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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-15006
AVANT IMMUNOTHERAPEUTICS, INC.
(Exact name of registrant as specified in charter)
DELAWARE NO. 13-3191702
(State of Incorporation) (I.R.S. Employer Identification No.)
119 FOURTH AVENUE, NEEDHAM, MASSACHUSETTS 02494-2725
(Address of principal executive offices) (Zip code)
(781) 433-0771
(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.
--- ---
Outstanding as of
Class July 23, 1999
----- -------------
Common Stock, par value $.001 42,534,254
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AVANT IMMUNOTHERAPEUTICS, INC.
TABLE OF CONTENTS
JUNE 30, 1999
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Page
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PART I -- FINANCIAL INFORMATION
Condensed Consolidated Balance Sheet at June 30, 1999 and December 31, 1998..........................3
Condensed Consolidated Statement of Operations for the Quarters Ended
June 30, 1999 and 1998......................................................................4
Condensed Consolidated Statement of Operations for the Six Months Ended
June 30, 1999 and 1998......................................................................5
Condensed Consolidated Statement of Cash Flows for the Six Months Ended
June 30, 1999 and 1998......................................................................6
Notes to Condensed Consolidated Financial Statements.................................................7
Management's Discussion and Analysis of Financial Condition and Results of
Operations.........................................................................................8
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings..........................................................................12
Item 2. Changes in Securities......................................................................12
Item 3. Defaults Upon Senior Securities............................................................12
Item 4. Submission of Matters to a Vote of Security Holders........................................12
Item 5. Other Information..........................................................................12
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits...............................................................................13
B. Reports on Form 8-K....................................................................13
Signatures..........................................................................................14
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AVANT IMMUNOTHERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
- ----------------------------------------------------------------- --------------------- ---------------------
<S> <C> <C>
ASSETS (audited)
Current Assets:
Cash and Cash Equivalents $ 8,361,000 $ 8,937,200
Marketable Securities -- 4,903,100
Current Portion Restricted Cash 750,000 750,000
Current Portion Lease Receivable 395,700 395,700
Prepaid Expenses and Other Current Assets, Net 566,300 629,700
- ----------------------------------------------------------------- --------------------- ---------------------
Total Current Assets 10,073,000 15,615,700
- ----------------------------------------------------------------- --------------------- ---------------------
Property and Equipment, Net 1,467,400 1,111,400
Restricted Cash 325,000 365,000
Long-Term Lease Receivable 647,500 827,300
Other Assets 3,982,700 4,730,700
- ----------------------------------------------------------------- --------------------- ---------------------
Total Assets $ 16,495,600 $ 22,650,100
- ----------------------------------------------------------------- --------------------- ---------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 104,700 $ 363,700
Accrued Expenses 996,500 1,184,700
Deferred Revenue 250,000 750,000
Short-Term Note Payable 750,000 750,000
Current Portion Lease Payable 269,200 269,200
- ----------------------------------------------------------------- --------------------- ---------------------
Total Current Liabilities 2,370,400 3,317,600
- ----------------------------------------------------------------- --------------------- ---------------------
Long-Term Lease Payable 435,800 562,900
- ----------------------------------------------------------------- --------------------- ---------------------
Stockholders' Equity:
Common Stock, $.001 Par Value 42,500 42,500
Additional Paid-In Capital 140,793,500 140,777,200
Less: Common Treasury Shares at Cost (12,300) (13,800)
Accumulated Deficit (127,134,300) (122,036,300)
- ----------------------------------------------------------------- --------------------- ---------------------
Total Stockholders' Equity 13,689,400 18,769,600
- ----------------------------------------------------------------- --------------------- ---------------------
- ----------------------------------------------------------------- --------------------- ---------------------
Total Liabilities and Stockholders' Equity $ 16,495,600 $ 22,650,100
- ----------------------------------------------------------------- --------------------- ---------------------
- ----------------------------------------------------------------- --------------------- ---------------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3
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AVANT IMMUNOTHERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE QUARTERS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1999 1998
- ----------------------------------------------------------------- --------------------- ---------------------
<S> <C> <C>
OPERATING REVENUE:
Product Sales, Product Development and
Licensing Agreements $ 847,900 $ 309,900
- ----------------------------------------------------------------- --------------------- ---------------------
OPERATING EXPENSE:
Research and Development 1,947,300 1,260,800
General and Administrative 974,400 646,100
Legal Settlement -- (165,600)
Amortization of Goodwill 409,800 --
- ----------------------------------------------------------------- --------------------- ---------------------
Total Operating Expense 3,331,500 1,741,300
- ----------------------------------------------------------------- --------------------- ---------------------
Operating Loss (2,483,600) (1,431,400)
Non-Operating Income, Net 127,400 130,900
- ----------------------------------------------------------------- --------------------- ---------------------
