<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
/ / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-26758
ALKERMES CLINICAL PARTNERS, L.P.
--------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 043-145043
------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
64 SIDNEY STREET, CAMBRIDGE, MA 02139-4136
- ---------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (617) 494-0171
------------------------
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. Yes _X_ No ___
<PAGE>
ALKERMES CLINICAL PARTNERS, L.P.
INDEX
-----
PAGE NO.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets 3
-March 31, 2000 and December 31, 1999
Statements of Operations 4
-Three months ended March 31, 2000 and 1999
Statements of Cash Flows 5
-Three months ended March 31, 2000 and 1999
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Item 6. Exhibits, Financial Statement Schedules and Reports 11
on Form 8-K
SIGNATURES 12
EXHIBIT INDEX 13
(2)
<PAGE>
ITEM 1. FINANCIAL STATEMENTS:
ALKERMES CLINICAL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
2000 2000
------------ ------------
<S> <C> <C>
ASSETS
Total Assets $-- $--
------------ ------------
------------ ------------
LIABILITIES AND PARTNERS' CAPITAL
Total Liabilities and Partners' Capital $-- $--
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
(3)
<PAGE>
ALKERMES CLINICAL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
2000 1999
---------------- ----------------
<S> <C> <C>
Revenue: $-- $--
---------------- ----------------
Expenses:
General and administrative 7,754 18,208
---------------- ----------------
7,754 18,208
---------------- ----------------
Net loss ($7,754) ($18,208)
---------------- ----------------
---------------- ----------------
Net Loss Per Class A and B Unit $-- $--
---------------- ----------------
---------------- ----------------
Average Class A and B Units Outstanding 921 921
---------------- ----------------
---------------- ----------------
</TABLE>
See notes to financial statements.
(4)
<PAGE>
ALKERMES CLINICAL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
2000 1999
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($7,754) ($7,754)
---------------- ----------------
Net cash used by operating activities (7,754) (7,754)
---------------- ----------------
Cash flows from financing activities:
General Partner's capital contributions 7,754 18,208
---------------- ----------------
Net decrease in cash and cash equivalents -- --
Cash and cash equivalents, beginning of period -- --
---------------- ----------------
Cash and cash equivalents, end of period $-- $--
---------------- ----------------
---------------- ----------------
</TABLE>
See notes to financial statements.
(5)
<PAGE>
ALKERMES CLINICAL PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
-----------------------------
1. BASIS OF PRESENTATION
---------------------
The financial statements for Alkermes Clinical Partners, L.P. (the
"Partnership") for the three month periods ended March 31, 2000 and 1999, are
unaudited and include all adjustments which, in the opinion of management,
are necessary to present fairly the results of operations for the periods
then ended. All such adjustments are of a normal recurring nature. These
financial statements should be read in conjunction with the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1999, which
includes financial statements and notes thereto for the years ended December
31, 1999, 1998 and 1997.
The results of the Partnership's operations for any interim period are not
necessarily indicative of the results of the Partnership's operations for any
other interim period or for a full year.
2. NET LOSS PER CLASS A AND B LIMITED PARTNERSHIP INTEREST
-------------------------------------------------------
Net loss per Class A and B limited partnership interest is calculated with
the net loss attributable only to the limited partners of the Partnership
(each, a "Limited Partner" and collectively, the "Limited Partners") and
excludes the loss attributable to the General Partner. There were no losses
attributable to the Limited Partners for the three months ended March 31,
2000 and 1999.
3. COMPLETION OF SCHEDULED FUNDING
-------------------------------
For the three months ended March 31, 2000 and 1999, the Partnership incurred
no research and development expenses related to the RMP(TM) program,
notwithstanding the continuing development of the product candidate. The
Partnership was providing funding to Alkermes, Inc. ("Alkermes") for research
and development expenses for Cereport(R) from capital contributions received
from Partners. Funding to Alkermes ended during the quarter ended June 30,
1996 when such capital contributions were substantially depleted. None of the
Partners of the Partnership is obligated to make any further capital
contributions. Since the funding was not sufficient for Alkermes to complete
clinical trials and seek regulatory approval of Cereport, Alkermes has used
its own resources, and intends to continue to use its own resources, to
develop Cereport. Alkermes has obtained and intends to continue to obtain
such resources through equity offerings, bank borrowings and its
collaborative arrangements. Alkermes is required to fund the development of
Cereport to maintain its Purchase Option with the Limited Partners.
