UNITED STATES
SECURITIES AND EXCHANGE COMMISSIO
WASHINGTON, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarter ended March 31, 1998
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: 0-10379
INTERFERON SCIENCES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 22-2313648
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
783 Jersey Avenue, New Brunswick, New Jersey 08901
Address of principal executive offices) (Zip code)
(732) 249 - 3250
(Registrant's telephone number, including area code)
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 [ ]
Number of shares outstanding of each of issuer's classes of common stock as of
May 1, 1998:
Common Stock 15,244,401 shares
<PAGE>
INTERFERON SCIENCES, INC. AND SUBSIDIARY
TABLE OF CONTENTS
Page
Part I. Financial Information:
Consolidated Condensed Balance Sheets--March 31, 1998
and December 31, 1997 1
Consolidated Condensed Statements of Operations--Three
Months Ended March 31, 1998 and 1997 2
Consolidated Condensed Statement of Changes in
Stockholders' Equity--Three Months Ended
March 31, 1998 3
Consolidated Condensed Statements of Cash Flows--Three
Months Ended March 31, 1998 and 1997 4
Notes to Consolidated Condensed Financial Statements 5-6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-9
Qualification Relating to Financial Information 10
Part II. Other Information 11
Signatures 12
<PAGE>
INTERFERON SCIENCES, INC. AND SUBSIDIARY
<TABLE>
PART I. FINANCIAL INFORMATION
CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
March 31, December 31,
1998 1997
(Unaudited) *
<S> <C> <C>
ASSETS ------------- -------------
Current assets
Cash and cash equivalents $ 7,895,647 $ 14,059,283
Accounts and other receivables 298,125 989,458
Inventories, net of reserves
of $10,344,551 and $7,254,710 2,981,761 3,332,653
Receivables from GP Strategies
and affiliated companies 35,323 21,904
Prepaid expenses and other
current assets 68,066 65,353
------------ ------------
Total current assets 11,278,922 18,468,651
------------ ------------
Property, plant and equipment,
at cost 13,586,676 13,496,755
Less accumulated depreciation (8,482,106) (8,266,892)
------------ ------------
5,104,570 5,229,863
------------ ------------
Patent costs, net of accumulated
amortization 273,297 280,962
Other assets 161,400 173,900
------------ ------------
Total assets $ 16,818,189 $ 24,153,376
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and
accrued expenses $ 3,511,968 $ 3,939,736
------------- -------------
Total current liabilities 3,511,968 3,939,736
------------- -------------
Commitments and contingencies
Stockholders' equity
Preferred stock, par value $.01 per share;
authorized-5,000,000 shares; none issued
and outstanding
Common stock, par value $.01 per share;
authorized-55,000,000 shares; issued
and outstanding-15,234,674 and
15,210,405 shares 152,347 152,104
Capital in excess of par value 124,122,203 123,946,331
Accumulated deficit (110,968,329) (103,884,795)
------------- -------------
Total stockholders' equity 13,306,221 20,213,640
------------- -------------
Total liabilities and stockholders'
equity $ 16,818,189 $ 24,153,376
============= ============
</TABLE>
*The condensed balance sheet as of December 31, 1997 has been summarized from
the Company's audited balance sheet as of that date. The accompanying notes are
an integral part of these consolidated condensed financial statements.
