<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND 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 AND EXCHANGE ACT OF 1934
Commission File Number: 0-28310
SIBIA Neurosciences, Inc.
------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-3616229
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
505 Coast Boulevard South, Suite 300, La Jolla, CA 92037
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(619) 452-5892
- ------------------------------------------------------------------------------
(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
requirement 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.
Class Outstanding at October 22, 1997
----- -------------------------------
Common Stock, $.001 par value 9,297,464
<PAGE> 2
SIBIA Neurosciences, Inc.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Financial Statements
Condensed Balance Sheet as of December 31, 1996
and September 30, 1997 (Unaudited).................................. 3
Condensed Statement of Operations (Unaudited) for the Three
Months and Nine Months Ended September 30, 1996 and 1997............ 4
Condensed Statement of Cash Flows (Unaudited) for the Nine
Months Ended September 30, 1996 and 1997........................... 5
Notes to Financial Statements (Unaudited)............................ 6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations....................... 9
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings....................................................13
ITEM 2. Changes in Securities................................................13
ITEM 3. Defaults Upon Senior Securities......................................13
ITEM 4. Submission of Matters to a Vote of Security Holders..................13
ITEM 5. Other Information....................................................13
ITEM 6. Exhibits and Reports on Form 8-K.....................................14
SIGNATURE....................................................................15
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Financial Statements
SIBIA Neurosciences, Inc.
Condensed Balance Sheet
<TABLE>
<CAPTION>
December 31, 1996 September 30, 1997
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 1,412,000 $ 3,140,000
Investment securities 36,052,000 32,605,000
Contracts and accounts receivable 68,000 586,000
Prepaid expenses and other current assets 684,000 749,000
------------ ------------
Total current assets 38,216,000 37,080,000
------------ ------------
Property and equipment, net 1,307,000 1,358,000
Other assets 460,000 103,000
------------ ------------
$ 39,983,000 $ 38,541,000
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,212,000 $ 1,553,000
Accrued liabilities 1,249,000 1,726,000
Deferred revenue 431,000 --
------------ ------------
Total current liabilities 2,892,000 3,279,000
------------ ------------
Long-term capital lease obligations 519,000 527,000
------------ ------------
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred Stock, $.001 par value; 5,000,000 shares authorized:
Series A Junior Participating Preferred Stock, 150,000
shares authorized. No shares issued and outstanding at
December 31, 1996 and September 30, 1997
Common stock, $.001 par value; 25,000,000 shares authorized;
9,154,157 and 9,289,480 shares issued and outstanding at
December 31, 1996 and September 30, 1997, respectively 9,000 9,000
Additional paid-in capital 59,746,000 59,941,000
Deferred compensation (1,039,000) (745,000)
Notes receivable from stockholders (640,000) (87,000)
Net unrealized gains on investment securities
available-for-sale 189,000 2,425,000
Accumulated deficit (21,693,000) (26,808,000)
------------ ------------
Total stockholders' equity 36,572,000 34,735,000
------------ ------------
$ 39,983,000 $ 38,541,000
============ ============
</TABLE>
See accompanying notes
3
<PAGE> 4
SIBIA Neurosciences, Inc.
Condensed Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1997 1996 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue:
Contract $ 2,013,000 $ 2,006,000 $ 6,368,000 $ 5,829,000
License and royalty 10,000 97,000 83,000 3,223,000
------------ ------------ ------------ ------------
Total revenue (Note 5) 2,023,000 2,103,000 6,451,000 9,052,000
------------ ------------ ------------ ------------
Expenses:
Research and development 3,246,000 4,090,000 8,902,000 12,160,000
General and administrative 1,058,000 1,073,000 2,702,000 3,715,000
------------ ------------ ------------ ------------
4,304,000 5,163,000 11,604,000 15,875,000
------------ ------------ ------------ ------------
(2,281,000) (3,060,000) (5,153,000) (6,823,000)
------------ ------------ ------------ ------------
Other income (expense):
Interest income 605,000 579,000 1,234,000 1,747,000
Interest expense (16,000) (14,000) (50,000) (43,000)
Other (1,000) -- 4,000 4,000
------------ ------------ ------------ ------------
588,000 565,000 1,188,000 1,708,000
------------ ------------ ------------ ------------
Net loss $ (1,693,000) $ (2,495,000) $ (3,965,000) $ (5,115,000)
============ ============ ============ ============
Net loss per common share $ (0.19) $ (0.27) $ (0.56) $ (0.55)
============ ============ ============ ============
Weighted average number of common
shares outstanding 8,979,713 9,256,339 7,116,130 9,224,416
============ ============ ============ ============
</TABLE>
See accompanying notes.
