1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: SEPTEMBER 30, 1998 Commission File No. 0-19193
CAMBRIDGE NEUROSCIENCE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3319074
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
ONE KENDALL SQUARE, BUILDING 700
CAMBRIDGE, MA 02139
(Address of principal executive offices including zip code)
617-225-0600
(Registrant's telephone number, including area code)
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
--- ---
At October 31, 1998, 18,071,459 shares of Common Stock, par value $.001 per
share, were issued and outstanding.
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CAMBRIDGE NEUROSCIENCE, INC.
INDEX
PAGE
PART I - FINANCIAL INFORMATION NUMBER
- ------------------------------- ------
ITEM 1 - FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
at September 30, 1998 and December 31, 1997 3
Condensed Consolidated Statements of Operations for the
three and nine months ended September 30, 1998 and 1997 4 - 5
Condensed Consolidated Statements of Cash Flows
for the nine months ended September 30, 1998 and 1997 6
Notes to Condensed Consolidated Financial Statements 7 - 8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8 - 13
PART II - OTHER INFORMATION
- ---------------------------
ITEM 5 - OTHER INFORMATION 14
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 14
SIGNATURES 15
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CAMBRIDGE NEUROSCIENCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
ASSETS (unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 7,473 $ 12,020
Marketable securities 6,891 26,561
Prepaid expenses and other current assets 722 1,575
--------- ---------
TOTAL CURRENT ASSETS 15,086 40,156
Equipment, Furniture and Fixtures, net 448 735
--------- ---------
$ 15,534 $ 40,891
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 1,786 $ 3,668
Research and development advances 1,478 2,900
--------- ---------
TOTAL CURRENT LIABILITIES 3,264 6,568
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01, 10,000
shares authorized; none issued - -
Common stock, par value $.001, 30,000
shares authorized; 18,057 shares issued
and outstanding at September 30, 1998;
17,858 at December 31, 1997 18 18
Additional paid-in capital 120,072 137,787
Accumulated deficit (107,820) (103,482)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 12,270 34,323
========= =========
$ 15,534 $ 40,891
========= =========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
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CAMBRIDGE NEUROSCIENCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1998 1997
--------- ---------
Revenues
Research and development $ 1,422 $ 817
Operating expenses
Research and development 1,233 4,442
General and administrative 288 670
-------- --------
1,521 5,112
-------- --------
Loss from operations (99) (4,295)
Interest income 201 632
-------- --------
Net income (loss) $ 102 $ (3,663)
======== ========
Basic and diluted net income (loss)
per common share $ 0.01 $ (0.21)
======== ========
Number of shares outstanding for purposes of
computing basic and diluted net income (loss)
per share 18,022 17,820
======== ========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
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CAMBRIDGE NEUROSCIENCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1998 1997
--------- ---------
Revenues
Research and development $ 1,973 $ 3,011
Operating expenses
Research and development 5,150 13,989
General and administrative 1,227 2,058
Restructuring costs 921 -
-------- --------
7,298 16,047
-------- --------
Loss from operations (5,325) (13,036)
Interest income 987 1,816
-------- --------
Net loss $ (4,338) $(11,220)
======== ========
Basic and diluted net loss per common share $ (0.24) $ (0.64)
======== ========
Number of shares outstanding for purposes of
computing basic and diluted net loss per share 17,945 17,411
======== ========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
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CAMBRIDGE NEUROSCIENCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
NINE MONTHS ENDED SEPTEMBER 30,
-------- --------
1998 1997
-------- --------
OPERATING ACTIVITIES
Net loss $ (4,338) $(11,220)
Expenses not requiring cash:
Depreciation and amortization 266 666
Common stock issued pursuant to an
employee benefit plan 135 178
-------- --------
(3,937) (10,376)
Changes in current assets and liabilities:
Prepaid expenses and other current assets 853 (154)
Accounts payable and accrued expenses (1,882) 90
Research and development advances (1,422) (2,471)
-------- --------
(2,451) (2,535)
-------- --------
Cash used for operating activities (6,388) (12,911)
INVESTING ACTIVITIES
Purchase of marketable securities (11,878) (31,040)
Sale of marketable securities 31,548 -
Purchase of equipment, furniture and fixtures (18) (245)
Disposals of equipment, furniture and fixtures 39 -
-------- --------
Cash provided by (used for) investing activities 19,691 (31,285)
FINANCING ACTIVITIES
Sales of common stock, net of offering
costs and repurchases 57 28,284
Dividend (17,907) -
-------- --------
Cash (used for) provided by financing activities (17,850) 28,284
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,547) (15,912)
Cash and cash equivalents at beginning of period 12,020 26,664
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,473 $ 10,752
======== ========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
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CAMBRIDGE NEUROSCIENCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Cambridge NeuroScience, Inc. (the "Company") as of September 30, 1998 and for
the three and nine month periods ended September 30, 1998 and 1997 have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q. 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, the accompanying consolidated financial statements include all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of the financial position, results of operations and cash flows for
the periods presented. The results of operations for the nine-month period ended
September 30, 1998 are not necessarily indicative of the results expected for
the full fiscal year.
