<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 1999
COMMISSION FILE NUMBER 0-13789
NASTECH PHARMACEUTICAL COMPANY INC.
(Exact name of registrant as specified in its charter)
DELAWARE 11-2658569
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
45 DAVIDS DRIVE, HAUPPAUGE, NEW YORK 11788
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (516) 273-0101
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Name of each exchange
Title of each class on which registered
------------------- -------------------
Common Stock, $.006 par value Nasdaq National Market
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:
DATE CLASS SHARES OUTSTANDING
June 30, 1999 Common stock - $.006 par value 6,381,455
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NASTECH PHARMACEUTICAL COMPANY INC.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
<TABLE>
<S> <C> <C>
ITEM 1 - FINANCIAL STATEMENTS Page
Balance Sheets as of June 30, 1999 (unaudited) and December 31, 1998..............................................1
Statements of Operations for the six months and three months ended June 30, 1999 (unaudited) and 1998
(unaudited).......................................................................................................2
Statements of Stockholders' Equity for the six months ended June 30, 1999 (unaudited) and the year
ended December 31,1998............................................................................................3
Statements of Cash Flows for the six months ended June 30, 1999 (unaudited) and 1998 (unaudited)..................4
Notes to Financial Statements.....................................................................................5
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...........................6-8
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK........................................................8
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS.................................................................................................9
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS.........................................................................9
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES...................................................................................9
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...............................................................9
ITEM 5 - OTHER INFORMATION.................................................................................................9
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K..................................................................................9
SIGNATURES.......................................................................................................10
</TABLE>
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
NASTECH PHARMACEUTICAL COMPANY INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
-------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................................................... $ 20,411 $ 23,515
Account receivable................................................................. 211 20
Royalties and fees receivable...................................................... 1,007 2,265
Inventories........................................................................ 371 390
Prepaid expenses and sundry assets................................................. 261 248
Due from related party............................................................. 32 32
-------- --------
Total current assets...................................................... 22,293 26,470
-------- --------
Property and equipment................................................................. 2,384 1,635
Less: Accumulated depreciation and amortization.................................... 800 602
-------- --------
Property and equipment, net............................................... 1,584 1,033
-------- --------
Other assets........................................................................... 15 15
-------- --------
Total assets $ 23,892 $ 27,518
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................................... $ 820 $ 625
Royalties payable.................................................................. 441 597
Accrued expenses and sundry liabilities............................................ 763 794
-------- --------
Total current liabilities................................................. 2,024 2,016
-------- --------
Stockholders' equity:
Preferred stock, $.01 par value; authorized: 100,000 shares; issued and
outstanding: none
Common stock, $0.006 par value; authorized: 25,000,000 shares; issued and
outstanding: 6,381,455 and 6,376,915 shares at June 30, 1999 and December 31,
1998, respectively................................................... . . . . 38 38
Additional paid-in capital......................................................... 37,445 37,426
Accumulated deficit................................................................ (15,615) (11,962)
-------- --------
Total stockholders' equity................................................ 21,868 25,502
-------- --------
Total liabilities and stockholders' equity................................ $ 23,892 $ 27,518
======== ========
</TABLE>
See accompanying notes to financial statements.
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NASTECH PHARMACEUTICAL COMPANY INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, THREE MONTHS ENDED JUNE 30,
------------------------- --------------------------
1999 1998 1999 1998
------- ------ ------- ------
<S> <C> <C> <C> <C>
Revenues:
Product sales........................... $ 170 $ 437 $ 137 $ 205
License fee and royalty income ......... 2,339 4,431 987 2,572
Interest income......................... 575 710 277 345
------- ------ ------- ------
Total revenues..................... 3,084 5,578 1,401 3,122
------- ------ ------- ------
Costs and expenses:
Cost of product sales................... 139 503 113 229
Research and development................ 4,547 2,423 1,529 1,360
Royalties............................... 772 663 441 375
Sales and marketing..................... 447 462 339 262
General and administrative.............. 832 1,054 397 659
------- ------ ------- ------
Total costs and expenses........... 6,737 5,105 2,819 2,885
------- ------ ------- ------
Net income (loss)........................... $(3,653) $ 473 $(1,418) $ 237
======= ====== ======= ======
Net income (loss) per common share-basic.... $ (.57) $ .08 $ (.22) $ .04
======= ====== ======= ======
Net income (loss) per common share-diluted.. $ (.57) $ .07 $ (.22) $ .04
------- ------ ------- ------
Average shares outstanding-basic............ 6,381 6,216 6,381 6,325
======= ====== ======= ======
Average shares outstanding-diluted.......... 6,381 6,530 6,381 6,535
======= ====== ======= ======
</TABLE>
See accompanying notes to financial statements.
