UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2001
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.
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(Exact name of Registrant as specified in its charter)
Delaware 13-3679168
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
321 ARSENAL STREET
WATERTOWN, MA 02472
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(Address of principal executive offices, including zip code)
(617) 673-7800
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(Telephone number, including area code)
Not applicable
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(Former name, former address and former fiscal year, if changed since last
report)
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 November 9, 2001, there were 11,432,093 shares of the Registrant's common
stock issued and outstanding.
OXiGENE, INC.
Cautionary Factors that may Affect Future Results
-------------------------------------------------
Our disclosure and analysis in this report contain "forward-looking
statements." Forward-looking statements give management's current expectations
or forecasts of future events. You can identify these statements by the fact
that they do not relate strictly to historic or current facts. They use words
such as "anticipate," "estimate," "expect," "project," "intend," "plan,"
"believe," and other words and terms of similar meaning. These include
statements, among others, relating to our planned future actions, our research
and development plans, our prospective products or product approvals, our
beliefs with respect to the sufficiency of our cash and cash equivalents, plans
with respect to funding operations, projected expense levels, and the outcome of
contingencies, such as future financial results, and our negotiations with
Bristol-Myers Squibb regarding the terms of the termination of our research
collaboration and license agreement.
Any or all of our forward-looking statements in this report may turn out to
be wrong. They can be affected by inaccurate assumptions we might make or by
known or unknown risks and uncertainties. Consequently, no forward-looking
statement can be guaranteed. Actual results may vary materially. The
uncertainties that may cause differences include, but are not limited to, the
ability of the Company to obtain collaborative or licensing arrangements; the
availability of necessary funds and our ability to raise capital when needed and
on reasonable terms, or at all; the efficacy of our potential products and their
efficacy at acceptable dosage levels; developing or contracting for the
necessary manufacturing processes; gaining necessary regulatory approvals and
protecting our intellectual property including that developed through our joint
venture with Peregrine Pharmaceuticals (formerly Techniclone Corporation), ARCUS
Therapeutics, LLC, and the impact of competition and technological advances on
our planned products.
We will not update forward-looking statements, whether as a result of new
information, future events or otherwise, unless required by law. You are advised
to consult any further disclosures we make in our reports to the Securities and
Exchange Commission including our 10-Q, 8-K and 10-K reports. Our filings list
various important factors that could cause actual results to differ materially
from expected results. We note these factors for investors as permitted by the
Private Securities Litigation Reform Act of 1995. You should understand that it
is not possible to predict or identify all such factors. Consequently, you
should not consider any such list to be a complete set of all potential risks or
uncertainties.
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INDEX
Page No.
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PART I - FINANCIAL INFORMATION.................................................1
Item 1. Financial Statements.............................................1
Condensed Consolidated Balance Sheets...........................1
Condensed Consolidated Statements of Operations.................2
Condensed Consolidated Statements of Cash Flows.................3
Notes to Condensed Consolidated Financial Statements............4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................4
Item 3. Quantitative and Qualitative Disclosures about Market Risks.....10
PART II - OTHER INFORMATION...................................................11
Item 1. Legal Proceedings...............................................11
Item 2. Changes in Securities and Use of Proceeds.......................11
Item 3. Defaults upon Senior Securities.................................11
Item 4. Submission of Matters to a Vote of Security Holders.............11
Item 5. Other Information...............................................11
Item 6. Exhibits and Reports on Form 8-K................................11
Signatures....................................................................12
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
OXiGENE, Inc.
