<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[x] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1995.
---------------
[ ] 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: 0-10736
-------
MGI PHARMA, INC.
----------------
(Exact name of registrant as specified in its charter)
Minnesota 41-1364647
- -------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
Suite 300E, Opus Center
9900 Bren Road East
Minneapolis, Minnesota 55343 (612) 935-7335
------------------------------ ------------------------------
(Address of principal executive (Registrant's telephone
offices and zip code) 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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.01 par value 12,707,730 shares
---------------------------- --------------------------------
(Class) (Outstanding at May 4, 1995)
<PAGE>
FORM 10-Q INDEX
MGI PHARMA, INC.
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - March 31,
1995 (unaudited) and December 31, 1994
Consolidated Statements of Operations
(unaudited) - Three Months Ended March 31,
1995 and 1994
Consolidated Statements of Cash Flows
(unaudited) - Three Months Ended March 31,
1995 and 1994
Notes to Consolidated Financial Statements
(unaudited)
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
SIGNATURES
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
CONSOLIDATED BALANCE SHEETS
MGI PHARMA, INC.
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
------------ ------------
(unaudited)
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 4,779,199 $ 6,728,006
Short-term investments 9,845,940 9,908,584
Receivables, less allowances of $376,751
and $347,823 596,547 283,636
Inventories 1,404,793 1,386,909
Prepaid expenses 275,678 595,746
----------- -----------
Total current assets 16,902,157 18,902,881
Equipment and furniture, at cost 315,308 359,393
less accumulated depreciation of
$606,060 and $624,122
Intangible assets, net of accumulated 353,750 371,666
amortization of $7,851,499 and
$7,833,583
Other assets 426,207 448,515
----------- -----------
Total assets $17,997,422 $20,082,455
=========== ===========
</TABLE>
(Continued)
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
Page 2
March 31, December 31,
1995 1994
------------ ------------
(unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 1,225,717 $ 1,752,555
Accrued expenses 1,257,695 1,499,702
Unearned revenue 583,333 777,778
Other current liabilities 49,007 14,124
------------ ------------
Total current liabilities 3,115,752 4,044,159
------------ ------------
Common stockholders' equity:
Common stock, $.01 par value,
30,000,000 authorized shares,
11,951,244 and 11,945,544
issued shares 119,512 119,455
Additional paid-in capital 79,731,510 79,706,292
Notes receivable from officers (480,318) (565,586)
Accumulated deficit (64,489,034) (63,221,865)
------------ ------------
Total common stockholders' equity 14,881,670 16,038,296
------------ ------------
Total liabilities and
stockholders' equity $ 17,997,422 $ 20,082,455
============ ============
</TABLE>
_____________________________________
See accompanying notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
MGI PHARMA, INC.
<TABLE>
<CAPTION>
Three Months Ended
----------------------------
March 31,
----------------------------
1995 1994
------------- -------------
(unaudited)
<S> <C> <C>
Revenues:
Sales $ 937,140 $ 387,899
Licensing 1,337,485 104,637
Interest and other 236,003 199,619
2,510,628 692,155
Costs and Expenses:
Research and development 1,547,795 1,183,336
Cost of sales 112,893 70,464
Selling, general and administrative 2,099,193 1,793,832
Amortization of intangible assets 17,916 388,309
----------- -----------
3,777,797 3,435,941
----------- -----------
Net loss $(1,267,169) $(2,743,786)
=========== ===========
</TABLE>
Net loss per common share $ (0.11) $ (0.24)
Weighted average number of
common shares outstanding 11,950,991 11,611,294
See accompanying notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
MGI PHARMA, INC.