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NASTECH PHARMACEUTICAL COMPANY INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED) AND
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
----------------------- PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
---------- --------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1997............................... 6,101,020 $ 37 $ 35,978 $ (11,086) $ 24,929
Shares issued in connection with exercise of
underwriter's warrants................................ 270,000 1 1,402 --- 1,403
Shares issued in connection with exercise of stock
options............................................... 6,000 --- 46 --- 46
Fractional shares redeemed in connection with reverse
stock split .......................................... (105) --- --- --- ---
Net loss year ended December 31, 1998 --- --- --- (876) (876)
---------- --------- ------------ ----------- ------------
BALANCE, DECEMBER 31, 1998............................... 6,376,915 38 37,426 (11,962) 25,502
Shares issued in connection with exercise of stock
options............................................... 5,000 --- 19 --- 19
Fractional shares redeemed in connection with reverse
stock split .......................................... (460) --- --- --- ---
Net loss six months ended June 30, 1999.................. --- --- --- (3,653) (3,653)
---------- --------- ------------ ----------- ------------
BALANCE, JUNE 30, 1999 (UNAUDITED)....................... 6,381,455 38 37,445 (15,615) 21,868
========== ========= ============ =========== ============
</TABLE>
See accompanying notes to financial statements.
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NASTECH PHARMACEUTICAL COMPANY INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------------
1999 1998
--------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)..................................................... $ (3,653) $ 473
Adjustments to reconcile net income (loss) to net cash used
in operating activities:
Depreciation and amortization.................................... 198 140
Changes in assets and liabilities:
Accounts and other receivables................................... 1,067 (2,089)
Inventories...................................................... 19 55
Prepaid expenses and sundry assets............................... (13) (145)
Accounts payable................................................. 195 (229)
Royalties payable................................................ (156) 184
Accrued expenses and sundry liabilities.......................... (31) (247)
--------- ----------
Net cash used in operating activities..................................... (2,374) (1,858)
--------- ----------
INVESTING ACTIVITIES:
Property, plant and equipment......................................... (749) (347)
--------- ----------
Net cash used in investing activities..................................... (749) (347)
--------- ----------
FINANCING ACTIVITIES:
Proceeds from exercise of warrants.................................... --- 1,403
Exercise of stock options............................................. 19 46
--------- ----------
Net cash provided by financing activities................................. 19 1,449
--------- ----------
Net decrease in cash and cash equivalents................................. (3,104) (756)
Cash and cash equivalents--beginning...................................... 23,515 25,294
--------- ----------
Cash and cash equivalents--ending......................................... $ 20,411 $24,538
========= ==========
</TABLE>
See accompanying notes to financial statements.
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NASTECH PHARMACEUTICAL COMPANY INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- GENERAL
The accompanying financial information should be read in conjunction
with the audited financial statements, including the notes thereto, as of and
for the year ended December 31, 1998, included in the Company's 1998 annual
report filed on Form 10-K.
The information furnished in this report reflects all adjustments
(consisting of only normal recurring accruals) which are, in the opinion of
management, necessary for a fair statement of the results for the interim
periods.
NOTE 2 -- NET INCOME (LOSS) PER COMMON SHARE
Basic net income (loss) per common share is calculated using the
weighted average number of common shares outstanding during the periods. Diluted
income (loss) per share is calculated by including all dilutive potential common
shares such as stock options and warrants. A reconciliation between the
numerators and denominators of the basic and diluted net income per common share
is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Six Months Ended Three Months Ended
June 30, June 30,
--------------------- ------------------------
1999 1998 1999 1998
-------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Net income (loss) (numerator for basic and
diluted net income (loss) per common share)........................ $(3,653) $ 473 $ (1,418) $ 237
======== ========== ========== ========
Weighted average common shares outstanding
(denominator for basic net income (loss) per common
share)............................................................ 6,381 6,216 6,381 6,325
Effect of dilutive securities-employee stock options and
warrants.......................................................... --- 314 --- 210
-------- ---------- ---------- --------
Adjusted weighted average common shares outstanding
(denominator for diluted income (loss) per common
share)............................................................ 6,381 6,530 6,381 6,535
======== ========== ========== ========
Net income (loss) per common share-basic.............................. $ (.57) $ .08 $ (.22) $ .04
======== ========== ========== ========
Net income (loss) per common share-diluted............................ $ (.57) $ .07 $ (.22) $ .04
======== ========== ========== ========
</TABLE>
Employee stock options totaling 1,096,216 at June 30, 1999 were
not included in the net loss per share calculation because their effect would
have been anti-dilutive.
