<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
- -------------------------------------------------------------------------------
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 000-25571
---------------------------------------------------------
AXONYX INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA 86-0883978
- ------------------------------------------------ -------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
825 THIRD AVENUE, 40TH FLOOR, NEW YORK, NEW YORK 10022
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(212) 688-4770
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes__ No__
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 14,214,019 shares of
common stock as of May 11, 2000.
Transitional Small Business Disclosure Format (check one);
------------
<PAGE>
AXONYX INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - March 31, 2000 (unaudited)
Statements of Operations (unaudited)
Statements of Changes in Stockholders' Equity
Statements of Cash Flows (unaudited)
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Plan of Operation
PART II. OTHER INFORMATION
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. Financial Statements
AXONYX INC.
(a development stage company)
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 2000 1999
--------------- ------------
(unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 4,873,000 $ 5,409,000
Stock subscription receivable - 298,000
Other 25,000 22,000
----------- -----------
Total current assets 4,898,000 5,729,000
Equipment, net 24,000 15,000
Other Assets:
Investments 3,800,000 -
Deposit 27,000 -
---------- -----------
3,827,000 -
---------- -----------
$ 8,749,000 $ 5,744,000
=========== ===========
LIABILITIES
Current liabilities:
Accrued expenses $ 171,000 $ 353,000
Deferred revenue 42,000 104,000
----------- -----------
213,000 457,000
STOCKHOLDERS' EQUITY
Preferred stock - $.001 par value, 5,000,000 shares authorized; none issued
Common Stock - $.001 par value, 25,000,000 shares authorized; 14,261,970 14,000 13,000
and 13,579,076 shares issued and outstanding, respectively.
Additional paid-in capital 15,779,000 11,655,000
Unearned compensation - stock/options - (29,000)
Deficit accumulated during development stage (7,257,000) (6,352,000)
----------- -----------
Total stockholders' equity 8,536,000 5,287,000
----------- -----------
$ 8,749,000 $ 5,744,000
=========== ===========
</TABLE>
<PAGE>
AXONYX INC.
(a development stage company)
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
January 9,
1997
(inception)
Three months ended through
March 31, March 31,
2000 1999 2000
------------------- ------------------- -----------------
<S> <C> <C> <C>
Revenue $ 63,000 $ - $ 209,000
Costs and expenses:
Research and development 614,000 520,000 4,449,000
General and administrative 396,000 369,000 3,107,000
---------- ----------- -----------
1,010,000 889,000 7,556,000
---------- ----------- -----------
Loss from operations (947,000) (889,000) (7,347,000)
Interest expense - - (23,000)
Interest income 42,000 9,000 113,000
------------- ----------- -----------
Net loss $ (905,000) $ (880,000) $(7,257,000)
=========== =========== ===========
Net loss per common share $ (0.07) $ (0.07)
========== ===========
Weighted average shares-basic and diluted 13,879,009 12,230,002
</TABLE>
<PAGE>
AXONYX INC.
(a development stage company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)
<TABLE>
<CAPTION>
COMMON STOCK DEFICIT
--------------------- UNEARNED ACCUMULATED
NUMBER ADDITIONAL COMPENSATION DURING THE TOTAL
OF PAID-IN STOCK DEVELOPMENT STOCKHOLDERS'
SHARES AMOUNT CAPITAL OPTIONS STAGE EQUITY
------ ------ ------- ------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
BALANCE - DECEMBER 31,
1999 13,579,076 $ 13,000 $11,655,000 $ (29,000) $ (6,352,000) $ 5,287,000
Issuance of common stock
and warrants, net 670,600 1,000 3,860,000 3,861,000
Stock options granted 126,000 (126,000) -
Shares issuable to New York
University and scientists 12,294 138,000 138,000
Amortization 155,000 155,000
Net Loss - - - - (905,000) (905,000)
----------- --------- ------------ --------- ------------ -----------
BALANCE - MARCH 31, 2000
14,261,970 $ 14,000 $15,779,000 $ - $ (7,257,000) $ 8,536,000
=========== ========= ============ ========= ============ ===========
</TABLE>
<PAGE>
AXONYX INC.
