<PAGE> 1 OF 16
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934.
For the quarterly period ended March 31, 1995
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934.
For the transition period from to
Commission File #0-14732
ADVANCED MAGNETICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-2742593
(State or other jurisdiction of (I.R.S. Employer Incorporation
organization) or Identification No.)
61 Mooney Street
Cambridge, MA 02138
(Address of principal executive offices)
Registrant's telephone number, including area code: 617/497-2070
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
At May 3, 1995, 6,727,744 shares of registrant's common stock (par
value, $.01) were outstanding.
<PAGE> 2 OF 16
ADVANCED MAGNETICS, INC.
FORM 10-Q
QUARTER ENDED MARCH 31, 1995
PART I. FINANCIAL INFORMATION
Item 1 -- Financial Statements
<PAGE> 3 OF 16
<TABLE>
ADVANCED MAGNETICS, INC.
BALANCE SHEET
MARCH 31, 1995 AND SEPTEMBER 30, 1994
(Unaudited)
<CAPTION>
ASSETS March 31, September 30,
1995 1994
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,115,493 $ 6,462,193
Marketable securities (Note B) 36,880,078 33,199,085
Accounts receivable 1,032,726 248,390
Recoverable income taxes 90,117 90,117
Prepaid expenses 303,886 112,846
Total current assets 42,422,300 40,112,631
Property, plant and equipment:
Land 360,000 360,000
Building 4,320,766 4,316,706
Laboratory equipment 6,220,504 5,598,456
Furniture and fixtures 496,613 324,453
11,397,883 10,599,615
Less--accumulated depreciation
and amortization 4,617,575 4,136,092
Net property, plant and equipment 6,780,308 6,463,523
Other assets 96,546 96,546
Total assets $ 49,299,154 $ 46,672,700
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 468,069 $ 273,385
Accrued expenses 418,796 947,840
Income taxes payable (Note D) 375,000 ---
Total current liabilities 1,261,865 1,221,225
Stockholders' equity:
Preferred stock, par value $.01
per share, authorized
2,000,000 shares; none issued --- ---
Common stock, par value $.01 per
share, authorized 15,000,000
shares; issued and outstanding
6,726,951 shares at March 31, 1995
and 6,712,572 shares at
September 30, 1994 67,270 67,126
Additional paid-in capital 44,862,803 44,660,834
Retained earnings 3,274,205 723,515
Unrealized losses on marketable
securities (Note B) (166,989) ---
Total stockholders' equity 48,037,289 45,451,475
Total liabilities and
stockholders' equity $ 49,299,154 $ 46,672,700
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 4 OF 16
<TABLE>
ADVANCED MAGNETICS, INC.
STATEMENT OF OPERATIONS
FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED
MARCH 31, 1995 AND 1994
(Unaudited)
<CAPTION>
Three-Month Six-Month Period
Period Ended Ended March 31,
March 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
License fees $ 5,000,000 $ 2,000,000 $ 5,000,000 $ 3,005,000
Royalties --- --- --- 13,461
Product sales 789,026 138,950 844,285 200,550
Interest, dividends
and net gains and
losses on sales
of securities 438,669 476,985 1,120,655 886,152
Total revenues 6,227,695 2,615,935 6,964,940 4,105,163
Cost and expenses:
Cost of product sales 157,804 26,600 168,854 38,900
Research and
development expenses 1,968,069 1,729,071 3,579,516 3,349,152
Credit for purchase
of in-process
research and
development (Note F) --- --- (380,000) ---
Selling, general and
administrative
expenses 472,530 472,106 788,420 944,323
Total costs and
expenses 2,598,403 2,227,777 4,156,790 4,332,375
Other income:
Gain on sale of
in-vitro product line
(Note C) --- --- --- 2,649,580
Income before provision
for income taxes 3,629,292 388,158 2,808,150 2,422,368
Provision for income
taxes 375,000 16,500 375,000 102,000
Income before
cumulative effect of
accounting change 3,254,292 371,658 2,433,150 2,320,368
Cumulative effect of
accounting change
(Note B) --- --- 117,540 ---
Net income $ 3,254,292 $ 371,658 $ 2,550,690 $ 2,320,368
Net income per share
before cumulative
effect of
accounting change $ 0.48 $ 0.05 $ 0.36 $ 0.34
Cumulative effect of
accounting change --- --- 0.01 ---
Income per share $ 0.48 $ 0.05 $ 0.37 $ 0.34
Weighted average number
of common and common
equivalent shares 6,835,370 6,853,453 6,828,497 6,857,979
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 5 OF 16
<TABLE>
ADVANCED MAGNETICS, INC.
STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIODS ENDED
MARCH 31, 1995 AND 1994
(Unaudited)
<CAPTION>
Six-Month Periods Ended March 31,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 5,112,799 $ 3,092,219
Cash paid to suppliers and employees (4,080,707) (4,031,398)
Dividends and interest received 1,045,310 607,029
Income taxes paid --- (136,500)
Net realized gains (losses) on sales
of securities (2,428) 156,644
Net cash provided by (used in) 2,074,974 (312,006)
operating activities
Cash flows from investing activities:
Proceeds from sales of securities 750,000 3,666,318
Purchase of securities (4,455,519) (24,615,839)
Capital expenditures (798,268) (309,652)
Net cash (used in) investing
activities (4,503,787) (21,259,173)
Cash flows from financing activities:
Proceeds from issuances of common
stock 82,113 288,651
Purchase of treasury stock --- (299,716)
Net cash provided by (used in)
financing activities 82,113 (11,065)
Net (decrease) in cash and cash
equivalents (2,346,700) (21,582,244)
Cash and cash equivalents at beginning
of the period 6,462,193 25,837,909
Cash and cash equivalents at end of
the period $ 4,115,493 $ 4,255,665
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 6 OF 16
<TABLE>
ADVANCED MAGNETICS, INC.
RECONCILIATION OF NET INCOME
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
FOR THE SIX-MONTH PERIODS ENDED
MARCH 31, 1995 AND 1994
(Unaudited)
<CAPTION>
Six-Month Periods Ended March 31,
1995 1994
<S> <C> <C>
Net income $ 2,550,690 $ 2,320,368
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Cumulative effect of accounting change (117,540) ---
Credit for purchase of in-process
research and development (380,000) ---
Depreciation and amortization 481,483 408,316
Amortization of U. S. Treasury Notes
Discount (24,924) ---
(Increase) in accounts receivable (784,336) (249,271)
(Increase) in prepaid expenses (191,040) (101,301)
Decrease in other assets --- 9,443
(Decrease) increase in accounts payable
and accrued expenses 165,641 (49,981)
Gain on sale of in-vitro product line --- (2,649,580)
Income taxes payable 375,000 ---
Total adjustments (475,716) (2,632,374)
Net cash provided by (used in)
operating activities $ 2,074,974 $ (312,006)
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 7 OF 16
ADVANCED MAGNETICS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995
A. Summary of Accounting Policies.
The balance sheet of Advanced Magnetics, Inc. (the "Company") as
of March 31, 1995 and the statement of operations and cash flows for
the quarter then ended are unaudited and in the opinion of management,
all adjustments necessary for a fair presentation of such financial
statements have been recorded. Such adjustments consisted only of
normal recurring items.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The year-end
balance sheet data was derived from audited financial statements, but
does not include disclosures required by generally accepted accounting
principles. It is suggested that these interim financial statements
be read in conjunction with the Company's most recent Form 10-K and
Annual Report as of September 30, 1994.
B. Marketable Securities.
The cost and market value of the marketable securities portfolio
are as follows:
March 31, 1995 September 30, 1994
Cost $ 37,047,067 $ 33,316,625
Market $ 36,880,078 $ 33,199,085
The Company adopted Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity
Securities", in its first fiscal quarter ended December 31, 1994.