Net Loss $ (2,356,200) $ (1,300,500)
- ----------------------------------------------------------------- --------------------- ---------------------
- ----------------------------------------------------------------- --------------------- ---------------------
Net Loss Per Common Share $ (0.06) $ (0.05)
- ----------------------------------------------------------------- --------------------- ---------------------
- ----------------------------------------------------------------- --------------------- ---------------------
Weighted Average Common Shares Outstanding 42,529,600 28,494,300
- ----------------------------------------------------------------- --------------------- ---------------------
- ----------------------------------------------------------------- --------------------- ---------------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4
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AVANT IMMUNOTHERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1999 1998
- ----------------------------------------------------------------- --------------------- ---------------------
<S> <C> <C>
OPERATING REVENUE:
Product Sales, Product Development and
Licensing Agreements $ 1,185,800 $ 670,900
- ----------------------------------------------------------------- --------------------- ---------------------
OPERATING EXPENSE:
Research and Development 3,838,400 2,470,800
General and Administrative 1,944,200 1,311,700
Legal Settlement -- (165,600)
Amortization of Goodwill 819,600 --
- ----------------------------------------------------------------- --------------------- ---------------------
Total Operating Expense 6,602,200 3,616,900
- ----------------------------------------------------------------- --------------------- ---------------------
Operating Loss (5,416,400) (2,946,000)
Non-Operating Income, Net 318,400 230,000
- ----------------------------------------------------------------- --------------------- ---------------------
Net Loss $ (5,098,000) $ (2,716,000)
- ----------------------------------------------------------------- --------------------- ---------------------
- ----------------------------------------------------------------- --------------------- ---------------------
Net Loss Per Common Share $ (0.12) $ (0.10)
- ----------------------------------------------------------------- --------------------- ---------------------
- ----------------------------------------------------------------- --------------------- ---------------------
Weighted Average Common Shares Outstanding 42,528,000 27,638,900
- ----------------------------------------------------------------- --------------------- ---------------------
- ----------------------------------------------------------------- --------------------- ---------------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5
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AVANT IMMUNOTHERAPEUTICS, INC..
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1999 1998
- ----------------------------------------------------------------- --------------------- ---------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (5,098,000) $ (2,716,000)
Adjustments to Reconcile Net Loss to Net Cash
Used by Operating Activities:
Depreciation and Amortization 1,124,700 177,300
Write-off of Capitalized Patent Costs -- 12,300
Gain on Sale of Equipment -- (20,000)
Returned Stock -- (165,600)
Net Change in Current Assets and Current Liabilities (883,800) (1,313,600)
- ----------------------------------------------------------------- --------------------- ---------------------
Net Cash Used by Operating Activities (4,857,100) (4,025,600)
- ----------------------------------------------------------------- --------------------- ---------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Property and Equipment (580,400) (74,500)
Proceeds from the Sale of Equipment -- 23,000
Other Noncurrent Assets (99,600) (183,400)
(Increase) Decrease in Restricted Cash 40,000 (670,000)
Redemption of Marketable Securities 4,903,100 --
- ----------------------------------------------------------------- --------------------- ---------------------
Net Cash Provided (Used) by Investing Activities 4,263,100 (904,900)
- ----------------------------------------------------------------- --------------------- ---------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the Exercise of Stock Options 17,200 9,700
Proceeds from the Issuance of Common Stock 600 3,699,900
Proceeds from Sale of Stock -- 2,000
- ----------------------------------------------------------------- --------------------- ---------------------
Net Cash Provided by Financing Activities 17,800 3,711,600
- ----------------------------------------------------------------- --------------------- ---------------------
Increase (Decrease) in Cash and Cash Equivalents (576,200) (1,218,900)
Cash and Cash Equivalents at Beginning of Period 8,937,200 6,436,300
- ----------------------------------------------------------------- --------------------- ---------------------
Cash and Cash Equivalents at End of Period $ 8,361,000 $ 5,217,400
- ----------------------------------------------------------------- --------------------- ---------------------
- ----------------------------------------------------------------- --------------------- ---------------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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AVANT IMMUNOTHERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(1) NATURE OF BUSINESS
AVANT Immunotherapeutics, Inc. ("AVANT" or the "Company") is a
biopharmaceutical company engaged in the discovery, development and
commercialization of products that harness the human immune response to prevent
and treat disease. The Company's lead therapeutic program is focused on
compounds that inhibit the inappropriate activity of the complement cascade
which is a vital part of the body's immune defense system. The Company is also
engaged in the development of Therapore(TM), a novel system for the delivery of
immunotherapeutics for chronic viral infections and certain cancers. The Company
and its collaborators are developing vaccines using proprietary adjuvants for
the prevention of influenza, Lyme disease, and respiratory syncytial virus
(RSV). In a further collaboration, the Company is developing an oral human
rotavirus vaccine, and is developing its own proprietary vaccine for the
management of atherosclerosis.
