-----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, HlQ96SiJU5LVC3V8oXJteTskDqm13RUpEl+AyU2Qszs2ROFzIWCxLQ55g3fV1+ls YCj3SB4WxFuWIbmQLRs3eQ== 0000950133-96-000505.txt : 19960729 0000950133-96-000505.hdr.sgml : 19960729 ACCESSION NUMBER: 0000950133-96-000505 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960508 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GUILFORD PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000918066 STANDARD INDUSTRIAL CLASSIFICATION: 2834 IRS NUMBER: 521841960 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-23736 FILM NUMBER: 96557851 BUSINESS ADDRESS: STREET 1: 6611 TRIBUTARY ST CITY: BALTIMORE STATE: MD ZIP: 21221 BUSINESS PHONE: 4106316300 10-Q 1 GUILFORD PHARMACEUTICALS INC. FORM 10-Q, 3/31/96. 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 -------------- COMMISSION FILE NUMBER 0-23736 ------- GUILFORD PHARMACEUTICALS INC. (Exact name of registrant as specified in its charter) - - ------------------------------------------------------------------------------- DELAWARE 52-1841960 - - ------------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 6611 TRIBUTARY STREET, BALTIMORE, MARYLAND 21224 - - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) 410-631-6300 - - ------------------------------------------------------------------------------- (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 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 --------- --------- 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 March 31, 1996 Common Stock, $.01 par value 9,093,065 - - ---------------------------- -----------------------------------------
2 GUILFORD PHARMACEUTICALS INC. (A DEVELOPMENT STAGE COMPANY) INDEX
Page (s) ---- PART I. FINANCIAL INFORMATION (UNAUDITED) Item 1. Financial Statements Balance Sheets - March 31, 1996 and December 31, 1995 3 Statements of Operations - Three months ended March 31, 1996 and March 31, 1995 and the period from July 14, 1993 (date of inception) to March 31, 1996 4 Statement of Stockholders' Equity - Three months ended March 31, 1996 5 Statements of Cash Flows Three months ended March 31, 1996 and March 31, 1995, and the period from July 14, 1993 (date of inception) to March 31, 1996 6 Notes to Financial Statements 7-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-11 PART II. OTHER INFORMATION 12 SIGNATURES 13
2 3 GUILFORD PHARMACEUTICALS INC. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS
MARCH 31, DECEMBER 31, 1996 1995 ---- ---- ASSETS Current assets: Cash and cash equivalents $ 39,118,595 $ 4,259,531 Short-term investments 9,360,993 11,552,038 Short-term investments - restricted 238,021 250,000 Licensing fee receivable 100,000 555,500 Subscription receivable 5,640,000 - Other current assets 172,139 291,580 ------------ ------------ Total current assets 54,629,748 16,908,649 Investments - restricted 4,094,007 3,392,284 Notes receivable from employees 86,653 85,476 Property and equipment, net 8,260,543 5,455,791 Other assets 204,099 206,202 ------------ ------------ $ 67,275,050 $ 26,048,402 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable: Trade $ 1,617,002 $ 1,149,743 Construction 1,924,828 489,960 Bond payable - current portion 528,656 293,469 Accrued consulting and contracted research expense 371,860 400,909 Accrued offering costs 254,133 116,000 Accrued payroll and related costs 343,812 681,000 Accrued expenses and other current liabilities 371,987 447,999 ------------ ------------ Total current liabilities 5,412,278 3,579,080 Bond payable, less current portion 5,462,783 4,695,508 Commitments Stockholders' equity: Convertible preferred stock, par value $.01 per share Authorized 4,700,000 shares, none issued - - Series A junior participating preferred stock, par value $.01 per share. Authorized 300,000 shares, none issued - - Common stock, par value $.01 per share. Authorized 20,000,000 shares; 9,093,065 and 6,793,065 issued and outstanding at March 31, 1996 and December 31, 1995, respectively 90,931 67,931 Additional paid-in capital 81,212,826 38,122,463 Notes receivable on common stock (139,500) (139,500) Deficit accumulated during the development stage (24,466,537) (19,947,437) Deferred compensation (297,731) (329,643) ------------ ------------ Total stockholders' equity 56,399,989 17,773,814 ------------ ------------ $ 67,275,050 $ 26,048,402 ============ ============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 3 4 GUILFORD PHARMACEUTICALS INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS
JULY 14, 1993 THREE MONTHS ENDED MARCH 31, (DATE OF INCEPTION) TO 1996 1995 MARCH 31, 1996 ------------ ------------ ---------------------- Revenues: License fee revenue $ 100,000 - 655,500 Research and development revenue under collaborative agreements 9,649 - 39,919 ------------ ------------ ---------------------- Total revenues 109,649 - 695,419 Operating expenses: Research and development 3,374,127 1,584,467 16,458,774 Research and development - Gell Pharmaceuticals Inc. 197,671 - 730,298 General and administrative 1,344,228 774,953 8,447,518 Compensation expense - warrants - - 991,304 ------------ ------------ ---------------------- Total operating expenses 4,916,026 2,359,420 26,627,894 ------------ ------------ ---------------------- Loss from operations (4,806,377) (2,359,420) (25,932,475) Other income (expense): Interest income 358,409 178,788 1,531,681 Other income - 29,590 199,319 Interest expense (71,132) (37,965) (265,062) ------------ ------------ ---------------------- Net loss $ (4,519,100) (2,189,007) (24,466,537) ============ ============ ====================== Net loss per share $ (0.65) (0.58) (6.28) ============ ============ ====================== Shares used in computation of net loss per share 6,959,072 3,786,276 3,894,585 ============ ============ ======================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 4 5 GUILFORD PHARMACEUTICALS INC. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF STOCKHOLDERS' EQUITY THREE MONTHS ENDED MARCH 31, 1996
COMMON STOCK ------------ ADDITIONAL NUMBER PAID-IN OF SHARES AMOUNT CAPITAL --------- ------ ------- BALANCE, DECEMBER 31, 1995 6,793,065 $67,931 38,122,463 Issuance of common stock in public offering at $20.00 per share, net of offering costs 2,300,000 23,000 42,858,797 Proceeds from Gell Pharmaceuticals relating to the put option 231,566 Amortization of deferred compensation Net loss for the period ---------- -------- ----------- BALANCE, MARCH 31, 1996 9,093,065 $90,931 81,212,826 ---------- -------- -----------
DEFICIT NOTES ACCUMULATED RECEIVABLE DURING TOTAL ON COMMON DEVELOPMENT DEFERRED STOCKHOLDERS' STOCK STAGE COMPENSATION EQUITY ----- ----- ------------ ------ BALANCE, DECEMBER 31, 1995 (139,500) (19,947,437) (329,643) 17,773,814 Issuance of common stock in public offering at $20.00 per share, net of offering costs 42,881,797 Proceeds from Gell Pharmaceuticals relating to the put option 231,566 Amortization of deferred compensation 31,912 31,912 Net loss for the period (4,519,100) (4,519,100) ---------- ------------- ---------- ------------ BALANCE, MARCH 31, 1996 (139,500) (24,466,537) (297,731) $56,399,989 ---------- ------------- ---------- ------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 5 6 GUILFORD PHARMACEUTICALS INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, JULY 14, 1993 ---------------------------- (DATE OF INCEPTION) TO 1996 1995 MARCH 31, 1996 ---- ---- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (4,519,100) $ (2,189,007) $ (24,466,537) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 230,885 59,342 842,282 Noncash compensation expense 31,912 17,064 1,213,172 Provision for loss related to advance to underwriter - - 175,000 Preferred stock issued in exchange for technology acquired in the research and development stage - 300,000 Preferred stock issued in exchange for various expenses paid for by Scios Nova Inc. on behalf of the Company - - 245,225 Changes in assets and liabilities: Licensing fee receivable 455,500 - (100,000) Notes receivable (1,177) 20,392 88,347 Other current assets 119,441 1,552 (347,139) Other assets 2,103 (23,359) (204,099) Accounts payable 1,902,128 (618,504) 3,541,831 Advance from Gell Pharmaceuticals Inc. (91,852) - - Accrued expenses and other liabilities (212,264) (90,718) 1,370,001 ------------ ------------ ------------- Net cash used in operating activities (2,082,424) (2,823,238) (17,341,917) ------------ ------------ ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Investment in purchases of property and equipment (3,035,637) (948,299) (9,102,825) Maturities of short-term investments 6,684,825 6,285,503 46,755,412 Purchases of short-term investments (5,195,503) (5,589,179) (60,210,412) Restricted cash 11,979 - (238,021) ------------ ------------ ------------- Net cash used in investing activities (1,534,336) (251,975) (22,795,846) ------------ ------------ ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of preferred stock - - 2,964,775 Net proceeds from issuances of common stock 37,241,796 167,017 68,727,101 Proceeds from bond issuance 1,002,462 1,337,112 5,991,439 Proceeds from Gell Pharmaceuticals relating to the put option 231,566 - 958,043 Proceeds received on subscriptions receivable - 500,000 Advances from Scios Nova Inc. - - 115,000 ------------ ------------ ------------- Net cash provided by financing activities 38,475,824 1,504,129 79,256,358 ------------ ------------ ------------- Net increase (decrease) in cash and cash equivalents 