4
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SIBIA Neurosciences, Inc.
Condensed Statement of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1997
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (3,965,000) $ (5,115,000)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation and amortization 426,000 479,000
Compensation from issuance of common stock options 559,000 294,000
(Gain) loss on disposal of property (1,000) (4,000)
Net amortization of premium and discount on
investment securities (410,000) (96,000)
Increase (decrease) in cash resulting from changes in:
Contract and accounts receivable 14,000 (518,000)
Prepaid expenses and other assets (863,000) 286,000
Accounts payable and accrued liabilities 201,000 785,000
Deferred revenue 432,000 (431,000)
------------ ------------
Net cash provided (used) by operating activities (3,607,000) (4,320,000)
------------ ------------
Cash flows from investing activities:
Purchases of investment securities available-for-sale (38,044,000) (11,920,000)
Maturities of investment securities available-for-sale 2,800,000 17,681,000
Maturities of investment securities held-to-maturity 13,992,000
Principal payments received on investment securities
available-for-sale 32,000 18,000
Proceeds from disposal of property and equipment 5,000 4,000
Acquisition of property and equipment (156,000) (88,000)
------------ ------------
Net cash provided (used) by investing activities (21,371,000) 5,695,000
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of stock 25,994,000 195,000
Proceeds from payment on notes receivable 26,000 553,000
Principal payments on capital lease obligations (342,000) (395,000)
------------ ------------
Net cash provided (used) by financing activities 25,678,000 353,000
------------ ------------
Net increase in cash and cash equivalents 700,000 1,728,000
Cash and cash equivalents at beginning of period 2,274,000 1,412,000
------------ ------------
Cash and cash equivalents at end of period $ 2,974,000 $ 3,140,000
============ ============
</TABLE>
See accompanying notes
5
<PAGE> 6
SIBIA Neurosciences, Inc.
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1997
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements of SIBIA Neurosciences, Inc.
("SIBIA" or the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
rules and regulations of the Securities and Exchange Commission ("SEC").
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and nine month periods ended September 30, 1997
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1997. For further information, refer to the financial
statements and footnotes thereto for the year ended December 31, 1996, included
in the Company's Form 10-K and Registration Statement (No. 333-39389) on Form
S-1 filed with the SEC in November 1997 for the proposed public offering of
2,250,000 shares of Common Stock by the Company and 250,000 shares of Common
Stock by a stockholder of the Company.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses and
related disclosures as of the date of the financial statements. Actual results
could differ from such estimates.
2. NET LOSS PER COMMON SHARE
Net loss per common share is computed pursuant to the treasury stock method
using the weighted average number of common shares outstanding during the
periods presented. Other Common Stock equivalents are antidilutive and are
excluded from the computation of net loss per common share.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per Share", which
establishes standards for computing and presenting earnings per share (EPS).
SFAS No. 128 will be adopted by the Company as required for the interim periods
and fiscal years ending after December 15, 1997. Upon adoption of SFAS No. 128,
the Company will present basic EPS as well as diluted EPS in the period of
adoption and restate all prior-period EPS data presented for comparative
purposes. Basic EPS will be computed by dividing income available to holders of
Common Stock by the weighted average number of shares of Common Stock
outstanding. Diluted EPS will be computed similarly to basic EPS except that the
weighted average number of shares of Common Stock outstanding will be increased
to include the number of additional shares of Common Stock that would have been
outstanding if the dilutive potential common shares had been issued. Pro forma
EPS calculations under SFAS No. 128 are not presented as they are not materially
different than those currently presented.
