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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 period ended September 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
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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
--- ---
Number of shares of $.01 par value common stock outstanding as of
October 23, 1997 20,340,727
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Page 1 of 12
Exhibit Index is on Page 10
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IMMULOGIC PHARMACEUTICAL CORPORATION
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION Page No.
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Item 1. Condensed Consolidated Financial Statements and Notes
Condensed Consolidated Balance Sheets 3
September 30, 1997 and December 31, 1996
Condensed Consolidated Statements of Operations 4
Three and Nine Months Ended September 30, 1997
and 1996
Condensed Consolidated Statements of Cash Flows 5
Nine Months Ended September 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 6. Exhibits 10
Reports on Form 8-K 10
SIGNATURES 11
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PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
IMMULOGIC PHARMACEUTICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands)
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 7,221 $ 23,742
Short-term investments 29,087 30,881
Prepaid expenses and other current assets 623 625
--------- ---------
Total current assets 36,931 55,248
Property and equipment, net 7,781 8,933
Long-term investments 18,006 15,424
Other assets 49 49
--------- ---------
Total assets $ 62,767 $ 79,654
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 377 $ 789
Accrued expense and other current liabilities 4,335 6,564
--------- ---------
Total current liabilities 4,712 7,353
Other long-term liabilities 325 375
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Total liabilities 5,037 7,728
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Stockholders' equity:
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; 20,340,727 and 20,224,516 shares issued
and outstanding at September 30, 1997 and
December 31, 1996, respectively 203 202
Additional paid-in capital 185,251 185,040
Accumulated deficit (127,724) (113,316)
--------- ---------
Total stockholders' equity 57,730 71,926
--------- ---------
Total liabilities and stockholders' equity $ 62,767 $ 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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
------- ------- -------- --------
Revenues:
Sponsored research revenues $ 462 $ 762 $ 1,382 $ 2,012
------- ------- -------- --------
Total revenues 462 762 1,382 2,012
Operating expenses:
Research and development 3,113 7,447 13,117 19,532
General and administrative 965 1,785 5,249 4,770
------- ------- -------- --------
Total operating expenses 4,078 9,232 18,366 24,302
------- ------- -------- --------
Operating loss (3,616) (8,470) (16,984) (22,290)
Interest income 834 974 2,576 3,522
------- ------- -------- --------
Net loss $(2,782) $(7,496) $(14,408) $(18,768)
======= ======= ======== ========
Net loss per common share $ (0.14) $ (0.37) $ (0.71) $ (0.93)
======= ======== ========
Weighted average number of
common shares outstanding 20,270 20,232 20,251 20,207
======= ======= ======== ========
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)
NINE MONTHS
ENDED SEPTEMBER 30,
1997 1996
-------- --------
Cash flows for operating activities:
Net loss $(14,408) $(18,768)
Adjustments used to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 1,768 1,960
Write off of offering costs - 17
401(k) employer stock match 135 151
Change in assets and liabilities:
Prepaid and other current assets 2 (901)
Other assets - 5
Accounts payable (412) 229
Accrued expenses (2,229) (34)
Other liabilities - non current (50) (50)
-------- --------
Total adjustments (786) 1,377
-------- --------
Net cash used in operating activities (15,194) (17,391)
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Cash flows from investing activities:
Purchase of equipment and leasehold improvements (609) (550)
Purchase of short-term investments (30,222) (42,729)
Redemption of short-term investments 32,016 55,369
Purchase of long-term investments (14,042) (6,112)
Redemption of long-term investments 11,460 3,766
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Net cash provided by (used in) investing activities (1,397) 9,744
-------- --------
Cash flows from financing activities:
Proceeds from exercise of stock options 70 908
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Net cash provided by financing activities 70 908
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Net decrease in cash and cash equivalents (16,521) (6,739)
Cash and cash equivalents, beginning of period 23,742 19,067
-------- --------
Cash and cash equivalents, end of period $ 7,221 $ 12,328
======== ========
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
September 30, 1997
(unaudited)
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.