34,859,064 (1,571,084) 39,118,595 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD 4,259,531 4,039,856 - ------------ ------------ ------------- CASH AND CASH EQUIVALENTS AT THE END OF PERIOD $ 39,118,595 $ 2,468,772 $ 39,118,595 ============ ============ ============= SUPPLEMENTARY INFORMATION Noncash transactions: Issued shares of common stock in lieu of cash bonus $ - $ 28,209 $ 28,209 Issuances of common stock to executive officers - 182,525 509,850 Interest paid, net of amount capitalized 110,506 21,922 275,523 Collateral transferred from unrestricted to restricted investments 701,723 935,979 4,094,007 Receivable from over-allotment purchase of 300,000 common shares $ 5,640,000 $ - $ 5,640,000 ============ ============ =============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 6 7 GUILFORD PHARMACEUTICALS INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 (UNAUDITED) 1. BASIS OF PRESENTATION The financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's annual report on Form 10-K/A2 for the year ended December 31, 1995. Except for the historical information contained in this Form 10-Q, the matters discussed in the quarterly report are forward-looking statements. These statements involve risks and uncertainties that could cause the actual results to differ from predicted results. Information concerning factors that could affect the Company's financial results are set forth in the Company's filings with the Securities and Exchange Commission including the recently filed registration statement on Form S-3 declared effective on March 21, 1996. In the opinion of the Company's management, the accompanying unaudited financial statements contain adjustments, all of which are of a normal recurring nature, necessary to present fairly its financial position, results of operations, changes in stockholders' equity and cash flows for the respective periods as set forth in the Index to Financial Information. Interim results are not necessarily indicative of results for the full fiscal year. 2. NET LOSS PER SHARE Net loss per share is computed using the weighted average number of shares of Common Stock outstanding and gives effect to certain adjustments described below. Common equivalent shares from stock options and convertible preferred stock are generally excluded from the computation as their effect is antidilutive, except that, pursuant to Securities and Exchange Commission ("SEC") Staff Accounting Bulletins and SEC Staff policy, common and common equivalent shares issued during the 12 month period prior to the June 1994 initial public offering at prices below the public offering price are presumed to have been issued in contemplation of the public offering and have been included in the calculation as if they were outstanding for all periods presented (using the treasury stock method and initial public offering price of $8.00 per share for stock options and the if-converted method for convertible preferred stock through the conversion date, June 24, 1994). 7 8 GUILFORD PHARMACEUTICALS INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS (CONTINUED) The following table sets forth the calculation of total number of shares used in the computation of net loss per common share:
July 14, 1993 (date of inception) to Three Months Ended March 31, March 31, 1996 ------------------------------ -------------- 1996 1995 ---- ---- Weighted average common shares outstanding . . . . . . . . 6,890,867 3,723,048 3,363,599 Incremental shares assumed to be outstanding related to common stock, stock options and warrants granted based on the treasury stock method . . . . . . . . . . . . . . . . 68,205 63,228 165,298 Convertible preferred stock (assumed converted 1 for 1 basis following the 1 for 2.3 reverse common stock split through June 24, 1994, the date such shares were converted) . . . . . . . . . . . . . . . . 0 0 365,688 ----------- ----------- ----------- Weighted average common and common equivalent shares used in computation of net loss per share . . . . . . . . . . . . . . . . 6,959,072 3,786,276 3,894,585 ========= ========= =========