NOTE 3 -- INCOME TAXES
At June 30, 1999, the Company has available net operating loss
carryforwards for federal and state income tax reporting purposes of
approximately $12.4 million and has available research and development credit
carryforwards for federal income tax reporting purposes of approximately
$637,000, which are available to offset future taxable income, if any. These
carryforwards expire beginning in 2000 through 2019. A valuation allowance has
been applied to offset the respective deferred tax assets in recognition of the
uncertainty that such tax benefits will be realized. The Company's ability to
use such net operating loss and research and development credit carryforwards is
limited by change of control provisions under Section 382 of the Internal
Revenue Code.
NOTE 4 -- CONTRACTUAL MILESTONES - SCHWARZ PHARMA
Pursuant to the terms of a licensing agreement between the Company
and Schwarz Pharma for the development and U.S. marketing rights to intranasal
scopolamine, there are several milestone objectives that the Company must meet
in order to be eligible for certain payments. The agreement provides that in the
event a milestone objective is not
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<PAGE> 8
achieved within six months of its required completion date, Schwarz Pharma may
elect to either pay 50% of the scheduled milestone payment or, in its
discretion, terminate the agreement. The contract also permits either party to
terminate the contract upon the other party's failure to comply in any material
respect with its terms.
The filing of the New Drug Application ("NDA") is a stated milestone
objective which has been delayed (in excess of six months) as a result of
additional safety studies requested by the Food and Drug Administration ("FDA").
The Company plans to file the NDA in late 1999. At that time, Schwarz Pharma may
elect to either pay 50% of the scheduled milestone or terminate the agreement.
If payment is made then the Company will receive $250,000 within a defined time
period after filing. In addition, the delay in filing the NDA has affected the
Company's ability to earn future milestones totaling $1.1 million. The 50%
penalty provision reduces the availability of these milestones to $550,000
contingent upon favorable product approval actions by the FDA.
NOTE 5 -- SUBSEQUENT EVENT
In July 1999, the shareholders of the Company approved a 1:100
reverse split of its Common Stock followed immediately by a 100:1 forward split.
The Company intends to effectuate these transactions on August 17, 1999. The
purpose of these transactions, as set forth in the Company's proxy statement to
shareholders, is to enable a redemption of odd-lot shares and reduce certain
related administrative costs incurred annually by the Company.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Except for historical information contained herein, the statements
in this Item are forward-looking statements that are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and uncertainties
that reflect the Company's intentions, expectations or beliefs concerning future
events, including, but not limited to, expectations with respect to FDA approval
of new products, technology and product development milestones, the ability of
the Company to manufacture and meet market demand for its products, the market
acceptance of products under control of the Company's licensees, the ability of
the Company to negotiate favorable collaborative agreements, the commencement of
sales of new products, and the sufficiency of the Company's cash flow for future
liquidity and capital resource needs. These factors, among others, could cause
results to differ materially from those in the forward-looking statements. In
addition, significant fluctuations in quarterly and fiscal operating results may
occur as a result of varying milestone payments and the timing of costs and
expenses related to the Company's research and development programs.
The Company is engaged in the research, development, manufacturing
and commercialization of nasally administered forms of prescription and
over-the-counter pharmaceuticals that are currently delivered in oral,
injectable or other dosage forms. The nasal delivery of certain pharmaceuticals
may enable more rapid systemic absorption, lower required dosages, quicker onset
of desired effect, and painless, convenient patient self-administration,
resulting in improved patient compliance and pharmacoeconomics. The Company
focuses its research primarily on drugs with demonstrated safety and efficacy,
which, through current delivery forms, have certain bioavailability, therapeutic
or patient compliance limitations that may be improved with a preferred delivery
system.