Prior period financial statements have not been restated. The
Company's current portfolio consists of securities classified as
available-for-sales securities at fair market value. At March 31,
1995, unrealized losses on marketable securities amounted to $166,989
and were recorded as a separate component of equity. The Company
recorded a $117,540 unrealized loss on market value of securities in
the fiscal year ended September 30, 1994. In the first fiscal quarter
ended December 31, 1994, the Company recorded a cumulative effect of
the accounting change of $117,540 including the reversal of the
reserve for the carrying value of marketable securities. At March 31,
1995, 72% of the Company's portfolio was invested in U. S. Treasury
Notes, 5% in corporate bonds, 19% in preferred stocks and 4% in common
stocks.
C. Sale of In-Vitro Product Line.
On October 15, 1993, the Company sold its in-vitro product line
to PerSeptive Biosystems, Inc. ("PerSeptive") for $4,156,674 in
PerSeptive's common stock, plus an earn out based on 1995 revenues.
The Company recognized a pre-tax gain of $2,649,580 on this sale in
the first fiscal quarter of 1994.
D. Income Taxes.
The Company accounts for income taxes in conformance with FAS 109
"Accounting for Income Taxes," which requires the asset and liability
approach for financial accounting and reporting for income taxes.
<PAGE> 8 OF 16
The provision for income taxes for the six-month periods ended
March 31, 1995 and 1994 was at a different rate than the U. S.
Statutory rate for the following reasons:
<TABLE>
<CAPTION>
Six-Month Period Ended
March 31,
1995 1994
<S> <C> <C>
U. S. Statutory Tax Rate 34.0% 34.0%
State income taxes, net of
Federal benefit .0 0.2
Dividend Received Deduction (5.6) (6.8)
Amortization of Purchased
Technology (12.9) (11.8)
Alternative Minimum Tax 13.4 .0
Utilization of Net Operating
Loss (15.8) (7.6)
Other 0.3 (3.8)
Effective Tax Rate 13.4% 4.2%
</TABLE>
During the six months ended March 31, 1995, the net change in the
valuation allowance was a decrease of approximately $950,000. The
decrease resulted from the realization of certain net operating loss
and purchase technology carryforwards. During the six months ended
March 31, 1994, the net change in the valuation allowance was a
decrease of approximately $682,000. The decrease resulted from the
realization of certain operating loss and purchase technology
carryforwards which were offset against the gain realization upon sale
of the Company's in-vitro product line.
E. Legal Proceedings.
The Company and certain of its officers were sued in an action
in the United States District Court for the District of
Massachusetts on September 3, 1992. The plaintiff, a former
consultant to the Company, claims that he was incorrectly omitted as
an inventor or joint inventor on six of the Company's patents and on
pending applications, and seeks injunctive relief and unspecified
monetary damages. The plaintiff filed a related case in the
Superior Court of the Commonwealth of Massachusetts. The Superior
Court has dismissed some of the claims on summary judgment. While
the final outcome of these actions cannot be determined, the Company
believes that the plaintiff's claims are without merit and intends
to defend the actions vigorously.
F. Agreements.
On August 30, 1994, the Company signed an agreement with
Bristol-Myers Squibb Co. to reacquire the development and marketing
rights to AMI-227 previously licensed to Squibb Diagnostics, a
division of Bristol-Myers Squibb Co. ("Squibb"). As part of the
transaction, Bristol-Myers Squibb Co. returned to the Company a
warrant to purchase 600,000 shares of the Company's common stock,
valued at $240,000. The Company agreed to pay Bristol-Myers Squibb
Co. $1,000,000 in two cash payments, of which $500,000 was paid on
August 30, 1994 and $500,000 was to be paid upon acceptance of 1,200
vials of the AMI-227 suitable for worldwide preclinical and clinical
studies. Furthermore, the Company agreed to pay up to $2,750,000
for future royalties based on the Company's sales of AMI-227. In
connection with the purchase, the Company recorded a charge of
$760,000 in the fourth quarter of fiscal 1994 which represented the
value of the purchase of in-process research and development. In
the first quarter of fiscal 1995, the Company and Bristol-Myers
Squibb Co. agreed that the 1200 vials of AMI-227 delivered to the
Company by Squibb were not acceptable. In addition, they agreed
that any future delivery of AMI-227 under the agreement will not be
required and that the Company will not be required to make the
$500,000 payment. Accordingly, the Company recorded a credit for
$380,000 to the purchase of in-process research and development and
adjusted the value of the warrant to purchase 600,000 shares of the
Company's common stock by $120,000 in the first quarter of fiscal
1995.