The consolidated financial statements presented as of December 31, 1997 are
derived from the audited financial statements and footnotes thereto, included in
the Company's Annual Report on Form 10-K (File number 0-19193).
The Company is engaged in the development of proprietary pharmaceuticals to
prevent, reduce or reverse damage caused by severe disorders of and injuries to
the nervous system.
2. BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share is based on the weighted-average number
of common shares outstanding during each of the periods. Common equivalent
shares from stock options are excluded as their effect is antidilutive. For the
three month period ended September 30, 1998, the average exercise price of
options outstanding during that period was less than the average market price
for the quarter. Therefore, these options were not included in the computation
of net income per share for the third quarter of 1998 as their effect would be
antidilutive.
3. RESEARCH AND DEVELOPMENT REVENUE
The Company recognizes research and development revenue as earned and such
revenue represents reimbursement of the Company's expenditures pursuant to the
terms of two collaboration agreements. In November 1996, the Company entered
into a collaboration agreement with Allergan, Inc. ("Allergan") for the
development of treatments for ophthalmic disorders, including glaucoma. Pursuant
to this agreement, Allergan provides $1.0 million in research funding per year
through November 1999. Revenue pursuant to this agreement is recognized as
payments are received, on a quarterly basis.
In 1995, the Company entered into a collaboration with Boehringer Ingelheim
International, GmbH ("BI") for the development and commercialization of
CERESTAT[R] (aptiganel). Pursuant to the collaboration agreement, the Company
was obligated to fund approximately 25% of the development expenses for
aptiganel in the United States and Europe. Revenue earned pursuant to this
agreement represents reimbursement by BI of expenditures by the Company in
excess of its contractual obligations. The agreement provided that BI would
advance cash to the Company in the event that it was expected that the Company's
expenditures would exceed its contractual obligations. In 1995 and 1996, the
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CAMBRIDGE NEUROSCIENCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Company received advances from BI. As previously reported, the Company and BI
agreed to end this collaboration. In November 1998, the two companies signed a
termination agreement and have reached a final settlement of costs subject to
the collaboration. As a result, in the third quarter of 1998, the Company made
an adjustment to reduce the accrual for excess advances payable to BI and
recognized revenue earned. (See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources").
4. RESTRUCTURING COSTS
On March 9, 1998, the Company announced the implementation of a cost
reduction plan which included a reduction in headcount from approximately 60 to
30 employees. Included in operating expenses in the nine months ended September
30, 1998 is a one-time cost of $921,000 associated with this reduction in staff,
consisting primarily of severance and related benefits.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Revenues
Research and development revenues in the three months ended September 30,
1998 were $1.4 million, compared to $817,000 in the same period in 1997. Revenue
for the third quarter of 1998 included $1.2 million recognized pursuant to the
collaboration agreement with Boehringer Ingelheim International, GmbH ("BI") for
the development of aptiganel, compared to $527,000 in the same period in 1997.
