-----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, QdrxI6XGCXNOQxkl6hRF5KVs12Jx2yh2ZyBLUIME8BUKrCkprLpNIr7TS89TuQhk ZaPOlyW90zEqF/R1iJcQDw== 0000950109-97-004160.txt : 19970520 0000950109-97-004160.hdr.sgml : 19970520 ACCESSION NUMBER: 0000950109-97-004160 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOSTON LIFE SCIENCES INC /DE CENTRAL INDEX KEY: 0000094784 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 870277826 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-06533 FILM NUMBER: 97607804 BUSINESS ADDRESS: STREET 1: 1601 TRAPELO RD STREET 2: RESERVOIR PL CITY: WALTHAM STATE: MA ZIP: 02154 BUSINESS PHONE: 6178908263 MAIL ADDRESS: STREET 2: 1601 TRAPELO RD CITY: WALTHAN STATE: MA ZIP: 02154 FORMER COMPANY: FORMER CONFORMED NAME: GREENWICH PHARMACEUTICALS INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: STRATEGIC MEDICAL RESEARCH CORP /DE DATE OF NAME CHANGE: 19790521 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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 March 31, 1997 ---------------------------- 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 0-6533 ---------------------------------------------------------- BOSTON LIFE SCIENCES, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 87-0277826 - -------------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 31 Newbury Street, Suite 300, Boston, Massachusetts 02116 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) (617) 425-0200 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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. (X) Yes ( ) No As of May 12, 1997 there were 124,645,990 shares of Common Stock outstanding. BOSTON LIFE SCIENCES, INC.
INDEX TO FORM 10-Q Page(s) ------- Part I - Financial Information: Item 1 - Financial Statements (unaudited) Condensed Consolidated Balance Sheets as of 1 March 31, 1997 and December 31, 1996 Condensed Consolidated Statements of Income 2 for the three months ended March 31, 1997 and 1996 Condensed Consolidated Statements of Cash Flows 3 for the three months ended March 31, 1997 and 1996 Notes to Condensed Consolidated Financial Statements 4-5 Item 2 - Management's Discussion and Analysis of 6-8 Financial Condition and Results of Operations Part II - Other Information Item 1 - Legal Proceedings 9 Item 2 - Changes in Securities 9 Item 3 - Defaults Upon Senior Securities 9 Item 4 - Submission of Matters to a Vote of 9 Security Holders Item 5 - Other Information 9 Item 6 - Exhibits and Reports on Form 8-K 9 Signature (s) 10
Part I -- Financial Information Item 1 -- Financial Statements Boston Life Sciences, Inc. (A Development Stage Enterprise) Consolidated Balance Sheet -------------------------- (Unaudited)
March 31, 1997 December 31, 1996 ---------------- ------------------- Assets Current Assets: Cash and cash equivalents $ 6,643,311 $ 8,580,206 Short-term investments 13,603,700 12,995,022 Prepaid sponsored research & development expenses 40,000 431,000 Other current assets 129,196 430,231 ------------ ------------ Total current assets 20,416,207 22,436,459 Fixed assets, net 95,743 100,997 Technology acquired 3,500,000 3,500,000 Other assets 115,674 115,674 ------------ ------------ Total assets $ 24,127,624 $ 26,153,130 ============ ============ Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses 1,638,476 1,907,912 Deferred revenue 33,060 83,060 Notes payable 24,266 61,752 ------------ ------------ Total current liabilities 1,695,802 2,052,724 ------------ ------------ Stockholders' equity: Series A Convertible Preferred stock, $.01 par value 611 1,336 1,000,000 shares authorized 61,123 shares outstanding on March 31, 1997 and 133,610 shares outstanding on December 31, 1996 Common stock, $0.01 par value; 1,239,324 1,110,485 175,000,000 shares authorized 123,932,386 shares outstanding on March 31, 1997 and 111,048,538 shares outstanding on December 31, 1996 Additional paid-in-capital 48,467,777 48,521,331 Unrealized losses on investments (150,256) 0 Deferred compensation (168,290) (240,290) Deficit accumulated during development stage (26,957,344) (25,292,456) ------------ ------------ Total stockholders' equity 22,431,822 24,100,406 ------------ ------------ Total liabilities and stockholders' equity $ 24,127,624 $ 26,153,130 ============ ============
See Notes to Consolidated Financial Statements 1 Boston Life Sciences, Inc. (A Development Stage Enterprise) Consolidated Statement of Operations ------------------------------------ (Unaudited)
From inception Three Months Ended (October 16, 1992) March 31, to March 31, --------------------------------------- 1997 1996 1997 ------------------ ------------------- -------------------- Revenues $ 50,000 $ 49,727 $ 666,940 Operating Expenses Research and development expenses 973,992 315,373 7,996,872 Licensing fees 0 10,000 633,683 THERAFECTIN(R) related expenses 551,045 367,262 2,097,836 General and administrative expenses 517,000 775,421 6,566,570 Purchased research and development in-process 0 0 10,421,544 ------------ ------------ ------------- Loss from operations (1,992,037) (1,418,329) (27,049,565) Net interest income (expense) 327,149 (127,267) 92,221 ------------ ------------ ------------- Net loss $(1,664,888) $(1,545,596) $(26,957,344) ============ ============ ============= Net loss per common share $ (0.01) $ (0.02) ============ ============ Weighted average shares outstanding 116,212,247 85,077,251 ============ ============
