<PAGE>
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 EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1999
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 0-21863
EPIX MEDICAL, INC.
-------------------
(Exact name of Registrant as Specified in its Charter)
DELAWARE 04-3030815
- --------------------------------- -------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
71 ROGERS STREET
CAMBRIDGE, MASSACHUSETTS 02142
- --------------------------------- -------------------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (617) 250-6000
---------------
Securities registered pursuant to Section 12(b) of the Act: NONE
--------
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE PER SHARE
--------------------------------------
(Title of Class)
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
As of August 9, 1999, 11,591,988 shares of the registrant's Common Stock,
$.01 par value per share, were issued and outstanding.
<PAGE>
EPIX MEDICAL, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements (Unaudited)
Balance Sheets--June 30, 1999 and December 31, 1998 3
Statements of Operations--Three Months and Six Months Ended June 30, 1999 and 1998 4
Statements of Cash Flows--Six Months Ended June 30, 1999 and 1998 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 6. Exhibits and Reports on Form 8-K 12
Signature 13
</TABLE>
2
<PAGE>
EPIX MEDICAL, INC.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
--------------------- ---------------------
<S> <C> <C>
Assets:
Current assets:
Cash and cash equivalents $1,708,200 $ 369,454
Available-for-sale marketable securities 19,203,223 28,731,747
Prepaid expenses and other current assets 602,619 517,701
--------------------- ---------------------
Total current assets 21,514,042 29,618,902
Property and equipment, net 2,542,668 2,861,277
Notes receivable from officer 346,023 335,888
Other assets 100,237 87,152
--------------------- ---------------------
Total assets $24,502,970 $32,903,219
--------------------- ---------------------
--------------------- ---------------------
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable and accrued expenses $2,548,549 $2,681,137
Contract advances 206,736 611,038
Current portion of capital lease obligations 410,931 384,976
Current portion of note payable 372,637 349,009
--------------------- ---------------------
Total current liabilities 3,538,853 4,026,160
Capital lease obligations, less current portion 522,848 602,407
Note payable, less current portion 579,228 771,647
Common stock, $.01 par value, 15,000,000 shares authorized; 11,561,188 and
11,458,401 shares issued and outstanding at
June 30, 1999 and December 31, 1998, respectively 115,613 114,584
Additional paid-in capital 56,276,954 55,839,411
Loan to stock option holders (377,421) (123,119)
Accumulated deficit (36,132,873) (28,415,324)
Accumulated other comprehensive income (20,232) 87,453
--------------------- ---------------------
Total stockholders' equity 19,862,041 27,503,005
--------------------- ---------------------
Total liabilities and stockholders' equity $ 24,502,970 $ 32,903,219
--------------------- ---------------------
--------------------- ---------------------
</TABLE>
See accompanying notes.
3
<PAGE>
EPIX MEDICAL, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998
--------------------- ---------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Revenues $ 266,552 $ 517,199 $ 553,819 $ 941,024
Operating expenses:
Research and development 3,431,476 3,074,708 6,717,967 5,964,532
General and administrative 1,090,087 1,023,014 2,132,042 1,866,354
--------------------- ---------------------- --------------------- -------------------
Total operating expenses 4,521,563 4,097,722 8,850,009 7,830,886
--------------------- ---------------------- --------------------- -------------------
Operating loss (4,255,011) (3,580,523) (8,296,190) (6,889,862)
Interest income 315,840 540,312 686,733 993,443
Interest expense (53,701) (15,104) (108,093) (27,757)
--------------------- ---------------------- --------------------- -------------------
Net loss $(3,992,872) $(3,055,315) $(7,717,550) $(5,924,176)
--------------------- ---------------------- --------------------- -------------------
--------------------- ---------------------- --------------------- -------------------
Weighted average shares
Basic and diluted 11,494,531 11,326,494 11,479,530 11,294,304
--------------------- ---------------------- --------------------- -------------------
--------------------- ---------------------- --------------------- -------------------
Loss per common share
Basic and diluted $(0.35) $(0.27) $(0.67) $(0.52)
--------------------- ---------------------- --------------------- -------------------
--------------------- ---------------------- --------------------- -------------------
</TABLE>
See accompanying notes.
