<PAGE>
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF A FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 2000
GEMINI GENOMICS PLC
(Translation of registrant's name into English)
162 SCIENCE PARK,
MILTON ROAD,
CAMBRIDGE,
CB4 OGH.
ENGLAND
(address of principal executive offices)
(Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.)
FORM 20-F X FORM 40-F
(Indicate by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
YES NO X
(If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2 (b): N/A)
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1 Financial statements - Unaudited
Consolidated Balance Sheets at September 30, 2000 and March 31, 2000
Consolidated Statements of Operations for the three month and six month
periods ended September 30, 2000 and 1999, and for the period from
September 11, 1995 (inception) to September 30, 2000
Consolidated Statement of Cash Flows for the six month periods ended
September 30, 2000 and 1999, and period from September 11, 1995
(inception) to September 30, 2000
ITEM 2 Management's discussion and analysis of financial condition and results
of Operation
ITEM 3 Market risk
PART II OTHER INFORMATION
ITEM 1 Issue of share options
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
GEMINI GENOMICS PLC.
(a development stage company)
Condensed Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
September 30, March 31,
2000 2000
------------- ------------
(unaudited) (*)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 90,028 $ 13,414
Accounts receivable - 88
Inventories 330 179
Prepaid expenses and other 1,112 665
------------- ------------
Total current assets 91,470 14,346
Property, plant and equipment, net 2,373 2,641
Goodwill and other intangible assets, net 4,373 5,249
------------- ------------
Total assets $ 98,216 $ 22,236
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank loans $ 176 $ 243
Accounts payable 2,613 2,487
Accrued liabilities 3,065 3,626
Current portion of capital lease obligations 810 1,005
------------- ------------
Total current liabilities 6,664 7,361
Capital lease obligations 2,330 2,912
Other noncurrent liabilities 0 75
------------- ------------
Total liabilities 8,994 10,348
------------- ------------
Commitments and contingencies:
Shareholders' equity:
Ordinary shares 5,212 4,192
Additional paid in capital 132,963 48,954
Deferred compensation (1,903) (2,611)
Notes receivable from shareholders - (40)
Accumulated other comprehensive loss (1,313) (414)
Deficit accumulated during the development stage (45,737) (38,193)
------------- ------------
Total shareholders' equity 89,222 11,888
============= ============
Total liabilities and shareholders' equity $ 98,216 $ 22,236
============= ============
</TABLE>
(*) The balance sheet at March 31, 2000 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
<PAGE>
GEMINI GENOMICS PLC.
(a development stage company)
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended Period from
September 30, September 30, September 11,
2000 1999 2000 1999 1995 (inception)
to September 30, 2000
--------------------------- ------------------------ -------------
<S> <C> <C> <C> <C> <C>
Revenue $ 0 $ 0 $ 0 $ 115 $ 362
Costs and expenses
Costs of revenue - - - 25 25
Research and development 2,945 1,329 5,877 3,162 32,853
Marketing, general and administrative 1,540 915 3,319 1,758 14,100
Amortisation of goodwill 258 - 525 - 836
-------------------------- ------------------------ ------------
Total costs and expenses $ 4,743 $ 2,244 $ 9,721 $ 4,945 $ 47,814
-------------------------- ------------------------ ------------
Loss from operations (4,743) (2,244) (9,721) (4,830) (47,452)
Interest income 979 104 1,116 216 2,046
Interest expense (127) (122) (261) (180) (1,653)
Foreign currency gain 1,322 - 1,322 - 1,322
-------------------------- ------------------------ ------------
Net loss $ (2,569) $ (2,262) $ (7,544) $ (4,794) $ (45,737)
========================== ======================== ============
Basic and diluted net loss per share $ (0.04) $ (0.11) $ (0.14) $ (0.24) $ (2.53)
========================== ======================== ============
Basic and diluted net loss per ADS $ (0.08) $ (0.23) $ (0.28) $ (0.48) $ (5.06)
========================== ======================== ============
Shares used in computing basic and
diluted net loss per share and per ADS 60,350,165 20,000,000 55,622,693 20,000,000 18,092,797
========================== ======================== ============
</TABLE>
<PAGE>
GEMINI GENOMICS PLC.
