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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, 1997
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 0-19117
IMMULOGIC PHARMACEUTICAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3397957
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
610 Lincoln Street, Waltham, MA 02154
(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
Number of shares of $.01 par value common stock outstanding as of June 30, 1997
20,242,640
Exhibit Index is on Page 10
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IMMULOGIC PHARMACEUTICAL CORPORATION
INDEX TO FORM 10-Q
Page No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 3
June 30, 1997 and December 31, 1996
Condensed Consolidated Statements of Operations 4
Three and Six Months Ended June 30, 1997 and 1996
Condensed Consolidated Statements of Cash Flows 5
Six Months Ended June 30, 1997 and 1996
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
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 6. Exhibits 10
Reports on Form 8-K 10
SIGNATURES 11
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
IMMULOGIC PHARMACEUTICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands)
June 30, 1997 December 31, 1996
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ASSETS
------
Current assets:
Cash and cash equivalents $ 19,654 $ 23,742
Short-term investments 30,806 30,881
Prepaid expenses and other current assets 885 625
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Total current assets 51,345 55,248
Property and equipment, net 8,203 8,933
Long-term investments 7,186 15,424
Other assets 49 49
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Total assets $ 66,783 $ 79,654
========= =========
LIABILITIES
-----------
Current liabilities:
Accounts payable $ 736 $ 789
Accrued expense and other current liabilities 5,331 6,564
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Total current liabilities 6,067 7,353
Other long-term liabilities 325 375
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Total liabilities: 6,392 7,728
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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; 20,242,640 and 20,224,516 shares issued
and outstanding at June 30, 1997 and
December 31, 1996,
respectively 202 202
Additional paid-in capital 185,131 185,040
Accumulated deficit (124,942) (113,316)
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Total stockholders' equity 60,391 71,926
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Total liabilities and stockholders' equity $ 66,783 $ 79,654
========= =========
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,
--------------------------- -------------------------
1997 1996 1997 1996
Revenues:
Sponsored research revenues $ 368 $ 625 $ 920 $ 1,250
----------- ----------- ----------- ----------
Total revenues 368 625 920 1,250
Operating expenses:
Research and development 5,113 5,978 10,004 12,085
General and administrative 1,396 1,517 4,284 2,985
----------- ----------- ----------- -----------
Total operating expenses 6,509 7,495 14,288 15,070
----------- ----------- ---------- ----------
Operating loss (6,141) (6,870) (13,368) (13,820)
Interest income 851 1,277 1,742 2,548
----------- ---------- ----------- -----------
Net loss $ (5,290) $ (5,593) $ (11,626) $ (11,272)
========== ========== ========== ==========
Net loss per common share $ (0.26) $ (0.28) $ (0.57) $ (0.56)
=========== =========== =========== ===========
Weighted average number of
common shares outstanding 20,242 20,217 20,241 20,194
========== ========== ========== ==========
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,
-------------------------
1997 1996
Operating activities:
Net loss $(11,626) $(11,272)
Depreciation and amortization 1,319 1,321
Other (1,512) (184)
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Net cash used in operating activities (11,819) (10,135)
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Investing activities:
Purchase of equipment and leasehold improvements (588) (432)
Net change in short-term investments 75 7,020
Net change in long-term investments 8,238 (4,200)
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Net cash provided by investing activities 7,725 2,388
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Financing activities:
Exercise of stock options 6 997
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Net cash provided by financing activities 6 997
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Net decrease in cash and cash equivalents (4,088) (6,750)
Cash and cash equivalents, beginning of period 23,742 19,067
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Cash and cash equivalents, end of period $ 19,654 $ 12,317
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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
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 1996
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.
Note B - Work Force Reduction
On June 17, 1997, ImmuLogic announced that it had reduced its work force and
restructured its operations in accordance with its intent to focus development
efforts on the ALLERVAX(R) allergy program. The 28% reduction, or 39 positions,
left the Company with 94 full-time employees. As a result of the reduction and
restructuring, the Company recorded a $650,000 one-time charge during the second
quarter of 1997, consisting primarily of severance payments provided to
employees whose positions were eliminated as a result of the work force
reduction. A substantial amount of the $650,000 charge was paid during the
second quarter of 1997. This work force reduction and restructuring of
operations is expected to result in annualized savings to the Company of
approximately $2.6 million.
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IMMULOGIC PHARMACEUTICAL CORPORATION
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Revenues for the second quarter of 1997 were $368,000 compared to $625,000 for
the second quarter of 1996. For the first six months of 1997, revenues were
$920,000 consisting primarily of research funding from Schering AG, Germany
(Schering) related to a joint development and collaboration agreement in the
Company's multiple sclerosis program and sponsored research revenues from the
National Institute of Health (NIH) for a grant related to the research and
development of a cocaine vaccine. For the first six months of 1996, revenues
were $1,250,000, consisting entirely of research funding from Schering related
to the aforementioned joint development and collaboration agreement in the
Company's multiple sclerosis program.
