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 June 30, 1998
Commission file number 0-15681
WESTMED VENTURE PARTNERS, L.P.
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(Exact name of registrant as specified in its charter)
Delaware 13-3443230
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(State of organization) (I.R.S. Employer Identification No.)
CIBC Oppenheimer Tower, World Financial Center
New York, New York 10281
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(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (212) 667-7000
Not applicable
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Former name, former address and former fiscal year, if changed since last report
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
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets as of June 30, 1998 (Unaudited) and December 31, 1997
Schedule of Portfolio Investments at June 30, 1998 (Unaudited)
Statements of Operations for the Three and Six Months Ended June 30, 1998 and
1997 (Unaudited)
Statements of Cash Flows for the Six Months Ended June 30, 1998 and 1997
(Unaudited)
Statement of Changes in Partners' Capital for the Six Months Ended
June 30, 1998 (Unaudited)
Notes to Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
WESTMED VENTURE PARTNERS, L.P.
BALANCE SHEETS
<TABLE>
June 30, 1998 December 31,
(Unaudited) 1997
ASSETS
Portfolio investments, at fair value (cost $3,931,993 at
<S> <C> <C> <C> <C> <C> <C> <C>
June 30, 1998 and $4,630,040 at December 31, 1997) $ 3,977,540 $ 3,511,745
Cash and cash equivalents 1,662,633 1,725,666
Prepaid expenses 60,557 37,451
Accrued interest receivable 317 635
------------------ -----------------
TOTAL ASSETS $ 5,701,047 $ 5,275,497
================== =================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 56,813 $ 73,487
Due to Managing General Partner 33,845 25,960
Due to Independent General Partners 5,000 10,000
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Total liabilities 95,658 109,447
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Partners' Capital:
Managing General Partner 56,057 51,664
Limited Partners (66,929 Units) 5,549,332 5,114,386
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Total Partners' Capital 5,605,389 5,166,050
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TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 5,701,047 $ 5,275,497
================== =================
</TABLE>
See notes to financial statements.
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (Unaudited)
June 30, 1998
Active Portfolio Investments:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Initial Investment
Company / Position Date Cost Fair Value
Cortex Pharmaceuticals, Inc.(A)
140,833 shares of Common Stock May 1988 $ 504,038 $ 264,062
75,000 shares of Preferred Stock 53,030 13,798
--------------- ---------------
557,068 277,860
- -------------------------------------------------------------------------------------------------------------------------------
MNI Group Inc.(A)
211,973 shares of Common Stock Sept. 1987 451,457 36,576
- -------------------------------------------------------------------------------------------------------------------------------
Pharmaction Holdings, Ltd.(A)
Option to purchase 147,476 shares of Common Stock
at $.20 per share, expiring 3/31/99 Sept. 1987 0 0
- -------------------------------------------------------------------------------------------------------------------------------
Ultramed, Inc.
1,850,904 shares of Common Stock Oct. 1987 492,500 150,000
12% promissory note 7,500 7,500
-------------- ---------------
500,000 157,500
- -------------------------------------------------------------------------------------------------------------------------------
UroCor, Inc.(A)(B)
310,977 shares of Common Stock May 1991 707,146 2,197,189
- -------------------------------------------------------------------------------------------------------------------------------
Watson Pharmaceuticals, Inc. (A)
16,248 shares of Common Stock Jan. 1989 101,359 758,587
- -------------------------------------------------------------------------------------------------------------------------------
Xenova Group plc* (A)
304,403 Ordinary shares Aug. 1988 1,614,963 549,828
- -------------------------------------------------------------------------------------------------------------------------------
Totals From Active Portfolio Investments $ 3,931,993 $ 3,977,540
=================================
SUPPLEMENTAL INFORMATION: LIQUIDATED PORTFOLIO INVESTMENTS(D)
Cost Realized Loss Return
Totals From Liquidated Portfolio Investments(C) $ 24,786,277 $ (7,300,446) $ 17,485,831
======================================================
Combined Combined
Unrealized and Fair Value
Cost Realized Net Loss and Return
Totals From Active and Liquidated Portfolio Investments $ 28,718,270 $ (7,254,899) $ 21,463,371
======================================================
</TABLE>
(A) Public company
(B) In May 1998, the Partnership exercised its warrants to purchase 25,995
common shares of UroCor, Inc. for $93,679. The Partnership paid the Managing
General Partner a venture capital fee of $5,677 in connection with this
investment.