1
<PAGE>
INTERFERON SCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1998 1997
------------- ------------
<S> <C> <C>
Revenues
Alferon N Injection $ 252,523 $ 628,981
Research products and other revenues 77,025 25,218
------------- ------------
Total revenues 329,548 654,199
------------- ------------
Costs and expenses
Cost of goods sold 203,386 501,374
Provision for excess inventory 3,089,841
Research and development
(net of $29,375 and $58,749
of rental income received from
GP Strategies) 2,055,139 2,592,088
General and administrative
(includes $30,000 and $58,125
of payments to GP Strategies for
management fees and reimbursements
of certain salaries; net of $6,250
received from GP Strategies for the
three months ended March 31, 1998 for
reimbursements of certain salaries) 1,472,399 922,435
------------ -------------
Total costs and expenses 6,820,765 4,015,897
------------ -------------
Loss from operations (6,491,217) (3,361,698)
Interest income 144,720 176,889
Loss on repurchase of preferred stock (737,037)
------------- ------------
Net loss $ (7,083,534) $ (3,184,809)
============= =============
Basic and diluted loss per share $ (.47) $ (.26)
============= =============
Weighted average number of
shares outstanding 15,226,313 12,280,677
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
2
<PAGE>
INTERFERON SCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Capital Total
Common Stock in excess Accummulated Stockholders'
Shares Amount of par value Deficit Equity
------ ------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Balance at
Dec. 31,
1997 15,210,405 $152,104 $123,946,331 $(103,884,795) $20,213,640
Common stock
issued as
compensation 16,191 162 120,259 120,421
Common stock
issued under
Company 401(k)
Plan 8,078 81 55,613 55,694
Net loss (7,083,534) (7,083,534)
---------------------------------------------------------------------
Balance at
March 31,
1998 15,234,674 $152,347 $124,122,203 $(110,968,329) $13,306,221
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
3
<PAGE>
INTERFERON SCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1998 1997
-----------------------------
<S> <C> <C>
Cash flows from operations:
Net loss $(6,346,497) $(3,184,809)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation and amortization 222,879 186,502
Benefits paid with common stock 176,115
Provision for excess inventory 3,089,841
Change in operating assets and liabilities:
Inventories (2,738,949) (487,611)
Receivables from GP Strategies and
affiliated companies (13,419) (15,790)
Accounts and other receivables 691,333 (166,738)
Prepaid expenses and other current assets (2,713) (15,266)
Accounts payable and accrued expenses (427,768) (381,279)
----------------------------
Net cash used for operations (5,349,178) (4,064,991)
----------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (89,921) (140,325)
Reductions to other assets 12,500
----------------------------
Net cash used for investing activities (77,421) (140,325)
----------------------------
Cash flows from financing activities:
Net proceeds from preferred stock offering 7,179,000
Repurchase of preferred stock (7,916,037)
Proceeds from exercise of common stock
options 52,231
Purchase of fractional shares of common
stock (633)
----------------------------
Net cash (used for) provided by financing
activities (737,037) 51,598
----------------------------
Net decrease in cash and cash equivalents (6,163,636) (4,153,718)
Cash and cash equivalents at beginning
of period 14,059,283 17,491,955
-----------------------------
Cash and cash equivalents at end of period $ 7,895,647 $13,338,237
=============================
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
4
<PAGE>
INTERFERON SCIENCES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Earnings per Share
In the fourth quarter of 1997, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS
128), as required, and restated the previously reported earnings per share in
conforming with SFAS 128.
Note 2. Inventories
Inventories, consisting of material, labor and overhead, are classified
as follows:
March 31, December 31,
1998 1997
-------------- --------------
Finished goods $ 4,533,689 $ 3,720,000
Work in process 7,483,316 5,621,714
Raw materials 1,309,307 1,245,649
Less reserve for excess
inventory (10,344,551) (7,254,710)
-------------- ------------
$ 2,981,761 $ 3,332,653
============== ============
Finished goods inventory consists of vials of ALFERON N Injection,
available for commercial and clinical use either immediately or upon final
release by Quality Assurance.
In light of the results to date of the Company's phase 3 studies of
ALFERON N Injection in HIV and HCV-infected patients, the Company has
written-down the carrying value of its inventory of ALFERON N Injection to its
estimated net realizable value. The write-down was the result of the Company's
reassessment of anticipated near-term needs for product to be sold or utilized
in clinical trials (within approximately a two-year period based on historical
sales levels). As a result, inventories at December 31, 1997 reflect a reserve
for excess inventory of $7,254,710. Also, during the quarter ended March 31,
1998, the Company recorded an additional write-off of $3,089,841 of inventories
that were produced during the three months ended March 31, 1998.