See notes to consolidated financial statements. 2 Boston Life Sciences, Inc. (A Development Stage Enterprise) Consolidated Statement of Cash Flows ------------------------------------ (Unaudited)
Period from Three Months Ended March 31, inception (October --------------------------------- 16, 1992) through 1997 1996 March 31, 1997 --------------- --------------- ----------------- Cash flows from operating activities: Net loss $(1,664,888) $(1,545,596) $ (26,957,344) Adjustments to reconcile net loss to net cash used for operating activities: Purchased research and development in-process 0 0 10,421,544 Compensation charge related to options and warrants granted 72,000 79,590 668,396 Amortization and depreciation 20,000 244,593 1,295,637 Loss on disposal of fixed assets 0 0 15,589 Changes in operating assets and liabilities: Prepaid sponsored research & development expenses 391,000 81,201 (40,000) Other current assets 301,035 99,589 366,332 Accounts payable and accrued expenses (269,436) 174,338 690,811 Deferred revenue (50,000) 150,273 33,060 ------------ ------------ ------------ Net cash used for operating activities (1,200,289) (716,012) (13,505,975) ------------ ------------ ------------ Cash flows from investing activities: Net cash provided by acquisition of Greenwich Pharmaceuticals 0 0 1,758,037 Increase in fixed assets (14,746) (2,444) (197,437) Proceeds from sale of fixed assets 0 0 9,800 Increase in other assets 0 0 (115,674) Short term investments: Purchases (3,626,417) 0 (26,199,478) Sales and maturities 2,867,483 248,320 12,445,522 ------------ ------------ ------------ Net cash provided by (used in) investing activities (773,680) 245,876 (12,299,230) ------------ ------------ ------------ Cash flows from financing activities: Proceeds from issuance of common stock 74,560 328,985 13,000,703 Proceeds from issuance of convertible preferred stock 0 23,991,000 20,872,170 Proceeds from issuance of notes payable 0 0 2,585,000 Proceeds from issuance of convertible debt 0 0 1,000,000 Principal payments of notes payable (37,486) (1,424,506) (2,772,201) Payment of note issuance costs 0 0 (399,702) Payment of stock issuance and merger transaction costs 0 (3,163,409) (1,837,454) ------------ ------------ ------------ Net cash provided by financing activities 37,074 19,732,070 32,448,516 ------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents (1,936,895) 19,261,934 6,643,311 Cash and cash equivalents at beginning of period 8,580,206 2,125,838 0 ------------ ------------ ------------ Cash and cash equivalents at end of period $ 6,643,311 $ 21,387,772 $ 6,643,311 ============ ============ ============
See notes to consolidated financial statements. 3 Boston Life Sciences, Inc. (a development stage enterprise) Notes to Unaudited Consolidated Financial Statements (March 31, 1997) 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, these financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The interim unaudited consolidated financial statements contained herein include, in management's opinion, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented. The results of operations for the interim period shown on this report are not necessarily indicative of results for a full year. These financial statements should be read in conjunction with the Company's consolidated financial statements and notes for the year ended December 31, 1996, appearing in the Company's Annual Report on Form 10-K for such year. 2. Net Loss Per Share Net loss per share has been calculated by dividing net loss by the weighted average number of common shares outstanding during the period. All common stock equivalents have been excluded from the calculation of weighted average common shares outstanding since their inclusion would be anti-dilutive. 3. Supplemental disclosure of non-cash investing and financing activities: During the three months ended March 31, 1997, the Company issued 12,712,560 shares of common stock resulting from the conversion of 72,487 shares of preferred stock. During the three months ended March 31, 1996, $1 million of convertible subordinated debentures were converted into 1,566,047 shares of common stock. Also, $98,685 was ascribed to stock options issued to a consultant as partial compensation for services. In addition, the Company issued 29,262 shares of common stock upon the exercise of a certain warrant which was net of 5,305 shares with a market value of $7,293 surrendered to satisfy the exercise price of such warrant. 4 Boston Life Sciences, Inc. (a development stage enterprise) Notes to Unaudited Consolidated Financial Statements (March 31, 1997) 4. Investments At March 31, 1996, the cost basis of short-term investments exceeded their fair value by approximately $150,000. These investments, which are classified as available-for-sale, are reported at fair value, with the unrealized loss excluded from the statement of operations and reported as a separate component of stockholders' equity. 