The condensed consolidated financial statements include the accounts of
AVANT Immunotherapeutics, Inc. and its wholly owned subsidiary, T Cell
Diagnostics, Inc. All intercompany transactions have been eliminated.
(2) INTERIM FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements for the
three and six months ended June 30, 1999 and 1998 include the consolidated
accounts of the Company, and have been prepared in accordance with generally
accepted accounting principles and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. In the opinion of management, the information
contained herein reflects all adjustments, consisting solely of normal recurring
adjustments, that are necessary to present fairly the financial positions at
June 30, 1999 and December 31, 1998, the results of operations for the quarters
and six months ended June 30, 1999 and 1998, and the cash flows for the six
months ended June 30, 1999 and 1998. The results of operations for the quarter
and six months ended June 30, 1999 are not necessarily indicative of results for
any future interim period or for the full year.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted, although the Company believes that the disclosures
included are adequate to make the information presented not misleading. The
condensed consolidated financial statements and the notes included herein should
be read in conjunction with footnotes contained in the Company's Annual Report
on Form 10-K/A for the year ended December 31, 1998.
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SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: STATEMENTS CONTAINED IN THE FOLLOWING, ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, THAT ARE NOT
HISTORICAL FACTS ARE FORWARD-LOOKING STATEMENTS AS THE TERM IS DEFINED UNDER THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS ARE SUBJECT TO
A VARIETY OF RISKS AND UNCERTAINTIES. THERE ARE A NUMBER OF IMPORTANT FACTORS
THAT COULD CAUSE THE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN
ANY FORWARD-LOOKING STATEMENTS MADE BY THE COMPANY. THESE FACTORS INCLUDE, BUT
ARE NOT LIMITED TO: (i) THE COMPANY'S ABILITY TO SUCCESSFULLY COMPLETE PRODUCT
RESEARCH AND DEVELOPMENT, INCLUDING PRE-CLINICAL AND CLINICAL STUDIES, AND
COMMERCIALIZATION; (ii) THE COMPANY'S ABILITY TO OBTAIN SUBSTANTIAL ADDITIONAL
FUNDING; (iii) THE COMPANY'S ABILITY TO OBTAIN REQUIRED GOVERNMENTAL APPROVALS;
(iv) THE COMPANY'S ABILITY TO ATTRACT MANUFACTURING, SALES, DISTRIBUTION AND
MARKETING PARTNERS AND OTHER STRATEGIC ALLIANCES; AND (v) THE COMPANY'S ABILITY
TO DEVELOP AND COMMERCIALIZE ITS PRODUCTS BEFORE ITS COMPETITORS.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company is engaged in the discovery, development and
commercialization of products that harness the human immune response to prevent
and treat disease. The Company's products derive from a broad set of
complementary technologies with the ability to inhibit the complement system,
regulate T and B cell activity, and enable the creation and delivery of
preventative and therapeutic vaccines. The Company is using these technologies
to develop vaccines and immunotherapeutics that prevent or treat disease caused
by infectious organisms, and drugs and treatment vaccines that modify
undesirable activity by the body's own proteins or cells.
In July 1999, Novartis Pharma AG, Basel, Switzerland ("Novartis")
exercised its option to license TP10 following extensive preclinical testing of
TP10 in its transplantation models. The exercise triggers a $6 million equity
investment and license payment subject to certain conditions being met. In
October 1997, the Company had entered into an option agreement with Novartis
relating to the development of TP10 for use in xenotransplantation (animal
organs into humans) and allotransplantation (human organs into humans). The
agreement granted Novartis a two-year option to license TP10 with exclusive
worldwide marketing rights (except Japan) in the fields of xenotransplantation
and allotransplantation.