(C) During February 1998, the Partnership received a liquidating cash
distribution of $30,107 from Argonaut Medical, Inc. During April 1998, the
Partnership sold its investment in Exocell, Inc. for $150,000, realizing a
loss of $617,296.
(D) Amounts provided for "Supplemental Information: Liquidated Portfolio
Investments" are cumulative from inception through June 30, 1998.
* May be deemed an affiliated person of the Partnership as defined in the
Investment Company Act of 1940. See notes to financial statements.
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
------------- ------------- ------------- ---------
INVESTMENT INCOME AND EXPENSES
Income:
<S> <C> <C> <C> <C>
Interest from short-term investments $ 23,321 $ 24,448 $ 43,915 $ 62,177
Interest, dividends and other income from
portfolio investments - 5,436 - 10,526
------------- ------------- ------------- --------------
Total investment income 23,321 29,884 43,915 72,703
------------- ------------- ------------- --------------
Expenses:
Management fee 28,168 63,226 57,208 128,871
Professional fees 18,750 15,813 41,734 34,164
Mailing and printing 9,303 5,463 17,146 18,133
Insurance expense 14,532 18,892 28,894 40,182
Custodial fees 713 (73) 1,140 1,258
Independent General Partners' fees 2,500 2,500 5,000 5,000
Miscellaneous - - - 250
------------- ------------- ------------- --------------
Total investment expenses 73,966 105,821 151,122 227,858
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NET INVESTMENT LOSS (50,645) (75,937) (107,207) (155,155)
Net realized (loss) gain from portfolio investments (617,296) 2,823,657 (617,296) 2,781,892
------------- ------------- ------------- --------------
NET REALIZED (LOSS) GAIN FROM
OPERATIONS (667,941) 2,747,720 (724,503) 2,626,737
Change in unrealized appreciation or
depreciation of investments 494,423 (2,853,237) 1,163,842 (2,666,992)
------------- -------------- ------------- --------------
NET (DECREASE) INCREASE IN NET
ASSETS RESULTING FROM OPERATIONS $ (173,518) $ (105,517) $ 439,339 $ (40,255)
============= ============= ============= ==============
</TABLE>
See notes to financial statements.
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
STATEMENTS OF CASH FLOWS (Unaudited)
For the Six Months Ended June 30,
<TABLE>
1998 1997
-------------- ---------
CASH FLOWS USED FOR OPERATING ACTIVITIES
<S> <C> <C>
Net investment loss $ (107,207) $ (155,155)
Adjustments to reconcile net investment loss to cash used for operating
activities:
(Increase) decrease in accrued interest receivable and other assets (22,788) 16,986
Decrease in payables (13,789) (16,159)
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Cash used for operating activities (143,784) (154,328)
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CASH FLOWS PROVIDED FROM INVESTING ACTIVITIES
Proceeds from the sale of portfolio investments 150,000 1,437,572
Cost of portfolio investments purchased (99,356) -
Cash distribution received 30,107 149,947
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Cash provided from investing activities 80,751 1,587,519
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CASH FLOWS USED FOR FINANCING ACTIVITIES
Cash distribution paid to Partners - (4,529,538)
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Decrease in cash and cash equivalents (63,033) (3,096,347)
Cash and cash equivalents at beginning of period 1,725,666 6,135,508
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,662,633 $ 3,039,161
============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (Unaudited)
For the Six Months Ended June 30, 1998
<TABLE>
Managing
General Limited
Partner Partners Total
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997 $ 51,664 $ 5,114,386 $ 5,166,050
Net increase in net assets resulting
from operations 4,393 434,946 439,339
------------- --------------- ----------------
Balance at June 30, 1998 $ 56,057 $ 5,549,332(A) $ 5,605,389
============= =============== ================
</TABLE>
(A) The net asset value per unit of limited partnership interest, including
the allocation of net unrealized appreciation of investments, was $83 at
June 30, 1998. Such per unit amount is based on average allocations to
all limited partners and does not reflect specific limited partner
allocations, which are determined by the original closing date associated
with the units of limited partnership interest held by each limited
partner.
See notes to financial statements.
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. Organization and Purpose
WestMed Venture Partners, L.P. (the "Partnership") was formed under Delaware law
on February 5, 1987. The Partnership operates as a business development company
under the Investment Company Act of 1940, as amended. The Partnership is a
closed-end investment fund and accordingly its units of limited partnership
interest ("Units") are not redeemable. A total of 66,929 Units were sold to
limited partners (the "Limited Partners" and together with the Managing General
Partner (as hereinafter defined), the "Partners") at $500 per Unit.