(a development stage company)
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
January 9,
1997
(inception)
Three months ended through
March 31, March 31,
2000 1999 2000
--------- ---------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (905,000) $ (880,000) $(7,257,000)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation and amortization 1,000 1,000 4,000
Issuance and amortization of compensatory
stock options 155,000 151,000 643,000
Cost of services paid with common stock 138,000 399,000 3,201,000
Changes in:
other assets (30,000) (9,000) (48,000)
accrued expenses and deferred revenue (244,000) (19,000) 213,000
--------- ---------- -----------
Net cash used in operating activities (885,000) (357,000) (3,244,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (10,000) (9,000) (28,000)
Investments (3,800,000) - (3,800,000)
----------- ---------- -----------
Net cash used in investing activities (3,810,000) (9,000) (3,828,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible notes payable - 200,000
Net proceeds from issuance of common stock and warrants 4,159,000 720,000 11,797,000
Cost of merger - - (52,000)
---------- ---------- -----------
Net cash provided by financing activities 4,159,000 720,000 11,945,000
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (536,000) 354,000 4,873,000
Cash and cash equivalents at beginning of period 5,409,000 1,558,000 -
---------- ---------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $4,873,000 $1,912,000 $ 4,873,000
========== ========== ===========
</TABLE>
<PAGE>
AXONYX INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(1) FINANCIAL STATEMENT PRESENTATION
The unaudited financial statements of Axonyx Inc. (the "Company") herein have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission (SEC) and, in the opinion of management, reflect all
adjustments (consisting only of normal recurring accruals) necessary to present
fairly the results of operations for the interim periods presented. Certain
information and footnote disclosure normally included in the financial
statements, prepared in accordance with generally accepted accounting
principles, have been condensed or omitted pursuant to such rules and
regulations. However, management believes that the disclosures are adequate to
make the information presented not misleading. These financial statements and
notes thereto should be read in conjunction with the financial statements and
the notes thereto for the year ended December 31, 1999 included in the Company's
Form 10-KSB filing. The results for the interim periods are not necessarily
indicative of the results for the full fiscal year.
(2) PRIVATE PLACEMENT:
The Company completed its private equity financing in Europe. During the period
January 1, 2000 through March 31, 2000 the Company sold 156.5 units at $25,000
per unit. Each unit consists of 4,000 shares of common stock and 2,000 warrants
to purchase common stock at $11.00 per share. In connection with the private
placement the Company issued 39,600 shares of common stock and warrants to
purchase 19,800 shares of common stock at $11.00 per share as finder's fees.
(3) EXERCISE OF RIGHT TO LICENSE BY ARES SERONO
On May 2, 2000 Ares Serono International, S.A. ("Ares Serono") informed Axonyx
that it is exercising its right to license certain of Axonyx's patent
rights under the Development Agreement and Right to License signed with Axonyx
in May 1999. The two companies are currently negotiating the final terms of a
licensing agreement. Under the Development Agreement Ares Serono undertook
research on Axonyx's Amyloid Inhibitory Peptides ("AIPs") and Prion Inhibitory
Peptides ("PIPs") technology for a one year term, with a right to sublicense
Axonyx's patent rights to the AIPs and the PIPs. Under a licensing agreement
Ares Serono would continue the research and development of the AIP & PIP
technologies initiated during the term of the Development Agreement. In
addition, within 30 days of signing a license agreement with Axonyx, Ares Serono
will pay Axonyx a nonrefundable licence fee of $1.5 million.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THIS QUARTERLY REPORT ON FORM 10-QSB CONTAINS "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. ALL
STATEMENTS, OTHER THAN STATEMENTS OF HISTORICAL FACTS, INCLUDED IN OR
INCORPORATED BY REFERENCE INTO THIS FORM 10-QSB, ARE FORWARD-LOOKING STATEMENTS.
IN ADDITION, WHEN USED IN THIS DOCUMENT, THE WORDS "ANTICIPATE," "ESTIMATE,"
"PROJECT," AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS,
UNCERTAINTIES AND ASSUMPTIONS INCLUDING THOSE RISKS DESCRIBED IN THE COMPANY'S
REPORT ON THIS FORM 10-QSB SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES
MATERIALIZE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS
MAY VARY MATERIALLY FROM THOSE ANTICIPATED, ESTIMATED OR PROJECTED. ALTHOUGH THE
COMPANY BELIEVES THAT THE EXPECTATIONS INCLUDED IN SUCH FORWARD-LOOKING
STATEMENTS ARE REASONABLE, THE COMPANY CANNOT GIVE ANY ASSURANCES THAT THESE
EXPECTATIONS WILL PROVE TO BE CORRECT.