<PAGE> 9 OF 16
On February 1, 1995 the Company entered into an agreement with
Berlex Laboratories, Inc. ("Berlex") granting Berlex a product
license and exclusive marketing rights to the Company's Feridex
I.V. (trademark) magnetic resonance imaging (MRI) contrast agent in the United
States and Canada. Under the terms of the agreement, Berlex paid a
$5,000,000 non-refundable license fee and will pay an additional
$5,000,000 license fee when the product has been approved for
commercial marketing in the United States by the U. S. Food and Drug
Administration (FDA). In addition, the Company will receive
payments for manufacturing the product and royalties on future
sales. The Company submitted a New Drug Application (NDA) for
Feridex I.V. to the FDA in February 1994 which was accepted for
filing in April 1994.
<PAGE> 10 OF 16
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Overview
Since its inception, Advanced Magnetics, Inc. (the "Company") has
focused its efforts on developing its core magnetic particle
technology, primarily to develop MRI contrast agents. Advanced
Magnetics has funded its operations with cash from license fees from
corporate partners, royalties, sales of its in-vitro products, fees
from contract research performed for third parties, the proceeds of
financings, and income earned on invested cash. The Company has
received substantial license fee revenues from licenses of both its
MRI contrast agent technology and its in-vitro clinical laboratory
technology. The Company has also received royalty revenues under
licenses of its in-vitro clinical laboratory technology.
A substantial portion of the Company's expenses consists of
research and development expenses. The Company expects its research
and development expenses to increase as it funds clinical trials and
associated toxicology and pharmacology studies and as it devotes
resources to developing additional contrast agents and new therapeutic
drugs.
The Company's revenues and operating results can vary
substantially from period to period. In particular, the timing of the
receipt by the Company of license fees has historically caused
substantial variations in operating results from period to period. In
addition, variations in revenues and expenses resulting from clinical
trials, additional license or corporate partnering arrangements,
timing of regulatory approvals and royalty payments may cause
significant future variations in period to period results.
Results of Operations for the quarter ended March 31, 1995 as
compared to the quarter ended March 31, 1994.
Revenues
Total revenues of the Company were $6,227,695 in the second
fiscal quarter ended March 31, 1995 compared to $2,615,935 in the
second fiscal quarter ended March 31, 1994. The Company's revenues
consisted primarily of license fees, direct sales of products and
investment income. The increase in revenues of $3,611,760 compared to
the second fiscal quarter ended March 31, 1994 resulted primarily from
an increase in license fees of $3,000,000 and an increase in direct
product sales of $650,076. On February 1, 1995, the Company received
a $5,000,000 non-refundable license fee payment from Berlex under an
agreement granting Berlex a product license and exclusive marketing
rights to the Company's Feridex I.V. MRI contrast agent in the United
States and Canada. The second fiscal quarter of 1994 included a non-
refundable license fee of $2,000,000 paid by Squibb Diagnostics, a
division of Bristol-Myers Squibb, Inc. ("Squibb Diagnostics").
Product sales for the second fiscal quarter ended March 31, 1995
were $789,026 compared to $138,950 for the second fiscal quarter ended
March 31, 1994. The initial product launch in Europe of Endorem
(registered trademark) (ferumoxide), the Company's liver imaging contrast
agent, began in January 1995 and accounted for all the Company's
recognition of the product sales for the second fiscal quarter ended
March 31, 1995. Product sales for the second fiscal quarter ended
March 31, 1994 of $138,950 were for the initial product launch in Europe
in December 1993 of Lumirem (registered trademark) (ferumoxsil), the
Company's gastrointestinal imaging agent.
