-----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, IGVET9nrpjqlU8A90m5uaVlH49ujNZe6FImvBV32XYXQL9yXtJq+TpDFs5XgXcpI Um5gQRZh4VZThRIYP0izyA== /in/edgar/work/0000927016-00-004036/0000927016-00-004036.txt : 20001115 0000927016-00-004036.hdr.sgml : 20001115 ACCESSION NUMBER: 0000927016-00-004036 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AUTOIMMUNE INC CENTRAL INDEX KEY: 0000879106 STANDARD INDUSTRIAL CLASSIFICATION: [2836 ] IRS NUMBER: 133489062 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20948 FILM NUMBER: 767093 BUSINESS ADDRESS: STREET 1: 128 SPRING ST CITY: LEXINGTON STATE: MA ZIP: 02173 BUSINESS PHONE: 6178600710 MAIL ADDRESS: STREET 1: 128 SPRING STREET CITY: LEXINGTON STATE: MA ZIP: 02173 10-Q 1 0001.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 FOR THE QUARTER ENDED SEPTEMBER 30, 2000 COMMISSION FILE NO. 0-20948 ------- AUTOIMMUNE INC. (Exact Name of Registrant as Specified in its Charter) Delaware 13-348-9062 (State of Incorporation) (I.R.S. Employer Identification No.) 128 Spring Street, Lexington, MA 02421 (Address of Principal Executive Offices) (781) 860-0710 (Registrant's Telephone No., 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 ------------ ---------- Number of shares outstanding of the registrant's Common Stock as of October 31, 2000: Common Stock, par value $.01 16,759,623 shares outstanding AUTOIMMUNE INC. QUARTER ENDED SEPTEMBER 30, 2000 TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Page Number Item 1 - Financial Statements Balance Sheet December 31, 1999 and September 30, 2000............. 2 Statement of Operations for the three and nine months ended September 30, 1999 and 2000 and for the period from inception (September 9, 1988) through September 30, 2000....... 3 Statement of Cash Flows for the nine months ended September 30, 1999 and 2000 and for the period from inception (September 9, 1988) through September 30, 2000........................... 4 Notes to the Unaudited Financial Statements.............. 5 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations........ 7 Item 3 - Quantitative and Qualitative Disclosures about Market Risk ................................... 8 PART II - OTHER INFORMATION Item 6(b) - Reports on Form 8-K............................... 9 Signatures.................................................... 10 AUTOIMMUNE INC. (A development stage company) BALANCE SHEET (Unaudited) December 31, September 30, 1999 2000 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 6,973,000 $ 10,049,000 Marketable securities - - Interest receivable - - Prepaid expenses and other current assets 109,000 35,000 ------------ ------------ Total current assets 7,082,000 10,084,000 Fixed assets, net - - ------------ ------------ $ 7,082,000 $ 10,084,000 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 64,000 $ 145,000 Accrued expenses 607,000 80,000 Deferred revenue - 2,000 ------------ ------------ Total current liabilities 671,000 227,000 ------------ ------------ Commitments and contingencies ------------ ------------ Stockholders' equity: Common stock, $.01 par value; 25,000,000 shares authorized; 16,657,872 and 16,759,623 shares issued and outstanding at December 31, 1999 and September 30, 2000, respectively 167,000 168,000 Additional paid-in capital 117,714,000 117,907,000 Deficit accumulated during the development stage (111,470,000) (108,218,000) Valuation allowance for marketable securities - - ------------- ------------ Total stockholders' equity 6,411,000 9,857,000 ------------- ------------ $ 7,082,000 $ 10,084,000 ============= ============ 2 AUTOIMMUNE INC. (A development stage company) STATEMENT OF OPERATIONS (Unaudited)
Period from inception Three months ended Nine months ended (September 9, 1988) September 30, September 30, September 30, September 30, through 1999 2000 1999 2000 September 30, 2000 ------------- ------------- --------------- ------------- ------------------ Revenue: License rights $ - $ 3,000 $ - $ 4,003,000 $ 4,003,000 Option fees - - - - 2,200,000 Research and development revenue under collaborative agreements - - - - 955,000 ------------- ------------- --------------- ------------- -------------- Total revenues - 3,000 - 4,003,000 7,158,000 ------------- ------------- --------------- ------------- -------------- Costs and expenses: Research and development: Related party 260,000 15,000 941,000 245,000 19,577,000 All other 2,420,000 126,000 7,576,000 400,000 91,155,000 General and administrative 332,000 118,000 1,267,000 550,000 16,205,000 ------------- ------------- --------------- ------------- -------------- Total costs and expenses 3,012,000 259,000 9,784,000 1,195,000 126,937,000 ------------- ------------- --------------- ------------- -------------- Interest income 151,000 157,000 492,000 444,000 11,868,000 Interest expense (1,000) - (2,000) - (303,000) ------------- ------------- --------------- ------------- --------------- 