<PAGE>
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UNITED STATES
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 SEPTEMBER 30, 1997
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 0-20726
CORTECH, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 84-0894091
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
6850 N. BROADWAY, SUITE G
DENVER, COLORADO 80221
(Address of principal executive offices) (Zip Code)
(303) 650-1200
(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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock $0.002 par value 18,523,918
- ----------------------------- ---------------------------------
(Class) (Outstanding at October 31, 1997)
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<PAGE>
CORTECH, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
--------
Item 1. Financial Statements and Notes
Balance Sheets -- September 30, 1997
and December 31, 1996. . . . . . . . . . . . . . . . . . . . . 3
Statements of Operations --
for the three and nine months ended
September 30, 1997 and 1996. . . . . . . . . . . . . . . . . . 4
Statements of Cash Flows --
for the nine months ended
September 30, 1997 and 1996. . . . . . . . . . . . . . . . . . 5
Notes to Financial Statements. . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . . . . . . . . 8
Item 3. Quantitative and Qualitative Disclosure
About Market Risk. . . . . . . . . . . . . . . . . . . . . . . 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 13
Item 2. Changes in Securities and Use of Proceeds. . . . . . . . . . . . 13
Item 3. Default upon Senior Securities . . . . . . . . . . . . . . . . . 13
Item 4. Submission of Matters to a Vote
of Security Holders. . . . . . . . . . . . . . . . . . . . . . 13
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . . 13
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 13
SIGNATURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS AND NOTES.
CORTECH, INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . $ 7,868 $ 7,792
Short-term investments (Note 2) . . . . . . . . 8,261 13,186
Prepaid expenses and other. . . . . . . . . . . 405 845
-------- --------
Total current assets. . . . . . . . . . . . 16,534 21,823
-------- --------
PROPERTY AND EQUIPMENT, at cost
Laboratory and pilot production equipment . . . 6,433 7,101
Leasehold improvements. . . . . . . . . . . . . 8,026 8,026
Office furniture and equipment. . . . . . . . . 2,380 2,483
-------- --------
16,839 17,610
Less -- Accumulated depreciation
and amortization. . . . . . . . . . . . . . . . (15,083) (13,950)
-------- --------
1,756 3,660
-------- --------
$ 18,290 $ 25,483
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable. . . . . . . . . . . . . . . . $ 244 $ 680
Accrued vacation and other
compensation (Note 4) . . . . . . . . . . . . 348 185
Unearned income . . . . . . . . . . . . . . . . -- 1,323
Advances from corporate partner . . . . . . . . 121 964
Other . . . . . . . . . . . . . . . . . . . . . 151 206
-------- --------
Total current liabilities . . . . . . . . . 864 3,358
-------- --------
STOCKHOLDERS' EQUITY
Preferred stock, $.002 par value,
2,000,000 shares authorized, none issued. . . -- --
Common stock, $.002 par value, 50,000,000
shares authorized 18,523,918 and
18,518,079 shares issued and outstanding,
respectively. . . . . . . . . . . . . . . . . 37 37
Warrants. . . . . . . . . . . . . . . . . . . . 2,330 2,330
Additional paid-in capital. . . . . . . . . . . 97,656 97,659
Deferred compensation . . . . . . . . . . . . . (3) (40)
Accumulated deficit . . . . . . . . . . . . . . (82,594) (77,861)
-------- --------
Total stockholders' equity. . . . . . . . . 17,426 22,125
-------- --------
$ 18,290 $ 25,483
-------- --------
-------- --------
The accompanying notes to financial statements are an
integral part of these statements.
3
<PAGE>
CORTECH, INC.
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
--------------------------------------- ---------------------------------------
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996 SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
REVENUES
Sponsored research and development (Note 3)
Corporate partners. . . . . . . . . . . . . . $ 614 $ 688 $ 3,358 $ 4,613
Related party . . . . . . . . . . . . . . . . -- 340 -- 1,014
Interest income . . . . . . . . . . . . . . . . 224 293 732 904
---------- ---------- ---------- ----------
838 1,321 4,090 6,531
---------- ---------- ---------- ----------
EXPENSES
Research and development. . . . . . . . . . . . 1,381 2,795 5,421 8,808
General and administrative. . . . . . . . . . . 629 756 2,041 2,623
Restructuring charge. . . . . . . . . . . . . . 696 -- 1,361 --
---------- ---------- ---------- ----------
2,706 3,551 8,823 11,431
---------- ---------- ---------- ----------
NET LOSS. . . . . . . . . . . . . . . . . . . . . $ (1,868) $ (2,230) $ (4,733) $ (4,900)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net loss per share. . . . . . . . . . . . . . . $ (0.10) $ (0.12) $ (0.26) $ (0.27)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average common shares
outstanding . . . . . . . . . . . . . . . . . 18,523,918 18,127,000 18,521,031 18,289,344
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes to financial statements are an
integral part of these statements.