(6)
<PAGE>
Alkermes is also obligated, through the General Partner, to perform
administrative services for the Partnership, such as preparing financial
statements, tax returns and reports to Partners. Alkermes intends to continue
to cause the General Partner to perform such services at its expense since
the Partnership's current assets are depleted, unless it exercises its
Purchase Option and thereby acquires all the interests in the Partnership.
The services performed by Alkermes and the General Partner constitute all of
the activities undertaken by or on behalf of the Partnership.
After March 31, 2000, the Partnership is expected to have no future liquidity
or capital resources requirements other than those funded by Alkermes.
(7)
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
Alkermes Clinical Partners, L.P. (the "Partnership") was formed on February
7, 1992, and is managed by its general partner, Alkermes Development
Corporation II (the "General Partner"), a wholly owned subsidiary of
Alkermes, Inc. ("Alkermes" or the "Company"). The Partnership was organized
to fund the further development and clinical testing of a family of
molecules, designated by Alkermes as Receptor-Mediated Permeabilizers(TM)
("RMPs(TM)"), for human pharmaceutical use in the United States and Canada.
IMPORTANT FACTORS REGARDING FORWARD-LOOKING STATEMENTS
Any statements set forth below or otherwise made in writing or orally by the
Partnership or the General Partner with regard to its expectations as to
financial results and other aspects of its business may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements can be identified by
forward-looking words such as "may", "will", "expect", "anticipate",
"believe", "estimate", "continue" or similar words. Although the General
Partner believes that its expectations are based on reasonable assumptions
within the bounds of its knowledge of its business and operations, there can
be no assurance that actual results of the Partnership's or the Company's
development activities and the Partnership's results of operations will not
differ materially from its expectations. Factors which could cause actual
results to differ from expectations include, among others:
(i) the Partnership and the Company could not be permitted by regulatory
authorities to undertake additional clinical trials for
Cereport(R) or clinical trials could be delayed or
regulatory authorities could require additional clinical trials
before approving Cereport;
(ii) clinical trials for Cereport may not proceed as planned, the trials
may require more time to enroll patients than anticipated, and even
if they are completed Cereport could prove to be ineffective or unsafe;
(iii) the Company could incur difficulties or set-backs in obtaining the
substantial additional funding required to continue research and
development programs and clinical trials;
(iv) the Company could reduce or discontinue funding of Cereport;
(v) even if Cereport appears promising at an early stage of development, it
could fail to receive necessary regulatory approvals, be difficult to
manufacture on a large scale, be uneconomical, fail to achieve market
acceptance, be precluded from commercialization by proprietary rights
of third parties or experience substantial competition in the
marketplace; and
(vi) technological change in the biotechnology or pharmaceutical industries
and the approval of other drugs or therapies to treat brain tumors
could render Cereport obsolete or noncompetitive.
(8)
<PAGE>
RESULTS OF OPERATIONS
REVENUES
The Partnership had no revenue for the three months ended March 31, 2000 and
1999. The Partnership anticipates that it will have no revenues in the
foreseeable future.
EXPENSES
Research and development expenses for the three months ended March 31, 2000
and 1999 were both zero. The research and development expenses were zero
because of the completion of the development funding to Alkermes pursuant to
the product development agreement between Alkermes and the Partnership (the
"Product Development Agreement").
General and administrative expenses for the three months ended March 31, 2000
were $7,754 as compared to $18,208 for the three months ended March 31, 1999.
The decrease was mainly a result of decreased professional service fees.
Alkermes is obligated through the General Partner to perform general and
administrative services for the Partnership at its expense, unless Alkermes
exercises its Purchase Option and thereby acquires all limited partnership
interests in the Partnership (see Liquidity and Capital Resources).
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000, the Partnership had no remaining assets or liabilities.
The Partnership's primary source of funding and capital resources had been
the annual capital contributions by the Limited Partners and the General
Partner. The Limited Partners' capital contributions were remitted to the
Partnership in four annual installments, the fourth and final payment of
which was due on April 15, 1995. There have been and will be no additional
capital contributions received by the Partnership from the Limited Partners
after the quarter ended June 30, 1996.
