-----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, SPnScJTAtLDNSo5NS1BvIxxsOG65fLPblgVxLAdxr2SR1ycq6A9Djtdh5R85FgiM pCKCdYVJSjUwn63dzW33wg== 0001036050-98-000870.txt : 19980515 0001036050-98-000870.hdr.sgml : 19980515 ACCESSION NUMBER: 0001036050-98-000870 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 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: SEC FILE NUMBER: 000-06533 FILM NUMBER: 98621419 BUSINESS ADDRESS: STREET 1: 31 NEWBURY ST STREET 2: SUITE 300 CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 6174250200 MAIL ADDRESS: STREET 1: 31 NEWBURY STREET STREET 2: SUITE 300 CITY: BOSTON STATE: MA ZIP: 02116 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, 1998 ---------------------- 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 11, 1998 THERE WERE 13,036,855 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, 1998 AND DECEMBER 31, 1997 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 2 FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 3 FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 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)
31-Mar-98 31-Dec-97 ------------------- ------------------- Assets Current Assets: Cash and cash equivalents $ 1,504,096 $ 1,713,975 Short-term investments 10,533,383 12,338,496 Prepaid sponsored research & development expenses 190,000 150,000 Other current assets 446,939 508,208 ------------------- ------------------- Total current assets 12,674,418 14,710,679 Fixed assets, net 76,126 95,061 Technology acquired 3,500,000 3,500,000 Other assets 273,229 273,229 ------------------- ------------------- Total assets $ 16,523,773 $ 18,578,969 =================== =================== Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses 1,528,859 1,991,804 ------------------- ------------------- Total current liabilities 1,528,859 1,991,804 ------------------- ------------------- Stockholders' equity: Series A Convertible Preferred stock, $.01 par value 271 284 1,000,000 shares authorized 27,145 shares outstanding on March 31, 1998 and 28,372 shares outstanding on December 31, 1997 Common stock, $0.01 par value; 130,269 129,938 25,000,000 shares authorized 13,026,929 shares outstanding on March 31, 1998 and 12,993,838 shares outstanding on December 31, 1997 Additional paid-in-capital 49,753,572 49,624,386 Unrealized gains on investments 25,179 99,029 Deficit accumulated during development stage (34,914,377) (33,266,472) ------------------- ------------------- Total stockholders' equity 14,994,914 16,587,165 ------------------- ------------------- Total liabilities and stockholders' equity $ 16,523,773 $ 18,578,969 =================== ===================
See Notes to Consolidated Financial Statements 1 BOSTON LIFE SCIENCES, INC. (A Development Stage Enterprise) Consolidated Statement of Operations (Unaudited)
Three Months Ended From inception March 31, (October 16, 1992) -------------------------------------------- to March 31, 1998 1997 1998 ------------------- ------------------- -------------------- Revenues $ 0 $ 50,000 $ 700,000 Operating Expenses Research and development expenses 1,117,644 973,992 13,014,757 Licensing fees 55,000 0 708,683 THERAFECTIN/R/ related expenses 127,000 551,045 3,863,831 General and administrative expenses 599,311 517,000 8,767,272 Purchased research and development in-process 0 0 10,421,544 ------------------- ------------------- -------------------- Loss from operations (1,898,955) (1,992,037) (36,076,087) Net interest income (expense) 251,050 327,149 1,161,710 ------------------- ------------------- -------------------- Net loss $(1,647,905) $(1,664,888) $(34,914,377) =================== =================== ==================== Basic and diluted net loss per common share $ (0.13) $ (0.14) =================== =================== Weighted average shares outstanding 13,010,383 11,621,225 =================== ===================
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 1998 1997 31-Mar-98 ------------------- ------------------- -------------------- Cash flows from operating activities: Net loss $(1,647,905) $(1,664,888) $ (34,914,377) 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 125,000 72,000 999,540 Amortization and depreciation 20,000 20,000 1,375,583 Loss on disposal of fixed assets 0 0 15,589 Changes in operating assets and liabilities: Prepaid sponsored research & development expenses (40,000) 391,000 (190,000) Other current assets 61,269 301,035 48,589 Accounts payable and accrued expenses (462,945) (269,436) 581,194 Deferred revenue 0 (50,000) 0 ------------------- ------------------- -------------------- Net cash used for operating activities (1,944,581) (1,200,289) (21,662,338) ------------------- ------------------- -------------------- Cash flows from investing activities: Net cash provided by acquisition of Greenwich Pharmaceutical 0 0 1,758,037 Increase in fixed assets (1,065) (14,746) (257,766) Proceeds from sale of fixed assets 0 0 9,800 Increase in other assets 0 0 (273,229) Short term investments: Purchases (4,890,671) (3,626,417) (36,448,625) Sales and maturities 6,621,934 2,867,483 25,940,421 ------------------- ------------------- -------------------- Net cash provided by (used in) investing activities 1,730,198 (773,680) (9,271,362) ------------------- ------------------- -------------------- Cash flows from financing activities: Proceeds from issuance