The general partners of the Partnership include two individuals (the
"Independent General Partners") and the managing general
partner, WestMed Venture Management, L.P., a Delaware limited partnership
(the "Managing General Partner" and collectively with
the Independent General Partners, the "General Partners").
The general partner of the Managing General Partner is Medical
Venture Holdings, Inc., a Delaware corporation affiliated with CIBC
Oppenheimer Corp. ("Opco") (formerly Oppenheimer & Co.,
Inc.). Opco is the successor corporation to Oppenheimer & Co., Inc.,
following the acquisition and subsequent merger of
Oppenheimer & Co., Inc. and CIBC Wood Gundy Corp. in November 1997.
Opco is a subsidiary of Canadian Imperial Bank of
Commerce. The limited partners of the Managing General Partner are Opco,
MVP Holdings, Inc. and BSW, Inc., a Delaware
corporation owned by John A. Balkoski, Philippe L. Sommer and Howard S.
Wachtler. Alsacia Venture Management, Inc. (the
"Sub-Manager"), a corporation controlled by Philippe L. Sommer, serves
as the sub-manager of the Partnership pursuant to a
sub-management agreement between the Managing General Partner and the
Sub-Manager. The Sub-Manager has been retained by the
Managing General Partner to assist the Managing General Partner in the
performance of certain of its duties to the Partnership.
The Partnership's objective is to achieve long-term capital appreciation
from
its portfolio of venture capital investments, consisting of companies engaged
in
the health care industry. The Partnership's originally scheduled termination
date was December 31, 1997, with provision for extension for two additional two
year periods. The General Partners have elected not to extend the Partnership's
termination date. However, pursuant to the Partnership Agreement (as hereinafter
defined) and Delaware Law, the Managing General Partner will continue to manage
the Partnership through its date of liquidation, which will occur when it has
satisfied all liabilities and obligations to creditors and has sold, distributed
or otherwise disposed of its investments in portfolio companies.
2. Summary of Significant Accounting Policies
Valuation of Investments - Portfolio investments are carried at fair value as
determined quarterly by the Managing General Partner under the supervision of
the Independent General Partners. The fair value of publicly-held portfolio
securities is adjusted to the closing public market price for the last trading
day of theaccounting period discounted for sales restrictions, if any. Factors
considered in the determination of an
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS (Unaudited) - continued
appropriate discount include underwriter lock-up or Rule 144 trading
restrictions, insider status where the Partnership either has a representative
serving on the board of directors of the portfolio company under consideration
or is greater than a 5% shareholder thereof, and other liquidity factors such as
the size of the Partnership's position in a given company compared to the
trading history of the public security. Privately-held portfolio securities are
carried at cost until significant developments affecting the portfolio company
provide a basis for change in valuation. The fair value of private securities is
adjusted (i) to reflect meaningful third-party transactions in the private
market and (ii) to reflect significant progress or slippage in the development
of the company's business such that cost no longer reflects fair value. As a
venture capital investment fund, the Partnership's portfolio investments involve
a high degree of business and financial risk that can result in substantial
losses. The Managing General Partner considers such risks in determining the
fair value of the Partnership's portfolio investments.
Use of Estimates - 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.
Investment Transactions - Investment transactions are recorded on the accrual
method. For portfolio investments, transactions are recorded on the date which
the Partnership obtains an enforceable right to demand the securities or payment
thereof. Realized gains and losses on investments sold are computed on a
specific identification basis.
Statements of Cash Flows - Cash and cash equivalents include short-term
interest-bearing investments in commercial paper and other money market
investments. The Partnership also considers its interest-bearing cash account to
be cash equivalents.
Income Taxes - No provision for income taxes has been made since all income and
losses are allocable to the partners for inclusion in their respective tax
returns. The Partnership's net assets for financial reporting purposes differ
from its net assets for tax purposes. Net unrealized appreciation of $45,547 at
June 30, 1998, which was recorded for financial statement purposes, has not been
recognized for tax purposes. Additionally, from inception to June 30, 1998,
other timing differences totaling $8.8 million, relating to net realized losses,
original sales commissions paid and other costs of selling the Units, have been
recorded on the Partnership's financial statements but have not yet been
deducted for tax purposes.
Reclassifications - Certain reclassifications were made to the prior period
financial statements in order to conform to the current period presentation.
