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 QUARTERLY PERIOD ENDED MARCH 31, 1996
Commission File Number 0-14758
SOMATIX THERAPY CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-2762045
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
850 Marina Village Parkway, Alameda, California 94501
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(Address of principal executive offices) (zip code)
(510) 748-3000
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(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
----- -----
The number of shares outstanding of each of the issuer's classes of common stock
as of:
Class Outstanding at March 31, 1996
- --------------------------------------------------------------------------------
Common Stock, $0.01 Par Value 23,054,202
Preferred Stock, $0.01 Par Value 235,891
<PAGE>
<TABLE>
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TABLE OF CONTENTS
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<CAPTION>
PAGE NO.
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PART I. FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheets as of
March 31, 1996 and June 30, 1995..................................................... 1,2
Consolidated Statements of Operations
for the Three and Nine Months Ended
March 31, 1996 and 1995.............................................................. 3
Consolidated Statements of Cash Flows
for the Three and Nine Months Ended
March 31, 1996 and 1995.............................................................. 4
Notes to Consolidated Financial Statements........................................... 5
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................................................................... 6
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
Signatures 13
</TABLE>
i.
<PAGE>
SOMATIX THERAPY CORPORATION
------------------
CONSOLIDATED BALANCE SHEETS
<TABLE>
ASSETS
<CAPTION>
March 31, June 30,
1996 1995
(unaudited)
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents ................................................ $ 4,736,000 $14,326,000
Marketable securities..................................................... 4,838,000 250,000
Other current assets...................................................... 507,000 726,000
---------- -----------
Total current assets................................................ 10,081,000 15,302,000
Marketable securities, long-term.............................................. 103,000 --
Restricted cash............................................................... 650,000 300,000
Equipment and improvements, at cost:
Laboratory and production equipment....................................... 4,239,000 3,942,000
Equipment under capital leases............................................ 3,145,000 3,078,000
Furniture and office equipment............................................ 1,241,000 1,115,000
Leasehold improvements.................................................... 4,223,000 3,781,000
----------- -----------
12,848,000 11,916,000
Less accumulated depreciation and amortization............................ 9,932,000 8,523,000
----------- -----------
Net equipment and improvements............................................ 2,916,000 3,393,000
----------- -----------
Other assets.................................................................. 156,000 133,000
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$ 13,906,000 $19,128,000
============ ===========
<FN>
See accompanying notes.
</FN>
</TABLE>
1.
<PAGE>
SOMATIX THERAPY CORPORATION
----------------------
CONSOLIDATED BALANCE SHEETS - CONTINUED
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
March 31, June 30,
1996 1995
(unaudited)
--------------- ---------------
<S> <C> <C>
Current liabilities:
Accounts payable and accrued liabilities............................ $ 1,798,000 $ 2,642,000
Accrued compensation and related expenses........................... 999,000 992,000
Capital lease obligations........................................... 796,000 718,000
Accrued restructuring costs......................................... 438,000 859,000
Other current liabilities........................................... 186,000 186,000
--------------- ---------------
Total current liabilities....................................... 4,217,000 5,397,000
Capital lease obligations, net of current portion........................ 1,207,000 1,692,000
Accrued restructuring costs,
net of current portion.............................................. 928,000 1,288,000
Other liabilities........................................................ 240,000 262,000
Stockholders' equity
Series A preferred stock, par value $0.01
per share, 1,000,000 shares authorized;
235,891 shares, issued and outstanding
(254,000 at June 30, 1995).......................................... 2,000 3,000
Common stock, par value $0.01 per share,
40,000,000 shares authorized,
23,054,202 issued and outstanding
(20,991,996 at June 30, 1995)....................................... 231,000 210,000
Additional paid-in capital............................................. 171,742,000 159,749,000
Accumulated deficit.................................................... (164,661,000) (149,473,000)
--------------- ---------------
Total stockholders' equity........................................ 7,314,000 10,489,000
--------------- ---------------
$ 13,906,000 $ 19,128,000
=============== ===============
<FN>
See accompanying notes.
</FN>
</TABLE>
2.