Interest, dividends and net gains and losses on sales of
securities were $438,669 for the second fiscal quarter ended March 31,
1995 compared to $476,985 for the second fiscal quarter ended March
31, 1994. These amounts included an increase in revenue from interest
and dividends to $441,097 in the second fiscal quarter ended March 31,
1995 from $320,341 in the second fiscal quarter ended March 31, 1994.
The increase was primarily a result of an increase in interest revenue
from the purchase of United States Treasury notes. In the second
fiscal quarter ended March 31, 1995, net gains and losses on sales of
securities were a net loss of $2,428 compared to a net gain of
$156,644 in the second fiscal quarter ended March 31, 1994.
<PAGE> 11 OF 16
Costs and Expenses
The cost of product sales for the first fiscal quarter ended
March 31, 1995 was $157,804 compared to $26,600 for the second fiscal
quarter ended March 31, 1994. The cost of product sales was 20% of
sales for both fiscal second quarters. The Company has produced
products for sale on a made to order basis only. Research and
development expenses for the second fiscal quarter ended March 31,
1995 were $1,968,069, an increase of 14% compared to $1,729,071 for
the second fiscal quarter ended March 31, 1994. The increase in
research and development expense was primarily due to expenditures for
the newly formed Clinical Development Group in the Company's
Princeton, New Jersey office and human clinical trials for certain of
the Company's development stage products. General and administrative
expenses for the second fiscal quarter ended March 31, 1995 were
$472,530, consistent with general and administrative expenses of
$472,106 for the second fiscal quarter ended March 31, 1994.
Earnings
For the reasons stated above, net income for the second fiscal
quarter ended March 31, 1995 was $3,254,292 or $0.48 per share
compared to net income of $371,658 or $0.05 per share for the second
fiscal period ended March 31, 1994.
Results of Operations for the Six Months Ended March 31, 1995 as
Compared to the Six Months Ended March 31, 1994
Revenues
Total revenues for the six-month period ended March 31, 1995
increased 70% to $6,964,940 compared to $4,105,163 for the six-month
period ended March 31, 1994.
License fee revenues increased approximately $2,000,000 for the
six-month period ended March 31, 1995 as a result of a $5,000,000
payment received on February 1, 1995 from Berlex under an agreement
granting Berlex a product license and exclusive marketing rights to
the Company's Feridex I.V. MRI contrast agent in the United States
and Canada. License fees revenues for the six-month period ended
March 31, 1994 were $3,005,000 and included a non-refundable license
fee of $3,000,000 paid by Squibb Diagnostics.
There were no royalty revenues received in the six-month period
ended March 31, 1995 compared to $13,461 for the six-month period
ended March 31, 1994.
Product sales of $844,285 for the six-month period ended March
31, 1995 were primarily for the initial product launch in Europe of
Endorem (registered trademark) (ferumoxide), the Company's liver
imaging contrast agent. Product sales of $200,550 for the six-month
period ended March 31, 1994 were primarily for the launch in Europe
of Lumirem (registered trademark) (ferumoxsil), the Company's
gastrointestinal imaging contrast agent.
Interest, dividends and gains and losses on sales of securities
resulted in a gain of $1,120,655 in the six-month period ended March
31, 1995 compared to a gain of $886,152 in the six-month period
ended March 31, 1994. These amounts include interest and dividend
revenues of $1,123,083 for the six-month period ended March 31, 1995
compared to $729,508 for the six-month period ended March 31, 1994.
The increase was primarily a result of an increase in interest
revenue from the purchase of United States Treasury notes. Net
gains (losses) from sales of marketable securities was a loss of
$2,428 for the six-month period ended March 31, 1995 compared to a
net gain of $156,644 for the six-month period ended March 31, 1994.