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1995 1994
--------------- -------------
(unaudited) (unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $(1,267,169) $(2,743,786)
Adjustments for non-cash items:
Depreciation and asset amortization 47,545 423,060
Unearned revenue amortization (194,445) --
Facility rent abatement (25,027) (19,393)
Other 26,756 25,698
Change in operating assets and liabilities:
Receivables (312,911) 38,365
Inventories (17,884) (459,060)
Prepaid expenses 320,068 (254,486)
Accounts payable and accrued expenses (755,348) (1,220,168)
Other current liabilities 34,883 52,470
----------- -----------
Net cash used in operating activities (2,143,532) (4,157,300)
----------- -----------
INVESTING ACTIVITIES:
Purchase of investments (6,812,592) (4,263,946)
Maturity of investments 6,875,236 8,991,734
Purchase of equipment and furniture (770) (73,216)
Other 107,576 (9,617)
----------- -----------
Net cash provided by investing activities 169,450 4,644,955
----------- -----------
FINANCING ACTIVITIES:
Issuance of shares under stock
plans 25,275 233,440
----------- -----------
Net cash provided by financing
activities 25,275 233,440
----------- -----------
Increase (decrease) in cash and cash
equivalents (1,948,807) 721,095
Cash and cash equivalents at
beginning of period 6,728,006 4,684,085
----------- -----------
Cash and cash equivalents at
end of period $ 4,779,199 $ 5,405,180
=========== ===========
- -----------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
MGI PHARMA, INC.
(1) Basis of Presentation
---------------------
MGI PHARMA, INC. ("MGI" or the "Company") is a pharmaceutical company that
acquires, develops and markets pharmaceuticals that address unmet medical needs.
The Company is initially focused on products that treat cancer or improve the
quality of life for cancer patients.
The consolidated financial statements include the accounts of the Company and
Molecular Genetics Research, Inc., its wholly owned subsidiary, for all periods
presented until it was merged into MGI and ceased to exist in November 1994.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal, recurring accruals) considered necessary for fair presentation have been
included. Interim results may not be indicative of annual results. For further
information, refer to the consolidated financial statements and footnotes
included in the Company's report on Form 10-K for the year ended December 31,
1994.
(2) Loss Per Common Share
---------------------
Loss per common share is based upon the weighted average number of shares
outstanding during each period. Common stock equivalents are not included as
their effect is antidilutive.
(3) Short-Term Investments
----------------------
Held-to-maturity investments at March 31, 1995, including estimated fair value
based on quoted market prices or valuation models, are summarized in the
following table:
<TABLE>
<CAPTION>
Estimated
Cost Fair Value
---------- ----------
<S> <C> <C>
Bankers acceptance $ 984,778 $ 984,778
Eurodollar certificates 1,009,458 1,009,458
Commercial paper 7,851,704 7,851,704
---------- ----------
Short-term investments $9,845,940 $9,845,940
========== ==========
</TABLE>
<PAGE>
(4) Inventories
-----------
Inventories at March 31, 1995, and December 31, 1994, are summarized in the
following table:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Raw materials and supplies $ 20,110 $ 145,164
Work in process 222,371 14,676
Finished goods 1,162,312 1,227,069
---------- ----------
Total $1,404,793 $1,386,909
========== ==========
</TABLE>
Inventories are stated at the lower of cost or market. Cost is determined on a
first-in, first-out basis.
(5) Accrued Expenses
----------------
Accrued expenses at March 31, 1995, and December 31, 1994, are summarized in the
following table:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Product development commitments $ 343,350 $ 477,358
Bonuses 171,487 226,776
Other accrued expenses 742,858 795,568
---------- ----------
$1,257,695 $1,499,702
========== ==========
</TABLE>
(6) Strategic Alliance
------------------
During June 1994, in conjunction with granting Kissei Pharmaceutical Co., Ltd.,
a Japanese pharmaceutical company, an option to license commercial rights in
Japan for Salagen(R) Tablets, MGI issued 217,054 shares of common stock to
Kissei Pharmaceutical at a premium over market value. The issuance premium of
$1,166,667 will be amortized evenly through December 31, 1995, with the
unamortized balance of $583,333 at March 31, 1994 recorded as unearned licensing
revenue in the accompanying balance sheet. Proceeds of $3.5 million from the
stock issuance are being used to supplement funding of MGI's clinical studies
with Salagen(R) Tablets as a potential treatment for chronic dry mouth symptoms
resulting from Sjogren's syndrome.
