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 MARCH 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934.
FOR THE TRANSITION PERIOD FROM ______ TO ______
Commission File Number 33-14582
PAINEWEBBER R&D PARTNERS II, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3437420
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1285 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10019
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 713-2000
---------------------
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> Page 1
PAINEWEBBER R&D PARTNERS II, L.P.
(a Delaware Limited Partnership)
FORM 10-Q
MARCH 31, 1996
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Statements of Financial Condition
(unaudited) at March 31, 1996 and December 2
31, 1995
Statements of Operations
(unaudited) for the three months ended
March 31, 1996 and 1995 3
Statement of Changes in Partners' Capital
(unaudited) for the three months ended
March 31, 1996 3
Statements of Cash Flows
(unaudited) for the three months ended
March 31, 1996 and 1995 4
Notes to Financial Statements
(unaudited) 5-11
Item 2. Management's Discussion and Analysis of 12
Financial Condition and Results of
Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
All schedules are omitted either because they are not applicable or the
information required to be submitted has been included in the financial
statements or notes thereto.
<PAGE> Page 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PAINEWEBBER R&D PARTNERS II, L.P.
(a Delaware Limited Partnership)
Statements of Financial Condition
(unaudited)
March 31, December 31,
1996 1995
- -------------------------------------------------------------------------------
Assets:
Cash $ 26,210 $ 5,858
Marketable securities, at market value 1,214,887 1,247,309
Investments, at fair value 3,292,500 3,791,626
Interest receivable 3,861 5,518
Investments in product development projects 166,275 189,256
Royalty income receivable 31,765 26,158
------------ ------------
Total assets $ 4,735,498 $ 5,265,725
============ ============
Liabilities and partners' capital:
Accrued liabilities $ 101,455 $ 97,486
Partners' capital 4,634,043 5,168,239
------------ ------------
Total liabilities and partners' capital $ 4,735,498 $ 5,265,725
============ ============
- -------------------------------------------------------------------------------
See notes to financial statements.
<PAGE> Page 3
PAINEWEBBER R&D PARTNERS II, L.P.
(a Delaware Limited Partnership)
Statements of Operations
(unaudited)
For the three months ended March 31, 1996 1995
- -------------------------------------------------------------------------------
Revenues:
Interest income $ 11,993 $ 28,323
Income from product development project 31,765 27,731
Unrealized (depreciation) appreciation of
investments and marketable securities (453,101) 1,531,958
Gain on sale of investment 8,474 -
-------- ---------
(400,869) 1,588,012
-------- ---------
Expenses:
Expenditures under product development
projects 3,013 4,149
Management fee 68,505 125,582
General and administrative costs 61,809 67,694
-------- ---------
133,327 197,425
-------- ---------
Net income (loss) $ (534,196) $ 1,390,587
======== =========
Net income (loss) per partnership unit:
Limited partners (based on 8,257 units) $ (64.05) $ 166.73
General partner $ (5,341.96) $13,905.87
- -------------------------------------------------------------------------------
See notes to financial statements.
Statement of Changes in Partners' Capital
(unaudited)
Limited General
For the three months ended March 31, 1996 Partners Partner Total
- -------------------------------------------------------------------------------
Balance at December 31, 1995 $ 5,114,512 $ 53,727 $ 5,168,239
Net loss (528,854) (5,342) (534,196)
------------ --------- -----------
Balance at March 31, 1996 $ 4,585,658 $ 48,385 $ 4,634,043
============ ========= ===========
- -------------------------------------------------------------------------------
See notes to financial statements.
<PAGE> Page 4
PAINEWEBBER R&D PARTNERS II, L.P.
(a Delaware Limited Partnership)
Statements of Cash Flows
(unaudited)
For the three months ended March 31, 1996 1995
- ------------------------------------------------------------------------------
Cash flows from operating activities:
Net income (loss) $ (534,196) $ 1,390,587
Adjustments to reconcile net income (loss) to
cash provided by operating activities:
Unrealized depreciation (appreciation) of
investments and marketable securities 453,101 (1,531,958)
Equity in earnings of product development projects 3,013 4,149
Decrease (increase) in operating assets:
Marketable securities 78,448 1,028,650
Interest receivable 1,657 3,429
Royalty income receivable (5,607) 14,741
Increase in operating liabilities:
Accrued liabilities 3,969 6,630
---------- ----------
Cash provided by operating activities 385 916,228
---------- ----------
Cash flows from investing activities:
Distributions from product development project 19,967 -
---------- ----------
Cash flows from financing activities:
Distributions to partners - (917,444)
---------- ----------
Increase (decrease) in cash 20,352 (1,216)
Cash at beginning of period 5,858 6,703
---------- ----------
Cash at end of period $ 26,210 $ 5,487
========== ===========
- ------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
The Partnership paid no cash for interest or taxes during the three months
ended March 31, 1996 and 1995.