150,000 157,000 490,000 444,000 11,565,000 ------------- ------------- --------------- ------------- --------------- Net income (loss) $ (2,862,000) $ (99,000) $ (9,294,000) $ 3,252,000 $ (108,214,000) ============= ============= =============== ============= ============== Net income (loss) per share-basic $ (0.17) $ (0.01) $ (0.56) $ 0.19 ============= ============= =============== ============= Net income (loss) per share-diluted $ (0.17) $ (0.01) $ (0.56) $ 0.19 ============= ============= =============== ============= Weighted average common shares outstanding-basic 16,639,338 16,759,623 16,584,389 16,737,884 ============= ============= =============== ============= Weighted average common shares outstanding-basic 16,639,338 16,759,623 16,584,389 17,303,059 ============= ============= =============== =============
3 AUTOIMMUNE INC. (A development stage company) STATEMENT OF CASH FLOWS Increase (Decrease) in Cash and Cash Equivalents (Unaudited)
Period from inception (September 9, 1988) Nine months ended through September 30, September 30, September 30, 1999 2000 2000 ------------- ------------ ----------------- Cash flows from operating activities: Net income (loss) $ (9,294,000) $ 3,252,000 $ (108,214,000) Adjustment to reconcile net loss to net cash used by operating activities: Interest expense related to demand notes converted into Series A mandatorily redeemable covertible preferred stock - - 48,000 Patent costs paid with junior convertible preferred and common stock - - 3,000 Depreciation and amortization 311,000 - 4,464,000 Loss on sale/disposal of fixed assets 36,000 - 642,000 Decrease in capitalized patent costs - - 563,000 Decrease in interest receivable 77,000 - - (Increase) decrease in prepaid expenses 45,000 74,000 (35,000) Increase (decrease) in accounts payable (208,000) 81,000 145,000 Increase (decrease) in accrued expenses (379,000) (527,000) 80,000 Increase (decrease) in deferred revenue 0 2,000 2,000 ------------- ------------ ----------------- Net cash provided (used) by operating activities (9,412,000) 2,882,000 (102,302,000) ------------- ------------ ----------------- Cash flows from investing activities: Purchase of available-for-sale marketable securities (4,316,000) (6,783,000) (268,503,000) Proceeds from sale/maturity of available-for-sale marketable 17,038,000 6,783,000 257,492,000 securities Proceeds from maturity of held-to-maturity marketable - - 11,011,000 securities Proceeds from sale of equipment 241,000 - 306,000 Purchase of fixed assets (51,000) - (5,288,000) Increase in patent costs - - (563,000) Increase in other assets - - (125,000) ------------- ------------ -------------- Net cash provided (used) by investing activities 12,912,000 0 (5,670,000) ------------- ------------ -------------- Cash flows from financing activities: Proceeds from sale-leaseback of fixed assets - - 2,872,000 Payments on obligations under capital leases (193,000) - (2,872,000) Net proceeds from issuance of mandatorily redeemable convertible preferred stock - - 10,011,000 Proceeds from bridge notes - - 300,000 Proceeds from issuance of common stock 165,000 194,000 105,510,000 Proceeds from issuance of convertible notes payable - - 2,200,000 ------------- ------------ -------------- Net cash provided (used) by financing activities (28,000) 194,000 118,021,000 ------------- ------------ -------------- Net increase (decrease) in cash and cash equivalents 3,472,000 3,076,000 10,049,000 Cash and cash equivalents, beginning of period 4,801,000 6,973,000 - ------------- ------------ -------------- Cash and cash equivalents, end of period $ 8,273,000 $ 10,049,000 $ 10,049,000 ============= ============ ==============
4 AUTOIMMUNE INC. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS 1. INTERIM FINANCIAL DATA The interim financial data as of September 30, 2000, for the three and nine month periods ended September 30, 1999 and 2000 and for the period from inception (September 9, 1988) through September 30, 2000 are unaudited, however, in the opinion of the Company, these interim data include all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of the results for these interim periods. These financial statements should be read in conjunction with the financial statements and the notes thereto for the period ended December 31, 1999 included in the Company's Form 10-K. Results for interim periods are not necessarily indicative of results for the entire year. 2. CASH EQUIVALENTS AND MARKETABLE SECURITIES The following is a summary of cash equivalents held by the Company. Cash equivalents are carried at fair market value, which approximated amortized cost at December 31, 1999 and September 30, 2000: December 31, September 30, 1999 2000 ----------- ------------ Money market $ 659,000 $ 7,144,000 U.S. Government debt securities 6,270,000 2,773,000 ----------- ----------- $ 6,929,000 $ 9,917,000 =========== =========== There were no marketable securities at December 31, 1999 or at September 30, 2000. Gross realized gains and losses on sales of marketable securities for the three and nine month periods ended September 30, 1999 and 2000 were not significant. Marketable securities which were purchased and sold in periods prior to adoption of Statement of Financial Accounting Standards (SFAS) No. 115 on January 1, 1994, other than held-to-maturity marketable securities, are included in the category available-for-sale marketable securities in the "period from inception" column of the statement of cash flows. 