6
<PAGE> 7
3. STOCKHOLDERS' EQUITY
In March 1997, the Board of Directors of the Company designated 150,000 shares
of $.001 Par Value Preferred Stock as Series A Junior Participating Preferred
Stock and adopted a Share Purchase Rights Plan pursuant to which preferred share
purchase rights (the "Rights") were distributed for each share of Common Stock
of the Company held as of the close of business on April 2, 1997. Each Right,
under certain circumstances, entitles the holder thereof to purchase from the
Company one one-hundredth of a share of Series A Junior Participating Preferred
Stock (each a "Preferred Share") at an exercise price of $60.00 per one
one-hundredth of a Preferred Share. Each one one-hundredth of a share of
Preferred Share has rights, preferences and privileges equal to the value of a
share of Common Stock. The Rights will expire on March 17, 2007, unless the
Rights are earlier redeemed or exchanged by the Company. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors.
4. STATEMENT OF CASH FLOWS
Non-cash financing activities were comprised of capital lease obligations of
$436,000 and $240,000, respectively, in the nine-month periods ended September
30, 1997 and 1996.
5. SIGNIFICANT COLLABORATIVE AGREEMENTS
In October 1997, the Company and Eli Lilly and Company ("Lilly") completed their
collaborative research in the area of VGCCs. The Company and Lilly will
independently pursue discovery and development of drug leads that act on VGCC
drug targets identified under this collaboration. The Company is entitled to
receive milestone payments and royalties on sales of products identified by
Lilly within a certain period of time and commercialized, and is free to develop
compounds it discovers in this area on its own or with other partners. In
November 1997, Lilly exercised its option to obtain a non-exclusive license to
the Company's flourescence-based ion assay technology.
Total costs incurred under the Company's various collaborative agreements for
the three and nine-month periods ended September 30, 1997, including certain
administrative costs, aggregated $1,377,000 and $4,458,000, respectively. For
the corresponding periods in 1996, such costs aggregated $1,459,000 and
$4,344,000, respectively.
Total revenue for the three and nine-month periods ended September 30, 1997
included $870,000 and $2,755,000, respectively, from a collaborative partner
that is a related party. For the corresponding periods in 1996, total revenue
included $1,519,000 and $5,047,000, respectively, from two collaborative
partners that were related parties.
6. LEASE LINE FUNDING
In February 1997, the Company received a firm commitment to fund a $1,500,000
lease line through March 31, 1998. The fundings will have terms generally
consistent with those of the Company's existing lease commitments.
7. DEVELOPMENT AGREEMENT
In February 1997, the Company entered into a development and license agreement
with Meiji Seika Kaisha, Ltd. ("Meiji") for the development and
commercialization of the Company's
7
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proprietary nicotinic acetylcholine receptor agonist, SIB-1508Y, as a treatment
for Parkinson's disease and other nervous system disorders in Japan and other
Asian countries. Under the agreement, the Company received a one-time license
fee of $3,000,000 for the license of certain technology to Meiji. In addition,
the Company may receive development milestone payments and royalties on future
products, if the product is successfully commercialized in such countries. SIBIA
has retained rights to develop and commercialize SIB-1508Y outside of Japan and
certain other Asian countries, and has retained rights to manufacture clinical
supplies and commercial material worldwide.
8. COMMITMENTS AND CONTINGENCIES
The Company is involved in certain litigation with Cadus Pharmaceutical
Corporation. See further discussion of this matter at Item 1 in Part II of this
Form 10-Q.
8
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ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
OVERVIEW
Except for the historical information contained herein, the discussion in this
report contains forward-looking statements that involve risks and uncertainties.
