<PAGE> 1
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 0-15190
OSI Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3159796
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
106 Charles Lindbergh Boulevard, Uniondale, New York 11553
(Address of principal executive offices) (Zip Code)
516-222-0023
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report.)
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
APPLICABLE ONLY TO CORPORATE ISSUERS:
At April 30, 1998 the registrant had outstanding 22,270,958 shares of common
stock $.01 par value.
<PAGE> 2
OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I - FINANCIAL INFORMATION.............................................................................3
Item 1. Financial Statements
Consolidated Balance Sheets
- March 31, 1998 and September 30, 1997......................................................3
Consolidated Statements of Operations
- Three months ended March 31, 1998 and 1997.................................................5
Consolidated Statements of Operations
- Six months ended March 31, 1998 and 1997 ..................................................6
Consolidated Statements of Cash Flows
- Six months ended March 31, 1998 and 1997...................................................7
Notes to Consolidated Financial Statements...................................................9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.........................................................10
Item 3. Quantitative and Qualitative Disclosures About Market Risk .................................13
PART II - OTHER INFORMATION...............................................................................14
Item 1. Legal Proceedings...........................................................................14
Item 2. Changes in Securities and Use of Proceeds...................................................14
Item 3. Defaults Upon Senior Securities.............................................................14
Item 4. Submission of Matters to a Vote of Security Holders ........................................14
Item 5. Other Information...........................................................................14
Item 6. Exhibits and Reports on Form 8-K............................................................15
SIGNATURES................................................................................................16
EXHIBIT INDEX.............................................................................................17
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, September 30,
Assets 1998 1997
- ------ ---- ----
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,448,441 $ 8,636,634
Short-term investments 19,155,500 23,198,035
Receivables, including
trade receivables of $207,480 and
$350,100 at March 31, 1998 and
September 30, 1997, respectively 1,431,888 1,215,672
Interest receivable 248,291 475,800
Grants receivable 259,868 179,740
Prepaid expenses and other 920,535 820,151
----------- -----------
Total current assets 30,464,523 34,526,032
----------- -----------
Property, equipment and leasehold
improvements - net 7,781,462 7,752,286
Compound library assets - net 6,203,466 6,800,406
Loans to officers and employees 34,317 34,317
Other assets 1,690,464 1,287,782
Intangible assets - net 8,454,371 9,184,742
----------- -----------
$54,628,603 $59,585,565
=========== ===========
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 2,793,795 $ 4,180,039
Current portion of unearned revenue 1,513,860 733,377
----------- -----------
Total current liabilities 4,307,655 4,913,416
----------- -----------
Other liabilities:
Loan payable 107,718 151,985
Deferred acquisition costs 650,856 630,796
Accrued postretirement benefits cost 1,045,196 944,500
----------- -----------
Total liabilities 6,111,425 6,640,697
----------- -----------
</TABLE>
(continued)
-3-
<PAGE> 4
OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
<TABLE>
<CAPTION>
March 31, September 30,
Liabilities and Stockholders' Equity (cont'd) 1998 1997
- --------------------------------------------- ---- ----
(unaudited)
<S> <C> <C>
Stockholders' equity:
Common stock, $.01 par value;
50,000,000 shares authorized, 22,270,958
and 22,262,220 issued and
outstanding at March 31, 1998 and
September 30, 1997, respectively 222,710 222,622
Additional paid-in capital 104,905,223 104,864,056
Treasury stock, at cost 897,838 shares at
March 31, 1998 and
September 30, 1997 (6,284,866) (6,284,866)
Accumulated deficit (50,210,300) (45,657,713)
Cumulative translation adjustments (42,989) (101,531)
Unrealized holding loss on
short-term investments (72,600) (97,700)
------------- -------------
Total stockholders' equity 48,517,178 52,944,868
------------- -------------
Commitments and contingencies
$ 54,628,603 $ 59,585,565
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
-4-
<PAGE> 5
OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
---- ----
<S> <C> <C>
Revenues:
Collaborative program revenues,
principally from related parties $ 3,935,450 $ 4,538,549
Sales 235,299 327,327
Other research revenue 259,376 301,579
------------ ------------
