<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, 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 0-20726
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 80221
DENVER, COLORADO (Zip Code)
(Address of principal executive offices)
(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 April 30, 1998)
================================================================================
<PAGE>
CORTECH, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
--------
Item 1. Financial Statements and Notes (unaudited)
Balance Sheets - March 31, 1998
and December 31, 1997. . . . . . . . . . . . . . . . . . . 3
Statements of Operations -
for the three months ended
March 31, 1998 and 1997. . . . . . . . . . . . . . . . . . 4
Statements of Cash Flows -
for the three months ended
March 31, 1998 and 1997. . . . . . . . . . . . . . . . . . 5
Notes to Financial Statements. . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . . . . . . 7
Item 3. Quantitative and Qualitative Disclosures
About Market Risk. . . . . . . . . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . 9
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 10
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS AND NOTES.
CORTECH, INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
--------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . $ 14,315 $ 11,562
Short-term investments (Note 2) . . . . . . . . . . - 3,841
Prepaid expenses and other. . . . . . . . . . . . . 279 308
-------- --------
Total current assets. . . . . . . . . . . . . . 14,594 15,711
-------- --------
PROPERTY AND EQUIPMENT, at cost
Leasehold improvements. . . . . . . . . . . . . . . 5,118 8,026
Office furniture and equipment. . . . . . . . . . . 2,300 2,300
-------- --------
7,418 10,326
Less - Accumulated depreciation and amortization. . (7,082) (9,592)
-------- --------
336 734
-------- --------
Total Assets. . . . . . . . . . . . . . . . . $ 14,930 $ 16,445
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable. . . . . . . . . . . . . . . . . . $ 707 $ 600
Accrued liabilities . . . . . . . . . . . . . . . . 33 162
Accrued vacation and other compensation . . . . . . 160 264
Advances from corporate partners. . . . . . . . . . 45 36
-------- --------
Total current liabilities . . . . . . . . . . 945 1,062
-------- --------
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 shares issued and
outstanding . . . . . . . . . . . . . . . . . . . 37 37
Warrants. . . . . . . . . . . . . . . . . . . . . . 1,077 1,077
Additional paid-in capital. . . . . . . . . . . . . 98,909 98,909
Deferred compensation . . . . . . . . . . . . . . . - (1)
Accumulated deficit . . . . . . . . . . . . . . . . (86,038) (84,639)
-------- --------
Total stockholders' equity. . . . . . . . . . 13,985 15,383
-------- --------
Total Liabilities and Stockholders' Equity. . $ 14,930 $ 16,445
-------- --------
-------- --------
</TABLE>
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>
<CAPTION>
FOR THE THREE MONTHS ENDED
-------------------------------
MARCH 31, 1998 MARCH 31, 1997
-------------- --------------
<S> <C> <C>
REVENUES:
Sponsored research and development (Note 3)
Ono . . . . . . . . . . . . . . . . . . . . $ - $ 1,446
SB. . . . . . . . . . . . . . . . . . . . . - 435
----------- -----------
Total revenues. . . . . . . . . . . . . . - 1,881
----------- -----------
EXPENSES:
Research and development. . . . . . . . . . . 288 2,334
General and administrative. . . . . . . . . . 1,522 757
----------- -----------
Total expenses. . . . . . . . . . . . . . 1,810 3,091
----------- -----------
Operating loss. . . . . . . . . . . . . . (1,810) (1,210)
----------- -----------
Interest income . . . . . . . . . . . . . . . . 196 313
Gain on disposition of property and equipment . 215 -
----------- -----------
NET LOSS. . . . . . . . . . . . . . . . . . . . $ (1,399) $ (897)
----------- -----------
----------- -----------
Basic net loss per share. . . . . . . . . . . $ (0.08) $ (0.05)
----------- -----------
----------- -----------
Weighted average common shares
outstanding . . . . . . . . . . . . . . . . 18,523,918 18,518,079
----------- -----------
----------- -----------
