-----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, S+ckwd9hUNsLs4pVdlnkH+oAVz6c4wwlFwQKmbshL5J4IDZaJK3nT4yx/b67nOmW 8oAwqDo9sOPtTQ72ah0vIA== 0000892569-96-002194.txt : 19961104 0000892569-96-002194.hdr.sgml : 19961104 ACCESSION NUMBER: 0000892569-96-002194 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961101 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLERGAN LIGAND RETINOID THERAPEUTICS INC CENTRAL INDEX KEY: 0000934592 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 330642614 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-25962 FILM NUMBER: 96651814 BUSINESS ADDRESS: STREET 1: 9393 TOWNE CENTER DR CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 6195353900 MAIL ADDRESS: STREET 1: 2525 DUPONT DR CITY: IRVINE STATE: CA ZIP: 92715 10-Q 1 QUARTERLY REPORT FOR THE PERIOD ENDED 9/30/96 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ______________________________________________________________________________ (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. ____________________________________________________________________________ COMMISSION FILE NUMBER 0-25970 ALLERGAN LIGAND RETINOID THERAPEUTICS, INC. A DELAWARE CORPORATION IRS EMPLOYER IDENTIFICATION 33-0642614 2525 DUPONT DRIVE, IRVINE, CALIFORNIA 92612 TELEPHONE NUMBER 714/246-4500 Indicate by a 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. (1) X yes no ----- ----- (2) X yes no ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. As of October 31, 1996 there were 3,250,000 shares of callable common stock outstanding, and 200 shares of special common stock outstanding. 1 2 ALLERGAN LIGAND RETINOID THERAPEUTICS, INC. FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996 INDEX
Page ---- PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS Statement of Operations - Three and Nine Months ended September 30, 1996 and Three Months and Period ended September 30, 1995 3 Condensed Balance Sheets at September 30, 1996 and December 31, 1995 4 Statement of Cash Flows - Nine Months ended September 30, 1996 and Period ended September 30, 1995 5 Notes to Financial Statements 6 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 7-9 PART II - OTHER INFORMATION ITEM 6 10 Signature 11
2 3 PART I - FINANCIAL INFORMATION Allergan Ligand Retinoid Therapeutics, Inc. Statement of Operations (In thousands, except per share amounts)
Three Months ended Nine Months Period September 30, ended ended --------------------- September 30, September 30, 1996 1995 1996 1995 ---- ---- ---- ---- Revenues: Interest income $ 926 $ 1,274 $ 3,014 $ 1,677 Costs and expenses: Research and development 9,379 5,436 22,089 13,516 General and administrative expenses 404 369 1,192 703 ------- ------- -------- -------- Total costs and expenses 9,783 5,805 23,281 14,219 ------- ------- -------- -------- Net loss $(8,857) $(4,531) $(20,267) $(12,542) ======= ======= ======== ======== Net loss per callable common share $ (2.73) $ (1.39) $ (6.24) $ (3.86) ======= ======= ======== ======== Weighted average callable common shares outstanding 3,250 3,250 3,250 3,250
See accompanying notes. 3 4 Allergan Ligand Retinoid Therapeutics, Inc. Condensed Balance Sheets (In thousands, except share data)
September 30, December 31, 1996 1995 ---- ---- ASSETS Cash and cash equivalents $ 38,953 $ 79,793 Marketable securities 20,351 -- Other assets 882 335 -------- -------- $ 60,186 $ 80,128 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Payable to Allergan, Inc. and Ligand Pharmaceuticals Incorporated $ 3,987 $ 2,886 Accounts payable and accrued liabilities 203 766 -------- -------- Total current liabilities 4,190 3,652 Stockholders' equity: Callable Common stock, $.001 par value; 3,250,000 shares authorized, issued and outstanding 3 3 Additional paid-in capital 94,256 94,256 Accumulated deficit (38,050) (17,783) Unrealized holding loss on marketable securities (213) -- -------- -------- Total stockholders' equity 55,996 76,476 -------- -------- $ 60,186 $ 80,128 ======== ========
See accompanying notes. 4 5 Allergan Ligand Retinoid Therapeutics, Inc. Statement of Cash Flows (In thousands)
Nine Months Period ended ended September 30, September 30, 1996 1995 ---- ---- OPERATING ACTIVITIES: Net loss $(20,267) $(12,542) Changes in operating assets and liabilities: Other assets (547) (438) Payable to Allergan, Inc. and Ligand Pharmaceuticals Incorporated 1,101 3,774 Accounts payable and accrued liabilities (563) 814 -------- -------- Net cash used in operating activities (20,276) (8,392) INVESTING ACTIVITIES: Purchase of marketable securities (20,564) -- Net proceeds from offering of units -- 27,245 Contribution from Allergan, Inc. -- 50,000 Contribution from Ligand Pharmaceuticals Incorporated -- 17,500 -------- -------- Net cash provided by (used in) investing activities (20,564) 94,745 -------- -------- Net increase (decrease) in cash and cash equivalents (40,840) 86,353 Cash and cash equivalents at beginning of period 79,793 -- -------- -------- Cash and cash equivalents at end of period $ 38,953 $ 86,353 ======== ========