(7) Stock Incentive Plans
---------------------
Under stock incentive plans, designated persons (including officers, directors
and employees) have been or may be granted rights to acquire Company common
stock. These rights include, but are not limited to, stock options, limited
stock appreciation rights and restricted stock units. At March 31, 1995,
3,076,304 shares of common stock remain reserved for issuance to employees and
nonemployees of which 1,418,932 remain available for grant (includes 150,500
authorized by the Company's Board of Directors for the purpose of future
technology acquisitions) and options to purchase 1,657,372 shares of common
stock were outstanding, of which 686,122 were execisable. Options
outstanding had a weighted average exercise price of $8.58 per share.
<PAGE>
Loans to officers were made for their exercises of options and payment of
associated tax obligations. The loans are full recourse, unsecured obligations
with principal and accrued interest payable on demand. At March 31, 1995,
$581,349 of principal remains outstanding. The portion required to exercise
options is presented as "Notes receivable from officers" within common
shareholders' equity and the remaining balance is presented as "Other assets" in
the accompanying balance sheet.
(8) Stockholders' Equity
--------------------
Changes in common stock and additional paid-in capital were as follows:
<TABLE>
<CAPTION>
Notes
Common stock Additional receivable
----------------------- paid-in from
Shares Par value capital officers
------------ --------- ----------- ----------
<S> <C> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 1994:
Balance at
December 31, 1993 11,557,491 $115,575 $76,592,239 $(437,388)
Exercise of stock options 77,931 779 232,661 --
Employee retirement savings
plan contribution 1,170 12 17,246 --
Note payment -- -- -- 10,875
---------- -------- ----------- ---------
Balance at
March 31, 1994 11,636,592 $116,366 $76,842,146 $(426,513)
========== ======== =========== =========
THREE MONTHS ENDED MARCH 31, 1995:
Balance at
December 31, 1994 11,945,544 $119,455 $79,706,292 $(565,586)
Exercise of stock options 5,700 57 25,218 --
Note payment -- -- -- 85,268
---------- -------- ----------- ---------
Balance at
March 31, 1995 11,951,244 $119,512 $79,731,510 $(480,318)
========== ======== =========== =========
</TABLE>
(9) Stockholders' Equity
--------------------
In April 1995, MGI issued 750,000 shares of common stock to Dainippon
Pharmaceutical Co., Ltd. in conjunction with granting Dainippon an option to
license commercial rights in Japan for acylfulvenes, a family of early stage
anti-tumor compounds. Net proceeds of $2,837,688 were received from this
issuance.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
- --------
MGI PHARMA, INC. ("MGI" or the "Company") is a pharmaceutical company which
acquires, develops and markets pharmaceuticals that address unmet medical needs.
The Company is initially focused on products that treat cancer or improve the
quality of life for cancer patients.
In March 1994, MGI received approval from the Food and Drug Administration
("FDA") to market Salagen(R) Tablets for treatment of radiation-induced dry
mouth in head and neck cancer patients. Product launch in the U.S. occurred
during the 1994 second quarter. The rate at which Salagen(R) Tablets penetrate
the market will likely be the primary determinant of the Company's operating
results and rate of investment in other development programs.
Commercialization of Salagen(R) Tablets outside the United States is being
accomplished through licensing relationships in various geographic territories.
In 1994, commercialization rights for Canada and Japan were granted to The
Upjohn Company of Canada and Kissei Pharmaceutical Co. Ltd., respectively.
These alliances follow the 1992 granting of commercialization rights for Europe
to Chiron Therapeutics.
Results of Operations
- ---------------------
The Company's net loss of $1,267,169 in the 1995 first quarter compares with a
net loss of $2,743,786 in the corresponding 1994 period. The decreased loss in
1995 primarily reflects increased sales revenue due to the launch of Salagen(R)
Tablets and increased licensing revenue due to the strategic alliance agreements
with Chiron Therapeutics and Kissei Pharmaceutical, including a $1 million non-
recurring milestone payment. These increases were partially reduced by an
increase in selling expenses associated with the continuing promotion of
Salagen(R) Tablets, an increase in research and development expense, and reduced
sales of DIDRONEL(R) I.V. Infusion (a treatment for hypercalcemia of
malignancy).