- ------------------------------------------------------------------------------
See notes to financial statements.
<PAGE> Page 5
PAINEWEBBER R&D PARTNERS II, L.P.
(a Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND BUSINESS
The financial information as of and for the periods ended March 31, 1996
and 1995 is unaudited. However, in the opinion of management of PaineWebber
R&D Partners II, L.P. (the "Partnership"), such information includes all
adjustments, consisting only of normal recurring accruals, necessary
for a fair presentation. The results of operations reported for
the interim period ended March 31, 1996, are not necessarily
indicative of results to be expected for the year ended December 31, 1996.
These financial statements should be read in conjunction with the most
recent annual report of the Partnership on Form 10-K for the year ended
December 31, 1995.
The Partnership is a Delaware limited partnership that commenced
operations on September 30, 1987 with a total of $72.0 million available for
investment. PWDC Holding Company (the "Manager") is the general partner of
PaineWebber Technologies II, L.P. (the "General Partner"), which is the
general partner of the Partnership. PWDC Holding Company is a wholly owned
subsidiary of PaineWebber Development Corporation ("PWDC"), an indirect,
wholly owned subsidiary of Paine Webber Group Inc. The Partnership will
terminate on December 31, 2012, unless its term is extended or reduced by the
General Partner.
The principal objective of the Partnership is to provide long-term capital
appreciation to investors through investing in the development and
commercialization of new products with technology companies ("Sponsor
Companies"), which are expected to address significant market
opportunities. Once the product development phase is completed, the Sponsor
Companies have the option to license and commercialize the products
resulting from the product development project, and the Partnership has the
right to receive payments based upon the sale of such products. In connection
with product development projects (the "Projects"), the Partnership sought to
obtain warrants to purchase the common stock of Sponsor Companies. These
warrants will have the potential to provide additional capital appreciation to
the Partnership which is not directly dependent upon the outcome of the Projects
(see Note 5). In addition, the Partnership invests as a limited partner in
product development limited partnerships. Such partnerships were formed to
develop specific, new products through contracts with Sponsor Companies.
The Sponsor Companies conduct the Projects and affiliates of the Sponsor
Companies serve as general partners of the partnerships. As a result
of restructuring some of the original Projects, the Partnership also obtained
restricted common stock in some of the Sponsor Companies. As such, the
Partnership is engaged in diverse Projects through contracts, participation in
other partnerships and investments in securities of the Sponsor Companies.
All distributions to the limited partners of the Partnership (the "Limited
Partners") and the General Partner (collectively, the "Partners") from the
Partnership will initially be made pro rata in accordance with their
respective net capital contributions. The following table sets forth
the proportion of each distribution to be received by the Limited Partners and
the General Partner, respectively:
<PAGE> Page 6
PAINEWEBBER R&D PARTNERS II, L.P.
(a Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(NOTE 1 CONTINUED)
<TABLE>
<CAPTION>
Limited Partner General Partner
--------------- ---------------
<S> <C> <C>
I. Until the value of the aggregate distributions for each
limited partnership unit ("Unit") equals $10,000 plus simple
interest on such amount accrued at 7% per annum for each
Unit sold at the Initial Closing (6% per annum for each
subsequent Unit sold up to the 5,000th Unit and 5% per annum
for each Unit sold thereafter) ("Contribution Payout").......... 99% 1%
II. After Contribution Payout and until the value of the
aggregate distributions for each Unit equals $50,000 ("Final
Payout")........................................................ 80% 20%
III. After Final Payout.............................................. 75% 25%
</TABLE>
For the quarter ended March 31, 1996, the Partnership made no cash or
security distributions. At March 31, 1996, the Partnership has made cash
and security distributions since inception of $1,585 and $7,297 per Unit,
respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements are prepared in conformity with generally accepted
accounting principles which require management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
The Partnership accounted for its investments in restricted common stock
(where the restriction period expired in one year or less) held as of or
acquired after January 1, 1994, in accordance with the provisions of
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities".
Marketable securities consist of a money market fund and common stock
which are recorded at market value. Marketable securities are not considered
cash equivalents for the Statements of Cash Flows.
Realized and unrealized gains or losses are determined on a specific
identification method and are reflected in the Statements of Operations
during the period in which the change in value occurs.
