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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
Commission file number 0 22332
INSITE VISION INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 94-3015807
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
965 ATLANTIC AVENUE
ALAMEDA, CA 94501
(Address of Principal Executive Offices, including Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (510) 865-8800
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 of Registrant's common stock, $.01 par value,
outstanding as of September 30, 2000: 24,829,627.
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QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000
TABLE OF CONTENTS
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Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at
September 30, 2000 and December 31, 1999...................................3
Condensed Consolidated Statements of Operations
For the three and nine months ended September 30, 2000 and 1999............4
Condensed Consolidated Statements of Cash Flows
For the nine months ended September 30, 2000 and 1999......................5
Notes to Condensed Consolidated Financial Statements .....................6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..............................7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibits ..................................................................16
Reports on Form 8-K........................................................16
</TABLE>
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PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements
INSITE VISION INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
(in thousands, except share and per share amounts) 2000 1999
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ASSETS
Current assets:
Cash and cash equivalents $ 20,596 $ 6,746
Prepaid expenses and other current assets 419 598
--------- --------
Total current assets 21,015 7,344
Property and equipment, at cost:
Laboratory and other equipment 632 204
Leasehold improvements 9 10
--------- --------
641 214
Accumulated depreciation 136 95
--------- --------
505 119
Note receivable from stockholder 181 --
--------- --------
Total assets $ 21,701 $ 7,463
========= ========
LIABILITIES, REDEEMABLE PREFERRED STOCK AND COMMON
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 264 $ 119
Deferred cost recovery 709 --
Accrued liabilities 308 534
Accrued compensation and related expense 704 524
--------- --------
Total current liabilities 1,985 1,177
Long-term notes payable 28 --
Commitments
Redeemable preferred stock, $0.01 par value,
5,000,000 shares authorized; no shares issued and
outstanding at September 30, 2000 and
December 31, 1999 -- 30
Common stockholders' equity:
Common stock, $0.01 par value, 60,000,000
shares authorized; 24,829,627 issued and
outstanding at September 30, 2000; 20,298,923
issued and outstanding at December 31, 1999 248 203
Additional paid-in-capital 106,898 90,807
Note receivable from stockholder (76) --
Accumulated deficit (87,382) (84,754)
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Common stockholders' equity 19,688 6,256
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Total liabilities, redeemable preferred stock and
common stockholders' equity $ 21,701 $ 7,463
========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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INSITE VISION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands, except per share amounts) 2000 1999 2000 1999
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Royalty revenues $ 14 $ 2 $ 22 $ 10
Operating expenses:
Research and development 1,839 1,603 4,872 4,354
Cost reimbursement 978 1,414 3,704 3,214
-------- -------- -------- --------
Research and development, net 861 189 1,168 1,140
General and administrative 670 550 2,003 1,737
-------- -------- -------- --------
Total operating expenses 1,531 739 3,171 2,877
-------- -------- -------- --------
Loss from operations (1,517) (737) (3,149) (2,867)
Interest, other income and expense, net 272 18 524 52
-------- -------- -------- --------
Net loss (1,245) (719) (2,625) (2,815)
Non-cash preferred dividends (1) (1) (3) (21)
-------- -------- -------- --------
Net loss applicable to common stockholders $ (1,246) $ (720) $ (2,628) $ (2,836)
======== ======== ======== ========
Basic and diluted net loss per share
applicable to common stockholders $ (0.05) $ (0.04) $ (0.11) $ (0.15)
======== ======== ======== ========
Shares used to calculate basic and diluted
net loss per share 24,795 19,711 23,151 18,953
======== ======== ======== ========
</TABLE>
No cash dividends were declared or paid during the periods.
See accompanying notes to condensed consolidated financial statements.
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INSITE VISION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended September 30,
(in thousands) 2000 1999
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OPERATING ACTIVITIES
Net loss $ (2,625) $(2,815)
Adjustments to reconcile net loss to net cash used in
Operating activities:
Depreciation and amortization 227 436
Issuance of note receivable from stockholder (181) --
Loss on sale of property and equipment -- 107
Changes in:
Prepaid expenses and other current assets 179 (219)
Accounts payable and accrued liabilities 801 618
-------- -------
Net cash used in operating activities (1,599) (1,873)
INVESTING ACTIVITIES
Sale of property and equipment -- 410
Purchases of property and equipment (423) (84)
-------- -------
Net cash provided by (used in) investing activities (423) 326
FINANCING ACTIVITIES
Issuance of common stock 15,876 3,511
Payment of capital lease obligation (4) --
-------- -------
Net cash provided by financing activities 15,872 3,511
Net increase in cash and cash equivalents 13,850 1,964
Cash and cash equivalents, beginning of period 6,746 1,037
-------- -------
Cash and cash equivalents, end of period $ 20,596 $ 3,001
======== =======
Supplemental disclosures:
Non-cash preferred dividends $ 3 $ 21
======== =======
Non-cash conversion of redeemable preferred stock
to common stock $ 33 $ 1,503
======== =======
Capital lease obligation incurred $ 39 $ --
======== =======
Common stock issued for note receivable
from stockholder $ 76 $ --
======== =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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INSITE VISION INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information pursuant to the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, considered necessary
for a fair presentation have been included. Operating results for the nine-month
period ended September 30, 2000, are not necessarily indicative of the results
that may be expected for any future period.
These financial statements and notes should be read in conjunction
with the Company's audited financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1999.
NOTE 2 - NOTE RECEIVABLE FROM STOCKHOLDER
In May 2000, the Company issued loans to Dr. Chandrasekaran, the
Company's Chief Executive Officer (CEO) and Chairman of the Board, related to
his exercise of 126,667 options to acquire common stock. The loans are full
recourse, have a term of 4 years and bear interest at 7%. Interest payments are
due semi-annually and principal payments are due annually. While the 126,667
shares of common stock issued secure the loans, the Company is not limited to
these shares to satisfy the loan.
