-----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, BD3zFwauz8SOa6JqlyABRZi4pi9S/Z1j/44l9E1xPTU79K7vQeUD/afZy88pUBnB 92ElZ0wxfAlyH35edIykJQ== 0000927538-99-000011.txt : 19990514 0000927538-99-000011.hdr.sgml : 19990514 ACCESSION NUMBER: 0000927538-99-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROGENICS PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000835887 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 133379479 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23143 FILM NUMBER: 99619766 BUSINESS ADDRESS: STREET 1: 777 OLD SAW MILL RIVER ROAD CITY: TARRYTOWN STATE: NY ZIP: 10591 BUSINESS PHONE: 9147892800 MAIL ADDRESS: STREET 1: 777 OLD SAW MILL RIVER ROAD CITY: TARRYTOWN STATE: NY ZIP: 10591 10-Q 1 UNITED STATES 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, 1999 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 number 000-23143 PROGENICS PHARMACEUTICALS, INC. ------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 13-3379479 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 777 Old Saw Mill River Road Tarrytown, New York 10591 --------------------------- (Address of principal executive offices) (Zip Code) (914) 789-2800 -------------- (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 ----- ----- As of March 31, 1998 there were 9,398,356 shares of common stock, par value $.0013 per share, of the registrant outstanding. PROGENICS PHARMACEUTICALS, INC. INDEX Page No. -------- PART I - FINANCIAL INFORMATION Item 1. Financial Statements Condensed Balance Sheets............................... 3 Condensed Statements of Operations..................... 4 Condensed Statement of Stockholders' Equity............ 5 Condensed Statements of Cash Flows..................... 6 Notes to Condensed Financial Statements................ 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......... 9 Item 3. Quantitative and Qualitative Disclosures about Market Risk...................................... 12 PART II - OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds........ 13 Item 6. Exhibits and Reports on Form 8-K................. 13 2 PROGENICS PHARMACEUTICALS, INC. CONDENSED BALANCE SHEETS AT MARCH 31, 1999 AND DECEMBER 31, 1998 (Unaudited) March 31, December 31, 1999 1998 ASSETS: ------------- ------------- Current assets: Cash and cash equivalents............... $ 13,001,637 $ 14,437,263 Marketable securities................... 9,011,353 10,212,876 Accounts receivable..................... 2,467,993 1,634,480 Interest receivable 323,173 300,340 Other current assets.................... 258,223 255,522 ------------- ------------- Total current assets................. 25,062,379 26,840,481 Marketable securities..................... 1,287,508 Fixed assets, at cost, net of accumulated depreciation and amortization........... 1,125,781 1,045,389 Security deposits and other assets........ 13,745 13,745 ------------- ------------- Total assets......................... $ 27,489,413 $ 27,899,615 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY: Current Liabilities: Accounts payable and accrued liabilities........................... $ 1,156,395 $ 1,595,665 Capital lease obligations, current portion....................... 106,869 107,346 ------------- ------------- Total current liabilities............ 1,263,264 1,703,011 Capital lease obligations................. 88,694 117,166 ------------- ------------- Total liabilities.................... 1,351,958 1,820,177 ------------- ------------- Commitments and contingencies Stockholders' equity: Preferred stock, $.001 par value, 14,320,174 authorized; none issued and outstanding Common stock - $.0013 par value, 40,000,000 authorized; issued and outstanding - 9,398,356 in 1999, 9,358,207 in 1998............ 12,218 12,166 Additional paid-in capital.............. 44,557,704 44,377,193 Unearned compensation................... (981,050) (1,111,018) Accumulated deficit..................... (17,452,902) (17,207,993) Accumulated other comprehensive income......................... 1,485 9,090 ------------- ------------- Total stockholders' equity........... 26,137,455 26,079,438 ------------- ------------- Total liabilities and stockholders' equity............... $ 27,489,413 $ 27,899,615 ============= ============= The accompanying notes are an integral part of these statements. 3 PROGENICS PHARMACEUTICALS, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) Three months ended March 31, ----------------------------- 1999 1998 ------------- ------------- Revenues: Contract research and development....... $ 2,614,606 $ 1,713,179 Research grants......................... 211,500 Product sales........................... 17,980 6,623 Interest income......................... 303,296 369,525 ------------- ------------- Total revenues....................... 3,147,382 2,089,327 ------------- ------------- Expenses: Research and development................ 2,360,280 1,377,530 General and administrative.............. 868,738 785,210 Interest expense........................ 13,503 8,955 Depreciation and amortization........... 149,770 82,097 ------------- ------------- Total expenses....................... 3,392,291 2,253,792 ------------- ------------- Net loss............................. $ (244,909) $ (164,465) ============= ============= Net loss per share - basic and diluted.... $ (0.03) $ (0.02) ========== ========== The accompanying notes are an integral part of these statements. 4 PROGENICS PHARMACEUTICALS, INC. CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE QUARTER ENDED MARCH 31, 1999 (Unaudited)