<PAGE>
SOMATIX THERAPY CORPORATION
---------------------
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------- -------------------------
March 31, March 31, March 31, March 31,
1996 1995 1996 1995
--------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
Revenues:
Research Agreement...................... $ -- $ -- $ -- $ 250,000
Costs and expenses:
Research and development................ 4,656,000 4,809,000 12,787,000 13,605,000
General and administrative.............. 1,049,000 1,008,000 3,019,000 3,020,000
Write-off of in-process
technology.......................... 13,679,000 13,679,000
------------- ------------- ------------ ----------------
Total costs and expenses............ 5,705,000 19,496,000 15,806,000 30,304,000
------------- ------------- ------------ ----------------
Operating loss.............................. (5,705,000) (19,496,000) (15,806,000) (30,054,000)
Other income, net........................... 197,000 20,000 618,000 259,000
------------- ------------- ------------ ----------------
Net loss............................ $(5,508,000) $(19,476,000) $(15,188,000) $(29,795,000)
============= ============= ============ ================
Net loss per share.......................... $ (0.24) $ (1.15) $ (0.67) $(1.85)
============= ============= ============ ================
Shares used in calculation of
net loss per share...................... 23,043,251 16,911,945 22,535,177 16,145,588
<FN>
Quarterly paid-in-kind dividend on preferred stock was distributed at March 31,
1996 in the amount of 3,920 preferred shares.
See accompanying notes.
</FN>
</TABLE>
3.
<PAGE>
SOMATIX THERAPY CORPORATION
------------------------
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ended March 31,
-----------------------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss ..................................................................... $(15,188,000) (29,795,000)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization .......................................... 1,409,000 1,426,000
Write-off of acquired in-process
technology ........................................................ 13,679,000
Decrease (increase) in
other current assets ................................................. 219,000 (65,000)
Decrease (increase)in other assets ..................................... (23,000) (23,000)
Increase (decrease) in accounts payable
and accrued liabilities .............................................. (844,000) 234,000
Increase (decrease)in accrued compensation
and related expenses ................................................. 7,000 538,000
Decrease in accrued restructuring cost ................................. (781,000) --
Increase (decrease) in other
liabilities .......................................................... (22,000) 18,000
------------ ------------
Net cash used in operating
activities ........................................................ (15,223,000) (13,988,000)
Cash flows from investing activities:
Sales of marketable securities ............................................ 8,440,000 23,025,000
Purchase of marketable securities ......................................... (13,131,000) (6,811,000)
Increase in restricted cash ............................................... (350,000) (50,000)
Purchase of equipment and
improvements ........................................................... (932,000) (1,328,000)
------------ ------------
Net cash provided by (used in)
investing activities .............................................. (5,973,000) 14,836,000
Cash flows from financing activities:
Borrowings under sale/leaseback
agreement .............................................................. 204,000 803,000
Principal payments under capital
lease obligations ...................................................... (611,000) (501,000)
Net proceeds from issuance of
common stock ........................................................... 12,013,000 199,000
------------ ------------
Net cash provided by
financing activities .............................................. 11,606,000 501,000
Net increase (decrease) in cash .............................................. (9,590,000) 1,349,000
Cash and cash equivalents,
beginning of period ....................................................... 14,326,000 777,000
------------ ------------
Cash and cash equivalents,
end of period ............................................................. $ 4,736,000 $ 2,126,000
============ ============
Cash paid for interest ....................................................... $ 237,000 $ 218,000
<FN>
See accompanying notes.
</FN>
</TABLE>
4.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
1. Basis of Presentation
The information at March 31, 1996 and 1995, and for the periods then
ended, is unaudited, but includes all adjustments (consisting only of normal
recurring entries) which the Company's management believes to be necessary for
the fair presentation of the financial position, results of operations and
changes in cash flows for the periods presented. Interim results are not
necessarily indicative of results for a full year. The accompanying consolidated
financial statements should be read in conjunction with the Company's audited
financial statements for the fiscal year ended June 30, 1995.
2. Per Share Information
Per share information is based on the weighted average number of shares
of common stock outstanding during each period. Shares issuable upon the
conversion of preferred stock to common stock and shares issuable upon the
exercise of outstanding options and warrants to purchase shares of the Company's
common stock (common stock equivalents) are not included in the calculation of
the net loss per share for the three and nine month periods ended March 31, 1996
and 1995, since their inclusion would be anti-dilutive.
