-----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, GSCKbpDWAlrZaMFb8SQggLB8E5PZCDr4swgvgJA+Vtd1nelD1mtSPN5ikVHfZR+D uTNJiAhIrriFauH/g5aHeQ== 0000903112-97-001018.txt : 19970815 0000903112-97-001018.hdr.sgml : 19970815 ACCESSION NUMBER: 0000903112-97-001018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OXIGENE INC CENTRAL INDEX KEY: 0000908259 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 133679168 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21990 FILM NUMBER: 97661468 BUSINESS ADDRESS: STREET 1: 110 EAST 59TH ST CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2124310001 MAIL ADDRESS: STREET 1: C/O BATTLE FOWLER LLP STREET 2: 75 EAST 55TH STREET CITY: NEW YORK STATE: NY ZIP: 10022 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 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 June 30, 1997 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: 0-21990 OXiGENE, INC. (Exact name of Registrant as specified in its charter) DELAWARE 13-3679168 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 110 East 59th Street New York, NY 10022 (Address of principal executive offices, including zip code) (212) 421-0001 (Telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.01 per share Warrant to Purchase One Share of Common Stock 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 June 30, 1997, there were 9,912,105 shares of the Registrant's Common Stock issued and outstanding. OXiGENE, INC. This Quarterly Report on Form 10-Q contains historical information and forward- looking statements. Statements looking forward in time are included in this Form 10-Q pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. They involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to be materially different from any future performance suggested herein. In the context of forward-looking information provided in this Form 10-Q and in other reports, please refer to the discussion of risk factors detailed in the Company's Annual Report on Form 10-K, as well as the other information contained in the Company's filings with the Securities and Exchange Commission during the past 12 months. INDEX PAGE NO. PART I. FINANCIAL INFORMATION 1 Item 1. Financial Statements 1 Consolidated Balance Sheets 2 Consolidated Statement of Operations 3 Consolidated Statements of Cash Flows 4 Notes to Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION 10 Item 1. Legal Proceedings 10 Item 2. Changes in Securities 10 Item 3. Defaults Upon Senior Securities 10 Item 4. Submission of Matters to a Vote of Securityholders 10 Item 5. Other Information 10 Item 6. Exhibits and Reports on Form 8-K 10 SIGNATURES 11 ii PART I. FINANCIAL INFORMATION Item 1. Financial Statements The accompanying consolidated financial statements have been prepared by OXiGENE, Inc. ("OXiGENE" or the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the Company's opinion, these financial statements contain all adjustments necessary to present fairly the financial position of OXiGENE, Inc. as of June 30, 1997 and December 31, 1996, the results of operations for the three-month and six-month periods ended June 30, 1997 and June 30, 1996, and the cash flows for the six month periods ended June 30, 1997 and June 30, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. The results of operations for the period ended June 30, 1997 are not necessarily indicative of the results of operations and cash flows for any subsequent interim period or for the full year. 1 OXiGENE, INC. (A development stage company) Condensed Consolidated Balance Sheets (All amounts in thousands) June 30, 1997 December 31, 1996 ================= ================= (Unaudited) Assets Current assets: Cash and cash equivalents 42,206 40,517 Prepaid expenses 397 195 Interest receivable 420 280 Other 57 77 ----------------- ---------------- Total current assets 43,080 41,069 Furniture, fixtures and equipment, at cost 218 143 Accumulated depreciation (70) (53) ----------------- ---------------- Net property and equipment 148 90 Deposits 80 10 ----------------- ---------------- Total assets 43,308 41,169 ================= ================ Liabilities and stockholders' equity Current Liabilities: Accounts payable and accrued expenses 893 231 Other payables 22 419 ----------------- ---------------- Total current liabilities 915 650 Stockholders' equity Common stock $0.01 par value: Authorized shares - 60,000,000 shares Issued and outstanding 9,912,105 at June 30, 1997 9,052,343 at December 31, 1996 99 90 Additional paid-in capital 63,848 57,674 Deficit accumulated during the development stage (21,462) (17,358) Foreign currency translation adjustment (92) 113 ----------------- ---------------- Total stockholders' equity 42,393 40,519 ----------------- ---------------- Total liabilities and stockholders' equity 43,308 41,169 ================= ================ The accompanying notes are an integral part of this statement OXiGENE, INC. (A development stage company) Condensed Consolidated Statement