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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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: June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-19117
IMMULOGIC PHARMACEUTICAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 13-3397957
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
610 Lincoln Street, Waltham, MA 02154
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 466-6000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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 requirement for the past 90 days.
Yes X No
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Number of shares of $.01 par value common stock outstanding as of
June 30, 1996 20,223,063
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Exhibit Index is on Page 10
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IMMULOGIC PHARMACEUTICAL CORPORATION
INDEX TO FORM 10-Q
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Page No.
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PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements 3
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Condensed Consolidated Balance Sheets 3
June 30, 1996 and December 31, 1995
Condensed Consolidated Statements of Operations 4
Three and Six Months Ended June 30, 1996 and 1995
Condensed Consolidated Statements of Cash Flows 5
Six Months Ended June 30, 1996 and 1995
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 7
- ------- Condition and Results of Operations
PART II. OTHER INFORMATION
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Item 4. Submission of Matters to a Vote of Security Holders 9
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Item 6. Exhibits 10
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Reports on Form 8-K 10
SIGNATURES 11
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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IMMULOGIC PHARMACEUTICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
June 30, 1996 December 31, 1995
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(Unaudited)
ASSETS
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Current assets:
Cash and cash equivalents $ 12,317 $ 19,067
Short-term investments 34,901 41,921
Prepaid expenses and other current assets 1,198 732
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Total current assets 48,416 61,720
Property and equipment, net 9,959 10,834
Long-term investments 29,172 24,972
Other assets 49 53
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Total assets $ 87,596 $ 97,579
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LIABILITIES
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Current liabilities:
Accounts payable $ 1,632 $ 895
Accrued expense and other current liabilities 6,315 6,724
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Total current liabilities 7,947 7,619
Other long-term liabilities 375 425
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Total liabilities: 8,322 8,044
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STOCKHOLDERS' EQUITY
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Preferred stock - $.01 par value;
1,000,000 shares authorized; no shares issued or outstanding
Common stock - $.01 par value; 40,000,000 shares authorized; - -
20,223,063 and 19,924,471 shares issued and outstanding at
June 30, 1996 and December 31, 1995, respectively 202 199
Additional paid-in capital 184,790 183,796
Less deferred compensation - (14)
Accumulated deficit (105,718) (94,446)
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Total stockholders' equity 79,274 89,535
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Total liabilities and stockholders' equity $ 87,596 $ 97,579
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The accompanying notes are an integral part of the condensed consolidated
financial statements.
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IMMULOGIC PHARMACEUTICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
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Revenues:
License fees - - - $ 5,000
Sponsored research revenues $ 625 $ 745 $ 1,250 1,406
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Total revenues 625 745 1,250 6,406
Operating expenses:
Research and development 5,978 6,400 12,085 12,705
General and administrative 1,517 1,595 2,985 3,141
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Total operating expenses 7,495 7,995 15,070 15,846
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Operating loss (6,870) (7,250) (13,820) (9,440)
Interest income 1,277 935 2,548 1,725
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Net loss $(5,593) $(6,315) $(11,272) $(7,715)
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Net loss per common share $ (0.28) $ (0.39) $ (0.56) $ (0.49)
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Weighted average number of
common shares outstanding 20,217 16,083 20,194 15,647
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The accompanying notes are an integral part of the condensed consolidated
financial statements.
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IMMULOGIC PHARMACEUTICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Six Months Ended June 30,
1996 1995
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Operating activities:
Net loss $(11,272) $(7,715)
Depreciation and amortization 1,321 1,943
Other (184) 238
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Net cash used in operating activities (10,135) (5,534)
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Investing activities:
Purchase of equipment and leasehold improvements (432) (183)
Net change in short-term investments 7,020 (9,975)
Net change in long-term investments (4,200) 2,379
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Net cash provided by (used in) investing activities 2,388 (7,779)
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Financing activities:
Issuance of common stock - 8,000
Exercise of stock options 997 23
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Net cash provided by financing activities 997 8,023
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Net decrease in cash and cash equivalents (6,750) (5,290)
Cash and cash equivalents, beginning of period 19,067 13,608
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Cash and cash equivalents, end of period $ 12,317 $ 8,318
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The accompanying notes are an integral part of the condensed consolidated
financial statements.
