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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 March 31, 1998.
[ ] 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
0-19290
COR THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-3060271
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
256 East Grand Avenue, South San Francisco, California 94080
(Address of principal executive offices and zip code)
(650) 244-6800
(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 [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock $.0001 par value 24,088,791
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Outstanding at April 30, 1998
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COR THERAPEUTICS, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
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Item 1. Financial Statements and Notes
Condensed Balance Sheets - March 31, 1998
and December 31, 1997 3
Statements of Operations - for the three months
ended March 31, 1998 and 1997 4
Statements of Cash Flows - for the three months
ended March 31, 1998 and 1997 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 11
COR(TM) and INTEGRILIN(TM) are trademarks of the Company.
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COR THERAPEUTICS, INC.
CONDENSED BALANCE SHEETS
(in thousands)
ASSETS
March 31, December 31,
1998 1997
------------ ------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 19,937 $ 22,209
Short-term investments 58,022 60,360
Contract receivables 832 422
Other current assets 8,557 6,986
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Total current assets 87,348 89,977
Property and equipment, net 4,911 5,408
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$ 92,259 $ 95,385
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,805 $ 2,446
Accrued compensation 1,980 2,510
Accrued development costs 2,930 3,155
Accrued pre-commercial costs 2,276 1,256
Deferred revenue 886 886
Other accrued liabilities 2,417 1,345
Long-term debt -- current portion 650 873
Capital lease obligations -- current portion 1,765 1,699
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Total current liabilities 15,709 14,170
Long-term debt -- noncurrent portion 1,309 1,014
Capital lease obligations -- noncurrent portion 1,335 1,803
Stockholders' equity 240,732 239,948
Accumulated deficit (166,826) (161,550)
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Total stockholders' equity 73,906 78,398
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$ 92,259 $ 95,385
========= =========
See accompanying notes.
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COR THERAPEUTICS, INC.
STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
----------------------------
1998 1997
-------- --------
Contract revenues $ 8,412 $ 6,325
Expenses:
Research and development 9,999 12,033
Marketing, general and administrative 4,696 2,505
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Total expenses 14,695 14,538
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Loss from operations (6,283) (8,213)
Interest income 1,147 709
Interest expense (140) (171)
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Net loss $(5,276) $(7,675)
======== ========
Basic and diluted net loss per share $ (0.22) $ (0.38)
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Shares used in computing basic and diluted net loss per share 23,878 20,040
======== ========
See accompanying notes.
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COR THERAPEUTICS, INC.
STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
(in thousands)
(Unaudited)
Three Months Ended
March 31,
----------------------------
1998 1997
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Cash flows provided by (used in) operating activities:
Net loss $ (5,276) $(7,675)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 862 933
Amortization of deferred compensation 62 46
Changes in assets and liabilities:
Contract receivables (410) 275
Other current assets (1,571) 157
Accounts payable 359 1,560
Accrued compensation (530) 600
Accrued development costs (225) (1,576)
Accrued pre-commercial costs 1,020 296
Deferred revenue -- (600)
Other accrued liabilities 1,072 (116)
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Total adjustments 639 1,575
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Net cash used in operating activities (4,637) (6,100)
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Cash flows provided by (used in) investing activities:
Purchases of short-term investments (28,193) (3,704)
Sales of short-term investments -- 13,317
Maturities of short-term investments 30,500 3,000
Additions to property and equipment (365) (499)
-------- --------
Net cash provided by investing activities 1,942 12,114
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Cash flows provided by (used in) financing activities:
Proceeds from long-term debt 290 --
Principal payments on long-term debt (218) (306)
Proceeds from capital lease obligations -- 572
Principal payments under capital lease obligations (402) (391)
Issuance of common stock 753 154
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Net cash provided by financing activities 423 29
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Net increase (decrease) in cash and cash equivalents (2,272) 6,043
Cash and cash equivalents at the beginning of the period 22,209 2,615
-------- --------
Cash and cash equivalents at the end of the period $ 19,937 $ 8,658
======== ========
See accompanying notes.
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COR THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COR Therapeutics, Inc. ("COR" or the "Company") was incorporated in Delaware on
February 4, 1988. The Company is focused on the discovery, development and
commercialization of novel pharmaceutical products for the treatment and
prevention of severe cardiovascular diseases.
Interim financial information
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions for Form 10-Q and Article 10 of Regulation
S-X. In the Company's opinion, the financial statements include all adjustments,
consisting only of normal recurring adjustments, which the Company considers
necessary to fairly state the Company's financial position and the results of
its operations and its cash flows. The balance sheet at December 31, 1997 has
been derived from the audited 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. The accompanying
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1997. The results of the Company's operations for any
interim period are not necessarily indicative of the results of the Company's
operations for any other interim period or for a full fiscal year.
2. LEGAL PROCEEDINGS
On January 30, 1998 the Company and Vaughn M. Kailian, the Company's President
and Chief Executive Officer, were named as defendants in a putative class action
lawsuit alleging violation of federal securities laws. Plaintiff and the Company
have agreed that plaintiff will voluntarily dismiss all claims against all
defendants in that action. The stipulated dismissal is pending before the
federal court for final approval.