4,430,125 5,167,455
------------ ------------
Expenses:
Research and development 4,674,878 4,469,910
Selling, general and administrative 1,796,303 1,817,517
Amortization of intangibles 365,185 365,187
------------ ------------
6,836,366 6,652,614
------------ ------------
Loss from operations (2,406,241) (1,485,159)
Other income (expense):
Net investment income 385,370 533,528
Other (62,985) (37,053)
------------ ------------
Net loss $(2,083,856) $ (988,684)
============ ============
Weighted average number of shares
of common stock outstanding 21,369,283 22,090,652
============ ============
Basic net loss per share $ (.10) $ (.04)
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
-5-
<PAGE> 6
OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
1998 1997
---- ----
<S> <C> <C>
Revenues:
Collaborative program revenues,
principally from related parties $ 7,442,876 $ 6,371,729
Sales 434,064 604,036
Other research revenue 739,808 506,479
------------ ------------
8,616,748 7,482,244
------------ ------------
Expenses:
Research and development 9,538,395 7,944,243
Selling, general and administrative 3,522,154 3,586,376
Amortization of intangibles 730,370 730,369
------------ ------------
13,790,919 12,260,988
------------ ------------
Loss from operations (5,174,171) (4,778,744)
Other income (expense):
Net investment income 786,607 1,136,986
Other (165,023) (43,381)
------------ ------------
Net loss $ (4,552,587) $ (3,685,139)
============ ============
Weighted average number of shares
of common stock outstanding 21,367,936 22,083,730
============ ============
Basic net loss per share $ (.21) $ (.17)
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
-6-
<PAGE> 7
OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (4,552,587) $ (3,685,139)
Adjustments to reconcile net loss
to net cash used by operating activities:
(Gain) loss on sale of investments (5,310) 16,776
Depreciation and amortization 912,784 743,633
Amortization of library assets 901,478 550,755
Amortization of intangibles 730,370 730,369
Amortization of warrants 20,060 20,060
Foreign exchange (gain) loss 58,542 (46,125)
Changes in assets and liabilities:
Receivables (216,216) 397,858
Interest receivable 227,509 76,741
Grants receivable (80,128) 88,376
Prepaid expenses and other (100,384) (217,184)
Other assets (402,682) (638,384)
Accounts payable
and accrued expenses (1,386,244) (1,127,036)
Unearned revenue 780,483 863,616
Accrued postretirement
benefits cost 100,696 61,896
------------ ------------
Net cash used by
operating activities $ (3,011,629) $ (2,163,788)
------------ ------------
Cash flows from investing activities:
Additions to short-term
investments $ (3,575,545) $ (3,920,205)
Maturities and sales of short-term
investments 7,648,490 10,870,979
Additions to library assets (304,538) --
Additions to property,
equipment and leasehold
improvements (941,959) (987,165)
------------ ------------
Net cash provided by investing
activities $ 2,826,448 $ 5,963,609
------------ ------------
</TABLE>
(continued)
-7-
<PAGE> 8
OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
1998 1997
---- ----
<S> <C> <C>
Cash flows from financing activities:
Proceeds from exercise
of stock options and
employee stock purchase plan $ 41,255 $ 85,862
Net change in loans payable (44,267) 114,860
Purchase of treasury stock -- (8,750,000)
------------ ------------
Net cash used by financing
activities (3,012) (8,549,278)
Net decrease in cash and cash
equivalents (188,193) (4,749,457)
Cash and cash equivalents at
beginning of period $ 8,636,634 $ 13,409,866
============ ============
Cash and cash equivalents
at end of period $ 8,448,441 $ 8,660,409
============ ============
Issuance of treasury stock for
acquisition of license to the Dow
Compound Library $ -- $ 2,500,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
-8-
<PAGE> 9
OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position of OSI
Pharmaceuticals, Inc. and its subsidiaries (the "Company") as of March 31, 1998
and September 30, 1997, and its results of operations for the three and six
months ended March 31, 1998 and 1997 and its cash flows for the six months ended
March 31, 1998 and 1997. Certain reclassifications have been made to the prior
period financial statements to conform them to the current presentation.
It is recommended that these consolidated financial statements be read in
conjunction with the consolidated financial statements and notes thereto in the
Company's 1997 Annual Report on Form 10-K.
Results for interim periods are not necessarily indicative of results for the
entire year.
(2) Net Loss Per Share
Effective December 31, 1997, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("FASB 128"), which
replaced the calculation of primary and fully diluted earnings per share with
basic and diluted earnings per share. Basic loss per share is computed by
dividing the net loss by the weighted-average number of common shares
outstanding during the period. Diluted loss per share is not presented as the
inclusion of potential common shares (stock options outstanding and warrants)
would be antidilutive. Adoption of FASB 128 did not have a material effect.
