-----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, oy3e0sOFv/Dh/VBV1hoEYZsLW5YNmvQ7MeitiMlsZnj8dcC+kWcstG8/o3xQEoQ9 d18NUCGdJgwGq2/AVJVq3g== 0000900577-95-000002.txt : 19950612 0000900577-95-000002.hdr.sgml : 19950612 ACCESSION NUMBER: 0000900577-95-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950510 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANCED MAGNETICS INC CENTRAL INDEX KEY: 0000792977 STANDARD INDUSTRIAL CLASSIFICATION: 2835 IRS NUMBER: 042742593 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14732 FILM NUMBER: 95536083 BUSINESS ADDRESS: STREET 1: 61 MOONEY ST CITY: CAMBRIDGE STATE: MA ZIP: 02138 BUSINESS PHONE: 6174972070 MAIL ADDRESS: STREET 1: TESTA HURWITZ & THIBEAULT STREET 2: 53 STATE STREET CITY: BOSTON STATE: MA ZIP: 02109 10-Q 1 1 OF 16 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 (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, 1995 OR [ ] Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934. For the transition period from to Commission File #0-14732 ADVANCED MAGNETICS, INC. (Exact name of registrant as specified in its charter) Delaware 04-2742593 (State or other jurisdiction of (I.R.S. Employer Incorporation organization) or Identification No.) 61 Mooney Street Cambridge, MA 02138 (Address of principal executive offices) Registrant's telephone number, including area code: 617/497-2070 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 May 3, 1995, 6,727,744 shares of registrant's common stock (par value, $.01) were outstanding. 2 OF 16 ADVANCED MAGNETICS, INC. FORM 10-Q QUARTER ENDED MARCH 31, 1995 PART I. FINANCIAL INFORMATION Item 1 -- Financial Statements 3 OF 16 ADVANCED MAGNETICS, INC. BALANCE SHEET MARCH 31, 1995 AND SEPTEMBER 30, 1994 (Unaudited)
ASSETS March 31, September 30, 1995 1994 Current assets: Cash and cash equivalents $ 4,115,493 $ 6,462,193 Marketable securities (Note B) 36,880,078 33,199,085 Accounts receivable 1,032,726 248,390 Recoverable income taxes 90,117 90,117 Prepaid expenses 303,886 112,846 Total current assets 42,422,300 40,112,631 Property, plant and equipment: Land 360,000 360,000 Building 4,320,766 4,316,706 Laboratory equipment 6,220,504 5,598,456 Furniture and fixtures 496,613 324,453 11,397,883 10,599,615 Less--accumulated depreciation and amortization 4,617,575 4,136,092 Net property, plant and equipment 6,780,308 6,463,523 Other assets 96,546 96,546 Total assets $ 49,299,154 $ 46,672,700 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 468,069 $ 273,385 Accrued expenses 418,796 947,840 Income taxes payable (Note D) 375,000 --- Total current liabilities 1,261,865 1,221,225 Stockholders' equity: Preferred stock, par value $.01 per share, authorized 2,000,000 shares; none issued --- --- Common stock, par value $.01 per share, authorized 15,000,000 shares; issued and outstanding 6,726,951 shares at March 31, 1995 and 6,712,572 shares at September 30, 1994 67,270 67,126 Additional paid-in capital 44,862,803 44,660,834 Retained earnings 3,274,205 723,515 Unrealized losses on marketable securities (Note B) (166,989) --- Total stockholders' equity 48,037,289 45,451,475 Total liabilities and stockholders' equity $ 49,299,154 $ 46,672,700
The accompanying notes are an integral part of the financial statements. 4 OF 16 ADVANCED MAGNETICS, INC. STATEMENT OF OPERATIONS FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED MARCH 31, 1995 AND 1994 (Unaudited)
Three-Month Six-Month Period Period Ended Ended March 31, March 31, 1995 1994 1995 1994 Revenues: License fees $ 5,000,000 $ 2,000,000 $ 5,000,000 $ 3,005,000 Royalties --- --- --- 13,461 Product sales 789,026 138,950 844,285 200,550 Interest, dividends and net gains and losses on sales of securities 438,669 476,985 1,120,655 886,152 Total revenues 6,227,695 2,615,935 6,964,940 4,105,163 Cost and expenses: Cost of product sales 157,804 26,600 168,854 38,900 Research and development expenses 1,968,069 1,729,071 3,579,516 3,349,152 Credit for purchase of in-process research and development (Note F) --- --- (380,000) --- Selling, general and administrative expenses 472,530 472,106 788,420 944,323 Total costs and expenses 2,598,403 2,227,777 4,156,790 4,332,375 Other income: Gain on sale of in-vitro product line (Note C) --- --- --- 2,649,580 Income before provision for income taxes 3,629,292 388,158 2,808,150 2,422,368 Provision for income taxes 375,000 16,500 375,000 102,000 Income before cumulative effect of accounting change 3,254,292 371,658 2,433,150 2,320,368 Cumulative effect of accounting change (Note B) --- --- 117,540 --- Net income $ 3,254,292 $ 371,658 $ 2,550,690 $ 2,320,368 Net income per share before cumulative effect of accounting change $ 0.48 $ 0.05 $ 0.36 $ 0.34 Cumulative effect of accounting change --- --- 0.01 --- Income per share $ 0.48 $ 0.05 $ 0.37 $ 0.34 Weighted average number of common and common equivalent shares 6,835,370 6,853,453 6,828,497 6,857,979