<PAGE> 12 OF 16
Costs and Expenses
The cost of product sales for the six-month period ended March
31, 1995 related primarily to the sales in Europe of Endorem
(registered trademark) (ferumoxide), the Company's liver imaging
contrast agent. The cost of products sales for the six-month period
ended March 31, 1994 related primarily to the sales in Europe of Lumirem
(registered trademark) (ferumoxsil), the Company's gastrointestinal
imaging contrast agent. The cost of product sales for both six-month
periods was 20% of sales. The Company produces products for sale on a
made-to-order basis only. Research and development expenses for the
six-month period ended March 31, 1995 increased 7% to $3,579,516 from
$3,349,152 for the six-month period ended March 31, 1994. The increase
in research and development expenses was primarily due to expenditures
for the newly formed Clinical Development Group in the Company's Princeton,
New Jersey office and human clinical trials for several of the Company's
development stage products. In the first fiscal quarter, the
Company and Bristol-Myers Squibb Co. agreed that the 1,200 vials of
AMI-227 delivered were not acceptable. In addition, they agreed
that any future delivery of AMI-227 under the agreement will not be
required and that the Company will not be required to make the
$500,000 payment. Accordingly, the Company recorded a credit for
$380,000 to the purchase of in-process research and development as
well as a $120,000 adjustment to the value of the warrant to
purchase 600,000 shares of the Company's Common Stock. General
and administrative expenses for the six-month period ended
March 31, 1995 of $788,420 decreased 17% from $944,323 for the six-
month period ended March 31, 1994. The decrease was primarily due
to a decrease in legal and consulting fees.
Other
In the six month period ended March 31, 1994, the Company
recognized a pre-tax gain of $2,649,580 from the sale of its in-
vitro product line to PerSeptive on October 15, 1993.
The company adopted Statement of Financial Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities",
in the first quarter of fiscal 1995. As a result, the Company
recorded a cumulative effect for the accounting change of $117,540.
Income before the cumulative effect was $2,433,150.
Income Taxes
The income tax provision for the six-month period ended March
31, 1995 was $375,000 or 13.4% of income before taxes. The income
tax provision for the six-month period ended March 31, 1994 was
$102,000 or 4.2% of income before taxes (Note D).
Earnings
For the reasons stated above, net income for the six-month
period ended March 31, 1995 was $2,550,690 or $0.37 per share
compared to net income of $2,320,368 or $0.34 per share for the six-
month period ended March 31, 1994.
Liquidity and Capital Resources
At March 31, 1995, the Company's cash and cash equivalents
totaled $4,115,493, representing a decrease of $2,346,700 from cash
and cash equivalents at September 30, 1994. Additionally, the
Company had marketable securities of $36,880,078 at March 31, 1995
compared to $33,199,085 at September 30, 1994. Cash provided by
operating activities was $2,074,974 for the six-month period ended
March 31, 1995 compared to $312,006 cash used in operating
activities for the six-month period ended March 31, 1994. Cash
provided by operating activities for the six-month period ended
March 31, 1995 was primarily due to the $5,000,000 license fee paid
by Berlex under a product license agreement granting Berlex
exclusive marketing rights to the Company's Feridex I.V. MRI
contrast agent. Cash used in investing activities was $4,503,787
for the six-month period ended March 31, 1995 compared to
$21,259,173 for the six-month period ended March 31, 1994. Cash
used in investing activities for the six-month period ended March
31, 1995 includes the purchase of United States Treasury notes at a cost of
<PAGE> 13 OF 16
$4,003,516. Cash used in investing activities for the six-month
period ended March 31, 1994 included the purchase of United States
Treasury notes at a cost of $22,290,547. Cash provided by financing
activities for the six-month period ended March 31, 1995 was $82,113
which resulted from issuance of common stock under employee stock
option plans.. Cash used by financing activities for the six-month
period ended March 31, 1994 was $11,065.
Capital expenditures for the six-month period ended March 31,
1995 were $798,268 compared to $309,652 in the six-month period
ended March 31, 1994. The increase in capital expenditures for the
six-month period ended March 31, 1995 was primarily attributable to
an upgrade in the Company's magnetic resonance imaging equipment and
for the expenses associated with the newly formed Clinical
Development Group in the Company's Princeton, New Jersey office.
The Company has not planned any near term additional acquisitions or
major equipment expenditures and believes its available cash and
cash equivalents and marketable securities are sufficient to meet
its anticipated needs through fiscal 1996.