4
<PAGE>
EPIX MEDICAL, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1999 JUNE 30, 1998
------------------------ ------------------------
<S> <C> <C>
Operating activities:
Net loss $(7,717,550) $(5,924,175)
Adjustments to reconcile net loss to cash used by operating
activities:
Depreciation and amortization 503,065 344,114
Stock compensation expense 98,956 -
Loss on sale of fixed assets 18,501 -
Change in operating assets and liabilities:
Prepaid expenses, other current assets, notes
receivable from officer and other assets (108,138) (337,853)
Contract advances (404,302) (30,298)
Accounts payable and accrued expenses (132,588) 67,556
------------------------ ------------------------
Net cash used in operating activities (7,742,056) (5,880,656)
Investing activities:
Purchase of fixed assets (67,698) (759,212)
Proceeds from sale of fixed assets 19,500 -
Purchases of marketable securities (113,922,818) (261,073,362)
Proceeds from sales or redemptions of marketable securities 123,343,657 267,711,098
------------------------ ------------------------
Net cash provided by investing activities 9,372,641 5,878,524
Financing activities:
Repayment of capital lease obligations (208,363) (209,205)
Repayment of note payable (168,791) -
Proceeds from ESPP purchase 66,895 76,216
Proceeds from issuance of stock options and warrants 18,420 64,209
------------------------ ------------------------
Net cash used by financing activities (291,839) (68,780)
------------------------ ------------------------
Increase (decrease) in cash and cash equivalents 1,338,746 (70,912)
Cash and cash equivalents at beginning of period 369,454 1,455,657
------------------------ ------------------------
Cash and cash equivalents at end of period $ 1,708,200 $ 1,384,745
------------------------ ------------------------
------------------------ ------------------------
Supplemental disclosure of noncash investing and financing activities:
Fixed assets acquired through lease financing $154,759 $492,265
------------------------ ------------------------
------------------------ ------------------------
Issuance of stock option loan for exercise of stock options $254,302 $118,602
------------------------ ------------------------
------------------------ ------------------------
Supplemental cash flow information:
Cash paid for interest $108,093 $27,757
------------------------ ------------------------
------------------------ ------------------------
</TABLE>
See accompanying notes.
5
<PAGE>
EPIX MEDICAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
1. BASIS OF PRESENTATION
The unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and the rules of the
Securities and Exchange Commission (the "Commission"). Accordingly, they do
not include all of the information and footnotes required to be presented for
complete financial statements. The accompanying condensed financial
statements reflect all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods presented. The results of
the interim period ended June 30, 1999 are not necessarily indicative of the
results expected for the full fiscal year.
The condensed financial statements and related disclosures have been
prepared with the assumption that users of the interim financial statements
have read or have access to the audited financial statements for the
preceding fiscal year. Accordingly, these condensed financial statements
should be read in conjunction with the audited financial statements and the
related notes thereto included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1998.
2. TRANSITION FROM A DEVELOPMENT STAGE ENTERPRISE TO AN ESTABLISHED OPERATING
ENTERPRISE
During March 1999, the Company met with the Food and Drug Administration
("FDA") to discuss the proposed protocol application to initiate a Phase III
clinical trial for aortoiliac occlusive disease ("AIOD"). The Company began
this trial in June 1999.
The Company considers this event an important milestone and believes that
the progression from Phase II to Phase III for AIOD during 1999 warrants the
transition from a development stage enterprise, as defined by Financial
Standards No. 7, "Accounting and Reporting by Development Stage Enterprises"
("SFAS 7") issued by the Financial Accounting Standard Board ("FASB"), to an
established operating enterprise. Consequently, cumulative amounts and other
additional disclosures required by SFAS 7 have not been provided.
3. COMPREHENSIVE INCOME
Financial Standards No. 130, "Reporting Comprehensive Income" ("SFAS
130") requires unrealized gains or losses on the Company's available-for-sale
securities to be included in other comprehensive income. Total comprehensive
income (loss) for the quarter ended June 30, 1999 amounted to ($70,635)
compared to $17,844 in the same period in 1998. Total comprehensive income
(loss) for the six months ended June 30, 1999 amounted to ($107,685) compared
to $4,404 in the same period in 1998.
