-----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, IMQwNJWtI6/irGF1BSd96RTBDJG82J107jEKu93iEsW5D+DOx1T6WTt06ZnnojMg 9pHhaDFkSEtjENYO9EYtgQ== 0001012870-97-002262.txt : 19971117 0001012870-97-002262.hdr.sgml : 19971117 ACCESSION NUMBER: 0001012870-97-002262 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AVIRON CENTRAL INDEX KEY: 0000949173 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 770309686 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20815 FILM NUMBER: 97718313 BUSINESS ADDRESS: STREET 1: 297 N BERNARDO AVE CITY: MOUNTAIN VIEW STATE: CA ZIP: 94043 BUSINESS PHONE: 4159196500 MAIL ADDRESS: STREET 1: 297 NORTH BERNARDO AVE CITY: MOUNTAIN VIEW STATE: CA ZIP: 94043 10-Q 1 QUARTER ENDING 09/30/97 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 September 30, 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 0-20815 AVIRON (Exact name of registrant as specified in its charter) Delaware 77-0309686 (State or other jurisdiction of (I.R.S.Employer incorporation or organization) Identification No.) 297 North Bernardo Avenue, Mountain View, California 94043 (Address of principal executive offices including zip code) (650) 919-6500 (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- (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. 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. Common Stock $.001 par value 16,055,235 shares --------------------------------------- --------------------------------- (Class) (Outstanding at November 11, 1997) AVIRON TABLE OF CONTENTS PAGE NUMBER ----------- COVER PAGE 1 TABLE OF CONTENTS 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS AND NOTES (UNAUDITED). Condensed Balance Sheets as of September 30, 1997 and December 31, 1996 3 Condensed Statements of Operations for the three and nine- month periods ended September 30, 1997 and 1996 4 Condensed Statements of Cash Flows for the nine- month periods ended September 30, 1997 and 1996 5 Notes to Condensed Financial Statements 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 8 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. 11 ITEM 2. CHANGES IN SECURITIES. 11 ITEM 3. DEFAULTS UPON SENIOR SECURITIES. 11 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 11 ITEM 5. OTHER INFORMATION. 11 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 12 SIGNATURES 13 EXHIBIT INDEX 14 2. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS AVIRON CONDENSED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
SEPTEMBER 30, DECEMBER 31, 1997 1996 ------------------------------ (Unaudited) (Note) ASSETS CURRENT ASSETS: Cash and cash equivalents............................ $ 50,335 $ 12,166 Short-term investments............................... 34,899 5,706 Accounts receivable.................................. 29 500 Prepaid expenses and other current assets............ 671 813 -------- -------- Total Current Assets................................... 85,934 19,185 Property and equipment, net............................ 2,684 2,319 Deposits and other assets.............................. 509 88 -------- -------- TOTAL ASSETS........................................... $ 89,127 $ 21,592 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable..................................... $ 2,114 $ 695 Accrued compensation................................. 169 138 Accrued clinical trial costs......................... 400 752 Accrued offering costs............................... 64 474 Accrued expenses and other liabilities............... 322 143 Current portion of capital lease obligations......... 508 572 -------- -------- Total Current Liabilities.............................. 3,577 2,774 Capital lease obligations, noncurrent.................. 624 871 STOCKHOLDERS' EQUITY: Preferred stock, $0.001 par value; 5,000,000 shares authorized, issuable in series; none outstanding at September 30, 1997 and December 31, 1996........ -- -- Common stock, $0.001 par value; 30,000,000 shares authorized; 16,052,235 and 11,452,033 shares issued and outstanding at September 30, 1997 and December 31, 1996, respectively.................... 16 11 Additional paid-in capital........................... 142,443 59,127 Notes receivable from stockholders................... (135) (157) Deferred compensation................................ (720) (1,099) Accumulated deficit.................................. (56,678) (39,935) -------- -------- Total Stockholders' Equity............................. 84,926 17,947 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............. $ 89,127 $ 21,592 ======== ========