of Operations (All amounts in thousands, except per share data) (unaudited) Period from February 22, 1988 Three months ended Six months ended (Inception) June 30, June 30, through 1997 1996 1997 1996 June 30, 1997 ======= ======= ======= ======= ================ Revenue Interest income 552 125 1,083 254 2,514 Research 31 ------- ------- ------- ------- ------- Total revenue 552 125 1,083 254 2,545 Operating expenses Research and development 2,368 1,460 4,100 2,689 15,993 General and administrative 611 563 1,086 976 8,014 ------- ------- ------- ------- ------- Total operating expenses 2,979 2,023 5,186 3,665 24,007 ------- ------- ------- ------- ------- Net loss (2,427) (1,898) (4,103) (3,411) (21,462) ======= ======= ======= ======== ======= Net loss per common share (0.25) (0.27) (0.43) (0.49) Weighted average number of common shares outstanding 9,760 6,971 9,470 6,971 The accompanying notes are an integral part of this statement OXiGENE, Inc. (A development stage company) Condensed Consolidated Statements of Cash Flows (All amounts in thousands) (Unaudited) Period from February 22, 1988 Six Months ended (Inception) June 30, through 1997 1996 June 30, 1997 ------- ------- ------------- Operating activities Net Loss (4,103) (3,411) (21,462) Adjustment to reconcile net loss to net cash used in operating activities: Depreciation 21 6 82 Compensation related to issuance of warrants, options and stock appreciation rights 711 1,008 2,417 Other 21 Changes in operating assets and liabilities: Prepaid expenses and other current assets (188) 93 (740) Accounts payable and accrued expenses 167 375 793 ------ ------ ------ Net cash used in operating activities (3,392) (1,929) (18,889) Financing activities Proceeds frodm issuance of common stock and capital contribution 5,471 1,763 61,530 ------ ------ ------ Net cash provided by financing activities 5,471 1,763 61,530 Investing activities Purchases of securities available-for-sale (3,368) Proceeds from sale of securities available-for-sale 502 3,356 Deposits (70) (80) Purchase of furniture, fixture and equipment (88) (11) (250) ------ ------ ------ Net cash used in investing activities (158) 491 (342) Effect of exchange rate on changes in cash (232) (22) (93) ------ ------ ------- Net increase in cash and cash equivalents 1,689 303 42,206 Cash and cash equivalents at beginning of period 40,517 10,407 ------ ------ ------ Cash and cash equivalents at end of period 42,206 10,710 42,206 ====== ====== ====== The accompanying notes are an integral part of this statement OXiGENE, INC. (A development stage company) NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997 1. Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 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. Operating results for the six-month period ended June 30, 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. Cash and Cash Equivalents The Company considers all highly liquid financial instruments with a maturity of three months or less when purchased to be cash equivalents. Net Loss Per Share Net loss per share is based upon the Company's aggregate net loss divided by the weighted average number of shares of Common Stock outstanding during the respective periods. All options and warrants were antidilutive and, accordingly, excluded from the calculation of weighted average shares. In February 1997, the Financial Accounting Standards Board issued Statement No.128, Earnings per Share, which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. Statement No. 128 will not have a material impact on the Company's net loss per share for the six months ended June 30, 1997 and 1996. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary OXiGENE Europe AB. Intercompany balances and transactions have been eliminated. Reclassification Certain 1996 amounts have been reclassified to conform to the current period's presentation. 5 2. Stockholder's Equity During the six-month period ended June 30, 1997, the Company issued 859,762 shares of Common Stock upon exercise of previously granted warrants, options and stock appreciation rights ("SARs"), with proceeds to the Company of approximately $5.5 million. During the six-month period ended June 30, 1997, the Company recorded a charge for financial reporting purposes of approximately $0.7 million because the market value of the Company's Common Stock exceeded the exercise prices of SARs granted by the Company. Because upon exercise SARs are satisfied only by the distribution of shares of Common Stock, the charge was credited to additional paid-in capital. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Description of Business OXiGENE is a development-stage pharmaceutical company engaged in the research and development of products designed to enhance the clinical efficacy of radiation and chemotherapy, the most common and traditional forms of non-surgical cancer treatment. OXiGENE has devoted substantially all of its efforts and resources to research and development conducted on its own behalf and through strategic collaborations with clinical institutions and other organizations, particularly the University of Lund in Lund, Sweden. Consequently, OXiGENE believes that its research and development expenditures have been somewhat lower than those of other comparable development-stage companies. OXiGENE has generated a cumulative net loss of approximately $21.5 million for the period from its inception through June 30, 1997. OXiGENE expects to incur significant additional operating losses over at least the next several years, principally as a result of its continuing clinical trials and anticipated research and development expenditures. The principal source of OXiGENE's working capital has been the proceeds of private and public equity financings. As of June 30, 1997, OXiGENE had no long-term debt or loans payable. Since its inception, the Company has had no material amount of licensing or other fee income, and does not anticipate any such income for the foreseeable future. Results of Operations - Six Months Ended June 30, 1997 and 1996 During the six-month periods ended June 30, 1997 and 1996, the Company had no revenues, except for approximately $1.1 million and $0.3 million of interest income, respectively. The increase in interest income is attributable primarily to the investment of the net proceeds of the Company's secondary offering in connection with its listing on the Stockholm Stock Exchange, which was completed in November 1996, as well as cash received upon exercise of options and warrants in the first six month of 1997. See "--Liquidity and Capital Resources." Operating expenses for those periods were approximately $5.2 million and $3.7 million, respectively. Research and development expenses for the six-month period ended June 30, 1997 increased to approximately $4.1 million from approximately $2.7 million for the comparable 1996 period. Research and development expenses include a charge for financial reporting purposes of approximately $0.7 million and $1.0 million for the six-month period ended June 30, 1997 and 1996, respectively. This charge was recorded because the market value per share of Common Stock on June 30, 1997 ($34.75) exceeded the exercise price of SARs previously granted by the Company to certain clinical investigators and consultants. Without giving effect to such charge, research and development expenses increased by approximately $1.7 million compared to the comparable 1996 period. Generally, the Company makes payments to its clinical investigators if and when certain predetermined milestones in its clinical trials are reached, rather than on a fixed quarterly or monthly basis. As a result of the foregoing and the existence of outstanding SARs, research and development expenses have fluctuated, and are expected to continue to fluctuate, from quarter to quarter. General and administrative expenses for the six-month period ended June 30, 1997 increased to approximately $1.1 million from approximately $1.0 million for the comparable 1996 period. The increase in general and administrative expenses is primarily attributable to an increase in the Company's activities, mostly in Sweden. 7 Liquidity and Capital Resources OXiGENE has experienced net losses and negative cash flow from operations each year since its inception and, as of June 30, 1997, had a deficit during the development stage of approximately $21.5 million. The Company expects to incur substantial additional expenses, resulting in significant losses, over at least the next several years due to, among other factors, its continuing clinical trials and anticipated research and development activities. To date, the Company has financed its operations principally through the net proceeds it has received from private and public equity financings. The Company had cash and cash equivalents of approximately $42.2 million at June 30, 1997, compared to approximately $40.5 million at December 31, 1996. The increase in cash and cash equivalents in the first six months of 1997 is primarily attributable to the issuance, upon exercise of outstanding options and warrants, of 859,762 shares of Common Stock, with proceeds to the Company of approximately $5.5 million. A portion of these proceeds was used to finance operations during the six months ended June 30, 1997. OXiGENE's policy is to contain its fixed expenditures by maintaining a relatively small number of employees and relying as much as possible on outside services for its research, development, preclinical testing and clinical trials. The Company maintains small executive offices in New York and in Lund, Sweden, and recently established an office in Stockholm, Sweden. In addition, in May 1997, the Company opened a research and clinical trial coordination center in Boston, Massachusetts. The Company contracts with Cato Research, Ltd., Durham, North Carolina, for the coordination of the Company's clinical trials and retention of its clinical files. The Company pays the University