<PAGE>
UNITED STATES
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 September 30, 1996
or
[ ] TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
.
Commission File Number: 0-28078
FemRx, Inc.
(Exact name of registrant as specified in its charter)
Delaware 77-0389440
---------------------- -------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1221 Innsbruck Drive
Sunnyvale, CA 94089
(Address of principal executive office)
(408) 752-8580
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required 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
reguired to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [ X ] Yes [ ] No
The number of outstanding shares of the registrant's Common Stock, $.001
par value, was 8,834,938 as of October 22, 1996.
1
<PAGE>
FemRx, Inc.
Index
<TABLE>
<CAPTION>
PAGE
<S> <C>
Part I: Financial Information
Item 1: Financial Statements (Unaudited)
Condensed Balance Sheets - September 30, 1996
and December 31, 1995 3
Condensed Statements of Operations - Three months ended
September 30,1996 and 1995, Nine months ended September
30, 1996 and 1995 and the period from inception
(March 23, 1992) through September 30, 1996 4
Condensed Statements of Cash Flows - Nine months ended
September 30, 1996 and 1995 and the period from inception
(March 23, 1992) through September 30, 1996 5
Notes to Condensed Financial Statements 6
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II: Other Information 11
Signature 12
Index to Exhibits 13
</TABLE>
2
<PAGE>
Part I: Financial Information
Item 1: Financial Statements
FemRx, Inc.
(A development stage company)
Condensed Balance Sheets
(In thousands)
Assets
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
--------------- --------------
<S> <C> <C>
(unaudited) (see note below)
Current Assets:
Cash and cash equivalents $ 22,525 $ 3,457
Inventory 333 ---
Prepaid and other current assets 269 15
--------------- --------------
Total current assets 23,127 3,472
Property and equipment, net 1,231 588
Deposits and other assets 77 55
--------------- --------------
Total assets $ 24,435 $ 4,115
=============== ==============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued
liabilities $ 1,326 $ 320
Other current liabilities 140 73
-------------- ---------------
Total current liabilities 1,466 393
Noncurrent liabilities 298 185
Stockholders' equity:
Preferred stock --- 6,128
Common stock 33,802 2,570
Common stock subscribed --- 76
Stock subscription receivable --- (76)
Treasury stock (3) ---
Notes receivable from stockholders (58) (4)
Deferred compensation (1,310) (1,669)
Deficit accumulated during
development stage (9,760) (3,488)
-------------- ---------------
Total stockholders' equity 22,671 3,537
-------------- ---------------
Total liabilities
and stockholders' equity $ 24,435 $ 4,115
============== ===============
</TABLE>
Note: The balance sheet at December 31, 1995 has been derived from the
audited financial statements at that date but does not include all of
the information and footnotes required by generally accepted
accounting principles for complete financial statements.
See accompanying notes to financial statements
3
<PAGE>
FemRx, Inc.
(A development stage company)
Condensed Statements of Operations
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Period from
Inception
(March 23,
Three Months Ended Nine Months Ended 1992) to
September 30, September 30, September 30,
------------------ ----------------
1996 1995 1996 1995 1996
-------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Operating Expenses:
Research and development $ 1,499 $ 577 $ 3,828 $ 965 $ 6,425
Selling, general and
administrative 1,599 315 3,112 527 4,174
-------- ------- ------- ------- ---------
Total operating expenses 3,098 892 6,940 1,492 10,599
Interest income 331 80 705 133 899
Interest expense (13) (10) (37) (10) (60)
-------- ------- ------- ------- ---------
Net Loss $ (2,780) $ (822) $ (6,272) $(1,369) $ (9,760)
========= ======== ======== ======== =========
Net loss pershare $ (0.31) $ (0.13) $ (0.95) $ (0.22)
========= ======== ======== ========
Shares used in computing
net loss per share 8,837 6,143 6,575 6,121
========= ======== ======== ========
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
FemRx, Inc.
(A development stage company)
Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Period from
Inception
(March 23,
Nine Months Ended 1992) to
September 30, September 30,
----------------------
1996 1995 1996
----------- ---------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (6,272) $ (1,369) $ (9,760)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization 577 49 1,251
Changes in assets and liabilities:
Inventory and other assets (587) (109) (657)
Accounts payable and
accrued liabilities 986 147 1,538
---------- --------- ----------
Net cash used in operating activities (5,296) (1,282) (7,628)
Cash flows from investing activities:
Capital expenditures (861) (344) (1,499)
---------- --------- -----------
Net cash used in investing activities (861) (344) (1,499)
Cash flows from financing activities:
Capital lease transactions 178 170 451
Proceeds from issuance of
preferred stock --- 6,128 6,128
Proceeds from issuance of
common stock 25,047 9 25,073
---------- --------- ----------
Net cash provided by financing
activities 25,225 6,307 31,652
Net increase in cash and cash
equivalents 19,068 4,681 22,525
Cash and cash equivalents at the
beginning of the period 3,457 --- ---
---------- --------- ---------
Cash and cash equivalents at the
end of the period $ 22,525 $ 4,681 $ 22,525
========== ========= ==========
</TABLE>
See accompanying notes to financial statements
5
<PAGE>
FemRx, Inc.