Note: The balance sheet at December 31, 1996 has been derived from audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles. See accompanying notes. 3. AVIRON STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------- ---------------------- 1997 1996 1997 1996 --------- --------- ---------- ---------- REVENUES: Contract revenue.............. $ 32 $ 688 $ 446 $ 1,063 ------- ------- -------- -------- Total revenue................... 32 688 446 1,063 ------- ------- -------- -------- OPERATING EXPENSES: Research and development...... 5,119 4,372 14,016 10,705 General and administrative.... 1,677 1,190 4,298 3,465 ------- ------- -------- -------- TOTAL OPERATING EXPENSES........ 6,796 5,562 18,314 14,170 LOSS FROM OPERATIONS............ (6,764) (4,874) (17,868) (13,107) OTHER INCOME/(EXPENSE): Interest income............... 712 107 1,289 505 Interest expense.............. (43) (58) (141) (138) ------- ------- -------- -------- TOTAL OTHER INCOME, NET......... 669 49 1,148 367 ------- ------- -------- -------- NET LOSS........................ $(6,095) $(4,825) $(16,720) $(12,740) ======= ======= ======== ======== Net loss per share.............. $(0.42) $(1.28) ======= ======== Shares used in computing net loss per share............ 14,480 13,083 Pro forma net loss per share.... $(0.52) $ (1.38) ======= ======== Shares used in calculating pro forma net loss per share...... 9,222 9,211
See accompanying notes. 4. AVIRON STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
Nine Months Ended ------------------------------ SEPTEMBER 30, SEPTEMBER 30, 1997 1996 -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES............................ Net Loss........................................................ $(16,720) $(12,740) Adjustment to reconcile net loss to net cash used in operating activities: Depreciation and amortization............................... 477 400 Amortization of deferred compensation....................... 504 452 Forgiveness of note receivable.............................. 22 -- Changes in assets and liabilities: Accounts receivable......................................... 471 (500) Prepaid expenses and other current assets................... 142 (541) Deposits and other assets................................... (421) 13 Accounts payable............................................ 1,419 511 Accrued expenses and other liabilities...................... (452) 498 -------------- -------------- Net Cash Used in Operating Activities........................... (14,558) (11,907) Cash Flows From Investing Activities............................ Purchases of short-term investments......................... (38,168) (5,281) Maturities of short-term investments........................ 8,952 10,049 Expenditures for property and equipment..................... (689) (509) -------------- -------------- Net Cash Provided by (Used In) Investing Activities............. (29,905) 4,259 -------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on capital lease obligation.............. (464) (449) Proceeds from issuance of: Series C convertible preferred stock................. -- 184 Common stock, net.................................... 83,096 199 -------------- -------------- Net Cash Provided by (Used in) Financing Activities............. 82,632 (66) -------------- -------------- Net Increase/(Decrease) in Cash and Cash Equivalents............ 38,169 (7,714) Cash and Cash Equivalents at Beginning of Period................ 12,166 11,532 -------------- -------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD...................... $ 50,335 $ 3,818 ============== ============== SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING AND INVESTING ACTIVITIES: Equipment acquired under lease line of credit............... 153 966 Deferred compensation related to grant of certain stock options, less cancellations................................ 125 1,577 Warrant issued in lieu of payment of legal fees............. 100 -- Common stock issued in exchange for notes receivable, less cancellations......................................... -- 262
See accompanying notes. 5. AVIRON NOTES TO CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 1997 (UNAUDITED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The financial information as of September 30, 1997 and for the three months and nine months ended September 30, 1997 and 1996 is unaudited, but includes all adjustments (consisting only of normal recurring adjustments) which Aviron (the "Company") considers necessary for a fair presentation of the financial position at such date and the operating results and cash flows for those periods. The balance sheet data at December 31, 1996 is derived from audited financial statements at that date. The accompanying condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. The results of the Company's operations for any interim period are not necessarily indicative of the results of the Company's operations for a full fiscal year. 2. NET LOSS PER SHARE Except as noted below, historical net loss per share is computed using the weighted average number of common shares outstanding. Common equivalent shares from stock options, convertible preferred stock and warrants are excluded from the computation as their effect is antidilutive, except that, pursuant to the Securities and Exchange Commission Staff Accounting Bulletins, common and common equivalent shares issued during the 12 months prior to the filing of the Company's initial public offering at prices substantially below the public offering price have been included in the calculation as if they were outstanding for the period ended September 30, 1996 (using the treasury stock method and the assumed public offering price for stock options and warrants and the if- converted method for convertible preferred stock). Net loss per share for the nine months ended September 30, 1996, calculated at this basis was $2.76 per share, and 4,612,812 shares were used in the calculation. Pro forma per share data for the three and nine months ended September 30, 1996, gives effect to the conversion of the preferred stock (which converted into shares of common stock upon the completion of the initial public offering) as if converted from the original date of issuance. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share, which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute loss per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. The adoption of SFAS 128 is expected to have no impact on reported loss per share as all common equivalent shares are antidilutive. 3. CHANGES IN SECURITIES On March 27, 1997, the Company sold and issued to Biotech Target, S.A., a 5% stockholder of the Company, 1,714,286 shares of common stock, for gross proceeds of $15,000,000, in a private placement. No underwriter or placement agent was involved in the transaction. In August 1997, 2,400,000 shares of Common Stock were sold to the public in an underwritten public offering at $27.00 per share. The Company received net proceeds from this offering, after payment of selling commissions and offering expenses, of approximately $60.5 million. In September 1997, 290,000 additional shares were sold at $27.00 per share, and the Company received additional net proceeds of approximately $7.4 million. 6. 4. LITIGATION On July 1, 1996, Chiron Corporation ("Chiron") filed a complaint against the Company in San Mateo County, California, Superior Court, alleging that certain of Aviron's patent applications relating to its EBV program were based on Chiron proprietary information which was improperly conveyed to Aviron by a former Chiron employee, and that the Company had engaged in unfair competition. In September 1997, the Company and Chiron concluded an amicable settlement of the litigation, under which Aviron agreed to pay a nominal amount in exchange for a dismissal of the litigation and a general release by Chiron as to both Aviron and its employee. 5. OTHER EVENTS ARCH Development Corporation ("ARCH"), an Illinois not-for-profit corporation associated with the University of Chicago, has asserted an interpretation of the financial terms of its agreement with the Company relating to the license by Aviron of its EBV technology to SmithKline Beecham which would require the Company to pay ARCH one-half of any future or past payments (including sub- license fees and milestone payments) received by Aviron under its agreement with SmithKline Beecham. The Company disputes ARCH's interpretation of the financial terms of the agreement. No assurance can be given, however, that the Company's interpretation will prevail. Failure of the Company to prevail could have a material adverse effect on the Company's business, financial condition or results of operations. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management's Discussion and Analysis of Financial Condition and Results of Operations contains, in addition to historical information, forward-looking statements which involve risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward- looking statements as a result of certain factors, including those set forth in the Company's Registration Statement on Form S-1, File No. 333-32043, filed July 25, 1997, in the section entitled "Risk Factors." OVERVIEW Since its inception in April 1992, Aviron has devoted substantially all of its resources to its research and development programs. To date, Aviron has not generated any revenues from the sale of products and does not expect to generate any such revenues for at least several years, if at all. Aviron has incurred cumulative net losses of approximately $56.7 million as of September 30, 1997, and it expects to incur increasing operating losses for a number of years. Aviron has financed its operations through proceeds from private placements of Preferred Stock, public offerings and private placements of Common Stock and revenue from its collaborative agreements, equipment lease financing and investment income earned on cash, cash equivalent balances and short-term investments. In July 1997 the Company filed a Registration Statement on Form S-1 for an underwritten public offering of up to 2,875,000 shares of Common Stock (the "Offering"). The Offering was declared effective by the Securities and Exchange Commission in August 1997. At the initial closing of the Offering, 2,400,000 shares were sold by the underwriters at $27.00 per share. The Company received net proceeds, after payment of selling commissions and offering expenses, of approximately $60.5 million. In September 1997, 290,000 additional shares were sold by the underwriters at $27.00 per share, and the Company received additional net proceeds of approximately $7.4 million. The Company expects its research and development expenditures to increase substantially over the next several years as the Company expands its research and development efforts and preclinical testing and clinical trials with respect to certain of its programs. In addition, general and administrative expenses are expected to continue to increase as the Company expands its operations and incurs the additional expenses associated with preparing to market the cold adapted influenza vaccine. 