-----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, O3dpI8d4WUGYRg9URcsDCGnEpFkeW2UkFjOOpb/yb9zW4b4QEwuCLgqAKc3s8Tuq nPYgz0N6bp8NsNUmO4lkxA== 0000914121-99-001111.txt : 19991117 0000914121-99-001111.hdr.sgml : 19991117 ACCESSION NUMBER: 0000914121-99-001111 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 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: 99754395 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 September 30, 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 incorporation or organization) Identification No.) 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: 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 November 12, 1999, there were 10,267,001 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 1 Item 1. Financial Statements 1 Condensed Consolidated Balance Sheets 2 Condensed Consolidated Statement of Operations 3 Condensed Consolidated Statements of Cash Flows 4 Notes to Condensed Consolidated Financial 5 Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Item 3. Quantitative and Qualitative Disclosures about 9 Market Risks 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 10 Securityholders Item 5. Other Information 11 Item 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 12 ii PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The accompanying unaudited condensed 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 September 30, 1999 and December 31, 1998, the results of operations for the three months and nine months ended September 30, 1999 and September 30, 1998 and the cash flows for the nine months ended September 30, 1999 and September 30, 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 periods ended September 30, 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, except share amounts, in thousands of dollars) September 30, December 31, 1999 1998 (unaudited) ----------- ------------ ASSETS Current assets: Cash and cash equivalents $ 23,841 $ 31,757 Prepaid expenses 280 609 Interest receivable 468 196 Other 59 173 -- --- Total current assets 24,648 32,735 Furniture, fixtures and equipment, at cost 228 372 Accumulated depreciation (117) (168) ----- ----- Net property and equipment 111 204 Deposits 80 80 -- -- Total assets $ 24,839 $ 33,019 ======== ======== LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Accounts payable and accrued $ 1,682 $ 2,171 expenses Other payables 29 656 -- --- Total current liabilities 1,711 2,827 Stockholders equity Common stock, $0,01 par value: Authorized shares - 60,000,000 shares Issued and outstanding 10,265,931 at September 30, 1999 10,207,049 at December 31, 1998 103 102 Additional paid-in capital 68,894 68,715 Deficit accumulated during the (44,502) (36,966) development stage Accumulated other comprehensive income 292 326 Deffered compensation (1,659) (1,985) ------- ------- Total stockholders equity 23,128 30,192 ------ ------ Total liabilities and stockholders equity $24,839 $33,019 ======= ======= The accompanying notes are an integral part of this statement. OXIGENE, INC. (A development stage company) Condensed Consolidated Statements of Operations (All amounts in thousands of dollars, except per share data) (Unaudited)
Three months ended Nine months ended Period from September 30, September 30, February 22, 1988 (inception) through 1999 1998 1999 1998 SEPTEMBER 30, 1999 ---- ---- ---- ---- ------------------ REVENUE Interest income $ 312 $ 497 $ 1,024 $ 1,559 $ 6,671 Research income --- --- ----- ----- 31 -- Total revenue 312 497 1,024 1,559 6,702 OPERATING EXPENSES Research and development 2,992 3,331 6,498 7,506 36,031 General and administrative 559 569 2,062 2,133 15,173 --- --- ----- ----- ------ Total operating expenses 3,551 3,900 8,560 9,639 51,204 ----- ----- ----- ----- ------ NET LOSS $(3,239) $(3,403) $(7,536) $(8,080) $(44,502) ======== ======== ======== ======== ========= NET LOSS PER COMMON SHARE $(0.32) $(0.33) $(0.74) $(0.79) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 10,262 10,204 10,233 10,199 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 of dollars) (Unaudited)
Nine months ended Period from Septmeber 30, February 22, 1988 (inception) through 1999 1998 SEPTEMBER 30, 1999 ---- ---- ------------------ OPERATING ACTIVITIES Net loss $ (7,536) $ (8,080) $ (44,502) Adjustment to reconcile net loss to net cash used in operating activities: Loss on securities available-for-sale 12 Depreciation Abandonment of furniture, 32 58 234 fixtures and equipment 77 0 90 Compensation related to issuance of warrants, options and stock appreciation rights 408 (512) 3,126 Changes in operating assets and liabilities: Prepaid expenses and other current assets 169 (156) (852) Accounts payable and accrued expenses and other payables (1,095) 3,392 1,816 ------- ----- ----- Net cash used in operating activities (7,945) (5,298) (40,076) FINANCING ACTIVITIES Proceeds from investor 100 Repayment to investor (100) Proceeds from issuance of common stock and capital contribution 98 110 64,160 Other capital contribution ___ ___ 53 -- Net cash provided by financing activities 98 110 64,213 INVESTING ACTIVITIES Purchases of securities available-for-sale (3,368) Proceeds from sale of securities 3,356 available-for-sale Deposits (80) Purchase of furniture, fixture and equipment (18) (56) (454) ---- ---- ----- Net cash used in investing activities (18) (56) (546) ---- ---- ----- Effect of exchange rate on changes in cash (51) (54) 250 ---- ---- --- Net increase in cash and cash equivalents (7,916) (5,298) 23,841 Cash and cash equivalents at beginning of period 31,757 40,137 ------ ------ ------ Cash and cash equivalents at end of period $23,841 $34,839 $23,841 ======= ======= ======= The accompanying notes are an integral part of this statement.
