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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 June 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)
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PART I FINANCIAL INFORMATION
ITEM 1 Financial statements - Unaudited
Consolidated Balance Sheets at June 30, 2000 and March 31, 2000
Consolidated Statements of Operations for the three month periods
ended June 30, 2000 and 1999, and for the period from September 11,
1995 (inception) to June 30, 2000
Consolidated Statement of Cash Flows for the three month periods
ended June 30, 2000 and 1999, and period from September 11, 1995
(inception) to June 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
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
GEMINI GENOMICS PLC.
(a development stage company)
Condensed Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
June 30, March 31,
2000 2000
-------------- --------------
(unaudited) (*)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,370 $ 13,414
Accounts receivable 26 88
Inventories 103 179
Prepaid expenses and other 1,000 665
-------------- --------------
Total current assets 8,499 14,346
Property, plant and equipment, net 2,491 2,641
Goodwill and other intangible assets, net 4,742 5,249
-------------- --------------
Total assets $ 15,732 $ 22,236
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank loans $ 239 $ 243
Accounts payable 1,545 2,487
Accrued liabilities 3,768 3,626
Current portion of capital lease obligations 864 1,005
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Total current liabilities 6,416 7,361
Capital lease obligations 2,548 2,912
Other noncurrent liabilities 14 75
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Total liabilities 8,978 10,348
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Commitments and contingencies:
Shareholders' equity:
Ordinary shares 4,192 4,192
Additional paid in capital 48,954 48,954
Deferred compensation (2,251) (2,611)
Notes receivable from shareholders (28) (40)
Accumulated other comprehensive loss (945) (414)
Deficit accumulated during the development stage (43,168) (38,193)
-------------- --------------
Total shareholders' equity 6,754 11,888
============== ==============
Total liabilities and shareholders' equity $ 15,732 $ 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.
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GEMINI GENOMICS PLC.
(a development stage company)
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
<TABLE>
<CAPTION>
Period from
Three months ended September 11,
June 30, 1995 (inception)
2000 1999 to June 30, 2000
------------------------- ----------------
<S> <C> <C> <C>
Revenue 0 $ 115 $ 362
Costs and expenses
Costs of revenue 0 25 25
Research and development 2,932 1,833 29,908
Marketing, general and administrative 1,780 843 12,561
Amortisation of goodwill 267 0 578
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Total costs and expenses $ 4,979 $ 2,701 $ 43,072
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Loss from operations (4,979) $ (2,586) (42,710)
Interest income 138 112 1,067
Interest expense (134) (58) (1,525)
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Net loss $ (4,975) $ (2,532) $ (43,168)
========================= =============
Basic and diluted net loss per share $ (0.10) $ (0.13) $ (2.72)
========================= =============
Basic and diluted net loss per ADS $ (0.20) $ (0.25) $ (5.44)
========================= =============
Shares used in computing basic and
diluted net loss per share and per ADS 50,895,220 20,000,000 15,863,542
========================= =============
</TABLE>
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GEMINI GENOMICS PLC.
(a development stage company)
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Period from
For the three months ended September 11, 1995
June 30, (inception)
2000 1999 to June 30, 2000
-------------------------- ----------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Operating loss $ (4,975) $ (2,532) $ (43,168)
Adjustments to reconcile operating loss to net
cash outflow:
Depreciation and amortisation 873 237 3,896
Non-cash consideration 0 0 2,736
Changes in operating assets & liabilities (713) 160 2,593
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Net cash used in operating activities (4,815) (2,135) (33,943)
INVESTING ACTIVITIES:
Purchases of plant, property & equipment (261) (127) (4,204)
Purchase of Eurona 0 0 (19)
------------------------- -------------
Net cash used in investing activities (261) (127) (4,223)
FINANCING ACTIVITIES:
Proceeds of capital lease obligations 0 0 8,005
Payments of capital lease obligations (305) (344) (4,241)
Net proceeds of ordinary & preferred share issues 0 0 42,108
Loans (repaid)/received (48) 0 195
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Net cash provided by financing activities (353) (344) 46,067
Net increase/(decrease) in cash and cash equivalents (5,429) (2,606) 7,901
Effect of exchange rate change on cash and cash
equivalents (615) (236) (531)
Cash and cash equivalents, beginning of period 13,414 12,165 0
------------------------- -------------
Cash and cash equivalents, end of period $ 7,370 $ 9,323 $ 7,370
========================= =============
</TABLE>
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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 June 30,
2000 and the Company's consolidated results of operations for the three-month
periods ended June 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 June 2000, leaving a $0.1
million provision at 30 June 2000. The Company also realigned the research focus
of Eurona although the only activities terminated were those of the executive
functions.