Note 3. Preferred Stock
On February 5, 1998, the Company completed the sale of 7,500 shares of
Series A Convertible Preferred Stock to an institutional investor for an
aggregate amount of $7,500,000. The $7,179,000 of net proceeds were expected to
augment the Company's working capital while awaiting the results of the two
Phase 3 clinical trials of ALFERON N Injection for the treatment of HIV-infected
and hepatitis C patients. After considering the reaction of the Company's
stockholders to the issuance and the negative impact the issuance apparently had
on the Company's market capitalization, the Board of Directors determined on
February 13, 1998 to exercise an option to repurchase the shares of Convertible
Preferred Stock for $7,894,737 (plus accrued dividends). The net loss to the
Company on the repurchase of the Preferred Stock amounted to $737,037 and was
recorded on the income statement under the caption of loss on repurchase of
preferred stock for the quarter ended March 31, 1998.
5
<PAGE>
Note 4. Operations and Liquidity
The Company has experienced significant operating losses since its
inception in 1980. As of March 31, 1998, the Company had an accumulated deficit
of approximately $111.0 million. For the three months ended March 31, 1998 and
the years ended December 31, 1997, 1996 and 1995, the Company had losses from
operations of approximately $6.5 million, $22.4 million, $12.4 million and $7.4
million, respectively. Although the Company received FDA approval in October
1989 to market ALFERON N Injection in the United States for the treatment of
certain genital warts and ALFERON N Injection currently is marketed and sold in
the United States by the Company, in Mexico by Industria Farmaceutica Andromaco,
S.A. De C.V. and in Germany by Cell Pharm GmbH ("Cell Pharm"), the Company has
had limited revenues from the sale of ALFERON N Injection to date. For the
Company to operate profitably, the Company must sell significantly more ALFERON
N Injection. Increased sales will depend primarily upon the expansion of
existing markets and/or successful attainment of FDA approval to market ALFERON
N Injection for additional indications, of which there can be no assurance.
There can be no assurance that sufficient quantities of ALFERON N Injection will
be sold to allow the Company to operate profitably.
The Company has limited financial resources as of March 31, 1998 with
which to support future operating activities and to satisfy its financial
obligations as they become payable. Consequently, management is continuing to
actively pursue raising additional capital by either (i) issuing securities in a
public or private equity offering, (ii) licensing the rights to its injectable,
topical or oral formulations of alpha interferon, or (iii) entering into
collaborative or other arrangements with corporate partners. Insufficient funds
will require the Company to further delay, scale back, or eliminate certain or
all of its activities or to license third parties to commercialize products or
technologies that the Company would otherwise seek to develop itself. In
addition, the Company hopes to renegotiate the minimum purchase commitment
for white blood cells discussed in Management's Discussion and Analysis of
Financial Condition and Liquidity, but if it is unable to do so such
obligation may have a material adverse effect on the financial condition of
the Company.
Based on the Company's estimates of revenues, expenses and levels of
production, management believes that the cash available will be sufficient to
enable the Company to continue operations through approximately September 1998.
However, actual results, especially with respect to revenues, may differ
materially from such estimates, and no assurance can be given that additional
funding will not be required sooner than anticipated or that such additional
funding, whether from financial markets or collaborative or other arrangements
with corporate partners or from other sources, will be available when needed or
on terms acceptable to the Company.
6
<PAGE>
INTERFERON SCIENCES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Financial Condition and Liquidity
As of May 1, 1998, the Company had an aggregate of $5.9 million in cash
and cash equivalents. Until utilized, such cash and cash equivalents are being
invested principally in short-term interest-bearing investments.
The Company requires substantial funds to conduct research and
development and pre-clinical and clinical testing and to market its products.