Revenue pursuant to the BI agreement represents reimbursement of the excess of
the Company's expenditures over its funding obligation under the agreement (see
Note 3 to the Condensed Consolidated Financial Statements). In the second half
of 1997, the Company and BI discontinued enrollment into the Phase III clinical
trials of aptiganel in both stroke and traumatic brain injury. As previously
reported, the Company and BI agreed to end this collaboration. In November 1998,
the two companies signed a termination agreement and have reached a final
settlement of costs subject to the collaboration. As a result, in the third
quarter of 1998, the Company recognized $1.2 million of revenue, representing
revenue earned in 1998 pursuant to this collaboration and an adjustment to
reduce the accrual for advances to be repaid to BI. Any future costs incurred
for the further development of aptiganel will not be subject to reimbursement
from BI and, as a result, the Company will not recognize any further revenue
pursuant to this collaboration. (See -"Liquidity and Capital Resources")
Revenue of $250,000 earned in the third quarter of 1998 pursuant to the
agreement with Allergan (see Note 3 to the Condensed Consolidated Financial
Statements), was comparable to the amount of revenue earned in the same period
in 1997.
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CAMBRIDGE NEUROSCIENCE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
Operating Expenses
Total operating expenses for the quarter ended September 30, 1998 were $1.5
million, compared to $5.1 million in the same period in 1997, a decrease of $3.6
million, or 70%. Research and development expenses decreased by $3.2 million, or
72%, to $1.2 million in the three months ended September 30, 1998, compared to
$4.4 million in the same period in 1997. This reduction in research and
development expenses was due to the discontinuation of the Phase III clinical
trial of aptiganel in traumatic brain injury ("TBI") in the second half of 1997,
as well as the decrease in costs as a result of the reduction in workforce in
March 1998 (see Note 4 to the Condensed Consolidated Financial Statements).
General and administrative expenses decreased by $382,000, or 57%, to $288,000
in the quarter ended September 30, 1998, compared to $670,000 in the same period
in 1997, reflecting the reduction in workforce which occurred in March 1998 as
well as the resignation of the former Chief Executive Officer in the second
quarter of 1998.
Interest Income
Interest income for the third quarter of 1998 was $201,000, compared to
$632,000 in the same period in 1997. This decrease was due to lower cash
balances available for investment in the third quarter of 1998, following the
payment of a dividend of $17.9 million in April 1998.
Net Income (Loss) Per Share
The Company had net income per share for the third quarter of 1998 of
$0.01, compared to a net loss per share of ($0.21) in the same period in 1997.
This fluctuation is a result of a decrease in operating expenses in the third
quarter of 1998, compared to the same period in 1997, and the recognition of
revenue pursuant to the BI collaboration, following the $1.2 million adjustment
to reduce the accrual for advances to be repaid to BI.
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Revenues
In the nine months ended September 30, 1998, the Company had research and
development revenues of $2.0 million, compared to $3.0 million in the same
period in 1997, a decrease of $1.0 million, or 34%. Revenues in the first nine
months of 1998 included $1.2 million earned pursuant to the collaboration
agreement with BI, compared to $2.2 million in the first nine months of 1997.
This decrease in revenue pursuant to the BI agreement reflects the
discontinuation of the Phase III clinical trials of aptiganel in the second half
of 1997 as well as the termination of the collaboration agreement in 1998. (See
"--Liquidity and Capital Resources) Pursuant to the termination of the BI
collaboration, any future costs incurred for the further development of
aptiganel will not be subject to reimbursement from BI and, as a result, the
Company will not recognize any further revenue pursuant to this collaboration.
Revenues in both 1998 and 1997 included $750,000 earned pursuant to the Allergan
agreement.
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CAMBRIDGE NEUROSCIENCE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
Operating Expenses
In the first nine months of 1998, the Company had total operating expenses
of $7.3 million, compared to $16.0 million in the first nine months of 1997, a
decrease of $8.7 million, or 55%. Research and development expenses decreased by
$8.8 million, or 63%, to $5.2 million in the first nine months of 1998, compared
to $14.0 million in the same period in 1997, due primarily to the termination of
the Phase III clinical trial of aptiganel in TBI in the second half of 1997 as
well as to the reduction in workforce in March 1998.
