-----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, J9CNUGHSup1cBemHA8o1CTaDvfmp4Hj0WeXdRYEVkbh/Lh+TOGseFiB5rTRRhlaY MKj+g4AVjUL75lIWT5205Q== 0000950130-95-000989.txt : 19950516 0000950130-95-000989.hdr.sgml : 19950516 ACCESSION NUMBER: 0000950130-95-000989 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEUROGEN CORP CENTRAL INDEX KEY: 0000849043 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 222845714 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18311 FILM NUMBER: 95539842 BUSINESS ADDRESS: STREET 1: 35 NORTHEAST INDUSTRIAL RD CITY: BRANFORD STATE: CT ZIP: 06405 BUSINESS PHONE: 2034888201 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------- FORM 10-Q [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 Commission File Number 0-18311 NEUROGEN CORPORATION (Exact name of registrant as specified in its charter) Delaware 22-2845714 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 35 Northeast Industrial Road Branford, Connecticut 06405 (Address of principal executive offices) (Zip Code) (203) 488-8201 (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 May 15, 1995, the registrant had 10,100,463 shares of Common Stock outstanding. NEUROGEN CORPORATION INDEX
Page Number ------ Part I - Financial Information Item 1. Financial Statements............................................ 1 Balance Sheets at March 31, 1995 and December 31, 1994............................................ 1,2 Statements of Operations and Accumulated Deficit for the three-month periods ended March 31, 1995 and 1994............ 3 Statements of Cash Flows for the three-month periods ended March 31, 1995 and 1994...................................... 4 Notes to Financial Statements................................. 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations......................................... 6-8
Part II - Other Information
Item 1. Legal Proceedings............................................. 9 Item 2. Changes in Securities......................................... 9 Item 3. Defaults upon Senior Securities............................... 9 Item 4. Submission of Matters to a Vote of Security Holders .......... 9 Item 5. Other Information............................................. 9 Item 6. Exhibits and Reports on Form 8-K.............................. 9 Signature ............................................................. 10 Exhibit Index ......................................................... 11-13
Part I - Financial Information Item 1 - Financial Statements
Neurogen Corporation Balance Sheets March 31, December 31, 1995 1994 (Unaudited) (Audited) ------------- ------------ Assets Current assets: Cash and cash equivalents $ 7,837,401 $ 9,439,727 Marketable securities 6,207,790 6,040,434 Other current assets 299,433 398,542 ----------- ----------- Total current assets 14,344,624 15,878,703 Property, plant & equipment: Land 425,000 425,000 Building 8,384,368 8,379,703 Equipment 2,636,658 2,297,728 Furniture 137,085 110,668 Equipment and furniture under capital lease - 1,200,000 ----------- ----------- 11,583,111 12,413,099 Less accumulated depreciation 1,586,282 2,588,476 ----------- ----------- Net property, plant and equipment 9,996,829 9,824,623 Other assets, net 190,316 185,752 ----------- ----------- $24,531,769 $25,889,078 =========== ===========
See accompanying notes to financial statements. 1 Neurogen Corporation Balance Sheets
March 31, December 31, 1995 1994 (Unaudited) (Audited) ------------- ------------- Liabilities & Stockholders' Equity Current Liabilities: Accrued expenses $ 538,740 $ 949,717 Unearned revenue from collaborative partner 719,666 - Current portion of mortgage payable 145,581 141,125 Current portion of capital lease obligation - 30,863 ------------ ------------ Total current liabilities 1,403,987 1,121,705 Mortgage payable, excluding current portion 581,777 619,887 Other compensation 62,587 62,587 Deferred gain on sale of assets - 4,375 ------------ ------------ Total liabilities 2,048,351 1,808,554 Stockholders' Equity: Preferred stock, par value $.025 per share. Authorized 2,000,000 shares; none issued - - Common stock, par value $.025 per share. Authorized 30,000,000 shares; issued and outstanding 10,098,663 shares at March 31, 1995 and 10,082,763 shares at December 31, 1994 252,467 252,069 Additional paid-in capital 45,681,091 45,607,590 Accumulated deficit (23,466,643) (21,766,182) Unrealized gain (loss) on marketable securities 16,503 (12,953) ------------ ------------ Total stockholders' equity 22,483,418 24,080,524 - - ------------ ------------ $ 24,531,769 $ 25,889,078 ============ ============
See accompanying notes to financial statements. 2 Neurogen Corporation Statements of Operations and Accumulated Deficit
