-----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, ACwTKFx3V2BeQHmWCrAujwMeTbeX5XHQ0Qx/YcULpj/2s4n5N8keuzqcpkArzqy/ pN7kyHd3VR9gQIZJPIeZUw== 0000912057-96-025951.txt : 19961115 0000912057-96-025951.hdr.sgml : 19961115 ACCESSION NUMBER: 0000912057-96-025951 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: IGEN INC /CA/ CENTRAL INDEX KEY: 0000916304 STANDARD INDUSTRIAL CLASSIFICATION: PATENT OWNERS & LESSORS [6794] IRS NUMBER: 942852543 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-23252 FILM NUMBER: 96660973 BUSINESS ADDRESS: STREET 1: 16020 INDUSTRIAL DRIVE CITY: GAITHERSBURG STATE: MD ZIP: 20877 BUSINESS PHONE: 3019848000 MAIL ADDRESS: STREET 1: 16020 INDUSTRIAL DRIVE CITY: GAITHERSBURG STATE: MD ZIP: 20877 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES ACT OF 1934 For Quarter Ended September 30, 1996 Commission File Number 0-23252 IGEN, INC. ----------------------------------------------------- (Exact name of registrant as specified in its charter) CALIFORNIA 94-2852543 ------------------------------- ------------------ (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 16020 INDUSTRIAL DRIVE, GAITHERSBURG, MD 20877 ------------------------------------------------------- (Address of principal executive offices) (Zip Code) (301) 984-8000 ---------------------------------------------------- (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 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 ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at October 22, 1996 Common Stock, $0.001 par value 14,967,519 ------------------------------ ---------- IGEN, INC. INDEX PAGE ---- PART I FINANCIAL INFORMATION Item 1: FINANCIAL STATEMENTS Balance Sheets - September 30, 1996, and March 31, 1996 3 Statements of Operations - For the three and six months ended September 30, 1996 and 1995 4 Statements of Cash Flows - For the six months ended September 30, 1996 and 1995 5 Notes to Financial Statements 6 Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8 PART II OTHER INFORMATION Item 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 11 Item 6: EXHIBITS AND REPORTS ON FORM 8-K 12 SIGNATURES 13 2 IGEN, INC. BALANCE SHEETS (IN THOUSANDS) SEPTEMBER 30, MARCH 31, 1996 1996 ------------- --------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 1,914 $ 4,001 Short term investments 10,597 16,216 Accounts receivable 1,871 1,892 Inventory 1,808 1,648 Prepaid expenses 651 1,035 Other current assets 271 420 --------- --------- Total current assets 17,112 25,212 --------- --------- EQUIPMENT, FURNITURE, AND IMPROVEMENTS 6,395 6,172 Accumulated depreciation and amortization (3,228) (2,590) --------- --------- Equipment, furniture, and improvements, net 3,167 3,582 --------- --------- OTHER ASSETS 467 482 --------- --------- TOTAL $ 20,746 $ 29,276 --------- --------- --------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 3,637 $ 3,793 Deferred revenue 2,412 7,532 Obligations under Capital Leases 187 187 --------- -------- Total current liabilities 6,236 11,512 --------- -------- OBLIGATIONS UNDER CAPITAL LEASES - NONCURRENT 91 329 STOCKHOLDERS' EQUITY: Common stock: $.001 par value, 50,000,000 shares authorized; shares issued and outstanding: September 30, 1996--14,964,419 March 31, 1996-- 14,908,530 15 15 Additional paid-in capital 64,821 64,676 Accumulated deficit (50,052) (46,818) Deferred compensation (36) (91) Notes receivable from sale of common stock (329) (347) --------- --------- Total stockholders' equity 14,419 17,435 --------- --------- TOTAL $ 20,746 $ 29,276 --------- --------- --------- --------- See notes to financial statements. 3 IGEN, INC. STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1996 1995 1996 1995 ---- ---- ---- ---- (UNAUDITED) (UNAUDITED) REVENUES: License and royalty income $ 2,378 $ 2,382 $ 4,752 $ 4,735 Contract revenue 522 428 1,246 945 Product sales 1,450 1,246 3,333 1,919 -------- -------- -------- -------- Total 4,350 4,056 9,331 7,599 -------- -------- -------- -------- OPERATING COSTS AND EXPENSES: Product costs 613 604 1,237 894 Research and development 3,079 3,592 6,634 6,764 Marketing, general and administrative 2,543 2,036 5,103 4,317 -------- -------- -------- -------- Total 6,235 6,232 12,974 11,975 -------- -------- -------- -------- LOSS FROM OPERATIONS (1,885) (2,176) (3,643) (4,376) INTEREST INCOME - net 175 228 409 587 -------- -------- -------- -------- NET LOSS $(1,710) $(1,948) $(3,234) $(3,789) -------- -------- -------- -------- -------- -------- -------- -------- NET LOSS PER SHARE $(.11) $(.13) $(.22) $(.26) -------- -------- -------- -------- -------- -------- -------- -------- SHARES USED IN COMPUTING NET LOSS PER SHARE 14,958 14,733 14,941 14,739 -------- -------- -------- -------- -------- -------- -------- --------
See notes to financial statements. 4 IGEN, INC. STATEMENTS OF CASH FLOWS (IN THOUSANDS)