Condensed Consolidated Balance Sheets
(All amounts, except share amounts, in thousands)
(Unaudited)
September 30, December 31,
2001 2000
---- ----
Assets
Current assets:
Cash and cash equivalents $20,749 $27,063
Available-for-sale security -0- 549
Prepaid expenses 668 287
Interest receivable 105 277
Other current assets 97 61
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Total current assets 21,619 28,237
Property and equipment, at cost 939 827
Accumulated depreciation (269) (173)
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Net property and equipment 670 654
License agreements, net of accumulated amortization 2,013 2,236
Deposits 86 102
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Total assets $24,388 $31,229
======= =======
Liabilities and stockholders' equity Current liabilities:
Amount payable under license agreement - current $ 256 $ 251
Accrued expenses for research and development 834 687
Other accrued expenses 231 499
Other payables 785 494
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Total current liabilities 2,106 1,931
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Amount payable under license agreement - non-current 594 707
Deferred licensing revenue 7,045 7,445
Stockholders' equity:
Common stock, $0.01 par value:
Authorized shares - 60,000,000 shares
Issued and outstanding - 11,432,093 and 11,373,593 at
September 30, 2001 and December 31, 2000, respectively 114 114
Common stock, issuable - 0 and 42,000 shares at
September 30,2001 and December 31, 2000, respectively -0- 370
Additional paid-in capital 82,457 81,984
Accumulated deficit (64,424) (56,502)
Accumulated other comprehensive income (loss) 387 (973)
Notes receivable (3,860) (3,609)
Deferred compensation (31) (238)
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Total stockholders' equity 14,643 21,146
------- -------
Total liabilities and stockholders' equity $24,388 $31,229
======= =======
The accompanying notes are an integral part of this statement.
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OXiGENE, Inc.
Condensed Consolidated Statements of Operations
(All amounts in thousands, except per share data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2001 2000 2001 2000
---- ---- ---- ----
Revenues
Licensing revenue $ 454 $ 384 $ 1,702 $ 1,247
Interest income 123 499 641 1,477
------- ------- ------- -------
Total revenues 577 883 2,343 2,724
Expenses
Costs relating to licensing revenue 320 250 1,302 846
Amortization of license agreement 75 99 223 148
Research and development 1,096 2,048 4,368 6,305
General and administrative 1,105 885 3,764 2,349
Loss on sale and write-down of
available-for-sale security -0- 267 551 -0-
Interest expense 21 23 57 80
------- ------- ------- -------
Total expenses 2,617 3,572 10,265 9,728
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Net loss $(2,040) $(2,689) $(7,922) $(7,004)
======= ======= ======= =======
Net loss per common share $ (0.18) $ (0.24) $ (0.70) $ (0.62)
======= ======= ======= =======
Weighted average number of common
shares outstanding 11,331 11,322 11,260 11,305
======= ======= ======= =======
Net Loss $(2,040) $(2,689) $(7,922) $(7,004)
Other comprehensive loss:
Unrealized loss from available-
for-sale security including
reclassification adjustment
for loss included in net loss -0- (574) 1,451 (574)
Foreign currency translation
adjustment (67) 215 (91) (89)
------- ------- ------- -------
Total other comprehensive (loss) income (67) (359) 1,360 (663)
------- ------- ------- -------
Comprehensive loss $(2,107) $(3,048) $(6,562) $(7,667)
======= ======= ======= =======
The accompanying notes are an integral part of this statement.
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OXiGENE, Inc.
Condensed Consolidated Statements of Cash Flows
(All amounts in thousands)
(Unaudited)
Nine months ended
September 30,
2001 2000
---- ----
Operating Activities
Net loss $(7,922) $(7,004)
Adjustment to reconcile net loss to net cash (used in) provided by
operating activities:
Loss on sale and write-down of available-for-sale security 551 -0-
Depreciation 131 40
Abandonment of property and equipment 30 4
Compensation related to issuance of options and stock
appreciation rights 59 282
Amortization of licensing revenue (400) (400)
Amortization of licensing agreement 223 148
Changes in operating assets and liabilities:
Accounts receivable - license agreement -0- 9,250
Prepaid expenses and other current assets (261) 592
Accounts payable and accrued expenses 235 (1,152)
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Net cash (used in) provided by operating activities (7,354) 1,760
Financing Activities
Proceeds from issuance of common stock and capital contribution -0- 357
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Net cash provided by financing activities -0- 357
Investing Activities
Short-term investment -0- (2,000)
Amounts paid for licensing agreement (108) (1,080)
Proceeds from sale of available-for-sale security 1,449 -0-
Deposits 16 (22)
Purchase of property and equipment (188) (138)
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Net cash provided by (used in) investing activities 1,169 (3,240)
Effect of exchange rate on changes in cash (129) (66)
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Net decrease in cash and cash equivalents (6,314) (1,189)
Cash and cash equivalents at beginning of period 27,063 30,448
------- -------
Cash and cash equivalents at end of period $20,749 $29,259
======= =======
The accompanying notes are an integral part of this statement.