General and administrative expenses decreased by $831,000, or 40%, to
$1.2 million in the first nine months of 1998, compared to $2.1 million in the
same period in 1997. This decrease reflects primarily the reduction in salaries
and benefits and related costs associated with the reduction in workforce in
March 1998. Operating expenses for the nine months ended September 30, 1998
included restructuring costs of $921,000, consisting primarily of severance and
related benefits associated with this reduction in staff (see Note 4 to the
Condensed Consolidated Financial Statements).
Interest Income
Interest income decreased by $829,000, or 46%, to $987,000 in the first
nine months of 1998, compared to $1.8 million in the same period in 1997. This
decrease was a result of the decrease in cash available for investment in 1998
following the payment of a dividend totaling $17.9 million in April 1998.
Net Loss Per Share
In the first nine months of 1998, the Company had a net loss of $4.3
million, or ($0.24) per share, compared to a net loss of $11.2 million, or
($0.64) per share in the same period in 1997. This decrease in net loss per
share reflects a 55% decrease in operating expenses, primarily as a result of
the discontinuation of the Phase III trials of aptiganel. This decrease in
operating expenses was offset in part by lower interest income and a decrease in
revenue earned pursuant to the BI agreement in 1998 due to the discontinuation
of the clinical trials of aptiganel and the decision to terminate the related
collaboration.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1998, the Company had cash and cash equivalents and
marketable securities of $14.4 million, compared to $38.6 million at December
31, 1997. In the first nine months of 1998, the Company used $6.4 million for
operating activities. On April 14, 1998, the Company paid a dividend in the
amount of $1.00 per share, totaling $17.9 million.
On March 9, 1998, the Company implemented a cost reduction plan which
included a reduction in headcount from approximately 60 to 30 employees. The
cost of $921,000 associated with this reduction in staff, consisting primarily
of severance and related benefits, was recognized as restructuring costs in the
first quarter of 1998. In an effort to reduce facilities-related costs, in June
1998, the Company entered into an agreement to sub-lease approximately half of
its office and laboratory facilities.
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CAMBRIDGE NEUROSCIENCE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
The Company is continuing to evaluate alternatives for maximizing
shareholder value, which may include the sale of some or all of the Company's
technology and other assets or the merger with or acquisition of another
company. Effective May 6, 1998, Harry W. Wilcox, III, the former Senior Vice
President of Business Development and Chief Financial Officer, was appointed
President and Chief Executive Officer of the Company. Mr. Wilcox also joined the
Company's Board of Directors at that time. Elkan R. Gamzu, the former President
and Chief Executive Officer, is now serving as a consultant to the Company in
the areas of clinical trial data analysis and strategy relating to the potential
future development of aptiganel.
In 1995, the Company entered into a collaboration with BI for the
development and commercialization of CERESTAT (aptiganel). Pursuant to the
collaboration agreement, the Company was obligated to fund approximately 25% of
the development expenses for aptiganel in the United States and Europe. BI was
obligated to pay the remaining 75% of such costs and all of the development
costs in Japan. Revenue earned pursuant to this agreement represents
reimbursement by BI of expenditures by the Company in excess of its contractual
obligations. (See Note 3 to the Condensed Consolidated Financial Statements). In
the second half of 1997, the Company and BI discontinued enrollment of patients
into the clinical trials of aptiganel in both stroke and traumatic brain injury.
The collaboration agreement provided that BI would advance cash to the
Company in the event that the Company's expenditures were expected to exceed its
contractual obligation. Such advances were received by the Company in 1995 and
1996. As previously reported, the Company and BI agreed to end this
collaboration. In November 1998, the two companies signed a termination
agreement and have reached a final settlement of costs subject to the
collaboration. As a result, in the third quarter of 1998, the Company recognized
$1.2 million of revenue, representing revenue earned in 1998 pursuant to this
collaboration and an adjustment to reduce the accrual for advances to be repaid
to BI. Included in Total Current Liabilities as of September 30, 1998 are
research and development advances relating to the BI collaboration of $1.5
million, which the Company will repay to BI in November 1998.