3. FIXED ASSETS Fixed assets consist of the following: ESTIMATED USEFUL LIFE DECEMBER 31, SEPTEMBER 30, (YEARS) 1999 2000 ----------- ----------- -------- Laboratory equipment 2 - 5 $160,000 $160,000 ----------- -------- 160,000 160,000 Less - accumulated depreciation and amortization 160,000 160,000 ----------- -------- $ - $ - =========== ======== 5 AUTOIMMUNE INC. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS 4. ACCRUED EXPENSES Accrued expenses consist of the following: DECEMBER 31, SEPTEMBER 30, 1999 2000 ------------ ------------ Accrued employee costs $ 37,000 $ - Accrued professional fees 92,000 80,000 Accrued severance 478,000 - --------- -------- $ 607,000 $ 80,000 ========= ======== 5. Comprehensive Income Comprehensive loss for the three month periods ended September 30, 1999 and 2000 was $2,862,000 and $99,000, respectively. Comprehensive loss for the nine month period ended September 30, 1999 was $9,299,000 and comprehensive income for the nine month period ended September 30, 2000 was $3,252,000. Net unrealized gain (loss) on marketable securities is comprised of the following: THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1999 2000 1999 2000 -------- -------- -------- ------- Unrealized holding gain (loss) arising during the period $ - $ - $ - $ - Reclassification adjustment for (gain) loss included in net income - - (5,000) - -------- -------- --------- ------- Net unrealized gain (loss) on marketable securities $ - $ - $ (5,000) $ - ======== ======== ========= ======= 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS OVERVIEW Since its inception through September 30, 2000, the Company has incurred ongoing losses from operations and has cumulative losses as of September 30, 2000 totaling $108,214,000. To date, the Company has not recorded any revenues from the sale of products. Revenues recorded through September 30, 2000 were earned in connection with the sale of certain patent rights, granting of certain short- term rights and contract research. The Company expects to remain in the development stage for the foreseeable future and accordingly, may continue to incur losses. The sections of "Management's Discussion and Analysis of Financial Condition and Results of Operations" captioned "Overview" and "Liquidity and Capital Resources" contain forward-looking statements which involve risks and uncertainties. What may occur in the future could differ significantly from what is discussed in the forward-looking statements due to a number of important factors, including, but not limited to, the developmental stage of the Company's products and uncertainties of clinical trial results and regulatory approval; the Company's capital requirements, history of operating losses and lack of product revenue and its limited manufacturing and marketing experience; and the risks of technological change and competition. These factors are more fully discussed in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission in the section captioned "Business - Factors to be Considered". The discussion in the Annual Report on Form 10-K is hereby incorporated by reference into this Quarterly Report. THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1999 AND 2000 There was no revenue for the three and nine month periods ended September 30, 1999. Revenue was $3,000 for the three month period ended September 30, 2000 and $4,003,000 for the nine month period ended September 30, 2000. The $4,000,000 represents the initial payment by a subsidiary of Elan Plc for the purchase of certain patent rights related to Alzheimer's disease and the remainder represents the first of monthly license payments from Rycor Technology Investments Corporation which began in September 2000. Research and development expenses were $2,680,000 and $141,000 for the three month periods ended September 30, 1999 and 2000, respectively. Research and development expenses were $8,517,000 and $645,000 for the nine month periods ended September 30, 1999 and 2000, respectively. The decrease is due to the cessation of Colloral clinical trials and the elimination of research and development expenses except contract research support for The Brigham and Women's Hospital and costs associated with maintaining the Company's patent portfolio. General