5. New Accounting Standard In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 128, "Earnings per Share". The standard will be effective for the Company's fiscal year ending December 31, 1997. The adoption of this standard is not expected to have a material effect on the Company's financial statements. 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (March 31, 1997) This Quarterly Report on Form 10-Q contains forward-looking statements. Specifically, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words "believes," "anticipates," "plans," "expects," and similar expressions are intended to identify forward-looking statements. There are a number of meaningful factors that could cause the Company's actual results to differ materially from those indicated by any such forward-looking statements. These factors include, without limitation, the duration and results of clinical trials and their effect on the FDA regulatory process, uncertainties regarding receipt of approvals for any possible products and any commercial acceptance of such products, possible difficulties with obtaining necessary patent protection, and uncertainties regarding the outcome of any of the Company's collaborations or alliances with third parties. Other factors include those set forth under the caption "Forward-Looking Statements" in the Company's Annual Report on Form 10-K for the year ended December 31, 1996 and the documents referred to under such caption. Results of Operations Overview The Company is a biotechnology company engaged in the research and development of novel therapeutic and diagnostic products to treat chronic debilitating diseases such as cancer, central nervous system disorders and autoimmune diseases. The Company expects that its research and development costs will continue to increase as the Company attempts to gain regulatory approval for commercial introduction of its proposed products. At March 31, 1997, the Company is considered a "development stage enterprise" as defined in Statement of Financial Accounting Standards No. 7. Three Months Ended March 31, 1997 and 1996 The Company's net loss was $1,664,888 during the three months ended March 31, 1997 as compared with $1,545,596 during the three months ended March 31, 1996. Net loss per common share equaled $.01 per share for the 1997 period as compared to $.02 per share for the 1996 period. The higher net loss in the 1997 period was primarily due to increased research and development expenses, and higher costs associated with the Phase III clinical trial for THERAFECTIN(R). These increased expenses were partially offset by lower general and administrative expenses, and the recognition of net interest income in the 1997 period as compared to net interest expense in the 1996 period. Revenue was $50,000 during the three months ended March 31, 1997 as compared with $49,727 during the comparable 1996 period. Revenue for both periods was attributable to a research and development agreement entered into with Zeneca Pharmaceuticals, Ltd. ("Zeneca Pharmaceuticals") in 1995. Research and development expenses were $973,992 during the three months ended March 31, 1997 as compared with $315,373 during the three months ended March 31, 1996. The increase was primarily attributable to an expansion in the number of technologies under development as well as an increased level of expenditures for technologies which were under development during both periods. During the 1997 period, the Company incurred expenses totaling $359,000 for two technologies which had not yet been licensed to the Company during the comparable 1996 period. In addition, the Company increased the funding for one of its programs from approximately $90,000 during the 1996 period to approximately $320,000 during the 1997 period. Finally, the Company increased the number of 6 personnel supporting its research and development activities from two to four. The majority of the Company's research and development expenses were sponsored research obligations paid to Harvard University and its affiliated hospitals. The Company expects to incur research and development costs between $5 million to $6 million during 1997. Licensing fees were zero during the three months ended March 31, 1997 as compared with $10,000 during the three months ended March 31, 1996. The Company did not execute any new licensing agreements during the 1997 period or incur any obligations under its existing licensing agreements. The Company entered into one new licensing agreement during the 1996 period. The Company expects to pay future licensing fees, the timing and amounts of which will depend upon the terms of agreements which may be executed for technologies currently being developed or which may be developed in the future. There can be no assurance regarding the likelihood or materiality of any such future licensing agreements. THERAFECTIN(R) related expenses were $551,045 during the three months ended March 31, 1997 as compared with $367,262 during the three months ended March 