ACCUMULATED COMMON STOCK ADDITIONAL OTHER TOTAL ----------------- PAID-IN UNEARNED ACCUMULATED COMPREHENSIVE STOCKHOLDERS' COMPREHENSIVE Shares Amount CAPITAL COMPENSATION DEFICIT INCOME (LOSS) EQUITY LOSS --------- ------- ----------- ------------ ------------- ------------- ------------- ------------- Balance at December 31, 1998 9,358,207 $12,166 $44,377,193 ($1,111,018) ($17,207,993) $9,090 $26,079,438 Amortization of unearned compensation 129,968 129,968 Issuance of compensatory stock options 48,332 48,332 Sale of Common Stock under employee stock purchase plans and exercise of stock options and warrants 40,149 52 132,179 132,231 Net loss (244,909) (244,909) ($244,909) Change in unrealized gain on marketable securities (7,605) (7,605) (7,605) --------- ------- ----------- ------------ ------------- ------------- ------------- ------------- Balance at March 31, 1999 9,398,356 $12,218 $44,557,704 ($981,050) ($17,452,902) $1,485 $26,137,455 ($252,514) ========= ======= =========== ============ ============= ============= ============= =============
The accompanying notes are an integral part of the financial statements. 5 PROGENICS PHARMACEUTICALS, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Increase (Decrease) in Cash and Cash Equivalents Three months ended March 31, ----------------------------- 1999 1998 ------------- ------------- Cash flows from operating activities: Net loss................................... $ (244,909) $ (164,465) ------------- ------------- Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization............ 149,770 82,097 Amortization of discounts, net of premiums, on marketable securities...... 33,370 29,772 Noncash expenses incurred in connection with issuance of common stock, stock options and warrants.................... 178,300 162,590 Changes in assets and liabilities: Increase in accounts receivable......... (833,513) (260,677) Increase in prepaid expenses and other current assets......................... (25,534) (167,964) Decrease in accounts payable and accrued expenses....................... (465,460) (548,724) Decrease in income taxes payable........ (25,000) ------------- ------------- Total adjustments.................. (963,067) (727,906) ------------- ------------- Net cash used in operating activities... (1,207,976) (892,371) ------------- ------------- Cash flows from investing activities: Capital expenditures....................... (203,972) (6,850) Sale of marketable securities.......... 2,475,000 Purchase of marketable securities (2,601,960) (7,435,782) ------------- ------------- Net cash used in investing activities... (330,932) (7,442,632) ------------- ------------- Cash flows from financing activities: Proceeds from the exercise of stock options and other adjustments to stockholders' equity.................... 132,231 31,302 Payment of capital lease obligations....... (28,949) (19,336) ------------- ------------- Net cash provided by financing activities.......................... 103,282 11,966 ------------- ------------- Net decrease in cash and cash Equivalents......................... (1,435,626) (8,323,037) ------------- ------------- Cash and cash equivalents at beginning of period................................. 14,437,263 21,737,925 ------------- ------------- Cash and cash equivalents at end of period........................... $ 13,001,637 $ 13,414,888 ============= ============= Supplemental disclosure of noncash investing and financing activities: Fixed assets included in accounts payable and accrued expenses........... $ 14,769 $ 34,563 ============= ============= The accompanying notes are an integral part of these statements. 6 PROGENICS PHARMACEUTICALS, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS 1. Interim Financial Statements The interim Condensed Financial Statements of Progenics Pharmaceuticals, Inc. (the "Company") have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and disclosures necessary for a presentation of the Company's financial position, results of operations and cash flows in conformity with generally accepted accounting principles. In the opinion of management, these financial statements reflect all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the Company's financial position, results of operation and cash flows for such periods. The results of operations for any interim periods are not necessarily indicative of the results for the full year. These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998. 2. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses as of March 31, 1999 and Decemer 31, 1998 consist of the following: March 31, 1999 December 31, 1998 -------------- ----------------- Accounts payable $ 909,079 $ 1,156,442 Accrued payroll and related costs 150,316 144,615 Legal and accounting fees payable 97,000 294,608 ------------ ------------- $ 1,156,395 $ 1,595,665 ============ ============= 3. Net Loss Per Share The Company's basic net loss per share amounts have been computed by dividing net loss by the weighted average number of Common shares outstanding. For the three months ended March 31, 1999 and 1998, the Company reported net losses and, therefore, no common stock equivalents were included in the computation of diluted net loss per share since such inclusion would have been antidilutive. The calculations of basic and diluted net loss per share are as follows: Net Loss Shares Per Share (Numerator) (Denominator) Amount ----------- ------------- --------- 1999: Basic and Diluted ($244,909) 9,371,742 ($0.03) 1998: Basic and Diluted ($164,465) 9,002,504 ($0.02) Options and warrants which have been excluded from the diluted per share amounts because their effect would have been antidilutive include the following: Three Months Ended March 31, ---------------------------------------------- 1999 1998 --------------------- --------------------- Wtd. Avg. Wtd. Avg. Wtd. Avg. Exercise Wtd. Avg. Exercise Number Price Number Price --------- --------- --------- --------- Options 3,214,639 $8.17 2,309,797 $4.54 Warrants 329,841 $6.12 330,455 $6.10 --------- --------- Total 3,544,480 $7.98 2,640,252 $4.74 ========= ========= 7 4. Reclassifications Certain reclassifications have been made to the 1998 financial statements to conform with the 1999 presentation. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements in this Form 10-Q constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any expected future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: technological uncertainties related to early stage product development, uncertainties associated with preclinical and clinical testing, risks relating to corporate collaborations, the lack of product revenue and the uncertainty of future profitability, the need for additional financing and other factors set forth more fully in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 and other periodic filings with the Securities and Exchange Commission. The following discussion should be read in conjunction with the Company's Condensed Financial Statements and the related notes thereto. General Progenics is a biopharmaceutical company focusing on the development and commercialization of innovative products for the treatment and prevention of cancer and viral diseases. The Company commenced principal operations in late 1988 and since that time has been engaged primarily in organizational efforts, including recruitment of scientific and management personnel, research and development efforts, development of its manufacturing capabilities, establishment of corporate collaborations and raising capital. In order to commercialize the principal products that the Company has under development, the Company will need to address a number of technological challenges and comply with comprehensive regulatory requirements. Accordingly, it is not possible to predict the amount of funds that will be required or the length of time that will pass before the Company receives revenues from sales of any of its products. To date, product sales have consisted solely of limited revenues from the sale of research reagents. The Company expects that sales of research reagents in the future will not significantly increase over current levels. The Company's other sources of revenues through March 31, 1999 have been payments received under its collaboration agreements, research grants and contracts related to the Company's cancer and HIV programs and interest income. To date, a majority of the Company's expenditures have been for research and development activities. The Company expects that its research and development expenses will increase significantly as its programs progress and the Company makes filings for related regulatory approvals. The Company had recurring losses prior to 1997 and had at March 31, 1999 an accumulated deficit of $17,453,000. The Company has financed its operations primarily through the private sale and issuance of equity securities, a line of credit that has since been repaid and terminated, payments received under its collaboration with the Bristol-Myers Squibb Company ("BMS") beginning in July 1997, payments received under its collaboration with F. Hoffmann-La Roche Ltd and Hoffmann-La Roche, Inc. ("Roche") beginning in January 1998 and the proceeds of the Company's initial public offering in November 1997. The Company will require additional funds to complete the development of its products, to fund the cost of clinical trials, and to fund operating losses which are expected to continue for the foreseeable future. The Company does not expect its products under development to be commercialized in the near future. 