6
<PAGE>
4. EARNINGS (LOSS) PER SHARE
The Company computes earnings (loss) per share in accordance with the
provisions of SFAS No. 128, "Earnings per Share." Basic net earnings (loss)
per share is based upon the weighted-average number of common shares
outstanding and excludes the effect of dilutive potential common stock
issuable upon exercise of stock options. Diluted net earnings (loss) per
share includes the effect of dilutive potential common stock issuable upon
exercise of stock options using the treasury stock method. In computing
diluted earnings (loss) per share, only potential common shares that are
dilutive, those that reduce earnings per share, are included. The exercise of
options is not assumed if the result is antidilutive, such as when a loss
from continuing operations is reported. The following table sets forth the
computation of basic and diluted loss per share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------------- ----------------------------------
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998
----------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Numerator:
Net loss $(3,992,872) $(3,055,315) $(7,717,550) $(5,924,176)
----------------- ----------------- ----------------- ----------------
Numerator for basic and diluted loss per share $(3,992,872) $(3,055,315) $(7,717,550) $(5,924,176)
Denominator:
Denominator for basic and diluted loss per share
- weighted average shares 11,494,531 11,326,494 11,479,530 11,294,304
----------------- ----------------- ----------------- ----------------
----------------- ----------------- ----------------- ----------------
Basic and diluted loss per share $(0.35) $(0.27) $(0.67) $(0.52)
</TABLE>
5. RELATED PARTY TRANSACTION
During June 1999, the Company received a promissory note with 25% recourse
from an executive officer of the Company pursuant to an employee stock option
financing program available to all employees of the Company. The promissory
note is secured by shares of common stock of the Company equal in value at
the time of the transaction to approximately 150% of the amount of the
promissory note. The proceeds from the executive loan evidenced by this
promissory note were used to exercise certain stock options held by the
executive officer. The difference between the exercise price and the fair
market value of the stock, less 25% related to the recourse stipulation, was
recorded as stock compensation expense during the second quarter of 1999. The
loan amount plus accrued interest was recorded as a loan to stock option
holders in the financial statements. This transaction is summarized below:
<TABLE>
<CAPTION>
SHARES OF COMPANY COMMON STOCK
INTEREST PROVIDED AS
DATE OF NOTE TERM AMOUNT RATE COLLATERAL
- ------------------------------------ ------------- ------------ ----------- ---------------------------------
<S> <C> <C> <C> <C>
June 3, 1999 60 months $249,993 5.25% 55,554
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Since commencing operations in 1992, the Company has been engaged principally
in the research and development of its product candidates as well as seeking
various regulatory clearances and patent protection. The Company has had no
revenues from product sales and has incurred losses from inception through
June 30, 1999, in the aggregate of approximately $36.1 million. The Company
has received revenues in connection with various licensing and collaboration
agreements. In August 1996, the Company entered into a strategic alliance
with Mallinckrodt Inc. ("Mallinckrodt") pursuant to which it received $6.0
million in up-front license fees. The agreement provided for an additional
$2.0 million milestone payment, which was received in July 1997. In March
1996, the Company entered into a strategic alliance with Daiichi Radioisotope
Laboratories, Ltd. ("Daiichi"). Under this agreement, the Company received
$3.0 million in license fees and $5.0 million from the sale of shares of the
Company's preferred stock, and was entitled to receive up to $3.3 million in
future payments based upon the Company's achievement of certain product
development milestones. The Company received $900,000 of such milestone
payments in July 1997.
The Company expects continued operating losses for the next several years as
it incurs expenses to support research and development and to obtain
regulatory approvals.
The Company's initial product candidate, AngioMARK (MS-325), is currently the
Company's only product candidate undergoing human clinical trials. The
Company filed an investigational new drug ("IND") application for AngioMARK
in July 1996. The Company initiated a Phase I clinical trial in 1996 and a
Phase I dose escalation study in 1997, both of which have been completed. The
Company completed a Phase II clinical trial in June 1998 to test the safety
and preliminary efficacy of AngioMARK-enhanced magnetic resonance angiography
("MRA") for the evaluation of AIOD and is currently conducting a Phase II
feasibility trial to test the safety and feasibility of AngioMARK-enhanced
MRA for the evaluation of coronary artery disease ("CAD"). In December 1998,
the Company filed a proposed protocol application with the FDA to initiate a
Phase III clinical trial of AIOD. During March 1999, the Company met with the
FDA to discuss the proposed protocol application to initiate a Phase III
clinical trial for AIOD. The Company initiated a Phase III clinical trial for
AIOD in June 1999. In addition, in January 1998, the Company initiated a
Phase II clinical trial to test the safety and feasibility of AngioMARK for
detecting breast cancer.