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ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
REVENUES
Revenues for the third quarter of 1997 were $462,000 compared to $762,000 for
the third quarter of 1996. For the first nine months of 1997, revenues were
$1,382,000. Revenues for the first nine months of 1996 were $2,012,000. In both
periods, revenues consisted 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.
OPERATING EXPENSES
For the quarter ended September 30, 1997, the Company's research and development
expenses decreased $4,334,000 or 58.2% to $3,113,000 from $7,447,000 for the
same period in 1996. Research and development expenses for the nine months ended
September 30, 1997 and September 30, 1996 were $13,117,000 and $19,532,000,
respectively. The decrease in research and development expenses in both periods
is due primarily to reduced clinical trial and related development activity as
compared to prior year and headcount and related cost savings resulting from the
work force reduction which occurred during the second quarter of 1997.
General and administrative expenses were $965,000 and $1,785,000 for the
quarters ended September 30, 1997 and 1996, respectively, representing a
decrease of $820,000 or 45.9%. The decrease was primarily due to headcount and
related cost savings resulting from the work force reduction which occurred
during the second quarter of 1997. General and administrative expenses were
$5,249,000 for the first nine months of 1997 as compared to $4,770,000 for the
same time period in 1996, an increase of $479,000 or 10.0%. The increase was
primarily due to severance paid during 1997 to former executive officers of the
Company offset in part by headcount and related cost savings resulting from the
aforementioned work force reduction.
INTEREST INCOME
Interest income for the third quarter of 1997 was $834,000 compared to $974,000
for the third quarter of 1996, a decrease of $140,000 or 14.4%. For the first
nine months of 1997, interest income was $2,576,000 compared to $3,522,000 for
the first nine months of 1996, a decrease of $946,000 or 26.9%. The decrease in
interest income for both the quarter and year-to-date resulted primarily from a
lower available investment balance as compared to the prior year. In addition,
the year-to-date decrease resulted from 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.
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NET LOSS
The Company reported a net loss of $2,782,000 ($(0.14) per share) for the third
quarter of 1997 compared to a net loss of $7,496,000 ($(0.37) per share) for the
third quarter of 1996, a decrease of $4,714,000 or 62.9%. The decrease in net
loss for the period resulted primarily due to reduced clinical trial and related
development activity as compared to prior year and headcount and related cost
savings resulting from the work force reduction which occurred during the second
quarter of 1997 offset in part by lower interest income for the quarter. For the
first nine months of 1997, the Company reported a net loss of $14,408,000
($(0.71) per share) compared to a net loss of $18,768,000 ($0.93) per share) for
the comparable 1996 period. The decrease in the net loss for the nine-month
period was due to reduced clinical trial and related development activity as
compared to prior year and headcount and related cost savings resulting from the
work force reduction which occurred during the second quarter of 1997 offset in
part by severance paid to former executive officers of the Company, severance
paid to former employees in connection with the work force reduction, and lower
interest income.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents and investments were $54,314,000 at September 30, 1997
compared to $70,047,00 at December 31, 1996. During the remainder of 1997, the
Company expects to incur expenses consistent with the amounts incurred during
the third quarter of 1997.
Net cash used in operations for the nine months ended September 30, 1997 was
$15,194,000 as compared to $17,391,000 in the comparable 1996 period. The
decrease of $2,197,000 was due primarily to reduced clinical trial and related
development activity as compared to prior year and headcount and related cost
savings resulting from the work force reduction which occurred during the second
quarter of 1997. Offsetting these savings was a decrease in current liabilities
of $2,229,000 due to the payment of expenses accrued as of December 31, 1996 and
reduced clinical trial and related activity for the first nine 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. The Company
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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FORWARD LOOKING STATEMENTS
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 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit:
Exhibit
Number Exhibit Page No.
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27 Financial Data Schedule 11
(b) Reports on Form 8-K: No Current Reports on Form 8-K
were filed during the quarter
ended September 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: 11/11/97 /s/ J. Joseph Marr
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J. Joseph Marr, M.D.
Chief Operating Officer
Date: 11/11/97 /s/ J. Richard Crowley
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J. Richard Crowley
Chief Financial Officer
(Principal Financial and Accounting Officer)
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