Three Months Three Months Ended Ended March 31, March 31, 1995 1994 (Unaudited) (Unaudited) ------------ ------------- Research revenue $ 1,869,667 $ 1,150,000 Operating Expenses: Research and development 3,043,972 2,359,756 General and administrative 688,432 797,527 ------------ ------------ Total operating expenses 3,732,404 3,157,283 Other income (expense): Investment income 180,375 55,661 Interest expense (18,099) (25,211) ------------ ------------ Total other income (net) 162,276 30,450 ------------ ------------ Net loss $ (1,700,461) $ (1,976,833) ------------ ------------ Net loss per common share $ (.17) $ (.22) ============ ============ Weighted average shares outstanding 10,084,000 8,970,000 ------------ ------------ Accumulated deficit: Beginning of period $(21,766,182) $(15,114,987) ------------ ------------ End of period $(23,466,643) $(17,091,820) ============ ============
See accompanying notes to financial statements. 3 Neurogen Corporation Statements of Cash Flows
Three Months Three Months Ended March Ended March 31, 31, 1995 1994 (Unaudited) (Unaudited) ------------ ------------- Cash flows from operating activities: Net loss $(1,700,461) $(1,976,833) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization expense 202,264 212,285 Unrealized loss on marketable securities - 26,080 Net gain on sale of assets (4,375) (6,562) Changes in operating assets and liabilities: Decrease in accrued expenses (410,977) (77,504) Increase in unearned revenue from collaborative partner 719,666 - Decrease in other current assets 99,109 57,682 Increase in other assets (9,022) (35,490) ----------- ----------- Net cash used in operating activities (1,103,796) (1,800,342) ----------- ----------- Cash flows from investing activities: Purchase of plant and equipment (370,012) (58,414) Purchases of marketable securities (4,116,343) (6,044,316) Sales of marketable securities 3,978,444 5,998,748 Net cash used in investing activities (507,911) (103,982) ----------- ----------- Cash flows from financing activities: Exercise of employee stock options 73,898 - Exercise of warrants - 30,000 Principal payments under mortgage payable (33,654) (29,718) Principal payments under capital lease obligations (30,863) (83,574) ----------- ----------- Net cash provided by (used in) financing activities 9,381 (83,292) ----------- ----------- Net decrease in cash and cash equivalents (1,602,326) (1,987,616) Cash and cash equivalents at beginning of period 9,439,727 6,403,987 ----------- ----------- Cash and cash equivalents at end of period $ 7,837,401 $ 4,416,371 =========== ===========
See accompanying notes to financial statements. 4 Neurogen Corporation Notes to Financial Statements March 31, 1995 (Unaudited) (1) Basis of Presentation and Summary of Significant Accounting Policies --------------------------------------------------------------------- The unaudited financial statements have been prepared from the books and records of Neurogen Corporation (the "Company") in accordance with generally accepted accounting principles for interim financial information pursuant to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Interim results are not necessarily indicative of the results that may be expected for the fiscal year. (2) Expiration of Capital Lease Obligations --------------------------------------- In March 1995, the Company purchased for $245,000 equipment which was the subject of an earlier sale/leaseback transaction and which the Company had leased over a four year period. Leased assets of $1,200,000 and related accumulated depreciation were removed from the Company's balance sheet when the assets were bought back. 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Since its inception in September 1987, Neurogen has been engaged in the discovery and development of proprietary therapeutic products for the treatment of psychiatric and neurological disorders. The Company has not derived any revenue from product sales and expects to incur significant and increasing losses over at least the next several years as it continues to expand its discovery and development programs. Its revenues have come from two collaborative research agreements entered into with Pfizer Inc ("Pfizer") and from interest income. The Company entered into the first of these agreements (the "1992 Pfizer Agreement") in February 1992 to collaborate with respect to its anxiolytic and cognitive enhancer projects. The Company entered into its second agreement with Pfizer (the "1994 Pfizer Agreement" and collectively with the 1992 Pfizer Agreement, the "Pfizer Agreements") in June 1994 to collaborate with respect to its sleep disorder project. Results of Operations The Company's revenues were $1,869,667 for the three months ended March 31, 1995 compared to $1,150,000 for the same period in 1994. Research funding pursuant to the Pfizer Agreements constituted substantially all of the Company's revenues and increased 63% for the three month period ended March 31, 1995 compared to the same period in 1994. This increase is due to the commencement of the 1994 Pfizer Agreement. Other