4
<PAGE>
CORTECH, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
------------------ ------------------
<S> <C> <C>
CASH FLOWS USED IN OPERATING ACTIVITIES
Net loss . . . . . . . . . . . . . . . . . . . . . . . . $ (4,733) $ (4,900)
Adjustments to reconcile net loss
to net cash used in operations --
Depreciation and amortization. . . . . . . . . . . . 1,312 1,590
Issuance of common stock in exchange for
termination of right of first offer. . . . . . . . -- 486
Research and compensation expense related to
grant of options, including amortization of
deferred compensation. . . . . . . . . . . . . . . 34 92
Impairment of property and equipment . . . . . . . . 580 --
Gain on sale of equipment. . . . . . . . . . . . . . (14) --
Decrease (increase) in prepaid expenses and other. . 440 (258)
(Decrease) in accounts payable . . . . . . . . . . . (436) (139)
(Decrease) increase in unearned income . . . . . . . (1,323) 687
(Decrease) increase in advances from
corporate partner. . . . . . . . . . . . . . . . . (843) 1,194
Increase (decrease) in accrued compensation,
payroll taxes and other. . . . . . . . . . . . . . 108 (130)
-------- --------
Net cash used in operating activities. . . . . . (4,875) (1,378)
-------- --------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES
Purchases of property and equipment. . . . . . . . . . . (39) (401)
Sales of property and equipment. . . . . . . . . . . . . 65 --
Purchases of short-term investments. . . . . . . . . . . (15,922) (16,037)
Sales of short-term investments. . . . . . . . . . . . . 20,847 19,751
-------- --------
Net cash provided by investing activities. . . . 4,951 3,313
-------- --------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Proceeds from issuance of common stock . . . . . . . . . -- 29
Proceeds from exercise of options. . . . . . . . . . . . -- 816
-------- --------
Net cash provided by financing activities. . . . -- 845
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS. . . . . . . . . 76 2,780
CASH AND CASH EQUIVALENTS, beginning of period . . . . . . 7,792 6,194
-------- --------
CASH AND CASH EQUIVALENTS, end of period . . . . . . . . . $ 7,868 $ 8,974
-------- --------
-------- --------
</TABLE>
The accompanying notes to financial statements are an
integral part of these statements.
5
<PAGE>
CORTECH, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(1) SIGNIFICANT ACCOUNTING POLICIES
The balance sheet at September 30, 1997, the related statements of
operations and statements of cash flows for the three and nine month periods
ended September 30, 1997 and 1996 are unaudited, but in management's opinion
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of such financial statements. Interim
results are not necessarily indicative of results for a full year. The
accompanying financial statements should be read in conjunction with the
financial statements as of and for the year ended December 31, 1996.
(2) SHORT-TERM INVESTMENTS
Under Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," the Company's
short-term investments, which consisted entirely of government securities,
were classified as available-for-sale. These securities mature on various
dates through February 1998. As of September 30, 1997, these securities had
an amortized cost of $8.3 million, which approximated market value.
(3) RESEARCH AND DEVELOPMENT AGREEMENTS
During the first quarter of 1997, Cortech received $1.5 million from Ono
Pharmaceutical Co., Ltd. ("Ono") for work to be performed during the second
and third quarters of 1997 under a contract to develop an oral elastase
inhibitor signed in March of 1995 and amended in April 1997. Of the $1.5
million, Cortech recognized $886,000 as revenue in the first and second
quarters of 1997 and $614,000 in the third quarter of 1997. Under the terms of
the amended agreement, Ono has assumed all responsibilities for research
activities during the final six months of the agreement, which will terminate on
March 14, 1998. As a result of this reallocation of responsibilities, Ono is
no longer required to pay the Company the last scheduled $1.5 million in
research funding to offset certain costs that the Company would otherwise
have incurred under the agreement. Cortech expects no further payments from
Ono under the agreement.
In November 1995, Cortech entered into a worldwide product development
and license agreement with SmithKline Beecham ("SB") for the development of
Bradycor-TM-. In March 1997, SB and the Company agreed to terminate their
collaboration when a Phase II trial of Bradycor in patients with traumatic
brain injury failed to demonstrate a statistically significant effect of the
compound on intracranial pressure, the primary endpoint. SB made a one-time
payment to Cortech of $1.0 million for an exclusive license to Bradycor in
1995 and paid $4.0 million in milestone payments during 1996. Cortech
expects no further payments from SB under the agreement.