The following discussion and analysis should be read in conjunction
with the financial statements of the Company and the notes thereto appearing in
Part I Item 1.
Axonyx Inc. ("Axonyx" or the "Company") is engaged in the business of
identifying and acquiring novel post-discovery central nervous system (CNS) drug
candidates to advance through clinical development towards regulatory approval.
The Company is engaged in the business of acquiring patent rights and developing
CNS pharmaceutical compounds and diagnostics with significant potential market
impact. The Company has acquired worldwide exclusive patent rights to three main
classes of therapeutic compounds designed for the treatment of Alzheimer's
Disease (AD), Moderate Cognitive Impairment (MCI), and related diseases. The
Company licensed these patent rights from New York University (NYU) and, via a
sublicense, from the National Institutes of Health\National Institute on Aging
(NIA) (the "Licensors") and has an ongoing research and development relationship
with both Licensors.
The Company's current business strategy is to pursue three different
types of products for the treatment of AD, one for prion-related diseases, and a
diagnostic test for AD. The AD targeted approaches include: (1) Phenserine, an
analog of physostigmine and a potent inhibitor of acetylcholinesterase, (2) a
butyrylcholinesterase inhibitor which will be chosen from a group of selectively
acting compounds, the best studied of which is Cymserine, and (3) compounds
called Amyloid Inhibitory Peptides (AIPs) which may prevent and reverse the
formation of amyloid plaques in AD and in diseases of peripheral amyloidosis.
The Company is also conducting research on compounds called Prion Inhibitory
Peptides (PIPs) designed for the diagnosis and treatment of prion diseases such
as Bovine Spongiform Encephalopathy (also known as "Mad Cow Disease") and the
human form of the disease, Creutzfeldt-Jakob Disease, new variant. In the area
of diagnostics, the Company has entered into an agreement with the
<PAGE>
University of Melbourne (Australia) for collaborative research on the
development of a diagnostic test for AD.
Axonyx's plan is to: (1) identify, acquire and exploit rights to new
technologies and compounds relating to AD and other neurological disorders; (2)
enhance the value of those assets through further research and clinical testing;
(3) perform clinical studies towards regulatory approval and market its drugs
and diagnostic tests through profitable licensing agreements with major
pharmaceutical companies; and (4) work to develop other promising compounds
in-house and in collaboration with third parties such as its current Licensors
at NYU and the NIA, and through corporate joint ventures with companies such as
Ares Serono International, S.A., a subsidiary of which signed a Development
Agreement and Right to License Agreement with Axonyx in May 1999. Axonyx intends
to develop other corporate partnerships with established and well capitalized
pharmaceutical companies for the clinical development of its compounds and for
their production, commercialization and marketing. The Company expects to derive
its revenues from patent sub-licensing fees, royalties from pharmaceutical
sales, appropriate milestone payments, and research and development contracts.
In May 1999, the Company entered into a Development Agreement and Right
to License with a wholly owned subsidiary of Ares Serono International, S.A., a
Swiss pharmaceutical company, ("Ares Serono"). Under the agreement Ares Serono
is undertaking research on the AIPs and PIPs for a one year term, with a right
to sublicense Axonyx's patent rights to the AIPs and the PIPs. In addition to
pursuing significant new research on the AIPs and PIPs, Ares Serono paid Axonyx
an up front fee for the right to sublicense. On May 2, 2000 Ares Serono informed
Axonyx that it is exercising its right to license under the Development
Agreement and the two companies are currently negotiating the final terms of a
licensing agreement. Under a licensing agreement Ares Serono would continue the
research and development of the AIP & PIP technologies initiated during the term
of the Development Agreement. Any patent rights or know-how developed by Ares
Serono arising out of the conduct of the research shall revert to Axonyx if the
parties do not sign a licensing agreement.
On October 1, 1999 Axonyx Inc. signed a Sponsored Research Agreement
with the University of Melbourne (Australia). Under the Agreement, Axonyx
commits to fund a research project at the University of Melbourne to develop a
diagnostic test for Alzheimer's Disease. Axonyx undertakes to fund this research
for a three year period for approximately $60,000 per year. Each party will own
the resulting intellectual property as tenants in common in equal shares. Axonyx
also undertakes to pay the expenses associated with the filing and prosecution
of any patent applications covering the intellectual property resulting from the
research project. In addition, the University of Melbourne granted Axonyx an
option to acquire an exclusive worldwide license to the intellectual property or
patent resulting from the research project, and to an existing patent
application covering an Alzheimer's Disease diagnostic test on basic licensing
terms outlined in the Sponsored Research Agreement.