The Company anticipates fluctuation in its quarterly results of operations
due to several factors, including: the timing of fees and milestone payments
received from strategic partners; the formation of new strategic alliances by
the Company; the timing of expenditures in connection with research and
development activities; the timing of product introductions and associated
launch, marketing and sales activities; and the timing and extent of product
acceptance for different indications and geographical areas of the world.
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED JUNE 30, 1999 AND 1998
REVENUES. Second quarter revenues were approximately $267,000 and $517,000 in
1999 and 1998, respectively, and in both periods included revenues derived
from product development contracts.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses for the
three months ended June 30, 1999 were $3.4 million as compared to $3.1
million for the three months ended June 30, 1998. The increased research and
development expenses were largely due to increased costs for personnel and
additional resources to advance the Company's lead product candidate,
AngioMARK, through clinical trials.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses for
the three months ended June 30, 1999 were $1.1 million as compared to $1.0
million for the corresponding period of 1998. The increase was primarily due
to higher legal costs associated with ongoing patent activities.
INTEREST INCOME AND EXPENSE. Net interest income decreased approximately
$263,000 in 1999 as compared to 1998 mainly due to lower average levels of
invested cash during the second quarter of 1999. Cash, cash equivalents and
marketable securities at June 30, 1999 totaled $20.9 million.
8
<PAGE>
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1999 AND 1998
REVENUES. Revenues for the six months ended June 30, 1999 and June 30, 1998
were approximately $554,000 and $941,000, respectively, and in both periods
included revenues derived from product development contracts.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses for the
six months ended June 30, 1999 were $6.7 million as compared to $6.0 million
for the six months ended June 30, 1998. The increased research and
development expenses were largely due to increased costs for personnel and
additional resources to advance the Company's lead product candidate,
AngioMARK, through clinical trials. Additional personnel and resources to
support further development of the Company's core technology also contributed
to the increase.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses for
the six months ended June 30, 1999 were $2.1 million as compared to $1.9
million for the corresponding period of 1998. The increase was primarily due
to higher legal costs associated with ongoing patent activities.
INTEREST INCOME AND EXPENSE. Net interest income decreased approximately
$387,000 in 1999 as compared to 1998 mainly due to lower average levels of
invested cash during the six months ended June 30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations from inception through June 30, 1999
primarily with $14.3 million in net proceeds from the Company's initial
public offering completed in February 1997, $22.9 million from a follow-on
public offering of common stock in November 1997, $18.4 million from private
sales of equity securities, $18.0 million received from third parties in
connection with collaboration and license arrangements, $2.6 million of
equipment lease financing and $4.5 million in interest income.
The Company's principal source of liquidity consists of cash, cash
equivalents and marketable securities, which totaled $20.9 million at June
30, 1999, as compared to $29.1 million at December 31, 1998.
The Company is eligible to receive additional payments of $2.4 million from
Daiichi upon the attainment of certain future AngioMARK development
milestones. Daiichi is responsible for funding development of AngioMARK in
Japan. Under the Company's agreement with Mallinckrodt, Mallinckrodt and the
Company generally will share equally in future development costs of AngioMARK
up to a specified maximum amount.
During the six months ended June 30, 1999, the Company used approximately
$7.7 million of cash for operating activities. The Company expects that its
cash needs for operations will increase in future periods due to planned
clinical trials and other expenses associated with the development of
AngioMARK and new research and development programs.
The Company estimates that existing cash, cash equivalents and marketable
securities, will be sufficient to fund its operations through the first
quarter of 2000. The Company believes that it will need to raise additional
funds for research, development and other expenses, through equity or debt
financings, strategic alliances or otherwise, prior to commercialization of
any of its product candidates. The Company cannot guarantee that additional
financing will be available on terms acceptable to the Company, or at all.
The Company's future liquidity and capital requirements will depend on
numerous factors, including the following: the progress and scope of clinical
trials; the timing and costs of filing future regulatory submissions; the
timing and costs required to receive both United States and foreign
governmental approvals; the cost of filing, prosecuting, defending and
enforcing patent claims and other intellectual property rights; the extent to
which the Company's products gain market acceptance; the timing and costs of
product introductions; the extent of the Company's ongoing research and
development programs; the costs of training physicians to become proficient
with the use of the Company's products; and, if necessary, once regulatory
approvals are received, the costs of developing marketing and distribution
capabilities.