revenues consisting primarily of interest income, and gains and losses from U.S. government securities increased 268% for the first quarter of 1995 compared to the same period in 1994 due to higher interest rates and realized gains on the U.S. government securities. Research and development costs have increased $684,216, or 29%, to $3,043,972 for the three-month period ended March 31, 1995 as compared to the same period in 1994. This increase is due primarily to expansion of preclinical and clinical testing on the Company's lead antipsychotic compound, increased staffing levels and purchases of laboratory equipment, materials and supplies. Research and development costs represented 82% of total operating expenses for the first quarter of 1995 as compared to 75% for the same period in 1994. Neurogen expects research and development costs to increase significantly over the next several years as its drug development programs progress. General and administrative expenses decreased $109,095, or 14%, to $688,432 for the three-month period ended March 31, 1995 as compared to the same period in 1994. This decrease is primarily attributable to a refinement in the Company's allocation of expenses between research and development and general and administrative and to a general reduction in several areas. General and administrative expenses necessary to support the expanded research and development activities are expected to increase in the foreseeable future. The Company incurred a net loss of $1,700,461 for the three months ended March 31, 1995 as compared with a net loss of $1,976,833 for the same period in 1994. The net loss decreased in 1995 due primarily to revenue received under the 1994 Pfizer Agreement. 6 Results of operations may vary from quarter to quarter depending on numerous factors, including the timing of future strategic alliances, joint ventures or financings, if any, the progress of the Company's research and development projects, technological advances and determinations as to the commercial potential of proposed products. Liquidity and Capital Resources At March 31, 1995 and December 31, 1994, cash, cash equivalents and marketable securities were in the aggregate $14,045,000 and $15,480,000, respectively. The decrease in 1995 was due to expanding operations. Neurogen's cash requirements to date have been met by the proceeds of its financing activities, including interest earned on such proceeds and research funding received pursuant to the Pfizer Agreements. The Company's financing activities to date include three private placement offerings of the Company's common stock during the period 1988 and 1989, a public offering of the Company's common stock in each of 1989 and 1991, and the sale of common stock to Pfizer in 1992 and 1994 in connection with entering into the Pfizer Agreements. Total funding received from these financing activities was approximately $45,400,000. The Company's expenditures to date have been primarily to fund research and development and general and administrative expenses, including hiring research and development, management and administrative personnel, and to construct and equip its research and development facility. In the first quarter of 1992, the Company entered into the 1992 Pfizer Agreement effective January 1992 pursuant to which Pfizer made a $13,750,000 equity investment in the Company. Pursuant to the 1992 Pfizer Agreement, the Company expects to receive approximately $18,400,000 during the four year period which commenced January 1, 1992 for research and development funding of the Company's anxiolytic and cognitive enhancer projects, and may receive an additional $4,600,000 for a fifth year should Pfizer exercise its option to extend the collaboration. Neurogen could also receive additional milestone payments totaling $12,500,000 during the development and regulatory approval of its products. In return, Pfizer received the exclusive rights to manufacture and market GABA-based anxiolytics and cognition enhancers developed in the collaboration for which it will pay Neurogen royalties based upon net sales levels, if any, for such products. As of March 31, 1995, Pfizer had provided $14,950,000 of research funding to the Company pursuant to the 1992 Pfizer Agreement, in addition to its equity investment in 1992. Neurogen and Pfizer entered into their second collaborative agreement, the 1994 Pfizer Agreement, in June 1994, pursuant to which Pfizer provided $9,864,000 in equity financing. Pursuant to the 1994 Pfizer Agreement, the Company expects to receive approximately $7,386,000 during the three-year period which commenced July 1, 1994, for research and development funding of the Company's sleep disorder project and may receive additional funding of $2,379,000 for a fourth year should Pfizer exercise its option to extend the collaboration. Neurogen could also receive additional milestone payments totaling $3,250,000 during the development and regulatory approval of its sleep 7 disorder compounds. As part of this second collaboration, Pfizer received the exclusive right to manufacture and market GABA-based sleep disorder products developed in the collaboration for which it will pay Neurogen royalties depending upon levels of any net sales. As of March 31, 1995, Pfizer had provided $2,628,667 of research funding to the Company pursuant to the 1994 Pfizer Agreement, in addition to its equity investment in 1994. Under both the 1992 Pfizer Agreement and the 1994 Pfizer Agreement, in addition to making the equity investments and the research and milestone payments noted above, Pfizer is responsible for funding the cost of all clinical development and marketing, if any, of drugs developed from the collaboration. The Company plans to use its cash balance to fund research and development activities, for working capital and for general corporate purposes. Neurogen anticipates that its cash balance and interest thereon, as supplemented by research funding pursuant to the Pfizer Agreements, will be sufficient to fund its current and planned operations into mid-1996. However, Neurogen's funding requirements may change and will depend upon numerous factors, including but not limited to, the progress of the Company's research and development programs, the timing and results of preclinical testing and clinical studies, the timing of regulatory approvals, technological advances, determinations as to the commercial potential of its proposed products, the status of competitive products and the ability of the Company to establish and maintain collaborative arrangements with others for the purpose of funding certain research and development programs, conducting clinical studies, obtaining regulatory approvals and, if such approvals are obtained, manufacturing and marketing products. The Company anticipates that it will augment its cash balance through financing transactions, including the issuance of debt or equity securities and further corporate alliances. No arrangements have been entered into for any future financing and no assurances can be given that adequate levels of additional funding can be obtained and, if available, on favorable terms. 8 Part II - Other Information Item 1. Legal Proceedings Not applicable for the first quarter ended March 31, 1995. Item 2. Changes in Securities Not applicable for the first quarter ended March 31, 1995. Item 3. Defaults upon Senior Securities Not applicable for the first quarter ended March 31, 1995. Item 4. Submission of Matters to a Vote of Security Holders Not applicable for the first quarter ended March 31, 1995. Item 5. Other information Not applicable for the first quarter ended March 31, 1995. Item 6. Exhibits and Reports on Form 8-K (a) See Exhibit Index on page 11. (b) Reports on Form 8-K The Company made no filings on Form 8-K during the quarter ended March 31, 1995. 9 Signature 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. NEUROGEN CORPORATION By:/s/ STEPHEN R. DAVIS ----------------------- Stephen R. Davis Vice President-Finance and Chief Financial Officer Date: May 15, 1995 10 Exhibit Index ------------- Exhibit ------- Number ------ 10.1 - Neurogen Corporation Stock Option Plan, as amended (incorporated by reference to Exhibit 10.1 to the Company's Form 10-K for the fiscal year ended December 31, 1991). 10.2 - Form of Stock Option Agreement currently used in connection with the grant of options under Neurogen Corporation Stock Option Plan (incorporated by reference to Exhibit 10.2 to the Company's Form 10-K for the fiscal year ended December 31, 1992). 10.3 - Neurogen Corporation 1993 Omnibus Incentive Plan, as amended (incorporated by reference to Exhibit 10.3 to the Company's Form 10-K for the fiscal year ended December 31, 1993). 10.4 - Form of Stock Option Agreement currently used in connection with the grant of options under Neurogen Corporation 1993 Omnibus Incentive Plan (incorporated by reference of Exhibit 10.4 to the Company's Form 10-K for the fiscal year ended December 31, 1993). 10.5 - Neurogen Corporation 1993 Non-Employee Directors Stock Option Program (incorporated by reference to Exhibit 10.5 to the Company's Form 10-K for the fiscal year ended December 31, 1993). 10.6 - Form of Stock Option Agreement currently used in connection with the grant of options under Neurogen Corporation 1993 Non-Employee Directors Stock Option Program (incorporated by reference to Exhibit 10.6 to the Company's Form 10-K for the fiscal year ended December 31, 1993). 10.7 - Employment Contract between the Company and Harry H. Penner, Jr., dated as of October 12, 1993 (incorporated by reference to Exhibit 10.7 to the Company's Form 10-K for the fiscal year ended December 31, 1993). 10.8 - Employment Contract between the Company and John F. Tallman, dated as of December 1, 1993 (incorporated by reference to Exhibit 10.25 the Company's Form 10-G for the quarterly period ended September 30, 1994). 