The Company's actual results may differ significantly from those discussed in
this report. Factors that might cause or contribute to such differences include,
without limitation, those discussed in this Item 2 (Management's Discussion and
Analysis of Financial Condition and Results of Operations) as well as those
discussed in the Company's Form 10-K for the year ended December 31, 1996 and
Registration Statement (No. 333-39389) filed with the SEC in November 1997 under
the headings "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
SIBIA Neurosciences, Inc. ("SIBIA" or the "Company") is engaged in the discovery
and development of novel small molecule therapeutics for the treatment of
neurodegenerative, neuropsychiatric and neurological disorders, many of which
have large patient populations and represent critical unmet medical needs. SIBIA
is a leader in the development of proprietary drug discovery platforms that
combine key tools necessary for modern drug discovery, including genomics, high
throughput screening, advanced combinatorial chemistry techniques and
pharmacology. These platforms are based on two primary technologies in which the
Company has established a leading scientific and proprietary position: human
receptor/ion channel subtype technology and human protease technology. The
Company's proprietary molecular targets and drug candidates, together with its
drug discovery technologies and research expertise, have enabled the Company to
establish several corporate collaborations, which include Novartis AG
("Novartis"), Bristol-Myers Squibb Company ("Bristol-Myers Squibb") and Meiji
Seika Kaisha, Ltd. ("Meiji"), and multiple technology licensing arrangements,
which include The Salk Institute for Biological Studies ("The Salk Institute"),
Aurora Biosciences Corporation ("Aurora") and Neurocrine Biosciences, Inc.
("Neurocrine"). SIBIA believes its proprietary drug discovery technology
platform and drug candidates will lead to additional corporate collaborations
and licensing opportunities with pharmaceutical, biotechnology and drug
discovery service companies.
The Company has no products available for sale and does not expect to have any
products resulting from its research efforts, including its collaborations with
others, commercially available for at least several years, if at all. Except for
1995, the Company has incurred net losses every year since shifting its area of
therapeutic focus to the central nervous system in 1991. The Company is
continuing to incur losses and expects to incur increasing operating losses over
the next several years as the Company's research and development expenditures
increase. The Company expects that its revenue and other income for the next
several years will fluctuate significantly from quarter to quarter and will be
limited to payments under its collaborative relationships, license fees,
interest income and other miscellaneous income.
9
<PAGE> 10
RESULTS OF OPERATIONS
Revenue
The Company had total revenue of $2,103,000 for the third quarter and $9,052,000
for the nine-month period ended September 30, 1997, compared with $2,023,000 and
$6,451,000, respectively, for the same periods in 1996. The increase in the
comparable nine-month periods was due primarily to license revenue recognized in
1997 related to the Company's agreement with Meiji for the development of
SIB-1508Y, SIBIA's lead compound for Parkinson's disease.
Expenses
Research and development expenses increased to $4,090,000 for the third quarter
and $12,160,000 for the nine-month period ended September 30, 1997 from
$3,246,000 and $8,902,000, respectively, for the same periods in 1996. The
increase in research and development expenses was primarily the result of
expanded programs in drug discovery and for expenses associated with clinical
trials of SIB-1508Y.
General and administrative expenses increased to $1,073,000 for the third
quarter and $3,715,000 for the nine-month period ended September 30, 1997 from
$1,058,000 and $2,702,000, respectively, for the same periods in 1996. The
increase in general and administrative expenses in the comparable nine-month
periods was due primarily to the payment, in 1997, of foreign taxes related to
payments received under the Meiji agreement and increased legal fees related to
various patent and litigation matters. Such increases were offset by decreased
compensation expense relating to stock option grants.
Other Income
Other income was $565,000 for the third quarter and $1,708,000 for the
nine-month period ended September 30, 1997 compared to $588,000 and $1,118,000,
respectively, for the same periods in 1996. The increase in other income in the
comparable nine-month periods was due primarily to an increase in interest
income earned on proceeds from the Company's initial public offering of Common
Stock in May 1996.