The Company received a milestone payment from SmithKline Beecham
("SB") in June 1999 based on successful completion of a Phase II efficacy
study in infants of the Company's oral rotavirus vaccine and establishment of
a commercially viable process for manufacture of the vaccine. During 1997,
the Company established the collaboration with SB to develop and
commercialize the Company's rotavirus vaccine. Following the completion of
the Phase II study, SB has assumed responsibility for and will fund all
subsequent clinical and other development activities. The Company will be
entitled to receive milestone payment and royalties on vaccine sales under
the agreement which grants SB exclusive worldwide marketing rights to the
rotavirus vaccine.
On August 21, 1998 the Company acquired Virus Research Institute, Inc.
("VRI"), a company engaged in the discovery and development of systems for the
delivery of vaccines and immunotherapeutics, and novel vaccines for adults and
children. The Company issued 14,036,400 shares of its common stock and warrants
to purchase 1,811,200 shares of its common stock in exchange for all of the
outstanding common stock of VRI, on the basis of 1.55 shares of AVANT's common
stock and .20 of an AVANT warrant for each share of VRI common stock.
RESULTS OF OPERATIONS
QUARTER ENDED JUNE 30, 1999 COMPARED TO QUARTER ENDED JUNE 30, 1998 -- The
Company reported a consolidated net loss of $2,356,200, or $.06 per share, for
the quarter ended June 30, 1999, an increase of $1,055,700, or 81.2%, compared
to a net loss of $1,300,500, or $.05 per share, for the quarter ended June
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30, 1998. The increase in net loss for the second quarter of 1999 compared to
the second quarter of 1998 is primarily due to the increase in operating expense
resulting from the acquisition of VRI combined with a charge of $409,800 for the
amortization of goodwill and partially offset by an increase in operating
revenue.
Total operating revenue increased $538,000, or 173.6%, to $847,900 for
the second quarter of 1999 compared to $309,900 for the second quarter of 1998.
The increase is primarily due to a milestone payment received from SmithKline
Beecham ("SB") based on the Company's successful completion of a Phase II
efficacy study of its oral rotavirus vaccine and SB's establishment of a
commercially viable manufacturing process for the vaccine.
Total operating expense increased $1,590,200, or 91.3%, to $3,331,500
for the second quarter of 1999 compared to $1,741,300 for the second quarter of
1998. The increase in operating expense is primarily due to expanded operations
resulting from the acquisition of VRI combined with a charge of $409,800 for the
amortization of goodwill. Research and development expense increased $686,500,
or 54.4%, to $1,947,300 for the second quarter of 1999 compared to $1,260,800
for the second quarter of 1998. The increase in research and development expense
is due to increased spending associated with the Company's vaccine for the
management of atherosclerosis which began human clinical trials during the
second quarter of 1999 combined with costs attributable to the Company's
Therapore-TM- and novel polymer vaccine delivery system programs. General and
administrative expense increased $328,300, or 50.8%, to $974,400 for the second
quarter of 1999 compared to $646,100 for the second quarter of 1998. The
increase is primarily attributable to increased patent legal expense combined
with increased corporate development and administrative support costs. In May
1998, the Company used cash as collateral for a $750,000 note due November 15,
1999 issued in connection with the settlement of litigation with its former
landlord and the landlord's mortgagee. In accordance with the settlement
agreement, 66,250 shares of the Company's common stock issued to secure the note
were returned to the Company. The common stock was valued at $165,600 as of
October 31, 1997 and its return is included as a reduction of operating expense
in the second quarter of 1998.
Non operating income, comprised solely of interest income for 1999 and
1998, decreased $3,500, or 2.7%, to $127,400 for the second quarter of 1999
compared to $130,900 for the second quarter of 1998.
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998 -- The
Company reported a net loss of $5,098,000, or $.12 per share, for the six months
ended June 30, 1999, an increase of $2,382,000, or 87.7%, compared to a net loss
of $2,716,000, or $.10 per share, for the six months ended June 30, 1998.
Total operating revenue increased $514,900, or 76.7%, to $1,185,800
for the period ended June 30, 1999 compared to $670,900 for the period ended
June 30, 1998. Operating revenue for the six months ended June 30, 1998
included product sales revenue of $35,000 from sales of the Company's TRAx
- -Registered Trademark- test kit. The Company has suspended further
development and sales efforts of its TRAx-Registered Trademark- product
franchise while it continues to focus its efforts on establishing a
partnership for the TRAx-Registered Trademark- technology. Product
development and licensing agreements revenue of $1,185,800 increased
$549,900, or 86.5%, for the first six months of 1999 compared to $635,900 for
the same period last year. The increase is primarily due to a milestone
payment received under the Company's agreement with SB in 1999 based on the
Company's successful completion of a Phase II efficacy study of its oral
rotavirus vaccine and SB's establishment of a commercially viable
manufacturing process for the vaccine.
