-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TXArP+bwEINFQTV58x2cXInGOcm3LaNHaKISsZdSAUFH0kQOO5WhCJdcwqeRfJPq RzS956cKL7O4yYv3FXwX8g== 0000950133-97-002786.txt : 19970813 0000950133-97-002786.hdr.sgml : 19970813 ACCESSION NUMBER: 0000950133-97-002786 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970812 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOVAVAX INC CENTRAL INDEX KEY: 0001000694 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 222816046 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-26770 FILM NUMBER: 97656231 BUSINESS ADDRESS: STREET 1: 8320 GUILFORD RD CITY: COLUMBIA STATE: MD ZIP: 21046 BUSINESS PHONE: 3018168160 MAIL ADDRESS: STREET 1: 12111 PARKLAWN DR STREET 2: 12111 PARKLAWN DR CITY: ROCKVILLE STATE: MD ZIP: 20852 10-Q 1 NOVAVAX, INC. FORM 10-Q 1 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 Commission File No. JUNE 30, 1997 0-26770 ------------------- --------------------- NOVAVAX, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 22-2816046 ------------------------------- ---------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 8320 GUILFORD ROAD, COLUMBIA, MD 21046 - --------------------------------------- ---------- (Address of principal executive offices) (Zip code) (301) 854-3900 -------------------------------------------------- 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 ----- ----- The number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common Shares Outstanding at August 7, 1997 11,898,507 2 NOVAVAX, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three months ended June 30, Six months ended June 30, 1997 1996 1997 1996 ------------ ------------ ------------ ------------ Revenues: Total revenues $ 149,733 $ 26,997 $ 149,733 $ 26,997 ------------ ------------ ------------ ------------ Cost and expenses: General and administrative 601,567 540,744 1,243,820 976,483 Research and development 760,833 909,912 1,362,456 1,735,985 ------- ------- --------- --------- Operating loss (1,212,667) (1,423,659) (2,456,543) (2,685,471) Interest income 78,726 38,824 112,980 89,454 ------------ ------------ ------------ ------------ Net loss $ (1,133,941) $ (1,384,835) $ (2,343,563) $ (2,596,017) ============ ============ ============ ============ Net loss per common share $ (.10) $ (.14) $ (.21) $ (.26) ============ ============ ============ ============ Weighted average number of common shares outstanding 11,891,507 9,992,987 11,389,929 9,967,962 ============ ============ ============ ============
The accompanying notes are an integral part of the consolidated financial statements. 1 3 NOVAVAX, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)
June 30, December 31, ASSETS 1997 1996 ------------ ------------ Current assets: Cash and cash equivalents $ 5,846,499 $ 2,481,258 Marketable securities -- 500,820 Accounts receivable 92,653 -- Prepaid expenses and other current assets 96,492 171,027 ------------ ------------ Total current assets 6,035,644 3,153,105 ------------ ------------ Property and equipment - cost 1,419,447 1,383,123 Accumulated depreciation (483,465) (405,212) ------------ ------------ 935,982 977,911 ------------ ------------ Patent costs, net of accumulated amortization of $487,143 and $430,057 in 1997 and 1996, respectively 1,552,941 1,494,880 Other assets 77,177 96,056 ------------ ------------ Total assets $ 8,601,744 $ 5,721,952 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Capital lease obligations $ 10,744 $ 10,744 Accounts payable 349,916 367,754 Accrued payroll 89,148 196,593 Payable to former parent -- 6,176 ------------ ------------ Total current liabilities 449,808 581,267 ------------ ------------ Capital lease obligations, less current maturities 17,520 23,607 ------------ ------------ Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value, 2,000,000 shares authorized -- -- Common stock, $.01 par value, 30,000,000 shares authorized, 11,898,507 and 10,660,710 shares issued and outstanding in 1997 and 1996, respectively 118,985 106,607 Additional paid-in capital 37,469,600 32,409,899 Accumulated deficit (29,139,727) (26,796,164) Deferred compensation on stock options granted (314,442) (603,264) ------------ ------------ Total stockholders equity 8,134,416 5,117,078 ------------ ------------ Total liabilities and stockholders equity $ 8,601,744 $ 5,721,952 ============ ============
