<PAGE> 1
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 June 30, 1996
--------------------------------
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)
<TABLE>
<S> <C>
Delaware 04-2742593
(State or other jurisdiction of organization) (IRS Employer Incorporation or Identification No.)
</TABLE>
725 Concord Avenue
Cambridge, MA 02138
(Address of principal executive offices)
Registrant's telephone number, including area code: (617) 354-3929
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 August 8, 1996, 6,762,182 shares of registrant's common stock (par value,
$.01) were outstanding.
Page 1 of 14
<PAGE> 2
ADVANCED MAGNETICS, INC.
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
PART I. FINANCIAL INFORMATION
Item 1 -- Financial Statements
Page 2 of 14
<PAGE> 3
ADVANCED MAGNETICS, INC.
<TABLE>
BALANCE SHEET
JUNE 30, 1996 AND SEPTEMBER 30, 1995
(Unaudited)
<CAPTION>
ASSETS June 30, September 30,
------ -------- -------------
1996 1995
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents ....................................... $12,366,865 $ 1,066,419
Marketable securities (Note B) .................................. 24,128,253 36,561,263
Accounts receivable ............................................. 442,506 5,884,542
Recoverable income taxes ........................................ 90,117 90,117
Inventories ..................................................... 103,232 55,567
Prepaid expenses ................................................ 136,628 99,342
----------- -----------
Total current assets .......................................... 37,267,601 43,757,250
----------- -----------
Property, plant and equipment:
Land ............................................................ 360,000 360,000
Building ........................................................ 4,320,766 4,320,766
Laboratory equipment ............................................ 7,240,183 6,886,813
Furniture and fixtures .......................................... 550,828 516,418
12,471,777 12,083,997
----------- -----------
Less--accumulated depreciation and amortization ................. 5,932,161 5,143,097
----------- -----------
Net property, plant and equipment ............................... 6,539,616 6,940,900
----------- -----------
Other assets .................................................... 195,857 145,072
----------- -----------
Total assets .................................................. $44,003,074 $50,843,222
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................................ $ 437,730 $ 407,998
Accrued expenses ................................................ 505,358 1,214,152
Income taxes payable ............................................ 130,000 150,000
----------- -----------
Total current liabilities ..................................... 1,073,088 1,772,150
----------- -----------
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 6,771,882 shares at June 30, 1996
and 6,753,413 shares at September 30, 1995 ................... 67,719 67,534
Additional paid-in capital ...................................... 45,182,673 45,093,972
Retained earnings (deficit) ..................................... (4,189,483) 3,036,517
Unrealized gains on market value of securities (Note B) ......... 1,869,077 873,049
----------- -----------
Total stockholders' equity .................................... 42,929,986 49,071,072
----------- -----------
Total liabilities and stockholders' equity ...................... $44,003,074 $50,843,222
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 3 of 14
<PAGE> 4
ADVANCED MAGNETICS, INC.