SIX MONTHS ENDED SEPTEMBER 30, 1996 1995 ---- ---- (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(3,234) $(3,789) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Interest on notes receivable from sale of common stock (3) (15) Amortization of deferred compensation 55 54 Depreciation and amortization 653 548 Deferred revenue (5,120) (5,527) Add (deduct) items not affecting cash: Accounts receivable 21 (140) Inventory (160) (492) Prepaid expenses 384 (462) Other assets 149 (22) Accounts payable and accrued expenses (156) (853) ------- ------- Net cash used in operating activities (7,411) (10,698) ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for equipment, furniture and improvements (223) (849) Sale (Purchase) of short-term investments 5,619 (10,656) ------- ------- Net cash provided by (used in) investing activities 5,396 (11,505) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of notes receivable from sale of common stock, net 21 55 Issuance (purchase) of common stock - net 145 (370) Principal payments under capital lease obligations (238) (85) ------- ------ Net cash used in financing activities (72) (400) ------- ------ NET DECREASE IN CASH AND CASH EQUIVALENTS (2,087) (22,603) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,001 30,226 ------- ------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,914 $ 7,623 ------- ------- ------- -------
See notes to financial statements. 5 IGEN, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation and Accounting Policies The financial statements of IGEN, Inc. (the "Company") reflect, in the opinion of management, all adjustments, consisting only of normal and recurring adjustments, necessary to present fairly the Company's financial position at September 30, 1996 and the Company's results of operations for the three and six month periods ended September 30, 1996 and 1995 respectively. Interim period results are unaudited and are not necessarily indicative of results of operations or cash flows for a full year period. The balance sheet at March 31, 1996 was derived from audited financial statements at such date. Pursuant to accounting requirements of the Securities and Exchange Commission applicable to quarterly reports on Form 10-Q, the accompanying financial statements and these notes do not include all disclosures required by generally accepted accounting principles for complete financial statements. Accordingly, these statements should be read in conjunction with the Company's most recent annual financial statements included in the Company's Annual Report for the fiscal year ended March 31, 1996. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash Equivalents and Short-Term Investments - Cash equivalents include cash in banks, money market funds, securities of the U.S. Treasury and certificates of deposit with original maturities of three months or less. Concentration of Credit Risks - The Company has invested its excess cash generally in securities of the U.S. Treasury, money market funds, certificates of deposit and corporate bonds. The Company invests its excess cash in accordance with a policy objective that seeks to ensure both liquidity and safety of principal. The policy limits investments to certain types of instruments issued by institutions with strong investment grade credit ratings and places restrictions on their terms and concentrations by type and issuer. Inventory is recorded at the lower of cost or market using the first-in, first-out method and consists of the following (in thousands): SEPTEMBER 30, MARCH 31, 1996 1996 ------------ --------- Finished goods $1,104 $1,270 Work in process 105 244 Raw materials 599 134 ------ ------ Total $1,808 $1,648 ------ ------ ------ ------ 6 Equipment, Furniture, and Improvements are carried at cost. Depreciation is computed over the estimated useful lives of the assets, generally five years, using accelerated methods. Revenue Recognition - Nonrefundable license fees, option fees, and milestone payments in connection with research and development contracts or commercialization agreements with corporate partners are recognized when they are earned in accordance with the applicable performance requirements and contractual terms. Amounts received in advance of performance under contracts or commercialization agreements are recorded as deferred revenue until earned. Product sales revenue is recorded as products are shipped. Income (Loss) Per Share has been computed based on the weighted average number of common shares and common equivalent shares outstanding during each period including common equivalent shares calculated for the stock options and warrants under the treasury stock method for all periods presented. Accounting for Stock Compensation - In 1995, the FASB issued SFAS 123 "Accounting for Stock-Based Compensation" which will be effective for the Company's 1997 fiscal year. SFAS 123 allows for companies to adopt a new fair-value basis of accounting for stock options and other equity instruments, or the disclosure-only alternative for stock based compensation. The Company has not yet determined whether it will elect the expense recognition or disclosure-only alternative permitted under SFAS 123 and therefore has not yet determined the impact of such adoption on its financial position, results of operations, and cash flows. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The Company devotes substantially all of its resources to the research and development of its proprietary technologies, primarily the ORIGEN technology for clinical diagnostic and life science research products. The Company's sources of revenue have consisted primarily of license or research payments pursuant to licensing or collaborative research agreements and from product sales. The Company has entered into collaborative arrangements with corporate collaborators that provide for the development and marketing of certain ORIGEN systems. These agreements provide fees and royalties payable to the Company in exchange for licenses to produce and sell the resulting products. In the near term, the Company may selectively pursue additional strategic alliances although, over time, it expects an increasing amount of its revenues to be derived from sales of its products and royalties from corporate collaborations. Except for the historical information contained herein, the following discussion contains forward-looking statements that involve risks and uncertainties. Actual results might differ materially from these due to risks and uncertainties, including the impact of competitive products and pricing, the timely development and acceptance of new products and market conditions. A more detailed description of these risks and other risks applicable to IGEN appears in IGEN's Annual Report on Form 10-K for the year ended March 31, 1996. RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 1996 VS. SEPTEMBER 30, 1995 The Company had revenues of $4.4 million for the three months ended September 30, 1996, compared to revenues of $4.1 million for the corresponding period in 1995. This increase is attributable to sales of the Company's ORIGEN research instruments and reagents and cell culture products which were $1.5 million and $1.2 million in 1996 and 1995, respectively. Such product sales reflect higher placements of the ORIGEN Detection System. Contract revenue and other license fees increased to $2.9 million in 1996 as compared to $2.8 million for the same quarter in 1995, reflecting the timing of milestones and revenues received under IGEN's supplemental Assay Development Contract with Boehringer Mannheim GmbH. Product costs were $613,000 for the quarter ended September 30, 1996 (42% of product sales) and $604,000 for the same quarter in 1995 (48% of product sales). The decreased percentage of product costs in 1996 represents a change in the product sales mix. Research and development expenses decreased to $3.1 million for the three months ended September 30, 1996, from $3.6 million for the corresponding period in 1995. The decrease in costs in 1996 results from changes in external technical collaborations. Marketing, general and administrative expenses were $2.5 million and $2.0 million for the three months ended September 30, 1996, and 1995, respectively. The higher level of costs during the 1996 period is primarily a result of increased sales costs associated with the ORIGEN Detection System. Income (loss) from operations over the next several years is likely to fluctuate substantially from quarter to quarter as a result of differences in the timing of revenues earned under license and product development agreements, and associated product development expenses. 8 As of March 31, 1996, the Company had federal net operating loss and general business credit tax carry forwards of approximately $31.0 million and $2.1 million, respectively. The Company's ability to utilize its net operating loss and general business credit tax carry forwards may be subject to an annual limitation in future periods pursuant to the "change in ownership rules" under Section 382 of the Internal Revenue Service Code of 1986, as amended. SIX MONTHS ENDED SEPTEMBER 30, 1996 VS. SEPTEMBER 30, 1995 The Company had revenues of $9.3 million for the six months ended September 30, 1996, compared to revenues of $7.6 million for the corresponding period in 1995. The increase is attributable to higher product sales of the Company's ORIGEN Detection System and reagents and cell culture products which were $3.3 million and $1.9 million in 1996 and 1995 respectively. Contract revenue and license fees increased to $6.0 million during 1996, reflecting the timing of milestones and revenue received under IGEN's supplemental Assay Development Contract with Boehringer Mannheim, GmbH. Product costs were $1.2 million (37% of product sales) and $894,000 (47% of product sales) for the six months ended September 30, 1996 and 1995 respectively. The decreased percentage during 1996 represents a change in the product sales mix. Research and development expenses decreased to $6.6 million for the six months ended September 30, 1996, from $6.8 million for the corresponding period in 1995, representing decreased costs of external technical collaborations. Marketing, general and administrative expenses were $5.1 million and $4.3 million in 1996 and 1995, respectively. The higher level of costs during 1996 is primarily a result of increased sales costs associated with the ORIGEN Detection System. LIQUIDITY AND CAPITAL RESOURCES The Company has financed its operations through the sale of Preferred and