<PAGE> 1
================================================================================
SUBMITTED VIA EDGAR
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
---------- ----------
-----------------
Commission File Number 0-18231
ATRIX LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 84-1043826
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2579 MIDPOINT DRIVE FORT COLLINS, COLORADO 80525
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (970) 482-5868
Indicate by check mark whether the registrant ( 1 ) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
The number of shares outstanding of the registrant's common stock as of
July 15, 1998 was 11,310,544.
1
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ATRIX LABORATORIES, INC.
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------ ------------
ASSETS (UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 12,486,968 $ 15,185,841
Marketable securities, at fair market value 52,691,340 50,233,553
Accounts receivable, net of allowance for doubtful accounts of
$11,360 and $111,479 781,995 1,553,427
Interest receivable 665,955 340,346
Inventories 2,059,620 1,309,519
Prepaid expenses and deposits 794,515 196,574
------------ ------------
Total current assets 69,480,393 68,819,260
------------ ------------
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment 9,022,105 8,332,671
Leasehold improvements 605,107 605,107
------------ ------------
Total 9,627,212 8,937,778
Accumulated depreciation and amortization (2,839,030) (2,381,908)
------------ ------------
Property, plant and equipment, net 6,788,182 6,555,870
------------ ------------
OTHER ASSETS -
Intangible assets, net of accumulated amortization of $124,114 and $96,355 1,080,419 1,024,953
Deferred finance costs, net of accumulated amortization of
$162,531 and $22,814 1,810,429 1,893,576
------------ ------------
Total other assets 2,890,848 2,918,529
------------ ------------
TOTAL ASSETS $ 79,159,423 $ 78,293,659
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 928,844 $ 1,052,362
Interest payable 273,287 287,671
Accrued salaries and payroll taxes 221,333 155,200
Other accrued liabilities 37,406 95,508
Deferred revenue 6,668 --
------------ ------------
Total current liabilities 1,467,538 1,590,741
------------ ------------
CONVERTIBLE SUBORDINATED NOTES PAYABLE 50,000,000 50,000,000
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $.001 par value; 5,000,000 shares authorized, none Issued
or outstanding -- --
Common stock, $.001 par value; 25,000,000 shares authorized; 11,310,544 and
11,177,261 shares issued and outstanding 11,311 11,177
Additional paid-in capital 73,372,766 73,224,442
Unrealized holding loss on marketable securities (124,886) (177,867)
Accumulated deficit (45,567,306) (46,354,834)
------------ ------------
Total shareholders' equity 27,691,885 26,702,918
------------ ------------
TOTAL $ 79,159,423 $ 78,293,659
============ ============
</TABLE>
See notes to financial statements
2
<PAGE> 3
ATRIX LABORATORIES, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
----------- ------------
<S> <C> <C>
REVENUE:
Sales $ 847,621 $ 543,929
Contract revenue 120,249 237,056
Sale of marketing rights 7,000,000 --
Interest income 928,572 356,206
Other income, net 6,945 4,383
----------- ------------
Total revenue 8,903,387 1,141,574
----------- ------------
EXPENSES:
Cost of goods sold 445,807 435,551
Research and development
o ATRIDOX(TM)product 1,076,527 1,447,230
o Other 1,962,852 1,719,228
Administrative and marketing 1,647,819 527,213
----------- ------------
Total expenses 5,133,005 4,129,222
----------- ------------
NET INCOME (LOSS) $ 3,770,382 $ (2,987,648)
=========== ============
BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE $ .33 $ (0.27)
=========== ============
BASIC AND DILUTED
WEIGHTED AVERAGE SHARES OUTSTANDING 11,310,368 11,115,152
=========== ============
</TABLE>
See Notes to Financial Statements
3
<PAGE> 4
ATRIX LABORATORIES, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
REVENUE:
Sales $ 1,709,341 $ 753,668
Contract revenue 191,865 388,540
Sale of marketing rights 7,000,000 7,000,000
Interest income 1,907,538 793,716
Other income 59,682 13,351
----------- -----------
Total revenue 10,868,426 8,949,275
----------- -----------
EXPENSES:
Cost of goods sold 1,112,937 574,540
Research and development
o ATRIDOX(TM)product 2,105,299 2,910,189
o Other 3,751,187 3,034,530
Administrative and marketing 3,111,475 1,081,720
----------- -----------
Total expenses 10,080,898 7,600,979