The accompanying notes are an integral part of the consolidated financial statements. 2 4 NOVAVAX, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six months ended June 30, 1997 1996 ----------- ----------- Cash flows from operating activities: Net loss $(2,343,563) $(2,596,017) Reconciliation of net loss to net cash used by operating activities: Non-cash compensation expense 288,822 705,322 Depreciation and amortization 135,339 153,728 Issuance of stock to 401(k) plan 2,499 -- Provision for deferred taxes -- (100,000) Changes in operating assets and liabilities: Prepaid expenses and other assets 93,414 25,973 Accounts receivable (92,654) -- Payable to/receivable from former parent (6,176) 230,474 Accounts payable and accrued expenses (125,283) (36,002) ----------- ----------- Net cash used by operating activities (2,047,601) 1,616,522) ----------- ----------- Cash flows from investing activities: Proceeds from the sale of marketable securities 500,820 -- Capital expenditures (36,324) (24,259) Deferred patent costs (115,147) (206,305) ----------- ----------- Net cash provided (used) by investing activities 349,349 (230,564) ----------- ----------- Cash flows from financing activities: Payment of capital lease obligations (6,087) -- Proceeds from the private placement of common stock, net 5,002,718 -- Proceeds from exercise of common stock options 66,862 214,691 ----------- ----------- Net cash provided by financing activities 5,063,493 214,691 ----------- ----------- Net change in cash and cash equivalents 3,365,241 (1,632,395) Cash and cash equivalents at beginning of year 2,481,258 4,634,236 ----------- ----------- Cash and cash equivalents at June 30, 1997 and 1996 $ 5,846,499 $ 3,001,841 =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. 3 5 NOVAVAX, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation The accompanying consolidated financial statements include the accounts of Novavax its wholly-owned subsidiaries Micro-Pak, Inc. and Micro Vesicular Systems, Inc., and Lipovax, Inc. All significant intercompany accounts and transactions have been eliminated. These statements have been prepared by Novavax, Inc. without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. Certain information in footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles has been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. 2. Transactions with Former Parent On December 12, 1995 IGI distributed to the holders of record of IGI's common stock, at the close of business on the Record Date, November 28, 1995 one share of the Company's common stock for every one share of IGI common stock outstanding (the "Distribution"). Under a Transition Services Agreement, established at the time of the Distribution, IGI continued to provide certain administrative services to Novavax, including services relating to human resources, purchasing and accounting, data processing and payroll services from the Distribution until June 30, 1996. Novavax paid IGI a fee for all services provided by IGI employees, based on IGI's costs. For the six month period ended June 30, 1996, $230,474 of such costs were incurred. 3. Financing Transactions On February 10, 1997, Novavax signed a definitive agreement to privately place 1,200,000 common shares with Anaconda Opportunity Fund L.P. Novavax also granted warrants to purchase an additional 600,000 shares at a price of $6.00 per share and 600,000 shares at a price of $8.00 per share. The warrants have a three year term. The transaction was closed on March 14, 1997 at an aggregate price of $5,100,000. Upon closing, the Company received $4,100,000 in cash and a $1,000,000 promissory note. The note became due on March 27, 1997 and the Company has received all proceeds thereof. 4 6 NOVAVAX, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS The following discussion may contain "forward-looking" statements, as that term is defined by (i) the Private Securities Litigation Reform Act of 1995 (the "Reform Act") and (ii) in releases made by the Securities and Exchange Commission from time to time. Such statements should be read in conjunction with the cautionary factors described in Exhibit 99 attached to the Company's Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated into this discussion by this reference and the consolidated financial statements and related notes. The Company's future operating results may be affected by various trends and factors that are beyond the Company's control. These include among other factors, changes in general economic conditions, rapid or unexpected changes in technologies and uncertain business conditions that affect the pharmaceutical and vaccine industries. Accordingly, past results and trends should not be used by investors to anticipate future results or trends. RESULTS OF OPERATIONS The Company has incurred net losses since its inception from the development of its technologies for human pharmaceuticals, vaccines and vaccine adjuvants. Novavax expects the losses to increase in the near-term as it conducts additional human clinical trials and seeks regulatory approval for its product candidates. The Company also expects to continue to incur substantial operating losses over the extensive time period required to develop the Company's products, or until such time as revenues, to offset the losses, are sufficient to fund its continuing operations. 