3. LOSS PER SHARE
Basic and diluted net loss per share is calculated using the weighted average
number of shares of common stock outstanding of 23,878,000 and 20,040,000 at
March 31, 1998 and March 31, 1997, respectively. Potentially dilutive
securities, such as stock options, are excluded from the computation as their
effect is antidilutive.
4. RECENT ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1998, the Company adopted Financial Accounting Standards
Board's Statement of Financial Accounting Standard No. 130 ("Statement 130"),
Reporting Comprehensive Income. Statement 130 establishes new rules for the
reporting and display of comprehensive income and its components; however, the
adoption of this Statement had no impact on the Company's net income or
stockholders' equity. Statement 130 requires unrealized
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gains or losses on the Company's available-for-sale securities, which are
recorded separately in stockholders' equity, to be included in other
comprehensive income. Prior period financial statements have been reclassified
to conform to the requirements of Statement 130.
During the first quarter of 1998 and 1997, total comprehensive income (net loss
adjusted for unrealized gains or losses on available-for-sale securities)
amounted to $(5,308,000) and $(7,673,000), respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
In addition to the historical information contained herein, this document
includes forward-looking statements which involve risks and uncertainties.
Actual results of the Company's activities may differ significantly from the
potential results discussed in such forward-looking statements. Risk factors
that might cause such differences include, but are not limited to, those factors
identified below and in the sections titled "Business" and "Business-Additional
Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997.
The Company's business is subject to significant risks including, but not
limited to, market acceptance of INTEGRILIN(TM), the success of its research and
development efforts, lack of marketing and sales experience, the lengthy and
expensive regulatory process, intense competition, uncertainties related to
clinical trials, and the prosecution and enforcement of patents important to the
Company's business. Even if the Company's potential products appear promising at
various stages of development, they may not reach the market for a number of
reasons. Such reasons include, but are not limited to, the possibilities that
the potential products will be found ineffective during clinical trials, fail to
receive necessary regulatory approvals, be difficult to manufacture on a large
scale, be uneconomical to market or be precluded from commercialization by
proprietary rights of third parties. Additionally, even if a potential product
is approved for commercialization, it may not be successful for a number of
reasons, including, but not limited to, competition from competing products.
Additional expenses, delays and losses of opportunities that may arise out of
these and other risks could have a material adverse impact on the Company's
business, financial condition and results of operations.
Since its inception, COR has focused on the discovery and development of novel
pharmaceutical products for the treatment and prevention of severe
cardiovascular diseases. The Company has not generated any product revenues to
date. The Company has been unprofitable since inception and has incurred a
cumulative net loss of $166,826,000 during the period from inception to March
31, 1998. The Company's principal sources of working capital have been primarily
public equity financings and proceeds from collaboration research and
development agreements, as well as private equity financings, grant revenues,
interest income and property and equipment financings.
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The Company's lead product candidate is INTEGRILIN(TM) (eptifibatide).
INTEGRILIN(TM) is being developed for the treatment of Acute Ischemic Coronary
Syndromes ("AICS"), a leading cause of hospitalization in the United States. In
1995, COR studied INTEGRILIN(TM) in the treatment of elective and urgent
coronary angioplasty in the IMPACT II trial. Based on the data from this trial,
COR submitted a New Drug Application ("NDA") to the United States Food and
Drug Administration (the "FDA") seeking approval to market INTEGRILIN(TM) as an
adjunct to percutaneous transluminal coronary angioplasty ("PTCA").
In August 1997, the Company announced the results of the PURSUIT trial. The
PURSUIT trial was designed to determine the effect of INTEGRILIN(TM) as an
adjunct to current medical and interventional strategies in the treatment of
unstable angina and non-Q wave myocardial infarction ("NQMI"), the major
diseases of AICS. In October 1997, based on the positive data from the PURSUIT
trial, the Company submitted an amendment to its NDA to seek marketing approval
for INTEGRILIN(TM) in the treatment of unstable angina and NQMI and as an
adjunct to PTCA.
In early April 1998, the Company received a letter from the FDA stating that
INTEGRILIN(TM) is approvable for both the treatment of unstable angina and NQMI
and as an adjunct to PTCA. The Company is currently consulting with the FDA
regarding approval of INTEGRILIN(TM).
In February 1998, the European Union's ("EU") European Medicines Evaluation
Agency accepted for review a centralized Marketing Authorization
application for INTEGRILIN(TM) submitted by Schering-Plough Corporation
("Schering"), COR's worldwide partner for INTEGRILIN(TM). This application seeks
European marketing approval of INTEGRILIN(TM) in the EU for the treatment of
patients with unstable angina and NQMI and as an adjunct to PTCA.
In addition to the collaboration agreement with Schering for INTEGRILIN(TM), the
Company has collaboration agreements with Ortho Pharmaceutical Corporation, a
subsidiary of Johnson & Johnson, and Kyowa Hakko Kogyo Co., Ltd.