-9-
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THREE AND SIX MONTHS ENDED MARCH 31, 1998 AND 1997
REVENUES
Revenues for the three and six months ended March 31, 1998 were approximately
$4.4 million and $8.6 million, respectively, representing a decrease of $0.7
million or 14% and an increase of $1.1 million or 15%, respectively, compared to
revenues of $5.2 million and $7.5 million, respectively, reported for the three
and six months ended March 31, 1997. Collaborative program revenues decreased
approximately $0.6 million or 13% and increased approximately $1.1 million or
17%, respectively. The three month decrease is largely due to a $1.0 million
initiation fee from Hoechst Marion Roussel, Inc. ("HMRI") in connection with the
Company's chronic anemia program, which was received in March 1997. This
decrease was partially offset by a new collaborative research and license
agreement with Anaderm Research Corp. ("Anaderm") for the commencement on
October 1, 1997 of the funded phase of the research agreement among the Company,
Anaderm and Pfizer Inc. ("Pfizer"). The six month increase is primarily due to
the Anaderm program, as well as the collaborative research and license
agreements with: (1) Sankyo Company, Ltd. ("Sankyo") to discover and develop
novel pharmaceutical products to treat influenza, and (2) Bayer Corporation for
the continuing development of serum-based cancer diagnostics. The increase in
revenues was partially offset by a decrease in revenues related to the
completion on December 31, 1996 of the funded discovery phase of the Company's
collaborative program with Wyeth-Ayerst Laboratories relating to the discovery
and development of drugs for the treatment of diabetes and osteoporosis. Sales
revenue, representing primarily service revenue from the pharmaceutical division
of the Company's Aston Molecules Ltd. ("Aston") subsidiary, which the Company
acquired in September 1996, decreased approximately $92,000 and $170,000 or 28%
and 28%, respectively. The decrease was primarily due to the Company's decision
to devote certain of Aston's resources to internal programs as opposed to sales
outside the Company. Other research revenues, representing primarily government
grants and other research grants, decreased approximately $42,000 or 14%, and
increased approximately $233,000 or 46%, respectively, for the three and six
months ended March 31, 1998 compared to the three and six months ended March 31,
1997.
EXPENSES
The Company's operating expenses increased by approximately $184,000 and $1.5
million or 3% and 12%, respectively, for the three and six months ended March
31, 1998 compared to the three and six months ended March 31, 1997. Research and
development expenses increased approximately $205,000 and $1.6 million, or 5%
and 20%, respectively. The increase was due to: (1) the expansion of the
Company's joint venture with Anaderm for the discovery and development of novel
compounds to treat pigmentation disorders, wrinkles and baldness; (2) the joint
venture with Sepracor, Inc. ("Sepracor") for the discovery of certain
anti-infective and anti-inflammatory agents, which commenced in March 1997; and
(3) the collaborative agreement
-10-
<PAGE> 11
with Sankyo for the discovery and development of novel pharmaceutical products
to treat influenza, which commenced in February 1997. Also contributing to the
increase in expenses were costs associated with the expansion of the Company's
natural products discovery and medicinal chemistry operations at its MYCOsearch,
Inc. ("MYCOsearch") and Aston subsidiaries.
OTHER INCOME AND EXPENSE
Investment income decreased approximately $148,000 and $350,000 or 28% and 31%,
respectively, for the three and six months ended March 31, 1998 compared to the
three and six months ended March 31, 1997. This decrease relates to the decrease
in the principal balance invested.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, working capital (representing primarily cash, cash
equivalents and short-term investments) aggregated approximately $26.2 million.
The Company is dependent upon collaborative research revenues, government
research grants, interest income and cash balances, and will remain so until
products developed from its technology are successfully commercialized.
In connection with the formation of Helicon Therapeutics, Inc. ("Helicon") in
July 1997, the Company agreed to perform $1 million of molecular screening
services for Helicon through approximately July 1998 (and grant to Helicon a
non-exclusive license with respect to certain screening technology) in exchange
for its shares of Helicon's capital stock. Helicon is to provide research
funding to the Company for the second and third years of the initial three-year
term of this program. In addition, pursuant to its agreement with Pfizer and
Anaderm, the Company will contribute approximately $800,000 in drug discovery
resources (including assay biology, high throughput screening, lead optimization
and chemistry) to Anaderm in fiscal 1998 and, assuming Anaderm achieves certain
milestones, approximately an additional $1 million in such resources through
fiscal 1999.