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IMMULOGIC PHARMACEUTICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note A - Basis of Presentation
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The accompanying unaudited condensed consolidated financial statements reflect
all adjustments which are necessary, in the opinion of management, for a fair
presentation of results of the interim periods presented. The statements do not
include all information and footnote disclosures required by generally accepted
accounting principles and therefore should be read in conjunction with the
consolidated financial statements and footnotes included in the Company's 1995
Annual Report. The results of operations for the interim periods presented are
not necessarily indicative of the results of operations for the full fiscal
year.
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IMMULOGIC PHARMACEUTICAL CORPORATION
Item 2.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
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Revenues for the second quarter of 1996 were $625,000 compared to $745,000 for
the second quarter of 1995. For the first six months of 1996, revenues were
$1,250,000 consisting of research funding from Schering AG, Germany related to a
joint development and collaboration agreement in the Company's multiple
sclerosis program. In the comparable 1995 period, revenues were $6,406,000,
which included the last of three scheduled annual $5,000,000 license payments
from Hoechst Marion Roussell, Inc. (HMRI).
Total operating expenses for the second quarter of 1996 decreased $500,000 or
6.3% to $7,495,000 as compared to the second quarter of 1995. On a year-to-date
basis, total expenses decreased by $776,000 or 4.9% to $15,070,000 as compared
to the corresponding six-month 1995 period. The decrease in operating expenses
in both the three and six-month periods was primarily due to reduced headcount
and associated costs resulting from the Company's closing of its Palo Alto,
California research facility during the second quarter of 1995. This reduction
in operating expenses was partially offset by increased costs incurred in the
clinical trial program with respect to the Company's ALLERVAX[Registered
Trademark] CAT and ALLERVAX[Registered Trademark] RAGWEED products and the
associated cost of manufacturing these products for the clinical trial program.
Interest income for the second quarter of 1996 was $1,277,000 compared to
$935,000 for the second quarter of 1995, an increase of $342,000 or 36.6%. For
the first six months of 1996, interest income was $2,548,000 compared to
$1,725,000, an increase of $823,000 or 47.7%. The increase in interest income
for both the quarter and year-to-date resulted from a higher available
investment balance as compared to the prior year, as well as interest payments
received from HMRI relating to capital expenditures made by the Company to
manufacture the ALLERVAX[Registered Trademark] family of therapeutics.
The Company reported a net loss of $5,593,000 ($(0.28) per share) for the second
quarter of 1996 compared to a net loss of $6,315,000 ($(0.39) per share) for the
comparable 1995 period. For the first six months of 1996, the Company reported a
net loss of $11,272,000 ($(0.56) per share) compared to a net loss of $7,715,000
($(0.49) per share) for the comparable 1995 period. The increased net loss for
the six-month period was due to the receipt in 1995 of the last of three
scheduled annual $5,000,000 license payments from HMRI, offset in part by higher
interest income earned on the Company's investments and lower operating costs as
a result of the consolidation of the Company's research operations to Waltham,
Massachusetts during the second quarter of 1995.
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IMMULOGIC PHARMACEUTICAL CORPORATION
Item 2. - Continued
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Liquidity and Capital Resources
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At June 30, 1996, the Company had $40,469,000 of working capital consisting
primarily of cash and cash equivalents and short-term investments, as compared
to $54,101,000 at December 31, 1995. In addition, the Company had $29,172,000 in
long-term investments compared to $24,972,000 at December 31, 1995. The decrease
of $13,632,000 in working capital was primarily attributable to cash used in
operations of $10,135,000 and capital purchases of $432,000 offset in part by
stock option exercises of $997,000.