</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>
<CAPTION>
FOR THE THREE MONTHS ENDED
------------------------------
MARCH 31, 1998 MARCH 31, 1997
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss . . . . . . . . . . . . . . . . . . . . $(1,399) $ (897)
Adjustments to reconcile net loss to net cash
used in operating activities -
Depreciation and amortization. . . . . . . . . 317 459
Gain on disposition of equipment . . . . . . . (90) -
Research and compensation expense related to
grant of options, including amortization of
deferred compensation . . . . . . . . . . . . 1 14
Decrease in prepaid expenses and other . . . . 29 689
Decrease (increase) in accounts payable. . . . 107 (182)
Increase (decrease) in advances from
corporate partner . . . . . . . . . . . . . . 9 (528)
(Decrease) in accrued liabilities, accrued
vacation and other compensation . . . . . . . (233) (21)
Increase in unearned income. . . . . . . . . . - 29
------- -------
Net cash used in operating activities. . . . (1,259) (437)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment. . . . . . . - (29)
Proceeds from sales of property and equipment. . 171 -
Purchases of short-term investments. . . . . . . (9) (7,042)
Sales of short-term investments. . . . . . . . . 3,850 6,350
------- -------
Net cash provided by (used in) investing
activities. . . . . . . . . . . . . . . . . . 4,012 (721)
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS. . . . . . . . . . . . . . . . . . . 2,753 (1,158)
CASH AND CASH EQUIVALENTS, beginning of period . . 11,562 7,792
------- -------
CASH AND CASH EQUIVALENTS, end of period . . . . . $14,315 $ 6,634
------- -------
------- -------
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
ACTIVITIES:
Note receivable for sale of property and
equipment . . . . . . . . . . . . . . . . . . . $ 125 $ -
------- -------
------- -------
</TABLE>
The accompanying notes to financial statements are an
integral part of these statements.
5
<PAGE>
CORTECH, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
(1) SIGNIFICANT ACCOUNTING POLICIES
The balance sheet at March 31, 1998 and the related statements of
operations and statements of cash flows for the three-month periods ended
March 31, 1998 and 1997 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, 1997 (included in the
Company's 1997 Annual Report on Form 10-K filed with the Securities and
Exchange Commission).
Certain items in the prior period have been reclassified to conform to
the current presentation.
NEW ACCOUNTING PRONOUNCEMENT
In March 1998, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting of Comprehensive Income". Management
believes the adoption of SFAS 130 will not have a significant impact on the
Company's financial position and results of operations.
(2) SHORT-TERM INVESTMENTS
Under SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," the Company's short-term investments held as of March 31, 1997,
which consisted entirely of government securities, were classified as
available-for-sale. These securities matured on various dates through August
1997.
(3) RESEARCH AND DEVELOPMENT AGREEMENTS
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 benefit of the
compound on intracranial pressure, the primary endpoint of the trial.
During the first quarter of 1997, Cortech received $1.5 million from Ono
Pharmaceutical Co., Ltd. ("Ono") for work to be performed over the next six
months (under an agreement signed in March 1995 and amended in April 1997)
to develop an oral elastase inhibitor. Of this amount, $1.4 million was
recorded as unearned income and was recognized as revenue over the following
six months (including $246,000 in the first quarter of 1997). Under the
terms of the amended agreement, Ono assumed all responsibilities for research
activities during the final six-month period of the collaborative project
(which terminated on March 14, 1998). As a result of this reallocation of
responsibilities, Ono was not required to pay the Company $1.5 million in
research funding to offset the costs that the Company would otherwise have
incurred under the agreement during such final six-month period.