9 Results of Operations Three Months Ended March 31, 1999 and 1998 Contract research and development revenue increased to approximately $2,615,000 for the three months ended March 31, 1999 from approximately $1,713,000 for the three months ended March 31, 1998 as the Company received reimbursement of clinical development costs under its Joint Development and Master License Agreement with BMS (the "BMS License Agreement"), the collaboration with Roche and contract revenue from the National Institutes of Health and the Department of Defense. Revenues from research grants were approximately $212,000 for the three months ended March 31, 1999. No research grant revenues were recognized for the three months ended March 31, 1998. The increase resulted from the funding of a greater number of grants in the first three months of 1999. Sales of research reagents increased to approximately $18,000 for the three months ended March 31, 1999 from approximately $7,000 for the three months ended March 31, 1998 resulting from increased orders for such reagents. Interest income decreased to approximately $303,000 for the three months ended March 31, 1999 from approximately $370,000 for the three months ended March 31, 1998 due to the decrease in cash available for investing as the Company funded its expanded research programs. Research and development expenses increased to approximately $2,360,000 for the three months ended March 31, 1999 from approximately $1,378,000 for the three months ended March 31, 1998. The increase was principally due to additional costs in 1999 of conducting the Company's Phase III clinical trials, including the manufacture of GMK and MGV. The Company also paid $100,000 to Sloan-Kettering as a license fee for the rights to a new product, dehydroascorbic acid, ("DHA"), a derivative of vitamin C and issued stock options to a consultant. General and administrative expenses increased to approximately $869,000 for the three months ended March 31, 1999 from approximately $785,000 for the three months ended March 31, 1998. The increase was principally due to increases in employee salaries, the additional salary of a president hired in July 1998,and increased legal fees and patent expenses as the Company negotiated the in-licensing of new products offset by a decrease in franchise taxes. Interest expense increased to approximately $14,000 for the three months ended March 31, 1999 from approximately $9,000 for the three months ended March 31, 1998 due to an increase in capital leases. Depreciation expense increased to approximately $150,000 for the three months ended March 31, 1999 from approximately $82,000 for the three months ended March 31, 1998 due to an increase in capital expenditures and leasehold improvements during the third and fourth quarters of 1998. The Company's net loss for the three months ended March 31, 1999 was approximately $245,000 compared to a net loss of approximately $164,000 for the three months ended March 31, 1998. Liquidity and Capital Resources The Company has funded its operations since inception primarily through private placements of equity securities, loans that were subsequently converted into equity securities, a line of credit that was repaid and terminated, payments received under collaboration agreements including those with BMS and Roche, an initial public offering, funding under research grants and contracts, interest on investments, the sale of research reagents, and the proceeds from the exercise of outstanding options and warrants. 10 At March 31, 1999, the Company had cash, cash equivalents and marketable securities totaling approximately $23,300,000 compared with approximately $24,650,000 at December 31, 1998. The Company's facility lease has been extended to December 2000. In connection with the extended facility lease, the Company expended approximately $830,000 for equipment and leasehold improvements during the period from January 1, 1998 to March 31, 1999 and expects that an additional $250,000 will be spent to enhance its manufacturing capabilities for clinical trials during 1999. The Company believes that its present capital resources should be sufficient to fund operations at least through the end of 2000, based on the Company's current operating plan. No assurance can be given that there will be no change that would consume the Company's liquid assets before such time. The Company will require substantial funds to conduct research and development activities, preclinical studies, clinical trials and other activities relating to the commercialization of any potential products. In addition, the Company's cash requirements may vary materially from those now planned because of results of research and development and product testing, potential relationships with in-licensors and collaborators, changes in the focus and direction of the Company's research and development programs, competitive and technological advances, the cost of filing, prosecuting, defending and enforcing patent claims, the regulatory approval process, manufacturing and marketing and other costs associated with the commercialization of products following receipt of regulatory approvals and other factors. The Company has no committed external sources of capital and, as discussed above, expects no significant product revenues for a number of years as it will take at least that much time to bring the Company's products to the commercial marketing stage. The Company may seek additional financing, such as through future offerings of equity or debt securities or agreements with corporate partners and collaborators with respect to the development of the Company's technology, to fund future operations. There can be no assurance, however, that the Company will be able to obtain additional funds on acceptable terms, if at all. Year 2000 