The accompanying notes are an integral part of the financial statements. 5 OF 16 ADVANCED MAGNETICS, INC. STATEMENT OF CASH FLOWS FOR THE SIX-MONTH PERIODS ENDED MARCH 31, 1995 AND 1994 (Unaudited)
Six-Month Periods Ended March 31, 1995 1994 Cash flows from operating activities: Cash received from customers $ 5,112,799 $ 3,092,219 Cash paid to suppliers and employees (4,080,707) (4,031,398) Dividends and interest received 1,045,310 607,029 Income taxes paid --- (136,500) Net realized gains (losses) on sales of securities (2,428) 156,644 Net cash provided by (used in) 2,074,974 (312,006) operating activities Cash flows from investing activities: Proceeds from sales of securities 750,000 3,666,318 Purchase of securities (4,455,519) (24,615,839) Capital expenditures (798,268) (309,652) Net cash (used in) investing activities (4,503,787) (21,259,173) Cash flows from financing activities: Proceeds from issuances of common stock 82,113 288,651 Purchase of treasury stock --- (299,716) Net cash provided by (used in) financing activities 82,113 (11,065) Net (decrease) in cash and cash equivalents (2,346,700) (21,582,244) Cash and cash equivalents at beginning of the period 6,462,193 25,837,909 Cash and cash equivalents at end of the period $ 4,115,493 $ 4,255,665
The accompanying notes are an integral part of the financial statements. 6 OF 16 ADVANCED MAGNETICS, INC. RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES FOR THE SIX-MONTH PERIODS ENDED MARCH 31, 1995 AND 1994 (Unaudited)
Six-Month Periods Ended March 31, 1995 1994 Net income $ 2,550,690 $ 2,320,368 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Cumulative effect of accounting change (117,540) --- Credit for purchase of in-process research and development (380,000) --- Depreciation and amortization 481,483 408,316 Amortization of U. S. Treasury Notes Discount (24,924) --- (Increase) in accounts receivable (784,336) (249,271) (Increase) in prepaid expenses (191,040) (101,301) Decrease in other assets --- 9,443 (Decrease) increase in accounts payable and accrued expenses 165,641 (49,981) Gain on sale of in-vitro product line --- (2,649,580) Income taxes payable 375,000 --- Total adjustments (475,716) (2,632,374) Net cash provided by (used in) operating activities $ 2,074,974 $ (312,006)
The accompanying notes are an integral part of the financial statements. 7 OF 16 ADVANCED MAGNETICS, INC. NOTES TO FINANCIAL STATEMENTS MARCH 31, 1995 A. Summary of Accounting Policies. The balance sheet of Advanced Magnetics, Inc. (the "Company") as of March 31, 1995 and the statement of operations and cash flows for the quarter then ended are unaudited and in the opinion of management, all adjustments necessary for a fair presentation of such financial statements have been recorded. Such adjustments consisted only of normal recurring items. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The year-end balance sheet data was derived from audited financial statements, but does not include disclosures required by generally accepted accounting principles. It is suggested that these interim financial statements be read in conjunction with the Company's most recent Form 10-K and Annual Report as of September 30, 1994. B. Marketable Securities. The cost and market value of the marketable securities portfolio are as follows: March 31, 1995 September 30, 1994 Cost $ 37,047,067 $ 33,316,625 Market $ 36,880,078 $ 33,199,085 The Company adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities", in its first fiscal quarter ended December 31, 1994. Prior period financial statements have not been restated. The Company's current portfolio