(4) OTHER
On February 27, 1998, a complaint was filed in the New Castle County,
Delaware Court of Chancery naming the Company, the Company's directors and
BioStar, Inc. ("BioStar") as defendants. The complaint, filed by a stockholder
of the Company, claims to be on behalf of a class of all the Company's
stockholders and contends that the directors of the Company breached their
fiduciary duties to the Company's stockholders when they unanimously approved
the proposed combination with BioStar. The complaint seeks to enjoin the
proposed combination with BioStar as well as the operation of the Company's
stockholder rights plan and seeks an order rescinding the proposed combination
with BioStar upon its consummation as well as compensatory damages and costs.
The Company believes that the claims are without merit and intends to
vigorously defend against this suit. Although there can be no assurances in
this regard, the Company believes that the suit will have no material adverse
effect on the Company because the Company (i) believes that the claimant will
not prevail on the merits, (ii) has insurance which it believes will cover the
cost of defending this claim (except for a $75,000 deductible amount) and
(iii) has terminated the agreement which provided for the proposed combination
with BioStar.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH
THE COMPANY'S 1997 ANNUAL REPORT ON FORM 10-K AS WELL AS THE COMPANY'S
FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN THIS QUARTERLY
REPORT ON FORM 10-Q. WHEN USED IN THIS DISCUSSION, THE WORD "EXPECTS" AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH
STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED. SUCH RISKS AND
UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, THE RISKS DISCUSSED BELOW AS
WELL AS THE RISKS DISCUSSED IN THE SECTIONS ENTITLED "RISK FACTORS" AND
"CORTECH BUSINESS" IN THE COMPANY'S 1997 ANNUAL REPORT ON FORM 10-K. THE
FORWARD-LOOKING STATEMENTS CONTAINED HEREIN SPEAK ONLY AS OF THE DATE HEREOF.
THE COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO RELEASE
PUBLICLY ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS CONTAINED
HEREIN TO REFLECT ANY CHANGE IN THE COMPANY'S EXPECTATIONS WITH REGARD THERETO
OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH
STATEMENT IS BASED.
GENERAL
Cortech is a biopharmaceutical company whose principal focus has been the
discovery and development of novel therapeutics for the treatment of
inflammatory disorders. Specifically, the Company has directed its research
and development efforts principally toward protease inhibitors and bradykinin
antagonists. These efforts have produced certain intellectual property rights.
In response to disappointing test results and its loss of collaborative
partner support, the Company has (i) implemented a series of reductions in
force over the past, approximately three-and-one-half years (which has reduced
the number of full time, regular employees from more than 200 to fewer than
15) and (ii) effectively discontinued all internal research and development
activities. In addition, the Company is currently decommissioning its
laboratories, has sold most of its scientific and technical equipment and
plans to sell most of its office furniture and equipment and, where possible,
its leasehold improvements.
As a result of these actions, the Company no longer has the staff or
operative facilities required to recommence internal research and development
activities. The Company has retained a core group of professionals who, among
other things, are actively engaged in ongoing efforts to realize appropriate
value from the Company's tangible and intangible assets. It is uncertain,
however, whether the Company will be able to retain employees with sufficient
knowledge and experience to realize appropriate value from the Company's
intangible assets.
In light of the above, the Company's management has focused on evaluating
various strategic alternatives. As a result, on December 22, 1997, the
Company entered into an Agreement and Plan of Merger and Reorganization (the
"Reorganization Agreement") with BioStar, Inc., a privately held diagnostics
company based in Boulder, Colorado ("BioStar"). The Reorganization Agreement
provided, among other things, (i) for the combination of the Company and
BioStar and (ii) that either the Company or BioStar could terminate the
Reorganization Agreement if the combination was not consummated on or before
May 31, 1998. Because the Company and BioStar determined that the combination
was not likely to occur by such deadline, on May 7, 1998, the parties
mutually elected to terminate the Reorganization Agreement to allow both the
Company and BioStar to consider other alternatives.
The Company's management is currently evaluating the Company's strategic
alternatives in light of the termination of the Reorganization Agreement.