The Partnership was funding research and development expenses for Cereport
from capital contributions received from Partners. Such development was and
continues to be conducted for the Partnership by Alkermes pursuant to the
Product Development Agreement. The research and development funding to
Alkermes ended during the quarter ended June 30, 1996, when such capital
contributions were substantially depleted. None of the Partners is obligated
to make any further capital contributions. Because the funding was not
sufficient for Alkermes to complete clinical trials and seek regulatory
approval of Cereport, Alkermes has used its own resources, and intends to
continue to obtain such resources through equity offerings, bank borrowings
and its collaborative arrangements. Effective September 30, 1997, Alkermes
entered into an agreement with ALZA Corporation related to the development
and commercialization of Cereport. Alkermes is required to fund the
development of Cereport to maintain its Purchase Option with the Limited
Partners.
The Partnership used its remaining cash and cash equivalents during the
quarter ended September 30, 1997 to pay for administrative services for the
Partnership. Alkermes is obligated, through the General Partner, to perform
administrative services for the Partnership,
(9)
<PAGE>
such as preparing financial statements, tax returns and reports to the
Limited Partners. Alkermes intends to continue to cause the General Partner
to perform such services at its expense since the Partnership's current
assets are depleted to maintain its Purchase Option with the Limited
Partners, unless it exercises its Purchase Option and thereby acquires all
limited partnership interests in the Partnership. The activities performed by
Alkermes and the General Partner constitute all of the activities undertaken
by or on behalf of the Partnership.
After March 31, 2000, the Partnership is expected to have no future liquidity
or capital resources requirements other than those funded by Alkermes.
(10)
<PAGE>
ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
Number Exhibit
------ -------
<S> <C>
3.1 Alkermes Clinical Partners, L.P. Agreement of Limited
Partnership, dated as of February 7, 1992.*
3.1(a) Amendment No. 1 to Alkermes Clinical Partners, L.P. Agreement of
Limited Partnership, dated as of September 29, 1992.*
3.1(b) Amendment No. 2 to Alkermes Clinical Partners, L.P. Agreement of
Limited Partnership, dated as of March 30, 1993.*
4.1 Alkermes Clinical Partners, L.P. Agreement of Limited
Partnership, dated as of February 7, 1992.*
4.1(a) Amendment No. 1 to Alkermes Clinical Partners, L.P. Agreement of
Limited Partnership, dated as of September 29, 1992.*
4.1(b) Amendment No. 2 to Alkermes Clinical Partners, L.P. Agreement of
Limited Partnership, dated as of March 30, 1993.*
27 Financial Data Schedule.
</TABLE>
* Incorporated by reference to Exhibits to the Registrant's Registration
Statement on Form 10 filed September 13, 1995.
(b) During the quarter ended March 31, 2000, the Registrant filed
no reports on Form 8-K.
(11)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALKERMES CLINICAL PARTNERS, L.P.
(Registrant)
By its General Partner
ALKERMES DEVELOPMENT CORPORATION II
Date: May 11, 2000 By: /S/ RICHARD F. POPS
-------------------------------------
Richard F. Pops
Director, President and Chief Executive
Officer (Principal Executive Officer)
Date: May 11, 2000 By: /S/ JAMES M. FRATES
------------------------------------
James M. Frates
Director, Vice President, Chief
Financial Officer, Treasurer and
Assistant Secretary (Principal
Financial and Accounting Officer)
(12)
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
3.1 Alkermes Clinical Partners, L.P. Agreement of Limited
Partnership, dated as of February 7, 1992.*
3.1(a) Amendment No. 1 to Alkermes Clinical Partners, L.P. Agreement of
Limited Partnership, dated as of September 29, 1992.*
3.1(b) Amendment No. 2 to Alkermes Clinical Partners, L.P. Agreement of
Limited Partnership, dated as of March 30, 1993.*
4.1 Alkermes Clinical Partners, L.P. Agreement of Limited
Partnership, dated as of February 7, 1992.*
4.1(a) Amendment No. 1 to Alkermes Clinical Partners, L.P. Agreement of
Limited Partnership, dated as of September 29, 1992.*
4.1(b) Amendment No. 2 to Alkermes Clinical Partners, L.P. Agreement of
Limited Partnership, dated as of March 30, 1993.*
27 Financial Data Schedule.
</TABLE>
* Incorporated by reference to Exhibits to the Registrant's Registration
Statement on Form 10 filed September 13, 1995.
(13)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10-Q FOR
THE THREE MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 8
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (8)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