6
<PAGE>
(4) COMMITMENTS
In April 1997, the Company announced a significant corporate-wide
downsizing, which reduced the Company's full time staff by approximately 50%,
at the end of the second quarter of 1997. This downsizing followed the
Company's announcement that, in response to SB's termination of the Bradycor
license agreement, it was planning an aggressive restructuring. The Company
recorded a charge of $665,000 in May 1997 for costs related to the
downsizing. Of this amount, $595,000 was paid out in the third quarter, and
the remaining $70,000 will be paid out by the end of the first quarter of
1998.
(5) SUBSEQUENT EVENT
On October 1, 1997, following the contractually scheduled end of the
Company's operational responsibilities in the oral elastase research program
funded by Ono, the Company commenced a further downsizing of its staff. In
connection with this restructuring, the Company recorded a restructuring
charge of $696,000, of which $580,000 represents an impairment of the value of
the Company's scientific and office equipment.
The Company no longer has the scientific staff that would be required to
conduct further research or development activities on site. The remaining
core staff is expected to be engaged primarily in seeking to realize
appropriate value out of Cortech's tangible and intangible assets, including,
potentially, directing activities of third parties. The Company's intangible
assets consist primarily of a portfolio of bradykinin antagonists and protease
inhibitors. Cortech is proceeding to liquidate its technical equipment, most
of its office furniture and equipment, and, where possible, its leasehold
improvements.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
THE FOLLOWING DISCUSSION CONTAINS, IN ADDITION TO HISTORICAL INFORMATION,
FORWARD-LOOKING STATEMENTS. THE COMPANY'S ACTUAL RESULTS MAY DIFFER
SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS.
FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE
NOT LIMITED TO, THOSE DISCUSSED UNDER THE CAPTION "ADDITIONAL RISKS" AND IN
THE COMPANY'S 1996 ANNUAL REPORT ON FORM 10-K.
GENERAL
Cortech, Inc. (the "Company") is a biopharmaceutical company whose focus
has been the discovery and development of novel therapeutics for the
treatment of inflammatory disorders. The Company has directed its research
and development efforts principally toward protease inhibitors and bradykinin
antagonists. As a result of a series of corporate downsizings, the Company no
longer has the scientific staff that would be required to continue its
research and development activities on-site. However, Cortech has retained a
core staff of professionals who are engaged primarily in ongoing efforts to
realize appropriate value out of Cortech's tangible and intangible assets.
These efforts include supporting the activities of third parties. Cortech is
also proceeding to liquidate its technical equipment, most of its office
furniture and equipment, and, where possible, its leasehold improvements.
Cortech's intangible assets consist primarily of the portfolio described below.
Cortech's efforts in protease inhibition have been focused primarily on
the discovery and development of inhibitors of human neutrophil elastase
("HNE"). Initially, parenteral inhibitors were developed. Those efforts
evolved into work on inhibitors for chronic oral administration for potential
use in the treatment of chronic obstructive pulmonary disease and emphysema.
The resulting technology formed the basis for the collaboration with Ono
Pharmaceutical Co., Ltd. ("Ono") of Osaka, Japan to support continued
discovery research efforts in this area. Under the terms of an amendment
signed in April 1997, Ono has now assumed all responsibilities for research
activities being conducted during the final six months of the agreement,
which will terminate on March 14, 1998. As a result of this reallocation of
responsibilities, Ono is no longer required to pay Cortech the last scheduled
$1.5 million in research funding to offset certain costs that the Company
would otherwise have incurred under the agreement. For most of the third
quarter, the Company's research efforts focused primarily on fulfilling its
responsibilities under the Ono agreement. Although Cortech has retained
product rights under the agreement outside of Ono's territory, the Company has
now ended its direct participation in these research activities.
Clinical development of CE-1037, the Company's parenteral HNE inhibitor,
was funded by Hoechst Marion Roussel, Inc. ("HMRI") from 1987 until December
1996 when HMRI terminated the agreement. Clinical development of the
compound, which had reached early Phase II testing in Acute Respiratory
Distress Syndrome, remains suspended. The Company does not intend to
undertake further development of this compound without a collaborative
partner.
Cortech's endeavors in the field of HNE inhibition have also led to the
development of a proprietary technology that has the potential to be applied
to the development of a broader range of protease targets.