consists of securities classified as available-for-sales securities at fair market value. At March 31, 1995, unrealized losses on marketable securities amounted to $166,989 and were recorded as a separate component of equity. The Company recorded a $117,540 unrealized loss on market value of securities in the fiscal year ended September 30, 1994. In the first fiscal quarter ended December 31, 1994, the Company recorded a cumulative effect of the accounting change of $117,540 including the reversal of the reserve for the carrying value of marketable securities. At March 31, 1995, 72% of the Company's portfolio was invested in U. S. Treasury Notes, 5% in corporate bonds, 19% in preferred stocks and 4% in common stocks. C. Sale of In-Vitro Product Line. On October 15, 1993, the Company sold its in-vitro product line to PerSeptive Biosystems, Inc. ("PerSeptive") for $4,156,674 in PerSeptive's common stock, plus an earn out based on 1995 revenues. The Company recognized a pre-tax gain of $2,649,580 on this sale in the first fiscal quarter of 1994. D. Income Taxes. The Company accounts for income taxes in conformance with FAS 109 "Accounting for Income Taxes," which requires the asset and liability approach for financial accounting and reporting for income taxes. 8 OF 16 The provision for income taxes for the six-month periods ended March 31, 1995 and 1994 was at a different rate than the U. S. Statutory rate for the following reasons:
Six-Month Period Ended March 31, 1995 1994 U. S. Statutory Tax Rate 34.0% 34.0% State income taxes, net of Federal benefit .0 0.2 Dividend Received Deduction (5.6) (6.8) Amortization of Purchased Technology (12.9) (11.8) Alternative Minimum Tax 13.4 .0 Utilization of Net Operating Loss (15.8) (7.6) Other 0.3 (3.8) Effective Tax Rate 13.4% 4.2%
During the six months ended March 31, 1995, the net change in the valuation allowance was a decrease of approximately $950,000. The decrease resulted from the realization of certain net operating loss and purchase technology carryforwards. During the six months ended March 31, 1994, the net change in the valuation allowance was a decrease of approximately $682,000. The decrease resulted from the realization of certain operating loss and purchase technology carryforwards which were offset against the gain realization upon sale of the Company's in-vitro product line. E. Legal Proceedings. The Company and certain of its officers were sued in an action in the United States District Court for the District of Massachusetts on September 3, 1992. The plaintiff, a former consultant to the Company, claims that he was incorrectly omitted as an inventor or joint inventor on six of the Company's patents and on pending applications, and seeks injunctive relief and unspecified monetary damages. The plaintiff filed a related case in the Superior Court of the Commonwealth of Massachusetts. The Superior Court has dismissed some of the claims on summary judgment. While the final outcome of these actions cannot be determined, the Company believes that the plaintiff's claims are without merit and intends to defend the actions vigorously. F. Agreements. On August 30, 1994, the Company signed an agreement with Bristol-Myers Squibb Co. to reacquire the development and marketing rights to AMI-227 previously licensed to Squibb Diagnostics, a division of Bristol-Myers Squibb Co. ("Squibb"). As part of the transaction, Bristol-Myers Squibb Co. returned to the Company a warrant to purchase 600,000 shares of the Company's common stock, valued at $240,000. The Company agreed to pay Bristol-Myers Squibb Co. $1,000,000 in two cash payments, of which $500,000 was paid on August 30, 1994 and $500,000 was to be paid upon acceptance of 1,200 vials of the AMI-227 suitable for worldwide preclinical and clinical studies. Furthermore, the Company agreed to pay up to $2,750,000 for future royalties based on the Company's sales of AMI-227. In connection with the purchase, the Company recorded a charge of $760,000 in the fourth quarter of fiscal 1994 which represented the value of the purchase of in-process research and development. In the first quarter of fiscal 1995, the Company and Bristol-Myers Squibb Co. agreed that the 1200 vials of AMI-227 delivered to the Company by Squibb were not acceptable. In addition, they agreed that any future delivery of AMI-227 under the agreement will not be required and that the Company will not be required to make the $500,000 payment. Accordingly, the Company recorded a credit for $380,000 to the purchase of in-process research and development and adjusted the value of the warrant to purchase 600,000 shares of the Company's common stock by $120,000 in the first quarter of fiscal 1995. 