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS (Unaudited) - continued
3. Allocations of Partnership Profits and Losses
Pursuant to the Partnership's agreement of limited partnership, as amended (the
"Partnership Agreement"), the Partnership's net income and net realized gains
from all sources are allocated to all Partners, in proportion to their capital
contributions, until all Partners have been allocated an amount equal to 6% per
annum, simple interest, on their total Adjusted Invested Capital; i.e., original
capital contributions reduced by previous distributions (the "Priority Return").
Thereafter, net income and net realized gains from venture capital investments
in excess of the amount used to cover the Priority Return are allocated 20% to
the Managing General Partner and 80% to all Partners in proportion to their
capital contributions. Any net income from non-venture capital investments in
excess of the amount used to cover the Priority Return is allocated to all
Partners in proportion to their capital contributions. Realized losses are
allocated to all Partners in proportion to their capital contributions. However,
if realized gains had been previously allocated in the 80-20 ratio, then losses
are allocated in the reverse order in which profits were allocated. From its
inception to June 30, 1998, the Partnership has a $6.8 million net realized loss
from its venture capital investments including interest and other income from
portfolio investments totaling $493,000.
4. Related Party Transactions
Pursuant to the Partnership Agreement, the Managing General Partner is entitled
to receive a one-time venture capital fee equal to 5% of the gross proceeds from
the sale of Units. Such fee is incurred as portfolio investments are made in the
proportion to the cost of each portfolio investment to the net proceeds from the
sale of Units. Venture capital fees incurred are recorded as a cost of acquiring
the portfolio investments. Venture capital fees of $5,677 were incurred during
the quarter ended June 30, 1998. Cumulative venture capital fees incurred from
inception to June 30, 1998 totaled $1.6 million.
Pursuant to a management agreement between the Partnership and the Managing
General Partner, the Managing General Partner is responsible for the management,
administrative and certain investment advisory services necessary for the
operation of the Partnership. For such services, the Managing General Partner
receives a management fee at the annual rate of 2% of the lesser of the net
assets of the Partnership or the net contributed capital of the Partnership;
i.e., gross capital contributions to the Partnership (net of selling commissions
and organizational expenses) reduced by capital distributed. Such fee is
determined and payable quarterly. The compensation of the Sub-Manager is paid
directly by the Managing General Partner.
For services rendered to the Partnership, each of the two Independent General
Partners receives a $5,000 annual fee and reimbursement for all out-of-pocket
expenses relating to attendance at meetings of the General Partners.
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS (Unaudited) - continued
5. Classification of Investments
As of June 30, 1998, the Partnership's investments were categorized as follows:
\
<TABLE>
Percentage of
Type of Investments Cost Fair Value of Net Assets*
- ------------------- ---------------- --------------- ---------------
<S> <C> <C> <C>
Common Stock $ 3,871,463 $ 3,956,242 70.58%
Preferred Stock 53,030 13,798 0.25%
Debt Securities 7,500 7,500 0.13%
---------------- --------------- -------
$ 3,931,993 $ 3,977,540 70.96%
================ =============== ======
Country/Geographic Region
Eastern U.S. $ 951,457 $ 194,076 3.46%
Midwestern U.S. 707,146 2,197,189 39.20%
Western U.S. 658,427 1,036,447 18.49%
United Kingdom 1,614,963 549,828 9.81%
---------------- --------------- -------
$ 3,931,993 $ 3,977,540 70.96%
================ =============== ======
Industry
Biotechnology $ 2,172,031 $ 827,688 14.77%
Medical Devices 500,000 157,500 2.81%
Medical Services 707,146 2,197,189 39.20%
Nutritional Products 451,457 36,576 0.65%
Pharmaceuticals 101,359 758,587 13.53%
---------------- --------------- ------
$ 3,931,993 $ 3,977,540 70.96%
================ =============== ======
</TABLE>
* Percentage of net assets is based on fair value.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Liquidity and Capital Resources
In May 1998, the Partnership exercised its warrants to purchase 25,995 common
shares of UroCor, Inc. for $99,356, which includes a $5,677 venture capital fee
paid to the Managing General Partner. Additionally, as discussed below, during
the six months ended June 30, 1998, the Partnership liquidated certain portfolio
investments for net proceeds of $180,107.
At June 30, 1998, the Partnership held $1,662,633 in cash and cash equivalents,
including $1,577,727 in short-term securities with maturities of less than one
year and $84,906 in an interest-bearing cash account. For the three and six
months ended June 30, 1998, the Partnership earned interest from such
investments of $23,321 and $43,915, respectively. Interest earned from
short-term investments in future periods is subject to fluctuations in
short-term interest rates and changes in funds available for investment.