NOTE 3 - DEFERRED COST RECOVERY
In January 2000, the Company received $2.0 million from Pharmacia
Corporation (Pharmacia) pursuant to the November 1999 ISV-900 Project Agreement,
to be used to reimburse the Company for costs incurred in support of the ISV-900
project. As of September 30, 2000, $709,000 of these funds were included in
current liabilities as deferred cost recovery. The Company directly reduces
expenses for amounts reimbursed pursuant to cost sharing agreements. During the
nine month period ended September 30, 2000 and 1999, research and development
expenses were reduced by $3.7 million and $3.2 million, respectively, for costs
reimbursed by Pharmacia pursuant to ISV-205, ISV-900 and ISV-402 agreements.
NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission ("SEC")
issued Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in
Financial Statements." SAB 101 summarizes certain of the SEC's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. In September 2000, the SEC issued Staff Accounting Bulletin No. 101B
which defers the effective date of SAB 101 until no later than the fourth
quarter of 2000. The Company is currently evaluating the effect of SAB 101 on
its operations and financial position.
In June 1998, the Financial Accounting Standards Board ("FASB") issued
statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Financial Instruments and for Hedging Activities" ("SFAS 133") which provides a
comprehensive and consistent standard for the recognition and measurement of
derivatives and hedging activities. In June 1999, the FASB issued Financial
Accounting Standards No. 137, which deferred the effective date of SFAS 133 to
fiscal years beginning after June 15, 2000. The adoption of SFAS 133 is not
anticipated to have an impact on the Company's results of operations or
financial condition when adopted as the Company holds no derivative financial
instruments and does not currently engage in hedging activities.
In March 2000, the FASB issued Interpretation No. 44 ("FIN 44"),
"Accounting for Certain Transactions Involving Stock Compensation - an
Interpretation of APB 25." This Interpretation clarifies (a) the definition of
employee for purposes of applying Opinion 25, (b) the criteria for determining
whether a plan qualifies as a noncompensatory plan, (c) the accounting
consequence of various modifications to the terms of a previously fixed stock
option or award, and (d) the accounting for an
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exchange of stock compensation awards in a business combination. This
Interpretation is effective July 1, 2000, but certain conclusions in this
Interpretation cover specific events that occur after either December 15, 1998,
or January 12, 2000. To the extent that this Interpretation covers events
occurring during the period after December 15, 1998, or January 12, 2000, but
before the effective date of July 1, 2000, the effects of applying this
Interpretation are recognized on a prospective basis from July 1, 2000. The
adoption of FIN 44 does not have a material impact on the Company's financial
statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the
financial statements and notes thereto included in this Quarterly Report and in
the Company's Annual Report on Form 10-K for the year ended December 31, 1999.
Except for the historical information contained herein, the discussion
in this Quarterly Report may be deemed to contain certain forward-looking
statements as defined in Section 21E of the Securities and Exchange Act of 1934,
as amended, such as statements of our plans, objectives, expectations and
intentions, that involve risks and uncertainties. The cautionary statements made
in this Quarterly Report, including those set forth below under the heading
"Risk Factors," should be read as being applicable to all relevant
forward-looking statements wherever they appear in this Quarterly Report. Our
actual results could differ materially from those discussed herein.
OVERVIEW
InSite Vision Incorporated is developing genetically based tools, for
the diagnosis, prognosis and management of glaucoma, as well as ophthalmic
pharmaceutical products based on its proprietary DuraSite(R) eyedrop-based drug
delivery technology.
We are focusing our research and development on the following:
- expansion of the ISV-900 technology for the prognosis, diagnosis
and management of glaucoma;
- providing on-going technical support to Pharmacia for ISV-205 for
the treatment of glaucoma;
- ISV-401, a formulation of a novel antibiotic not currently used
in ophthalmology;
- ISV-014, a retinal drug delivery device; and
- treatments for diabetic retinopathy and macular degeneration.
We are collaborating with academic researchers to develop new
diagnostic, prognostic and management tools for primary congenital, juvenile and
primary open angle glaucomas. Primary congenital glaucoma is an inherited eye
disorder and is one of the leading causes of blindness and visual impairment
affecting infants. A gene-based diagnostic kit may allow early detection of the
disease before considerable irreversible damage has occurred and may improve the
ability to treat it successfully. Primary open angle glaucoma usually affects
people over the age of forty. Current glaucoma tests are generally unable to
detect the disease before substantial damage to the optic nerve has occurred.
Gene-based tests may make it possible to identify patients at risk and initiate
treatment before permanent optic nerve damage and vision loss occurs.
Our glaucoma genetics program, which is being carried out in
collaboration with academic researchers, is focused on discovering genes that
are associated with glaucoma, and the mutations on these genes that cause the
disease. This genetic information then may be applied to develop new glaucoma
diagnostic, prognostic and management tools. To date, our academic collaborators
have identified genes associated with primary open-angle glaucoma (the most
prevalent form of the disease in adults), juvenile glaucoma and primary
congenital glaucoma. We have developed a diagnostic/prognostic technology,
ISV-900, which may be capable of identifying multiple glaucoma genetic markers
from a single sample, and have licensed ISV-900 to Pharmacia in November 1999.
Another result of the glaucoma genetics research has been the
development of the ISV-205 product candidate. This DuraSite formulation contains
a drug that has been shown in cell and organ culture systems to inhibit the
production of a protein that appears to cause glaucoma. In January 1999, we
entered into a transaction that granted Pharmacia an exclusive worldwide license
for ISV-205 for the treatment of glaucoma. In June 1999, we announced positive
results of our steroid induced glaucoma Phase II trial of ISV-205. Pharmacia has
assumed continued development of the product with our continued technical
support.
Our ISV-401 is a formulation of an antibiotic that has not previously
been used in ophthalmology. ISV-401 contains an antibiotic, which is effective
both for gram-negative and gram-positive bacteria and may also provide reduced
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dosing frequency. Current ophthalmic antibiotics must be dosed every two hours
during the first day and four times a day for the remainder of the treatment
period, which may be up to fourteen days. This may result in patient compliance
issues that could be minimized with an improved product. Also, since the
antibiotic is effective for a broad-spectrum of bacteria, physicians could use
it to treat a variety of ophthalmic diseases instead of targeting each disease
specifically.