(A development stage company)
Notes to Condensed Financial Statements
September 30, 1996
(Unaudited)
1. Basis of Presentation
The accompanying unaudited financial statements of FemRx, Inc.
(the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and
with the instructions for Form 10-Q and Article 10 of Regulation
S-X. In the opinion of management all adjustments necessary to
present fairly the financial position, results of operations, and
cash flows at September 30, 1996, and for all periods presented, have
been made. Although the Company believes that the disclosures in
these financial statements are adequate to make the information
presented not misleading, certain information normally included in
financial statements and related footnotes prepared have been
condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC"). The accompanying
financial data should be reviewed in conjunction with the audited
financial statements and notes thereto included in the Company's
Registration Statement on Form S-1 (Registration Statement File No
333-1080) and related prospectus for the Company's initial public
offering of its Common Stock, which was completed on March 27, 1996.
The results of operations for the three and nine months ended
September 30, 1996 are not necessarily indicative of the results that
may be expected for the fiscal year ended December 31, 1996.
2. Net Loss per Share
Except as noted below, net loss per share is computed using the
weighted average number of common shares outstanding. Common
equivalent shares are excluded from the computation as their effect
is antidilutive, except that, pursuant to the SEC Staff Accounting
Bulletins, common and common equivalent shares (stock options,
preferred stock and preferred stock warrants) issued during the 12
month period prior to the initial filing of the proposed offering at
prices below the assumed public offering price have been included in
the calculation as if they were outstanding for all periods through
December 31, 1995 (using the treasury stock method for stock options).
As described above, the antidilutive effect of certain stock
options is included in the calculation of loss per share for all
periods through December 31, 1995, but is excluded from the
calculation after that date. The following supplemental per share
data is provided to show the calculation on a consistent basis for
the periods presented. It has been computed as described above, but
excludes the antidilutive effect of common equivalent shares from
stock options and warrants issued at prices substantially below the
public offering price during the 12 month period prior to the initial
filing of the public offering, and also gives retroactive effect from
the date of issuance to the conversion of preferred stock which
automatically converted to common stock upon the closing of the
Company's initial public offering.
<TABLE>
<CAPTION>
Three Months Ended Nine months Ended
September 30, September 30,
------------------ -----------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Supplemental net
loss per share $(0.31) $(0.52) $(0.81) $(0.92)
======= ======= ======= =======
Shares used in computing
supplemental net loss
per share 8,837 1,572 7,787 1,491
======= ======= ======= =======
</TABLE>
6
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
unaudited financial statements and notes thereto included in Part I
Item 1 of this quarterly report and the audited financial statements
and notes thereto and Management's Discussion and Analysis of
Financial Condition and Results of Operations for the year ended
December 31, 1995 contained in the Company's Registration Statement
on Form S-1 (Registration Statement No. 333-1080) and related
prospectus for the Company's initial public offering of its Common
Stock, which was completed on March 27, 1996.
Except for the historical information contained herein, the
following discussion contains forward-looking statements that involve
risks and uncertainties. The Company's actual results could differ
materially from those discussed here. Factors that could cause or
contribute to such differences include, but are not limited to, those
discussed in this section, as well as in the sections entitled
Overview, Results of Operations, Liquidity and Capital Resources, and
Additional Factors That May Effect Future Results, and those
discussed in the Company's Form S-1 for the Company's initial public
offering completed on March 27, 1996.
Overview
Since its inception, the Company has been primarily engaged in
the research and development of its OPERA STAR System and related
products. The OPERA STAR System is an innovative surgical system for
the diagnosis and treatment of gynecologic disorders. OPERA stands
for Out-Patient Endometrial Resection/Ablation. OPERA is a less
invasive alternative to hysterectomy for patients suffering from
abnormal uterine bleeding. OPERA consists of diagnosis by a
gynecologic surgeon and the use of the Company's OPERA STAR
resectoscope under visual guidance to collect a pathology sample,
resect the endometrial lining together with any submucosal fibroids
and coagulate the entire uterine cavity. The Company has also
developed a proprietary fluid management system, called the Flo-Stat
System, for use in gynecologic procedures. In March 1996, the
Company obtained clearance from the FDA to market the OPERA STAR
System in the U.S.. In May 1996, the Company obtained clearance from
the FDA to market the Flo-Stat System in the U.S..