----------- -----------
NET INCOME $ 787,528 $ 1,348,296
=========== ===========
BASIC AND DILUTED INCOME PER COMMON SHARE $ .07 $ 0.12
=========== ===========
BASIC AND DILUTED
WEIGHTED AVERAGE SHARES OUTSTANDING 11,299,707 11,114,512
=========== ===========
</TABLE>
See Notes to Financial Statements
4
<PAGE> 5
ATRIX LABORATORIES, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Additional Unrealized Total
Common Stock Paid-In Holding Accumulated Shareholder's
Shares Amount Capital Loss Deficit Equity
---------- ------- ----------- --------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 11,177,261 $11,177 $73,224,442 $(177,867) $(46,354,834) $26,702,918
Exercise of stock options 133,283 134 148,324 -- -- 148,458
Unrealized holding gain -- -- -- 52,981 -- 52,981
Net income -- -- -- -- 787,528 787,528
---------- ------- ----------- --------- ------------ ----------
Balance, June 30, 1998 11,310,544 $11,311 $73,372,766 $(124,886) $(45,567,306) 27,691,885
========== ======= =========== ========= ============ ===========
</TABLE>
See Notes to Financial Statements
5
<PAGE> 6
ATRIX LABORATORIES, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 787,528 $ 1,348,296
Adjustments to reconcile net income to net cash provided by
Operating activities:
Depreciation 479,180 353,258
Amortization of intangible assets 27,760 8,265
Amortization of bond premiums 47,660 --
Amortization of deferred financing costs 83,147 --
Gain on sale of marketable securities (23,438) --
Loss on sale of property, plant and equipment 8,959 (201)
Write-off of obsolete patents 18,611 --
Net changes in current assets and liabilities:
Restricted cash equivalents -- 7,000,000
Accounts receivable 771,432 (300,588)
Interest receivable (325,609) 6,998
Inventories (750,101) (177,873)
Prepaid expenses and deposits (597,941) (492,518)
Accounts payable -trade (123,518) 360,880
Interest payable (14,384) --
Accrued salaries and payroll taxes 66,133 6,745
Other accrued liabilities (58,102) (54,017)
Deferred revenue 6,668 (6,927,192)
------------ ------------
Net cash provided by operating activities 403,985 1,132,053
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (723,164) (1,017,086)
Acquisition of leasehold improvements -- (23,309)
Investments in intangible assets (149,497) (80,738)
Proceeds from sale of equipment 2,713 201
Proceeds from sale of marketable securities 10,023,438 991,127
Proceeds from maturity of marketable securities 23,618,987 --
Investment in marketable securities (36,023,793) (3,131,962)
------------ ------------
Net cash used in investing activities (3,251,316) (3,261,767)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES -
Net cash provided by the issuance of common stock 148,458 50,396
------------ ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,698,873) (2,079,318)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 15,185,841 18,368,472
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 12,486,968 $ 16,289,154
============ ============
</TABLE>
See Notes to Financial Statements
6
<PAGE> 7
ATRIX LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited financial statements of Atrix Laboratories,
Inc. (the "Company") have been prepared in accordance with generally accepted
accounting principles for interim financial statements and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all
adjustments considered necessary (which consist only of normal recurring
accruals) for a fair presentation have been included. These financial statements
should be read in conjunction with the audited financial statements and notes
thereto for the year ended December 31, 1997, filed with the Securities and
Exchange Commission in the Company's Annual Report Form on 10-K.
NOTE 2. INVENTORIES
Inventories are stated at the lower of cost, determined by the
first-in, first-out (FIFO) method, or market. The components of inventories at
June 30, 1998 and December 31, 1997 are as follows:
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
Raw Materials $1,134,993 $ 563,503
Work in Process 731,601 500,198
Finished Goods 193,026 245,818
---------- ----------
$2,059,620 $1,309,519
========== ==========
</TABLE>
NOTE 3. MILESTONE PAYMENT
Pursuant to its agreement with Block Drug Company ("Block"), the
Company received a $7,000,000 milestone payment on April 17, 1998. The milestone
payment was paid as a result of the receipt of an Approvable Letter for the
ATRIDOX(TM) drug product received on April 8, 1998 from the U.S. Food and Drug
Administration ("FDA").