The Company believes that with the funding from its collaborative research
programs, government research grants, interest income, and cash balances, its
financial resources are adequate for its operations for approximately the next
three to four years based on its current business plan even if no milestone
payments or royalties are received during this period. However, the Company's
capital requirements may vary as a result of a number of factors, including, but
not limited to, competitive and technological developments, funds required for
further expansion or enhancement of the Company's technology platform (including
possible additional joint ventures, collaborations and acquisitions), potential
milestone payments, and the time and expense required to obtain governmental
approval of products, some of which factors are beyond the Company's control.
One of the Company's strategic objectives is to manage its financial resources
and the growth of its drug discovery and development programs so as to balance
its proprietary efforts and co-
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<PAGE> 12
ventures with its funded collaborations. In pursuing this objective, the Company
has expanded the scope of its discovery and development activities without
significantly increasing its rate of cash consumption. An example of this was
the conversion of the Company's chronic anemia program from an exclusively
proprietary effort to a funded collaboration with HMRI in the second quarter of
fiscal 1997. This made additional resources formerly allocated to the
proprietary chronic anemia program available for other proprietary programs and
co-ventures without requiring an increase in the rate of cash consumption. The
Company expects to continue its current level of expenditures and capital
investment over the next several years to enhance its drug discovery
technologies, pursue internal proprietary drug discovery programs, and to commit
resources to co-ventures with pharmaceutical companies.
Examples of the Company's co-ventures with pharmaceutical companies include the
formation of Helicon in July 1997 with Cold Spring Harbor Laboratory and
Hoffman-La Roche Inc., the formation of Anaderm in April 1996 with Pfizer and
New York University, and the Company's co-ventures with BioChem Pharma
(International) Inc., which commenced in May 1996, and with Sepracor, which
commenced in March 1997. Generally the Company expects to commit greater
resources to such programs in exchange for greater commercialization rights, as
compared to its traditional collaborative research programs in which the Company
receives research funding and royalties on sales of commercialized products. If
the developmental activities on which one or more of these ventures are focused
are successful, then the Company will be required to make substantial additional
capital investment in such venture(s) in order to maintain its percentage
participation.
There can be no assurance that scheduled payments will be made by third parties,
that current agreements will not be canceled, that government research grants
will continue to be received at current levels, that milestone payments will be
made, or that unanticipated events requiring the expenditure of funds will not
occur. Further, there can be no assurance that the Company will be able to
obtain any additional required funds on acceptable terms, if at all. Failure to
obtain additional funds when required would have a material adverse effect on
the Company's business, financial condition and results of operations.
YEAR 2000 COMPLIANCE
The Company is currently working to resolve the potential impact of the Year
2000 on the processing of date-sensitive information by the Company's
computerized information systems. The Year 2000 problem is the result of
computer programs being written using two digits (rather than four) to define an
applicable year. Substantially all of the Company's biology and chemistry
databases are stored on Oracle tables and ISIS chemical structure databases,
which are Year 2000 compliant, as are its Novell network servers. The Company
currently plans to convert its financial records to an Oracle based system and
is in the process of implementing a new planning and budgeting package both of
which are Year 2000 compliant. Based on current information, costs of addressing
remaining potential problems are not expected to have a material adverse impact
to the Company's financial position, results of operations, or cash flows in
future periods.
-12-
<PAGE> 13
NEW ACCOUNTING PRONOUNCEMENTS
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related Information,"
and SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits." SFAS No. 130 establishes standards for reporting and
display of comprehensive income and its components. SFAS No. 131 establishes
standards for reporting information about operating segments and related
disclosures about products and services, geographic areas and major customers.
SFAS No. 132 revises current disclosure requirements for employers' pensions and
other retiree benefits. These standards are effective for years beginning after
December 15, 1997. These standards expand or modify current disclosures and,
accordingly, will have no impact on the Company's reported financial position,
results of operations and cash flows.