It is anticipated that funds needed to cover the Partnership's future operating
expenses will be obtained from existing cash reserves, interest from short-term
investments and proceeds received from the sale of portfolio investments.
Results of Operations
For the three and six months ended June 30,1998, the Partnership had a net
realized loss from operations of $667,941 and $724,503, respectively. For the
three and six months ended June 30, 1997, the Partnership had net realized gain
from operations of $2,747,720 and $2,626,737, respectively. Net realized gain or
loss from operations is comprised of (i) net realized gain or loss from
portfolio investments and (ii) net investment income or loss (interest and
dividend income less operating expenses).
Realized Gains and Losses from Portfolio Investments - For both the three and
six months ended June 30, 1998, the Partnership had a net realized loss from its
portfolio investments of $617,296. In April 1998, the Partnership sold its
investment in Exocell, Inc. for net proceeds of $150,000 compared to the cost
basis of $767,296. Additionally, during the first quarter of 1998, the
Partnership received a liquidating cash distribution of $30,107 from Argonaut
Medical, Inc., resulting in no gain or loss.
For the three and six months ended June 30, 1997, the Partnership had a net
realized gain from its portfolio investments of $2,823,657 and $2,781,892,
respectively. During the second quarter of 1997, the Partnership sold certain of
its publicly-traded securities as follows: 40,000 common shares of UroCor, Inc.
for $379,982, realizing a gain of $167,862; its remaining 125,404 common shares
of Somatogen, Inc. for $666,660, realizing a gain of $9,466; and 100,197 common
shares of Watson Pharmaceuticals, Inc. for $3,896,375, realizing a gain of
$2,646,329. During the first quarter of 1997, the Partnership sold certain of
its publicly-traded portfolio securities as follows: its remaining 3,926 shares
of HBO & Co., Inc. common stock for $244,385, realizing a gain of $78,451;
10,000 common shares of UroCor, Inc. for $109,994, realizing a gain of $64,388;
and its remaining 294,953 ordinary shares of Pharmaction Holding, Ltd. for
$36,509, realizing a loss of $213,491. In addition, the Partnership received
cash distributions from Argonaut Medical, Inc. and Nimbus Medical, LP. totaling
$149,947, resulting in a realized gain of $28,887.
<PAGE>
Investment Income and Expenses - Net investment loss for the three months ended
June 30, 1998 and 1997 was $50,645 and $75,937, respectively. The lower net
investment loss for the 1998 period compared to the 1997 period consists of a
$31,855 decrease in operating expenses offset by a $6,563 decrease in investment
income for the period. The reduction in operating expenses primarily resulted
from a $35,058 decrease in the management fee, as discussed below. Additionally,
a decrease in other expenses was mostly offset by an increase in professional
fees and printing fees for the three month period. The decrease in investment
income primarily resulted from a $5,436 reduction in interest income from
portfolio investments for 1998 compared to 1997. During 1997, the Partnership
accrued interest on a promissory note from a portfolio company which was
written-off during the second half of 1997.
Net investment loss for the six months ended June 30, 1998 and 1997 was $107,207
and $155,155, respectively. The lower net investment loss for the 1998 period
compared to the 1997 period consists of a $76,736 decrease in operating expenses
offset by a $28,788 decrease in investment income. The decrease in operating
expenses includes a $71,663 decrease in the management fee, as discussed below.
Additionally, a decrease in other expenses was mostly offset by an increase in
professional fees for the six month period. As discussed above, the decrease in
interest income resulted from a $10,526 reduction in interest earned from
portfolio investments during 1997 and also from an $18,262 decrease in interest
income from short-term investments, primarily related to the reduced amount of
funds available for such investments during the 1998 period as compared to the
same period in 1997.