<TABLE>
STATEMENT OF OPERATIONS
FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED
JUNE 30, 1996 AND 1995
(Unaudited)
-----------
<CAPTION>
Three-Month Period Ended June 30, Nine-Month Period Ended June 30,
--------------------------------- --------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
License fees ...................... $ -- $ -- $ -- $5,000,000
Royalties ......................... (25,000) 38,366 125,000 38,366
Product sales ..................... -- 1,276,172 12,762 2,120,457
Interest, dividends and net gains
and losses on sales of securities 470,373 575,172 1,310,539 1,695,827
----------- ----------- ----------- ----------
Total revenues ............... 445,373 1,889,710 1,448,301 8,854,650
----------- ----------- ----------- ----------
Cost and expenses:
Cost of product sales ............. -- 256,333 2,550 425,187
Research and development expenses . 2,559,241 2,578,498 7,236,546 6,158,014
Credit for purchase of in-process
research and development ........ -- -- -- (380,000)
Selling, general and administrative
expenses ........................ 749,235 511,506 1,435,206 1,299,926
----------- ----------- ----------- ----------
Total costs and expenses ..... 3,308,476 3,346,337 8,674,302 7,503,127
----------- ----------- ----------- ----------
Income (loss) before provision for
income taxes ................... (2,863,103) (1,456,627) (7,226,001) 1,351,523
Income tax provision (benefit) .... -- (178,500) -- 196,500
----------- ----------- ----------- ----------
Income (loss) before cumulative
effect of accounting change .... (2,863,103) (1,278,127) (7,226,001) 1,155,023
Cumulative effect of accounting
change .......................... -- -- -- 117,540
----------- ----------- ----------- ----------
Net income (loss) .................... $(2,863,103) $(1,278,127) $(7,226,001) $1,272,563
=========== =========== =========== ==========
Net income (loss) per share before
cumulative effect of accounting
change .......................... $ (0.42) $ (0.19) $ (1.07) $ 0.17
Cumulative effect of accounting
change .......................... -- -- -- 0.02
----------- ----------- ----------- ----------
Income (loss) per share .............. $ (0.42) $ (0.19) $ (1.07) $ 0.19
----------- ----------- ----------- ----------
Weighted average number of common
and common equivalent shares .... 6,768,705 6,731,245 6,762,983 6,851,389
----------- ----------- ----------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 4 of 14
<PAGE> 5
ADVANCED MAGNETICS, INC.
<TABLE>
STATEMENT OF CASH FLOWS
FOR THE NINE-MONTH PERIODS ENDED
JUNE 30, 1996 AND 1995
(Unaudited)
-----------
<CAPTION>
Nine-Month Periods Ended
June 30,
--------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers ....................... $ 1,300,212 $ 5,961,705
Cash paid to suppliers and employees ............... (8,253,418) (6,984,616)
Dividends and interest received .................... 1,501,027 1,255,921
Income taxes paid .................................. (20,000) (250,000)
Income tax refund .................................. -- --
Net realized gains (losses) on sales of securities . (31,996) (2,428)
----------- -----------
Net cash provided by (used in) operating activities (5,504,175) (19,418)
----------- -----------
Cash flows from investing activities:
Proceeds from sales of securities .................. 8,779,668 750,000
Proceeds from U.S. Treasury Notes maturing ......... 9,796,348 2,987,638
Purchase of securities ............................. (1,421,716) (5,644,725)
Capital expenditures ............................... (387,780) (1,358,889)
(Increase) in other assets ......................... (50,785) (48,526)
----------- -----------
Net cash provided by (used in) investing activities 16,715,735 (3,314,502)
----------- -----------
Cash flows from financing activities:
Proceeds from issuances of common stock ............ 273,754 349,045
Purchase of treasury stock ......................... (184,868) --
----------- -----------
Net cash provided by financing activities .......... 88,886 349,045
Net increase (decrease) in cash and cash equivalents 11,300,446 (2,984,875)
Cash and cash equivalents at beginning of the period 1,066,419 6,462,193
----------- -----------
Cash and cash equivalents at end of the period ..... $12,366,865 $ 3,477,318
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 5 of 14
<PAGE> 6
ADVANCED MAGNETICS, INC.
<TABLE>
RECONCILIATION OF NET INCOME
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
FOR THE NINE-MONTH PERIODS ENDED
JUNE 30, 1996 AND 1995
(Unaudited)
-----------
<CAPTION>
Nine-Month Periods
Ended June 30,
--------------------------
1996 1995
---- ----
<S> <C> <C>
Net income (Loss) .......................................... $(7,226,001) $ 1,272,563
----------- -----------
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 .............................. 789,064 755,946
Accretion of U.S. Treasury Notes Discount .................. (23,321) (40,070)
Decrease (increase) in accounts receivable ................. 1,344,263 (1,599,383)
(Increase) decrease in prepaid expenses .................... (37,286) (225,535)
(Decrease) increase in accounts payable and accrued expenses (283,229) 368,101
(Decrease) in income taxes payable ......................... (20,000) --
(Increase) in recoverable income taxes ..................... -- (53,500)
(Increase) in inventories .................................. (47,665) --
----------- -----------
Total adjustments .......................................... 1,721,826 (1,291,981)
----------- -----------
Net cash provided by (used in) operating activities ........ $(5,504,175) $ (19,418)