Pursuant to the agreement signed in November 1996 with Allergan, the
Company may receive up to $3.0 million in research and development funding
through 1999. At September 30, 1998, the Company had received $2.0 million
pursuant to this funding arrangement, of which $750,000 was recognized as
revenue in the first nine months of 1998. Under this agreement, Allergan is
responsible for the development of potential products and will bear all
associated costs. The collaboration also provides that the Company may receive
up to an additional $18.5 million upon the achievement of certain milestones.
However, there can be no assurance as to when or if these milestones will be
achieved. Allergan may terminate the agreement at any time upon six months prior
written notice.
In December 1996, the Company formed a subsidiary, Cambridge NeuroScience
Partners, Inc. ("CNPI"), to pursue the development of treatments for Alzheimer's
disease and other neurological disorders. CNPI entered into a collaboration
agreement with the J. David Gladstone Institutes ("Gladstone"). Pursuant to this
collaboration, Gladstone is conducting a research program over a three year
period, for which CNPI is providing at least $1.25 million in funding per year.
The Company owns 80% of the outstanding stock of CNPI and has guaranteed CNPI's
obligations with respect to its collaboration with Gladstone.
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CAMBRIDGE NEUROSCIENCE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
The Company believes that cash and cash equivalents and investments in
marketable securities available at September 30, 1998 will be sufficient to
maintain operations through 1999. Based on the continuing evaluations of the
data from the clinical trials, the Company may pursue further development of
aptiganel through a new collaboration, a business combination or government
funding. There can be no assurance, however, that any such further development
will be undertaken or that the Company will be successful in securing a new
collaboration, effecting a business combination or otherwise obtaining the
funding necessary for such further development. In addition, the Company has
focused resources on the Allergan/ion-channel blocker research program and the
advancement of the Glial Growth Factor 2 program. As a result of the reduction
in headcount that took place in March and the dividend payment in April, fewer
resources are being devoted to the Company's other research and development
programs. Insufficient funds may require the Company to delay, scale back or
eliminate certain of its research and product development programs or to license
third parties to commercialize products or technologies that the Company might
otherwise undertake itself.
The Company does not believe that inflation has had a material impact on
its results of operations.
As previously reported, the Company was notified that its common stock has
not been in compliance with the closing bid price requirements of the Nasdaq
Stock Market ("Nasdaq") and would be delisted. On September 25, 1998, the
Company requested an oral hearing to stay delisting, which hearing has been
scheduled for November 12, 1998. Pending the results of this hearing, the
Company's common stock will continue to trade on Nasdaq without restriction. If,
based on the outcome of this hearing, the Company is not granted a temporary
stay of delisting, it intends to commence trading on the OTC Bulletin Board.
The Company is aware of the issues that many computer systems will face as
the year 2000 approaches. These issues are the result of computer programs
having been written using two digits rather than four digits to define the
applicable year. Any of the Company's programs that have time-sensitive software
may recognize a date using "00" as the year 1900 rather than the year 2000,
resulting in system failures or miscalculations. The Company is in the process
of conducting a review of its information technology ("IT") and non-IT systems
that could be affected by this issue and may contract with an outside consultant
to ensure the timely completion of this project. An inventory of key financial
systems has been compiled and an inventory of other key informational and
operational systems (including systems supporting the Company's research and
development programs) is in process. Upon completion of the assessment of these
systems, which is targeted for January 1999, the Company will adopt a formal
plan to upgrade or replace those systems that are not year 2000 compliant. This
plan will include testing of any new software and hardware purchased to ensure
that they are working properly and have adequately addressed the year 2000
issues identified. Remediation of any year 2000 problems identified may include
the upgrade of computer operating systems, the upgrade or replacement of certain
software programs and the replacement of equipment. The Company expects to have
identified and resolved any year 2000 problems before June 30, 1999.
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CAMBRIDGE NEUROSCIENCE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
At September 30, 1998, the Company had completed a preliminary assessment
of basic systems supporting the finance and accounting function. In connection
with this assessment, the Company has contacted and received assurance of
compliance, or plans to become compliant, from software vendors and major
service providers supporting this functional area. The Company does not
currently have any exclusive or material relationships with third parties, other
than certain utility providers, which, if impacted by lack of year 2000
compliance on the part of the third parties, would have a material impact on the
Company's operations. However, there can be no assurance that such third parties
will achieve compliance on a timely basis or that any lack of compliance on the
part of the third parties will not materially affect the Company's operations.