and administrative expenses were $332,000 and $118,000 for the three month periods ended September 30, 1999 and 2000, respectively. General and administrative expenses were $1,267,000 and $550,000 for the nine month periods September 30, 1999 and 2000, respectively. The decrease in general and administrative expenses is due to the reduction of personnel costs. Net interest income was $150,000 and $157,000 for the three month periods ended September 30, 1999 and 2000, respectively. The increase is due to a higher interest rate earned during the current period. Net interest income was $490,000 and $444,000 for the nine month periods ended September 30, 1999 and 2000, respectively. The decrease is due to an average lower balance of cash available for investment. 7 AUTOIMMUNE INC. The net loss was $2,862,000 and $99,000 for the three month periods ended September 30, 1999 and 2000, respectively. The change reflects the cessation of Colloral clinical trials and the elimination of operating expenses except contract research support for The Brigham and Women's Hospital and costs associated with maintaining the Company's patent portfolio and corporate structure. The net loss was $9,294,000 for the nine month period ended September 30, 1999 and net income was $3,252,000 for the nine month period ended September 30, 2000. The change reflects the revenue generated in 2000 and the reduction of operating expenses. The net loss per share was $0.17 and $0.01 for the three months ended September 30, 1999 and 2000, respectively. The net loss per share was $0.56 for the nine months ended September 30, 1999 and net income per share was $0.19 for the nine months ended September 30, 2000. In September 1999, the Company announced disappointing results from the phase III trial of Colloral, its product for rheumatoid arthritis. Very soon thereafter, the Company began a corporate downsizing which was completed by year end and resulted in the elimination of all full time employees. Two former employees, the President and Director of Finance, signed consulting agreements with the Company to provide corporate business development and reporting services on an as needed basis in the future. LIQUIDITY AND CAPITAL RESOURCES The Company's needs for funds have historically fluctuated from period to period as it has increased or decreased the scope of its research and development activities. Since inception, the Company has funded these needs almost entirely through sales of its equity securities. The Company's working capital and capital requirements will depend on numerous factors, including the strategic direction that the Company and its shareholders choose, the level of resources that the Company devotes to the development of its products, the extent to which it proceeds by means of collaborative relationships and its competitive environment. The Company believes that current cash and marketable securities, and the interest earned from the investment thereof, will be sufficient to meet the Company's operating expenses and capital requirements for at least five years. At the appropriate time, the Company may intend to seek additional funding through public or private equity or debt financing, collaborative arrangements or from other sources. If additional funds are necessary but not available, the Company will have to modify its business strategy, and its business will be materially adversely affected. In order to preserve principal and maintain liquidity, the Company's funds are invested in U.S. Treasury obligations and other short-term instruments. As of September 30, 2000, the Company's cash and cash equivalents and marketable securities totaled $10,049,000. Current liabilities at September 30, 2000 were $227,000. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company invests all of its cash in U.S. Treasury obligations and money market instruments. These investments are denominated in U.S. dollars. Due to the conservative nature of these instruments, the Company does not believe that it has material exposure to interest rate or market risk. 8 AUTOIMMUNE INC. PART II - OTHER INFORMATION Item 6(b) - REPORTS ON FORM 8-K No reports on Form 8-K have been filed during the quarter for which this report is filed. 9 AUTOIMMUNE INC. SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AUTOIMMUNE INC. Date: November 14, 2000 /s/ Robert C. Bishop ------------------------------------ Robert C. Bishop Chairman and Chief Executive Officer /s/ Heather A. Ellerkamp ------------------------------------ Heather A. Ellerkamp Director of Finance and Treasurer EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-2000 JUL-01-2000 SEP-30-2000 10,049,000 0 0 0 0 10,084,000 160,000 (160,000) 10,084,000 227,000 0 0 0 118,075,000 (108,218,000) 10,084,000 0 3,000 0 259,000 0 0 0 (99,000) 0 (99,000) 0 0 0 (99,000) (0.1) (0.1)
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