If the Company signs a licensing agreement with Ares Serono, it will
receive a $1.5 million fee within thirty days. There can be no assurance that
additional revenues from patent licensing or research and development contracts
will be generated in fiscal year 2000.
<PAGE>
RESULTS OF OPERATIONS
Since the commencement of operations of its predecessor in January 1997,
the Company's efforts have been principally devoted to research and development
of its licensed pharmaceutical compounds, corporate consolidation, and raising
capital.
For the three months ended March 31, 2000, the Company recognized revenue
in the amount of $63,000 in connection with Development Agreement and Right to
License with Ares Serono.
For the three months ended March 31, 2000 the Company incurred a loss from
operations of $947,000 compared to a loss from operations of $889,000 for the
three months ended March 31, 1999. The increase is due to additional research
and development activities and an increase in general and administrative
expenses. The Company expects to incur additional losses for the foreseeable
future.
For the three months ended March 31, 2000 the Company incurred research and
development costs of $614,000 compared to $520,000 for the three months ended
March 31, 1999. The increase is due primarily to the hiring of a scientific
director, an increase in research activities, offset by a decrease in charges
associated with the issuance of common shares to New York University and certain
scientists.
For the three months ended March 31, 2000 the Company incurred general and
administrative costs of $396,000 compared to $369,000 for the three months ended
March 31, 1999. The increase is due to hiring employees, and an overall increase
in costs due to the Company's commencement of activities associated with patent
support, investor relations and marketing the Company's research and development
activities.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000, the Company had $4,873,000 in cash and cash
equivalents. To maximize potential yields, the Company has made investments in
bonds in the amount of $3,800,000. These bonds are long term and are subject to
the risks associated with changes in interest rates and other related risks. The
Company does not have any available lines of credit. Since inception the Company
has financed its operations through loans from a shareholder, licensing
revenues, and from private placements of equity securities.
The Company estimates that it currently has sufficient capital
resources to meet its budgetary needs for the next twelve months ending March
2001. The Company received $4.76 million total gross proceeds from its equity
private offering of units that terminated on February 1, 2000. The Company filed
a registration statement on Form SB-2 on May 3, 2000 to register 1,060,000
shares of common stock, of which 1,005,000 shares are issuable upon exercise of
common stock purchase warrants at $3.75 per share, and is pursuing sub-licensing
and other collaborative arrangements that may generate additional capital for
the Company. However, there can be no assurance that the Company will generate
additional revenues, that a significant number of warrant holders will exercise
their warrants, or that potential financings through bank borrowings, debt or
equity offerings, or otherwise, will be available on acceptable terms or at all.
<PAGE>
SUBSEQUENT EVENTS
On April 3, 2000 the shares of common stock of Axonyx began trading on
the Nasdaq SmallCap Market under the stock symbol AXYX. Prior to that date the
shares of common stock of Axonyx were traded on the OTC Bulletin Board.
On May 3, 2000 the Company filed a registration statement on Form SB-2
to register 1,060,000 shares of common stock, of which 1,005,000 shares are
issuable upon exercise of common stock purchase warrants at $3.75 per share.
On May 5, 2000, the Company notified the holders of warrants to
purchase 1,005,000 shares of common stock that the Company is calling the
warrants for exercise. Under the call provision of the warrants the Company has
the right to call the warrants for exercise if the average closing bid price for
the Company's common stock is equal to or greater than $7.50 for any consecutive
period of thirty days. Under the call notice, the holders were notified that
they must exercise the warrants prior to May 26, 2000. This call period was
subsequently extended by the Board to 11:59 p.m. Pacific Standard Time on June
9, 2000. Any warrants outstanding after that date will be terminated. The
warrants were issued in a private placement of units in 1998 and are exercisable
at $3.75 per share. The shares underlying the warrants are covered by a
registration statement filed by the Company on May 3, 2000.