The Company has experienced significant operating losses since
inception and, as of September 30, 1996, had an accumulated deficit
of approximately $9.8 million. The Company expects to continue to
generate substantial losses due to increased operating expenditures
primarily attributed to research and development activities,
including clinical trials, and establishing commercial manufacturing,
marketing and sales capabilities. The Company anticipates that its
research and development expenses will increase in the future to
support increased product development activities, including clinical
trials, and that its selling, general and administrative expenses
will increase due to increased marketing and sales activities. The
Company expects that its results of operations will fluctuate
significantly from quarter to quarter due to a variety of factors
including the timing of such expenditures, timing in the receipt of
orders, the rate of acceptance of the Company's products in the
marketplace, introduction of new products by competitors of the
Company, pricing of competitive products and the cost and effect of
promotional discounts and marketing programs. The Company's gross
margins, if any, will be depressed for several quarters due to
manufacturing start-up and overhead costs allocated over low
production volumes. There can be no assurance that the Company will
ever achieve revenue or profitability.
7
<PAGE>
Results of Operations
Three months ended September 30, 1996 and September 30, 1995
No net sales were recorded in either fiscal period. The Company
anticipates receiving orders and recognizing revenue in the fourth
quarter of 1996.
Research and development expenses for the three months ended
September 30, 1996 increased to $1,499,000 from $577,000 for the
three months ended September 30, 1995, due primarily to costs
associated with clinical trials, additional product research,
prototype development, patent preparation and filing, manufacturing
facility preparation, and costs including the hiring of regulatory,
research, clinical, engineering and manufacturing personnel.
Selling, general and administrative expenses for the three
months ended September 30, 1996 increased to $1,599,000 from $315,000
for the three months ended September 30, 1995, due primarily to the
establishment of the Company's administrative headquarters, sales
organization and the costs related to the hiring of additional
personnel.
Interest income for the three months ended September 30, 1996
increased to $331,000 from $80,000 for the three months ended
September 30, 1995, due to interest received on the Company's cash
and cash equivalents from the proceeds of the public offering which
were received at the end of March 1996, and from the Underwriters
exercise of their option for additional shares from which proceeds
were received at the end of April 1996.
Interest expense for the three months ended September 30, 1996
increased to $13,000 from $10,000 for the three months ended
September 30, 1995, due to interest payments on higher outstanding
balances on an equipment lease line established during 1995.
Nine months ended September 30, 1996 and September 30, 1995
No net sales were recorded in either fiscal period
Research and development expenses for the nine months ended
September 30, 1996 increased to $3,828,000 from $965,000 for the nine
months ended September 30, 1995, due primarily to costs associated
with clinical trials, additional product research, prototype
development, patent preparation and filing, manufacturing facility
preparation, and costs including the hiring of regulatory, research,
clinical, engineering and manufacturing personnel.
Selling, general and administrative expenses for the nine months
ended September 30, 1996 increased to $3,112,000 from $527,000 for
the nine months ended September 30, 1995 due primarily to the
establishment of the Company's administrative headquarters, sales
organization and the costs related to the hiring of additional
personnel.
Interest income for the nine months ended September 30, 1996
increased to $705,000 from $133,000 for the nine months ended
September 30, 1995, due to interest received on the Company's cash
and cash equivalents from the proceeds of the public offering which
were received at the end of March 1996, and from the Underwriters
exercise of their option for additional shares from which proceeds
were received at the end of April 1996.
Interest expense for the nine months ended September 30, 1996
increased to $37,000 from $10,000 for the nine months ended September
30, 1995, due to interest payments on higher outstanding balances on
an equipment lease line established during 1995.
Liquidity and Capital Resources
On March 27, 1996 the Company completed an initial public
offering of 2,700,000 shares of Common Stock at a price of $9.00 per
share. The net proceeds (after underwriting discounts and expenses)
8
<PAGE>
to the Company from the initial public offering were approximately
$21.6 million. On April 26, 1996, the Underwriters exercised their
option to purchase an additional 405,000 shares of common stock at a
price of $9.00 per share. The net proceeds (after underwriting
discounts and expenses) to the Company from the exercise of their
option were approximately $3.4 million. As of September 30, 1996 the
Company had cash and cash equivalents of approximately $22.5
million. The Company also has a $750,000 leaseline of which $237,000
was available for borrowing on September 30, 1996.
