-----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, Db0f93x+T8NPFBSp0gXfJ/dmWdoTncuUE03qg+Zfs4pXDPyPZxYmNmTyNdyme1qB Ssk2SyTE3OFzMa5wLpv7hg== 0000950133-97-001734.txt : 19970512 0000950133-97-001734.hdr.sgml : 19970512 ACCESSION NUMBER: 0000950133-97-001734 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970509 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: 97598655 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. MARCH 31, 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 April 30, 1997 11,888,507 2 NOVAVAX, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three months ended March 31, 1997 1996 ----------- ----------- Revenues: Total revenues $ - $ - Cost and expenses: General and administrative $ 642,253 $ 435,739 Research and development 601,623 826,073 ----------- ----------- Total costs and expenses (1,243,876) (1,261,812) Interest income 34,254 50,630 Net loss $(1,209,622) $(1,211,182) =========== =========== Net loss per common share $ (.11) $ (.12) ====== ====== Weighted average number of common shares outstanding 10,889,546 9,942,936 =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. 1 3 NOVAVAX, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)
March 31, December 31, ASSETS 1997 1996 ------------ ------------ Current assets: Cash and cash equivalents $ 6,841,069 $ 2,481,258 Marketable securities - 500,820 Prepaid expenses and other current assets 103,048 171,027 ----------- ----------- Total current assets 6,944,117 3,153,105 ----------- ----------- Property and equipment - cost 1,413,440 1,383,123 Accumulated depreciation (444,531) (405,212) ----------- ----------- 968,909 977,911 ----------- ----------- Patent costs, net of accumulated amortization of $458,600 and $430,057 in 1997 and 1996, respectively 1,500,593 1,484,880 Other assets 77,177 96,056 ----------- ----------- Total assets $ 9,490,796 $ 5,721,952 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Capital lease obligations $ 10,744 $ 10,744 Accounts payable 269,217 367,754 Accrued payroll 85,633 196,593 Payable to former parent - 6,176 ----------- ----------- Total current liabilities 365,594 581,267 ----------- ----------- Capital lease obligations, less current maturities 21,056 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, 11,888,507 and 10,660,710 shares issued and outstanding in 1997 and 1996, respectively 118,885 106,607 Additional paid-in capital 37,449,900 32,409,899 Accumulated deficit (28,005,786) (26,796,164) Deferred compensation on stock options granted (458,853) (603,264) ------------ ----------- Total stockholders' equity 9,104,146 5,117,078 ------------ ----------- Total liabilities and stockholders' equity $ 9,490,796 $ 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)
Three months ended March 31, 1997 1996 ----------- ----------- Cash flows from operating activities: Net loss $(1,209,622) $(1,211,182) Reconciliation of net loss to net cash used by operating activities: Non-cash compensation expense 144,411 352,661 Depreciation and amortization 67,862 72,668 Issuance of stock to 401(k) plan 2,499 - Changes in operating assets and liabilities: Prepaid and other assets 96,858 27,393 Payable to/receivable from former parent (6,176) 42,783 Accounts payable and accrued expenses (209,497) (27,380) ----------- ----------- Net cash used by operating activities (1,113,665) (743,057) ----------- ----------- Cash flows from investing activities: Proceeds from the sale of marketable securities 500,820 - Capital expenditures (30,317) - Deferred patent costs (44,256) (74,718) ----------- ----------- Net cash provided (used) by investing activities 426,247 (74,718) ----------- ----------- Cash flows from financing activities: Payment of capital lease obligations (2,551) - Proceeds from the private placement of common stock, net 5,002,718 - Proceeds from exercise of common stock options 47,062 70,120 ----------- ----------- Net cash provided by financing activities 5,047,229 70,120 ----------- ----------- Net change in cash and cash equivalents 4,359,811 (747,655) Cash and cash equivalents at beginning of year 2,481,258 4,634,236 ----------- ----------- Cash and cash equivalents at March 31, 1997 and 1996 $ 6,841,069 $ 3,886,581 =========== ===========
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. Net Loss Per Common Share Net loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock and common stock equivalents outstanding during the three month periods ended March 31, 1997 and March 31, 1996, respectively. Options and warrants granted subsequent to December 12, 1995, (the "Distribution Date") the date on which the Company's former parent, IGI, Inc., distributed its majority interest in Novavax to the IGI stockholders (the "Distribution") are antidilutive and therefore have not been included in shares outstanding. 4 6 NOVAVAX, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 3. Transactions with Former Parent 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 period ended March 31, 1996, $145,464 of such costs were incurred. 4. Income Taxes Novavax has recorded no net provision for income taxes in the accompanying financial statements due to the existence of net operating losses. 5 7 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 to 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. 6 8 NOVAVAX, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued) Three months ended March 31, 1997 compared to 1996 The net loss of $1,209,622 for the first quarter ended March 31, 1997, was virtually unchanged from the net loss of $1,211,182 in the first quarter ended March 31, 1996. General and administrative expenses were $642,253 for the three months ended March 1997 compared to $435,739 incurred in the first three months of 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 quarter 1996 and the first quarter 1997. Additional non-recurring charges together with an increase in the non-cash compensation expense related to non-employee options and warrants granted during 1996, also contributed to the $206,514 increase. Research and development expenses were $601,623 and $826,073 for the three months ended March 31, 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 $116,717 in the first quarter 1997, compared to $352,500 in the first quarter 1996. Expenses exclusive of these totaled $484,906 and $473,573 for the periods ended March 31, 1997 and 1996, respectively. Net interest income of $34,254 was recorded in the three months ended March 31, 1997 compared with net interest income of $50,630 in the three months ended March 31, 1996 due to lower than average cash balances during the first quarter 1997 prior to the receipt of the $5,002,718, net of transaction costs, for the sale of 1,200,000 common shares and warrants to purchase an additional 1,200,000 common shares to Anaconda Opportunity Fund, L.P. 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 evolution 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 Liquidity and Capital Resources (continued) The Company used $1,113,665 of its cash resources to fund the activities of its research and development programs, costs associated with obtaining regulatory approvals and preclinical and clinical testing. In addition to the proceeds of $47,062 received from the exercise of stock options, Novavax received $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 March 31, 1997 totaled $6,841,069. Novavax estimates that existing cash resources will be sufficient to finance its operations at its current level of development activity for approximately 18 to 20 months. 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 Account Pronouncement 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 None 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 9 11 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: May 9, 1997 By: /s/ ELAINE T. BENNETT --------------------------- Elaine T. Bennett Vice President (Principal Financial and Accounting Officer) 10 EX-11 2 COMPUTATION. 1 EXHIBIT 11 NOVAVAX, INC. AND SUBSIDIARIES COMPUTATION OF NET LOSS PER COMMON SHARE (Unaudited)
Three months ended March 31, --------- 1997 1996 -------- -------- Net loss $(1,209,622) $(1,211,182) ============ ============ Weighted average of common shares outstanding 10,889,546 9,942,936 ============ ============ Net loss per common share outstanding $(.11) $(.12) ===== =====
Common stock equivalents were not included in the above as they are antidilutive. 11 EX-27 3 FINANCIAL DATA SCHEDULE.
5 3-MOS DEC-31-1996 MAR-31-1997 6,841,069 0 0 0 0 6,944,117 1,413,440 (444,531) 9,490,796 365,594 0 0 0 118,885 0 9,104,146 0 0 0 1,243,876 0 0 0 (1,209,622) 0 (1,209,622) 0 0 0 (1,209,622) (.11) (.11)
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