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OXiGENE, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2001
1. Basis of Presentation
The accompanying unaudited condensed financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States 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 accounting principles generally
accepted in the United States 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 months and nine months ended September 30, 2001 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2001.
The condensed consolidated balance sheet at December 31, 2000 has been
derived from the audited consolidated financial statements at that date but does
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
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, 2000.
2. Net Loss Per Share
Basic and diluted net loss per share was calculated in accordance with the
provisions of Statement of Financial Accounting Standards No. 128, Earnings Per
Share, by dividing the net loss per share by the weighted-average number of
shares outstanding, excluding an insignificant number of antidilutive restricted
shares. All options and warrants issued by the Company were antidilutive and,
accordingly, excluded from the calculation of weighted-average shares.
3. Stockholders' Equity
The market value of the Company's common stock at September 30, 2001 was
lower than the exercise price of issued SAR's. Accordingly, there was no
financial reporting impact for the nine months ended September 30, 2001. During
the nine months ended September 30, 2001, the Company recorded stock-based
compensation expense of approximately $0.1 million in connection with options
issued to non-employees in the prior years. In connection with the write-down
and sale of available-for-sale security in March and June 2001, respectively,
the Company reclassified from accumulated other comprehensive loss into earnings
for the nine-month period ended September 30, 2001, the related unrealized
holding loss as of December 31, 2000 of approximately $1.5 million.
4. Subsequent Event
On October 24, 2001, the Company and Bristol-Myers Squibb Company ("BMS")
mutually agreed to terminate the research and development agreement dated
December 15, 1999 between the two companies. As a result, the Company regained
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the development and patent/license rights that were subject of such agreement.
Under the termination provisions of the BMS Sub-License Agreement, the Company
regained the substantial majority of intellectual property and other rights
related to its Combretastatin compounds automatically and without payment of
consideration. However, with respect to certain limited property rights related
to intellectual property developed by BMS over the term of the collaboration,
the Company may be required to pay BMS consideration for such rights. The amount
of any payment must be mutually negotiated and agreed upon. The Company is in
the early stages of evaluating such property rights and negotiations with BMS
regarding the same and the amount of any such consideration cannot be determined
at this time. The Company does not believe any such amounts it may be required
to pay will be material.
Item.2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
This Management's Discussion and Analysis of Financial Condition and
results of Operations as of September 30, 2001 and 2000 and for the three and
nine months ended September 30, 2001 and 2000 should be read in conjunction with
the sections of our audited consolidated financial statements and notes thereto,
as well as our "Management's Discussion and Analysis of Financial Condition and
Results of Operations" that is included in our Annual Report on Form 10-K for
the year ended December 31, 2000.
Description of Business
OXiGENE is an international biopharmaceutical company engaged principally
in research into and the development of products for use in the treatment of
cancer. The Company's activities initially were directed primarily towards
products designed to complement and enhance the clinical efficacy of radiation
and chemotherapy, which are the most common and traditional forms of
non-surgical cancer treatment. In recent years, however, the Company's efforts
have focused on developing products for application as direct cancer treatment
agents, particularly vascular targeting agents ("VTA"). Additionally, the
Company is investigating whether certain of its developmental-stage products may
have a use as anti-inflammatory agents and in other applications such as
treating ocular diseases characterized by neo-vascularization and in stent
restenosis.
