SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1996
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 Number 0-21990
OXiGENE, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3679168
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
110 East 59th Street
New York, NY 10022
(Address of principal executive offices, including zip code)
(212) 421-0001
(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:
Title of Class
Common Stock, par value $.01 per share
Warrant to Purchase One Share of Common Stock
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
As of March 31, 1996, there were 6,973,300 shares of the Registrant's Common
Stock issued and outstanding.
OXiGENE, INC.
This Quarterly Report on Form 10-Q contains historical information and
forward-looking statements. Statements looking forward in time are included in
this Form 10-Q pursuant to the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. They involve known and unknown risks
and uncertainties that may cause the Company's actual results in future periods
to be materially different from any future performance suggested herein. In the
context of forward-looking information provided in this Form 10-Q and in other
reports, please refer to the discussion of risk factors detailed in, as well as
the other information contained in, the Company's filings with the Securities
and Exchange Commission during the past 12 months.
INDEX PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 2
Consolidated Balance Sheets 3
Consolidated Statement of Operations 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of 7
Financial Condition and Results of
Operations
PART II. OTHER INFORMATION 10
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of 10
Securityholders
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying consolidated financial statements have been prepared
by OXiGENE, Inc. (the "Company"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. In the Company's
opinion, these financial statements contain all adjustments necessary to
present fairly the financial position of OXiGENE, Inc. as of March 31, 1996 and
December 31, 1995, the results of operations for the three months ended March
31, 1996 and March 31, 1995, and the cash flows for the three month periods
ended March 31, 1996 and March 31, 1995. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1995. The
results of operations for the period ended March 31, 1996 are not necessarily
indicative of the results of operations and cash flows for any subsequent
interim period or for the full year.
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OXiGENE, INC.
(A development stage company)
CONSOLIDATED BALANCE SHEETS
(All amounts in Thousands)
March 31, December 31,
1996 1995
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $10,529 $10,407
Securities available-for-sale -- 502
Prepaid expenses 99 50
Interest receivable 120 202
Other 12 19
-- --
Total current assets 10,760 11,180
Furniture, fixtures and equipment, at cost 66 62
Accumulated depreciation (28) (25)
---- ----
Net property and equipment 38 37
Deposits 10 10
Total assets $10,808 $11,227
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses:
Due to Cato Research, Ltd. $ 158 $ 134
Accrued expenses 458 259
Accrued stock appreciation rights 814 223
Other payables 54 54
-- --
Total current liabilities 1,484 670
Stockholders' equity Common stock $0.01 par value:
Authorized shares - 15,000,000 shares
Issued and outstanding
6,973,300 at March 31, 1996
6,823,300 at December 31, 1995 70 68
Additional paid-in capital 22,146 21,864
Deficit accumulated during the development stage (12,913) (11,400)
Foreign currency translation adjustment 21 25
-- --
Total stockholders' equity 9,324 10,557
Total liabilities and stockholders' equity $10,808 $11,227
The accompanying notes are an integral part of these financial statements.
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OXiGENE, INC.
(A development stage company)
CONSOLIDATED STATEMENT OF OPERATIONS
(All amounts in Thousands, except per share data)
(Unaudited)
Three months ended March 31,
1996 1995
Revenue
Interest income $ 129 $ 53
Operating expenses
Research and development:
Cato Research, Ltd. 228 148
Other 786 513
----- ---
Total research and development 1,014 661
General and administrative 628 413
----- ---
Total operating expenses 1,642 1,074
Net loss (1,513) (1,021)
Net loss per common share (0.22) (0.20)
Weighted average number of shares of
Common Stock outstanding 6,881 5,058
The accompanying notes are an integral part of these financial statements.
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OXiGENE, INC.
(A development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in Thousands)
(Unaudited)
Three months ended March 31,
1996 1995
Operating activities
Net loss $(1,513) $(1,021)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 3 2
Amortization of debt securities -- 4
Compensation related to issuance of warrants,
options and stock appreciation rights 591 --
Changes in operating assets and liabilities:
Prepaid expenses and other current assets 40 152
Accounts payable and accrued expenses 223 139
--- ---
Net cash used by operating activities (656) (724)
Financing activities
Proceeds from issuance of common stock, net 283 --
Net cash provided by financing activities 283 --
Investing activities
Proceeds from sale of securities available-for-sale 502 --
Purchase of furniture, fixture and equipment (4) (11)
Net cash used in investing activities 498 (11)
Effect of exchange rate on changes in cash (3)
Net increase (decrease) in cash and cash equivalents 122 (735)
10,407 1,194
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period $10,529 $ 459
The accompanying notes are an integral part of these financial statements.