Because of anticipated spending to support development of AngioMARK and new
research programs, the Company does not expect positive cash flow from
operating activities for any future quarterly or annual period prior to
commercialization of AngioMARK. The Company anticipates continued investments
in fixed assets, including equipment and facilities expansion to support new
and continuing research and development programs. The Company's current lease
agreement for its principal scientific facilities expires on December 31,
2002. In April 1999, the Company secured an additional option to extend the
term of the lease for an additional three or five year period. The Company
also has a lease for nearby office space. In June 1999, the Company exercised
its option to extend the term of this lease for an additional three year
period ending December 31, 2002.
9
<PAGE>
The Company has incurred tax losses to date and therefore has not paid
significant federal or state income taxes since inception. At December 31,
1998, the Company had loss carryforwards of approximately $26.0 million
available to offset future taxable income. These amounts expire at various
times through 2018. As a result of ownership changes resulting from sales of
equity securities, the Company's ability to use the loss carryforwards is
subject to limitations as defined in Sections 382 and 383 of the Internal
Revenue Code of 1986, as amended (the "Code"). The Company currently
estimates that the annual limitation on its use of net operating losses
through May 31, 1996 will be approximately $900,000. Pursuant to Sections 382
and 383 of the Code, the change in ownership resulting from public equity
offerings in 1997 and any other future ownership changes may further limit
utilization of losses and credits in any one year. The Company also is
eligible for research and development tax credits that can be carried forward
to offset federal taxable income. The annual limitation and the timing of
attaining profitability may result in the expiration of net operating loss
and tax credit carryforwards before utilization.
The Company does not believe that inflation has had a material impact on its
operations.
YEAR 2000
The Year 2000 issue results from computer programs and systems that were
created to accept only two digit dates. Such systems may not be able to
distinguish 20th century dates from 21st century dates. This could result in
miscalculations and system failures that could inhibit the Company's ability
to engage in normal business activities.
THE COMPANY'S STATE OF READINESS AND RISK
The Company conducted both internal and external reviews to address the Year
2000 issue. Internally, the Company reviewed information technology ("IT")
systems, and non-IT systems such as scientific instruments and other
electronic devices that could be affected by this issue. Externally, the
Company contacted all of its significant external business partners
(including vendors, suppliers and strategic partners) to determine the extent
to which the Company is vulnerable to their failures and to ascertain Year
2000 compliance and risk. The inventory and assessment of IT systems,
scientific instruments, and material third parties has been completed. The
Company will utilize both internal and external resources to reprogram, or
replace, and test the software and systems for Year 2000 modifications. The
Company expects to complete remediation efforts and the validation phase by
the end of the third quarter of 1999. If any of the Company's business
partners do not, or if the Company itself does not, successfully deal with
the Year 2000 issue, the Company could experience delays in its receipt of
funding, materials and other resources which could adversely affect the
conduct of its research and development operations. The severity of these
possible problems would depend on the nature of the problem and how quickly
it could be corrected or an alternative implemented, which is unknown at this
time. Although the Company expects to have obtained Year 2000 compliance
before the Year 2000, the inability of the Company or its business partners
to remedy the Year 2000 issue could have a significant impact on the
Company's business, financial position or results of operations.
THE COMPANY'S COSTS OF YEAR 2000 REMEDIATION
While management has not specifically determined the costs of its Year 2000
efforts, the total cost to achieve Year 2000 compliance is currently
projected to be less than $100,000. Such costs will include direct and
indirect costs incurred through monitoring and managing the Year 2000 issue.
Direct costs include potential charges by third-party software and hardware
vendors for product enhancements, costs involved in testing software products
for Year 2000 compliance and any resulting costs for developing and
implementing contingency plans for critical software products which are not
enhanced. Indirect costs will principally consist of the time devoted by
existing employees in monitoring software vendor progress, testing enhanced
software products and implementing any necessary contingency plans. The
Company believes such costs will not have a material effect on the Company's
business, financial position, or results of operations.
THE COMPANY'S CONTINGENCY PLANS
At this time the Company has not initiated the formulation of contingency
plans. The determination of the necessity for contingency plans will be made
by the end of the third quarter of 1999. Some risks of the Year 2000 issue,
however, are beyond the control of the Company and its business partners.