Total operating expense increased $2,985,300, or 82.5%, to $6,602,200
for the six months ended June 30, 1999 compared to $3,616,900 for the six months
ended June 30, 1998. The increase in operating expense is primarily due to
expanded operations resulting from the acquisition of VRI combined with a charge
of $819,600 for the amortization of goodwill. For the first six months of 1999
research and development expense increased $1,367,600, or 55.4% to $3,838,400
compared to $2,470,800 for the first six months of 1998 primarily due to
increased spending associated with the Company's vaccine for the
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management of atherosclerosis which began human clinical trials during the
second quarter of 1999 combined with costs attributable to the Company's
Therapore-TM- and novel polymer vaccine delivery system programs. General and
administrative expense increased $632,500, or 48.2%, to $1,944,200 for the six
months ended June 30, 1999 compared to $1,311,700 for same period last year
primarily due to increased patent legal expense combined with increased
corporate development and administrative support costs. In May 1998, the Company
used cash as collateral for a $750,000 note due November 15, 1999 issued in
connection with the settlement of litigation with its former landlord and the
landlord's mortgagee. In accordance with the settlement agreement, 66,250 shares
of the Company's common stock issued to secure the note were returned to the
Company. The common stock was valued at $165,600 as of October 31, 1997 and its
return is included as a reduction of operating expense in 1998.
Non operating income increased $88,400, or 38.4%, to $318,400 for the
six months ended June 30, 1999 compared to $230,000 for the six months ended
June 30, 1998. Interest income increased $108,400, or 51.6%, to $318,400 for the
six months ended June 30, 1999 compared to $210,000 for the six months ended
June 30, 1998. The increase in interest income is primarily due to higher cash
balances in 1999 compared to 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company ended the second quarter with cash and cash equivalents of
$8,361,000 compared to cash, cash equivalents and marketable securities of
$13,840,300 at December 31, 1998. The decrease in cash is attributable to net
cash used in operations of $4,857,100 combined with the acquisition of property
and equipment of $580,400 for the six months ended June 30, 1999. In July 1999,
Novartis exercised its option to license TP10 following extensive preclinical
testing of TP10 in its transplantation models. The exercise triggers a $6
million equity investment and license payment subject to certain conditions
being met. In March 1998, the Company completed a private placement of
approximately 2,043,000 shares of common stock to institutional investors at a
price of $1.90 per share. Net proceeds from the private placement totaled
approximately $3,699,900.
The Company believes that cash inflows from existing SBIR grants and
collaborations, interest income from invested funds, and its current cash and
cash equivalents, net of restricted amounts, will be sufficient to meet
estimated working capital requirements and fund operations through December 31,
1999. The working capital requirements of the Company are dependent on several
factors including, but not limited to, the costs associated with research and
development programs, preclinical and clinical studies, and the scope of
collaborative arrangements. The Company has decided to delay clinical trials of
a Therapore-TM- -formulated melanoma immunotherapeutic vaccine which had earlier
been scheduled for late 1999. During 1999, the Company expects to take steps to
raise additional capital including, but not limited to, licensing of technology
programs with existing or new collaborative partners, possible business
combinations, or issuance of common stock via private placement and public
offering.
THE STATEMENTS IN THE FOLLOWING SECTION INCLUDE THE "YEAR 2000
READINESS DISCLOSURE" WITHIN THE MEANING OF THE YEAR 2000 INFORMATION AND
READINESS DISCLOSURE ACT.
YEAR 2000
THIS SECTION CONTAINS CERTAIN STATEMENTS THAT ARE FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE
COMPANY'S YEAR 2000 COMPLIANCE, AND THE EVENTUAL AFFECTS OF THE YEAR 2000 ON THE
COMPANY MAY BE MATERIALLY DIFFERENT THAN CURRENTLY PROJECTED. THIS MAY BE DUE
TO, AMONG OTHER THINGS, DELAYS IN THE IMPLEMENTATION OF THE COMPANY'S YEAR 2000
PLAN AND THE FAILURE OF KEY THIRD PARTIES WITH WHOM THE COMPANY HAS A
SIGNIFICANT BUSINESS RELATIONSHIP TO ACHIEVE YEAR 2000 COMPLIANCE.