Ophthalmic conditions that involve retinal damage include macular
degeneration, which affects 10 million or more people in the U.S., and diabetic
retinopathy, a common side effect of diabetes. Approximately ten to fourteen
million people in the U.S. are diabetics. Both macular degeneration and diabetic
retinopathy can lead to irreversible vision loss and blindness. Current
treatment of retinal diseases generally involves surgery and laser treatments
that can lead to loss of vision, retinal detachment and infection. There is no
effective drug therapy for these conditions.
Another technology platform is comprised of a device, ISV-014, for the
controlled, non-surgical delivery of ophthalmic drugs to the retina and
surrounding tissues. We are continuing to enhance the device and are
collaborating with various academic researchers to perform invivo experiments
delivering products with a variety of molecular sizes to retinal tissues. The
combination of this device technology with polymer-based drug platforms may
permit long term delivery of therapeutic agents to treat several retinal
diseases, most of which cannot be effectively treated at the present time.
We had been developing ISV-615, a DuraSite-based ophthalmic
formulation of batimastat that we had been evaluating for its potential in
preventing neovascularization in the retina related to diabetic retinopathy and
macular degeneration. We had been obtaining batimastat, the active ingredient of
ISV-615, through a 1992 agreement with British Biotech Pharmaceuticals Limited,
which in December 1996 advised us that it had discontinued development and
manufacturing of batimastat. We were in negotiations with British Biotech on a
new licensing agreement related to batimastat that would have provided for
continued supply of the drug and access to other proprietary information. In
October 2000 we received notice from British Biotech that they were terminating
licensing negotiations and that we would not have access to their proprietary
information on batimastat. We are continuing to pursue a license of batimastat
and are also very interested in other treatments for retinal diseases. In an
effort to expand our development programs in this area we have identified other
compounds that also act against neovascularization. We are currently in
discussions with a company on a development agreement for several of these
compounds.
The DuraSite delivery system is a patented eyedrop formulation
comprising a cross-linked carboxyl-containing polymer, which incorporates the
drug to be delivered to the eye. The formulation is instilled in the cul-de-sac
of the eye as a small volume eyedrop. DuraSite can be customized to deliver a
wide variety of potential drug candidates with a broad range of molecular
weights and other properties. The DuraSite formulation remains in the eye for up
to several hours during which time the active drug ingredient is gradually
released. DuraSite extends the residence time of the drug due to a combination
of mucoadhesion, surface tension and viscosity. Eyedrops delivered in the
DuraSite system contrast to conventional eyedrops which typically only last in
the eye a few minutes, thus requiring delivery of a highly concentrated burst of
drug and frequent administration to sustain therapeutic levels. The increased
residence time for DuraSite is designed to permit lower concentrations of a drug
to be administered over a longer period of time, thereby minimizing the
inconvenience of frequent dosing and reducing the potential related adverse side
effects.
To date, we have not received any revenues from the sale of products,
although we have received a small amount of royalties from the sale of products
using our licensed technology. Other than 1999, we have been unprofitable since
our inception due to continuing research and development efforts, including
preclinical studies, clinical trials and manufacturing of our product
candidates. We have financed our research and development activities and
operations primarily through private and public placement of our equity
securities and, to a lesser extent, from collaborative agreements.
As of September 30, 2000, our accumulated deficit was approximately
$87.4 million. There can be no assurance that we will ever achieve either
significant revenues or profitable operations.
RESULTS OF OPERATIONS
We earned revenues of $22,000 in the first nine months of 2000, from
sales of AquaSite(R), by CIBA Vision and certain key components of AquaSite to
Kukje Pharma Ind. Co., Ltd., our AquaSite manufacturing partner in Korea. We
earned $10,000 in the first nine months of 1999, from sales of AquaSite by CIBA
Vision. To date, we have not relied on such revenues to fund our activities.
Our research and development (R&D) expenses were $1.8 million and
$1.6 million for the third quarters of 2000 and 1999,
respectively, and $4.9 million and $4.4 million for the nine months ended
September 30, 2000 and 1999,
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respectively. These increases mainly reflect an increase in R&D headcount of 4%
in 2000 as compared to 1999, and costs associated with preclinical testing
conducted outside of the Company related to our ISV-401 and ISV-402 antibiotic
programs. Reimbursement of research expenses decreased to $1.0 million from $1.4
million in the third quarter of 2000 and 1999, respectively, and increased to
$3.7 million from $3.2 million for the nine months ended September 30, 2000 and
1999, respectively. The decrease for the third quarter reflected the shift of
the ISV-205 development activities to Pharmacia. The increase for the nine month
period reflects an increase in the programs that Pharmacia is supporting from
the January 1999, ISV-205 license agreement, to also include the November 1999,
ISV-900 license agreement and the ISV-402 pre-feasibility study.
General and administrative expenses increased 22% for the third
quarter of 2000 to $670,000 from $550,000 for the third quarter of 1999. This
increase was primarily due to higher consulting and other outside service costs,
mainly related to financial, public and investor relation activities. General
and administrative expenses increased 15% to $2.0 million from $1.7 million for
the nine months ended September 30, 2000 and 1999, respectively. The increase
reflected the higher consulting and other outside services for financial, public
and investor relation activities.
Net interest and other income was $272,000 and $18,000 in the third
quarter of 2000 and 1999, respectively, and $524,000 and $52,000 for the nine
months ended September 30, 2000 and 1999, respectively. These fluctuations are
due principally to changes in average cash balances. Interest earned in the
future will be dependent on our funding cycles and prevailing interest rates.