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OXiGENE, INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
1. Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three month
period ended March 31, 1996 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1996. For further information,
refer to the consolidated financial statements and footnotes thereto included
in the Company's annual report on Form 10-K for the year ended December 31,
1995.
Cash and Cash Equivalents
The Company considers all highly liquid financial instruments with a
maturity of three months or less when purchased to be cash equivalents.
Net Loss Per Share
Net loss per share is based upon the Company's aggregate net loss
divided by the weighted average number of shares of Common Stock outstanding
during the respective periods. All options and warrants were antidilutive and,
accordingly, excluded from the calculation of weighted average shares.
2. Principles of Consolidation
At the end of 1994, the Company established a wholly-owned operating
subsidiary in Sweden, OXIGENE (Europe) AB. This subsidiary manages and controls
the Company's research and development work, and monitors the European clinical
trials. The consolidated financial statements include the accounts of the
Company and OXiGENE Europe AB, effective January 1, 1995.
Intercompany balances and transactions have been eliminated.
3. Stockholder's Equity
During the three-month period ended March 31, 1996, the Company issued
150,000 shares of Common Stock upon exercise of previously granted warrants.
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Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Description of Business
OXiGENE is a development stage pharmaceutical company engaged
primarily in developing products designed to enhance traditional treatments for
cancer, aging, and autoimmune diseases. Currently under development are (1)
therapeutics that inhibit the ability of cancer cells to repair their DNA
structure after damage produced by radiation or chemotherapy; (2)
chemopreventive agents that stimulate DNA repair to strengthen the body's
immune system; and (3) diagnostics that measure DNA activity to determine
immune function and status. Since its inception in February, 1988, the Company
has devoted substantially all of its efforts and resources to research and
development conducted on its own behalf and through collaborations with
clinical institutions, primarily the University of Lund, Sweden. The Company
has generated a cumulative net loss of $12,913,000 for the period from its
inception through March 31, 1996. The Company expects to incur additional
operating losses in the year ending December 31, 1996, and for several years
thereafter, principally as a result of its continuing anticipated research and
development and clinical trials expenditures. The major source of the Company's
working capital has been the proceeds of private and public equity financing.
Most recently, in the summer of 1995, the Company completed a private placement
of approximately $10,000,000, before expenses. As of March 31, 1996, the
Company had no long-term debt or loans payable. Since its inception, the
Company has had no licensing or other fee income, and does not anticipate any
such income for the foreseeable future. The Company had interest income of
$129,000 for the three months period ended March 31, 1996.
Results of Operations - Three Months Ended March 31, 1996 and 1995
During the three months ended March 31, 1996 and 1995, the Company had
no income, except for $129,000 of interest income for the three months ended
March 31, 1996 and $53,000 of interest income for the three month period ended
March 31, 1995. The operating expenses for those periods were $1,642,000 and
$1,074,000, respectively. The research and development expenses for the same
periods were $1,014,000 and $661,000, respectively, and the general and
administrative expenses were $628,000 and $413,000, respectively. The increase
in reported research and development expenses was attributable to a charge for
financial reporting purposes of $591,000. This charge was recorded because the
market value per share of Common Stock on March 31, 1996 ($19.25) exceeded the
exercise price of stock appreciation rights previously granted by the Company to
certain clinical investigators and consultants. Without giving effect to such
charge, research and development expenses declined by approximately $238,000,
compared to the comparable 1995 period, as a result of the timing of the
Company's payments to clinical investigators. Generally, the Company makes
payments to clinical investigators if and when certain predetermined milestones
in its clinical trials are reached, rather than on a fixed quarterly or monthly
basis. As a result of the foregoing and the existence of outstanding stock
appreciation rights, research and development expenses have fluctuated, and are
expected to continue to fluctuate, from quarter to quarter. General and
administrative expenses increased primarily as a result of an increase in the
Company's activities, mostly in Sweden.