FORWARD LOOKING STATEMENTS
Certain of the matters and subject areas discussed in this report that are not
statements of current or historical fact are "forward-looking statements" that
convey information about potential future circumstances and developments. These
forward-looking statements are necessarily based on various assumptions, involve
known and unknown risks and generally are subject to the inherent risks and
uncertainties surrounding expectations regarding future occurrence. As a result,
the Company's actual future experience may differ materially from the results,
achievements or performance described or implied in such statements. Factors
that might cause the Company's actual future experience to differ materially
from the forward-looking statements include, but are not limited to, (i) the
Company's absence of commercialized drug products, (ii) the Company's dependence
on third parties for clinical development and commercialization of potential
products, (iii) the potential failure of the Company's lead compounds currently
in clinical trials to progress successfully through clinical development, (iv)
the potential failure of any drug candidates that emerge from the Company's
discovery operations to progress successfully to or through clinical
development, (v) competition, (vi) government regulation and (vii)
pharmaceutical pricing. These and additional factors that may cause the
Company's actual future experience to differ materially from the forward-looking
statements contained in this report are discussed in Exhibit 99 to the Company's
annual report on Form 10-K for the fiscal year ended September 30, 1997.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
-13-
<PAGE> 14
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's annual meeting of stockholders was held March 25, 1998. The
following eight directors were elected:
<TABLE>
<CAPTION>
Name For Withholding Authority
---- --- ---------------------
<S> <C> <C>
1. Gary E. Frashier 16,505,290 47,276
2. Edwin A. Gee, Ph.D. 15,505,810 51,756
3. G. Morgan Browne 16,505,290 52,276
4. John H. French, II 16,488,923 58,643
5. Daryl K. Granner, MD 16,508,590 48,976
6. Walter M. Lovenberg, Ph.D. 16,510,190 47,376
7. Steve M. Peltzman 16,506,473 51,093
8. John P. White 16,510,103 47,483
</TABLE>
In addition, the appointment of KPMG Peat Marwick LLP as auditors for fiscal
year ended September 30, 1998 was ratified (16,493,050 shares voted in favor,
36,387 shares voted against and 28,129 shares abstained).
ITEM 5. OTHER INFORMATION
Not applicable.
-14-
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
3.1 Certificate of Incorporation, as amended (1)
3.2 By-Laws, as amended (2)
27 Financial Data Schedule
-------------------------------
(1) Included as an exhibit to the Company's
quarterly report on Form 10-Q for the
quarter ended December 31, 1997, filed on
February 17, 1998, and incorporated herein
by reference.
(2) Included as an exhibit to the Company's
registration statement on Form S-3 (File No.
333-937) initially filed on February 14,
1996, and incorporated herein by reference.
(B) REPORTS ON FORM 8-K
None.
-15-
<PAGE> 16
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.
OSI PHARMACEUTICALS, INC.
Date: May 15, 1998 /s/ Gary E. Frashier
------------------------------------------
Gary E. Frashier
Chairman and Chief Executive Officer
Date: May 15, 1998 /s/ Robert L. Van Nostrand
------------------------------------------
Robert L. Van Nostrand
Vice President and Chief Financial Officer
(Principal Financial Officer)
-16-
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
3.1 Certificate of Incorporation, as amended (1)
3.2 By-Laws, as amended (2)
27 Financial Data Schedule
</TABLE>
---------------
(1) Included as an exhibit to the Company's quarterly report filed
on Form 10-Q for the quarter ended December 31, 1997, filed on
February 27, 1998, and incorporated herein by reference.
(2) Included as an exhibit to the Company's registration statement
on Form S-3 (File No. 333-937) initially filed on February 14,
1996, and incorporated herein by reference.
-17-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 8,448,441
<SECURITIES> 19,155,500
<RECEIVABLES> 1,541,409
<ALLOWANCES> 109,521
<INVENTORY> 0
<CURRENT-ASSETS> 30,464,523
<PP&E> 19,070,435
<DEPRECIATION> 11,288,973
<TOTAL-ASSETS> 54,628,603
<CURRENT-LIABILITIES> 4,307,655
<BONDS> 0
0
0
<COMMON> 222,710
<OTHER-SE> 48,294,468
<TOTAL-LIABILITY-AND-EQUITY> 54,628,603
<SALES> 434,064
<TOTAL-REVENUES> 8,616,748
<CGS> 0
<TOTAL-COSTS> 13,790,919
<OTHER-EXPENSES> 165,023
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,395
<INCOME-PRETAX> (4,552,587)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,552,587)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> (0.21)
<EPS-DILUTED> (0.21)
</TABLE>