Common Stock, aggregating approximately $60 million through September 30, 1996, collaborative research and licensing agreements and sales of its ORIGEN line of products. As of September 30, 1996, the Company had $12.5 million in cash, cash equivalents and short term investments. Working capital excluding current deferred revenue which is classified as a current liability was $13.3 million at September 30, 1996. Including current deferred revenue, working capital was $10.9 million. Net cash used in operating activities was $7.4 million for the six months ended September 30, 1996, as compared to $10.7 million for the corresponding period in 1995. The lower amount of net cash used in 1996 was primarily due to a decreased net loss and changes in accounts payable balances. The Company used $223,000 and $849,000 of net cash for investing activities, substantially related to the acquisition of laboratory equipment, furniture and leasehold improvements, during the six months ended September 30, 1996 and 1995, respectively. During the six months ended September 30, 1995, the Company used approximately $400,000 to repurchase shares of its stock under a Stock Repurchase Plan. 9 The Company expects to incur substantial additional research and development expenses, manufacturing costs and marketing and distribution expenses. It is the Company's intention to selectively seek additional collaborative or license agreements with suitable corporate collaborators although there can be no assurance the Company will be able to enter into such agreements or that amounts received under such agreements will reduce substantially the Company's funding requirements. Additional equity or debt financing may be required, and there can be no assurance that these funds may be available on favorable terms, if at all. The Company's future capital requirements depend on many factors, including continued scientific progress in its diagnostics programs, the magnitude of these programs, the time and costs involved in obtaining regulatory approvals, the costs involved in filing, prosecuting and enforcing patent claims, competing technological and market developments, changes in its existing license and other agreements, the ability of the Company to establish development arrangements, the cost of manufacturing scale-up and effective commercialization activities and arrangements. 10 IGEN, INC. PART II OTHER INFORMATION Item 4: Submission of Matters to a vote of Security Holders. (a) The Annual Meeting of Shareholders of IGEN, Inc. was held on September 10, 1996. (b) The matters voted upon at the meeting and the voting of shareholders with respect thereto are as follows: The election of Edward B. Lurier, Richard Massey, William J. O'Neill, Robert Salsman, Hubert Rehkaemper, and Samuel J. Wohlstadter to the Board of Directors to hold office until the next annual meeting of shareholders and until his successor is elected and has qualified, or until such director's earlier death, resignation or removal. The voting results, with approximately 77% of the shares voting, was as follows: Lurier: For: 11,616,116 Against: 54,852 Massey: For: 11,602,002 Against: 68,966 O'Neill: For: 11,615,916 Against: 55,052 Salsmans: For: 11,462,627 Against: 208,341 Rehkaemper: For: 11,624,207 Against: 46,761 Wohlstadter: For: 11,608,757 Against: 62,211 The voting results of the proposal to approve a change in the Company's state of incorporation from California to Delaware, is as follows: For: 8,568,602 Against: 373,506 Abstain: 12,876 No-Vote: 2,715,984 11 The voting results to approve the selection of Deloitte & Touche LLP as the Company's Auditors is as follows: For: 11,644,428 Against: 2,900 Abstain: 23,640 No-Vote: -0- Item 6: Exhibits and Reports on Form 8-K. (a) Exhibits 11.1 Statements regarding computation of per share earnings for the three months and six months ended September 30, 1996 and 1995. (b) Reports on Form 8-K None 12 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. IGEN, Inc. Date: November 8, 1996 ---------------- --------------------------------------------------- George V. Migausky Vice President of Finance and Chief Financial Officer (On behalf of the Registrant and as Principal Financial Officer) 13 EXHIBIT INDEX Exhibit Number Description Page - -------------- ----------- ---- 11.1 Computation of per share data 15 14 EX-11.1 2 EXHIBIT 11.1 IGEN, INC. EXHIBIT 11.1 STATEMENT RE: COMPUTATION OF NET INCOME PER SHARE (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30 1996 1995 1996 1995 ---- ---- ---- ---- Average Common Shares Outstanding: 14,958 14,733 14,941 14,739 ------- ------- ------- ------- Net Loss $(1,710) $(1,948) $(3,234) $(3,789) ------- ------- ------- ------- ------- ------- ------- ------- Net loss per share $(.11) $(.13) $(.22) $(.26) ------- ------- ------- ------- ------- ------- ------- ------- 15 EX-27 3 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS MAR-31-1996 APR-01-1996 SEP-30-1996 1,914 10,597 1,871 0 1,808 17,112 6,395 (3,228) 20,746 6,236 0 0 0 15 14,404 20,746 3,333 9,331 1,237 12,974 0 0 (409) (3,234) 0 (3,234) 0 0 0 (3,234) (.22) (.22)
-----END PRIVACY-ENHANCED MESSAGE-----