For the three months ended March 31, 1998, the cash utilized by the Company's
operations was approximately $5.3 million of which increases in inventories
accounted for approximately $2.7 million. The Company had continued to increase
its investment in inventories of ALFERON N Injection to meet anticipated
increases in market demand, for use in the Company-sponsored Phase 3 and Phase 2
clinical trials, and so that inventory would be available in the event ALFERON N
Injection was subsequently approved for the treatment of HIV or hepatitis C or
both by the U.S. Food and Drug Administration. In light of the results to date
of the Company's Phase 3 studies of ALFERON N Injection in HIV- and HCV-infected
patients, the Company has determined that it has enough inventory on hand to
satisfy its clinical and commercial needs for the foreseeable future and
therefore discontinued production of ALFERON N Injection in April 1998. The
Company currently obtains human white blood cells used in the manufacture of
ALFERON N Injection from several sources, including the American Red Cross
pursuant to a supply agreement dated April 1, 1997. The Company will not need
more human white blood cells until such time as production of ALFERON N
Injection is resumed. Under the terms of the agreement with the American Red
Cross, the Company is obligated to purchase a minimum number of human white
blood cells each month through March 1999. The aggregate commitment is
approximately $260,000 per month. The Company hopes to renegotiate the minimum
purchase commitment, but if it is unable to do so such obligation may have a
material adverse effect on the financial condition of the Company. The Company's
future capital requirements will depend on many factors, including: continued
scientific progress in its drug development programs; the magnitude of these
programs; progress with pre-clinical testing and clinical trials; the time and
costs involved in obtaining regulatory approvals; the costs involved in filing,
prosecuting, and enforcing patent claims; competing technologies and market
developments; changes in its existing research relationships; and the ability of
the Company to establish collaborative arrangements and effective
commercialization activities and arrangements.
The Company anticipates that the cash that will be utilized by the
Company's operations in 1998 will be significantly less than in 1997 as a result
of the discontinuance in April 1998 of manufacturing, the conclusion in 1998 of
the Company's Phase 3 studies of ALFERON N Injection in HIV- and HCV-infected
patients, and certain other cost reductions instituted in 1998 by the Company,
offset in part by the expenses associated with the HIV and hepatitis C
co-infection study that commenced in December 1997. Based on the Company's
estimates of revenues, expenses, and levels of production, management believes
that the cash presently available will be sufficient to enable the Company to
continue operations through approximately September 1998. However, actual
results, especially with respect to revenues, may differ materially from such
estimates, and no assurance can be given that additional funding will not be
required sooner than anticipated or that such additional funding, whether from
financial markets or collaborative or other arrangements with corporate partners
or from other sources, will be available when needed or on terms acceptable to
the Company. Insufficient funds will require the Company to further delay, scale
back, or eliminate certain or all of its research and development programs or to
license third parties to commercialize products or technologies that the Company
would otherwise seek to develop itself. The Independent Auditors' Report dated
April 2, 1998 on the Company's consolidated financial statements ended December
31, 1997 notes that the Company has suffered recurring losses from operations
and has an accumulated deficit that raise substantial doubt about its ability to
continue as a going concern.
7
<PAGE>
Results of Operations
For the three months ended March 31, 1998, the Company's revenues of
$329,548 included $252,523 from the sale of ALFERON N Injection and the balance
from sales of research products and other revenues. Revenues of $654,199 for the
three months ended March 31, 1997 included $628,981 from the sale of ALFERON N
Injection and the balance from sales of research products. Cost of goods sold
totaled $203,386 and $501,374 for the three months ended March 31, 1998 and
1997, respectively.
In May 1997, the Company appointed Alternate Site Distributors, Inc.
("ASD"), a wholly owned subsidiary of Bergen Brunswig Corporation, the sole
United States distributor of ALFERON N Injection. According to ASD, it sold
4,372 vials of ALFERON N Injection in the three months ended March 31, 1998,
compared to 3,083 sold by the Company in the United States during the three
months ended March 31, 1997. Despite this increase, the Company's revenues from
the sale of ALFERON N Injection decreased by $376,458 in the three months ended
March 31, 1998 compared to the three months ended March 31, 1997. This decrease
resulted in approximately equal parts from a decline in foreign sales and the
fact that ASD's sales in the 1998 quarter were primarily from ASD's inventory.