Liquidity and Capital Resources
The company has experienced net losses and negative cash flow from
operations each year since its inception and, as of March 31, 1996, the Company
had a cumulative deficit of $12,913,000. To date, the Company has financed its
operations primarily through the proceeds of private and public equity
financing. The Company has attempted
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to contain costs and reduce cash outflow by maintaining low overhead costs,
using consultants as required and utilizing facilities available at the
University of Lund, Sweden for research and development.
At December 31, 1995, the Company had $10,909,000 in cash and cash
equivalents and marketable securities available for sale. In the first quarter
of 1996, the Company disposed of its marketable securities. The proceeds from
this disposition were mostly used to finance operations during the three months
ended March 31, 1996. At March 21, 1996, the Company had $10,529,000 in cash
and cash equivalents.
The Company expects to incur additional expenses which will
probably result in significant losses over the next several years as it
continues to expand its research and development activities and undertakes the
clinical trials required to bring its products to the marketplace.
The Company's policy is to maintain a relatively small number of
executives and to rely as much as possible on outside services for its clinical
research, clinical trials and administration. The Company maintains small
executive offices in New York and in Lund, Sweden, both of which are subleased.
The Company no longer considers closing its New York executive office and
consolidating its administrative and financial functions in the Lund facility.
Further, the Company contemplates subleasing new laboratory space in the New
York metropolitan area that will complement research activities with those at
the Lund facility. The Company contracts with Cato Research, Ltd., Durham,
North Carolina, for the coordination of the Company's clinical trials and
retention of its clinical files. The Company pays the University of Lund,
Sweden and other hospitals, where applicable, on a per patient basis for
conducting its clinical trials.
The Company's working capital and capital requirements may,
however, vary materially from those now planned due to numerous factors
including, but not limited to, the progress of the Company's research and
development programs, the results of preclinical testing and clinical trials,
the timing and costs involved in obtaining regulatory approvals, the level of
resources that the Company will devote to the development of its manufacturing,
marketing and sales capabilities, technological advances, the approval of
pending patent applications and the status of collaborative agreements with
other companies to provide funding and services to the Company to support or
defray some of or all of the costs associated with any of or all these
activities. The Company anticipates that its current assets will be sufficient
to complete the perquisite clinical trials prior to regulatory approval for its
current compounds, Sensamide(TM) and Neu-Sensamide(TM). A collaborative
agreement with a third party to complete development of these or other products
or bring products to market will be sought during 1996 and thereafter. There
can be no assurance that the Company's current assets will be sufficient to
attain clinical trials milestones or that a third party collaboration can be
realized or that additional financing, if required, will be available on
acceptable terms, if at all. The Company had no material commitments for
capital expenditures as of March 31, 1996 out of the normal course of business,
including expenditures associated with its clinical trials.
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Tax Matters
As of December 31, 1995, the Company had, for Federal income tax
purposes, net operating loss carryforwards of approximately $10,672,000.
Pursuant to the Tax Reform Act of 1986, annual utilization of the Company's net
operating loss carryforwards may be limited if a cumulative change in ownership
of the Company's stock of more than 50% (within the meaning of the Internal
Revenue Code) occurs within any three-year period. The Company has made no
determination concerning whether there has been such a cumulative change in
ownership and it is possible that such a change in ownership may be deemed to
have occurred following the Company's initial public offering, which was
completed in October, 1993, and/or the private placement of 1,666,700 shares of
Common Stock, which was completed in July 1995.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There are no legal proceedings pending or, to the Company's best
knowledge, threatened against the Company.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
On April 15, 1996, the Company announced that it had received a
notice of allowance from the United States Patent and Trademark
Office with respect to Neu-Sensamide(TM). A copy of the press
release is attached hereto as Exhibit 99.1.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
The following exhibit is filed as part of this Quarterly
Report on Form 10-Q:
27.1 Financial Data Schedule
99.1 Press Release, dated April 15, 1996, with respect to
notice of allowance for patent covering
Neu-Sensamide(TM).
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the first quarter of
1996.
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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.
OXiGENE, INC.
Date: May 14, 1996 /s/ Bjorn Nordenvall
------------------------------- --------------------
Bjorn Nordenvall
President and Chief Executive Officer
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OXiGENE, INC.
Quarterly Report on Form 10-Q
for the Fiscal Quarter Ended March 31, 1996
Exhibits
Exhibit
Number Description
27.1 Financial data schedule.
99.1 Press release dated April 15, 1996.