RESULTS OF OPERATIONS
REVENUES
Revenues from research and development decreased from $1.9 million in the
first quarter of 1997 to zero in the first quarter of 1998. The decrease in
revenues resulted primarily from an April 1997 amendment to the Ono Agreement
(defined below) with Ono Pharmaceutical Co. Ltd. ("Ono"), which terminated
the obligation of Ono to make further research payments to the Company, and
the discontinuation, as of March 1997, of the Company's collaboration with
SmithKline Beecham ("SB"). The Company expects no further payments from Ono
or SB.
7
<PAGE>
In the first quarter of 1997, (i) the Company recognized as revenue
$435,000 received from SB for work performed in connection with Bradycor
clinical trials and (ii) the Company received $1.5 million from Ono for work
performed in 1997 under a contract to develop an oral elastase inhibitor (the
"Ono Agreement"). Pursuant to the Ono Agreement, the Company had received an
additional $1.3 million in 1996, $1.2 million of which was recorded as revenue
in the first quarter of 1997 (as a result of work performed in the first
quarter of 1997 by the Company). Of the $1.5 million received from Ono in the
first quarter of 1997 under the Ono Agreement, the Company recognized $246,000
as revenue in the first quarter of 1997. Under the terms of the Ono Agreement,
as amended in April 1997, Ono assumed all responsibilities for research
activities which were conducted during the final six months of the
collaborative project (which terminated on March 14, 1998). As a result, Ono
was not 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.
RESEARCH AND DEVELOPMENT
Expenses for research and development decreased from $2.3 million in the
first quarter of 1997 to $300,000 in the first quarter of 1998. This decrease
was due primarily to the cessation of internal research and development
activities by the Company in late 1997.
GENERAL AND ADMINISTRATIVE
General and administrative expenses increased from $757,000 in the first
quarter of 1997 to $1.5 million in the first quarter of 1998. The increase
was due substantially to certain costs related to the proposed combination
with BioStar ($242,000), costs related to stockholder litigation ($91,000)
and certain severance payments to former employees ($81,000), with the
remainder of the increase attributable to certain overhead costs that would
otherwise have been allocated to research and development expenses had the
Company's internal research and development efforts not been ceased in late
1997 ($391,000).
NET LOSS
The net loss for the first quarter ended March 31, 1998 increased to $1.4
million from $897,000 for the first quarter ended March 31, 1997. The increase
was due principally to a decrease in revenues and increased general and
administrative expenses, although the increase was partially offset by a
decrease in research and development expenses.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company had cash, cash equivalents and short-term
investments totaling $14.3 million, compared to $15.4 million at December 31,
1997. The Company's net cash used in operating activities totaled $1.3 million
for the three months ended March 31, 1998, as compared to $437,000 in the
first quarter of 1997. The Company's expenditures, net of depreciation and
non-cash charges, decreased from $2.6 million in the first quarter of 1997 to
$1.2 million in the first quarter of 1998. This decrease reflects the
cessation of internal research and development activities by the Company in
late 1997 and the effects of the restructurings implemented by the Company in
May and November 1997.
In January 1998, the Company sold certain leasehold improvements for
$150,000 in cash and a note receivable of $125,000 payable in July 1998 which
resulted in a gain of $215,000. There can be no assurances that any of the
Company's remaining assets can be sold for book value, if at all.
The Company presently expects to receive no revenues from sponsored
arrangements for internal research and development in 1998 (or future years).
From its inception through March 31, 1998, 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 October 1993 follow-on public offering.
The Company has experienced net losses and negative cash flows from
operations each year since inception and has incurred an accumulated deficit
of $86.0 million through March 31, 1998.
8
<PAGE>
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK.
No information is presented for this Item (the Company is not presently
required to prepare or provide this information pursuant to Instructions to
Item 305 of Regulation S-K).
PART II
ITEM 1. LEGAL PROCEEDINGS.