9 OF 16 On February 1, 1995 the Company entered into an agreement with Berlex Laboratories, Inc. ("Berlex") granting Berlex a product license and exclusive marketing rights to the Company's Feridex I.V. (trademark) magnetic resonance imaging (MRI) contrast agent in the United States and Canada. Under the terms of the agreement, Berlex paid a $5,000,000 non-refundable license fee and will pay an additional $5,000,000 license fee when the product has been approved for commercial marketing in the United States by the U. S. Food and Drug Administration (FDA). In addition, the Company will receive payments for manufacturing the product and royalties on future sales. The Company submitted a New Drug Application (NDA) for Feridex I.V. to the FDA in February 1994 which was accepted for filing in April 1994. 10 OF 16 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations. Overview Since its inception, Advanced Magnetics, Inc. (the "Company") has focused its efforts on developing its core magnetic particle technology, primarily to develop MRI contrast agents. Advanced Magnetics has funded its operations with cash from license fees from corporate partners, royalties, sales of its in-vitro products, fees from contract research performed for third parties, the proceeds of financings, and income earned on invested cash. The Company has received substantial license fee revenues from licenses of both its MRI contrast agent technology and its in-vitro clinical laboratory technology. The Company has also received royalty revenues under licenses of its in-vitro clinical laboratory technology. A substantial portion of the Company's expenses consists of research and development expenses. The Company expects its research and development expenses to increase as it funds clinical trials and associated toxicology and pharmacology studies and as it devotes resources to developing additional contrast agents and new therapeutic drugs. The Company's revenues and operating results can vary substantially from period to period. In particular, the timing of the receipt by the Company of license fees has historically caused substantial variations in operating results from period to period. In addition, variations in revenues and expenses resulting from clinical trials, additional license or corporate partnering arrangements, timing of regulatory approvals and royalty payments may cause significant future variations in period to period results. Results of Operations for the quarter ended March 31, 1995 as compared to the quarter ended March 31, 1994. Revenues Total revenues of the Company were $6,227,695 in the second fiscal quarter ended March 31, 1995 compared to $2,615,935 in the second fiscal quarter ended March 31, 1994. The Company's revenues consisted primarily of license fees, direct sales of products and investment income. The increase in revenues of $3,611,760 compared to the second fiscal quarter ended March 31, 1994 resulted primarily from an increase in license fees of $3,000,000 and an increase in direct product sales of $650,076. On February 1, 1995, the Company received a $5,000,000 non-refundable license fee payment from Berlex under an agreement granting Berlex a product license and exclusive marketing rights to the Company's Feridex I.V. MRI contrast agent in the United States and Canada. The second fiscal quarter of 1994 included a non- refundable license fee of $2,000,000 paid by Squibb Diagnostics, a division of Bristol-Myers Squibb, Inc. ("Squibb Diagnostics"). Product sales for the second fiscal quarter ended March 31, 1995 were $789,026 compared to $138,950 for the second fiscal quarter ended March 31, 1994. The initial product launch in Europe of Endorem (registered trademark) (ferumoxide), the Company's liver imaging contrast agent, began in January 1995 and accounted for