See accompanying notes. 5 6 Allergan Ligand Retinoid Therapeutics, Inc. Notes to Financial Statements 1. Allergan Ligand Retinoid Therapeutics, Inc. (the Company) was incorporated in Delaware in 1994 and commenced operations on June 3, 1995 to continue the efforts of the Allergan Ligand Joint Venture (Joint Venture), established by Allergan, Inc. (Allergan) and Ligand Pharmaceuticals Incorporated (Ligand) in June 1992, to discover, develop and commercialize drugs based on retinoids. On June 3, 1995, the Company and Ligand completed a public offering (the Offering) of 3.25 million units, each unit consisting of one share of the Company's callable common stock (Callable Common Stock) and two warrants, each to purchase one share of Ligand common stock. The Offering raised net proceeds for the Company of $26.8 million. At the completion of the Offering, Ligand contributed $17.5 million in cash, as well as warrants in exchange for (i) a right to acquire all of the Callable Common Stock at specified future dates and amounts and (ii) a right to acquire all rights to the 1057 product, jointly with Allergan, currently under development by the Company. At the same time, Allergan contributed $50.0 million in cash to the Company in exchange for (i) the right to acquire one-half of technologies and other assets in the event Ligand exercises its right to acquire all of the Callable Common Stock, (ii) a similar right to acquire all of the Callable Common Stock if Ligand does not exercise its right and (iii) a right to acquire all rights to the 1057 product, jointly with Ligand. 2. In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial information contained therein. These statements do not include all disclosures required by generally accepted accounting principles. The results of operations for the quarter and nine months ended September 30, 1996 are not necessarily indicative of the results to be expected for the year ending December 31, 1996. Net loss per callable common share is computed by dividing the net loss by the number of callable common shares outstanding, which was 3,250,000 at all times during the quarter. 3. The Company invests its excess cash in money market funds and debt instruments of financial institutions and corporations with strong credit ratings. The Company has established guidelines with respect to the diversification and maturities in order to maintain safety and liquidity. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company's investments are classified as available-for-sale and are carried at fair value, with unrealized gains and losses reported as a separate component of stockholders' equity. The investments are adjusted for amortization of premiums and discounts to maturity and such amortization is included in interest income. 6 7 ALLERGAN LIGAND RETINOID THERAPEUTICS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 1996 Allergan Ligand Retinoid Therapeutics, Inc. (ALRT) commenced operations in June 1995 and received net proceeds of approximately $26.8 million upon issuance of 3.25 million Units (the Offering), each of which consists of one share of Callable Common Stock and two Warrants, each to purchase one share of Ligand Pharmaceuticals Incorporated (Ligand) common stock. At that time, ALRT also received cash contributions of $50.0 million from Allergan, Inc. (Allergan) and $17.5 million from Ligand (the Contributions). ALRT is utilizing substantially all of the net proceeds of the Offering and the Contributions to continue the research and development of potential retinoid compounds. The shares of Callable Common Stock are subject to a stock purchase option (the Stock Purchase Option), pursuant to which Ligand, and in the event not exercised by Ligand, Allergan, has an irrevocable option to purchase all, but not less than all, of the Callable Common Stock outstanding at the time such option is exercised at stated exercise prices from June 3, 1997 until the expiration of the Stock Purchase Option on the earlier of June 3, 2000 or a limited period of time after a major agreement among ALRT, Ligand and Allergan is terminated due to an event of default. Ligand and Allergan also have the option, which must be exercised together, to acquire assets related to the development of the 1057 product. RESULTS OF OPERATIONS - --------------------- The Company incurred a net loss of $8.9 million for the quarter and $20.3 million for the nine months ended September 30, 1996. Interest income was $0.9 million for the third quarter and $3.0 million for the nine months ended September 30, 1996 as a result of investment of the remaining unexpended cash held by ALRT. Interest income was $1.3 million for the third quarter of 1995. Interest income of $1.7 million for the period ended September 30, 1995 was earned on cash held during the period from completion of the offering on June 3, 1995. The decrease in interest income in the third quarter of 1996 compared to 1995 is the result of the decrease in unexpended funds as ALRT funds its operating activities. Interest income will continue to decrease in future periods as funds are used in performance of research and development activities, subject to general interest rate trends. Research and development expenses were $9.4 million in the third quarter and $22.1 million for the nine months ended September 30, 1996. Such expenses were $5.4 million for the quarter and $13.5 million for the period ended September 30, 1995. Expenses in 1995 include research and development costs incurred from January 1 to June 3 by a joint venture operated by Allergan and Ligand which were reimbursed by ALRT following completion of the Offering. Research and development activities have been performed primarily by Ligand and Allergan under contracts with ALRT since June 1995. Research and development expenses in 1996 have exceeded comparable expenses incurred in 1995 due to the acceleration of development activities. General and administrative expenses were $0.4 million in the third quarter of 1996 and $1.2 million for the nine months ended September 30, 1996. In 1995, general and administrative expenses were $0.4 million for the quarter 7 8 Allergan Ligand Retinoid Therapeutics, Inc. RESULTS OF OPERATIONS (Continued) - --------------------------------- and $0.7 million for the period ended September 30, 1995, and related primarily to the period from completion of the Offering on June 3, 1995. The Company's activities will be limited to conducting research and development under the agreements with Ligand and Allergan. The Company does not expect to generate any revenues other than interest income during subsequent periods. Consequently, it expects to continue to incur net losses in subsequent periods. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- As of September 30, 1996, ALRT had cash and cash equivalents of $39.0 million and marketable securities of $20.3 million. Although ALRT believes that the proceeds of the Offering together with the Contributions will be sufficient to enable it to continue development of a limited number of products in accordance with the Development Agreement among ALRT, Ligand and Allergan, and to commercialize formulations of ALRT1057, if it proves safe and efficacious, there can be no assurance that this will be the case. Until the expiration of the Stock Purchase Option, ALRT is significantly restricted from raising additional funds without Allergan's and Ligand's consent and there can be no assurance that ALRT will have sufficient funds to successfully develop any retinoid products (Products). While Allergan and Ligand may, at their option, provide funds for further development of the Products, they are not obligated to do so. Such funds will be advanced to ALRT, if at all, at the option of Allergan and Ligand and the decision to make such advances must be a joint decision. As a result, ALRT does not anticipate any future cash inflows other than earnings on unexpended cash balances. Substantial funding will be necessary to complete the development of and to commercialize the Products. If the Stock Purchase Option is not exercised, ALRT would have to raise substantial funding from third parties through the sale of securities or the licensing of Product or technology rights. There can be no assurance that such funds will be available or, if available, will be on commercially reasonable terms. In addition, until the termination of the Stock Purchase Option, ALRT is not able to issue additional capital stock, borrow more than $1 million in the aggregate, declare or pay dividends or make other distributions to stockholders, merge, consolidate or reorganize or liquidate or sell all or substantially all of its assets without the prior written approval of Allergan and Ligand. If ALRT does not use the available funds as provided in the Development Agreement or otherwise breaches any of its material obligations under any of the major agreements among ALRT, Ligand and Allergan, Allergan and Ligand may have the right to terminate the technology license agreement among ALRT, Ligand and Allergan, and thereby reacquire rights to all technology licensed to ALRT thereunder, including improvements made to such technology using funds provided by ALRT. In the event of such a termination by Allergan and Ligand, ALRT will not receive any royalty or other compensation and it is unlikely that Ligand or Allergan would exercise either the 1057 Purchase Option or the Stock Purchase Option. 8 9 Allergan Ligand Retinoid Therapeutics, Inc. LIQUIDITY AND CAPITAL RESOURCES (Continued) - ------------------------------------------- During the third quarter of 1996, ALRT invested its excess cash in money market funds and debt instruments of financial institutions and corporations with strong credit ratings. ALRT has established guidelines relative to diversification and maturities designed to maintain safety and liquidity. The guidelines are periodically reviewed and modified to take advantage of trends in yields and interest rates. The net proceeds from the Offering, combined with the Contributions and income on unexpended cash balances, are anticipated to provide funding for research and development and related administrative activities through the middle of the year 2000. The Company does not currently maintain any line of credit agreements. The Company believes the impact of inflation on its business activities has not been significant to date. This discussion may contain certain forward-looking statements. Actual results could differ materially from those currently anticipated due to a number of factors, including: (i) the Company's ability to commercialize and market its products will be subject to the regulatory approval of government authorities in the United States and elsewhere; such regulatory approval cannot be assured; (ii) the Company's products are in an early stage of development and will require extensive and time consuming clinical testing prior to commercialization; (iii) the Company competes against a number of companies with superior resources; (iv) the Company has announced certain interim clinical trial results; there can be no assurance that the final results obtained from any such trial will be substantially the same as such interim results, or that such final results will support the regulatory filings necessary for commercial sale. 9 10 Allergan Ligand Retinoid Therapeutics, Inc. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K - Exhibits (numbered in accordance with Item 601 of Regulation S-K) Exhibit 27 - Financial Data Schedule - Reports on Form 8-K. None. 10 11 SIGNATURE 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. Date: November 1, 1996 ALLERGAN LIGAND RETINOID THERAPEUTICS, INC. /s/ DWIGHT J. YODER --------------------------- Dwight J. Yoder Chief Financial Officer 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED BALANCE SHEETS AND THE STATEMENT OF OPERATIONS OF ALLERGAN LIGAND RETINOID THERAPEUTICS, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996. 1,000 U.S. DOLLARS 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 1 38,953 20,351 0 0 0 60,186 0 0 60,186 4,190 0 0 0 3 55,993 60,186 0 3,014 0 0 22,089 0 0 (20,267) 0 (20,267) 0 0 0 (20,267) (6.24) (6.24)
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