Compliance The "Year 2000" problem relates to many currently installed computers, software, and other equipment that relies on embedded technology (collectively, "Business Systems"). These Business Systems are not capable of distinguishing 21st century dates from 20th century dates. As a result, in less than one year, Business Systems used by many companies, in a very wide variety of applications, will experience operating difficulties unless they are modified, upgraded, or replaced to adequately process information involving, related to or dependent upon the century change. If a Business System used by the Company or a third party dealing with the Company fails because of the inability of the Business System to properly read a 21st century date, the results could have a material adverse effect on the Company. The Company recognizes the need to ensure its operations will not be adversely impacted by Year 2000 Business Systems failures and has established a team to address Year 2000 risk. The team is reviewing the Company's internal infrastructure and believes that it has identified substantially all of the major Business Systems used in connection with its internal operations. The Company has commenced the process of identifying and correcting the major Business Systems that may need to be modified, upgraded, or replaced, and expects to complete this process, along with remedial actions before the end of 1999. Costs incurred to date to correct Year 2000 problems have been immaterial. The Company estimates the total cost to complete any required modifications, upgrades, or replacements of affected Business Systems will not have a material impact on the Company's business or results of operations. This estimate is being monitored and will be revised, if necessary, as additional information becomes available. The Company also recognizes the risk that suppliers of products, services, and collaborators with whom the Company transacts business on a worldwide basis may not comply with Year 2000 requirements. The Company has initiated formal communications with significant suppliers and collaborators to determine the extent to which the Company is vulnerable if these third parties fail to remediate their own Year 2000 issues. The review is ongoing and the Company is unable to determine, at this time, the probability that any material supplier 11 or collaborator will not be able to correct any Year 2000 problem in a timely manner. In the event any such third parties cannot provide the Company with products, services, or continue the collaborations with the Company, the Company's results of operations could be materially adversely affected. Based on the above, the Company has yet to develop a comprehensive contingency plan with respect to the Year 2000 problem. The Company will continue to monitor its own Business Systems and, to the extent possible, evaluate the Business Systems of its third party suppliers and collaborators to ensure progress on this critical matter. However, if the Company identifies significant risk related to the Year 2000 compliance or progress deviates from anticipated timelines, the Company will develop contingency plans as deemed necessary at that time. Item 3. Quantitative and Qualitative Disclosures about Market Risk At March 31, 1999, the Company did not hold any market risk sensitive instruments 12 PART II - OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds (d) As of March 31, 1999, $16,584,000 of the $17,112,000 net proceeds from the Company's initial public offering, has been applied to research and development and general operating expenses and the remainder has been applied to temporary investments in corporate debt securities and money market funds. With the exception of compensation paid to the officers and certain of the directors of the Company as employees or consultants, no amounts paid in respect of operating expenses were paid to directors or officers of the Company or their associates, to any person owning 10% or more of any class of equity securities of the Company or to any affiliates of the Company. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27 - Financial Data Schedule (b) Reports on Form 8-K During the quarter ended March 31 1999, there were no reports on Form 8-K. 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. PROGENICS PHARMACEUTICALS, INC. Date: May 13, 1999 by /s/ Robert A. McKinney ---------------------------- Robert A. McKinney Vice President (Duly authorized officer of the Registrant and Principal Financial and Accounting Officer) 13 EXHIBIT INDEX Exhibit Description - ------- ------------------------------------- 27 Financial Data Schedule EX-27 2 ART. 5 FDS FOR 1ST QUARTER 10-Q
5 This Schedule contains summary financial information extracted from the Financial Statements of Progenics Pharmaceuticals, Inc. at March 31, 1999 and is qualified in its entirety by reference to such Financial Statements. 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 13,001,637 10,298,861 2,791,166 0 0 25,062,379 2,668,664 1,542,883 27,489,413 1,263,264 0 0 0 12,218 26,125,237 27,489,413 17,980 3,147,382 0 0 3,378,788 0 13,503 (244,909) 0 (244,909) 0 0 0 (244,909) (.03) (.03)
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