3. Accrued Restructuring Costs
On June 29, 1995, the Company completed a restructuring and cost
savings program separating its research and development infrastructure into two
groups. The development group will focus on clinical trials and product
development and the research group will focus on gene transfer technologies for
various medical applications. At March 31, 1996, accrued restructuring balance
was $1,366,000 consisting principally of future rent obligations.
4. Subsequent Event
On April 30, 1996, the Company received a second equity investment of
$10 million from Bristol-Myers Squibb. Bristol-Myers Squibb made an initial
equity investment of $10 million in the Company in August 1995. The second
investment is a milestone payment for the Company receiving protocol clearance
from the Food and Drug Administration for a phase III clinical trial for
GVAX(TM) cancer vaccine.
5.
<PAGE>
Item 2. Management's Discussion And Analysis Of Financial Condition And
Results Of Operations
Results Of Operations
Somatix Therapy Corporation ("Somatix" or the "Company") is a research
and development company in the field of gene therapy. Absent significant funding
from research collaborations, the Company expects costs and expenses to exceed
revenues in future periods. This may result in increasing losses for the next
several years.
There were no revenues for the three and nine month periods ended March
31, 1996 compared to $250,000 in the nine month period in the prior fiscal year.
Prior fiscal year revenues were derived from a research agreement.
Research and development expenses for the three and nine month periods
ended March 31, 1996 decreased by $153,000 and $818,000 respectively, from the
same periods in the prior fiscal year. The decrease is due to the Company's
restructuring and cost savings program implemented in June, 1995. In future
periods, the Company expects to incur increases in expense in support of
expanded on-going clinical trials and initiation of clinical trials for
additional indications.
Other income consists principally of interest income earned on the
Company's cash reserves. The increase, to $618,000 in the nine months of fiscal
year 1996, from $259,000 for the same period in fiscal year 1995, was primarily
due to larger cash balances available for investment.
Liquidity And Capital Resources
On March 31, 1996, the Company had cash, cash equivalents, and
marketable securities of $9,677,000, compared with $14,576,000 on June 30, 1995.
Subsequent to March 31, 1996, the Company received $10 million from an equity
investment in the Company (see Note 4 to the Consolidated Financial Statements).
Operating expenses have exceed revenues for a number of years. For the nine
month period ended March 31, 1996, capital expenditures amounted to $932,000.
The Company expects its cash requirements and net losses to increase
significantly in future periods due to higher research and development costs,
the cost of phase III clinical trials due to start by December 31, 1996, and
other expenses. The Company has no material capital commitments.
Given its current operating plans, the Company anticipates that its
existing cash will be sufficient to meet its cash requirements for the next ten
months. The Company's future cash requirements will depend upon many factors,
including the progress of the Company's research and development, the scope and
results of preclinical studies and clinical trials, the expense in conjunction
with obtaining regulatory approvals, the rate of technological advances, the
determination of the commercial potential of the Company's products under
development, the status of competitive products, and the establishment of
production capacity for clinical trials. The Company anticipates that it will be
required to raise substantial additional funds, through collaborative research,
development and commercialization relationships and public or private
financings. The Company may also seek to access the public equity markets if and
when conditions are favorable, even if it does not have an immediate need for
additional cash at that time. If financing opportunities are not available to
the Company, it will adjust its operating plans accordingly.
6.
<PAGE>
RISK FACTORS
Future Capital Needs; Uncertainty of Additional Financing
The Company's future capital requirements will depend on many factors,
including the progress of the Company's research and development, the scope and
results of preclinical studies and clinical trials, the cost of obtaining
regulatory approvals, the rate of technological advances, determinations as to
the commercial potential of the Company's products under development, the status
of competitive products and the establishment of manufacturing capacity. The
Company anticipates that it will be required to raise substantial additional
funds, including funds raised through collaborative relationships and public or
private financings. Because of the Company's significant long-term capital
requirements, it may seek to access the public equity markets whenever
conditions are favorable, even if it does not have an immediate need for
additional capital at that time. No assurance can be given that additional
financing will be available on acceptable terms, or at all. If adequate funds
are not available, the Company will be required to curtail significantly its
research and development programs or may be required to discontinue its programs
in their entirety and liquidate its assets.