(a development stage company)
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Period from
For the six months ended September 11 1995
September 30, (inception)
2000 1999 to September 30, 2000
------------------------- ---------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (7,544) $ (4,794) $ (45,737)
Adjustments to reconcile operating loss to net
cash used in operating activities:
Depreciation and amortisation 1,588 510 4,611
Non-cash consideration - - 2,736
Changes in operating assets & liabilities (547) 76 2,759
------------------------- -------------
Net cash used in operating activities (6,503) (4,208) (35,631)
INVESTING ACTIVITIES:
Purchases of plant, property & equipment (498) (194) (4,441)
Purchase of Eurona - - (19)
------------------------- -------------
Net cash used in investing activities (498) (194) (4,460)
FINANCING ACTIVITIES:
Proceeds of capital lease obligations - 1,838 8,005
Payments of capital lease obligations (505) (1,279) (4,441)
Proceeds from issuance of ordinary and preferred ordinary
shares, net of issuance costs 86,530 - 128,638
Loans (repaid) received (121) - 122
------------------------- -------------
Net cash provided by financing activities 85,904 559 132,324
Effect of exchange rate change on cash and cash equivalents (2,289) 125 (2,205)
Net increase/(decrease) in cash and cash equivalents 76,614 (3,718) 90,028
Cash and cash equivalents, end of period 13,414 12,165 -
------------------------- ------------
Cash and cash equivalents, beginning of period $ 90,028 $ 8,447 $ 90,028
========================= =============
</TABLE>
<PAGE>
GEMINI GENOMICS PLC.
(a development stage company)
Notes to the Condensed Consolidated Financial Statements (unaudited)
1. BASIS OF PRESENTATION
The unaudited consolidated financial statements of Gemini Genomics plc.
(Gemini or the Company) reflect, in the opinion of management, all adjustments,
consisting only of normal and recurring adjustments, necessary to present fairly
the Company's consolidated financial position at September 30, 2000 and the
Company's consolidated results of operations for the three-month and six-month
periods ended June 30 and September 30, 2000 and 1999. Interim-period results
are not necessarily indicative of results for any future interim period or of
operations or cash flows for a full-year period.
The year-end balance sheet data were derived from audited financial
statements, but do not include all disclosures required by generally accepted
accounting principles.
The consolidated financial statements include the accounts of the
Company's wholly-owned subsidiaries. Although the Company believes that the
disclosures in these financial statements are adequate to make the information
presented not misleading, certain information and footnote information normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission.
These financial statements and the notes accompanying them should be
read in conjunction with the Company's registration statement on Form F-1 filed
with the SEC on July 26, 2000. Stockholders are encouraged to review the Form
F-1 for a broader discussion of the Company's business and the opportunities and
risks inherent in the Company's business. Copies of the Form F-1 are available
from the Company on request.
2. ACQUISITION OF EURONA MEDICAL AB
On December 17, 1999, the Company completed the acquisition of Eurona
Medical AB (Eurona), a Swedish pharmacogenetics company. The Company assumed all
of the liabilities of Eurona and acquired all of its ordinary shares in exchange
for 1,820,180 preferred ordinary shares and $19,000 in cash. Including direct
acquisition costs of $186,000, the total purchase price was $4.9 million.
The acquisition was accounted for using the purchase method. Under the
purchase method of accounting, the aggregate acquisition cost is allocated to
the acquired company's assets and liabilities, based on the fair values on the
date of acquisition. Included within the liabilities assumed is $600,000
relating to termination costs of a number of employees (see below).
In purchasing Eurona, the Company obtained access to clinical
collaborators. The total spent by Eurona since inception on research and
development at the date of acquisition was approximately $8.9 million. Eurona
had raised a total of approximately $13.3 million in equity finance prior to
acquisition by the Company, but had not succeeded in commercializing its
business model.
The Company has performed a review of the research projects being
undertaken by Eurona and determined that none of the projects have economic
value as none of the research projects undertaken by Eurona will be pursued.
Consequently, in allocating the acquired assets and liabilities, no value has
been assigned to acquired in-process research and development and the full cost
of $4.9 million was recorded as goodwill and other intangibles and is being
amortised over its expected useful economic life of 5 years. The results of
operations of Eurona have been included in the consolidated results of the
company from the date of acquisition in December 1999.
The Company made a $0.6 million provision in respect of the termination
costs of 35 employees (largely executive, managerial and support staff) under an
integration plan approved in December 1999. These costs all related to salaries
and benefits due, and employment costs arising within these 35 employees' notice
periods. A total of $0.5 million of termination benefits have been paid, of
which $0.2 million were paid in the period to 30 September 2000, leaving a $0.1
million provision at 30 September 2000. The Company also realigned the research
focus of
<PAGE>
Eurona although the only activities terminated were those of the executive
functions.