We incurred net losses applicable to common stockholders of $1.2
million and $720,000 during the third quarter of 2000 and 1999, respectively,
and $2.6 million and $2.8 million for the nine months ended September 30, 2000
and 1999, respectively. The increase for the third quarter of 2000 compared to
1999 was primarily due to the decrease in the reimbursement of research expenses
as Pharmacia assumes the ISV-205 program activities. The decrease in the net
loss between the nine-month periods of 2000 and 1999, was due primarily to the
increase in interest and other income related to our increased average cash
balances. The positive impact of the increased interest and other income on the
net loss was partially offset by an increase in general and administrative
expenses due to higher external financial, public and investor relations
activities. We expect to incur additional losses over the next several years.
These losses are expected to fluctuate from period to period based primarily on
the level of our product development and clinical activities, the level of
third-party reimbursement and milestone payments we receive and any royalties on
the sale of sub-licensed products, if any.
LIQUIDITY AND CAPITAL RESOURCES
Through 1995, we financed our operations primarily through private
placements of preferred stock, totaling approximately $32 million, and an
October 1993 public offering of Common Stock, which resulted in net proceeds of
approximately $30 million. After 1995, we financed our operations primarily
through a January 1996 private placement of Common Stock and warrants resulting
in net proceeds of approximately $4.7 million and an April 1996 public offering
which raised net proceeds of approximately $8.1 million. In accordance with a
July 1996 agreement with Bausch & Lomb Pharmaceuticals, Inc. (B&L), the Company
received a total of $2.0 million from the sale of Common Stock in August 1996
and 1997. In September 1997, we completed a $7.0 million private placement of
7,000 shares of Series A Redeemable Convertible Preferred Stock (Series A
preferred stock) for which net proceeds were approximately $6.5 million. In
January 1999, we entered into a transaction with Pharmacia and we received a
total of $3.5 million from the sale of Common Stock in January 1999 and
September 1999. In November 1999, we entered into another transaction with
Pharmacia and we received a $5.0 million licensing fee and, in January 2000,
received $2.0 million from the sale of 723,195 shares of Common Stock. In April
2000, we received $625,000 from the issuance of Common Stock from the exercise
of warrants issued as part of the January 1996 private placement. In May 2000,
we completed a private placement of Common Stock and warrants resulting in net
proceeds of $13.0 million.
At September 30, 2000, we had cash and cash equivalents totaling $20.6
million compared to $6.7 million as of December 31, 1999. It is our policy to
invest these funds in highly liquid securities, such as interest bearing money
market funds, Treasury and federal agency notes and corporate debt.
The decrease in net cash used in operating activities of $274,000 for
the nine months ended September 30, 2000 compared to the same period in 1999
related primarily to transactions with Pharmacia. In January 2000, we received
$2.0 million from Pharmacia pursuant to the ISV-900 Project Agreement, to be
used to reimburse us for costs incurred in support of the ISV-900 project. As of
September 30, 2000, $709,000 of these funds were included in accounts payable
and accrued liabilities as deferred cost recovery. We also entered into
promissory notes with our CEO related to his exercise of stock
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options. The notes are full recourse, have a term of four years and bear
interest at a rate of 7%. The interest is payable semi-annually with annual
principal payments. While the 126,667 shares of common stock issued secure the
promissory notes we are not limited to these shares to satisfy the notes. The
$179,000 change in prepaid expenses and other current assets was primarily due
to the decrease in the receivable from Pharmacia for technical support provided
pursuant to the ISV-205 License Agreement and the amortization of certain
prepaid expenses.
We purchased $423,000 of laboratory and other equipment in the first
nine months of 2000 compared with $84,000 in the first nine months of 1999. We
also entered into a $39,000 capital lease for certain laboratory equipment and
began making payments on the liability.
In addition to the $13.0 million net proceeds raised by the May 2000
private placement and the $625,000 received from the April 2000 exercise of
warrants, in January 2000 we received $2.0 million from the issuance of Common
Stock to Pharmacia as part of the November 1999 Stock Purchase Agreement. In
addition, we received $213,000 from the issuance of Common Stock from the
exercise of stock options by employees and purchases made as part of the
employee stock purchase plan. Also, the warrant issued as part of the 1997
Series A Preferred private placement was exercised and converted into common
stock during the third quarter of 2000. We no longer have any obligations
outstanding related to the Series A Preferred stock.
Our future capital expenditures and requirements will depend on
numerous factors, including the progress of our research and development
programs and preclinical and clinical testing, the time and costs involved in
obtaining regulatory approvals, our ability to establish additional
collaborative arrangements, the cost of filing, prosecuting, defending and
enforcing patent claims and other intellectual property rights, competing
technological and market developments, changes in our existing collaborative and
licensing relationships, acquisition of new businesses, products and
technologies, the completion of commercialization activities and arrangements,
and the purchase of additional property and equipment.
We anticipate no material capital expenditures to be incurred for
environmental compliance in fiscal year 2000. Based on our good environmental
compliance record to date, and our current compliance with applicable
environmental laws and regulations, environmental compliance is not expected to
have a material adverse effect on our operations.
We believes that our cash and cash equivalents will be sufficient to
meet our operating expenses and cash requirements through the end of 2000. We
may require substantial additional funds prior to reaching sustained
profitability and we may seek private or public equity investments, future
collaborative agreements, and possibly research funding to meet such needs. Even
if we do not have an immediate need for additional cash, we may seek access to
the private or public equity markets if and when we believe conditions are
favorable. There is no assurance that such additional funds will be available
for us to finance our operations on acceptable terms, or at all.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB101"), "Revenue Recognition in Financial
Statements." SAB 101 summarizes certain of the SEC's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. In September 2000, the SEC issued Staff Accounting Bulletin No.
101B which defers the effective date of SAB 101 until no later than the fourth
quarter of 2000. We are currently evaluating the effect of SAB 101 on our
operations and financial position.
In June 1998, the Financial Accounting Standards Board ("FASB") issued
statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Financial Instruments and for Hedging Activities ("SFAS 133") which provides a
comprehensive and consistent standard for the recognition and measurement of
derivatives and hedging activities. In June 1999, the FASB issued Financial
Accounting Standards No. 137, which deferred the effective date of SFAS 133 to
fiscal years beginning after June 15, 2000. The adoption of SFAS 133 is not
anticipated to have an impact on our results of operations or financial
condition when adopted as we hold no derivative financial instruments and do
not currently engage in hedging activities.