5 7 NOVAVAX, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued) Three months ended June 30, 1997 compared to 1996 The net loss of $1,133,941 for the quarter ended June 30, 1997, was $250,894 less than the net loss of $1,384,835 in the quarter ended June 30, 1996. Revenues of $149,733, for services related to vaccine and adjuvant technologies were recognized during the three months ended June 30, 1997 compared to revenues of $26,997 during the three months ended June 30, 1996. General and administrative expenses were $601,567 for the three months ended June 1997 compared to $540,744 incurred in the three months ended June 1996. An increase in the non-cash compensation expense related to non-employee options and warrants granted during 1996, increased staffing, facility expansion and an increase in shareholder services contributed to most of the $60,823 increase. Non-recurring expenses incurred in 1996, associated with the Transition Services Agreement were offset by infrastructure growth to provide those functions internally. Research and development expenses were $760,833 and $909,912 for the three months ended June 30, 1997 and 1996, respectively. The decrease in these expenses was a direct result of the non-cash charges related to the below-market priced stock options issued at the time of the Distribution, of $116,718 in the second quarter 1997, compared to $345,000 in the second quarter 1996. Net expenses exclusive of these costs, totaled $644,115 and $564,912 for the periods ended June 30, 1997 and 1996, respectively. This increase of $79,203 is related to the number of products in clinical trials and facility expansion. Net interest income of $78,726 was recorded in the three months ended June 30, 1997 compared with net interest income of $38,824 in the three months ended June 30, 1996. The $39,902 increase is due to higher average cash balances during the second quarter 1997, when compared to average cash balances during the same period in 1996. Six months ended June 30, 1997 compared to 1996 The net loss of $2,343,563 for the six months ended June 30, 1997, was $252,454 lower than the net loss of $2,596,017 in the six months ended June 30, 1996. Revenues of $149,733 were recognized during the six months ended June 30, 1997, for services related to vaccine and adjuvant technologies compared with revenues of $26,997 during the six months ended June 30, 1996. 6 8 NOVAVAX, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued) Six months ended June 30, 1997 compared to 1996 (continued) General and administrative expenses were $1,243,820 for the first six months of 1997, as compared to the $976,483 incurred for general and administrative expenses for the same period in 1996. Increased staffing in administration and accounting in the latter part of 1996, including the addition of a Chief Financial Officer and a Chief Executive Officer, was a significant part of the variance between the first six months of 1996 and the first six months of 1997. Non-recurring expenses incurred in 1996, associated with the Transition Services Agreement were offset by infrastructure growth to provide those functions internally. Additionally, facility expansion and costs associated with financing and industry collaboration efforts, together with an increase in the non-cash compensation expense related to non-employee options and warrants granted during 1996, also contributed to the $267,337 increase. Research and development expenses were $1,362,456 and $1,735,985 for the six months ended June 30, 1997 and 1996, respectively. The decrease in these expenses was a direct result of the non-cash charges related to the below-market priced stock options issued at the time of the Distribution, of $233,436 in the first six months of 1997, compared to $697,500 in the first six months of 1996. Expenses exclusive of these totaled $1,129,020 and $1,038,485 for the six month periods ended June 30, 1997 and 1996, respectively. The increase of $98,035 in the net expenses is related to the number of products in clinical trials and facility expansion. Net interest income of $112,980 was recorded in the six months ended June 30, 1997 compared with net interest income of $89,454 in the six months ended June 30, 1996 due to an increase in average cash balances during the first six months of 1997 when compared to the average cash balances during the same period in 1996. Liquidity and Capital Resources Novavax's capital requirements depend on numerous factors, including but not limited to the progress of its research and development programs, the progress of preclinical and clinical testing, the time and costs involved in obtaining regulatory approvals, the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights, competing technological and market developments, and changes in Novavax's development of commercialization activities and arrangements. In less than one year the Company has moved three product candidates into clinical trials. This rapid development prompted the need for expansion in late 1996. Further expansion necessary to establish commercial-scale manufacturing capabilities and the future purchases of capital equipment are subject to the Company's ability to raise funds through equity financing, or collaborative arrangements with corporate partners. 