The table below presents the pro forma results of operations and
earnings per share for the combined results of Eurona and the Company for the
three months ended June 30, 1999 and the six months ended September 30, 1999
assuming that the transactions was completed on April 1, 1999.
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months Six months
ended September ended September
30, 1999 30, 1999
-----------------------------------
<S> <C> <C>
Revenues $ 0 $ 21
Net loss (4,914) (9,694)
Pro forma basic and diluted net loss per share $ (0.23) $ (0.44)
Pro forma basic and diluted net loss per ADS $ (0.45) $ (0.89)
Pro forma shares for basic and diluted net loss per share 21,820,180 21,820,180
</TABLE>
3. REVENUE RECOGNITION
Revenues are earned from services pursuant to customer licensing
agreements. Non-refundable license fees and advance royalties are recognized as
revenues when no further performance obligations exist. Where license fees and
other non-refundable payments are received in connection with research
collaboration agreements, the payments are deferred and recognized on a straight
line basis over the relevant period specified in the agreement. Milestone fees
are recognized on completion of specified milestones according to contract terms
and when no further performance obligations exist.
4. FOREIGN CURRENCY GAINS
During the three and six months ended September 30, 2000, foreign
currency gains amounted to $1.3 million, arising entirely within the three
months to September 30. No gains or losses were recorded during the equivalent
periods in 1999. The gain in 2000 arose from the foreign currency effects of
translating the funds received from our IPO in US dollars into British pounds,
our functional currency, at the date of IPO and back into US dollars for
reporting purposes at September 30, 2000. The possible future effects of foreign
currency gains or losses are discussed further under Item 2, Management
Discussion, and Item 3, Market Risk, below.
5. COMPREHENSIVE LOSS
During the three and six months ended September 30, 2000 and 1999,
total comprehensive loss amounted to $5,506,000, $8,443,000, $2,724,000, and
$5,144,000, respectively.
6. SEGMENT INFORMATION
Effective January 1998, the Company adopted SFAS No. 131, Disclosure
about the Segments of an Enterprise and Related Information. The Company has
determined it operates in only one segment for the following reasons: the
Company's principle product offering is the discovery of disease genes, and all
other product offerings are ancillary to this; the Company's chief operating
decision maker reviews the Company's results as a single entity; to date,
essentially all of the Company's efforts have been directed towards discovery of
disease genes and this is expected to remain the Company's focus for the
foreseeable future.
7. OFFERING OF ORDINARY SHARES IN THE FORM OF AMERICAN DEPOSITARY SHARES
The Company received net proceeds of $78.12 million from the issuance
of 12,000,000 ordinary shares in the form of ADSs on July 26, 2000, and a
further
<PAGE>
net $11.72 million from the issuance of 1,800,000 ordinary shares in the form of
ADSs on August 23, 2000 as a result of the adoption by the underwriters of their
over allocation option.
8. OPERATING LEASE COMMITMENTS
On July 31, 2000, the Company signed a 10 year operating lease for $475,000 per
year on 12,000 sq. ft. of office space in Newton, Ma., to house the US marketing
and investor relations operation. The Company has approval from the landlords to
sub-let half of this space. The landlords required a stand-by letter of credit
amounting to $951,000 to secure the lease. This letter of credit is supported by
a charge over an equivalent amount held in an interest-bearing bank account.
Item 2. Management's discussion and analysis of financial condition and results
of operations
Forward looking statements
Some statements contained in this report are forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and within
the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.
Discussions about the following include forward-looking statements:
- the Company's strategy;
- sufficiency of the Company's cash resources;
- revenues from existing and new collaborations;
- product development;
- effects of foreign currency transactions;
- the Company's research and development and other expenses; and
- the Company's operational and legal risks.
These statements involve risks and uncertainties. Actual results may
differ materially from those expressed or implied in those statements. In
evaluating such statements stockholders and investors should specifically
consider a number of factors and assumptions including those discussed in our
registration statement on Form F-1 filed with the Securities and Exchange
Commission on July 26, 2000.
Company overview
Gemini is a clinical genomics company that identifies relationships
between human genes and common human diseases. We focus on developing our
clinical information and genetic sample resources together with our
bioinformatics, information technology and laboratory capabilities and we have
also established technology alliances with Large Scale Proteomics, CuraGen and
Sequenom.