In March 2000, the FASB issued Interpretation No. 44 ("FIN 44"),
"Accounting for Certain Transactions Involving Stock Compensation -- an
Interpretation of APB 25." This Interpretation clarifies (a) the definition of
employee for purposes of applying Opinion 25, (b) the criteria for determining
whether a plan qualifies as a noncompensatory plan, (c) the accounting
consequence of various modifications to the terms of a previously fixed stock
option or award, and (d) the accounting for an exchange of stock compensation
awards in a business combination. This Interpretation is effective July 1,
2000, but certain conclusions in this Interpretation cover specific events that
occur after either December 15, 1998, or January 12, 2000. To the extent that
this Interpretation covers events occurring during the period after December
15, 1998, or January 12, 2000, but before the effective date of July 1, 2000,
the effects of applying this Interpretation are recognized on a prospective
basis from July 1, 2000. The adoption of FIN 44 does not have a material impact
on our financial statements.
RISK FACTORS
IT IS DIFFICULT TO EVALUATE OUR BUSINESS BECAUSE WE ARE IN AN EARLY STAGE OF
DEVELOPMENT AND OUR TECHNOLOGY IS UNTESTED.
We are in an early stage of developing our business. We are currently
only receiving a small amount of royalties from the sale of one of our products,
an over-the-counter dry eye treatment. Before regulatory authorities grant us
marketing approval, we need to conduct significant additional research and
development and preclinical and clinical testing. All of our products are
subject to risks that are inherent to products based upon new technologies.
These risks include the risks that our products:
o are found to be unsafe or ineffective;
o fail to receive necessary marketing clearance from regulatory
authorities;
o even if safe and effective, are too difficult to manufacture or
market;
o are unmarketable due to the proprietary rights of third parties;
or
o are not able to compete with superior, equivalent or more
cost-effective products offered by competitors.
Therefore, our research and development activities may not result in any
commercially viable products.
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WE MAY REQUIRE SIGNIFICANT ADDITIONAL FUNDING FOR OUR CAPITAL REQUIREMENTS AND
WE MAY HAVE DIFFICULTY RAISING ADDITIONAL FUNDING.
We may require substantial additional funding to develop and conduct
testing on our potential products. We may also require additional funding to
manufacture and market any products that we develop. Our future capital
requirements depend upon many factors, including:
o the progress of our research and development programs;
o the progress of preclinical and clinical testing;
o our ability to establish additional corporate partnerships to
develop, manufacture and market our potential products;
o the time and cost involved in obtaining regulatory approvals;
o the cost of filing, prosecuting, defending and enforcing patent
claims and other intellectual property rights;
o competing technological and market developments;
o changes in our existing collaborative and licensing
relationships; and
o the purchase of additional capital equipment.
In addition, as part of the ISV-900 licensing activities, we received a
$5 million licensing fee from Pharmacia Corporation. The University of
California Regents alleged that they were entitled to receive up to $2.5 million
of this payment under the terms of the August 1994 license agreement between the
UC Regents and us. We disputed this allegation and we were able to resolve this
conflict without making any additional payments from the licensing fee. We did,
however, agree to amend our 1994 license agreement with the University of
California Regents to provide for the payment of an increased royalty to the
University of California Regents for a limited period of time.
We may seek additional funding through public or private equity or debt
financing, collaborative or other arrangements, and from other sources. We may
not be able to secure additional funding from these sources, and any funding may
not be on terms acceptable to us.
Our stockholders will suffer substantial dilution if we raise additional
funds by issuing equity securities. However, if we cannot raise additional
funding, we may be required to delay, scale back or eliminate one or more of our
research, discovery or development programs, or scale back or cease operations
altogether. In addition, the failure to raise additional funding may force us to
enter into agreements with third parties on terms which are disadvantageous to
us, which may, among other things, require us to relinquish rights to our
technologies, products or potential products.
WE HAVE A HISTORY OF OPERATING LOSSES AND WE EXPECT TO CONTINUE TO HAVE LOSSES
IN THE FUTURE.
We have incurred significant operating losses since our inception in
1986. As of September 30, 2000, our accumulated deficit was approximately $87.4
million. We expect to incur net losses for the foreseeable future or until we
are able to achieve significant royalties from sales of our licensed products
even though we achieved profitability in 1999.
Attaining significant revenue or profitability depends upon our ability,
alone or with third parties, to successfully develop our potential products,
conduct clinical trials, obtain required regulatory approvals and successfully
manufacture and market our products. We may not ever achieve or be able to
maintain significant revenue or profitability.
WE RELY ON THIRD PARTIES TO DEVELOP, MARKET AND SELL OUR PRODUCTS, WE MAY NOT BE
ABLE TO CONTINUE OR ENTER INTO THIRD PARTY ARRANGEMENTS, AND THESE THIRD PARTIES
EFFORTS MAY NOT BE SUCCESSFUL.
We have not established a dedicated sales and marketing organization,
and we rely on third parties for clinical testing. Therefore, if we are to
successfully develop and commercialize our product candidates, we will be
required to enter into arrangements with one or more third parties that will:
o provide for Phase III clinical testing;
o obtain or assist us in other activities associated with obtaining
regulatory approvals for our product candidates; and
o market and sell our products, if they are approved.
We plan to market and sell products through arrangements with third
parties with expertise in the ophthalmic drug or diagnostic industries. We may
not be able to enter into such arrangements on acceptable terms or at all. If we
are not
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successful in concluding such arrangements on acceptable terms, we may be
required to establish our own sales and marketing organization, despite the fact
that we have no experience in sales, marketing or distribution. We may not be
able to build such a marketing staff or sales force and our sales and marketing
efforts may not be cost-effective or successful.
Our strategy for research, development and commercialization of certain
of our products requires us to enter into various arrangements with corporate
and academic collaborators, licensors, licensees and others. Furthermore, we are
dependent on the diligent efforts and subsequent success of these outside
parties in performing their responsibilities.