NOTE 4. COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income." Accordingly,
components of other comprehensive income (loss) are as follows:
<TABLE>
<CAPTION>
Balance January 1 Current Period Change Balance June 30
----------------- --------------------- ---------------
1998 1997 1998 1997 1998 1997
--------- ----------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Unrealized gain (loss) on securities $(177,867) $ (152,641) $ 52,981 $ (40,492) $ (124,886) $(193,133)
Net income 787,528 1,348,296
--------- ----------- ---------- ---------- ---------- ---------
Comprehensive income $ 840,509 $1,307,804
========= =========== ========== ========== ========== =========
</TABLE>
NOTE 5. INCOME (LOSS) PER COMMON SHARE
Basic income (loss) per common share excludes dilution and is computed
by dividing net income (loss) by the weighted average number of common shares
outstanding during the periods presented. Diluted income (loss) per common share
reflects the potential dilution of securities that could share in the earnings.
For the periods presented the effect of dilutive stock options is not
significant and the effect of the assumed conversion of convertible subordinated
notes would be antidilutive. Therefore, diluted income (loss) per share is not
materially different from basic income (loss) per common share.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations contains statements that constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as amended.
These statements include statements regarding the intent, belief or current
expectations of the Company, its directors or its officers with respect to,
among other things: (i) whether the Company will receive, and the timing of,
regulatory approvals or clearances to market the ATRIDOX(TM) product and any
other potential products, (ii) the results of current and future clinical
trials, and (iii) the time and expenses associated with the regulatory approval
process for products. The success of the Company's business operations is in
turn dependent on factors such as the receipt and timing of regulatory approvals
or clearances for potential products, the effectiveness of the Company's
marketing strategies to market its current and any future products, the
Company's ability to manufacture products on a commercial scale, the appeal of
the Company`s mix of products, the Company's success at entering into and
collaborating with others to conduct effective strategic alliances and joint
ventures, general competitive conditions within the biotechnology and drug
delivery industry and general economic conditions. Forward-looking statements
are not guarantees of future performance and involve risks and uncertainties and
actual results may differ materially from those projected in the forward-looking
statements as a result of various factors.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO
THREE MONTHS ENDED JUNE 30, 1997
Total revenues for the three months ended June 30, 1998 were
approximately $8,903,000 compared to approximately $1,142,000 for the three
months ended June 30, 1997. The increase was primarily due to the receipt of a
$7,000,000 milestone payment from Block Drug Company ("Block") during the
quarter. Additionally, interest income earned increased significantly due to the
increase in principal investments related to the proceeds from issuance of 7%
Convertible Subordinated Notes due 2004 (the "Convertible Notes").
The Company had sales of approximately $848,000 during the three months
ended June 30, 1998 compared to approximately $544,000 for the three months
ended June 30, 1997. The 56% increase in sales was primarily the result of the
addition of sales for the Heska Periodontal Product launched in the fourth
quarter of 1997.
Contract revenue represents revenue the Company received from grants
and from unaffiliated third parties for performing contract research and
development activities utilizing the ATRIGEL(R) system, and was approximately
$120,000 for the three months ended June 30, 1998 compared to approximately
$237,000 for the three months ended June 30, 1997, representing a 49% decrease.
The decrease was primarily due to the completion of several grants during 1997.
Interest income for the three months ended June 30, 1998 was
approximately $929,000 compared to approximately $356,000 for the three months
ended June 30, 1997, representing a 161% increase. Interest income increased due
to additions in principal investments as a result of the proceeds from the
$50,000,000 convertible subordinated note offering completed in the fourth
quarter 1997. In addition, a $7,000,000 milestone payment was received under the
Block Agreement. The majority of the funds were invested in U.S. government bond
funds, long-term U.S. government and government agency investments. The
remaining cash and cash equivalents were invested in interest bearing accounts
to fund the Company's short-term operations.
Research and development expenses - ATRIDOX(TM) product for the three
months ended June 30, 1998 were approximately $1,077,000 compared to
approximately $1,447,000 for the three months ended June 30, 1997, representing
a 26% decrease. The decrease was the result of completion of clinical studies
related to the ATRIDOX(TM) product in the prior year.
Other research and development expenses for the three months ended June
30, 1998 were approximately $1,963,000 compared to approximately $1,719,000 for
the three months ended June 30, 1997, representing a 14% increase. The increase
was primarily as a result of increased expenses associated with new research
project opportunities.