SIGNIFICANT CONTRACTS
Technology Alliances
In February 1999, we entered into a collaboration agreement with Large Scale
Biology. Under this agreement, we provide serum samples and clinical data
from selected identical twin pairs and Large Scale Biology applies its
proprietary protein analysis. This collaboration has successfully isolated in
excess of 70 proteins associated with the development of major chronic
diseases, including osteoporosis, osteoarthritis, obesity, diabetes, and
cardiovascular disease and patent applications were filed in September 2000.
Validation work will be carried out under this collaboration, and, if
completed successfully, these proteins could be novel therapeutics and
diagnostics in the identified disease areas. The discoveries have also formed
the basis of a patent filing covering
<PAGE>
possible applications in all the above areas. Each company is responsible for
its own costs under the project and we have not incurred material costs under
this agreement. When, and if, discoveries made under the collaboration are
commercialized, each company is required to make payments to the other
according to the nature of the product and its commercialization. The
agreement terminates when neither party is required to make further payments
thereunder. Large Scale Biology may terminate the agreement if it provides
notice within 120 days of the parties' decision not to proceed with the
project. Either party may terminate the collaboration agreement if there is a
material breach by the other that is not cured. No payments have been
received or made to date.
In September 1999, we entered into a collaboration agreement with
Celera to jointly search for novel gene discoveries. Under this agreement, we
provide fine-mapped chromosomal regions relating to one or a number of common
diseases, and Celera performs high-throughput sequencing genotyping and
additional analysis of these regions. Each company is responsible for their
own research costs. We will jointly own with Celera Genomics any gene
discoveries from this collaboration and will share equally with Celera
Genomics revenues received from licensing of such gene discoveries. All costs
of exploitation of gene discoveries will be shared equally by the Company and
Celera Genomics. The agreement terminates in September 2001. To date we have
not incurred material costs under this agreement.
In March 2000, we entered into separate collaboration agreements
with CuraGen and Sequenom. Under these agreements, we provide clinical data
and DNA samples and CuraGen and Sequenom provide genetic analysis of the
samples. Each company is responsible for its own costs, although we will
reimburse CuraGen and Sequenom for a portion of their costs. We have not
incurred material costs under the agreements to date, and we do not expect to
incur material cost reimbursement in future years. No minimum funding
commitments are defined in the agreements. Revenues arising from the
agreements will be shared between the Company and CuraGen or Sequenom. The
agreements with both CuraGen and Sequenom are each for an initial term of two
years.
In October 2000, we entered into a new drug target discovery
collaboration with CuraGen, which includes the application of CuraGen's
PathCalling(R) proteomic technology for the purpose of rapidly ascertaining
the biological context of disease associated genes. This collaboration will
allow the identification of potential therapeutic intervention points by
examining interactions between proteins within biochemical pathways. It is
anticipated that this collaborative research will enable Gemini and CuraGen
to identify key targets for drug discovery. The parties will jointly own
intellectual property arising from this collaboration. We have not incurred
material costs under the agreement to date, and we do not expect to incur
material cost reimbursement in future years. No minimum funding commitment is
defined in the agreement. Revenues arising from the agreement will be shared
between the Company and CuraGen. The agreement is for an initial term of two
years.
In November 2000, we entered into a discovery partnership with
Rosetta Inpharmatics to indentify and characterise sets of genes associated
with common human diseases. This reseach will initially focus on analysis of
RNA collected from Gemini's clinical populations to identify associations
between the most active genes and the risk or presence of common diseases,
which will result in tens of thousands of genes being screened over the
course of the collaboration. Gemini and Rosetta will each fund their
respective contributions and any intellectual property arising will be
jointly owned. It is intended to commercialise the results of this
collaboration by licensing the rights to third parties interested in the
development of gene-based therapeutics and diagnostic products.
License Agreements
We have entered into license agreements with Affymetrix and
Axis-Shield for the use of the Company's patents and patent applications
relating to the COL1A1 gene in the diagnosis of osteoporosis. Under these
agreements, the Company receives license fees and will potentially receive
royalties. Through September 30, 2000, the Company has received license fees
of $100,000 under the agreement with Affymetrix and $78,000 under the
agreement with Axis-Shield, which were reported in prior years. The license
agreements terminate upon the expiration of the patents relating to the
COL1A1 disease gene. In addition, we may terminate the Affymetrix license
agreement for an uncured material breach and may terminate the Axis-Shield
agreement for an uncured material breach or if Axis-Shield does not pay
royalties within 90 days of their being due.