With the launch of Salagen(R) Tablets in the 1994 second quarter, sales revenues
increased significantly to $2,874,490 primarily as a result of initial stocking
of wholesale and retail inventory distribution channels. Following this initial
stocking increase, 1994 third quarter sales predictably declined as wholesale
and retail inventories adjusted to match early demand. In addition, an
aggressive sampling program dampened near-term demand following launch. Sales
revenues were $405,405, $608,233 and $937,140 in the 1994 third and fourth
quarters and the 1995 first quarter, respectively. These increases were almost
exclusively due to increasing sales of Salagen(R) Tablets. A continuing pattern
of increasing sales revenues is important for
<PAGE>
achievement of management's goal of making MGI sustainably profitable.
The medical condition addressed by Salagen(R) Tablets had no prescription
pharmaceutical treatment prior to approval of this drug. Substantial effort has
been directed by the Company toward development of this new market, and to date
the cost of this selling effort has exceeded sales revenues.
The rate of sales growth following initial stocking of Salagen(R) Tablets has
been markedly slower than originally anticipated. Management remains convinced
that Salagen(R) Tablets are an effective and safe treatment for radiation-
induced dry mouth in head and neck cancer patients and can provide significant
relief to many patients. Also, management's evaluation of the patient
population who could benefit from Salagen(R) Tablets remains unchanged. The
rate at which the Company can increase sales of Salagen(R) Tablets will
determine if reduction of Company expenses may be required.
Salagen(R) Tablets were launched in the 1994 second quarter, so no sales of this
product occurred in the 1994 first quarter. The 1995 increase in sales revenue
is due to 1995 sales of Salagen(R) Tablets.
Cost of sales increased 60% from $70,464 in the 1994 first quarter to $112,893
in the 1995 first quarter. The 1995 increase in cost of sales results from
increased sales of Salagen(R) Tablets. Management believes future cost of sales
as a percent of sales will be significantly influenced by unit sales of
Salagen(R) Tablets, because fixed production costs will be allocated across a
larger base of production activity if unit sales increase.
Licensing revenue increased nearly twelvefold from $104,637 in the 1994 first
quarter to $1,337,485 in the 1995 first quarter. The 1995 increase primarily
results from a non-recurring $1,000,000 milestone payment from Chiron
Therapeutics following approval of Salagen(R) Tablets for marketing in the
United Kingdom. Future licensing revenue will likely fluctuate from one quarter
to the next and between years depending on the achievement of milestones and
level of recurring royalty generating activities by current partners, and the
timing of initiating additional license relationships.
Interest and other income increased 18% from $199,619 in the 1994 first quarter
to $236,003 in the 1995 first quarter. The 1995 increase results from increased
investment yield, partially reduced by a decrease in funds available for
investment. Until the Company realizes positive cash flow, whether from
operations or outside funding, funds available for investments will continue to
decline. Interest income would also decline, assuming yields remain constant.
Total research and development expense increased 31% from $1,183,336 in the 1994
first quarter to $1,547,795 in the 1995 first quarter. Expenses in 1995
primarily include continued development of Salagen(R)
<PAGE>
Tablets, especially toward expansion of the approved indication, and an early
stage anti-tumor compound.
Research and development expenses will likely fluctuate from one quarter to the
next and between years depending on the phase of development for individual
programs and the timing of these phases across all programs. In addition, the
Company's pace of development will be influenced by continued safe and
efficacious results from Company studies, regulatory decisions, and competitive
circumstances. Development efforts in 1995 are expected to focus primarily on
expansion of approved indications for Salagen(R) Tablets and an early stage
anti-tumor compound. The scale of future development efforts will also depend
on the Company's ability to generate positive cash flow from commercialization
of Salagen(R) Tablets and other sources of funding.
Selling, general and administrative expenses increased 17% from $1,793,832 in
the 1994 first quarter to $2,099,193 in the 1995 first quarter. The 1995
increase results from increased selling expenses associated with
commercialization of Salagen(R) Tablets following the 1994 second quarter launch
of this new product.
Using the purchase method of accounting to record acquisition of DIDRONEL(R)
I.V. Infusion, acquired intangible assets were recorded at their estimated fair
market value at their acquisition in 1990. The purchase price in excess of
these values is recorded as goodwill. These assets are being amortized over
their estimated useful lives (generally within five years, but ranging up to
fifteen years) on a straight-line basis which resulted in $388,309 and $17,916
of amortization expense in the first quarters of 1994 and 1995, respectively.