The Company receives licensing revenues on two commercial products -
Stadol(R)NS(TM) and Nascobal(R). Stadol NS, an opioid analgesic which is
classified as a Schedule IV substance, is used for the treatment of moderate to
severe pain and the acute pain of migraine. The product is currently marketed by
Bristol-Myers Squibb Co. (BMS) under an agreement that generates quarterly
royalties to the Company. Royalties from BMS are scheduled to terminate at time
of patent expiry in August 2001. In July 1997, the Company entered into an
exclusive licensing agreement for Nascobal(R) in the U.S. with Schwarz Pharma
and commercially launched the product in October 1997. Under the agreement, the
Company received minimum royalties of $2 million in 1998 and retains global
manufacturing rights. The minimum royalty expired in December 1998. Sales
re-orders of Nascobal(R) in early 1999 and 1998 were below expectations as a
result of a marketing issue which required a change in the packaging
configuration of the product. The Company shipped the new package configuration
to Schwarz Pharma in the second quarter of 1999.
In December 1997, the Company entered into an agreement with Schwarz
Pharma for U.S. marketing rights with respect to the Company's planned
intranasal compound, scopolamine, for the prevention and treatment of motion
sickness. As disclosed in Note 4 to the financial statements, the Company plans
to file the NDA in 1999.
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The Company intends to commit significant financial resources in the
future to internally fund concurrent research and development projects with the
goal of achieving greater economic benefit from product sales. In addition, the
Company's future profitability is primarily affected by, among others, the
success of product sales by its licensees, its investment and achievement of
milestones in research and development programs, regulatory uncertainties with
respect to its filings with the FDA, and the success of its financing
activities. As a result of the uncertainties associated with these factors and
the increased investment in research and development, the Company anticipates a
loss in calendar 1999.
RESULTS OF OPERATIONS
Six Months Ended June 30, 1999 Compared to Six Months Year Ended
June 30, 1998
Revenues decreased by $2,494,000, or 45%, to $3.1 million
primarily as a result of a decline in product sales and royalty income of
Nascobal(R) and milestone payments on intranasal scopolamine. Total revenues
from Schwarz Pharma on Nascobal(R) were $339,000 compared to $1,437,000 in 1998.
Sales re-orders of Nascobal(R) were below expectation as a result of the
marketing issue noted above. The revenue for the six months ended June 30, 1998
also included $1,000,000 as a minimum royalty from Schwarz Pharma on
Nascobal(R). Accordingly, royalty income on sales of Nascobal(R) decreased
$831,000, or 83%, to $169,000. Total milestone payments on scopolamine
decreased $1,600,000 or 76% to $500,000. Royalty income received from BMS on
sales of Stadol NS increased $235,000, or 17%, to $1,579,000. The Company
anticipates a decline in total revenues in 1999 primarily as a result of the
non-recurrence of the $2 million minimum royalty on Nascobal(R) and a
substantially lower amount of milestone payments available from Schwarz Pharma
on intranasal scopolamine.
Total costs and expenses increased by $1,632,000, or 32%, to $6.7
million in 1999. The details of the increase follow:
Research and development expense increased by $2.1 million, or 88%
to $4.5 million primarily as a result of the Company's clinical program for
intranasal scopolamine. In September 1998, the Company also entered into an
operating lease for a larger R&D facility and intends to pursue additional
internally funded projects in the future.
Royalties expense increased by $109,000 or 16% to $772,000 as a
result of the increase in sales of Stadol NS by BMS and the related royalty
payable to the University of Kentucky Research Foundation (UKRF) under a
separate agreement between the Company and UKRF. Royalties expense increases or
decreases approximately in proportion to royalty income associated with Stadol
NS.
As a percentage of total revenues, sales and marketing and general
and administrative expenses increased to 41% in 1999 as compared to 27% in 1998
as a result of the decline in revenues.
Three Months Ended June 30, 1999 Compared to Three Months Year Ended
June 30, 1998
Revenues decreased by $1,721,000, or 55%, to $1.4 million primarily
as a result of a decline in product sales and royalty income of Nascobal(R) and
milestone payments on intranasal scopolamine. Total revenues from Schwarz Pharma
on Nascobal(R) were $215,000 compared to $705,000 in 1998. Sales re-orders of
Nascobal(R) were below expectation as a result of the marketing issue noted
above. The revenue for the second quarter of 1998 also included $500,000 as a
minimum royalty from Schwarz Pharma on Nascobal(R). Accordingly, royalty income
on sales of Nascobal(R) decreased $422,000, or 84%, to $78,000. There were no
milestone payments in the current quarter as compared to $1,350,000 in the
comparable quarter of 1998. Royalty income received from BMS on sales of Stadol
NS increased $150,000, or 20%, to $901,000.