of common stock 4,504 74,560 13,014,249 Proceeds from issuance of convertible preferred stock 0 0 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 0 (37,486) (2,796,467) Payment of note issuance costs 0 0 (399,702) Payment of stock issuance and merger transaction costs 0 0 (1,837,454) ------------------- ------------------- -------------------- Net cash provided by financing activities 4,504 37,074 32,437,796 ------------------- ------------------- -------------------- Net increase (decrease) in cash and cash equivalents (209,879) (1,936,895) 1,504,096 Cash and cash equivalents at beginning of period 1,713,975 8,580,206 0 ------------------- ------------------- -------------------- Cash and cash equivalents at end of period $ 1,504,096 $ 6,643,311 $ 1,504,096 =================== =================== ====================
See notes to consolidated financial statements. 3 BOSTON LIFE SCIENCES, INC. (a development stage enterprise) Notes to Unaudited Condensed Consolidated Financial Statements (March 31, 1998) 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 condensed 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, 1997, 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, 1998, the Company issued 21,519 shares of common stock resulting from the conversion of 1,227 shares of preferred stock. 4. INVESTMENTS At March 31, 1998, the fair value of short-term investments exceeded their cost basis by approximately $25,179. These investments, which are classified as available-for-sale, are reported at fair value, with the unrealized gain excluded from the statement of operations and reported as a separate component of stockholders' equity. 4 BOSTON LIFE SCIENCES, INC. (a development stage enterprise) Notes to Unaudited Consolidated Financial Statements (March 31, 1998) 5. COLLABORATIVE AGREEMENT In June 1995, the Company entered into a research and development collaboration agreement (the "Agreement") with the U.K. company, Zeneca Pharmaceuticals, Inc. ("Zeneca"). Under the terms of the Agreement, which originally would have expired in June 1997, Zeneca provided funds for a two- year period to support the research and development of certain technology. In addition to providing funding, Zeneca has been screening its molecule collection, seeking to identify an inhibitor of the Company's transcription factor. The Agreement enabled Zeneca to acquire the product development rights to the Company's technology. Zeneca requested, and was granted, an extension, until January 1, 1998, to complete the screening of its molecule collection before deciding if it will exercise its product development rights. Zeneca has informed the Company that its screening process will not be completed until May 31, 1998 and proposed a second extension which has not been granted by the Company. If Zeneca desires to continue product development following completion of screening, the Company could receive additional milestone payments as well as royalties from the sale of any products originating from the collaboration. However, there can be no assurance that Zeneca will decide to continue product development, that Zeneca and the Company will reach a renegotiated development agreement, that the Company will receive any milestone or royalty payments, or that any products will result from the collaboration. 6. COMPREHENSIVE NET LOSS The Company adopted FASBF Statement No. 130, "Reporting Comprehensive Income", in the first quarter of 1998. This statement establishes standards for the reporting and display of comprehensive income or loss and its components in the financial statements. Comprehensive net loss for the three months ended March 31, was as follows: 1998 1997 Net loss $(1,647,905) $(1,664,888) Unrealized loss on investments ( 73,850) ( 150,256) Comprehensive net loss $(1,721,755) $(1,815,144) 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS of Financial Condition and Results of Operations (March 31, 1998) 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, 1997 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, 1998, the Company is considered a "development stage enterprise" as defined in Statement of Financial Accounting Standards No. 7. Three Months Ended March 31, 1998 and 1997 The Company's net loss was $1,647,905 during the three months ended March 31, 1998 as compared with $1,664,888 during the three months ended March 31, 1997. Net loss per common share equaled $.13 per share for the 1998 period as compared to $.14 per share for the 1997 period. The lower net loss in the 1998 period was primarily due to lower Therafectin related expenses partially offset by increased research and development expenses, a higher level of general and administrative costs, and a decrease in net interest income. Revenue was zero during the three months ended March 31, 1998 as compared with $50,000 during the comparable 1997 period. Revenue for the 1997 period was attributable to a research and development agreement (the "Agreement") entered into with Zeneca Pharmaceuticals, Ltd. ("Zeneca Pharmaceuticals") in 1995. Under the terms of the Agreement, which originally would have expired in June 1997, Zeneca provided funds for a two year period to support the research and development of this technology. In addition to providing funding, Zeneca has been screening its molecule collection, seeking to identify an inhibitor of the Company's transcription