OXiGENE has devoted substantially all of its efforts and resources to
research and development conducted on its own behalf and through strategic
collaborations with clinical institutions and other organizations, particularly
the University of Lund (Lund, Sweden), Baylor University (Waco, Texas), the
Danish Cancer Society (Aarhus, Denmark), the Gray Laboratory Cancer Research
Trust (Middlesex, United Kingdom) and Arizona State University (Tempe, Arizona).
Consequently, OXiGENE believes that its research and development expenditures
have been somewhat lower than those of other comparable companies.
On December 15, 1999, the Company entered into a Research Collaboration and
License Agreement with Bristol-Myers Squibb Company ("BMS") to sub-license the
rights to certain patent rights and other know-how and technology to which the
Company had an exclusive license (the "Sub-License Agreement"). Pursuant to the
terms of the Sub-License Agreement, BMS paid a non-refundable license fee,
reimbursed certain expenses incurred by the Company and funded research
performed by the Company based on a research program determined by a joint
development committee. In addition, BMS was required to pay additional amounts
upon certain milestones being reached and royalties on future net sales of
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products. On October 24, 2001, the Company and BMS mutually agreed to terminate
the Sub-License Agreement. As a result the Company regained the development and
patent/license rights that were subject of such agreement. Under the termination
provisions of the BMS Sub-License Agreement, the Company regained the
substantial majority of intellectual property and other rights related to its
Combretastatin compounds automatically and without payment of consideration.
However, with respect to certain limited property rights related to intellectual
property developed by BMS over the term of the collaboration, the Company may be
required to pay BMS consideration for such rights. The amount of any payment
must be mutually negotiated and agreed upon. The Company is in the early stages
of evaluating such property rights and negotiations with BMS regarding the same
and the amount of any such consideration cannot be determined at this time. The
Company does not believe any such amounts it may be required to pay will be
material.
On May 17, 2000, the Company entered into a joint venture agreement with
Peregrine Pharmaceuticals ("Peregrine") (formerly Techniclone Corporation),
forming ARCUS Therapeutics, LLC ("ARCUS") to develop and commercialize certain
VTA technologies. Peregrine has patent rights with respect to certain VTA
technologies used in the treatment of solid tumors by disrupting the function of
the tumor vessels. These technologies focus on using antibodies to effect
targeted delivery of VTA therapies to endothelial cells in tumor blood vessels.
Under the terms of the agreement, Peregrine licenses its intellectual property
to the joint venture, and OXiGENE provided sub-licenses with respect to its next
generation Combretastatin-based tubulin-binding compounds for use in conjunction
with a Peregrine antibody and, based on the development success of the joint
venture, will be required to spend up to $20 million to fund the development
expenses of ARCUS. Any further funding of the joint venture thereafter would be
shared by the partners on an equal basis. In addition, the Company has paid
Peregrine an upfront licensing fee of $1 million in cash and purchased $2
million, or 585,009 shares, of Peregrine's common stock, all of which were sold
by June 30, 2001 with the Company recording a loss on sale and write-down of
available-for-sale security of approximately $0.6 million for the nine months
ended September 30, 2001. Under the terms of the joint venture agreement, any
sub-licensing fees generated by the joint venture initially will be allocated
75% to Peregrine and 25% to the Company until Peregrine has reached $10 million
in sub-license fee revenues. Thereafter, the joint venture partners will share
sub-licensing fees on an equal basis. The Company is required to pay Peregrine
$1 million in cash and purchase an additional $1 million in Peregrine common
stock upon the filing of an Investigational New Drug application for the first
clinical drug candidate developed by ARCUS. Furthermore, Peregrine and OXiGENE
will share equally any royalty income or profit generate by the joint venture.