Early Stage of Development; No Developed or Approved Products
Somatix's potential gene therapy products are in research and
preclinical and clinical development. No revenues have been generated from the
sale of any of such products, nor are any such revenues expected for at least
the next several years. The products currently under development by the Company
will require significant additional research and development efforts, including
extensive preclinical and clinical testing and regulatory approval, prior to
commercial use. There can be no assurance that the Company's research and
development efforts will be successful, that any of the Company's potential gene
therapy products will prove to be safe and effective in clinical trials or that
any commercially successful products will ultimately be developed by the
Company. Even if developed, these products may not receive regulatory approval
or be successfully introduced and marketed at prices that would permit the
Company to operate profitably.
Uncertainty of Government Regulatory Requirements; Lengthy Approval Process
Because gene therapy is a relatively new technology and has not been
extensively tested in humans, the regulatory requirements governing gene therapy
products are uncertain and may be subject to substantial further review by
various regulatory authorities in the United States and abroad. These uncertain
requirements may result in extensive delays in initiating clinical trials and in
the regulatory approval process. Regulatory requirements ultimately imposed
could adversely affect the Company's ability to clinically test, manufacture or
market products.
The Company believes that its potential products will be regulated by
the FDA as biologics. Each potential product for a specific disease application
may be subject to regulation as a separate biologic, depending on its intended
use and FDA policy. The regulatory process for new therapeutic products,
including the required preclinical and clinical testing, is lengthy and
expensive, and there can be no assurance that FDA approvals will be obtained in
a timely manner, if at all. Future United States or foreign legislative or
administrative actions could also prevent or delay regulatory approval of the
Company's products. There can be no assurance that the Company will be able to
obtain the necessary authorizations to initiate clinical trials or approvals to
market any of its potential products. Even if FDA regulatory approvals are
obtained, a marketed product is subject to continual review. Later discovery of
previously unknown problems or failure to comply with the applicable regulatory
7.
<PAGE>
requirements may result in product marketing restrictions or withdrawal of the
product from the market, as well as possible civil or criminal sanctions. In
addition, many academic institutions and companies doing research in the gene
therapy field are using a variety of approaches and technologies. Any adverse
results obtained by such researchers in preclinical or clinical studies could
adversely affect the regulatory environment for gene therapy products generally,
possibly leading to delays in the approval process for the Company's potential
products.
The Company's business is subject to regulation under state and federal
laws regarding environmental protection and hazardous substances control. The
Company believes that its efforts to comply with these laws have had no adverse
impact upon its capital expenditures, results of operations or competitive
position, but there can be no assurance that this situation will continue.
Federal and state agencies and congressional committees have expressed interest
in further regulation of biotechnology. The Company is unable to estimate the
extent and impact of regulation in the biotechnology field resulting from any
future federal, state or local legislation or administrative action.
Dependence Upon Key Personnel and Collaborative Relationships
The Company's success is highly dependent on the retention of
principal members of its management and scientific staff and the recruitment of
additional qualified personnel. The loss of key personnel or the failure to
recruit necessary additional qualified personnel could have an adverse effect on
the operations of the Company. There is intense competition from other
companies, research and academic institutions and other organizations for
qualified personnel in the areas of the Company's activities. There is no
assurance that Somatix will be able to continue to attract and retain the
qualified personnel necessary for the development of its business. These
activities are expected to require the addition of new personnel with expertise
in the areas of clinical testing, manufacturing, marketing and distribution and
the development of additional expertise by existing personnel. The failure to
acquire such personnel or develop such expertise could adversely affect
prospects for the Company's success.
Patents, Proprietary Rights and Licenses
Patent positions in the field of biotechnology are generally highly
uncertain and involve complex legal and scientific questions. To date, there has
emerged no consistent policy regarding the breadth of claims allowed in
biotechnology patents, especially in the area of gene therapy. Accordingly,
there can be no assurance that patent applications and patents licensed to the
Company will result in patents being issued or that, if and when issued, the
patents will afford protection against competitors with similar technology.