Cortech's bradykinin antagonist portfolio consists of Bradycor-TM-, a
candidate for the treatment of traumatic brain injury ("TBI"), and CP-0597,
its lead second-generation compound, which is being evaluated for the treatment
of stroke. CP-0597 has demonstrated neuroprotective effects in experimental
models of acute ischemic stroke.
8
<PAGE>
In 1995 the Company entered into an agreement with SmithKline Beecham
("SB") for the development of Bradycor in TBI. The parties terminated the
agreement in the first quarter of 1997 following short-term results from a
placebo-controlled Phase II trial which failed to show a statistically
significant effect on intracranial pressure, the study's primary endpoint.
The data did, however, show modest positive trends in favor of Bradycor on
intracranial pressure and the requirement for other therapeutic interventions
to control intracranial pressure. Analysis of long-term recovery data was
completed during the third quarter by the American Brain Injury Consortium and
showed positive trends in functional outcome which were statistically
significant in the most severely injured patients.
RESULTS OF OPERATIONS
REVENUES
Revenues from research and development decreased from $1.0 million in the
third quarter of 1996 to $614,000 in the third quarter of 1997 and decreased
from $5.6 million to $3.4 million in the nine month periods ending September
30, 1996 and 1997, respectively. The decrease in revenues resulted primarily
from the terminations of the Company's agreements with SB and HMRI. The
Company expects no further payments from Ono, due to the April 1997 amendment
of the agreement, nor from SB or HMRI due to the cancellation of the agreements
with those collaborators.
During the first quarter of 1997, Cortech received $1.5 million from Ono
for work to be performed during the second and third quarters of 1997 under a
contract to develop an oral elastase inhibitor signed in March of 1995 and
amended in April 1997. Of the $1.5 million, Cortech recognized $886,000 as
revenue in the first and second quarters of 1997 and $614,000 in the third
quarter of 1997. Under the terms of the amended agreement, Ono has assumed
all responsibilities for research activities being conducted during the final
six months of the agreement, which will terminate on March 14, 1998. As a
result of this reallocation of responsibilities, Ono is no longer required to
pay the Company the last scheduled $1.5 million in research funding to offset
certain costs that the Company would otherwise have incurred under the
agreement. Cortech expects no further payments from Ono under the agreement.
RESEARCH AND DEVELOPMENT EXPENSES
Expenses for research and development decreased from $2.8 million in the
third quarter of 1996 to $1.4 million in the third quarter of 1997 and
decreased from $8.8 million in the nine months ended September 30, 1996 to
$5.4 million in the nine months ended September 30, 1997. These decreases
are due primarily to the reduced level of research and development activities
undertaken by Cortech in 1997 compared to 1996.
In April 1997, the Company announced a significant corporate-wide
downsizing, which reduced the Company's full time staff by approximately 50%
at the end of the second quarter of 1997. This downsizing followed the
Company's announcement that in response to SB's termination of the Bradycor
license agreement it was planning an aggressive restructuring. The Company
recorded a charge of $665,000 in May 1997 for costs related to the
downsizing.
9
<PAGE>
In October 1997, the Company implemented a further reduction in staff.
The Company recorded an additional restructuring charge of $696,000 in the
third quarter related to this event, of which $580,000 represents an
impairment of the value of the Company's scientific and office equipment. As
a result of the cumulative effects of the staffing reductions, Cortech no
longer has the capability to conduct research on-site.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses decreased from $756,000 in the third
quarter of 1996 to $629,000 in the third quarter of 1997 and decreased from
$2.6 million in the nine months ended September 30, 1996 to $2.0 million in
the nine months ended September 30, 1997. The decline resulted from the
decreases in staffing and general business activity partially offset by the
restructuring charge described above. The Company expects its general and
administrative expenses to decrease compared to the level reported in the
third quarter.
NET LOSS
The net loss for the third quarter ended September 30, 1997 decreased to
$1.9 million from $2.2 million for the third quarter ended September 30,
1996 and decreased from $4.9 million in the nine months ended September 30,
1996 to $4.7 million in the nine months ended September 30, 1997. The
decrease for the quarter was due principally to the decreased expenses offset
in part by the decreased revenues as described above. Cortech expects to
continue to report substantial losses in the future.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, the Company had cash, cash equivalents and
short-term investments totaling $16.1 million, compared to $21.0 million at
December 31, 1996. The Company's net cash used in operating activities
totaled $2.1 million and $4.9 million for the three and nine months ended
September 30, 1997. Operating activities used $1.5 million in the third
quarter of 1996 and $1.4 million in the first nine months of 1996. The
Company's expenditures, net of depreciation and non-cash charges, decreased
from $2.6 million in the third quarter of 1996 to $1.4 million in the third
quarter of 1997 and decreased from $9.7 million in the nine months ended
September 30, 1996 to $6.7 million in the first nine months of 1997. These
decreases reflect the overall reduction in research and development
activities and the initial effects of the restructuring announced in April
1997 and implemented in May of 1997.