In light of the results to date of the Company's Phase 3 studies of
ALFERON N Injection in HIV- and HCV-infected patients, the Company has
written-down the carrying value of its inventory of ALFERON N Injection to its
estimated net realizable value. The write-down was the result of the Company's
reassessment of anticipated near-term needs for product to be sold or utilized
in clinical trials (within approximately a two-year period based on historical
sales levels). As a result, during the three months ended March 31, 1998, the
Company recorded an inventory write-off of $3,089,841 in addition to the
$7,254,710 inventory write-down which was recorded at December 31, 1997.
Research and development expenses during the three months ended March
31, 1998 of $2,055,139 decreased by $536,949 from $2,592,088 for the same period
in 1997, principally because the Company has nearly concluded its Phase 3
clinical studies of ALFERON N Injection in HIV- and HCV-infected patients. The
Company received $29,375 and $58,749, respectively, as rental income from GP
Strategies Corporation ("GP Strategies") for the use of a portion of the
Company's facilities, which offset research and development expenses.
General and administrative expenses for the three months ended March
31, 1998 were $1,472,399 as compared to $922,435 for the same period in 1997.
The increase of $549,964 was principally due to increases in payroll and other
operating expenses. GP Strategies provides certain administrative services for
which the Company paid GP Strategies $30,000 for each of the three-month periods
ended March 31, 1998 and 1997. For the three months ended March 31, 1998 and
1997, payments to GP Strategies for the services provided to the Company by GP
Strategies personnel amounted to zero and $28,125, respectively. For the three
months ended March 31, 1998 and 1997, receipts from GP Strategies for the
services provided to GP Strategies by Company personnel amounted to $6,250 and
zero, respectively.
8
<PAGE>
On February 5, 1998, the Company completed the sale of 7,500 shares of
Series A Convertible Preferred Stock to an institutional investor for an
aggregate amount of $7,500,000. The $7,179,000 of net proceeds were expected to
augment the Company's working capital while awaiting the results of the two
Phase 3 clinical trials of ALFERON N Injection for the treatment of HIV-infected
and hepatitis C patients. After considering the reaction of the Company's
stockholders to the issuance and the negative impact the issuance apparently had
on the Company's market capitalization, the Board of Directors determined on
February 13, 1998 to exercise an option to repurchase the shares of Convertible
Preferred Stock for $7,894,737 (plus accrued dividends). The net loss to the
Company on the repurchase of the Preferred Stock amounted to $737,037 and was
recorded on the income statement under the caption of loss on repurchase of
preferred stock for the quarter ended March 31, 1998.
Interest income for the three months ended March 31, 1998 was $144,720
as compared to $176,889 for the same period in 1997. The decrease of $32,169 was
due to less funds available for investment in the current period.
As a result of the foregoing, the Company incurred net losses of $7,083,534
and $3,184,809 for the three months ended March 31, 1998 and 1997, respectively.
Recent Tax and Accounting Developments
The Financial Accounting Standards Board issued Accounting Standards
(SFAS 130), "Reporting Comprehensive Income", in June 1997 which requires a
statement of comprehensive income to be included in the financial statements for
fiscal years beginning after December 15, 1997. The Company has adopted this
Statement and has no other comprehensive income, other than net income,
therefore comprehensive income is the same as net income (loss).
In addition, in June of 1997, the FASB issued SFAS 131, "Disclosures
about Segments of an Enterprise and Related Information". SFAS 131 requires
disclosure of certain information about operating segments and about products
and services, geographic areas in which a company operates, and their major
customers. The Company is presently in the process of evaluating the effect that
this new standard will have on disclosures in the Company's financial
statements.