Even if we or those working with us obtain regulatory approvals, to the
extent we have entered into or will enter into co-marketing, co-promotion or
other licensing arrangements for the marketing and sale of our products, any
revenues that we receive will be dependent on the efforts of third parties, such
as Pharmacia Corporation, CIBA Vision and Bausch & Lomb. These partners may not
diligently or successfully market our products and these efforts may not be
successful. We may not be able to conclude arrangements with other companies to
support the commercialization of our products on acceptable terms.
In addition, our collaborators may take the position that they are free
to compete using our technology without compensating or entering into agreements
with us. Furthermore, our collaborators may pursue alternative technologies or
develop alternative products either on their own or in collaboration with
others, including our competitors, as a means for developing treatments for the
diseases or disorders targeted by these collaborative programs.
OUR BUSINESS DEPENDS UPON OUR PROPRIETARY RIGHTS, AND WE MAY NOT BE ABLE TO
ADEQUATELY PROTECT, ENFORCE OR SECURE OUR INTELLECTUAL PROPERTY RIGHTS.
Our success will depend in large part on our ability to obtain patents,
protect trade secrets, obtain and maintain rights to technology developed by
others, and operate without infringing upon the proprietary rights of others. A
substantial number of patents in the field of ophthalmology and genetics have
been issued to pharmaceutical, biotechnology and biopharmaceutical companies.
Moreover, competitors may have filed patent applications, may have been issued
patents or may obtain additional patents, and proprietary rights relating to
products or processes competitive with ours. Our patent applications may not be
approved. We may not be able to develop additional proprietary products that are
patentable. Even if we receive patent issuances, those issued patents may not be
able to provide us with adequate protection for our inventions or may be
challenged by others. Furthermore, the patents of others may impair our ability
to commercialize our products. The patent positions of firms in the
pharmaceutical and genetic industries generally are highly uncertain, involve
complex legal and factual questions, and have recently been the subject of much
litigation. Neither the United States Patent and Trademark Office nor the courts
has developed, formulated, or presented a consistent policy regarding the
breadth of claims allowed or the degree of protection afforded under
pharmaceutical and genetic patents. Despite our efforts to protect our
proprietary rights, others may independently develop similar products, duplicate
any of our products or design around any of our patents. In addition, third
parties from whom we have licensed or otherwise obtained technology may attempt
to terminate or scale back our rights.
A number of pharmaceutical and biotechnology companies and research and
academic institutions have developed technologies, filed patent applications or
received patents on various technologies that may be related to our business.
Some of these technologies, applications or patents may conflict with our
technologies or patent applications. Such conflicts could limit the scope of the
patents, if any, we may be able to obtain or result in the denial of our patent
applications. In addition, if the United States Patent and Trademark Office or
foreign patent agencies have issued or issue patents that cover our activities
to other companies, we may not be able to obtain licenses to these patents at
all, or at a reasonable cost, or be able to develop or obtain alternative
technology. If we do not obtain such licenses, we could encounter delays in or
be precluded altogether from introducing products to the market.
We may need to litigate in order to defend against or assert claims of
infringement, to enforce patents issued to us or to protect trade secrets or
know-how owned or licensed by us. Litigation could result in substantial cost to
and diversion of effort by us, which may harm our business. We have also agreed
to indemnify our licensees, including Pharmacia Corporation, against
infringement claims by third parties related to our technology, which could
result in additional litigation costs and liability for us. In addition, our
efforts to protect or defend our proprietary rights may not be successful or,
even if successful, may result in substantial cost to us.
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We also depend upon unpatented trade secrets to maintain our competitive
position. Others may independently develop substantially equivalent proprietary
information and techniques or otherwise gain access to our trade secrets. Our
trade secrets may also be disclosed, and we may not be able to effectively
protect our rights to unpatented trade secrets. To the extent that we or our
consultants or research collaborators use intellectual property owned by others,
disputes also may arise as to the rights in related or resulting know-how and
inventions.
IF WE ENGAGE IN ACQUISITIONS, WE WILL INCUR A VARIETY OF COSTS, AND THE
ANTICIPATED BENEFITS OF THE ACQUISITION MAY NEVER BE REALIZED.
At some point in the future, we may pursue acquisitions of companies,
product lines, technologies or businesses that our management believes are
complementary or otherwise beneficial to us. Any of these acquisitions could
have negative as well as positive effects on our business. Future acquisitions
may result in substantial dilution to our stockholders, the incurrence of
additional debt and amortization expenses related to goodwill, research and
development and other intangible assets. Any of these results could harm our
financial condition. In addition, acquisitions would involve several risks for
us, including:
o assimilating employees, operations, technologies and products
from the acquired companies with our existing employees,
operation, technologies and products;
o diverting our management's attention from day-to-day operation of
our business;
o entering markets in which we have no or limited direct
experience; and potentially losing key employees from the
acquired companies.
WE HAVE NO EXPERIENCE IN COMMERCIAL MANUFACTURING AND NEED TO ESTABLISH
MANUFACTURING RELATIONSHIPS WITH THIRD PARTIES, AND IF CONTRACT MANUFACTURING IS
NOT AVAILABLE TO US OR DOES NOT SATISFY REGULATORY REQUIREMENTS, WE WILL HAVE TO
ESTABLISH OUR OWN REGULATORY COMPLIANT MANUFACTURING CAPABILITY.
We have no experience manufacturing products for commercial purposes. We
have a pilot facility licensed by the State of California to manufacture a
number of our products for Phase I and Phase II clinical trials. In July 1999,
we terminated our alliance under which Bausch & Lomb agreed to manufacture our
products. Any delays or difficulties we may encounter in establishing and
maintaining a relationship with other qualified manufacturers to produce,
package and distribute our finished products may harm our clinical trials,
regulatory filings, market introduction and subsequent sales of our products.
