-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, VrSlv/nBEeVzo9x6QWOT3hFbh4eGO8nbKdL9ieMEPvb9F4BksbOVxANIsD+JblWr +Bs1RHHtMH0PbKF8m/1dIQ== 0000896415-95-000024.txt : 19950414 0000896415-95-000024.hdr.sgml : 19950414 ACCESSION NUMBER: 0000896415-95-000024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950225 FILED AS OF DATE: 19950411 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENOME THERAPEUTICS CORP CENTRAL INDEX KEY: 0000356830 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 042297484 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10824 FILM NUMBER: 95528046 BUSINESS ADDRESS: STREET 1: 1OO BEAVER ST CITY: WALTHAM STATE: MA ZIP: 02154 BUSINESS PHONE: 6178935007 MAIL ADDRESS: STREET 1: 100 BEAVER STREET CITY: WALTHAM STATE: MA ZIP: 02154 FORMER COMPANY: FORMER CONFORMED NAME: COLLABORATIVE RESEARCH INC DATE OF NAME CHANGE: 19920703 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ____________ FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For Quarter Ended: February 25, 1995 Commission File No: 0-10824 GENOME THERAPEUTICS CORPORATION (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-2297484 (State or other jurisdiction (I.R.S. employer of incorporation or organization) identification no.) 100 BEAVER STREET; WALTHAM, MASSACHUSETTS 02154 (Address of principal executive offices) (Zip code) Registrant's telephone number: (617) 893-5007 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 12,628,946 $.10 PAR VALUE Outstanding March 23, 1995 SERIES B RESTRICTED STOCK 57,512 $.10 PAR VALUE Outstanding March 23, 1995 PAGE 1 Genome Therapeutics Corp. and Subsidiaries Index to Financial Information (Unaudited) and Other Information Page Part I Financial Information (Unaudited): Consolidated Condensed Balance Sheets as of 3 February 25, 1995 and August 31, 1994 Consolidated Condensed Statements of Operations 4 for the 13-week periods ended February 25, 1995 and February 26, 1994 Consolidated Statements of Cash Flows for the 5 13-week periods ended February 25, 1995 and February 26, 1994 Notes to Consolidated Condensed Financial 6 Statements Management's Discussion and Analysis of Financial 7-9 Conditions and Results of Operations Part II Other Information: Other Information 10 Signature 11 PAGE 2 GENOME THERAPEUTICS CORP. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) February 25, 1995 August 31, 1994 Assets: Current Assets: Cash and Cash Equivalents $2,389,908 $1,208,836 Short-term Investments 800,179 3,008,344 Receivables: Trade and Other (net of allowances for doubtful accounts) 474,063 391,151 Unbilled Costs 269,849 229,045 Prepaid Expenses 149,107 17,836 Other Current Assets 3,800 4,550 ____________ ___________ Total Current Assets 4,086,906 4,859,762 Equipment and Leasehold Improvements, at cost: Laboratory and Scientific Equipment 1,045,127 752,482 Leasehold Improvements 1,570,930 1,446,236 Office Equipment and Furniture 728,149 532,656 Unfinished Plant and Equipment 115,246 173,186 ____________ ___________ 3,459,452 2,904,560 Less Accumulated Depreciation 2,253,184 2,120,146 ____________ ___________ 1,206,268 784,414 Other Assets 268,883 266,506 ____________ ___________ Total Assets $5,562,057 $5,910,682 Liabilities and Shareholders' Equity: Current Liabilities: Accounts Payable $405,078 $450,854 Accrued Expenses 905,029 838,595 Deferred Contract Revenue 56,325 37,991 Current Maturities of Capital Lease Obligations 212,649 193,388 _____________ ___________ Total Current Liabilities 1,579,081 1,520,828 Deferred Compensation 166,485 153,507 Capital Lease Obligations, net of Current Maturities 651,670 165,299 Shareholders' Equity 3,164,821 4,071,048 _____________ ___________ Total Liabilities and Shareholders' Equity $5,562,057 $5,910,682 See notes to Consolidated Condensed Financial Statements. PAGE 3 GENOME THERAPEUTICS CORP. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) ________________________________________________________________________________ 13 Weeks Ended 26 Weeks Ended 2/25/95 2/26/94 2/25/95 2/26/94 ________________________________________________________________________________ Revenues: Operating Revenues $1,888,668 $1,524,540 $3,426,568 $3,137,514 Interest Income 44,673 24,804 85,755 60,274 Royalties 35,559 47,584 71,120 78,834 ___________ ___________ ___________ __________ Total Revenues 1,968,900 1,596,928 3,583,443 3,276,622 Costs and Expenses: Cost of Revenues 1,661,910 1,308,153 2,988,760 2,594,864 Research and Development 282,272 64,717 537,903 92,529 General and Administrative 480,943 524,401 963,007 1,092,258 ___________ ___________ __________ __________ Total Costs and Expenses 1,425,125 1,897,271 4,489,670 3,779,651 ___________ ___________ __________ __________ Net Loss ($456,226) ($300,343) ($906,227) ($503,029) ___________ ___________ __________ _________) Net Loss per Common Share ($0.04) ($0.03) ($0.08) (0.05) ___________ ___________ __________ __________ Weighted Average Number of Common Shares Outstanding 11,778,946 10,737,435 11,778,946 10,718,463 ___________ ___________ ___________ __________ See notes to Consolidated Condensed Financial Statements PAGE 4 GENOME THERAPEUTICS CORP. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) _____________________________________________________________________________ Twenty-six Weeks Ended February 25, February 26, 1995 1994 _____________________________________________________________________________ Cash Flows from Operating Activities: Net Loss ($906,227) ($503,029) Adjustments to Reconcile Net Loss to Net Cash Used by Operating Activities: Depreciation and Amortization 144,380 101,012 Deferred Compensation 12,978 13,172 Provision for Accounts Receivable 0 45,161 Changes in Assets and Liabilities: (Increase) Decrease in Current Assets: Receivables (123,716) (105,296) Prepaid Expenses (131,271) (72,399) Other Current Assets 750 (39) Increase (Decrease) in Current Liabilities: Accounts Payable (45,776) (33,319) Accrued Expenses 232,674 (35,550) Deferred Contract Revenue 18,334 (84,053) ____________ ____________ Total Adjustments 108,253 (171,311) Net Cash Used for Operating Activities (797,974) (674,340) Cash Flows from Investing Activities: Purchases of Equipment and Leasehold Improvements (68,844) (17,329) Decrease in Short-Term Investments 2,208,165 (22,590) Increase in Other Assets (9,778) (114,716) Purchase of Long-term Investment 0 (50,000) ____________ _____________ Net Cash Provided by (Used for) Investing Activities 2,129,543 (204,635) Cash Flows from Financing Activities: Proceeds from Exercise of Stock Options 0 135,182 Principal Payments under Capital Lease Obligations (150,497) (87,622) ___________ _____________ Net Cash Provided by (Used for) Financing Activities (150,497) 47,560 ___________ _____________ Net Increase (Decrease) in Cash and Cash Equivalents 1,181,072 (831,415) Cash and Cash Equivalents at Beginning of Period 1,208,836 1,892,932 ___________ ____________ Cash and Cash Equivalents at End of Period $2,389,908 $1,061,517 _______________ ________________ Supplemental Disclosure of Cash Flow Information: Interest Paid during Period $28,354 $10,622 ___________ ____________ Supplemental Schedule of Noncash Investing Activities: Property and Equipment Acquired under Capital Leases $656,129 $23,665 See notes to Consolidated Condensed Financial Statements. PAGE 5 Notes to Consolidated Condensed Financial Statements (Unaudited) - ------------------------------------------------------------------------------- 1. The unaudited consolidated condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and include, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of interim results. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Company believes, however, that its disclosures are adequate to make the information presented not misleading. The results of operations for the thirteen (13) and twenty-six (26) week periods ended February 25, 1995 are not necessarily indicative of the results to be expected for the full fiscal year. 2. For all periods presented, net loss per common share is based upon the weighted average number of shares outstanding during the period, since inclusion of common equivalent shares would be anti-dilutive. 