7. In October 1995, the Company signed an agreement with SmithKline Beecham defining a collaboration on the Company's Epstein-Barr virus (EBV) vaccine technology (the "SB Agreement"). Under the terms of the SB Agreement, the Company granted SmithKline Beecham an exclusive license to produce, use and sell EBV vaccines incorporating the Company's technology for prophylactic and therapeutic uses on a worldwide basis, except in South and North Korea (together, Korea). The Company has retained the right to co-distribute a monovalent formulation of the vaccine in certain markets in the United States and to have SmithKline Beecham supply such vaccine. SmithKline Beecham has agreed to fund research and development at the Company related to the EBV vaccine, in specified minimum amounts, during the first two years of the SB Agreement. SmithKline Beecham made an initial upfront payment to the Company and agreed to make additional payments upon the achievement of certain product development milestones. The Company is entitled to royalties from SmithKline Beecham based on net sales of the vaccine. No assurance can be given, however, that the Company will receive any additional payments from SmithKline Beecham or that SmithKline Beecham will not terminate its agreement with the Company. The licensor of the technology underlying the SB Agreement has recently notified the Company that it believes it is entitled to one-half of the proceeds from this collaboration. In May 1995, the Company entered into a Development and License Agreement with Sang-A Pharm Co., Ltd. ("Sang-A''). The Company granted to Sang-A exclusive clinical development, manufacturing and marketing rights in Korea for specified products developed by Aviron, including vaccines for influenza (cold adapted and recombinant), EBV (marketing rights only), cytomegalovirus, herpes simplex virus type 2 and respiratory syncytial virus. However, the Company is under no obligation to develop any product. Sang-A also agreed to make payments to the Company upon meeting certain regulatory milestones for each product in Korea and to pay a royalty to the Company on net sales of such products in Korea. No assurance can be given, however, that the Company will receive any payments from Sang-A or that Sang-A will not terminate its agreement with the Company. In January 1997, the Hanbo Group, the conglomerate that owns Sang-A, declared bankruptcy. The Company is unable to predict what, if any, effect the bankruptcy of The Hanbo Group will have on the Company's agreement with Sang-A. On July 1, 1996, Chiron filed a complaint against the Company alleging misappropriation of trade secrets with respect to certain of Aviron's patent applications related to its EBV program. In September 1997, the Company and Chiron concluded an amicable settlement of the litigation, under which Aviron agreed to pay a nominal amount in exchange for a dismissal of the litigation and a general release by Chiron as to both Aviron and its employee. The Company currently is evaluating the costs and benefits of developing internal manufacturing capabilities or continuing to contract with third-party manufacturers. In 1996, the Company completed construction of a pilot manufacturing facility funded through its existing capital lease line of credit. However, if the Company decides to establish its own commercial manufacturing facility, it would require a significant amount of funds. In April 1997, the Company entered into an agreement with Evans Medical Limited for the commercial manufacture of the Company's live cold adapted influenza vaccine until December 31, 2000. In October 1997, the Company entered into an arrangement with Packaging Coordinators, Inc. for portions of the manufacturer of the live cold adapted influenza vaccine in the United States until October 2004. The Company's business is subject to significant risks, including but not limited to the risks inherent in its research and development efforts, including preclinical testing and clinical trials, uncertainties associated both with obtaining and enforcing its patents and with the patent rights of others, the lengthy, expensive and uncertain process of seeking regulatory approvals, uncertainties regarding government reforms and product pricing and reimbursement levels, technological change and competition, manufacturing uncertainties and dependence on third parties. Even if the Company's product candidates appear promising at an early stage of development, they may not reach the market for numerous reasons. Such reasons include the possibilities that the products will be found unsafe or ineffective during clinical trials, will fail to receive necessary regulatory approvals, will be difficult to manufacture 8. on a large scale, will be uneconomical to market or will be precluded from commercialization by proprietary rights of third parties. RESULTS OF OPERATIONS Three Months Ended September 30, 1997 and 1996 Revenues The Company earned $32,000 in revenue for the three months ended September 30, 1997, compared to $688,000 for the three months ended September 30, 1996. The revenue for both years resulted from research support payments due to