Pursuant to a management agreement between the Partnership and the Managing
General Partner, the Managing General Partner is responsible for the management,
administrative and certain investment advisory services necessary for the
operation of the Partnership. For such services, the Managing General Partner
receives a management fee at the annual rate of 2% of the lesser of the net
assets of the Partnership or the net contributed capital of the Partnership;
i.e., gross capital contributions, net of selling commissions and organizational
expenses, reduced by capital distributed. Such fee is determined and payable
quarterly. For the three months ended June 30, 1998 and 1997, the management fee
was $28,168 and $63,226, respectively. For the six months ended June 30, 1998
and 1997, the management fee was $57,208 and $128,871, respectively. The reduced
management fee for the 1998 periods compared to the 1997 periods, reflects the
reduced net asset value of the Partnership, primarily resulting from the
liquidation of certain portfolio investments during 1997 and the subsequent cash
distribution paid to Partners in October 1997. The reduced management fee also
reflects the lower fair value of certain portfolio investments as of June 30,
1998 compared to June 30, 1997. The management fee is expected to continue to
decline in future periods as the Partnership's remaining portfolio investments
are liquidated and subsequent distributions are paid to Partners. To the extent
possible, the management fee and other operating expenses are paid with funds
provided from operations. Funds provided from operations are obtained from
interest received from short-term investments, interest and dividend income from
portfolio investments and proceeds from the sale of portfolio investments.
Unrealized Gains and Losses and Changes in Unrealized Appreciation or
Depreciation of Portfolio Investments - For the six months ended June 30, 1998,
the Partnership had a $546,546 net unrealized gain, resulting from the net
upward revaluation of its publicly-held portfolio investments. Additionally,
during the six month period, $617,296 was transferred from unrealized loss to
realized loss relating to the sale of the Partnership's investment in Exocell,
Inc., as discussed above. As a result, net unrealized appreciation of
investments increased $1,163,842 for the six month period.
For the six months ended June 30, 1997, the Partnership had a $207,131 net
unrealized loss, resulting from the net downward revaluation of certain
portfolio investments during the period. Additionally, $2,459,861 was
transferred from unrealized gain to realized gain relating to portfolio
investments sold during the period, as discussed above. As a result, net
unrealized appreciation of investments declined $2,666,992 for the six month
period.
Net Assets - Changes to net assets resulting from operations are comprised of
(i) net realized gain or loss from operations and (ii) changes to net unrealized
appreciation or depreciation of portfolio investments.
At June 30, 1998, the Partnership's net assets were $5,605,389, reflecting an
increase of $439,339 from $5,166,050 at December 31, 1997. This increase was
comprised of the $1,163,842 increase to net unrealized appreciation of
investments partially offset by the $724,503 net realized loss from operations
for the six month period.
At June 30, 1997, the Partnership's net assets were $12,957,893, reflecting a
decline of $40,255 from net assets at December 31, 1996. This decrease resulted
from the $2,666,992 decrease to net unrealized appreciation of investments
offset by the $2,626,737 net realized gain from operations for the six month
period.
As of June 30, 1998 and December 31, 1997, the net asset value per $500 Unit,
including an allocation of net unrealized appreciation or depreciation of
portfolio investments, was $83 and $76, respectively. Such per Unit amounts are
based on average allocations to all Limited Partners and do not reflect specific
Limited Partner allocations, which are determined by the original closing date
associated with the Units held by each Limited Partner.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Partnership is not a party to any material pending legal proceedings.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the quarter covered
by this report.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(27) Financial Data Schedule.
(b) No reports on Form 8-K have been filed during the quarter
for which this report is filed.
<PAGE>
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.
WESTMED VENTURE PARTNERS, L.P.
By: WestMed Venture Management, L.P.
The Managing General Partner
By: MEDICAL VENTURE HOLDINGS, INC.
General Partner
By: /s/ Robert I. Kleinberg
Robert I. Kleinberg
Executive Vice President
By: /s/ Ann Oliveri Fusco
Ann Oliveri Fusco
Vice President and Principal Financial
and Accounting Officer
Date: August 14, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WESTMED
VENTURE PARTNERS, L.P.'S QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JUNE
30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 3,931,993
<INVESTMENTS-AT-VALUE> 3,977,540
<RECEIVABLES> 317
<ASSETS-OTHER> 60,557
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,701,047
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 95,658
<TOTAL-LIABILITIES> 95,658
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 66,929
<SHARES-COMMON-PRIOR> 66,929
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 45,547
<NET-ASSETS> 5,605,389
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 43,915
<OTHER-INCOME> 0
<EXPENSES-NET> 151,122
<NET-INVESTMENT-INCOME> (107,207)
<REALIZED-GAINS-CURRENT> (617,296)
<APPREC-INCREASE-CURRENT> 1,163,842
<NET-CHANGE-FROM-OPS> 439,339
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 439,339
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 5,385,720
<PER-SHARE-NAV-BEGIN> 76.42
<PER-SHARE-NII> (1.59)
<PER-SHARE-GAIN-APPREC> 8.08
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 82.91
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