all the Company's recognition of the product sales for the second fiscal quarter ended March 31, 1995. Product sales for the second fiscal quarter ended March 31, 1994 of $138,950 were for the initial product launch in Europe in December 1993 of Lumirem (registered trademark) (ferumoxsil), the Company's gastrointestinal imaging agent. Interest, dividends and net gains and losses on sales of securities were $438,669 for the second fiscal quarter ended March 31, 1995 compared to $476,985 for the second fiscal quarter ended March 31, 1994. These amounts included an increase in revenue from interest and dividends to $441,097 in the second fiscal quarter ended March 31, 1995 from $320,341 in the second fiscal quarter ended March 31, 1994. The increase was primarily a result of an increase in interest revenue from the purchase of United States Treasury notes. In the second fiscal quarter ended March 31, 1995, net gains and losses on sales of securities were a net loss of $2,428 compared to a net gain of $156,644 in the second fiscal quarter ended March 31, 1994. 11 OF 16 Costs and Expenses The cost of product sales for the first fiscal quarter ended March 31, 1995 was $157,804 compared to $26,600 for the second fiscal quarter ended March 31, 1994. The cost of product sales was 20% of sales for both fiscal second quarters. The Company has produced products for sale on a made to order basis only. Research and development expenses for the second fiscal quarter ended March 31, 1995 were $1,968,069, an increase of 14% compared to $1,729,071 for the second fiscal quarter ended March 31, 1994. The increase in research and development expense was primarily due to expenditures for the newly formed Clinical Development Group in the Company's Princeton, New Jersey office and human clinical trials for certain of the Company's development stage products. General and administrative expenses for the second fiscal quarter ended March 31, 1995 were $472,530, consistent with general and administrative expenses of $472,106 for the second fiscal quarter ended March 31, 1994. Earnings For the reasons stated above, net income for the second fiscal quarter ended March 31, 1995 was $3,254,292 or $0.48 per share compared to net income of $371,658 or $0.05 per share for the second fiscal period ended March 31, 1994. Results of Operations for the Six Months Ended March 31, 1995 as Compared to the Six Months Ended March 31, 1994 Revenues Total revenues for the six-month period ended March 31, 1995 increased 70% to $6,964,940 compared to $4,105,163 for the six-month period ended March 31, 1994. License fee revenues increased approximately $2,000,000 for the six-month period ended March 31, 1995 as a result of a $5,000,000 payment received on February 1, 1995 from Berlex under an agreement granting Berlex a product license and exclusive marketing rights to the Company's Feridex I.V. MRI contrast agent in the United States and Canada. License fees revenues for the six-month period ended March 31, 1994 were $3,005,000 and included a non-refundable license fee of $3,000,000 paid by Squibb Diagnostics. There were no royalty revenues received in the six-month period ended March 31, 1995 compared to $13,461 for the six-month period ended March 31, 1994. Product sales of $844,285 for the six-month period ended March 31, 1995 were primarily for the initial product launch in Europe of Endorem (registered trademark) (ferumoxide), the Company's liver imaging contrast agent. Product sales of $200,550 for the six-month period ended March 31, 1994 were primarily for the launch in Europe of Lumirem (registered trademark) (ferumoxsil), the Company's gastrointestinal imaging contrast agent. Interest, dividends and gains and losses on sales of securities resulted in a gain of $1,120,655 in the six-month period ended March 31, 1995 compared to a gain of $886,152 in the six-month period ended March 31, 1994. These amounts include interest and dividend revenues of $1,123,083 for the six-month period ended March 31, 1995 compared to $729,508 for the six-month period ended March 31, 1994. The increase was primarily a result of an increase in interest revenue from the purchase of United States Treasury notes. Net gains (losses) from sales of marketable securities was a loss of $2,428 for the six-month period ended March 31, 1995 compared to a net gain of $156,644 for the six-month period ended March 31, 1994. 