On March 7, 1996, the Company received notification from HMRI of its withdrawal
from its joint collaboration with the Company, effective September 7, 1996. The
Company and HMRI are working together to effect an orderly transition of
responsibilities. Under the terms of the agreement, upon termination of the
collaboration, the Company will reacquire all ownership rights to it's
ALLERVAX[Registered Trademark] allergy program.
The Company expects to incur losses for at least a number of years as the
Company's research, development, and clinical trial programs continue. ImmuLogic
has funded its operations to date primarily through the sale of equity
securities, sponsored research revenues, license payments, and earnings on
invested capital. The Company has expended substantial funds for the research
and development of its products, and will in the future expend substantial funds
for further research and development, establishment of commercial-scale
manufacturing capabilities, and the marketing of its products. The Company will
seek to obtain additional funds for these purposes through equity or debt
financings, collaborative arrangements with corporate partners, or from other
sources. No assurance can be given that such additional funds will be available
to the Company for such purposes on acceptable terms, if at all. Insufficient
funds could require the Company to delay, scale back, or eliminate certain of
its research and development programs or to license third parties to
commercialize products or technologies that the Company would otherwise develop
or commercialize itself.
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Securities Holders
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At the Annual Meeting of Stockholders on May 23, 1996, the vote with respect to
the election of six directors to the Board, consisting of Malcolm L. Gefter,
Robert J. Gerety, Alan J. Dalby, M Howard Jacobson, Kenneth L. Melmon, and Larry
Soll, was 17,959,160 shares FOR and 410,867 shares WITHHELD for all nominees.
The vote with respect to amending the Restated Certificate of Incorporation of
the Company to increase the number of authorized shares of common stock from
30,000,000 to 40,000,000 was 17,016,540 shares FOR, 1,130,471 shares AGAINST,
15,675 shares ABSTAINING and 207,341 shares subject to BROKER NON-VOTES. The
vote with respect to amending the Company's Restated Certificate of
Incorporation providing for the classification of the Board of Directors of the
Company into three classes with each class holding office for staggered three
year terms was 8,423,324 shares FOR, 6,246,675 shares AGAINST, 26,209 shares
ABSTAINING and 3,673,809 shares subject to BROKER NON-VOTES. The vote with
respect to approving the Company's 1996 Stock Option Plan was 10,802,014 shares
FOR, 7,199,768 shares AGAINST, 34,763 shares ABSTAINING and 315,482 shares
subject to BROKER NON-VOTES. The vote with respect to amending the Company's
1993 Director's Stock Option Plan increasing from 200,000 to 300,000 the number
of shares reserved for issuance under the plan was 13,788,712 shares FOR,
4,227,872 shares AGAINST, 37,961 shares ABSTAINING and 315,482 shares subject to
BROKER NON-VOTES. The vote with respect to ratifying the selection of Coopers
and Lybrand L.L.P. as the Company's independent auditors for the current year
was 18,329,120 shares FOR, 26,927 shares AGAINST and 13,980 shares ABSTAINING.
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Item 6. Exhibits and Reports on Form 8-K
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(a) EXHIBITS:
Exhibit
Number Exhibit
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3.01 Amended and Restated Certificate of
Incorporation, as amended
10.01 Consulting Agreement dated July 11, 1996
between the Registrant and Daniel A. Cuoco
10.02 Amendment to Company's 1993 Director's
Stock Option Plan
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
No Current Reports on Form 8-K were filed during the quarter ended
June 30, 1996.
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SIGNATURES
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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.
IMMULOGIC PHARMACEUTICAL CORPORATION
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(Registrant)
Date: August 8, 1996 /s/ Robert J. Gerety
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Robert J. Gerety, M.D., Ph.D.
President and Chief Executive Officer
Date: August 8, 1996 /s/ Richard N. Small
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Richard N. Small
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
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