3. EQUITY TRANSACTIONS On March 21, 1996, the Company completed a public offering of 2,000,000 shares of its common stock, $.01 par value per share, providing net proceeds of approximately $37.3 million to the Company. On March 28, 1996, the underwriters exercised their over-allotment option, related to the above, to purchase 300,000 additional shares of common stock, $.01 par value per share. There were no material contingencies or conditions precedent to closing and accordingly net proceeds of approximately $5.6 million to the Company (which closed on April 3, 1996) were recorded in subscriptions receivable and appropriate equity accounts. 8 9 GUILFORD PHARMACEUTICALS INC. (A DEVELOPMENT STAGE COMPANY) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION GENERAL Guilford is a development stage biopharmaceutical company engaged in the development of novel products in two principal areas: (i) targeted and controlled drug delivery systems using proprietary biodegradable polymers for the treatment of cancer and other diseases and (ii) therapeutic and diagnostic products for neurological diseases and conditions. Since inception, the Company has received approximately $78.3 million in net cash proceeds from sales of equity securities, $12.9 million from the initial public offering, $60.8 million (including $5.6 million received in April 1996, see Note 3 of Notes to Financial Statements) from two follow-on offerings and $4.6 million (including approximately $700,000 in cash proceeds from management and a founder/director) in private sales of equity securities. To date, the Company has not made any product sales or generated other significant revenues. A substantial part of the Company's activities since inception has been devoted to raising capital, recruiting personnel, initiating product research programs and clinical trials, constructing and validating its GLIADEL manufacturing facility and preparing and filing a Treatment IND and an NDA for its lead product candidate, GLIADEL. The Company has incurred net operating losses since its inception and expects such losses to increase substantially as it expands its research and development efforts. The Company will be required to conduct further research, development, clinical trials and regulatory compliance activities that, together with projected general and administrative expenses, are expected to result in significant operating losses for the foreseeable future. The Company's ability to achieve profitability will depend upon its ability, either alone or with others, to develop its product candidates successfully, conduct clinical trials, obtain required regulatory approvals, manufacture at reasonable cost and market its product candidates and enter into collaborative arrangements and license agreements on acceptable terms. In addition, the Company expects to experience quarter-to-quarter and year-to-year fluctuations in revenues, expenses and losses, some of which may be significant. The timing and extent of such fluctuations will depend, in part, on the timing and receipt, if ever, of planned regulatory approvals for GLIADEL and other product candidates, future license fees and milestone payments, if any, and the timing and extent of funding of clinical studies with respect to the Company's potential products. The Company expects that expenses related to research and product development, preclinical testing, clinical trials, regulatory matters, operations, and manufacturing will continue to increase for the foreseeable future as the Company develops its potential products. RESULTS OF OPERATIONS The Company recognized $109,649 in revenues for three months ended March 31, 1996, including $100,000 in licensing fee revenue pursuant to the Company's agreement with Orion Farmos related to the filing of the NDA for Gliadel. The Company received no revenues from licensing fees, research and development collaborative income or product sales during the same period ended in 1995. 9 10 GUILFORD PHARMACEUTICALS INC. (A DEVELOPMENT STAGE COMPANY) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION (CONTINUED) Research and development expenses increased to $3,571,798 for three months ended March 31, 1996 compared to $1,584,467 for the same period ended in 1995. The increase is primarily due to the expansion of the Company's research and development programs, scale-up of manufacturing and clinical research related to the treatment IND for Gliadel which resulted in an increase in the number of employees, personnel related costs, laboratory supplies and consumables along with outside services such as contracted research and consulting. General and administrative expenses increased to $1,344,228 for three months ended March 31, 1996 compared to $774,953 for the same period ended in 1995. The increase in expenditures is primarily the result of an increase in the number of employees and personnel related costs required to support the Company's ongoing research and development activities and outside services related to patent activities. Interest income increased to $358,409 for three months ended March 31, 1996 compared to $178,788 for the same period ended in 1995, primarily due to an increase in the average invested capital resulting primarily from equity offerings. Interest expense increased to $71,132 for three months ended March 31, 1996 compared to $37,965 for the same period in 