12 OF 16 Costs and Expenses The cost of product sales for the six-month period ended March 31, 1995 related primarily to the sales in Europe of Endorem (registered trademark) (ferumoxide), the Company's liver imaging contrast agent. The cost of products sales for the six-month period ended March 31, 1994 related primarily to the sales in Europe of Lumirem (registered trademark) (ferumoxsil), the Company's gastrointestinal imaging contrast agent. The cost of product sales for both six-month periods was 20% of sales. The Company produces products for sale on a made-to-order basis only. Research and development expenses for the six-month period ended March 31, 1995 increased 7% to $3,579,516 from $3,349,152 for the six-month period ended March 31, 1994. The increase in research and development expenses was primarily due to expenditures for the newly formed Clinical Development Group in the Company's Princeton, New Jersey office and human clinical trials for several of the Company's development stage products. In the first fiscal quarter, the Company and Bristol-Myers Squibb Co. agreed that the 1,200 vials of AMI-227 delivered were not acceptable. In addition, they agreed that any future delivery of AMI-227 under the agreement will not be required and that the Company will not be required to make the $500,000 payment. Accordingly, the Company recorded a credit for $380,000 to the purchase of in-process research and development as well as a $120,000 adjustment to the value of the warrant to purchase 600,000 shares of the Company's Common Stock. General and administrative expenses for the six-month period ended March 31, 1995 of $788,420 decreased 17% from $944,323 for the six- month period ended March 31, 1994. The decrease was primarily due to a decrease in legal and consulting fees. Other In the six month period ended March 31, 1994, the Company recognized a pre-tax gain of $2,649,580 from the sale of its in- vitro product line to PerSeptive on October 15, 1993. The company adopted Statement of Financial Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities", in the first quarter of fiscal 1995. As a result, the Company recorded a cumulative effect for the accounting change of $117,540. Income before the cumulative effect was $2,433,150. Income Taxes The income tax provision for the six-month period ended March 31, 1995 was $375,000 or 13.4% of income before taxes. The income tax provision for the six-month period ended March 31, 1994 was $102,000 or 4.2% of income before taxes (Note D). Earnings For the reasons stated above, net income for the six-month period ended March 31, 1995 was $2,550,690 or $0.37 per share compared to net income of $2,320,368 or $0.34 per share for the six- month period ended March 31, 1994. Liquidity and Capital Resources At March 31, 1995, the Company's cash and cash equivalents totaled $4,115,493, representing a decrease of $2,346,700 from cash and cash equivalents at September 30, 1994. Additionally, the Company had marketable securities of $36,880,078 at March 31, 1995 compared to $33,199,085 at September 30, 1994. Cash provided by operating activities was $2,074,974 for the six-month period ended March 31, 1995 compared to $312,006 cash used in operating activities for the six-month period ended March 31, 1994. Cash provided by operating activities for the six-month period ended March 31, 1995 was primarily due to the $5,000,000 license fee paid by Berlex under a product license agreement granting Berlex exclusive marketing rights to the Company's Feridex I.V. MRI contrast agent. Cash used in investing activities was $4,503,787 for the six-month period ended March 31, 1995 compared to $21,259,173 for the six-month period ended March 31, 1994. Cash used in investing activities for the six-month period ended March 31, 1995 includes the purchase of United States Treasury notes at a cost of 13 OF 16 $4,003,516. Cash used in investing activities for the six-month period ended March 31, 1994 included the purchase of United States Treasury notes at a cost of $22,290,547. Cash provided by financing activities for the six-month period ended