the Company under its license and development agreement with SmithKline Beecham. Operating Expenses Research and development expenses increased 17% to $5.1 million in the three months ended September 30, 1997 from $4.4 million for the three months ended September 30, 1996. These increases were primarily due to increases in research and development staffing, expenses associated with clinical trials of the Company's cold adapted influenza vaccine and preclinical testing associated with other programs. General and administrative expenses increased 41% to $1.7 million in the three months ended September 30, 1997 from $1.2 million for the three months ended September 30, 1996. These increases were incurred to support the Company's expanded research and development activities, and to fund patent and legal expenses and corporate development activities, and are expected to increase in the future in continued support of these activities. Interest Income Interest income increased 665% to $712,000 in the three months ended September 30, 1997 from $107,000 for the three months ended September 30, 1996. The income resulted primarily from the investment of proceeds from public offerings of Common Stock in 1996 and 1997, and a private placement of Common Stock in 1997. Nine Months Ended September 30, 1997 and 1996 Revenues The Company earned $446,000 in revenue for the nine months ended September 30, 1997, compared to $1,063,000 for the nine months ended September 30, 1996. The revenue for both periods resulted from research support payments due to the Company under its license and development agreement with SmithKline Beecham. Operating Expenses Research and development expenses increased 31% to $14.0 million in the nine months ended September 30, 1997, from $10.7 million for the nine months ended September 30, 1996. These increases were primarily due to increases in research and development staffing, expenses associated with clinical trials of the Company's cold adapted influenza vaccine and preclinical testing associated with other programs. 9. General and administrative expenses increased 24% to $4.3 million in the nine months ended September 30, 1997, from $3.5 million for the nine months ended September 30, 1996. These increases were incurred to support the Company's expanded research and development activities, and to fund patent and legal expenses and corporate development activities, and are expected to increase in the future in continued support of these activities. Interest Income Interest income increased 255% to $1,289,000 in the nine months ended September 30, 1997 from $505,000 for the nine months ended September 30, 1996. The income resulted primarily from the investment of proceeds from public offerings of Common Stock in 1996 and 1997, and a private placement of Common Stock in 1997. LIQUIDITY AND CAPITAL RESOURCES Aviron had cash, cash equivalents and short-term investments at September 30, 1997 of approximately $85.2 million. In order to preserve principal and maintain liquidity, the Company's funds are invested in United States Treasury obligations, highly rated corporate obligations and other short-term investments. The Company has financed its operations since inception primarily through private placements of Preferred Stock, an initial public offering of Common Stock in November 1996, a private sale of Common Stock in March 1997, and a second public offering of Common Stock in August 1997. Through September 30, 1997, the Company had raised approximately $139.6 million from such sales net of offering expenses. Cash used in operations was $14.6 million and $11.9 million for the first nine months of 1997 and 1996, respectively. Net cash used in operating activities increased primarily due to increased research and development expenditures. Capital expenditures, including equipment financed under line of credit, have decreased in 1997, primarily because expenditures for a pilot manufacturing facility were completed in 1996. The Company expects expenditures for research and development, clinical trials and general administrative expenditures to continue to increase during the remainder of 1997 and in 1998 as the Company develops its products and expands its clinical trials. The Company anticipates that its existing cash, cash equivalents and short- term investments, the proceeds of its 1997 public offering together with the interest thereon, and revenues from existing collaborations, will enable it to maintain its current and planned operations at least through mid-1999. The Company's future cash requirements will depend on numerous factors, including continued scientific progress in the research and development of the Company's technology and vaccine programs, the size and complexity of these programs, the ability of the Company to establish and maintain collaborative arrangements, progress with preclinical testing and clinical trials, the time and costs involved in obtaining regulatory approvals, the cost involved in preparing, filing, prosecuting, maintaining and enforcing patent claims, and product commercialization activities. The Company is seeking additional collaborative agreements with corporate partners and may seek additional funding through public or