Net cash used by operations in the nine months ended September
30, 1996 was $5.3 million primarily due to the Company's net loss and
inventory build-up in anticipation of fourth quarter 1996 sales,
partially offset by an increase in accounts payable and accrued
liabilities. During the first nine months of 1996 the Company used
approximately $900,000 to purchase equipment for operations. Cash
provided by financing activities during 1996 was $25.2 million
primarily due to proceeds from the issuance of common stock in
Company's initial public offering.
The Company currently has no commitments for any credit
facilities such as revolving credit agreements or lines of credit
that could provide additional working capital. The Company believes
that its existing cash will be sufficient to finance its capital
requirements through at least fiscal 1997. The Company's future
liquidity and capital requirements will depend on numerous factors,
including the resources necessary to develop, manufacture and market
products and the cost of obtaining and enforcing patents important to
the Company's business. The Company may be required to raise
additional funds through public or private financing, collaborative
relationships or other arrangements. There can be no assurance that
such additional funding, if needed, will be available on attractive
terms to the Company, or at all.
Additional Factors That May Affect Future Results
Dependence on OPERA STAR System and Flo-Stat System
The OPERA STAR System and Flo-Stat System are currently the
Company's only products. The Company expects that the OPERA STAR
System, and to a lesser extent, the Flo-Stat System, if
commercialized, will account for substantially all of the Company's
revenues for the foreseeable future. Even though the OPERA STAR
System and Flo-Stat System recently received FDA clearance, there can
be no assurance that the Company can successfully manufacture,
market, or realize any revenues from these products on a timely
basis, or at all. The Company's products will require further
development and regulatory clearances or approvals before they can be
marketed internationally. The Company has never sold any products,
and there can be no assurance that the Company's development and
marketing efforts will be successful or that the OPERA STAR System,
Flo-Stat System or other potential products developed by the Company
will be capable of being manufactured in commercial quantities at
acceptable costs. Failure to commercialize the OPERA STAR System and
Flo-Stat System would have a material adverse effect on the Company's
business, financial condition and results of operations.
Uncertainty of Market Acceptance
The Company believes that market acceptance of the Company's
products will depend, in part, on the Company's ability to provide
evidence to the medical community of the safety, efficacy and
cost-effectiveness of its products and the procedures in which these
products are intended to be used. To date, the OPERA STAR System has
only been used to treat a limited number of patients and no published
reports regarding the use of the OPERA STAR System exist to support
the Company's marketing effort. Furthermore, there is little
long-term follow-up data on patients who underwent OPERA using the
OPERA STAR System. If the Company is not able to demonstrate
long-term success with the OPERA STAR System, market acceptance would
be materially adversely affected.
The Company's OPERA STAR System is designed for use by a
gynecologic surgeon trained in the OPERA procedure. Market
acceptance of the Company's products will require a willingness on
the part of gynecologic surgeons to be trained to perform OPERA using
the Company's products. Furthermore, market acceptance may be
limited because some physicians and payors, recognizing that the
removal of the uterus in a hysterectomy precludes the potential
reoccurrence of uterine disorders, will be reluctant to substitute
the OPERA procedure (which allows the patient to retain her uterus)
for hysterectomy. The Company believes that most gynecologists view
hysterectomy as an appropriate therapy to treat a variety of uterine
disorders. As a result, the Company believes that recommendations
9
<PAGE>
and endorsements of its products by influential physicians will be
essential for market acceptance of its products. No assurances can
be made that the Company will receive such recommendations or
endorsements.
The Company further believes that the ability of health care
providers to obtain adequate reimbursement for OPERA procedures using
the OPERA STAR System will be critical to market acceptance of the
Company's products. There can be no assurance that the cost of
procedures in which the OPERA STAR System is used will be
reimbursable by third-party payors under existing reimbursement
policies and codes, or at all. The Company has no experience in
gaining reimbursement in the U.S. or any foreign market. The Company
expects to price its disposable resectoscope at a premium over the
prices currently charged for the disposable components of competitive
resectoscopes. Therefore, the Company anticipates that it may have
to offer substantial discounts on its OPERA STAR System motor drive
unit in order to stimulate demand for its products. The failure of
the Company to place sufficient quantities of its motor drive unit
would have a material adverse effect on its ability to sell the
disposable STAR. Another factor that may limit the market acceptance
of the Company's OPERA STAR System is that it is not currently
compatible with all telescopes utilized in gynecologic surgery and
therefore might require surgeons using incompatible telescopes to
acquire a different telescope in order to use the OPERA STAR System.