In June 1999, the Company entered into a research collaboration agreement
with Active Biotech of Sweden to explore the use of OXiGENE's benzamide and
nicotinamide technology (the benzamide technology also being the platform
technology for Declopramide) in the treatment of inflammatory diseases. Under
the agreement, Active Biotech will evaluate the technology's potential as a
treatment for inflammatory diseases. Active Biotech will conduct research with
an option to jointly develop anti-inflammatory drug candidates with OXiGENE upon
successful completion of the initial research.
The Company completed the sale of its Nicoplex and Thiol test products to
CampaMed LLC ("CampaMed") on July 2, 2001. Under the terms of the agreement,
CampaMed will provide up to $3.3 million in future installment payments based
upon sales of the products. In addition, OXiGENE was granted a 10% equity
position in CampaMed.
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On July 27, 2001, the Company entered into a materials transfer agreement
with JOMED Deutchland GmbH ("JOMED") of Germany to permit JOMED to evaluate the
use of OXiGENE's vascular targeting agents in an application on cardiovascular,
coronary stents in JOMED's in vitro and animal models to prevent restenosis.
During the second quarter of 2001, the Company completed the transition of
its scientific, administrative and financial functions to its Watertown,
Massachusetts offices. As part of the move, OXiGENE Chairman and CEO, Bjorn
Nordenvall, M.D., Ph.D., relocated to Boston, Massachusetts from Sweden.
OXiGENE has generated a cumulative net loss of approximately $64.4 million
for the period from its inception through September 30, 2001. OXiGENE expects to
incur significant additional operating losses over at least the next several
years, principally as a result of its continuing clinical trials and anticipated
research and development expenditures. The principal source of OXiGENE's working
capital has been the proceeds of private and public equity financings and the
payment of exercise prices in connection with the exercise of warrants and stock
options. Prior to entering into the BMS Sub-License Agreement, the Company had
no material amount of licensing or other fee income. As of September 30, 2001,
OXiGENE had no long-term debt or loans payable except for certain liabilities
under the Sub-License Agreement.
Results of Operations - Three and Nine Months Ended September 30, 2001 and 2000
Revenues
Three Months Ended September 30, 2001 and 2000
During the three months ended September 30, 2001 and 2000, the Company had
licensing revenue of approximately $0.5 million and approximately $0.4 million,
respectively, and approximately $0.1 million and approximately $0.5 million in
interest income, respectively.
Nine Months Ended September 30, 2001 and 2000
For the nine months ended September 30, 2001 and 2000, the Company had
licensing revenue of approximately $1.7 million and approximately $1.2 million,
respectively, and approximately $0.6 million and approximately $1.5 million in
interest income, respectively. The approximate $0.5 million increase in
licensing revenue is due to approximately $1.3 million of research and
development expenses reimbursable under the BMS Sub-License Agreement in the
nine months ended September 30, 2001, compared to approximately $0.8 million in
the respective period in 2000 and, accordingly, were classified as licensing
revenue and costs relating to licensing revenue. Interest income decreased by
approximately $0.8 million between the nine-month period ending September 30,
2001 and 2000 due to substantially lower interest rates earned on monies
invested. Due to the termination of the BMS Sub-License Agreement, the Company
will receive no further licensing revenue from BMS. The Company has deferred
licensing revenue pertaining to the BMS Sub-License Agreement of approximately
$7.0 million yet to be recognized. In connection with and subject to the terms
of the termination agreement to be negotiated between the Company and BMS, the
Company expects to finalize this amount as income, net of the amount of
consideration, if any, that the Company agrees to pay BMS to acquire certain
property rights related to intellectual property developed by BMS over the term
of the collaboration. Because of declining interest rates, the continuing
general economic shutdown and a reduction in the principal amount invested over
time as the Company uses cash to fund operations, the Company expects interest
income to continue to decline and remain lower for at least the next several
quarters, and possibly longer.