Contract manufacturers must adhere to Good Manufacturing Practices
regulations that are strictly enforced by the Federal Drug Administration, or
FDA, on an ongoing basis through its facilities inspection program. Contract
manufacturing facilities must pass a pre-approval plant inspection before the
FDA will approve a new drug application. Some of the material manufacturing
changes that occur after approval are also subject to FDA review and clearance
or approval. The FDA or other regulatory agencies may not approve the process or
the facilities by which any of our products may be manufactured. Our dependence
on third parties to manufacture our products may harm our ability to develop and
deliver products on a timely and competitive basis. Should we be required to
manufacture products ourselves, we:
o will be required to expend significant amounts of capital to
install a manufacturing capability;
o will be subject to the regulatory requirements described above;
o will be subject to similar risks regarding delays or difficulties
encountered in manufacturing any such products; and
o will require substantial additional capital.
Therefore, we may not be able to manufacture any products successfully or in a
cost-effective manner.
WE RELY ON A SOLE SOURCE FOR SOME OF THE RAW MATERIALS IN OUR PRODUCTS, AND THE
RAW MATERIALS WE NEED MAY NOT BE AVAILABLE TO US.
We have been dependent upon British Biotech for the supply of
batimastat, the active drug incorporated into our ISV-615 product candidate.
British Biotech has discontinued clinical testing of batimastat and informed
us that it will no longer manufacture the product. We are currently searching
for a new source of batimastat. In addition, British Biotech has informed us
that they are terminating licensing negotiations. If we are unable to secure a
license or are unsuccessful in finding a new source of batimastat on acceptable
terms we may be forced to discontinue this program.
Certain of the raw materials we use in formulating our DuraSite drug
delivery system are available from only one source. Any significant interruption
in the supply of these raw materials could delay our clinical trials, product
development or product sales and could harm our business.
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OUR PRODUCTS ARE SUBJECT TO GOVERNMENT REGULATIONS AND APPROVAL, WHICH MAY DELAY
OR PREVENT THE MARKETING OF POTENTIAL PRODUCTS AND IMPOSE COSTLY PROCEDURES UPON
OUR ACTIVITIES.
The FDA and comparable agencies in state and local jurisdictions and in
foreign countries impose substantial requirements upon preclinical and clinical
testing, manufacturing and marketing of pharmaceutical products. Lengthy and
detailed preclinical and clinical testing, validation of manufacturing and
quality control processes, and other costly and time-consuming procedures are
required. Satisfaction of these requirements typically takes several years and
the time needed to satisfy them may vary substantially, based on the type,
complexity and novelty of the pharmaceutical product. The effect of government
regulation may be to delay or to prevent marketing of potential products for a
considerable period of time and to impose costly procedures upon our activities.
The FDA or any other regulatory agency may not grant approval for any products
we develop on a timely basis, or at all. Success in preclinical or early stage
clinical trials does not assure success in later stage clinical trials. Data
obtained from preclinical and clinical activities are susceptible to varying
interpretations that could delay, limit or prevent regulatory approval. If
regulatory approval of a product is granted, such approval may impose
limitations on the indicated uses for which a product may be marketed. Further,
even after we have obtained regulatory approval, later discovery of previously
unknown problems with a product may result in restrictions on the product,
including withdrawal of the product from the market. Moreover, the FDA has
recently reduced previous restrictions on the marketing, sale and prescription
of products for indications other than those specifically approved by the FDA.
Accordingly, even if we receive FDA approval of a product for certain indicated
uses, our competitors, including our collaborators, could market products for
such indications even if such products have not been specifically approved for
such indications. Delay in obtaining or failure to obtain regulatory approvals
would make it difficult or impossible to market our products and would harm our
business.
The FDA's policies may change and additional government regulations may
be promulgated which could prevent or delay regulatory approval of our potential
products. Moreover, increased attention to the containment of health care costs
in the United States could result in new government regulations that could harm
our business. Adverse governmental regulation might arise from future
legislative or administrative action, either in the United States or abroad. See
"Risk Factors --Uncertainties regarding health care reform and third-party
reimbursement may impair our ability to raise capital, form collaborations and
sell our products."
WE COMPETE IN HIGHLY COMPETITIVE MARKETS AND OUR COMPETITORS' FINANCIAL,
TECHNICAL, MARKETING, MANUFACTURING AND HUMAN RESOURCES MAY SURPASS OR LIMIT OUR
ABILITY TO DEVELOP AND/OR MARKET OUT PRODUCTS AND TECHNOLOGIES.
Our success depends upon developing and maintaining a competitive
advantage in the development of products and technologies in our areas of focus.
We have many competitors in the United States and abroad, including
pharmaceutical, biotechnology and other companies with varying resources and
degrees of concentration in the ophthalmic market. Our competitors may have
existing products or products under development which may be technically
superior to ours or which may be less costly or more acceptable to the market.
Competition from such companies is intense and expected to increase as new
products enter the market and new technologies become available. Many of our
competitors have substantially greater financial, technical, marketing,
manufacturing and human resources. In addition, they may also succeed in
developing technologies and products that are more effective, safer, less
expensive or otherwise more commercially acceptable than any that we have or
will develop. Our competitors may obtain cost advantages, patent protection or
other intellectual property rights that would block or limit our ability to
develop our potential products. Our competitors may also obtain regulatory
approval for commercialization of their products more effectively or rapidly
than we will. If we decide to manufacture and market our products by ourselves,
we will be competing in areas in which we have limited or no experience such as
manufacturing efficiency and marketing capabilities. See "Risk Factors -- We
have no experience in commercial manufacturing and need to establish
manufacturing relationships with third parties, and if contract manufacturing is
not available to us or does not satisfy regulatory requirements, we will have to
establish our own regulatory compliant manufacturing capability."
WE ARE DEPENDENT UPON KEY EMPLOYEES AND WE MAY NOT BE ABLE TO RETAIN OR ATTRACT
NEW KEY EMPLOYEES.