Failure of the Company's products to achieve market acceptance would
have a material adverse effect on the Company's business, financial
condition and results of operations
Limited Operating Experience
The Company has a limited history of operations. Since its
incorporation in 1994, the Company has focused primarily on research
and product development efforts, clinical trials and seeking
regulatory clearance or approval for the OPERA STAR System and
Flo-Stat System. The Company has never generated revenues, and does
not have experience manufacturing in commercial quantities, marketing
or selling products. The Company has experienced significant
operating losses since inception and expects these losses to continue
for the next several years. There can be no assurance that the
Company's development efforts will result in a commercially available
product or that the Company will be successful in commercializing the
OPERA STAR System and Flo-Stat System. Whether the Company can
successfully manage the transition to a large-scale commercial
enterprise will depend upon a number of factors, including obtaining
U.S. and selected international regulatory and reimbursement
approvals for its existing or potential products, establishing its
commercial manufacturing capability, developing its U.S. marketing
and selling capabilities, and establishing a distribution network in
international markets. Failure to make such a transition
successfully would have a material adverse effect on the Company's
business, financial condition and results of operations.
History of Losses
The Company has experienced significant operating losses since
its inception and, as of September 30, 1996, had an accumulated
deficit of approximately $9.8 million. The Company expects to
generate substantial additional losses for the next several years due
to increased operating expenditures primarily attributable to
research and development activities, including clinical trials,
seeking regulatory and reimbursement approvals and establishing
manufacturing, marketing and sales activities. There can be no
assurance that the Company will achieve significant revenues.
Failure to achieve significant revenues would have a material adverse
effect on the Company's business, financial condition and results of
operations.
10
<PAGE>
Part II: Other Information
Item 1. Legal Proceedings
None
Item 2. Change in Securities
None
Item 3. Defaults in 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
11.1 Computation of loss per share (see Note 2 to
Financial Information in Part I of this Form 10-Q).
(b) Reports on Form 8-K
None
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.
FemRx, Inc.
By: /s/ EDWARD W. UNKART
-------------------------
Edward W. Unkart
Vice President, Finance and Administration,
Chief Financial Officer and Assistant Secretary
(Duly Authorized and Principal Financial and
Accounting Officer)
Date: October 25, 1996
12
<PAGE>
FemRx, Inc.
(A development stage company)
Index to Exhibits
Exhibit
Number Exhibit Page
11.1 Statement Regarding Computation of Net Loss Per Share 14
13
<PAGE>
<PAGE>
Exhibit 11.1
FemRx, Inc.
(A development stage company)
Statement Regarding Computation of Net Loss Per Share
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net loss $ (2,780) $ (822) $ (6,272) $ (1,369)
========= ========= ========= =========
Shares used in computing net loss per share:
Weighted average shares of
common stock outstanding 8,837 1,388 6,575 1,366
SEC staff accounting
bulletin topic 4D --- 4,755 --- 4,755
--------- --------- --------- ---------
Total shares used in computing
net loss per share 8,837 6,143 6,575 6,121
Net loss per share $ (0.31) $ (0.13) $ (0.95) $ (0.22)
========= ========= ========= =========
Shares used in computing supplemental
net loss per share :
Weighted average shares of
common stock outstanding 8,837 1,388 6,575 1,366
Weighted average shares of
the assumed conversion
of common stock and
preferred stock from
the date of issuance
that were convered by
SEC staff accounting
bulletin topic 4D --- 184 1,212 125
--------- --------- --------- ---------
Total shares used in computing
supplemental net loss per share: 8,837 1,572 7,787 1,491
========= ========= ========= =========
Supplemental net loss per share $ (0.31) $ (0.52) $ (0.81) $ (0.92)
========= ========= ========= =========
</TABLE>
14
<PAGE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED
BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON PAGES 3 AND 4
OF THE COMPANY'S FROM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 22,525
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 333
<CURRENT-ASSETS> 23,127
<PP&E> 1,231<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 24,435
<CURRENT-LIABILITIES> 1,466
<BONDS> 0
0
0
<COMMON> 33,802
<OTHER-SE> (61)
<TOTAL-LIABILITY-AND-EQUITY> 24,435
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,828<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37
<INCOME-PRETAX> (6,272)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,272)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,272)
<EPS-PRIMARY> (0.95)
<EPS-DILUTED> 0
<FN>
<F1>Item shown net of Depreciation, consistent with the balance
sheet presentation.
<F2>Item consists of research and development.
</FN>
</TABLE>