IMPACT OF THE YEAR 2000 ON COMPANY RESEARCH AND DEVELOPMENT
There has been no adverse effect on the computers, software and other
equipment utilizing microprocessors of Axonyx, its licensors and collaborating
research facilities related to the year 2000 date change. Axonyx and these other
third parties took steps to insure that their operations were not adversely
affected by Year 2000 software failures.
YEAR 2000 IMPACT ON INTERNAL BUSINESS OPERATIONS
There has been no adverse effect on Axonyx's computer software programs
and operating systems used in its internal operations due to the year 2000 date
change. The Company verified that these software programs and operating systems
are year 2000 compliant with operating ranges well beyond that date.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Between November 1, 1999 and February 1, 2000, the Company undertook an
equity offering of units in Europe to a limited number of accredited and
otherwise qualified investors based on their financial resources and knowledge
of investments, with each unit priced at $25,000 per unit (the "November 1999
Offering"). Each unit ("Unit") consists of 4,000 shares of common stock, par
value $0.001, and 2,000 Stock Purchase Warrants (the "Warrants") at a price of
$25,000 per Unit. Each Warrant entitles the holder to purchase one share at a
price of $11.00 until their expiration on August 1, 2004. As of February 1,
2000, the termination date of the private offering, the Company had sold 190.5
Units. Axonyx received gross proceeds of
<PAGE>
$4,762,500 in the November 1999 Offering. The issuance of securities in this
private offering is exempt from the registration requirements of the
Securities Act pursuant to Regulation D, Rule 506 of the Securities Act.
On January 21, 2000 Dr. Blas Frangione exercised certain options
granted under an Option Agreement dated April 3, 1997. Axonyx issued 75,473
shares of common stock to Dr. Frangione upon exercise of the options. The
issuance of the securities was exempt from the registration requirements of the
Securities Act pursuant to the exemption set forth in Section 4(2).
On February 10, 2000, New York University exercised certain options
granted under an Option Agreement dated April 3, 1997. Axonyx issued 150,944
shares of common stock to NYU upon exercise of the options. The issuance of the
securities was exempt from the registration requirements of the Securities Act
pursuant to the exemption set forth in Section 4(2).
On April 20, 2000, Axonyx issued an aggregate of 36,800 shares of
common stock and warrants to purchase 18,400 shares of common stock to three
non-U.S. corporations. The securities were issued to these firms pursuant to
Finder's Agreements with each firm in relation to the November 1999 Offering.
Each warrant entitles the holder to purchase one share at a price of $11.00
until their expiration on August 1, 2004. The issuance of the securities was
exempt from the registration requirements of the Securities Act pursuant to the
exemption set forth in Section 4(2).
On April 20, 2000, Axonyx issued 2,800 shares of common stock and
warrants to purchase 1,400 shares of common stock to an individual pursuant to a
Finder's Agreement in relation to the November 1999 Offering. Each warrant
entitles the holder to purchase one share at a price of $11.00 until its
expiration on August 1, 2004. The issuance of the securities was exempt from the
registration requirements of the Securities Act pursuant to the exemption set
forth in Section 4(2).
On April 27, 2000, Axonyx issued 30,000 shares of common stock to
Intertrend Management Ltd. upon the exercise of options granted to Intertrend
pursuant to a Stock Option Agreement dated January 5, 1999. The issuance of the
securities was exempt from the registration requirements of the Securities Act
pursuant to the exemption set forth in Section 4(2).
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K.
The following exhibits are filed as part of this report:
27.1 Financial Data Schedule
(b) Reports on 8-K
None.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AXONYX INC.
By: /s/ Marvin S. Hausman, M.D.
-------------------------------------------
Marvin S. Hausman, M.D.
President and Chief Executive Officer
By: /s/ Michael M. Strage
-------------------------------------------
Michael M. Strage
Treasurer and Principal Financial and
Accounting Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 4,873,000
<SECURITIES> 3,800,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,898,000
<PP&E> 28,000
<DEPRECIATION> 4,000
<TOTAL-ASSETS> 8,749,000
<CURRENT-LIABILITIES> 213,000
<BONDS> 0
0
0
<COMMON> 14,000
<OTHER-SE> 8,522,000
<TOTAL-LIABILITY-AND-EQUITY> 8,749,000
<SALES> 0
<TOTAL-REVENUES> 63,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 614,000<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (905,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (905,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (905,000)
<EPS-BASIC> (.07)
<EPS-DILUTED> (.07)
<FN>
<F1>Research and Development.
</FN>
</TABLE>