We are highly dependent on Dr. Chandrasekaran and other principal
members of our scientific and management staff. The loss of services from these
key personnel might significantly delay the achievement of planned development
objectives. Furthermore, a critical factor to our success is recruiting and
retaining qualified personnel. Competition for skilled individuals in the
biotechnology business is highly intense, and we may not be able to continue to
attract and retain personnel necessary for the development of our business. The
loss of key personnel or the failure to recruit additional personnel or to
develop needed expertise could harm our business.
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OUR INSURANCE COVERAGE MAY NOT ADEQUATELY COVER OUR POTENTIAL PRODUCT LIABILITY
EXPOSURE.
We are exposed to potential product liability risks inherent in the
development, testing, manufacturing, marketing and sale of human therapeutic
products. Product liability insurance for the pharmaceutical industry is
expensive. Our present product liability insurance coverage may not be adequate.
In addition our existing coverage will not be adequate as we further develop our
products, and adequate insurance coverage against potential claims may not be
available in sufficient amounts or at a reasonable cost.
UNCERTAINTIES REGARDING HEALTH CARE REFORM AND THIRD-PARTY REIMBURSEMENT MAY
IMPAIR OUR ABILITY TO RAISE CAPITAL, FORM COLLABORATIONS AND SELL OUR PRODUCTS.
The continuing efforts of governmental and third party payers to contain
or reduce the costs of health care through various means may harm our business.
For example, in some foreign markets the pricing or profitability of health care
products is subject to government control. In the United States, there have
been, and we expect there will continue to be, a number of federal and state
proposals to implement similar government control. The implementation or even
announcement of any of these legislative or regulatory proposals or reforms
could harm our business by impeding our ability to achieve profitability, raise
capital or form collaborations.
In addition, the availability of reimbursement from third party payers
determines, in part, sales of health care products in the United States and
elsewhere. Examples of such third party payers are government and private
insurance plans. Significant uncertainty exists as to the reimbursement status
of newly approved health care products, and third party payers are increasingly
challenging the prices charged for medical products and services. If we succeed
in bringing one or more products to the market, reimbursement from third party
payers may not be available or may not be sufficient to allow us to sell our
products on a competitive or profitable basis.
OUR USE OF HAZARDOUS MATERIALS MAY POSE ENVIRONMENTAL RISKS AND LIABILITIES,
WHICH MAY CAUSE US TO INCUR SIGNIFICANT COSTS.
Our research, development and manufacturing processes involve the
controlled use of small amounts of radioactive and other hazardous materials. We
are subject to federal, state and local laws, regulations and policies governing
the use, manufacture, storage, handling and disposal of radioactive and other
hazardous materials waste products. Although we believe that our safety
procedures for handling and disposing of these materials comply with the
standards prescribed by current laws and regulations, we cannot completely
eliminate the risk of accidental contamination or injury from these materials.
In the event of such an accident, we could be held liable for any damages that
result, and any such liability could exceed our resources. Moreover, we may be
required to incur significant costs to comply with environmental laws and
regulations, especially to the extent that we manufacture our own products.
MANAGEMENT AND PRINCIPAL STOCKHOLDERS MAY BE ABLE TO EXERT SIGNIFICANT CONTROL
ON MATTERS REQUIRING APPROVAL BY OUR STOCKHOLDERS.
As of September 30, 2000, our management and principal stockholders
together beneficially owned approximately 25% of our outstanding shares of
common stock. As a result, these stockholders, acting together, may be able to
effectively control all matters requiring approval by our stockholders,
including the election of a majority of our directors and the approval of
business combinations.
THE MARKET PRICES FOR SECURITIES OF BIOPHARMACEUTICAL AND BIOTECHNOLOGY
COMPANIES SUCH AS OURS MAY BE HIGHLY VOLATILE DUE TO REASONS THAT ARE RELATED
AND UNRELATED TO THE OPERATING PERFORMANCE AND PROGRESS OF OUR COMPANY.
The market prices for securities of biopharmaceutical and biotechnology
companies, including ours, have been highly volatile. The market has from time
to time experienced significant price and volume fluctuations that are unrelated
to the operating performance of particular companies. In addition, future
announcements, such as the results of testing and clinical trials, technological
innovations or new therapeutic products, governmental regulation, developments
in patent or other proprietary rights, litigation or public concern as to the
safety of products developed by us or others and general market conditions,
concerning us, our competitors or other biopharmaceutical companies, may have a
significant effect on the market price of our common stock. We have not paid any
cash dividends on our common stock, and we do not anticipate paying any
dividends in the foreseeable future.
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WE HAVE ADOPTED AND ARE SUBJECT TO ANTI-TAKEOVER PROVISIONS THAT COULD DELAY OR
PREVENT AN ACQUISITION OF OUR COMPANY.
Provisions of our certificate of incorporation and bylaws may constrain
or discourage a third party from acquiring, or attempting to acquire control of
us. Such provisions could limit the price that investors might be willing to pay
in the future for shares of our common stock. The board of directors has the
authority to issue up to 5,000,000 shares of preferred stock, 7,070 of which
have been designated as Series A Convertible Redeemable Preferred Stock.
Furthermore, the board of directors has the authority to determine the price,
rights, preferences, privileges and restrictions of the remaining unissued
shares of preferred stock without any further vote or action by the
stockholders. The rights of the holders of common stock will be subject to, and
may be adversely affected by, the rights of the holders of any preferred shares
and of preferred stock that may be issued in the future. The issuance of
preferred stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire a majority of our
outstanding voting stock. Provisions of Delaware law applicable to us could also
delay or make more difficult a merger, tender offer or proxy contest involving
us, including Section 203 of the Delaware General Corporation Law, which
prohibits a Delaware corporation from engaging in any business combination with
any interested stockholder for a period of three years unless conditions set
forth in the Delaware General Corporation Law are met.
PART II OTHER INFORMATION
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 September 30,
2000.
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.
INSITE VISION INCORPORATED
Dated: November 14, 2000 by: /s/ S. Kumar Chandrasekaran
-----------------------------
S. Kumar Chandrasekaran, Ph.D.
Chairman of the Board,
Chief Executive Officer and
Chief Financial Officer
(on behalf of the registrant and as
principal financial and accounting
officer)
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