March 31, 1995 was $82,113 which resulted from issuance of common stock under employee stock option plans.. Cash used by financing activities for the six-month period ended March 31, 1994 was $11,065. Capital expenditures for the six-month period ended March 31, 1995 were $798,268 compared to $309,652 in the six-month period ended March 31, 1994. The increase in capital expenditures for the six-month period ended March 31, 1995 was primarily attributable to an upgrade in the Company's magnetic resonance imaging equipment and for the expenses associated with the newly formed Clinical Development Group in the Company's Princeton, New Jersey office. The Company has not planned any near term additional acquisitions or major equipment expenditures and believes its available cash and cash equivalents and marketable securities are sufficient to meet its anticipated needs through fiscal 1996. The Company expects that its expenditures for research and development for the 1995 fiscal year will increase significantly compared to the fiscal year ended September 30, 1994. The expected increase in research and development expenses is due to the newly formed Clinical Development Group responsible for human clinical trials for the Company's development stage products and the funding for the development of additional contrast agents and antiviral therapeutics for treatment of hepatitis. Management believes that the Company's current operations are not materially impacted by the effects of inflation. 14 OF 16 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders On February 7, 1995, the Company held its Annual Meeting of Stockholders. At the meeting, the stockholders acted upon the following proposals: (i) election of directors and (ii) ratification of the firm of Coopers & Lybrand LLP as independent auditors for the fiscal year ending September 30, 1995. All of the above matters were approved by the stockholders. Votes "FOR" represent affirmative votes and do not include abstentions or broker non-votes. In cases where a signed proxy was submitted without designation, the shares represented by the proxy were voted "FOR" each proposal in the manner described in the Proxy Statement. On the record date (December 16, 1994), 6,720,115 shares of the Company's common stock were issued and outstanding. Voting results were as follows:
Matter For Against Withheld Abstain 1. Election of Directors Thomas Coor 5,621,276 N/A 48,658 N/A Jerome Goldstein 5,621,826 N/A 48,108 N/A Leslie Goldstein 5,596,312 N/A 73,622 N/A Richard L McIntire 5,621,862 N/A 48,072 N/A Edward B. Roberts 5,621,862 N/A 48,072 N/A Roger E. Travis 5,621,862 N/A 48,072 N/A George M. Whitesides 5,621,862 N/A 48,072 N/A
2. Ratification of Independent Auditors 5,624,382 10,476 N/A 35,076 Item 6. Exhibits Statement Recomputation of Per Share Earnings is filed as Part II, Exhibit 11, of this report. 15 OF 16 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. ADVANCED MAGNETICS, INC. Date May 3, 1995 By /s/ Jerome Goldstein Jerome Goldstein, President, Treasurer and Chairman of the Board of Directors Date May 3, 1995 By /s/ Anthony P. Annese Anthony P. Annese, Vice President and Principal Accounting Officer 16 OF 16 ADVANCED MAGNETICS, INC. Exhibit 11 - Statement Recomputation of Per Share Earnings Attached to and made part of Part II of Form 10-Q for the Three-Month and Six-Month Periods Ended March 31, 1995 and 1994 (unaudited)
Three-Month Periods Six-Month Periods Ended March 31, Ended March 31, 1995 1994 1995 1994 Weighted average number of shares issued and outstanding 6,724,796 6,689,383 6,720,831 6,677,417 Assumed exercise of options reduced by the number of shares which could have been purchased with the proceeds of those options 110,574 102,389 107,666 111,875 Assumed exercise of warrants reduced by the number of shares could have been purchased with the proceeds of those warrants --- 61,681 --- 68,687 As adjusted 6,835,370 6,853,453 6,828,497 6,857,979
EX-27 2
5 3-MOS SEP-30-1994 MAR-31-1995 4,115,493 36,880,078 1,032,726 0 0 42,422,300 11,397,883 4,617,575 49,299,154 1,261,865 0 67,270 0 0 48,137,008 49,299,154 789,026 6,227,695 157,804 2,598,403 2,440,419 0 0 3,629,292 375,000 0 0 0 0 3,254,292 .48 0
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