8
<PAGE> 9
Administrative and marketing expenses increased to approximately
$1,648,000 for the three months ended June 30, 1998 from approximately $527,000
for the three months ended June 30, 1997, representing a 213% increase. The
primary reason for this increase was interest expense of $921,000 for the three
months ended June 30, 1998, compared to $ -0- interest expense for the three
months ended June 30, 1997, incurred as a result of the Convertible Notes.
The Company recorded net income of approximately $3,770,000 for the three months
ended June 30, 1998 compared to a net loss of approximately $2,988,000 for the
three months ended June 30, 1997, representing a 226% increase. The increase was
primarily due to the receipt of a $7,000,000 milestone payment by Block during
the quarter and increased interest income.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO
SIX MONTHS ENDED JUNE 30,1997
Total revenues for the six months ended June 30, 1998 were approximately
$10,868,000 compared to approximately $8,949,000 for the six months ended June
30, 1997, representing a 21% increase. The increase was primarily due to
increased interest income as a result of an increase in principal investments
related to the proceeds from the Convertible Notes.
The Company had sales of approximately $1,709,000 during the six months
ended June 30, 1998 compared to approximately $754,000 for the six months ended
June 30, 1997, representing a 127% increase. The increase in sales was primarily
the result of the addition of sales for the Heska Periodontal Product launched
in the fourth quarter of 1997.
Contract revenue represents revenue the Company received from grants
and from unaffiliated third parties for performing contract research and
development activities utilizing the ATRIGEL(R) system, and was approximately
$192,000 for the six months ended June 30, 1998 compared to approximately
$389,000 for the six months ended June 30, 1997, representing a 51% decrease.
The decrease was primarily due to the completion of several grants during 1997.
Interest income for the six months ended June 30, 1998 was
approximately $1,908,000 compared to approximately $794,000 for the six months
ended June 30, 1997, representing a 140% increase. Interest income increased due
to additions in principal investments as a result of the proceeds from a
$50,000,000 convertible subordinated note offering completed in the fourth
quarter 1997 and the $7,000,000 payment received under the Block Agreement. The
majority of the funds were invested in U.S. government bond funds, long-term
U.S. government and government agency investments. The remaining cash and cash
equivalents were invested in interest bearing accounts to fund the Company's
short-term operations.
Cost of goods sold recorded for the six months ended June 30, 1998 was
approximately $1,113,000 compared to approximately $575,000 for the period ended
June 30, 1997, representing an increase of 94%. The increase is primarily
related to sales for the Heska Periodontal Product.
Research and development expenses - ATRIDOX(TM) product for the six
months ended June 30, 1998 were approximately $2,105,000 compared to
approximately $2,910,000 for the six months ended June 30, 1997, representing a
28% decrease. This decrease is primarily the result of a shift in research
efforts to new projects as a result of the issuance of an Approvable Letter from
the FDA for ATRIDOX(TM).
Other research and development expenses were approximately $3,751,000
for the six months ended June 30, 1998 compared to approximately $3,035,000 for
the six months ended June 30, 1997, representing a 24% increase. The increase
was primarily as a result of increased expenses associated with new research
project opportunities.
9
<PAGE> 10
Administrative and marketing expenses increased to approximately
$3,111,000 for the six months ended June 30, 1998 from approximately $1,082,000
for the six months ended June 30, 1997, representing a 188% increase. The
primary reason for this increase was interest expense of $1,788,000 for the six
months ended June 30, 1998 compared to interest expense of $ -0- for the six
months ended June 30, 1997 incurred as a result of the Convertible Notes.
For the reasons described above, the Company recorded net income of
approximately $788,000 for the six months ended June 30, 1998 compared to a net
income of approximately $1,348,000 for the six months ended June 30, 1997,
representing a 42% decrease.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1998, the Company had cash and cash equivalents of
approximately $12,487,000, marketable securities of approximately $52,691,000
and other current assets of approximately $4,302,000 for total current assets of
approximately $69,480,000. Current liabilities totaled approximately $1,468,000,
which resulted in working capital of approximately $68,012,000.
In August 1997, the Company established a $1,000,000 line of credit
with a bank. Borrowings under the line bear interest at the prime rate. As of
June 30, 1998, there were no borrowings outstanding under this agreement.
During the six months ended June 30, 1998, net cash provided by
operating activities was approximately $461,000. This was primarily a result of
the net income for the period of approximately $788,000, adjusted for certain
non-cash expenses, and changes in other operating assets and liabilities as set
forth in the statements of cash flows.