As the field of gene therapy becomes more established, competitors may
enter the field who have patent rights to genes and technology which may be used
in gene therapy. The Company's processes and potential products may conflict
with patents which have been or may be granted to competitors, academic
institutions, universities or others. For example, one of the Company's
competitors has been granted an exclusive license to a United States patent
issued to the National Institute of Health covering ex vivo gene therapy. The
Patent and Trademark Office recently declared an interference between the
competitor's patent, a patent application licensed exclusively to the Company,
and a patent application of a third party. The Company has been accorded Senior
Party status in the interference proceeding, because the application licensed to
the Company has a priority date earlier than that of either the patent issued to
the competitor or the third party's patent application. The interference
proceeding is in its early stages. It is expected that, unless settled, the
proceedings may last for several years.
8.
<PAGE>
Nothing can be predicted about the outcome of the proceedings, although the
Company believes that the result will not adversely impact the Company's overall
patent portfolio, which covers many aspects of gene therapy.
The Company has exclusively licensed two U.S. patents covering the ex
vivo modification of epithelial cells, one U.S. patent covering the ex vivo
modification of fibroblasts, and one U.S. patent covering the ex vivo
modification of cells to treat diseases of the central nervous system. The
Company has also recently received notices of allowance for pending applications
covering: genetically modified hepatocytes, the Company's proprietary packaging
cells, the use of retroviral producer cells to treat brain cancer, and the
Company's GVAX(TM) cancer vaccine. It is expected that the corresponding patents
will issue before the end of the year. The Company also holds exclusive licenses
to European patents covering the use of geneticallly modified epithelial cells,
endothelial cells, and fibroblasts, and has received a notice that its licensed
patent application for genetically modified hepatocytes has also been allowed.
The Company is also aware of pending patent applications which have
been licensed to a competitor of the Company relating to certain types of
genetically modified cells. For example, the Company is aware of a pending
application covering genetically modified endothelial cells and their use in
gene therapy. The patent application is assigned to the United States
Government, and it is believed that the patent application is exclusively
licensed to a competitor. There is no assurance that a license to this or
related patent applications will be available to the Company.
There can be no assurance that the Company will be able to obtain a
license to any third party technology that it may require to conduct its
business or that, if obtainable, such technology can be licensed at a reasonable
cost. If the Company does not obtain such licenses, it could encounter delays in
introducing any such potential products while it attempts to design around such
patents, or it could find that the development, manufacture or sale of such
potential products could be adversely effected. Failure by the Company to obtain
a license to relevant technology that it may require to commercialize its
technologies or potential products may have a material adverse effect on the
Company. In addition, the Company could incur substantial costs in defending
itself in lawsuits brought against it on such patents or in lawsuits in which
the Company's patents may be asserted by it against another party. In addition,
since patent applications in the United States are maintained in secrecy until
patents issue, and since publication of discoveries in the scientific or patent
literature often lags behind actual discoveries, Somatix cannot be certain that
its licensors were the first creators of inventions covered by its pending
patent applications or that they were the first to file patent applications for
such inventions.
9.
<PAGE>
In order to manufacture and market its products, the Company may be
required to obtain licenses to patents or other proprietary rights of third
parties. For example, a number of the DNA sequences which the Company expects to
use in its gene therapy products are or may become patented by third parties. As
a result, the Company may be required to obtain licenses under such patents in
order to conduct certain research, to manufacture or to market products that
contain proprietary genes. There can be no assurance that such licenses will be
available on commercially reasonable terms, if at all. For example, the Company
is aware of proceedings to determine rights to the human GM-CSF cDNA sequence in
the United States and Europe; the human GM-CSF cDNA sequence is an important
aspect of the Company's GVAX(TM) cancer vaccine. In the United States, in the
most recent public disclosure of which the Company is aware, the Board of Patent
Appeals and Interferences granted a motion by a third party in an interference
proceeding stating that the human GM-CSF cDNA sequence is not patentable over
the prior art. In Europe, an Opposition proceeding initiated by a third party to
invalidate a European patent covering human GM-CSF cDNA was unsuccessful. The
decision by the European Patent Office Opposition Division upholding the patent
has been appealed by this third party. There can be no assurance of the outcome
of these proceedings or the outcome of these proceedings on appeal, or that, if
required, a license of rights to the gene sequence will be available to the
Company on commercially reasonable terms, if at all.