3. On March 20, 1995, the Company sold 850,000 shares of common stock for net proceeds of $2,038,500. The following selected financial statement information reflects the private placement described above. February February 25, 1995 25, 1995 (Unaudited) (Pro-forma) Cash and Cash Equivalents $2,389,908 $4,428,408 Total Current Assets $4,086,906 $6,125,406 Total Assets $5,562,057 $7,600,557 Shareholders' Equity $3,164,821 $5,203,321 Total Liabilities and $5,562,057 $7,600,557 Shareholders' Equity PAGE 6 Management's Discussion and Analysis of Financial Condition and Results of Operations FINANCIAL CONDITION AND LIQUIDITY As of February 25 1995, the Company's cash and short-term investments were approximately $3,190,000. In addition, on March 20, 1995, the Company sold 850,000 shares of common stock for net proceeds of $2,038,500. The Company believes that these funds are adequate to meet its short-term operational and capital needs. However, the Company needs to continue to supplement its capital in order to pursue its therapeutic strategy. During the thirteen (13) and twenty-six (26) week periods ended February 25, 1995, the Company used cash resources of approximately $409,000 and $1,027,000, respectively, the majority of which was used to support operations. During the same periods last year, the Company used cash resources of approximately $422,000 and $809,000, respectively, to primarily support operations. RESULTS OF OPERATIONS For the thirteen week period ended February 25, 1995, total revenues increased approximately $372,000 or 23% when compared to the same period last year from $1,597,000 in fiscal 1994 to $1,969,000 in fiscal 1995 and increased $354,000 or 22% from $1,615,000 when compared to the prior quarter. For the twenty-six (26) week period ended February 25, 1995, total revenues increased $307,000 or 9% when compared to the same period last year from $3,277,000 in fiscal 1994 to $3,583,000 in fiscal 1995. For the thirteen (13) week period ended February 25, 1995, operating revenues increased substantially by approximately 23% when compared to both the same period last year and prior quarter of this year reflecting primarily an increase in newly funded government research programs. Operating revenue for the twenty-six (26) week period ended February 25, 1995 increased $289,000 or 9% when compared to the same period last year also reflecting an increase in newly funded government research programs. For the thirteen (13) and twenty-six (26) week periods ended February 25, 1995, royalty income decreased by approximately $12,000 and $8,000, respectively, when compared to the same periods last year reflecting a $16,000 favorable sales adjustment last year which increased royalty income to reflect actual sales performance by Pfizer, Dow Chemical's licensee, of recombinant chymosin. Royalty income from Dow is accrued monthly based on prior year sales and is adjusted once a year to reflect actual sales performance by Pfizer. This year's royalty adjustment is scheduled for next PAGE 7 quarter. Royalty income remained relatively constant when compared to the prior quarter. Interest income for the thirteen (13) and twenty-six (26) week periods ended February 25, 1995 increased approximately $20,000 and $25,000, respectively, when compared to the same periods last year reflecting an increase in interest rates as well as invested funds due to proceeds received from the sale of common stock during the second and third quarter of fiscal 1994. Interest income remained relatively constant when compared to the prior quarter. COSTS AND EXPENSES For the thirteen (13) week period ended February 25, 1995, cost of revenues, as a percentage of operating revenues, increased 2% when compared to both the same period last year and prior quarter of this year. For the twenty-six (26) week period ended February 25, 1995, cost of revenues, as a percentage of operating revenues, increased from 83% to 87% when compared to the same period last year. These increases can be attributed to increased occupancy cost and related depreciation and amortization expenses associated with