The Company expects that its expenditures for research and
development for the 1995 fiscal year will increase significantly
compared to the fiscal year ended September 30, 1994. The expected
increase in research and development expenses is due to the newly
formed Clinical Development Group responsible for human clinical
trials for the Company's development stage products and the funding
for the development of additional contrast agents and antiviral
therapeutics for treatment of hepatitis.
Management believes that the Company's current operations are
not materially impacted by the effects of inflation.
<PAGE> 14 OF 16
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On February 7, 1995, the Company held its Annual Meeting of
Stockholders. At the meeting, the stockholders acted upon the
following proposals: (i) election of directors and (ii)
ratification of the firm of Coopers & Lybrand LLP as independent
auditors for the fiscal year ending September 30, 1995. All of the
above matters were approved by the stockholders.
Votes "FOR" represent affirmative votes and do not include
abstentions or broker non-votes. In cases where a signed proxy was
submitted without designation, the shares represented by the proxy
were voted "FOR" each proposal in the manner described in the Proxy
Statement. On the record date (December 16, 1994), 6,720,115 shares
of the Company's common stock were issued and outstanding.
Voting results were as follows:
<TABLE>
<CAPTION>
Matter For Against Withheld Abstain
1. Election of Directors
<S> <C> <C> <C> <C>
Thomas Coor 5,621,276 N/A 48,658 N/A
Jerome Goldstein 5,621,826 N/A 48,108 N/A
Leslie Goldstein 5,596,312 N/A 73,622 N/A
Richard L McIntire 5,621,862 N/A 48,072 N/A
Edward B. Roberts 5,621,862 N/A 48,072 N/A
Roger E. Travis 5,621,862 N/A 48,072 N/A
George M. Whitesides 5,621,862 N/A 48,072 N/A
</TABLE>
2. Ratification of
Independent Auditors 5,624,382 10,476 N/A 35,076
Item 6. Exhibits
Statement Recomputation of Per Share Earnings is filed as Part
II, Exhibit 11, of this report.
<PAGE> 15 OF 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
ADVANCED MAGNETICS, INC.
Date May 3, 1995 By /s/ Jerome Goldstein
Jerome Goldstein, President,
Treasurer and Chairman of the
Board of Directors
Date May 3, 1995 By /s/ Anthony P. Annese
Anthony P. Annese,
Vice President and
Principal Accounting
Officer
<PAGE> 16 OF 16
ADVANCED MAGNETICS, INC.
Exhibit 11 - Statement Recomputation of Per Share Earnings
Attached to and made part of Part II of Form 10-Q for the
Three-Month and Six-Month Periods Ended March 31, 1995 and 1994
(unaudited)
<TABLE>
<CAPTION>
Three-Month Periods Six-Month Periods
Ended March 31, Ended March 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Weighted average number
of shares issued and
outstanding 6,724,796 6,689,383 6,720,831 6,677,417
Assumed exercise of
options reduced
by the number of
shares which
could have been
purchased with
the proceeds of
those options 110,574 102,389 107,666 111,875
Assumed exercise of
warrants reduced
by the number of
shares could have
been purchased with
the proceeds of
those warrants --- 61,681 --- 68,687
As adjusted 6,835,370 6,853,453 6,828,497 6,857,979
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> MAR-31-1995
<CASH> 4,115,493
<SECURITIES> 36,880,078
<RECEIVABLES> 1,032,726
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 42,422,300
<PP&E> 11,397,883
<DEPRECIATION> 4,617,575
<TOTAL-ASSETS> 49,299,154
<CURRENT-LIABILITIES> 1,261,865
<BONDS> 0
<COMMON> 67,270
0
0
<OTHER-SE> 48,137,008
<TOTAL-LIABILITY-AND-EQUITY> 49,299,154
<SALES> 789,026
<TOTAL-REVENUES> 6,227,695
<CGS> 157,804
<TOTAL-COSTS> 2,598,403
<OTHER-EXPENSES> 2,440,419
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,629,292
<INCOME-TAX> 375,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,254,292
<EPS-PRIMARY> .48
<EPS-DILUTED> 0
</TABLE>