The "Year 2000" issue affects computer systems that have date sensitive
programs that may not properly recognize the year 2000. Systems that do not
properly recognize such information could generate
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data or cause a system to fail, resulting in business interruption. The Company
is currently developing a plan to provide assurances that its computer systems
are Year 2000 compliant, and expects full compliance by the end of 1999. Given
the relatively small size of the Company's internal systems and the relatively
new hardware, software and operating systems, management does not anticipate any
significant delays in becoming Year 2000 compliant. Further, management believes
at present that the costs associated with modifications to become Year 2000
compliant will be immaterial to the Company's continued internal operations.
The Year 2000 issue is expected to affect the systems of various
entities with which the Company interacts, including the Company's research and
development partners, suppliers and vendors. The Company's assessment of third
parties risks and responses to those risks is not complete. There can be no
assurance that the systems of other companies on which the Company's system rely
will be timely converted, or that a failure by another company's system to be
Year 2000 compliant would not have a material adverse affect on the Company's
business, operating results and financial condition.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In January 1997, the Securities and Exchange Commission issued
Financial Reporting Release No. 48, which expands the disclosure requirements
for certain derivatives and other financial instruments. The Company does not
utilize derivative financial instruments.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 6, 1999, the Company held its Annual Meeting of Stockholders at
which the voters elected six directors to its Board of Directors and approved
the adoption of the AVANT Immunotherapeutics, Inc. 1999 Stock Option Plan.
At the Company's Annual Meeting of Stockholders, the following votes
were tabulated for the two proposals before the Company's Stockholders:
PROPOSAL I
Election of Directors:
<TABLE>
<CAPTION>
NUMBER OF SHARES/VOTES
--------------------------------------------
For Authority Withheld
----------------- -----------------------
<S> <C> <C>
J. Barrie Ward 34,052,809 368,628
John W. Littlechild 34,052,812 368,625
Una S. Ryan 34,049,112 372,325
Thomas R. Ostermueller 34,052,012 369,425
Frederick W. Kyle 34,052,437 369,000
Harry H. Penner, Jr. 34,052,512 368,925
</TABLE>
PROPOSAL II
Approval of the adoption of the AVANT Immunotherapeutics, Inc. 1999
Stock Option and Incentive Plan, replacing the Amended and Restated
1991 Stock Compensation Plan.
For 31,941,814
Against 1,810,203
Abstain 281,229
Del N-Voted 388,191
The number of shares issued, outstanding and eligible to vote as of the
record date of March 22, 1999 were 42,528,765. A quorum was present with
34,421,437 shares represented by 231 proxies or 80.93% of the eligible voting
shares.
ITEM 5. OTHER INFORMATION
In May 1999, the Company announced that Peter Sears has joined the
AVANT board of directors. Mr. Sears recently retired as Vice President, Business
Investments, SmithKline Beecham Corporation, and President and Founder of S.R.
One, Limited, Smith Kline Beecham's venture capital
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fund. Mr. Sears also serves as a Director for Alere, Inc., Bearsdon, Bio, Inc.,
and as Chairman of Gryphon Sciences. He is Chairman of the Japan American
Society of Greater Philadelphia and a Director of the University-City Science
Center in Philadelphia.
The Company announced on June 21, 1999 that it has received approval to
begin enrollment in its Phase I clinical trial of CETi-1, the Company's
investigational vaccine aimed at preventing or treating atherosclerosis by
raising serum levels of HDL (high-density lipoprotein) cholesterol. The Phase I
study, a double blind, ascending-dose trial to assess the safety and
immunogenicity of CETi-1, is being conducted at the Chicago Center for Clinical
Research.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
None
B. 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 thereunto duly authorized.
AVANT IMMUNOTHERAPEUTICS, INC.
BY: /s/ Una S. Ryan
------------------
Una S. Ryan, Ph.D.
President, and
Chief Executive Officer
Dated: November 8, 1999
14
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed financial statements of AVANT Immunotherapeutics, Inc. for the Six
Months Ended June 30, 1999 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
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0
0
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<INTEREST-EXPENSE> (318,400)
<INCOME-PRETAX> (5,098,000)
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<NET-INCOME> (5,098,000)
<EPS-BASIC> (0.12)
<EPS-DILUTED> (0.12)
</TABLE>