The identification of alternative vendors of services and supplies will be
considered in the development and implementation of a contingency plan.
Based on a preliminary assessment of existing systems, the Company does not
expect to incur material costs to evaluate and resolve any year 2000 problems.
However, if the evaluation and resolution of any year 2000 problems is not
completed on a timely basis, the year 2000 issue may impact the Company's daily
operations, resulting in the interruption or inaccurate processing of financial
information and data generated in the Company's research and development
efforts. The actual costs to be incurred by the Company will depend on a number
of factors which cannot be accurately predicted, including the availability and
cost of consultants and the extent and difficulty of the remediation and other
work to be done.
The Company does not have a contingency plan in place. The determination of
the necessity for a contingency plan will be made once the assessment and
remediation phases of this project have been completed. The Company expects to
have identified and resolved any year 2000 problems before June 30, 1999 and to
have established and tested a formal contingency plan, to the extent deemed
necessary, before the end of 1999.
The discussion contained in this section as well as elsewhere in this
Quarterly Report on Form 10-Q may contain forward-looking statements based on
the current expectations of the Company's management. The Company cautions
readers that there can be no assurance that the actual results or business
conditions will not differ materially from those projected or suggested in the
forward-looking statements as a result of various factors, including, but not
limited to, the following: uncertainties relating to the completion of clinical
trials of the Company's product candidates, particularly with respect to
aptiganel; uncertainties as to the Company's ability to continue operations and
achieve profitability; the early stage of development of many of the Company's
product candidates; the Company's reliance on current and prospective
collaborative partners to supply funds for research and development and to
commercialize its products; technical risks associated with the development of
new products; the competitive environment of the biotechnology industry; and,
the Company`s ability to identify and resolve potential year 2000 problems on a
timely basis. Readers are cautioned not to place undue reliance on these
forward-looking statements which speak only as of the date hereof. The Company
undertakes no obligation to publicly release the result of any revisions to
these forward- looking statements which may be made to reflect events or
circumstances occurring after the date hereof or to reflect the occurrence of
unanticipated events.
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CAMBRIDGE NEUROSCIENCE, INC.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
If any stockholder of the Company intends to present a proposal at the
1999 annual meeting of stockholders and desires it to be considered for
inclusion in the Company's proxy statement and form of proxy for that meeting,
such proposal must be received by the Company at One Kendall Square, Building
700, Cambridge, MA 02139, Attention: Harry W. Wilcox, III, no later than January
26, 1999. Stockholders who do not wish to include their proposals in such proxy
statement and form of proxy, but who wish to present their proposals at the
Company's 1999 annual meeting of stockholders must notify Mr. Wilcox in writing
at the aforementioned Company address no later than April 11, 1999 in order for
their proposals to be considered timely for purposes of Rule 14a-4 under the
Securities Exchange Act, as amended.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.28 Termination agreement, dated November 4, 1998, between the
Company and Boehringer Ingelheim International, GmbH. Filed
herewith.
27.1 Financial Data Schedule for the interim year-to-date period ended
September 30, 1998 (for electronic filing only).
(b) Reports on Form 8-K
None
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CAMBRIDGE NEUROSCIENCE, INC.
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.
CAMBRIDGE NEUROSCIENCE, INC.
Date NOVEMBER 6, 1998 /s/ Harry W. WilcoX, III
---------------------- -------------------------------------
Harry W. Wilcox, III
President and Chief Executive Officer
(Principal Executive Officer;
Acting Principal Financial Officer)
Date NOVEMBER 6, 1998 /s/ Glenn A. Shane
---------------------- -------------------------------------
Glenn A. Shane
(Principal Accounting Officer)
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CAMBRIDGE NEUROSCIENCE, INC.
EXHIBIT INDEX
Exhibit
Number Description
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10.28 Termination agreement, dated November 4, 1998, between the Company
and Boehringer Ingelheim International, GmbH. Filed herewith.
27.1 Financial Data Schedule for the interim year-to-date period ended
September 30, 1998 (for electronic filing only).
16