From its inception through September 30, 1997, the Company raised
cash totaling $97.1 million from the sale of equity securities, including
$33.6 million in net proceeds from its November 1992 initial public offering
and $37.7 million in net proceeds from its November 1993 follow-on public
offering.
During the first quarter of 1997, Cortech received $1.5 million from Ono
for work to be performed during the second and third quarters of 1997 under a
contract to develop an oral elastase inhibitor signed in March of 1995 and
amended in April 1997. Of the $1.5 million, Cortech recognized $886,000 as
revenue in the first and second quarters of 1997 and $614,000 in the third
quarter of 1997. Under the terms of the amended agreement, Ono has assumed
all responsibilities for research activities being conducted during the final
six months of the agreement, which will terminate
10
<PAGE>
on March 14, 1998. As a result of this reallocation of responsibilities,
Ono is no longer required to pay the Company the last scheduled $1.5 million
in research funding to offset certain costs that the Company would otherwise
have incurred under the agreement. Cortech expects no further payments from
Ono under the agreement.
The Company has experienced net losses and negative cash flows from
operations each year since inception and has incurred an accumulated deficit
of $82.6 million through September 30, 1997. The Company expects to incur
additional losses as a result of its continued business expenses and as a
result of charges related to its restructurings. The Company also expects to
continue to report losses after the restructuring is complete and all
transition costs are recorded, but the size of these losses is expected to be
smaller than those previously recorded.
ADDITIONAL RISKS
Management is focused primarily on exploration of strategic alternatives
by which to realize appropriate value for the Company's stockholders out of
Cortech's tangible and intangible assets, but there can be no assurance that
suitable opportunities will be identified, or that any such opportunities
will result in a transaction on favorable terms or at all. Certain strategic
opportunities could, if undertaken without the support of a commercial
partner, lead to substantial costs for work conducted under the Company's
direction by third parties.
There can be no assurance that any of the Company's projects will lead to
products that can be commercialized or that they will attract and maintain
the support of a collaborative partner or licensee. To the extent
development of the Company's projects is continued, such projects will face a
high degree of technological, regulatory and competitive risk. The
regulatory approval process for any new drug is arduous, and successful
completion of any trial or any phase of development does not provide
assurance that future phases will also be successfully completed or that
marketing approval will ultimately be obtained. Clinical development
programs for Bradycor and CE-1037 were suspended on the basis of new adverse
preclinical findings and subsequent termination of the Company's licensing
agreements with SB and HMRI, respectively. Although independent testing
failed to confirm the adverse findings, there can be no assurance that new
partners can be identified to carry these projects forward. In addition, the
Company's stock price, like that of many publicly traded biotechnology
companies, has, in the past, been highly volatile and may, in the future,
experience significant volatility.
11
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
Not applicable.
12
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS.
The Company is not party to any material legal proceedings.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Not applicable.
ITEM 3. DEFAULT UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits
Item Description
---- -----------
27.1 Financial Data Schedule.
b. Reports on Form 8-K
No reports on Form 8-K were filed by Cortech, Inc., during the quarter
ended September 30, 1997.
13
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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, on this 14th day
of November, 1997.
CORTECH, INC.
(Registrant)
Date: November 14, 1997 By: /s/ JOSEPH L. TURNER
----------------- --------------------------------------------
Joseph L. Turner
VICE PRESIDENT OF FINANCE AND ADMINISTRATION
AND PRINCIPAL ACCOUNTING OFFICER
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEETS AND STATEMENTS OF OPERATIONS FOUND ON PAGES 3 AND 4 OF THE COMPANY'S FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 7,868
<SECURITIES> 8,261
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,534
<PP&E> 16,839
<DEPRECIATION> (15,083)
<TOTAL-ASSETS> 18,290
<CURRENT-LIABILITIES> 864
<BONDS> 0
0
0
<COMMON> 37
<OTHER-SE> 17,389
<TOTAL-LIABILITY-AND-EQUITY> 18,290
<SALES> 0
<TOTAL-REVENUES> 4,090
<CGS> 0
<TOTAL-COSTS> 8,823
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,733)
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