Clinical Collaborations
We have entered into a number of agreements with clinical
collaborators, based at various universities and hospitals. Under these
agreements, we pay either an amount per item of clinical data provided, or an
annual fee. The maximum annual amount payable on any of the existing contracts
is approximately $800,000 and the annual aggregate cost is approximately $4.0
million.
The contracts vary in length with the last due to expire in December 2003.
REVENUES
We recorded no revenues in the three and six months ended September
30, 2000, compared to revenues of $115,000 in the three and six months ended
September 30, 1999. Our revenues in the six months ended September 30,1999
arose from the first licensing of our osteoporosis gene association patent
for diagnostic applications.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses for the three and six months
increased to $2.9 and $5.9 million, respectively, from $1.3 and $3.2 million for
the same
<PAGE>
periods in 1999. These expenses relate to clinical collaborators, salaries for
research and development personnel, external scientific advisors and laboratory
costs. The increase for the six months related to a $1.2 million increase in
internal research and development activity following the acquisition of Eurona
together with additional expenditure of $1.5 million in our research and
development program, including the commencement of activities with Newfound
Genomics Inc. We expect research and development expenses to increase in the
foreseeable future as a result of expansion in the clinical data collection
operations, further development of bioinformatics and statistical analysis
capabilities and analysis of genetic samples collected.
MARKETING, GENERAL AND ADMINISTRATIVE EXPENSES
Marketing, general and administrative expenses for the three and six
months ended June, 30 and September, 30 2000 increased to $1.5 and $3.3
million, respectively, from $0.9 and $1.8 million in the same periods last
year. These expenses consisted primarily of employment and facilities costs
and other expenses incurred by our business development, information
technology, finance and various support functions. This six month increase
related to $0.5 million of acquired activities, $0.8 million of additional
expenses relating to increased marketing activities, largely being additional
personnel, travel and material costs in business development, and $0.2
million of additional stock based compensation amortisation. We expect that
marketing, general and administrative expenses will increase throughout the
year due to the establishment of a corporate office, marketing and investor
relations facility in the USA, expanded IT support functions and increases in
personnel to support the Company's growing activity.
INTEREST INCOME (EXPENSE)
Net interest income (expense) in the three and six months ended
September 30, 2000, respectively, was $852,000 and $855,000, rising from
($18,000) and $36,000 for the same periods in 1999. The large increase over
the quarter ended September 30, 2000 was due to interest received on the
proceeds of the IPO undertaken in that period.
FOREIGN CURRENCY GAINS
The functional currency of our operating subsidiaries are British
pounds and Swedish kronor. In accordance with SFAS No. 52, Foreign Currency
Translation Swedish kronor are translated to British pounds for balance sheet
accounts using the exchange rate in effect at the balance sheet date and for
revenues and expense accounts at the average exchange rate during the period.
The effects of translation are recorded as a separate component of shareholders'
equity. We translate our consolidated financial statements from British pounds,
our functional currency, to U.S. dollars, for reporting purposes. Fluctuations
in the rate of exchange of the British pound relative to the U.S. dollar will
affect period-to-period comparisons of the reported results.
The net effect of currency translations in the three and six months
ended September 30, 2000 was a gain of $1.3 million and $1.3 million
respectively, rising from $0 in the same periods in 1999. The gain was a result
of US dollar denominated cash accounts and investments converted to our
functional currency, the British pound.
We have not taken any action to reduce our exposure to changes in
foreign currency exchange rates, such as options or futures contracts, with
respect to any transactions.
LIQUIDITY AND CAPITAL RESOURCES
We have financed operations since inception primarily through the
placement of equity securities. Since inception, the Company has raised
$128.6 million of equity from shareholders, including the net proceeds from
our initial public offering on July 26, 2000 and the exercise by the
underwriters of their over allotment option on August 23, 2000. In addition,
the Company entered into a number of capital lease agreements totalling $8.0
million to finance the acquisition of scientific and computer equipment. As
of September 30, 2000, capital repayments made on these leases totalled $4.4
million.