Amortization of recognized intangible assets will result in relatively nominal
annual expense during the remainder of the amortization period.
Liquidity and Capital Resources
- -------------------------------
At March 31, 1995, the Company had cash and cash equivalents and investments of
$14,625,139 and working capital of $13,786,405 compared to $16,636,590 and
$14,858,722, respectively, at December 31, 1994. During the three month period
ended March 31, 1995, the Company used cash of $2,143,532 to fund its operating
activities.
Cash in excess of current operating needs is invested in marketable debt
securities in accordance with the Company's investment policy. This policy
emphasizes principal preservation, so it requires strong issuer credit ratings
and limits the amount of credit exposure from any one issuer or industry.
The Company recognizes that substantial amounts of capital will be required to
finance continuing product development and commercialization efforts. Actual
expenditures will depend on, among
<PAGE>
other things: the outcome of product development opportunities which may become
available to the Company in the future, including acquisitions and other
business combinations; the outcome of marketing initiatives and strategic
marketing decisions; delays or changes in governmentally required testing and
approval procedures; and technological and competitive developments. The degree
to which commercialization of Salagen(R) Tablets is successful will influence
future spending decisions.
To meet financing requirements, the Company will utilize existing liquid assets,
interest earned thereon and other internally generated funds. In addition, the
Company expects to continue to seek financial assistance from other sources,
including contributions by others to joint ventures and other collaborative
arrangements for developing, testing, manufacturing and marketing products. MGI
may also finance working capital requirements and capital expenditures through
borrowings, lease arrangements, additional equity offerings or other financing
techniques.
For 1995, the Company adopted Statement of Financial Accounting Standards No.
119, Disclosures about Derivative Financial Instruments and Fair Value of
Financial Instruments. SFAS No. 119, prescribes new disclosures about
derivatives and other financial instruments. The Company does not currently
purchase derivatives, so the effect of SFAS No. 119 on Company reporting will be
deferred until, and if, the Company becomes a party to derivative transactions.
The Company has already implemented the fair value disclosures prescribed by
SFAS No. 119.
<PAGE>
MGI PHARMA, INC.
PART II - OTHER INFORMATION
Item 5. Other Information
- --------------------------
On April 27, 1995, MGI PHARMA, INC. ("MGI") concluded an arrangement
with Dainippon Pharmaceutical Co., Ltd. ("Dainippon"), whereby Dainippon was
granted a six month option to acquire a license for the right to develop and
market acylfulvenes, a family of early stage anti-tumor compounds, in Japan. As
part of the arrangement, Dainippon purchased 750,000 unregistered shares of MGI
common stock, approximately 6% of the total shares outstanding, for $3.875 per
share.
A copy of MGI's press release relating to the arrangement with
Dainippon is attached hereto as an exhibit and incorporated by reference herein.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) LISTING OF EXHIBITS:
11 Computation of Net Loss Per Common Share
27 Financial Data Schedule
99 Press Release dated April 27, 1995
(b) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the three months ended
March 31, 1995.
<PAGE>
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.
MGI PHARMA, INC.
/s/ James V. Adam
Date May 9, 1995 By ________________________________
James V. Adam, Vice President,
Chief Financial Officer,
Secretary and Treasurer
(authorized signatory and
principal financial officer)
<PAGE>
MGI PHARMA, INC.
Quarterly Report on Form 10-Q
for the
Quarter Ended March 31, 1995
EXHIBIT INDEX
-------------
Sequentially
Exhibit Numbered
Number Description Page
------ ----------- ------------
11 Computation of Net Loss per Common Share
27 Financial Data Schedule
99 Press Release dated April 27, 1995
<PAGE>
Exhibit 11
COMPUTATION OF NET LOSS PER COMMON SHARE
(unaudited)
MGI PHARMA, INC.