4 OXIGENE, INC. (A development stage company) Notes to Condensed Consolidated Financial Statements September 30, 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 months and nine months ended September 30, 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 there to 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 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 nine months ended September 30, 1999 and 1998, total comprehensive loss amounted to $7,562,000 and $8,163,000, respectively. 5 2. STOCKHOLDER'S EQUITY During the nine month period ended September 30, 1999 the Company issued 50,000 shares of Common Stock upon exercise of previously granted options, with proceeds to the Company of approximately $98,000. In addition, 987 shares were issued upon the exercise of stock appreciation rights ("SARS") and 7,875 shares were issued for research and development services provided to the Company. Such services were valued at $75,000. The market value of the Company's Common Stock at September 30, 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 financial reporting purpose was reduced by approximately $3,000 for the nine months ended September 30, 1999, to reflect the market value of the unexercised SARs at September 30, 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 nine months ended September 30, 1999, the Company recorded stock-based compensation expense of approximately $326,000 resulting from the amortization of deferred compensation in connection with options issued to non-employees in the 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 $44.5 million for the period from its inception through September 30, 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 financing. As of September 30, 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 - NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 During each of the nine-month periods ended September 30, 1999 and 1998, the Company had no revenues, except for approximately $1.0 million and $1.6 million in interest income, respectively. Operating expenses for those periods were approximately $8.6 million and $9.6 million, respectively. The decrease in operating expenses is primarily attributable to a decrease in research and development expenses related to the Combretastatin technology, and the closing down of the Lund office. This decrease is a function of the timing of certain research and development projects and is not necessarily indicative of any future research and development expenses. Research and development expenses for the nine-month period ended September 30, 1999 decreased to approximately $6.5 million from approximately $7.5 million for the comparable 1998 period. SARs previously granted by the Company to certain clinical investigators and consultants affect the research and development expenses with a charge for financial reporting in reporting periods when the market value per share of Common Stock increases. Because the market value of the Company's Common Stock at September 30, 1999 was less than the market value on December 31, 1998, and the market value of the Company's Common Stock at September 30, 1998 was less than the market value on December 31, 1997, the charge previously recorded for financial reporting purposes was reduced for the nine months ended September 30, 1999 and 1998 by approximately $3,000 and $512,000, respectively. Without giving effect to such credit, research and development expenses for the nine months ended September 30, 1999 decreased by approximately $1,517,000, compared to the comparable 1998 period. This decrease is primarily a result of a decrease in expenditures as described above. 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 7 development expenses have fluctuated, and are expected to continue to fluctuate, from quarter to quarter. General and administrative expenses for the nine-month period ended September 30, 1999 amounted to approximately $2.1 million compared to $2.1 million for the comparable 1998 period. LIQUIDITY AND CAPITAL RESOURCES OXiGENE has experienced net losses and negative cash flow from operations each year since its inception and, as of September 30, 1999, had a deficit during the development stage of approximately $44.5 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 net proceeds it has received from private and public equity financing. The Company had cash and cash equivalents of approximately $23.8 million at September 30, 1999, compared to approximately $31.8 million at December 31, 1998. The decrease in cash and cash equivalents is primarily a result of the cash being used to finance the Company's operating activities. During the nine months ended September 30, 1999, the Company received approximately $0.1 million upon the exercise of outstanding options, warrants and SARs. 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 (for drug development and clinical trials). In connection with the termination of certain of its clinical trials, the Company's Lund, Sweden, office was closed in the third quarter of 1999. 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 and clinical trials for the Company in connection with the preclinical and clinical testing of compounds under development by the Company, particularly Declopramide, former Oxi-104 and Combretastatin. Through September 30, 1999, the Company has paid ILEX approximately $6.4 million of which approximately $0.7 million was paid in the nine-month period ended September 30, 1999. The amounts paid to ILEX have fluctuated, and are expected to continue to fluctuate, from time to time. 8 The Company anticipates that its cash and cash equivalents as of September 30, 1999, should be sufficient to satisfy the Company's projected cash requirements for approximately 24 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 September 30, 1999. TAX MATTERS As of December 31, 1998, the Company had net operating loss carry forwards 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. IMPACT OF 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 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 relationship 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 DISCLOSURES ABOUT MARKET RISKS 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 As previously disclosed in the Company's Quarterly Report on Form 10-Q for the second quarter of 1999, two former employees have charged, among other things, that their employment was terminated because of their sex, and have instituted legal action at the state level. The Company believes their claims are not meritorious; the Company has controverted their claims and is vigorously defending these matters. 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. 10 ITEM 5. OTHER INFORMATION Not applicable 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 third quarter of 1999. 11 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: November 12, 1999 /s/ Bo Haglund ------------------------ ------------------------------------------- Bo Haglund Chief Financial Officer 12 OXiGENE, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 1999 EXHIBITS Exhibit Number Description - ------ ----------- 27.1 Financial data schedule. EX-27.1 2 OXIGENE, INC. FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 23,841 0 0 0 0 24,648 228 (117) 24,839 1,711 0 0 0 103 23,025 23,128 0 1,024 0 0 8,560 0 0 (7,536) 0 (7,536) 0 0 0 (7,536) (0.74) (0.74)
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