31, 1996. This increase was primarily due to the higher number of patients enrolled in the Phase III clinical trial for Therafectin(R) during the 1997 period as compared to the 1996 period. Enrollment in the trial, which began in March 1996, was completed in March 1997. Before any commercially viable product from Therafectin(R) may be developed, and any revenue generated therefrom, the Company currently expects that at least $1 million to $1.5 million of additional future expense will be necessary. There can be no assurance, however, that the expenditure of these additional amounts will result in the regulatory approval of any compounds or that such approval will ever be able to be obtained by the Company. General and administrative expenses were $517,000 during the three months ended March 31, 1997 as compared with $775,421 during the comparable 1996 period. This decrease was primarily due to (i) the incurrence, during the 1996 period, of contractual obligations totaling $175,000 associated with the employment contract between the Company and its Chief Executive Officer and (ii) lower professional services costs. Net interest income was $327,149 during the three months ended March 31, 1997 as compared with net interest expense of $127,267 during the three months ended March 31, 1996. The net interest income recognized during the 1997 period primarily related to higher cash balances associated with the Company raising net proceeds of approximately $25.7 million from two private placements completed in 1996. The net interest expense incurred during the 1996 period related to (i) the issuance of $2.175 million of notes payable during the first quarter of 1995, (ii) the issuance of $1.0 million of convertible subordinated debentures during the fourth quarter of 1995, and (iii) the amortization of the debt issuance costs associated with both financings. The debentures were converted into common stock in February 1996 and the Company paid the remaining principal on its notes payable at the beginning of the second quarter of 1996. Liquidity and Capital Resources Since its inception, the Company has satisfied its working capital requirements from the sale of the Company's securities through private placements. In January and February 1996, the Company raised approximately $20.7 million of net proceeds by completing a private placement of units consisting of (i) shares of its Series A Convertible Preferred Stock and (ii) warrants to purchase shares of the Company's common stock. In June 1996, the Company raised approximately $5 million of net proceeds by completing a private placement of 5 million shares of common stock (See Notes 8 and 9 of Notes to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 1996). In the future, the Company's ability to meet, and the level of, its working capital and capital requirements will depend on numerous factors, including the progress of the Company's 7 research and development activities, the level of resources that the Company devotes to the developmental, clinical, and regulatory aspects of its products, and the extent to which the Company enters into collaborative relationships with pharmaceutical and biotechnology companies. At March 31, 1997, the Company had available cash, cash equivalents and short term investments of approximately $20.2 million and working capital of approximately $18.7 million. The Company believes that the level of financial resources available at March 31, 1997 will provide sufficient working capital to meet its anticipated expenditures for more than the next twelve months. The Company may raise additional capital in the future through collaboration agreements with other pharmaceutical or biotechnology companies, debt financings and equity offerings. There can be no assurance, however, that the Company will be successful in such efforts or that additional funds will be available on acceptable terms, if at all. 8 PART II -- OTHER INFORMATION ---------------------------- ITEM 1: LEGAL PROCEEDINGS. ----------------- None. 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. None. (b) Reports on Form 8-K: The Registrant filed the following reports on Form 8-K during the quarter ended March 31, 1997 and through May 14, 1997. Date of Report Item Reported -------------- ------------- 1 Form 8-K filed January 13, 1997 5, 7 2 Form 8-K filed January 23, 1997 5, 7 9 SIGNATURE(S) ------------ 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. Boston Life Sciences, Inc. -------------------------- (Registrant) DATE: May 14, 1997 /s/ S. David Hillson --------------------------- S. David Hillson President and Chief Executive Officer /s/ Joseph Hernon -------------------------- Joseph Hernon Chief Financial Officer 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH 31, 1997 FINANCIAL STATEMENTS AS REPORTED ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 6,643,311 13,603,700 0 0 0 20,416,207 203,694 107,951 24,127,624 1,695,802 0 0 611 1,239,324 21,191,887 24,127,624 50,000 50,000 0 2,042,037 0 0 2,114 (1,664,888) 0 (1,664,888) 0 0 0 (1,664,888) (0.01) (0.01)
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