Total operating expenses for the second quarter of 1997 decreased $986,000 or
13.2% to $6,509,000 as compared to the second quarter of 1996. On a year-to-date
basis, total expenses decreased by $782,000 or 5.2% to $14,288,000 as compared
to the first six months of 1996. The decrease in operating expenses in both the
three and six-month periods was primarily due to reduced clinical trial and
related development activity as compared to the prior year offset in part by
severance paid to former executive officers of the Company and severance paid to
former employees in connection with the work force reduction which occurred
during the second quarter of 1997.
Interest income for the second quarter of 1997 was $851,000 compared to
$1,277,000 for the second quarter of 1996, a decrease of $426,000 or 33.4%. For
the first six months of 1997, interest income was $1,742,000 compared to
$2,548,000 for the first six months of 1996, a decrease of $806,000 or 31.6%.
The decrease in interest income for both the quarter and year-to-date resulted
from a lower available investment balance as compared to the prior year as well
as interest payments received from Hoechst Marion Roussel, Inc. during the prior
year period related to capital expenditures made by the Company to manufacture
the ALLERVAX(R) family of therapeutics. These interest payments to the Company
ended as of September 7, 1996.
The Company reported a net loss of $5,290,000 ($(0.26) per share) for the second
quarter of 1997 compared to a net loss of $5,593,000 ($(0.28) per share) for the
second quarter of 1996, a decrease of $303,000 or 5.4%. The decrease in net loss
for the period resulted primarily from reduced clinical trial and related
development activity as compared to the prior year, offset in part by severance
paid to former executive officers of the Company, severance paid in connection
with the work force reduction which occurred during the second quarter of 1997
and lower interest income. For the first six months of 1997, the Company
reported a net loss of $11,626,000 ($(0.57) per share) compared to a net loss of
$11,272,000 ($0.56) per share) for the comparable 1996 period. The increased net
loss for the six-month period was due to severance paid to former executive
officers of the Company, severance paid to former employees in connection with
the work force reduction which occurred during the second quarter of 1997
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and lower interest income offset by savings resulting from reduced clinical
trial and related development activity.
Liquidity and Capital Resources
At June 30, 1997, the Company had $45,278,000 of working capital consisting
primarily of cash and cash equivalents and short-term investments, as compared
to $47,895,000 at December 31, 1996. In addition, the Company had $7,186,000 in
long-term investments compared to $15,424,000 at December 31, 1996. The decrease
of $10,855,000 in working capital and long-term investments combined was
primarily attributable to cash used in operations of $11,819,000 and capital
purchases of $588,000.
In May 1997 the Company reported receipt of a $2.2 million cooperative award
from the National Institute on Drug Abuse (NIDA) to fund preclinical and initial
clinical evaluation of a cocaine vaccine to be completed over the next four
years. No revenues have been earned or cash received from this award during the
first six months of 1997.
The Company expects to incur losses for at least a number of years as the
Company's research, development, and clinical trial programs expand. 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.
This Quarterly Report on Form 10-Q contains forward-looking statements. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "believes," "anticipates," "plans," expects," intends" and
similar expressions are intended to identify forward-looking statements. There
are a number of important factors that could affect the future operating results
of the Company, including, without limitation, the factors set forth in the
preceding paragraph with respect to availability of funds and those set forth
under the heading "Factors Which May Affect Future Operating Results" and
elsewhere in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, as filed with the Securities and Exchange Commission, and the
information contained in this Quarterly Report on Form 10-Q should be read in
light of such factors.
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Securities Holders
At the Annual Meeting of Stockholders held on May 13, 1997, the vote with
respect to the election of seven directors to the Board was as follows; C.
Garrison Fathman, M.D., 19,005,458 shares FOR and 91,728 shares WITHHELD; Samuel
C. Fleming, 19,017,508 shares FOR and 79,678 shares WITHHELD; Paul A. Friedman,
M.D., 19,018,898 shares FOR and 78,288 shares WITHHELD; Carl S. Goldfischer,
M.D., 19,017,933 shares FOR and 79,253 shares WITHHELD; Geraldine A. Henwood,
19,015,564 shares FOR and 81,622 shares WITHHELD; J. Joseph Marr, M.D.,
19,017,608 shares FOR and 79,578 shares WITHHELD; and Richard F. Pops,
19,014,908 shares FOR and 82,278 shares WITHHELD. 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 19,015,064 shares FOR, 50,135
shares AGAINST and 31,987 shares ABSTAINING.
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Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS:
Exhibit
Number Exhibit
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10.01 Consulting Agreement dated May 13, 1997
between the Registrant and J. Richard Crowley
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, 1997.
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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.
IMMULOGIC PHARMACEUTICAL CORPORATION
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(Registrant)
Date: 8/1/97 J. Joseph Marr, M.D.
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J. Joseph Marr, M.D.
Chief Operating Officer
Date: 8/1/97 J. Richard Crowley
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J. Richard Crowley
Chief Financial Officer
(Principal Financial and Accounting Officer)
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