RESULTS OF OPERATIONS
Contract revenues for the quarter ended March 31, 1998 increased 33%, compared
to the corresponding period in 1997, primarily due to the receipt in January
1998 of an $8,000,000 milestone payment from Schering made in connection with
acceptance for review of the centralized Marketing Authorization application
seeking marketing approval of INTEGRILIN(TM) in the EU.
Research and development expenses decreased 17% for the quarter ended March 31,
1998, compared to the corresponding period in 1997, primarily due to the timing
of costs associated with the PURSUIT trial. The Company expects research and
development expenses to increase over the next several years, although the
timing of certain of these expenses may depend on the timing and phase of, and
indications pursued in, clinical trials of potential products.
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Marketing, general and administrative expenses increased 87% for the quarter
ended March 31, 1998, compared to the corresponding period in 1997, primarily
due to pre-commercial activities associated with INTEGRILIN(TM), as well as
increases in staffing and administrative expenses associated with general
corporate activities. The Company expects marketing, general and administrative
costs to continue to increase significantly over the next several years.
Interest income increased 62% for the quarter ended March 31, 1998, compared to
the corresponding period in 1997, primarily due to higher cash and investment
balances. Interest expense decreased 18% for the quarter ended March 31, 1998,
compared to the corresponding period of 1997, primarily due to the average
balance of debt outstanding.
The results of the Company's operations for any interim period are not
necessarily indicative of the results of the Company's operations for any other
interim period or for a full fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
The Company had available cash, cash equivalents and short-term investments of
$77,959,000 at March 31, 1998. Cash in excess of immediate requirements is
invested according to the Company's investment policy, which provides guidelines
with regard to liquidity and return and, wherever possible, seeks to minimize
the potential effects of concentration and credit risk. The Company has funded
its operations to date primarily through public equity financings and proceeds
from collaboration research and development agreements, as well as private
equity financings, interest income and property and equipment financings.
Net cash used for operating activities and additions to capital equipment
decreased to $5,002,000 for the quarter ended March 31, 1998, from $6,599,000
for the corresponding period in 1997, primarily due to the timing of recognition
of milestone and contract revenues related to the agreement with Schering. The
Company expects that its expenditures for operating activities and additions to
capital equipment will increase in future periods. The timing of these
expenditures may vary from period to period depending on the timing and phase
of, and indications pursued in, clinical trials of its potential products,
including INTEGRILIN(TM).
The Company expects that its cash requirements will increase in future periods
due to costs related to continuation and expansion of research and development,
including clinical trials, and increased marketing, sales, general and
administrative activities. The Company anticipates that its existing capital
resources and interest earned thereon will enable it to maintain its operations
at least through 1999. However, the Company's capital requirements may change
depending on numerous factors including, but not limited to, the commercial
success of INTEGRILIN(TM), the progress of the Company's research and
development programs, the scope and results of preclinical and clinical studies,
the number and nature of the indications the Company pursues in clinical
studies, the timing of regulatory approvals, technological advances,
determinations as to the commercial potential of the Company's potential
products and the status of competitive products. In addition, expenditures may
be dependent on the establishment and maintenance of collaboration relationships
with other companies, the availability of financing and other factors. The
Company may need to raise substantial additional funds in the future, and there
can be no assurance that such funds will be available on favorable terms, if at
all. If such funds are unavailable, the Company may need to delay or curtail its
research and development activities to
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a significant extent, which could have a material adverse effect on the
Company's business, financial condition and results of operations.
Until relatively recently, computer programs were written to record only two
digits of date-related information, making the programs unable to properly
distinguish between the year 2000 and the year 1900. Systems that cannot
properly distinguish such information may generate improper data. This condition
is commonly referred to as the Year 2000 Issue. The Year 2000 Issue may affect
systems of organizations with which the Company conducts business, including but
not limited to its corporate partners, suppliers and vendors. The Company is
addressing the Year 2000 Issue with such organizations. There can be no
assurance that the systems of other organizations on which the Company may rely
will adequately address the Year 2000 Issue, or that the failure of other
organizations to address the Year 2000 Issue will not have a material adverse
effect on the Company's business, financial condition or results of operations.
In addition, the Company is continuing to review its own systems to identify and
address systems that may require upgrading or reprogramming to address the Year
2000 Issue. The Company believes that the Year 2000 Issue will not have a
material adverse effect on its business, financial condition or results of
operations. However, the nature of the Year 2000 Issue is complex, and there can
be no assurance that the Company will be able to address problems that may arise
from the Year 2000 Issue without incurring a material adverse effect on the
Company's business, financial condition or results of operations.
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PART II. OTHER INFORMATION
Item 1. Legal proceedings. Note 2 of the Notes to Financial Statements is
incorporated by reference in Part II hereof.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule.
(b) Reports
There were no reports on Form 8-K filed for the quarter ended
March 31, 1998.
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.
Date: May 12, 1998
COR THERAPEUTICS, INC.
By: /s/ VAUGHN M. KAILIAN By: /s/ LAURA A. BREGE
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Vaughn M. Kailian Laura A. Brege
President and Chief Executive Officer Senior Vice President, Finance
and Chief Financial Officer
By: /s/ PETER S. RODDY
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Peter S. Roddy
Director, Finance and Controller
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