factor. Zeneca requested, and was granted, an extension, until January 1, 1998, to complete the screening of its molecule collection before deciding if it will exercise its product development rights. Zeneca has informed the Company that its screening process will not be completed until May 31, 1998 and proposed a second extension which has not been granted by the Company. If Zeneca desires to continue product development following completion of screening, the Company could receive additional milestone payments as well as royalties from the sale of any products originating from the collaboration. However, there can be no assurance that Zeneca will decide to continue product development, that Zeneca and the Company will reach a renegotiated 6 development agreement, that the Company will receive any milestone or royalty payments, or that any products will result from the collaboration. Research and development expenses were $1,117,644 during the three months ended March 31, 1998 as compared with $973,992 during the three months ended March 31, 1997. The increase was primarily attributable to an increased level of expenditures for technologies under development as well as an increase in the number of personnel supporting research and development activities. 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 1998. Licensing fees were $55,000 during the three months ended March 31, 1998 as compared with zero during the three months ended March 31, 1997. During the 1998 period, the Company paid $15,000 to license one new technology as compared to no new licensing agreements during the 1997 period. In addition to an initial licensing fee payment, the Company is obligated to pay additional amounts upon the attainment of development milestones, as defined in each respective licensing agreement, as well as royalties upon the sales of any resulting products. During the 1998 period, the Company made a milestone payment of $40,000 related to the development of one of its technologies. The Company expects to pay future licensing fees, the timing and amounts of which will depend upon the progress attained in developing existing technologies and 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 $127,000 during the three months ended March 31, 1998 as compared with $551,045 during the three months ended March 31, 1997. This decrease reflects differences in the status of the Phase III clinical trial for Therafectin during each respective period. Enrollment in the trial, which began in March 1996, was completed in March 1997. Expenses during the 1998 period primarily related to patients enrolled in the extension phase of the trial in which fewer patients were enrolled, and per-patient clinical costs were lower. Before any commercially viable product from Therafectin may be developed, and any revenue generated therefrom, the Company currently expects that at least $0.5 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 $599,311 during the three months ended March 31, 1998 as compared with $517,000 during the comparable 1997 period. This increase was primarily due to the overall growth of the Company as reflected in the increased level of research and development expenses and an increase in the number of personnel employed by the Company. Net interest income was $251,050 during the three months ended March 31, 1998 as compared with net interest income of $327,149 during the three months ended March 31, 1997. The higher level of interest income recognized during the 1997 period primarily related to higher average short term investment, cash and cash equivalent balances. 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 7 completing a private placement of 5 million shares of common stock (See Notes 9 and 10 of Notes to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 1997). 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 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, 1998, the Company had available cash, cash equivalents and short term investments of approximately $12.0 million and working capital of approximately $11.1 million. The Company believes that the level of financial resources available at March 31, 1998 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. --------------------- DURING THE QUARTER ENDED MARCH 31, 1998, THE COMPANY ISSUED 5,480 SHARES OF COMMON STOCK RELATED TO THE EXERCISE OF OUTSTANDING WARRANTS FOR WHICH THE COMPANY RECEIVED CONSIDERATION TOTALING $4,504. 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 included with this filing: 27 Financial Data Schedule (b) Reports on Form 8-K: The Registrant filed the following reports on Form 8-K during the quarter ended March 31, 1998 and through May 14, 1998. Date of Report Item Reported ------------------------------- ------------- 1 Form 8-K filed January 20, 1998 5,7 2 Form 8-K filed March 9, 1998 5,7 3 Form 8-K filed April 30, 1998 5,7 3 Form 8-K filed May 7, 1998 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, 1998 /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 financial statements as reported on Form 10Q and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 1,504,096 10,533,383 0 0 0 12,674,418 264,024 (187,898) 16,523,773 1,528,859 0 0 271 130,269 16,393,233 16,523,773 0 0 0 1,898,955 (251,050) 0 0 (1,647,905) 0 (1,647,905) 0 0 0 (1,647,905) (0.13) (0.13)
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