On February 27, 1998, a complaint was filed in the New Castle County,
Delaware Court of Chancery naming the Company, the Company's directors and
BioStar as defendants. The complaint, filed by a stockholder of the Company,
claims to be on behalf of a class of all the Company's stockholders and
contends that the directors of the Company breached their fiduciary duties to
the Company's stockholders when they unanimously approved the proposed
combination with BioStar. The complaint seeks to enjoin the proposed
combination with BioStar as well as the operation of the Company's
stockholder rights plan and seeks an order rescinding the proposed
combination with BioStar upon its consummation as well as compensatory
damages and costs. The Company believes that the claims are without merit and
intends to vigorously defend against this suit. Although there can be no
assurances in this regard, the Company believes that the suit will have no
material adverse effect on the Company because the Company (i) believes that
the claimant will not prevail on the merits, (ii) has insurance which it
believes will cover the cost of defending this claim (except for a $75,000
deductible amount) and (iii) has terminated the Reorganization Agreement
which provided for the proposed combination with BioStar.
9
<PAGE>
ITEM 5. OTHER INFORMATION.
TERMINATION OF MERGER AGREEMENT
On December 22, 1997, the Company entered into the Reorganization
Agreement with BioStar. The Reorganization Agreement provided, among other
things, (i) for the combination of the Company and BioStar and (ii) that
either the Company or BioStar could terminate the Reorganization Agreement if
the combination was not consummated on or before May 31, 1998. Because the
Company and BioStar determined that the combination was not likely to occur
by such deadline, on May 7, 1998 the parties mutually elected to terminate
the Reorganization Agreement to allow both the Company and BioStar to
consider other alternatives.
DELISTING NOTIFICATION FROM THE NASDAQ STOCK MARKET, INC.
The Company has been advised by The Nasdaq Stock Market, Inc. ("Nasdaq")
that the Company's Common Stock will be delisted from the Nasdaq National
Market due to (i) Nasdaq's assessment that the Company is operating analogous
to a "public shell" and (ii) a bid price for the Company's Common Stock of
less than $1.00 per share. Nasdaq has advised the Company that the Company's
Common Stock would be delisted with the opening of the market on May 1, 1998;
however, the Company has appealed the delisting to Nasdaq's Listing and
Hearing Review Committee and delisting of the Company's Common Stock has been
stayed during the pendency of such appeal.
In reaching its decision with respect to the "public shell"
determination, Nasdaq identified several factors, from its perspective, with
respect to such determination (i) the Company presently has no revenue
generating operations as identified in the Company's Annual Report on Form
10-K for the year ended December 31, 1997; (ii) the Company has only a
minimal staff dedicated to exploiting the Company's intellectual property
rights; (iii) the Company's principal asset is cash; and (iv) the Company's
operational focus, at the time of Nasdaq's determination, was the potential
combination with BioStar contemplated by the Reorganization Agreement.
With respect to the minimum bid price of $1.00 per share of the
Company's Common Stock, the Company had proposed consideration of a reverse
split of the Company's Common Stock in connection with a stockholder vote on
the proposed combination with BioStar. Insofar as a special stockholder
meeting will not be held for a vote on the canceled Reorganization Agreement,
the Company's management is presently evaluating a proposal for consideration of
a reverse split of the Company's Common Stock at the Company's 1998 Annual
Stockholder Meeting.
The can be no assurances that the Company will be able to maintain the
Nasdaq National Market listing for the Company's Common Stock (whether as a
result of failure to meet the minimum bid price requirement, as a result of
Nasdaq's assertion regarding the Company as analogous to a "public shell" or
as a result of other requirements imposed by the Nasdaq National Market). The
Company's management anticipates that the absence of the Nasdaq National Market
listing for the Company's Common Stock would have an adverse effect on the
market for, and potentially the market price of, the Company's Common Stock.
