADVANCED MAGNETICS, INC.
Exhibit 11 - Statement Recomputation of Per Share Earnings
Attached to and made part of Part II of Form 10-Q for the
Three-Month and Nine-Month Periods Ended June 30, 1995 and 1994
(unaudited)
Three-Month Periods Nine-Month Periods
Ended June 30, Ended June 30,
1995 1994 1995 1994
Weighted average number
of shares issued and
outstanding 6,731,245 6,697,203 6,724,384 6,684,084
Assumed exercise of
options reduced
by the number of
shares which
could have been
purchased with
the proceeds of
those options 164,006 96,266 127,005 106,937
Assumed exercise of
warrants reduced by
the number of shares
could have been
purchased with
the proceeds of
those warrants --- 46,942 --- 60,349
As adjusted 6,895,251 6,840,411 6,851,389 6,851,370