As of September 30, 2000 we had cash and cash equivalents of $90.0
million compared to cash and cash equivalents of $13.4 million at March 31,
2000. This
<PAGE>
increase of $76.6 million reflects the $86.5 million of net IPO proceeds, offset
by $6.5 million of cash operating expenses, $0.5 million of capital equipment
investment, $0.6 million of debt repayments, and exchange rate losses of $2.3
million. Company funds are invested in British pound and US dollar term deposits
with Barclays Bank plc, in British pound liquidity funds with Barclays Global
Investors, and in US dollar liquidity funds with Merrill Lynch, Barclays Global
Investors, and Chase Manhattan Vista Funds.
We established a $5.0 million line of credit for capital equipment
financings with Hewlett Packard International Bank in February 2000. We have
drawn a total of $2.0 million against this line of credit. Interest is repayable
quarterly at 10.7% per annum over the four year period of the lease, which has a
capital repayment holiday for the first 18 month period. We have no commitments
for any additional financings. In connection with entering into this line of
credit, we granted Hewlett Packard International Bank warrants to purchase
40,000 ordinary shares The Company has agreed to grant them additional warrants
to purchase up to 80,000 additional ordinary shares. Hewlett Packard
International Bank has until February 21, 2003 to exercise its outstanding
warrants and may do so by providing notice of its intention to exercise the
warrants as well as by paying an exercise price of (pound)0.05 ($0.08) per
ordinary share.
We expect our cash and cash equivalents, together with operational and
interest income earned, to be sufficient to fund operations for at least the
next 12 months. The adequacy of the available funds will depend on many factors,
including the scientific progress of our research and development programs, the
magnitude of those programs, commitments to existing and new clinical
collaborators, our ability to establish commercial and licensing arrangements,
capital expenditure, market developments and any future acquisitions.
Accordingly, we may require additional funds and may attempt to raise additional
funds through equity or debt financings, collaborative agreements with
commercial partners or from other sources.
Item 3 Market Risk
INTEREST RATE RISK
The primary objective of our investment activities is to preserve
capital while at the same time maximizing the income received from investments
without significantly increasing risk. We currently maintain a portfolio of cash
and cash equivalents by investing in term deposits of varying lengths, between
one day and one year, and in liquidity funds offering instant access and
variable interest rates. Due to the short term nature of these investments, we
believe we have no material exposure to interest rate risk arising from
investments.
EXCHANGE RATE RISK
The funds raised in US dollars from our initial public offering are
held in US dollar denominated investments. As our functional currency is the
British pound, we translate the US dollar denominated investments into British
pounds and record a gain or loss in the financial statements. A strengthening of
the British pound against the US dollar could result in a material increase in
the loss for any given financial period. The company has made significant
foreign currency gains in the quarter to September 30, 2000, but this gain
should not be seen as any indicator of future financial performance in this
area. Based on the cash balances on hand at September 30, 2000, the effect of
future currency fluctuations could be as follows:
<TABLE>
<CAPTION>
OPENING EXCHANGE CLOSING EXCHANGE PERCENTAGE CHANGE EXCHANGE GAIN /
RATE (US$:GBP) RATE (US$:GBP) IN EXCHANGE RATE (LOSS) IN PERIOD
($'000S)
<S> <C> <C> <C>
1.4785 1.5081 2% (1,729)
1.4785 1.4933 1% (869)
1.4785 1.4785 0% 0
1.4785 1.4637 -1% 877
1.4785 1.4489 -2% 1,764
</TABLE>
<PAGE>
We have undertaken no action to reduce our exposure to changes in
foreign currency exchange rates, such as options or futures contracts, with
respect to any transactions or investments.
PART II Other information
ISSUE OF SHARE OPTIONS
On July 26, 2000 we granted share options under our International
Executive Share Option Plan, Company Share Option Plan part B and individual
share option agreements giving the right to acquire a total of 1,179,906 ADSs
(2,359,812 ordinary shares) at an exercise price of $14 (the price at public
offering). 1,008,718 of these options have already vested and are subject to a
lock-up agreement preventing option holders from selling or otherwise disposing
of any ADSs for a period of 180 days from July 25, 2000. 85,594 of the remaining
options vest on July 26, 2001, with the final 85,594 vesting on July 26, 2002.
In aggregate, 901,550 of these options (1,803,100 ordinary shares) were granted
to directors and officers of the company.
Further details of the share option schemes operated by the company can
be found in our registration statement on Form F-1 filed with the Securities and
Exchange Commission on July 26, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GEMINI GENOMICS PLC
(Registrant)
Date: November 13, 2000 By: /s/ Paul J. Kelly
Dr. Paul J Kelly
Chief Executive Officer