10
<PAGE>
FORWARD-LOOKING STATEMENTS
The discussion included in this section as well as elsewhere in the
Quarterly Report on Form 10-Q contains forward-looking statements based on
the current expectations of the Company's management. Such statements are
subject to risks and uncertainties which could cause actual results to differ
materially from those projected. See "Important Factors Regarding
Forward-Looking Statements" attached as Exhibit 99.1 and incorporated herein
by reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1998 as previously filed with the Commission. Readers are
cautioned not to place undue reliance on the forward-looking statements which
speak only as of the date thereof. The Company undertakes no obligation to
release publicly the result of any revisions to these forward-looking
statements which may be made to reflect events or circumstances occurring
after the date hereof or to reflect the occurrence of unanticipated events.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
10.1 Sublease extension election for an additional three years,
beginning January 1, 2000 and ending December 31, 2002
pursuant to Article 5 of the First Amendment to Sublease
dated as of July 15, 1998 between the Company and SatCon
Technology Corporation. Filed herewith.
27.1 Financial Data Schedule for the interim year-to date period
ended June 30, 1999 (for electronic filing only).
99.1 Important Factors Regarding Forward-Looking Statements
filed as Exhibit 99.1 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1998 and
incorporated herein by reference.
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended June 30, 1999.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EPIX Medical, Inc.
Date: August 13, 1999 By: /s/ STEPHEN C. KNIGHT
---------------------
Stephen C. Knight,
Chief Financial Officer and
Senior Vice President, Finance and
Business Development
(Principal Financial Officer and
Accounting Officer)
13
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
10.1 Sublease extension election for an additional three years,
beginning January 1, 2000 and ending December 31, 2002 pursuant
to Article 5 of the First Amendment to Sublease dated as of July
15, 1998 between the Company and SatCon Technology Corporation.
Filed herewith.
27.1 Financial data schedule for the interim year-to-date period
ended June 30, 1999 (for electronic filing only).
99.1 Important Factors Regarding Forward-Looking Statements filed as
Exhibit 99.1 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1998 and incorporated herein by
reference.
</TABLE>
14
<PAGE>
[LOGO] EPIX Medical, Inc.
71 Rogers Street
Cambridge, MA 02142-1118
Tel: 617-250-6000
Fax: 617-260-6032
Web: www.epixmed.com
VIA HAND, RETURN RECEIPT REQUESTED
- ---------------------------------
June 30, 1999
SatCon Technology Corporation
161 First Street
Cambridge, MA 02142
To whom it may concern:
Pursuant to Article 5 of the First Amendment to Sublease dated as of July
15, 1998 by and between SatCon Technology Corporation and EPIX Medical, Inc.,
we hereby elect to extend the term of the sublease for an additional three (3)
years, beginning January 1, 2000 and ending December 31, 2002.
Sincerely,
/s/ Stephen C. Knight
Stephen C. Knight
Chief Financial Officer
Cc:
- --
SatCon Technology Corporation
c/o Mr. John McCabe
Corporate Controller
161 First Street
Cambridge, MA 02142
Gunwyn/First Street Limited Partnership
c/o Gunwyn Company
47 Thorndike Street
Cambridge, MA
Attention: Jennifer F. Francis
The Bulfinch Companies
c/o Mr. Eric Schlager
250 First Avenue, Suite 200
Needham, MA 02494-2805
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET OF EPIX MEDICAL, INC. AS OF JUNE 30, 1999 AND FOR THE SIX MONTH PERIOD
ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001027702
<NAME> EPIX MEDICAL, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,708,200
<SECURITIES> 19,203,223
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 21,514,042
<PP&E> 5,865,474
<DEPRECIATION> (3,322,806)
<TOTAL-ASSETS> 24,502,970
<CURRENT-LIABILITIES> 3,538,853
<BONDS> 579,228
0
0
<COMMON> 115,612
<OTHER-SE> 19,746,428
<TOTAL-LIABILITY-AND-EQUITY> 24,502,970
<SALES> 0
<TOTAL-REVENUES> 553,819
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 8,850,009
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 108,093
<INCOME-PRETAX> (7,717,550)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,717,550)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,717,550)
<EPS-BASIC> (0.67)
<EPS-DILUTED> (0.67)
</TABLE>