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Expenses
Three Months Ended September 30, 2001 and 2000
Total expenses for the three months ended September 30, 2001 decreased
approximately $1.0 million to approximately $2.6 million compared to
approximately $3.6 million for the comparable 2000 period. Research and
development expenses decreased approximately $1.0 million to approximately $1.1
million from approximately $2.0 million for the comparable 2000 period. The
decrease in research and development expenses is attributed to lower costs
associated with the clinical trials of CA4P and Declopramide. General and
administrative expenses for the three months ended September 30, 2001 increased
approximately $0.2 million to approximately $1.1 million from approximately $0.9
million for the comparable 2000 period. The higher general and administrative
expenses related to additional administrative staffing added during the period
and new strategies concerning public relations and legal matters.
Nine Months Ended September 30, 2001 and 2000
Operating expenses for the nine months ended September 30, 2001 and 2000
were approximately $10.3 million and $9.7 million, respectively. The increase in
total expenses is primarily attributable to higher general and administrative
costs associated with the Company's new corporate headquarters in Watertown,
Massachusetts following the transfer of functions from the Company's Swedish
offices, a loss on the sale and write-down of available-for-sale security of
Peregrine of approximately $0.6 million, additional administrative staffing
needs for the period, and new strategies concerning public relations and legal
matters. Research and development expenses for the nine-month period ended
September 30, 2001 decreased approximately $1.9 million to approximately $4.4
million from approximately $6.3 million for the comparable 2000 period. The
costs associated with the Phase I clinical trials for CA4P and Declopramide were
significantly reduced for the nine-month period ended September 30, 2001 as
compared to the same period in 2000. Because the Company has made a business
decision to cease further development of Declopramide so that the Company can
focus its resources on its Combretastatin compounds, research and development
expenses related to Declopramide will decrease in the fourth quarter and cease
all together as of the end of fiscal 2001. Research and development expenses
related to the Combretastatin compounds are expected to increase in the future
as a result of the Company regaining research and development rights upon the
termination of the BMS Sub-License Agreement. The Company is actively exploring
its options in this area, including the possibility of entering into new
collaboration agreements or assuming full cost of developing its Combretastatin
compounds for an indeterminate period of time. The Company records non-cash
charges related to the stock appreciation rights ("SARs") previously granted by
the Company to certain clinical investigators and consultants and non-qualified
stock options ("NQSOs") granted to certain non-employee consultants and advisory
board members. Because the market value of the Company's common stock at
September 30, 2001 was lower than the SARs' exercise price, there were no
charges related to SARs during the nine months ended September 30, 2001.
Similarly, because the market value of the Company's common stock at September
30, 2000 was lower than the market value on December 31, 1999, the charge
related to SAR's previously recorded for financial reporting purposes decreased
by approximately $0.1 million for the nine months ended September 30, 2000.
During the nine months ended September 30, 2001 and 2000, the Company recorded
$0.1 million and approximately $0.4 million, respectively, of research and
development expenses related to the fair value of the NQSOs vested during the
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respective period. Without giving effect to the charges related to SARs or
NQSOs, research and development expenses for the nine months ended September 30,
2001 decreased by approximately $1.7 million, compared to the comparable 2000
period. Generally, the Company makes payments to its 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 SARs and NQSOs, research and development
expenses have fluctuated, and are expected to continue to fluctuate, from
quarter to quarter. General and administrative expenses for the nine-month
period ended September 30, 2001 increased approximately $1.4 million to
approximately $3.8 million compared to approximately $2.3 million for the
comparable 2000 period. The higher general and administrative expenses related
to higher costs associated with the Company's new corporate headquarters in
Watertown, Massachusetts following the transfer of functions from the Company's
Swedish offices, additional administrative staffing added during the period, and
new strategies concerning public relations and legal matters.