If the Company's Common Stock is delisted from the Nasdaq National
Market, the Company expects that brokers would continue to make a market in
the Company's Common Stock on the OTC Bulletin Board.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits
Item Description
---- -----------
10.28 License Agreement dated November 13, 1996 between The
Johns Hopkins University and the Company, as amended.
27.1 Financial Data Schedule
b. Reports on Form 8-K
On January 13, 1998, the Company filed a report on Form 8-K which
discussed the Company's proposed combination with BioStar (which was
originally announced on December 22, 1997) and included as Exhibit 2.1
the Agreement and Plan of Merger and Reorganization dated December 22,
1997 executed by the Company and BioStar. The Company filed no other
reports on Form 8-K during the quarter ended March 31, 1998.
10
<PAGE>
SIGNATURES
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 May, 1998.
CORTECH, INC.
(Registrant)
Date: May 14, 1998 By: /s/ KENNETH R. LYNN
----------------------------- --------------------------------------
Kenneth R. Lynn
PRESIDENT, CHIEF EXECUTIVE OFFICER
AND ACTING CHIEF FINANCIAL OFFICER
(PRINCIPAL EXECUTIVE, ACCOUNTING AND
FINANCIAL OFFICER)
11
<PAGE>
EXHIBIT 10.28
AMENDMENT TO LICENSE AGREEMENT
This Amendment having an effective date of February 13, 1998 is made by and
between Cortech, Inc., a corporation having a principal place of business at
6850 North Broadway, Denver, Colorado 80221 (hereafter "Cortech") and The
Johns Hopkins University, having an address of 2024 E. Monument Street, Suite
2-100, Baltimore, Maryland 21205 (hereinafter "JHU").
WHEREAS, JHU and Cortech entered into a License Agreement dated November
21, 1996 (hereinafter the "Agreement"); and
WHEREAS, JHU and Cortech find it in their mutual best interests to amend
said Agreement such that certain rights to the inventions are terminated and
shall revert back to JHU, with JHU having sole ownership of said rights.
NOW THEREFORE, the parties hereto agree to replace or terminate the
following paragraphs as follows:
Paragraph 1.2 is replaced with the following: "Field" shall mean and
include the use of PATENT RIGHTS only for the use of Cortech's compound
CI-0694 (Sulfasim) and other compounds claimed in the U.S. Patent No.
5,599,912 entitled "Compounds and methods for suppressing an immune response
to sulfomethoxozale containing substances."
Paragraph 4.1 is replaced with the following: Each party will notify the
other promptly in writing when any infringement in the Field by another is
uncovered or suspected.
Paragraph 4.2 is replaced with the following: JHU shall have the sole
right but not the obligation to enforce any patent within PATENT RIGHTS
against any infringement or alleged infringement thereof.
Paragraph 4.3 is hereby terminated.
Paragraph 4.4 is replaced with the following: Any recovery by JHU under
Paragraph 4.2 shall be deemed to reflect the loss of commercial sales, and
JHU shall pay to Cortech fifteen percent (15%) of the recovery net of all
reasonable costs and expenses associated with a suit or settlement in the
PATENT RIGHTS in the FIELD.
Paragraph 7.2 is hereby terminated.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed the day and year first written above.
JOHNS HOPKINS UNIVERSITY CORTECH, INC.
By: /s/ Bart Chernow, M.D. By: /s/ Diarmuid Boran
------------------------------------- -------------------------------
Bart Chernow, M.D. Name: Diarmuid Boran
Vice Dean for Research and Technology Title: Vice President,
Professor of Medicine, Corporate Development
Anesthesiology and Critical Care
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<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
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 14,315
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 14,594
<PP&E> 7,418
<DEPRECIATION> 7,082
<TOTAL-ASSETS> 14,930
<CURRENT-LIABILITIES> 945
<BONDS> 0
0
0
<COMMON> 37
<OTHER-SE> 13,948
<TOTAL-LIABILITY-AND-EQUITY> 14,930
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,810
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,399)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,399)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> 0
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