Net cash used in investing activities was approximately $3,251,000
during the six months ended June 30, 1998, primarily as a result of the net
investment in marketable securities during the period and the acquisition of
property, plant and equipment.
The Company's long-term capital expenditure requirements will depend on
numerous factors, including the progress of the Company's research and
development programs, the time required to file and process regulatory approval
applications, the development of the Company's commercial manufacturing
facilities, the ability of the Company to obtain additional licensing
arrangements, and the demand for the Company's products, if and when approved.
The Company expended approximately $723,000 for property, plant and equipment
and leasehold improvements, and approximately $149,000 for patent development in
the six month period ending June 30, 1998. The Company expects its capital
expenditures to approximate $1,800,000 for the year ended December 31, 1998,
which will be used primarily to complete the automation of its manufacturing
facility and to upgrade laboratory equipment.
On April 8, 1998, the Company received an Approvable Letter from the
FDA for the ATRIDOX(TM) drug product. The Approvable Letter also resulted in the
Company's receipt of a $7,000,000 milestone payment pursuant to the Company's
agreement with Block which was received on April 17, 1998.
10
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
An annual meeting of the Shareholders of the Company was held on April
26, 1998, in Fort Collins, Colorado, for the purpose of re-electing William C.
O'Neill, Jr. and David R. Bethune to the Board of Directors as Class B directors
and ratifying the appointment of the Company's independent auditors.
The following votes were cast by the Shareholders with respect to the
election of directors:
<TABLE>
<CAPTION>
Shares Shares Shares
Voted Voted Voted Broker
For Against Abstained Non-Votes
---------- ------- --------- ---------
<S> <C> <C> <C> <C>
William C. O'Neill, Jr. 10,793,974 56,679 0 0
David R. Bethune 10,793,958 56,695 0 0
</TABLE>
The other directors whose term continues after the meeting are Dr. G.
Lee Southard, C. Rodney O'Connor, H. Stuart Campbell, John E. Urheim, Dr. D.
Walter Cohen, Dr. Jere E. Goyan and Dr. R. Bruce Merrifield.
The following votes were cast by the Shareholders with respect to the
resolution to ratify the Board of Directors' selection of Deloitte & Touche LLP
as the Company's independent auditors for the fiscal year ending December 31,
1998:
<TABLE>
<CAPTION>
Shares Shares Shares
Voted Voted Voted Broker
For Against Abstained Non-Votes
---------- ------- --------- ---------
<S> <C> <C> <C> <C>
10,756,627 34,456 59,570 0
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule.
(b) Reports on Form 8-K
An amendment to the Current Report on Form 8-K dated December
17, 1996, was filed with the Securities and Exchange
Commission on May 20, 1998 under Item 7, to update the
agreement between the registrant and Block Drug Corporation
dated December 16, 1996 based on the resolution of
registrant's request for confidential treatment. No other
reports on form 8-K were filed during the period ended June
30, 1998.
11
<PAGE> 12
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.
ATRIX LABORATORIES, INC.
(Registrant)
July 29, 1998 By: /s/ John E. Urheim
---------------------------------------
John E. Urheim
Vice Chairman of the Board of Directors
and Chief Executive Officer
July 29, 1998 By: /s/ Brian G. Richmond
---------------------------------------
Brian G. Richmond
Vice President--Finance, Assistant
Secretary, and Assistant Treasurer
12
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
27 Financial Data Schedule.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 12,486,968
<SECURITIES> 52,691,340
<RECEIVABLES> 793,355
<ALLOWANCES> 11,360
<INVENTORY> 2,059,620
<CURRENT-ASSETS> 69,480,393
<PP&E> 9,627,212
<DEPRECIATION> 2,839,030
<TOTAL-ASSETS> 79,159,423
<CURRENT-LIABILITIES> 1,467,538
<BONDS> 50,000,000
0
0
<COMMON> 11,311
<OTHER-SE> 27,680,574
<TOTAL-LIABILITY-AND-EQUITY> 79,159,423
<SALES> 1,709,341
<TOTAL-REVENUES> 10,868,426
<CGS> 1,112,937
<TOTAL-COSTS> 10,080,899
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 11,360
<INTEREST-EXPENSE> 1,787,528
<INCOME-PRETAX> 787,527
<INCOME-TAX> 0
<INCOME-CONTINUING> 787,527
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 787,527
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