10.9 - Open-End Mortgage Deed and Security Agreement between the Company and Orion Machinery & Engineering Corp., dated March 16, 1989 (incorporated by reference to Exhibit 10.15 to Registration Statement No. 33-29709 on Form S-1). 11 10.10 - Construction Agreement between the Company and Frank E. Downes Construction Company, Inc., dated August 25, 1992 (incorporated by reference to Exhibit 10.17 to the Company's Form 10-K for the fiscal year ended December 31, 1992). 10.11 - Letter Agreement between the Company and Biotechnology Venture Fund S.A., dated August 5, 1988 (incorporated by reference to Exhibit 10.26 to Registration Statement No. 33-29709 on Form S-1). 10.12 - Letter Agreement between the Company and Biotechnology Venture Fund S.A., dated February 5, 1989 (incorporated by reference to Exhibit 10.27 to Registration Statement No. 33-29709 on Form S-1). 10.13 - Letter Agreement between David Blech and Peter McPartland, dated February 17, 1989 (incorporated by reference to Exhibit 10.28 to Registration Statement No. 33-29709 on Form S-1). 10.14 - Letter Agreement between David Blech and Isaac Blech and Michael Drew, dated February 21, 1989 (incorporated by reference to Exhibit 10.29 to Registration Statement No. 33-29709 on Form S-1). 10.15 - Letter Agreement between the Company and Schroder International Trust Co., Ltd., dated February 24, 1989 (incorporated by reference to Exhibit 10.30 to Registration Statement No. 33-29709 on Form S-1). 10.16 - Form of Proprietary Information and Inventions Agreement (incorporated by reference to Exhibit 10.31 to Registration Statement No. 33-29709 on Form S-1). 10.17 - Warrant to Purchase 47,058 Shares of Common Stock to MMC/GATX Partnership No. I, dated February 20, 1991 (incorporated by reference to Exhibit 10.34 to the Company's Form 10-K for the fiscal year ended December 31, 1990). 10.18 - Collaborative Research Agreement between the Company and Pfizer Inc, dated as of January 1, 1992 (incorporated by reference to Exhibit 10.35 to the Company's Form 10-K for the fiscal year ended December 31, 1991). 10.19 - License Agreement between the Company and the National Technical Information Service, dated as of January 1, 1992 (incorporated by reference to Exhibit 10.36 to the Company's Form 10-K for the fiscal year ended December 31, 1991). 10.20 - Cooperative Research and Development Agreement between the Company and the National Institutes of Health, dated as of January 21, 1992 (incorporated by reference to Exhibit 10.37 to the Company's Form 10-K for the fiscal year ended December 31, 1991). 12 10.21 - Letter Agreement between the Company and Robert H. Roth dated April 14, 1994 (incorporated by reference to Exhibit 10.26 to the Company's Form 10-K for the fiscal year ended December 31, 1994). 10.22 - Letter Agreement between the Company and Barry M. Bloom, dated January 12, 1994 (incorporated by reference to Exhibit 10.25 to the Company's Form 10-K for the fiscal year ended December 31, 1993). 10.23 - Collaborative Research Agreement between the Company and Pfizer Inc, dated as of July 1, 1994 (incorporated by reference of Exhibit 10.1 to the Company's Form 10-Q for the quarterly period ended June 30, 1994). 10.24 - Stock Purchase Agreement between the Company and Pfizer dated as of July 1, 1994 (incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q for the quarterly period ended June 30, 1994). 10.25 - Registration Rights and Standstill Agreement Among Neurogen Corporation and the Persons and Entities listed on Schedule I thereto, dated as of July 11, 1994 (incorporated by reference to Exhibit 10.29 to the Company's Form 10-Q for the quarterly period ended September 30, 1994). 11.1 - Computation of Net Loss per Common Share. 27.1 - Financial Data Schedule 13 EX-11.1 2 COMPUTATION OF NET LOSS PER COMMON SHARE Exhibit 11.1
Neurogen Corporation Computation of Net Loss Per Common Share (in thousands, except Net Loss per Common Share amounts) Three Months Three Months Ended Ended March 31, 1995 March 31, 1994 (Unaudited) (Unaudited) -------------- -------------- Weighted average shares outstanding 10,084 8,970 Dilutive effect of: Warrants (1) - - Stock options (1) - - ---------------- --------------- Common and common equivalent shares 10,084 8,970 ================ =============== Net loss $ (1,700) $ (1,977) ================ =============== Net loss per common share $ (.17) $ (.22) ================ ===============
(1) The Common Stock Equivalents have not been included as their inclusion would be antidilutive. EX-27 3 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 7,837,401 6,207,790 0 0 0 14,344,624 11,583,111 1,586,282 24,531,769 1,403,987 0 252,467 0 0 22,230,951 24,531,769 0 1,869,667 0 3,732,404 (162,276) 0 18,099 (1,700,461) 0 (1,700,461) 0 0 0 (1,700,461) (.17) 0
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