private equity or debt financings. There can be no assurance, however, that any such agreements will be entered into or that they will reduce the Company's funding requirements or that additional funding will be available. The Company expects that additional equity or debt financings will be required to fund its operations. There can be no assurance that such funds will be available on favorable terms, if at all. If adequate funds are not available, the Company may be required to delay, reduce the scope of, or eliminate one or more of its research or development programs or to obtain funds through collaborative agreements with others that may require the Company to relinquish rights to certain of its technologies, product candidates or products that the Company would otherwise seek to develop or commercialize itself, which would materially adversely affect the Company's business, financial condition and results of operations. 10. AVIRON PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. On July 1, 1996, Chiron Corporation ("Chiron") filed a complaint against the Company in San Mateo County, California, Superior Court, alleging that certain of Aviron's patent applications related to its Epstein Barr Virus program were based on Chiron proprietary information, which were improperly conveyed to Aviron by a former Chiron employee, and that the Company had engaged in unfair competition. In September 1997, the Company and Chiron concluded an amicable settlement of the litigation, under which Aviron agreed to pay a nominal amount in exchange for a dismissal of the litigation and a general release by Chiron as to both Aviron and its employee. 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 11. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) EXHIBITS ITEM DESCRIPTION ---- ----------- 11.1 Statement regarding Computation of Pro Forma Net Loss Per Share. 27.1 Financial Data Schedules. * Certain information in this exhibit has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. (b) REPORTS ON FORM 8-K The Company filed a Current Report on Form 8-K dated October 8, 1997, SEC File No. 0-20815, on October 10, 1997, reporting on the adoption of a shareholder rights plan. 12. AVIRON SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed in its behalf by the undersigned thereunto duly authorized. AVIRON Date: November 13, 1997 By: /s/ J. Leighton Read, M.D. ---------------------- ---------------------------- J. Leighton Read, M.D. Chairman and Chief Executive Officer Date: November 13, 1997 By: /s/ Vera Kallmeyer, M.D., Ph.D. ---------------------- --------------------------------- Vera Kallmeyer, M.D., Ph.D. Chief Financial Officer and Vice President Corporate Development (Principal Financial and Accounting Officer) 13. EXHIBIT INDEX NO. OF EXHIBIT DESCRIPTION -------------- ----------- 11.1 Statement regarding Computation of Pro Forma Net Loss Per Share. 27.1 Financial Data Schedule. *Certain information in this exhibit has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 14. EX-11.1 2 STATEMENT RE COMPUTATION OF PRO FORMA EXHIBIT 11.1 STATEMENT OF COMPUTATION OF NET LOSS PER SHARE
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, --------------------------- --------------------------------- 1997 1996 1997 1996 -------------------------- ----------- ------------ Net loss............................................................ $(6,095,000) $(4,825,000) $(16,720,000) $(12,740,000) =========== =========== ============ ============ Weighted average shares of Common Stock outstanding 14,479,920 1,118,000 13,082,827 1,050,637 Shares related to staff accounting bulletin topic 4D: Stock options and warrants -- 270,351 -- 270,351 Common Stock...................................................... -- -- -- 56,245 Convertible Preferred Stock (Series C)............................ -- 3,235,579 -- 3,235,579 ----------- ----------- ------------ ------------ Shares used in computing net loss per share......................... 14,479,920 4,623,930 13,082,827 4,612,812 Net loss per share.................................................. $ (0.42) $ (1.04) $ (1.28) $ (2.76) Calculation of shares outstanding for computing pro forma net loss per share: Shares used in computing net loss per share....................... 4,623,930 4,612,812 Adjusted to reflect the effect of the assumed conversion of Preferred Stock from the date of issuance/1/..................... 4,598,080 4,598,080 ----------- ------------ Shares used in computing pro forma net loss per share............... 9,222,010 9,210,892 Pro forma net loss per share........................................ $ (0.52) $ (1.38) ==================================================================================================================================
/1/Series A and B shares EX-27.1 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS, STATEMENTS OF OPERATIONS AND STATEMENTS OF CASH FLOWS INCLUDED IN THE COMPANY'S FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO. 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 50,335 34,899 29 0 0 85,934 4,413 (1,729) 89,127 3,577 0 0 0 16 84,910 89,127 0 446 0 0 18,314 0 141 (16,720) 0 (16,720) 0 0 0 (16,720) (1.28) 0
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