-----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, KEk/N+ZPiQrwyT72LuAKKhJaH63QKK8JPqPzTsdpk7ixLvK3L5roWKYGdVO6Jm/e wyBPqw2iBo6tj3TaLTrsWQ== 0000914121-99-000479.txt : 19990518 0000914121-99-000479.hdr.sgml : 19990518 ACCESSION NUMBER: 0000914121-99-000479 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 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: SEC FILE NUMBER: 000-21990 FILM NUMBER: 99627605 BUSINESS ADDRESS: STREET 1: ONE COPLEY PLACE STREET 2: SUITE 602 CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 2124310001 MAIL ADDRESS: STREET 1: ONE COPLEY PLACE, SUITE 602 CITY: BOSTON STATE: MA ZIP: 02116 10-Q 1 QUARTERLY REPORT 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 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 0-21990 ----------------- OXiGENE, INC. (Exact name of Registrant as specified in its charter) DELAWARE 13-3679168 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) One Copley Place, Suite 602 Boston, MA 02116 (Address of principal executive offices, including zip code) (617) 536-9500 (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: Title of Class 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 March 31, 1999, there were 10,207,049 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, 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 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 Item 3. Quantitative and Qualitative Disclosure of Market Risk 9 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. (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 March 31, 1999 and December 31, 1998, the results of operations for the three months ended March 31, 1999 and March 31, 1998, and the cash flows for the three month periods ended March 31, 1999 and March 31, 1998. 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, 1998. The results of operations for the period ended March 31, 1999 are not necessarily indicative of the results of operations and cash flows for any subsequent interim period or for the full year. OXiGENE, INC. (A development stage company) Condensed Consolidated Balance Sheets (All amounts in thousands) March 31, December 31, 1999 1998 ---- ---- (unaudited) Assets Current assets: Cash and cash equivalents 29,938 31,756 Prepaid expenses 488 609 Interest receivable 303 196 Other 151 173 ------- ------- Total current assets 30,880 32,734 Furniture, fixtures and equipment, at cost 377 372 Accumulated depreciation (182) (167) ------- ------- Net property and equipment 195 205 Deposits 80 80 ------- ------- Total assets 31,155 33,019 ======= ======= Liabilities and stockholders' equity Current liabilities: Accounts payable and accrued expenses 2,799 2,171 Other payables 21 656 ------- ------- Total current liabilities 2,820 2,827 Stockholders' equity: Common stock, $0.01 par value: Authorized shares - 60,000,000 shares Issued and outstanding 10,207,049 at March 31, 1999 10,207,049 at December 31, 1998 102 102 Additional paid-in capital 68,566 68,715 Deficit accumulated during the development stage (38,819) (36,965) Deferred compensation (1,876) (1,985) Accumulated other comprehensive income 362 325 ------- ------- Total stockholders' equity 28,335 30,192 ------- ------ Total liabilities and stockholders' equity 31,155 33,019 ======= ======= The accompanying notes are an integral part of this statement. -2- OXiGENE, INC. (A development stage company) Condensed Consolidated Statements of Operations (All amounts in thousands, except per share date) (Unaudited) Period from Three months ended February 22, 1998 March 31, inception) through 1999 1998 March 31, 1999 ---- ---- ----------------- Revenue Interest Income 375 547 6,022 Research income 31 ------ ------ ------ Total revenue 375 547 6,053 Operating expenses Research and development 1,450 1,756 30,983 General and administrative 778 662 13,889 ------ ------ ------ Total operating expenses 2,228 2,418 44,872 ------ ------ ------ Net loss (1,853) (1,871) (38,819) Net loss per common share (0.18) (0.18) Weighted average number of common shares outstanding 10,207 10,194 The accompanying notes are an integral part of this statement. -3- OXiGENE, INC. (A development stage company) Condensed Consolidated Statements of Cash Flows (All amounts in thousands) (Unaudited)
Period from Three months ended February 22, 1998 March 31, (inception) through 1999 1998 March 31, 1999 ---- ---- -------------- Operating activities Net loss (1,853) (1,871) (38,819) Adjustment to reconcile net loss to net cash used in operating activities: Loss on securities available-for-sale 12 Depreciation 19 22 221 Abandonment of furniture, fixtures and equipment 13 Compensation related to issuance of warrants, options and stock appreciation rights (40) (130) 2,678 Changes in operating assets and liabilities: Prepaid expenses and other current assets 36 64 (985) Accounts payable and accrued expenses 20 479 2,931 ------- ------ ------- Net cash used in operating activities (1,818) (1,436) (33,949) ------- ------ ------- Financing activities Proceeds from investor 100 Repayment to investor (100) Proceeds from issuance of common stock and capital contribution 66 64,062 Other capital contribution 53 ------- ------ ------- Net cash provided by financing activities 0 66 64,115 Investing activities Purchase of securities available-for-sale (3,368) Proceeds from sale of securities available-for-sale 3,356 Deposits (80) Purchase of furniture, fixture and equipment (13) (107) (450) ------- ------ ------- Net cash used in investing activities (13) (107) (542) Effect of exchange rate on changes in cash 13 (20) 314 ------- ------ ------- Net (decrease)/increase in cash and cash equivalents (1,818) (1,497) 29,938 Cash and cash equivalents at beginning of period 31,756 40,137 ------- ------ Cash and cash equivalents at end of period 29,938 38,640 29,938 ======= ====== ======= The accompanying notes are an integral part of this statement.