Liquidity and Capital Resources
Except for the year ended December 31, 2000, OXiGENE has experienced net
losses and negative cash flow from operations each year since its inception and,
as of September 30, 2001, had an accumulated deficit of approximately $64.4
million. The Company expects to incur substantial additional expenses, resulting
in significant losses, over at least the next several years due to, among other
factors, its continuing clinical trials and anticipated research and development
activities. To date, the Company has financed its operations principally through
net proceeds it has received from private and public equity financings and the
payment of exercise prices in connection with the exercise of warrants and stock
options.
The Company had cash and cash equivalents of approximately $20.7 million at
September 30, 2001, compared to approximately $27.1 million at December 31,
2000. The decrease in cash and cash equivalents of approximately $6.3 million
was primarily attributable to the funding of the basic research programs and
higher general and administrative expenses.
OXiGENE's policy is to minimize its fixed expenditures by maintaining a
relatively small number of employees and relying as much as possible on outside
services for its research, development, pre-clinical testing and clinical
trials. The Company makes quarterly payments to the University of Lund, Lund,
Sweden, and Baylor University, Waco, TX, for pre-clinical research.
The Company anticipates that its cash and cash equivalents as of September
30, 2001, should be sufficient to satisfy the Company's projected cash
requirements as of that date for the foreseeable future. However, working
capital and capital requirements may vary materially from those now planned due
to numerous factors including, but not limited to, the ability of the Company to
obtain collaborative or licensing arrangements and the principal terms of any
such agreement; progress with pre-clinical testing and clinical trials; progress
of the Company's research and development programs; the time and costs required
to obtain regulatory approvals; the amount of resources the Company devotes to
developing manufacturing methods and advanced technologies; the costs of filing,
prosecuting and, if necessary, enforcing patent claims; the cost of
commercialization activities and arrangements; and the demand for products if
and when approved. The Company anticipates that it will have to seek substantial
additional private or public financing or enter into collaborative arrangements
-9-
with one or more third parties to complete the development of any products or
bring products to market. There can be no assurance that additional financing or
the opportunity for collaborations will be available on acceptable terms, if at
all. The Company had no material commitments for capital expenditures as of
September 30, 2001.
Tax Matters
As of December 31, 2000, the Company had net operating loss carryforwards
of approximately $76.8 million for U.S. and foreign income tax purposes, of
which approximately $45.9 million expires for U.S. purposes through 2020. The
utilization of approximately $2.5 million of such U.S. net operating losses is
subject to an annual limitation, pursuant to Section 382 of the U.S. Internal
Revenue Code, of approximately $350,000.
Item 3. Quantitative and Qualitative Disclosures about Market Risks
The Company's cash and cash equivalents are maintained primarily in U.S.
dollar accounts and amounts payable for research and development to research
organizations are contracted in U.S. dollars. Accordingly, the Company's
exposure to foreign currency risk is limited because its transactions are
primarily based in U.S. dollars. The Company does not have any other exposure to
market risk. The Company will develop policies and procedures to manage market
risk in the future as circumstances may require.
-10-
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no material suits or claims pending or, to the best of the Company's
knowledge, threatened against the Company.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
None.
(b) Reports on Form 8-K.
On August 24, 2001, the Company filed a report on Form 8-K
stating under Item 5 that the Company had issued two press
releases on August 20, 2001, -- first providing an interim update
on the Company's collaboration with Bristol-Myers Squibb to
develop Combretastatin compounds as anti-tumor agents and the
second announcing that the Company would conduct a conference
call on August 20, 2001, to comment on the development of
Combretastatin as an anti-tumor agent. Copies of the two press
releases and a transcript of the August 20, 2001, conference call
were attached as exhibits to the Form 8-K.
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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.
(Registrant)
Date: November 14, 2001 By: /s/ Frederick W. Driscoll
-----------------------------------------
Frederick W. Driscoll,
President of Operations
and Finance (Principal Financial
and Accounting Officer)
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