Total costs and expenses are virtually unchanged at $2.8 million. In
the prior year, the Company incurred expenses of $200,000 associated with merger
and acquisition activity which is classified in general and administrative
expense.
As a percentage of total revenues, sales and marketing and general
and administrative expenses increased to 53% in 1999 as compared to 30% in 1998
primarily as a result of the decline in revenues.
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<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1999, the Company's liquidity included cash and cash
equivalents of $20.4 million compared to $23.5 million at December 31, 1998.
Account, royalties and fee receivables at June 30, 1999 consist principally of
receivables pursuant to the BMS and Schwarz Pharma agreements.
In July 1999, the shareholders of the Company approved a 1:100
reverse split of its Common Stock followed immediately by a 100:1 forward split.
The Company intends to effectuate these transactions on August 17, 1999. The
purpose of these transactions, as set forth in the Company's proxy statement to
shareholders, is to enable a redemption of odd-lot shares and reduce certain
related administrative costs incurred annually by the Company.
At June 30, 1999, the Company had working capital of $20.3 million.
Management anticipates that its current cash position will provide adequate
funds for the Company's anticipated needs, including working capital, through
mid-2000. In 1999, the Company plans to invest up to $3 million in equipment and
leasehold improvements in connection with its new R&D facility. Based upon the
anticipated future financing requirements of the Company, management expects
that the Company may, from time to time, engage in additional financings of a
character and in amounts to be determined.
YEAR 2000 COMPLIANCE
The Company has conducted a review of its computer systems to
identify the systems that could be affected by the Year 2000 issue and, with
minor modifications to its computer systems, the Year 2000 will not pose a
significant operational problem for the Company. However, improper or inadequate
remediation of Year 2000 problems by suppliers, licensees and financial
institutions could adversely affect the Company's operations, liquidity or
financial condition.
The Company has contacted all significant suppliers, licensees and
financial institutions in order to identify potential areas of concern. It is
anticipated that this inquiry will be completed by the third quarter of 1999.
The Company is unable to determine at this time whether the consequences of Year
2000 failures by third parties will have a material adverse impact on the
Company.
Based on the results of the above inquiries, the Company may need to
create a contingency plan to identify and document potential business
disruptions and continuity planning procedures. The Company expects this
activity to be an on-going process during 1999.
The above comments on the Year 2000 issue contain forward-looking
statements relating to the Company's plans, strategies, expectations,
intentions, and resources that should be read in conjunction with the Company's
disclosures on forward-looking statements above.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
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<PAGE> 11
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The Company knows of no material litigation or proceedings, pending
or threatened, to which the Company is or may become a party.
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
In July 1999, the shareholders of the Company approved a 1:100
reverse split of its Common Stock followed immediately by a 100:1
forward split.
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
None
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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, duly authorized, in Hauppauge, State of New York, on August 11,
1999.
NASTECH PHARMACEUTICAL COMPANY INC.
By: /s/ Vincent D. Romeo, Ph.D.
-------------------------------
Vincent D. Romeo, Ph.D.
President and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Andrew Zinzi
-------------------------------
Andrew Zinzi
Chief Financial Officer
(Principal Financial and Accounting Officer)
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 20,411
<SECURITIES> 0
<RECEIVABLES> 1,218
<ALLOWANCES> 0
<INVENTORY> 371
<CURRENT-ASSETS> 22,293
<PP&E> 2,384
<DEPRECIATION> 800
<TOTAL-ASSETS> 23,892
<CURRENT-LIABILITIES> 2,024
<BONDS> 0
0
0
<COMMON> 38
<OTHER-SE> 21,830
<TOTAL-LIABILITY-AND-EQUITY> 23,892
<SALES> 261
<TOTAL-REVENUES> 3,084
<CGS> 139
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,598
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,653)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,653)
<EPS-BASIC> (.57)
<EPS-DILUTED> (.57)
</TABLE>