Additionally, a patent has been granted to a university which covers
certain adeno-associated virus vectors which may become important in the
Company's programs. The Company is currently negotiating an exclusive license to
this patent, but there is no assurance that such a license can be obtained on
commercially reasonable terms.
As the biotechnology industry expands and more patents are issued, the
risk increases that the Company's processes and potential products may give rise
to claims that they infringe the patents of others. Such other persons could
bring legal actions against the Company claiming damages and seeking to enjoin
certain research, manufacturing and marketing of the affected process or
potential product. If any such actions are successful, in addition to any
potential liability for damages, the Company could be required to obtain a
license in order to continue to use the affected process or to manufacture or
use the affected product or cease using such product or process if enjoined by a
court. There can be no assurance that the Company would prevail in any such
action or that any license required under any such patent would be made
available on acceptable terms, or at all. The Company believes that there may be
significant litigation and other legal proceedings in the industry regarding
patent and other intellectual property rights. If the Company becomes involved
in such litigation or proceedings, it could consume a substantial portion of the
Company's financial and human resources, regardless of the outcome.
10.
<PAGE>
The Company has acquired significant proprietary rights under license
agreements that permit the licensors to terminate those agreements in the event
of certain material breaches by the Company. Although the Company is not
currently in default under any of these agreements, there can be no assurance
that such defaults will not occur in the future. Should a default occur, and
should any of those agreements be terminated in the future, the Company could
lose the right to continue to develop one or more of these potential products.
The Company also relies upon unpatented proprietary technology. No
assurance can be given that the Company can meaningfully protect its rights in
such unpatented proprietary technology or that others will not duplicate or
independently develop substantially equivalent technology.
Commercialization: Lack of Manufacturing or Marketing Experience
The Company intends to market and sell some of its potential products
directly, while relying on sales and marketing expertise of potential corporate
partners for other programs. The Company has no experience in sales, marketing
or distribution of biopharmaceutical products and has not developed a specific
sales and marketing plan with respect to any of its potential products. The
decision to market products directly or through corporate partners will be based
on a number of factors including market size and concentration, the size and
expertise of the partner's sales force in a particular market and the Company's
overall strategic objectives. The Company is currently engaged in various stages
of discussions with potential partners. There can be no assurance that the
Company will be able to establish such relationships on acceptable terms and
conditions, or at all.
Competition
The gene therapy field is new and rapidly evolving, and it is expected
to continue to undergo significant and rapid technological change. Rapid
technological development could result in the Company's potential products,
services or processes becoming obsolete before the Company recovers a
significant portion of its related research, development and capital
expenditures. The Company will experience competition both from other companies
in the field of gene therapy and from companies which have other forms of
treatment for the diseases targeted by the Company. The Company is aware of
several development stage and established enterprises, including major
pharmaceutical and biotechnology firms as well as several major universities,
which are exploring the field of human gene therapy or are actively engaged in
research and development in areas including both retroviral vectors and other
methods of gene transfer. To the Company's knowledge, at least one of these
companies and several universities have participated in clinical trials using
retroviral vectors. The Company may also experience competition from companies
that have acquired or may acquire technology from such universities and other
research institutions. As these companies develop their technologies, they may
develop proprietary positions in certain aspects of gene therapy. Certain
competitors and potential competitors of the Company have substantially greater
product development capabilities and financial, scientific, marketing and human
resources than the Company, and other competitors of the Company may enter into
collaborative relationships with other companies having such greater resources.
Other companies may succeed in developing products earlier than the Company,
obtaining FDA approvals for such products more rapidly than the Company, or
developing products that are more effective than those proposed to be developed
by the Company. There can be no assurance that research and development by
others will not render the Company's technology or products obsolete or
non-competitive or result in treatments superior to any therapy developed by the
Company, or that any therapy developed by the Company will be preferred to any
existing or newly developed technologies.
11.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities. None.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
27 Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K were filed in the
quarter ended December 31, 1995.
12.
<PAGE>
SOMATIX THERAPY CORPORATION
March 31, 1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
DATE: May ___, 1996 By:
--------------------------------------
David W. Carter
President, Chief Executive Officer and
Chairman of the Board
DATE: May ___, 1996 By:
--------------------------------------
Mark N. K. Bagnall
Vice President, Finance (Principal
Financial and Accounting Officer)
13.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
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