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 6 of 14
<PAGE> 7
ADVANCED MAGNETICS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
A. SUMMARY OF ACCOUNTING POLICIES.
BUSINESS
--------
Founded in November 1981, Advanced Magnetics, Inc., a Delaware
Corporation (the "Company"), is a biopharmaceutical company engaged in the
development and manufacture of compounds utilizing the Company's core
proprietary colloidal superparamagnetic particle technology and core
polysaccharide technology for magnetic resonance imaging ("MRI") and for
polysaccharide directed, receptor-mediated drug delivery systems. The initial
products developed by the Company are diagnostic imaging agents for use in
conjunction with MRI to aid in the diagnosis of cancer and other diseases. In
therapeutics, the Company is developing antiviral products for the treatment of
hepatitis B.
The balance sheet of the Company as of June 30, 1996 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 preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. 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, 1995.
<TABLE>
B. MARKETABLE SECURITIES.
The cost and market value of the Company's marketable securities
portfolio are as follows:
<CAPTION>
June 30, 1996 September 30, 1995
------------------------- -------------------------
Cost Fair Value Cost Fair Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
U. S. government securities
Due in one year or less -- -- $ 9,501,365 $ 9,476,430
Due after one through five years $14,894,092 $14,742,075 14,869,406 14,737,500
Corporate debt
Due after five through ten years 1,408,294 1,709,550 1,980,040 2,002,500
Preferred stock 3,933,661 4,131,633 6,116,668 5,740,023
Common stock 2,023,129 3,544,995 3,220,735 4,604,810
----------- ----------- ----------- -----------
$22,259,176 $24,128,253 $35,688,214 $36,561,263
=========== =========== =========== ===========
</TABLE>
Page 7 of 14
<PAGE> 8
C. INCOME TAX
There was no income tax provision for the nine-month period ended June
30, 1996 due to an operating loss for the period. The provision for income taxes
for the nine-month period ended June 30, 1995 was at a rate of 14.5% of
operating income.
D. 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 certain 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 most 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.
Page 8 of 14
<PAGE> 9
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
Since its inception in November 1981, the Company has focused its
efforts on developing its core superparamagnetic iron oxide particle technology.
In recent years, the Company's efforts have been focused primarily on the
development of MRI contrast agents and, to a lesser extent, on the development
of a drug delivery platform that targets therapeutics to the liver. The Company
has funded its operations with cash from license fees, royalties, sales of its
products, the proceeds of financings, income earned on invested cash and fees
from contract research performed for third parties. The Company's long-term
viability and growth will depend on the successful commercialization of products
resulting from its research activities. Among other things, successful
commercialization of the Company's products will require obtaining necessary
governmental approvals in a timely manner, attracting and retaining key
employees and responding to technological changes in the marketplace.
The Company's operating results may continue to vary significantly from
quarter to quarter or from year to year depending on a number of factors,
including: (i) the timing of payments from corporate partners; (ii) the
introduction of new products; (iii) the timing and size of orders from
customers; (iv) the general level of acceptance of the Company's products; and
(v) increases or decreases in, and timing of research and development, clinical
trials and other expenses. Revenue or profits in any period will not necessarily
be indicative of results in subsequent periods and there can be no assurance
that the Company will achieve consistent profitability or that revenue growth
will occur in the future.
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 additional clinical trials and associated toxicology and
pharmacology studies and devotes resources to developing additional contrast
agents and hepatic drug product candidates.