-4- OXiGENE, INC. (A development stage company) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1999 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 three month period ended March 31, 1999 are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. 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, 1998. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned Swedish subsidiary, OXiGENE Europe AB. Intercompany balances and transactions have been eliminated. 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, have been excluded from the calculation of weighted average shares. Comprehensive Loss During the three months ended March 31, 1999 and 1998, total comprehensive loss amounted to $1,816,000 and $1,887,000, respectively. 2. Stockholders' Equity The market value of the Company's Common Stock at March 31, 1999 was lower than the market price of the Company's Common Stock at December 31, 1998. Accordingly, the charge related to SARs that previously was recorded for -5- financial reporting purposes was reduced by approximately $149,000 for the three months ended March 31, 1999. Because upon exercise SARs are satisfied only by the distribution of shares of Common Stock, the charge was debited to additional paid-in capital. During the three months ended March 31, 1999, the Company recorded stock-based compensation expense of approximately $109,000 related to options issued to non-employees in prior years. -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 $38.8 million for the period from its inception through March 31, 1999. 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 March 31, 1999, 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 - Three Months Ended March 31, 1999 and 1998 During the three-month periods ended March 31, 1999 and 1998, the Company had no revenues, except for approximately $0.4 million and $0.5 million of interest income in each such three-month period, respectively. Operating expenses for those periods were approximately $2.2 million and $2.4 million, respectively. Research and development expenses for the three-month period ended March 31, 1999 decreased to approximately $1.5 million from approximately $1.8 million for the comparable 1998 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 three-month period ended March 31, 1999 increased to approximately $0.8 million from approximately $0.7 million for the comparable 1998 period. The increase in general and administrative expenses is primarily attributable to an increase in the Company's activities, particularly, in the United States. Liquidity and Capital Resources OXiGENE has experienced net losses and negative cash flow from operations each year since its inception and, as of March 31, 1999, had a deficit during the development stage of approximately $38.8 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 proceeds it has received from private and public equity financings. -7- The Company had cash and cash equivalents of approximately $29.9 million at March 31, 1999, compared to approximately $31.8 million at December 31, 1998. The decrease in cash and cash equivalents in the first quarter is primarily a result of the cash being used to finance the Company's operating activities. During the first quarter of 1999, the Company received no proceeds from the exercise of outstanding options, warrants and SARs, compared to $0.1 million in the first quarter of 1998. 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 offices in Stockholm, Sweden (executive offices and investor relations), and in Boston, Massachusetts and Lund, Sweden (both research and clinical trial coordination centers). In connection with the termination of certain clinical trials, the Company's Lund office is expected to close in the third quarter of 1999. The Company pays the University of Lund, Sweden and other hospitals, where applicable, on a per patient basis for conducting its clinical trials. The Company has an agreement with ILEX(TM) Oncology Inc., a contract research organization in San Antonio, Texas ("ILEX"), pursuant to which ILEX performs contract research services for the Company in connection with the preclinical and clinical testing of compounds under development by the Company, particularly Declopramide and Combretastatin A-4 Prodrug. Through March 31, 1999, the Company has paid ILEX approximately $5.3 million, of which approximately $400,000 was paid in the three-month period ended March 31, 1999. The Company expects that the amounts payable to ILEX from time to time will increase significantly. The Company anticipates that its cash and cash equivalents as of March 31, 1999 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 March 31, 1999. -8- Tax Matters As of December 31, 1998, the Company had net operating loss carryforwards of approximately $49.0 million for U.S. and foreign income tax purposes, of which $26.6 million expires for U.S. purposes through 2018. The utilization of approximately $2.5 million of such U.S. net operating losses is subject to an annual limitation, pursuant to Section 382 of the U.S. Internal Revenue Code, of approximately $350,000. Year 2000 The Company's internal computer information system will be Year 2000 compliant before year end. These systems consist only of standard software from established and recognized providers. Any new software purchases will be Year 2000 compliant. The Company's Year 2000 issues and potential business interruptions, costs, damages or losses related thereto are primarily dependent upon the Year 2000 compliance of third parties. These third parties consist mainly of leading educational institutions and universities in the US and Europe, and clinical research organizations. The Company has no reason to believe that these third parties will not be Year 2000 compliant. However, the Company is in the process of reviewing its third party relationships in order to assess and address Year 2000 issues with respect to these third parties. The costs associated with the Company's Year 2000 compliance have been nominal, and the Company believes that the remaining costs will be minimal and will not have a material adverse effect on its financial condition or results of operations. The Company intends to develop a contingency plan to be able to react to any Year 2000 problems should they arise. Item 3. Quantitative and Qualitative Disclosure of Market Risk The Company's cash and cash equivalents are maintained primarily in US dollar accounts and amounts payable for research and development to research organizations are contracted in US dollars. Accordingly, the Company's exposure to foreign currency risk is limited because its transactions are primarily based in US dollars. The Company does not have any other exposure to market risk. The Company will develop policies and procedures to manage market risk in the future as circumstances may require. -9- PART II. OTHER INFORMATION Item 1. Legal Proceedings There are no material legal suits or claims 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 None. 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. Current report on Form 8-K, dated February 16, 1999, with respect to the press release relating to the discontinuance of the Company's Neu-Sensamide (TM) project. -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: May 14, 1999 /s/ Bo Haglund ------------------------- --------------------------------- Bo Haglund Chief Financial Officer OXiGENE, INC. Quarterly Report on Form 10-Q for the Fiscal Quarter Ended March 31, 1999 Exhibits Exhibit Number Description - ------ ----------- 27.1 Financial data schedule. EX-27.1 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1998 JAN-01-1999 MAR-31-1999 29,938 0 0 0 0 30,880 377 (182) 31,155 2,820 0 0 0 102 28,233 31,155 0 375 0 0 2,228 0 0 (1,853) 0 (1,853) 0 0 0 (1,853) (0.18) (0.18)
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