of Lund, Sweden and other hospitals, where applicable, on a per patient basis for conducting its clinical trials. Further, in May 1996, in collaboration with ILEX(TM) Oncology Inc., a contract research organization in San Antonio, Texas ("ILEX"), the Company established a large-scale synthesis of Oxi-104, a new chemical compound that is expected to enter into clinical testing in the third quarter of 1997, in accordance with current U.S. Good Laboratory Practice Standards. Through June 30, 1997, the Company has paid ILEX approximately $1.6 million, of which approximately $0.7 was paid in the six-month period ended June 30 1997. As research and development and clinical testing with respect to Oxi-104 continues, the Company expects that the amounts payable to ILEX from time to time will increase significantly. 8 The Company anticipates that its cash and cash equivalents as of June 30, 1997 should be sufficient to satisfy the Company's projected cash requirements for approximately 30 months. However, working capital and capital requirements may vary materially from those now planned due to numerous factors including, but not limited to, the progress with the preclinical testing and clinical trials; progress of the Company's research and development programs; the time and costs required to obtain regulatory approvals; the resources the Company devotes to manufacturing methods and advanced technologies; the ability of the Company to obtain collaborative or licensing arrangements; the costs of filing, prosecuting and, if necessary, enforcing patent claims; the cost of commercializing activities and arrangements; and the demand for its products if and when approved. The Company anticipates that it will have to seek substantial additional private or public financing or enter into collaborative arrangements with one or more third parties to complete the development of any products or bring products to market. There can be no assurance that additional financing will be available on acceptable terms, if at all. The Company had no material commitments for capital expenditures as of June 30, 1997. Tax Matters As of December 31, 1996, the Company had, for Federal income tax purposes, net operating loss carryforwards of approximately $23.0 million. Pursuant to the Tax Reform Act of 1986, annual utilization of the Company's net operating loss carryforwards may be limited if a cumulative change in ownership of the Company's stock of more than 50% (within the meaning of the Internal Revenue Code) occurs within any three-year period. The Company has made no determination concerning whether there has been such a cumulative change in ownership and it is possible that such a change in ownership may be deemed to have occurred following the Company's initial public offering (completed in October, 1993), private placement (completed in July 1995) and/or secondary offering (completed in November 1996). 9 PART II. OTHER INFORMATION Item 1. Legal Proceedings There are no legal proceedings pending or, to the Company's best knowledge, threatened against the Company. Item 2. Changes in Securities None. Item 3. Defaults upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders On May 30, 1997, the Company held its Annual Meeting of Stockholders (the "Meeting") in Stockholm, Sweden. At the Meeting, all nominees for director, Professor Marvin Caruthers, Michael Ionata, Dr. Bjorn Nordenvall, Dr. Ronald W. Pero and Dr. Claus Moller, were elected. There were 7,940,816 (or approximately 99.4%) votes cast in favor, and 46,900 (or approximately 0.5%) votes cast against the election of each of the aforementioned nominees for director. The Company's stockholders ratified the appointment of Ernst & Young LLP as the Company's independent auditors for the year ending December 31, 1997, with 7,987,041 votes (or approximately 100.0%) cast in favor, 600 votes against, and 75 abstentions. No other proposal were submitted to the Company's stockholders for approval at the Meeting. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. The following exhibit is filed as part of this Quarterly Report on Form 10-Q: 27.1 Financial Data Schedule (b) Reports on Form 8-K. No reports on Form 8-K were filed during the second quarter of 1997. 10 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. OXiGENE, INC. Date: August 12, 1997 /s/ Bo Haglund ----------------------------- Bo Haglund Chief Financial Officer (Principal Financial Officer) 11 OXiGENE, INC. Quarterly Report on Form 10-Q for the Fiscal Quarter Ended June 30, 1996 Exhibits Exhibit Number Description - ------- ----------- 27.1 Financial data schedule. 12 EX-27 2 ARTICLE 5 FDS FOR 2ND QUARTER 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENT OF OXiGENE, INC. FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1997 JUN-30-1997 42,206 0 0 0 0 43,080 218 (70) 43,308 915 0 0 0 99 42,294 43,308 0 1,083 0 5,186 0 0 0 (4,103) 0 (4,103) 0 0 0 (4,103) (0.43) (0.43)
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