LIQUIDITY AND CAPITAL RESOURCES
SIBIA has financed its operations primarily through equity financings, research
contracts (generally conducted on a best efforts basis), option, license and
royalty revenues. The Company has also received funds from the sale of its
interest in the SISKA Diagnostics joint venture and the settlement of certain
litigation. As of September 30, 1997, the Company had an accumulated deficit of
$26,808,000.
The Company anticipates that the cash, cash equivalents and investment
securities balance of $35,745,000 as of September 30, 1997 will be used to
support continued research and development of its technologies. The Company
leases laboratory and office facilities under an agreement expiring on December
31, 2001. The average minimum annual payment under the lease is approximately
$1,456,000, before consideration of sublease income. The Company believes that
its present facility will be adequate to conduct its research activities through
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December 2001. Management believes that it should be able to secure additional
space at commercially reasonable rates, if necessary. The Company has an option
to extend its lease for an additional five years.
The Company expects to incur substantial research and development expenses
including continued increases in personnel costs and costs related to the
continued expansion of its drug discovery platform and preclinical testing and
early stage clinical trials. The Company's future capital needs will be
dependent upon many factors, including progress in its research and development
activities, the magnitude and scope of these activities, progress with
pre-clinical and clinical trials, the cost of preparing, filing, prosecuting,
maintaining, defending and enforcing patent claims and other intellectual
property rights, competing technological and market developments, changes in or
terminations of existing collaborative arrangements, the establishment of
additional licensing and/or collaborative arrangements, and the cost of
manufacturing scale-up and development of marketing activities, if undertaken by
the Company. The Company intends to seek additional funding through research and
development relationships with suitable corporate collaborators or through
public or private financing. There can be no assurance that the Company will be
successful in its efforts to collaborate with additional partners or that
additional financing from other sources will be available on favorable terms, if
at all.
Funds generated from the Company's proposed public offering of Common Stock, if
any, together with payments under existing collaborative agreements, and the
Company's current cash reserves, will be insufficient to fund the Company's
operations through the completion of any clinical trials and commercialization
of its first product, if developed. Although the Company will seek to obtain
additional funds through public or private equity or debt financings,
collaborative or other arrangements with corporate partners or from other
sources, there can be no assurance that additional financing will be available
or, if available, that it will be available on acceptable terms. If additional
funds are raised by issuing equity securities, further dilution to then existing
stockholders would result. If adequate funds are not available, the Company may
be required to curtail significantly or eliminate one or more of its research,
discovery or development programs or obtain funds through additional
arrangements with corporate partners or others which may require the Company to
relinquish rights to certain of its technologies or product candidates that the
Company would not otherwise relinquish, which could have a material adverse
effect on the Company's business.
A key element of the Company's strategy is to enter into additional
collaborative arrangements with pharmaceutical and biotechnology companies to
develop and commercialize its drug candidates. There can be no assurance that
the Company will be able to negotiate collaborative arrangements in the future
on acceptable terms, if at all, or that such collaborative arrangements will be
successful. To the extent that the Company is not able to establish such
arrangements or any of its existing arrangements are terminated, it would
require significant capital to undertake development, regulatory, manufacturing
and marketing activities at its own expense and may be required to curtail
significantly or eliminate one or more of its research, discovery or
development programs, either of which could have a material adverse effect on
the Company's business.
Each of the Company's existing collaborative partners has the right to terminate
its respective collaboration under certain circumstances. For example, Novartis
can terminate its collaboration with the Company, with or without cause, upon
six months' prior written notice. If any of the Company's collaborative partners
terminates its agreement with the Company,
11
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the research program under the applicable collaborative agreement or the
development of drug candidates subject to such collaboration would be materially
adversely affected, which would have a material adverse effect on the Company's
business. In addition, because the Company's collaborative agreements accounted
for 97% and 64% of total revenues for the year ended December 31, 1996 and nine
months ended September 30, 1997, respectively, such a termination or breach
could materially adversely affect the Company's results of operations and
financial condition.