The table below presents the pro forma results of operations and
earnings
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per share for the combined results of Eurona and the Company for the three
months ended June 30, 1999 assuming that the transactions was completed on
April 1, 1999.
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months
ended June 30,
1999
--------------
<S> <C>
Revenues $ 21
Net loss (4,773)
Pro forma basic and diluted net loss per share $ (0.22)
Pro forma basic and diluted net loss per ADS $ (0.44)
Pro forma shares for basic and diluted net income per share 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. COMPREHENSIVE LOSS
During the quarters ended June 30, 2000 and 1999, total comprehensive
loss amounted to $5,506,000 and $2,724,000, respectively.
5. 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.
6. 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. The initial
public offering pro-forma effect on earnings (loss) per ordinary share for the
quarter ending 30 June 2000 would be ($0.08) and per ADS of ($0.16), assuming
all 12,000,000 shares issued related to the public offering were outstanding for
the entire period.
7. OPERATING LEASE COMMITMENTS
On 31 July 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
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Some statements contained in this report on 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;
- 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 September 1999, we entered into a collaboration agreement with
Celera to jointly search for novel gene discoveries. Under this agreement, we
provides fine-mapped regions and Celera performs high-throughput sequencing 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.
In February 1999, we entered into a collaboration agreement with Large Scale
Proteomics. Under this agreement, we provide samples and clinical data from
selected identical twin pairs and Large Scale Proteomics conducts protein
analysis. Each company is responsible for its own costs under the project. 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 Proteomics 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 March 2000, we entered into separate collaboration agreements with
CuraGen and Sequenom. Under these agreements, we provides 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.
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 disease gene. Under these agreements, the Company receives license fees
and will potentially receive royalties. Through June 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. The license agreements terminate
upon the expiration of the patents relating to the COL1A1 disease gene. In
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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 quarter ended June 30, 2000, compared to
revenues of $115,000 in the quarter ended June 30, 1999. Our revenues in the
quarter ended June 30, 1999 arose from the first licensing of our osteoporosis
gene association patent.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses increased by $1.1 million to $2.9
million in the quarter ended June 30, 2000. These expenses relate to clinical
collaborators, salaries for research and development personnel, external
scientific advisors and laboratory costs. The increase related to a $0.7 million
increase in internal research and development activity following the acquisition
of Eurona together with additional expenditure of $0.4 million in our research
and development program. 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 increased by $1.0
million to $1.8 million in the quarter ended June 30, 2000 from $0.8 million in
the quarter ended June 30, 1999. 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
increase related to $0.3 million of acquired activities, $0.4 million of
additional expenses relating to increased marketing activities, largely being
additional personnel, travel and material costs in business development, $0.1
million of additional stock based compensation amortisation, and additional
headcount and travel costs following the recruitment of senior officers in the
quarters to June and September 1999 who where fully active during the quarter
ended June 30, 2000, amounting to $0.2 million. We expect that marketing,
general and administrative expenses will increase throughout the year due to the
establishment of a marketing and investor relations facility in the USA,
expanded IT support functions and increases in personnel to support the
Company's growing complexity.
INTEREST INCOME
Net interest income in the quarters ended June 30, 2000 and 1999,
respectively, was $4,000 and $54,000.
LIQUIDITY AND CAPITAL RESOURCES
We have financed operations since inception primarily through the
private placement of equity securities. Since inception, the Company has raised
$120.2 million of equity from shareholders, including the net proceeds from our
initial public offering on July 26, 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 June 30, 2000, capital
repayments made on these leases totalled $4.2 million.
As of June 30, 2000 we had cash and cash equivalents of $7.4 million
compared to cash and cash equivalents of $13.4 million at March 31, 2000. This
decrease of $6.0 million reflects $4.8 million of cash operating expenses, $0.3
million of capital equipment investment, $0.4 million of debt repayments, and
exchange rate effects of $0.5 million. Company funds are invested in British
pound term deposits with HSBC.
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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 has 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 us with notice of its intention to exercise
the warrants as well as by paying an exercise price of L0.05 ($0.08) per
ordinary share.
We expect our cash and cash equivalents, together with the $78.12
million net proceeds from our initial public offering completed on July 26,
2000, and 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.
FOREIGN CURRENCY RATE FLUCTUATIONS
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,
its 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.
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.
Item 3 Market 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. Due to the short term nature of these investments, we
believe we have no material exposure to interest rate risk arising from
investments.
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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: August 11, 2000 By: /s/ Paul J. Kelly
------------------------
Dr. Paul J Kelly
Chief Executive Officer