The following information is required in computations of primary and fully
diluted loss per common share for each period:
Three Months Ended
March 31,
--------------------------
1995 1994
------------- -----------
LOSS:
Net loss $(1,267,169) $(2,743,786)
COMMON SHARES:
Adjusted weighted shares outstanding (a) 11,950,991 11,611,294
LOSS PER COMMON SHARE:
Net loss $ (0.11) $ (0.24)
(a) Net loss per common share shown on the face of the statements of operations
is the equivalent of a simple capital structure presentation since it excludes
common stock equivalents as their effect is antidilutive. There are no pro
forma fully diluted share outstanding adjustments, so primary and fully diluted
share amounts are identical.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE ACCOMPANYING CONSOLIDATED BALANCE SHEET OF MGI PHARMA, INC. AS OF
MARCH 31, 1995 AND THE RELATED CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE QUARTER ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 4,779,199
<SECURITIES> 9,845,940
<RECEIVABLES> 596,547
<ALLOWANCES> 376,751
<INVENTORY> 1,404,793
<CURRENT-ASSETS> 16,902,157
<PP&E> 315,308
<DEPRECIATION> 606,060
<TOTAL-ASSETS> 17,997,422
<CURRENT-LIABILITIES> 3,115,752
<BONDS> 0
<COMMON> 14,881,670
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 17,997,422
<SALES> 937,140
<TOTAL-REVENUES> 2,510,628
<CGS> 112,893
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,547,795
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,267,169)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,267,169)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,267,169)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
<PAGE>
EXHIBIT 99
NEWS RELEASE
FOR IMMEDIATE RELEASE
APRIL 27, 1995
CONTACT:
Lori Weiman
(612) 939-4666
MGI PHARMA, INC. Grants an Option for Japanese Rights to Cancer Compounds and
Sells Common Stock to Dainippon Pharmaceutical Co., Ltd.
MINNEAPOLIS, MN APRIL 27, 1995---- MGI PHARMA, INC. (NASDAQ:MOGN), a
pharmaceutical company, announced today that it has granted Dainippon
Pharmaceutical Co., Ltd., a Japanese pharmaceutical company, an exclusive six-
month option to acquire a license for the right to develop and market
acylfulvenes in Japan. Acylfulvenes are a family of compounds that have the
potential to become effective cancer therapies. In animal studies, these
compounds have shown particular efficacy against cancers of the lung, breast,
colon and epidermis. MGI expects to complete sufficient preclinical testing by
late summer to begin human testing before the end of the year. The option
agreement allows for a six-month period during which the two companies will
evaluate the data produced by MGI's preclinical studies and finalize the
licensing arrangements.
To secure this option agreement, Dainippon paid MGI PHARMA $250,000 and
purchased 750,000 unregistered shares of MGI common stock, approximately 6% of
the total outstanding, for $3.875 per share. The $3.1 million in proceeds will
be used to support MGI's ongoing development efforts. As of March 31, 1995,
MGI had approximately $14.6 million in cash and short-term investments.
Dr. Kenneth F. Tempero, MGI's chairman and chief executive officer, stated:
"We are very pleased to announce this strategic partnership with Dainippon
Pharmaceutical, a highly respected and well established Japanese company. This
arrangement is another example of MGI's long-term strategy of working with
leading pharmaceutical companies around the globe to expand the usefulness of
our product pipeline. Based on Dainippon's own testing, they now share our
excitement for the outstanding anti-tumor potential exhibited by the
acylfulvenes. We look forward to working with Dainippon over the next several
months to finalize the licensing agreement and continuing to make progress with
the development of this exciting new family of anti-cancer agents."
Dainippon Pharmaceuticals was established in 1897. Today, about 80% of its
business is in pharmaceuticals, while it also has interests in animal health,
medical diagnostics, food additives, and other chemical and laboratory products.
For the year ending March 31, 1995, Dainippon had over $1.5 billion (U.S.) in
net sales from all activities. It employs
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approximately 2,700 employees worldwide, including personnel at its USA
subsidiary, Dainippon Pharmaceutical USA Co., in Fort Lee, NJ.
MGI PHARMA is a pharmaceutical company, headquartered in Minneapolis,
Minnesota, that acquires, develops and markets specialty pharmaceuticals. MGI's
goal is to develop innovative products that significantly improve the treatment
of a variety of serious medical conditions. The company currently markets
Salagen(R) Tablets and Didronel(R) I.V. Infusion in the United States.
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