The discussion in this Item 2 contains some forward looking statements
which involve certain risks and uncertainties, including statements related to
expenditures on research and development, liquidity and capital resources and
capital expenditures. The Company's actual results may differ significantly from
those stated in any forward-looking statements. Factors that may cause such
differences include, but are not limited to, those relating to the timing and
results of U. S. Food and Drug Administration ("FDA") action, delays in
arrangements with clinical investigators, uncertainties relating to results of
clinical trials and product development and other risks identified from time to
time in the Company's other filings with the Securities and Exchange Commission.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1996 AS COMPARED TO THE
- ----------------------------------------------------------------------------
QUARTER ENDED JUNE 30, 1995.
- ----------------------------
REVENUES
- --------
Total revenues for the third fiscal quarter ended June 30, 1996 were
$445,373 compared to $1,889,710 for the third fiscal quarter ended June 30,
1995. The Company's revenues historically consist primarily of license fees,
royalties on products sold by licensees, direct sales of products and investment
income. The decrease in revenues in the third quarter ended June 30, 1996
compared to the third fiscal quarter ended June 30, 1995 resulted primarily from
the lack of license fees and product sales and a reduction in interest and
dividend income earned on investments.
Page 9 of 14
<PAGE> 10
The Company accounts for royalty revenue based on estimated product
sales by licensees for the applicable time period. There were no royalties for
the third fiscal quarter ended June 30, 1996, since there were no product sales
by licensees for this quarter. In addition, the company adjusted royalty revenue
for this period by $25,000 to reflect an overestimate of product sales in
previous periods. Royalties for the third fiscal quarter ended June 30, 1995
were $38,366.
There were no product sales for the third fiscal quarter ended June 30,
1996 compared to $1,276,172 for the third fiscal quarter ended June 30, 1995.
The initial product launch in Europe of the Company's liver contrast agent,
Feridex I.V. marketed in Europe under the name Endorem(R) (ferumoxide), began in
January 1995. All of the Company's product sales for the third fiscal quarter
ended June 30, 1995 related to Endorem. Although the distributors are presently
marketing and selling the Company's product, they have a sufficient level of
inventory from product sales in previous periods to satisfy their current
customer needs.
Interest, dividends and gains and losses on sales of securities resulted
in revenues of $470,373 for the third fiscal quarter ended June 30, 1996
compared to $575,172 for the third fiscal quarter ended June 30, 1995. Interest
income of $377,867 for the third fiscal quarter ended June 30, 1996 was $54,750
less than the third fiscal quarter ended June 30, 1995 primarily due to lower
interest rates earned on investments. Dividend income of $82,530 for the third
fiscal quarter ended June 30, 1996 was $60,025 less than the third fiscal
quarter ended June 30, 1995. There was a net gain on sales of securities of
$9,976 for the third fiscal quarter ended June 30, 1996. There were no sales of
securities in the third fiscal quarter ended June 30, 1995.
COSTS AND EXPENSES
Research and development expenses for the third fiscal quarter ended
June 30, 1996 were $2,559,241 compared to $2,578,498 for the third fiscal
quarter ended June 30, 1995. Selling, general and administrative expenses were
$749,235 for the third fiscal quarter ended June 30, 1996 compared to $511,506
for the third fiscal quarter ended June 30, 1995. The increase of $237,729 was
primarily related to the write-off of expenses associated with a proposed, but
later terminated, public offering of the Company's common stock.
The Company incurred no costs of product sold for the third fiscal
quarter ended June 30, 1996 compared to $256,333 for the third fiscal quarter
ended June 30, 1995.
INCOME TAXES
There was no provision for income taxes for the third fiscal quarter
ended June 30, 1996 due to an operating loss. There was an income tax benefit of
$178,500 for the third fiscal quarter ended June 30, 1995 due to the reduction
in the income tax provision for the nine-month period ended June 30, 1995.