Forward-Looking Statements
This report contains certain forward-looking statements
reflecting management's current views with respect to future events and
financial performance. These forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those in the forward-looking statements, including, but not limited to,
uncertainty of obtaining additional funding for the Company; uncertainty of
obtaining United States regulatory approvals for the Company's products under
development and foreign regulatory approvals for the Company's FDA-approved
product and products under development and, if such approvals are obtained,
uncertainty of the successful commercial development of such products;
substantial competition from companies with substantially greater resources than
the Company in the Company's present and potential businesses; no guaranteed
source of required materials for the Company's products; dependence on certain
distributors to market the Company's products; potential adverse side effects
from the use of the Company's products; potential patent infringement claims
against the Company; possible inability of the Company to protect its
technology; uncertainty of pharmaceutical pricing; substantial royalty
obligations payable by the Company; limited production experience of the
Company; risk of product liability; and risk of loss of key management
personnel, all of which are difficult to predict and many of which are beyond
control of the Company.
9
<PAGE>
INTERFERON SCIENCES, INC. AND SUBSIDIARY
QUALIFICATION RELATING TO FINANCIAL INFORMATION
MARCH 31, 1998
The financial information included herein is unaudited. Such
information, however, reflects all adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of management, necessary to a
fair statement of the results for the interim periods. The results for interim
periods are not necessarily indicative of results to be expected for the year.
10
<PAGE>
INTERFERON SCIENCES, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION
Item 2. Changes in Securities.
On February 5, 1998, the Company completed the sale of 7,500 shares
of Series A Convertible Preferred Stock to an institutional investor for an
aggregate amount of $7,500,000. The Company paid a total of $284,250 in
commissions in connection with the sale. The Preferred Stock (including unpaid
dividends) was convertible into the Company's Common Stock at a price equal to
the lesser of $12.50 and a discount of 5-15% from the weighted average trading
price of the Common Stock over the 10 trading days prior to conversion, subject
to certain adjustments. After considering the reaction of the Company's
stockholders to the issuance of the Preferred Stock and the negative impact the
issuance apparently had on the Company's market capitalization, the Board of
Directors of the Company determined on February 13, 1998 to exercise an option
to repurchase the shares of Convertible Preferred Stock for $7,894,737 (plus
accrued dividends). The sale of Convertible Preferred Stock was made in reliance
upon the exemption provided by Section 4(2) of the Securities Act of 1933 (the
"Securities Act") for a transaction by an issuer not involving any public
offering and/or Rule 506 of Regulation D promulgated under the Securities Act.
Item 6. Exhibits and Reports on Form 8-K.
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed for the period ended March
31, 1998.
11
<PAGE>
INTERFERON SCIENCES, INC.
MARCH 31, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed in its behalf by
the undersigned thereunto duly authorized.
INTERFRON SCIENCES, INC.
DATE: May 14, 1998 By: /s/ Lawrence M. Gordon
-----------------------
Lawrence M. Gordon
Chief Executive Officer
DATE: May 14, 1998 By: /s/ Donald W. Anderson
----------------------
Donald W. Anderson
Controller
12
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000351532
<NAME> INTERFERON SCIENCES, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 7,895,647
<SECURITIES> 0
<RECEIVABLES> 298,125
<ALLOWANCES> 0
<INVENTORY> 2,981,761
<CURRENT-ASSETS> 11,278,922
<PP&E> 13,586,676
<DEPRECIATION> 8,482,106
<TOTAL-ASSETS> 16,818,189
<CURRENT-LIABILITIES> 3,511,968
<BONDS> 0
0
0
<COMMON> 152,347
<OTHER-SE> 13,153,874
<TOTAL-LIABILITY-AND-EQUITY> 16,818,189
<SALES> 329,548
<TOTAL-REVENUES> 329,548
<CGS> 203,386
<TOTAL-COSTS> 203,386
<OTHER-EXPENSES> 6,617,379
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (7,083,534)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,083,534)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,083,534)
<EPS-PRIMARY> (.47)
<EPS-DILUTED> (.47)
</TABLE>