1995, relating to borrowings under the December 1994 loan agreement with Signet Bank providing for the construction of manufacturing, administrative and research and development facilities and for the purchase of related equipment. The Company received $29,590 in sublease income for three months ended March 31, 1995, compared to none for the same period in 1996. LIQUIDITY AND CAPITAL REQUIREMENTS The Company's cash and investments were $52,811,616 at March 31, 1996. Included in this amount is $4,094,007 of restricted cash held as collateral with respect to the Company's indebtedness. The Company has incurred net operating losses since its inception and expects such losses to increase substantially as its expands its research and development efforts and continues to prepare for a planned commercialization and product launch of GLIADEL. The Company does not expect operations either in the short-term or over the next several years to generate positive cash flow. The Company believes that its existing resources, along with the net proceeds from the March 1996 offering of 2,300,000 shares of the Company's common stock will be sufficient to fund the Company's planned activities through at least the end of 1997. There can be no assurance, however, that changes in the Company's research and development plans or other changes will not result in the earlier expenditure of such resources. The Company may need to raise substantial additional capital to fund future operations and to service existing indebtedness. The Company anticipates that it will fund future capital requirements through a combination of public and private financings, 10 11 GUILFORD PHARMACEUTICALS INC. (A DEVELOPMENT STAGE COMPANY) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION (CONTINUED) collaborative or other research and development agreements, commercialization and marketing arrangements with corporate partners or other potential sources. The Company's ability to raise future capital on acceptable terms is dependent on conditions in the public or private equity markets and the performance of the Company, as well as the overall performance of other companies in the biopharmaceutical and biotechnology sectors. There can be no assurance that required future financing arrangements will be available on acceptable terms, or at all. Capital expenditures of $3,035,637 were incurred in the first quarter ended March 31, 1996 compared to $948,299 for the same period ended March 31, 1995. These capital expenditures were related to the construction of research and development laboratories, expansion of the manufacturing facility and administrative offices. Additionally, such purchases included capital equipment and computer software to support the Company's activities. The Company expects to utilize, in 1996, available borrowings under its existing $8,000,000 loan agreement with Signet Bank to finance certain in-process tenant improvements related to the construction of research and development laboratories and other related areas. The Company expects additional capital will be required to provide for manufacturing plant capacity expansion and research and development laboratories. To fund such activities, the Company, in February 1996, has obtained a commitment for an additional $4,200,000 term loan with Signet Bank to support tenant improvements. In addition, the Company is negotiating a $5,000,000 lease financing arrangement for the funding of capital equipment. 11 12 GUILFORD PHARMACEUTICALS INC. (A DEVELOPMENT STAGE COMPANY) PART II. - OTHER INFORMATION Item 1. Legal Proceedings: None Item 2. Changes in Securities: None Item 3. Defaults in 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: None (b) Report on Form 8-K None 12 13 GUILFORD PHARMACEUTICALS INC. (A DEVELOPMENT STAGE COMPANY) 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. Guilford Pharmaceuticals Inc. Date: May 8, 1996 /s/ Craig R. Smith, M.D. ------------------------------------------- Craig R. Smith, M.D. President and Chief Executive Officer Date: May 8, 1996 /s/ Andrew R. Jordan ------------------------------------------- Andrew R. Jordan Vice President and Chief Financial Officer (Chief Accounting Officer) 13 EX-27 2 FINANCIAL DATA SCHEDULE.
5 This schedule contains summary financial information extracted from Form 10-Q, for the quarterly period ended March 31, 1996 and is qualified in its entirety by reference to such document (Form 10-Q) 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 39,118,595 0 5,740,000 0 0 54,629,748 9,102,825 842,282 67,275,050 5,412,278 5,462,783 0 0 90,931 56,399,989 67,275,050 0 109,649 0 4,916,026 0 0 71,132 (4,519,100) 0 (4,519,100) 0 0 0 (4,519,100) (.65) (.65)
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