EARNINGS
For the reasons stated above, there was a net loss of $2,863,103 or
$(0.42) per share for the third fiscal quarter ended June 30, 1996 compared to a
net loss of $1,278,127 or $(0.19) per share for the third fiscal quarter ended
June 30, 1995.
Page 10 of 14
<PAGE> 11
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED JUNE 30, 1996 AS COMPARED TO THE
- --------------------------------------------------------------------------------
NINE MONTHS ENDED JUNE 30, 1995
- -------------------------------
REVENUES
- --------
Total revenues for the nine-month period ended June 30, 1996 were
$1,448,301 compared to $8,854,650 for the nine-month period ended June 30, 1995.
There were no license fee revenues for the nine-month period ended June
30, 1996 compared to $5,000,000 for the nine-month period ended June 30, 1995.
The company received a non-refundable $5,000,000 license fee on February 1, 1995
from Berlex Laboratories, Inc. ("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.
Royalties for the nine-month period ended June 30, 1996 were $125,000
relating to product sales in Europe by Guerbet S.A. of the Company's Feridex
I.V., marketed in Europe under the name Endorem(R) (ferumoxide) and GastroMARK
MRI contrast agents. Royalties for the nine-month period ended June 30, 1995
were $38,366.
Product sales for the nine-month period ended June 30, 1996 were $12,762
compared to $2,120,457 for the nine-month period ended June 30, 1995 which were
primarily for the initial product launch in Europe of Endorem (ferumoxide), the
Company's liver imaging agent. Although the distributors are presently marketing
and selling the Company's product, they have a sufficient level of inventory
from product sales in previous periods to satisfy their current customer needs.
Interest, dividends and gains and losses on sales of securities resulted
in revenues of $1,310,539 for the nine-month period ended June 30, 1996 compared
to $1,695,827 for the nine-month period ended June 30, 1995. Interest income for
the nine-month period ended June 30, 1996 was $1,062,572 compared to $1,244,947
for the nine-month period ended June 30, 1995. The decrease was primarily due to
the maturing of United States Treasury Notes and lower interest rates earned on
money market accounts in 1996. Dividend income for the nine-month period ended
June 30, 1996 was $173,345 less than the nine-month period ended June 30, 1995
primarily due to a reduction in funds invested in dividend paying preferred
stocks. There was a net loss on sales of securities of $31,996 for the
nine-month period ended June 30, 1996 compared to a net loss of $2,428 for the
nine-month period ended June 30, 1995.
COSTS AND EXPENSES
- ------------------
The cost of product sales for the nine-month period ended June 30, 1996
was $2,550 compared to $425,187 for the nine-month period ended June 30, 1995.
The cost of product sales for the nine-month period ended June 30, 1995 related
primarily to the sale in Europe of Endorem, the Company's liver imaging agent.
The cost of product sales for both nine-month periods was 20% of product sales.
Research and development expenses for the nine-month period ended June 30, 1996
increased 25% to $7,236,546 from $6,158,014 for the nine-month period ended June
30, 1995. The increase was primarily a result of costs associated with Phase III
human clinical trials for the Company's Combidex(TM) contrast agent for use in
imaging lymph nodes, liver, spleen and blood vessels and pre-clinical
development of the Company's antiviral therapeutics. The nine-month period ended
June 30, 1995 reflected a $380,000 credit for the reversal of the purchase of
in-process research and development expenses that were expensed in the fiscal
year ended September 30, 1994 as part of the Company's Combidex transaction with
Squibb Diagnostics, a Division of Bristol-Myers Squibb Co. The Company was
relieved of its obligation to pay Bristol-Myers, and Bristol-Myers was relieved
of its obligation to deliver Combidex to the Company for clinical trials.
Selling general and administrative expenses increased 10% to $1,435,206 for the
nine-month period ended June 30, 1996 from $1,299,926 for the nine-month period
ended June 30, 1995. The increase was primarily due to expenses associated with
a proposed public offering of the Company's common stock.