7 9 NOVAVAX, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued) Liquidity and Capital Resources (continued) The Company used $2,205,159 of its cash resources during the six month period ended June 30, 1997 to fund the activities of its research and development programs, costs associated with obtaining regulatory approvals and preclinical and clinical testing. In addition to revenues of $149,733, Novavax received proceeds of $66,862 from the exercise of stock options and $5,002,718, net of all transaction costs, from the sale of 1,200,000 common shares and warrants to purchase an additional 1,200,000 common shares that were privately placed with Anaconda Opportunity Fund, L.P. in March 1997. Cash and cash equivalents on June 30, 1997 totaled $5,846,499. Novavax estimates that existing cash resources will be sufficient to finance its operations for approximately 14 to 16 months from June 30, 1997. This estimate considers the current level of development activity along with anticipated increases in spending associated with certain clinical testing and development activities. Past spending levels are not necessarily indicative of future spending. Future expenditures for product development, especially relating to outside testing and human clinical trials, are discretionary and, accordingly, can be adjusted to available cash. Moreover, the Company will seek to establish one or more collaborations with industry partners to defray the costs of clinical trials and other related activities. Novavax will also seek to obtain additional funds through public or private equity or debt financings, collaborative arrangements with pharmaceutical companies or from other sources. There can be no assurance that additional funding or bank financing will be available at all or on acceptable terms to permit successful commercialization of Novavax or Novavax's technology and products. If adequate funds are not available, Novavax may be required to significantly delay, reduce the scope of or eliminate one or more of its research or development programs, or seek alternative measures including arrangements with collaborative partners or others that may require Novavax to relinquish rights to certain of its technologies, product candidates or products. New Accounting Pronouncement: Financial Accounting Standards No. 128 In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, Earnings per Share, which is effective for years ending after December 15, 1997. The impact of this statement on loss per share amounts is not material for the periods presented. 8 10 NOVAVAX, INC. AND SUBSIDIARIES PART II OTHER INFORMATION Item 1 - Legal Proceedings None Item 2 - Changes in Securities None Item 3 - Defaults Upon Senior Securities None Item 4 - Submission of Matters to a Vote of Security Holders At the Company's Annual Meeting of Stockholders held on May 15, 1997, the following proposals were adopted by the vote specified below: 1. PROPOSAL I Election of Directors Number of Shares/Votes ---------------------- For Authority Withheld --- ------------------ J. Michael Lazarus 10,113,467 167,896 John O. Marsh, Jr. 10,111,117 170,246 Jane E. Hager 10,102,109 179,254 2. PROPOSAL II To ratify the appointment of Coopers & Lybrand L.L.P. as independent auditors of the company for the current fiscal year ending December 31, 1997. For 10,135,452 Against 136,958 Abstain 8,953 Broker non-votes 0 9 11 NOVAVAX, INC. AND SUBSIDIARIES PART II OTHER INFORMATION (continued) Item 5 - Other information None Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 11 - Computation of Net loss Per Common Share Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K None 10 12 NOVAVAX, INC. AND SUBSIDIARIES 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. NOVAVAX, INC. (Registrant) Date: August 8, 1997 By: /s/ BRENDA L. FUGAGLI -------------------------------------------- Brenda L. Fugagli Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 11 EX-11 2 COMPUTATION OF NET LOSS PER COMMON SHARE 1 EXHIBIT 11 NOVAVAX, INC. AND SUBSIDIARIE COMPUTATION OF NET LOSS PER COMMON SHARE (Unaudited)
Three months ended Six months ended June 30, June 30, -------- -------- 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Net loss $(1,133,941) $(1,384,835) $(2,343,563) $(2,596,017) ============ ============ ============ ============ Weighted average of common shares outstanding 11,891,507 9,992,987 11,389,929 9,967,962 ============ ============ ============ ============ Net loss per common share outstanding $ (.10) $ (.14) $ (.21) $ (.26) ============ ============ ============ ============
Common stock equivalents were not included in the above as they are antidilutive. 12 EX-27 3 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1996 JAN-01-1997 JUN-30-1997 5,846,499 0 92,653 0 0 6,035,644 1,419,447 (483,465) 8,601,744 449,808 0 0 0 118,985 0 8,601,744 149,733 149,733 0 2,606,276 0 0 0 (2,343,563) 0 (2,343,563) 0 0 0 (2,343,563) (.21) (.21)
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