The Company and Eli Lilly and Company ("Lilly") completed their collaborative
research in the area of VGCCs in October 1997. The Company and Lilly will
independently pursue discovery and development of drug leads that act on VGCC
drug targets identified under this collaboration. The Company will no longer
receive research support payments in connection with this collaboration. The
Company is entitled to receive milestone payments and royalties on sales of
products commercialized by Lilly and is free to develop compounds it discovers
in this area on its own or with other partners. The amount and timing of
resources dedicated by Lilly to development and commercialization of such
products is not within the control of the Company. There can be no assurance
that the Company will ever receive any milestone or royalty payments from
Lilly. In November 1997, Lilly exercised its option to obtain a non-exclusive
license to the Company's flourescence-based ion assay technology.
As of December 31, 1996, the Company had net operating loss carryforwards for
federal and state income tax purposes of approximately $20,730,000 and $700,000,
respectively, which expire beginning in 2006 and 2002, respectively. As of
December 31, 1996, the Company had federal and state tax credits for research
activities totaling approximately $1,116,000 and $370,000, respectively, which
are available to offset future income taxes. The federal credits expire during
the years 2004 to 2010. The Company's ability to utilize net operating loss
carryforwards and tax credits is subject to limitations as set forth in
applicable federal and state tax laws. As specified in the Internal Revenue
Code, an ownership change of more than 50% by a combination of the Company's
significant stockholders during any three-year period would result in certain
limitations on the Company's ability to utilize its net operating loss and
credit carryforwards. The Company expects to incur limitations on the Company's
ability to utilize its net operating loss and tax credit carryforwards.
12
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PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings:
On July 9, 1996, the Company filed an action for patent infringement
against Cadus Pharmaceutical Corporation ("Cadus") in the United States
District Court for the Southern District of California. The complaint
asserts that Cadus' assay technology infringes the Company's U.S. Patent
No. 5,401,629 (the "629 patent"), entitled "Assay Methods and
Compositions Useful for Measuring the Transduction of an Intracellular
Signal." Through the complaint, the Company seeks damages in an
unspecified amount and a preliminary and permanent injunction.
On August 1, 1996, Cadus filed its answer and a counterclaim seeking a
judicial declaration that the `629 patent and the Company's U.S. Patent
No. 5,436,128 entitled "Assay Methods and Composition for Detecting and
Evaluating the Intracellular Transduction of an Extracellular Signal,"
are invalid, unenforceable and not infringed, and further asserts claims
for intentional interference with prospective economic advantage and
unfair competition. The counterclaim seeks declaratory relief and
compensatory and punitive damages in an unspecified amount.
Company management believes that its complaint against Cadus is
well-founded and necessary to protect the value of its intellectual
property portfolio. Management believes that Cadus' counterclaim is
without merit and intends to vigorously prosecute its claim of
infringement and oppose Cadus' counterclaim.
Management believes that the ultimate resolution of the above matter
will not have a material adverse impact on the Company's financial
position, results of operations or cash flows.
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.
13
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ITEM 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
27.1 Financial Data Schedule. (Exhibit 27 is submitted as an
exhibit in the electronic format of this Quarterly Report on
Form 10-Q submitted to the Securities and Exchange Commission.)
(b) Reports on Form 8-K
None.
14
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
SIBIA Neurosciences, Inc.
Date: October 14, 1997 By: /s/ THOMAS A. REED
---------------- ----------------------------------
Thomas A. Reed
Vice President, Finance &
Administration, and Chief
Financial Officer
(on behalf of the registrant
and as the registrant's
principal financial officer)
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED BALANCE SHEET AS OF SEPTEMBER 30, 1997 AND UNAUDITED STATEMENT OF
OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,140,000
<SECURITIES> 32,605,000
<RECEIVABLES> 586,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 37,080,000
<PP&E> 1,358,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 38,541,000
<CURRENT-LIABILITIES> 3,279,000
<BONDS> 0
0
0
<COMMON> 9,000
<OTHER-SE> 34,726,000
<TOTAL-LIABILITY-AND-EQUITY> 38,541,000
<SALES> 0
<TOTAL-REVENUES> 9,052,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 15,875,000
<LOSS-PROVISION> 0
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