Page 11 of 14
<PAGE> 12
OTHER
The Company adopted Statement of Financial Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities", in the
nine-month period ended June 30, 1995. As a result, the Company recorded a
cumulative effect for the accounting change of $117,540. Income before the
cumulative effect was $1,155,023.
INCOME TAXES
There was no income tax provision for the nine-month period ended June
30, 1996 due to an operating loss. The income tax provision for the nine-month
period ended June 30, 1995 was $196,500. The tax rate was lower than the 34%
statutory rate as a result of tax benefit of temporary differences and dividend
income exclusions.
EARNINGS
For the reasons stated above, there was a net loss for the nine-month
period ended June 30, 1996 of $7,226,001 or $(1.07) per share compared to net
income of $1,272,563 or $0.19 per share for the nine-month period ended June 30,
1995.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company's cash and cash equivalents totaled
$12,366,865, representing an increase of $11,300,446 from cash and cash
equivalents at September 30, 1995. In addition, the Company had marketable
securities of $24,128,253 at June 30, 1996 as compared to $36,561,263 at June
30, 1995. Net cash used in operating activities was $5,504,175 in the nine-month
period ended June 30, 1996 compared to net cash used in operating activities of
$19,418 in the nine-month period ended June 30, 1995. Cash provided by investing
activities was $16,715,735 for the nine-month period ended June 30, 1996
compared to $3,314,502 used in investing activities in the nine-month period
ended June 30, 1995. Cash provided by investing activities in the nine-month
period ended June 30, 1996 included the proceeds of $8,779,668 from the sale of
marketable securities and the proceeds of $9,796,348 from maturing United States
Treasury Notes. Offsetting these proceeds was the purchase of marketable
securities of $1,421,716 in the nine-month period ended June 30, 1996. Cash used
in investing activities in the nine-month period ended June 30, 1995 included
the purchase of marketable securities of $5,644,725. Cash provided by financing
activities in the nine-month period ended June 30, 1996 was $88,886 compared to
$349,045 for the nine-month period ended June 30, 1995. Cash provided by
financing activities in the fiscal nine-month period ended June 30, 1996 and
1995 included $273,754 and $349,045 respectively from the issuance of common
stock. In May 1996, the Board of Directors authorized the purchase of up to
250,000 shares of the Company's common stock on the open market at prevailing
market prices. The Company purchased 10,000 shares for $184,868 in the third
fiscal quarter ended June 30, 1996.
Capital expenditures in the nine-month period ended June 30, 1996 were
$387,780 compared to $1,358,889 in the nine-month period ended June 30, 1995.
Capital expenditures in the nine-month period ended June 30, 1995 included an
upgrade to the Company's magnetic resonance imaging equipment and furnishings
and equipment associated with the establishment of the Clinical Development
Group in the Company's Princeton, New Jersey office. The Company has no current
commitment for any significant expenditures on property, plant and equipment.
The Company expects that expenditures for research and development for the
remainder of fiscal 1996 will continue to increase due to human clinical trials
for the Company's development stage contrast agents and antiviral hepatitis
therapeutics.
Management believes that funds for future needs can be generated from
existing cash balances, cash generated from investing activities and cash
generated from operations. In addition, the Company will consider from time to
time various financing alternatives and may seek to raise additional capital
through equity or debt financing or to enter into corporate partnering
arrangements. There can be no assurance, however, that such funding will be
available on terms acceptable to the Company, if at all.
Page 12 of 14
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27.1 Financial Data Schedule.
The Company did not file any current reports on Form 8-K during the
quarter ended June 30, 1996.
Page 13 of 14
<PAGE> 14
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 August 8, 1996 By /s/ Jerome Goldstein
------------------------- -------------------------------------
Jerome Goldstein, President,
Treasurer and Chairman of the Board
of Directors
Date August 8, 1996 By /s/ James A. Matheson
------------------------- -------------------------------------
James A. Matheson, Vice President
and Principal Accounting Officer
Page 14 of 14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
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