the expansion of the research contract business into laboratory space at our Beaver Street facility. Last year, this space was sublet to Dianon Systems, Inc., the purchaser of our diagnostics testing business. As of July 1994, Dianon has relocated its employees out of the sublet space to accommodate growth in the Company's research contract business. For the thirteen (13) week period ended February 25, 1995, cost of revenues, in absolute dollars, increased approximately 26% when compared to both the same period last year and the prior quarter. For the twenty-six (26) week period ended February 25, 1995, cost of revenues, in absolute dollars, increased 15% when compared with the same period last year. These increases reflect primarily the substantial increase in operating revenues as well as increased occupancy cost, as noted above. For the thirteen (13) and twenty-six (26) week periods ended February 25, 1995, company-funded research and development expenses increased substantially when compared to the same periods last year reflecting primarily the period expenses associated with the Company's project in Helicobacter pylori, the causative agent of stomach ulcers and believed to be responsible for some gastrointestinal cancers. For the thirteen (13) week period ended February 25, 1995, company-funded research and development expenses increased 10% when compared to the prior quarter. PAGE 8 For the thirteen (13) and twenty-six (26) week periods ended February 25, 1995, general and administrative expenses decreased by 8% and 11%, respectively, when compared to the same periods last year reflecting primarily personnel reduction in administrative support including the resignation of Dr. Orrie Friedman as a full-time employee and Chairman of the Board of the Company. As of June 30, 1994, Dr. Friedman terminated his employment with the Company. General and administrative expenses for the thirteen (13) week period ended February 25, 1995 remained relatively constant when compared to the prior quarter. PAGE 9 Part II 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 See Insert A Item 5. Other Information Subsequent to the quarter ended February 25, 1995, the Company issued 850,000 shares of Common Stock through a private placement. Proforma information is included in Note 3 to the Notes to Consolidated Condensed Financial Statements. Item 6. Exhibits and Reports on Form 8-K a) Exhibits: None. b) Reports on Form 8-K None. PAGE 10 Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized who also serves in the capacity of principal financial officer. Genome Therapeutics Corporation /S/ Fenel M. Eloi ______________________ Fenel M. Eloi (Principal Financial Officer) Date: March 23, 1995 PAGE 11 Insert A The Company's Special Meeting in lieu of an Annual Meeting was held on January 23, 1995. At the meeting, shareholders took the following actions. 1) Election of Directors. Name of Nominee Shares Voting For Withhold Authority Robert J. Hennessey 10,550,407 448,490 Orrie M. Friedman 10,534,712 464,185 Philip J. Leder 10,551,807 447,090 Lawrence Levy 10,542,907 455,990 Donald J. McCarren 10,547,107 451,790 Steven M. Rauscher 10,547,307 451,590 2) To approve a grant of stock option to Dr. Philip Leder For Against Abstain No Voting 10,113,161 670,508 71,554 143,674 3) To approve a grant of stock option to Dr. Paul Zamecnik For Against Abstain No Voting 10,063,109 713,925 78,189 143,674 4) To consider an amendment to the Company's Restated Articles of Organization to authorize 3,500,000 shares of preferred stock. For Against Abstain No Voting 6,487,846 815,512 71,699 3,623,840 5) To ratify the selection of Arthur Andersen LLP as the Company's auditors for the fiscal year ending August 31, 1995. For Against Abstain 10,902,892 47,295 48,710 EX-27 2
5 6-MOS AUG-31-1995 FEB-25-1995 2,389,908 800,179 972,917 229,005 0 4,086,906 3,549,452 2,253,184 5,562,057 1,579,081 651,670 1,177,894 0 0 1,986,927 5,562,057 3,426,568 3,583,443 2,998,760 2,998,760 1,500,910 0 28,354 (906,227) 0 (906,227) 0 0 0 (996,227) (.08) 0.00
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