The Partnership invested in Projects, further described in Note 5,
through one of the following two vehicles:
<PAGE> Page 7
PAINEWEBBER R&D PARTNERS II, L.P.
(a Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(NOTE 2 CONTINUED)
- Product Development Contracts
The Partnership paid amounts to Sponsor Companies under product
development contracts. Such amounts were expensed by the Partnership
when incurred by the Sponsor Companies. Income from the Sponsor
Companies is reflected in the Statements of Operations for the period
in which the income is earned.
- Product Development Limited Partnerships
The Partnership participates as a limited partner in product
development limited partnerships formed to develop specific products.
Such participations are accounted for using the equity method. Such
partnerships expensed product development costs when incurred.
The Partnership carries warrants at a zero value in cases where the Sponsor
Company's stock is not publicly traded or the exercise period has not been
attained. To the extent that the Partnership's warrants are currently
exercisable and the Sponsor Company's stock is publicly traded, the warrants
are carried at intrinsic value (the excess of market price per share over the
exercise price per share), which approximates fair value.
Certain reclassifications have been made in prior year amounts to conform to
current year presentations.
3. MARKETABLE SECURITIES AND INVESTMENTS
MARKETABLE SECURITIES:
The money market fund consists of obligations with maturities of one year or
less that are subject to fluctuations in value.
The Partnership held the following marketable securities:
<TABLE>
<CAPTION>
MARCH 31, 1996 DECEMBER 31, 1995
------------------------------ ------------------------------
MARKET COST MARKET COST
-------------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Money market fund $866,011 $866,011 $956,168 $956,168
Alkermes, Inc. common stock (3,227 shares) - - 25,616 22,589
Cygnus, Inc. common stock (11,867 shares) 247,726 69,719 265,525 69,719
Centocor, Inc. common stock (2,800 shares) 101,150 37,324 - -
------- ------- ------- -------
$1,214,887 $973,054 $1,247,309 $1,048,476
========== ======== ========== =========
</TABLE>
<PAGE> Page 8
PAINEWEBBER R&D PARTNERS II, L.P.
(a Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(NOTE 3 CONTINUED)
In January 1996, the Partnership sold its investment of 3,227 common
shares of Alkermes, Inc. for proceeds, net of commissions, of $34,090 and
recognized a gain upon the sale for the quarter ended March 31, 1996 of
$8,474. In February 1996, the Partnership exercised its warrants to
purchase 2,800 common shares of Centocor, Inc. ("Centocor") at an exercise
price of $13.33 per share. At March 31, 1996, Centocor common stock had a
market value of $36.125 per share. Cygnus, Inc. ("Cygnus") common stock
had a market value as of March 31, 1996 and December 31, 1995, of $20.875
and $22.375 per share, respectively.
INVESTMENTS:
The Partnership held the following investments:
<TABLE>
<CAPTION>
MARCH 31, 1996 DECEMBER 31, 1995
--------------- ------------------
<S> <C> <C>
Cygnus, Inc. $3,292,500 $3,742,500
Warrants to purchase 300,000 common shares
Centocor, Inc. - 49,126
Warrants to purchase 2,800 common shares ---------- ----------
$3,392,500 $3,791,626
========== ==========
</TABLE>
The Partnership recorded its warrants to purchase 300,000 common shares of
Cygnus as an investment with a carrying value equal to its intrinsic value
(which approximates fair value) -- (See Note 5). The intrinsic value as of
March 31, 1996, and December 31, 1995, was $10.975 and $12.475 per share,
respectively. Accordingly, the Partnership recognized unrealized depreciation
of $450,000 for the three months ended March 31, 1996, which has been included
in the accompanying Statements of Operations. At December 31, 1995, the
Partnership recorded its investment in Centocor warrants at their intrinsic
value of $17.545 per share. In February 1996, the Partnership exercised its
warrants for Centocor common shares (see Marketable Securities).
<PAGE> Page 9
PAINEWEBBER R&D PARTNERS II, L.P.
(a Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
4. RELATED PARTY TRANSACTIONS
The Manager receives an annual management fee for management and
administrative services provided to the Partnership. The management fee is
payable quarterly in advance and is adjusted annually on the first day of
each fiscal year in an amount proportionate to the increase in the prior
year in the Consumer Price Index published by the United States Department of
Labor. The management fees paid by the Partnership to the Manager were $68,505
and $125,582 for the three months ended March 31, 1996 and 1995, respectively.
Aggregate management fees paid to the Manager since January 1, 1995, were
$415,575.
The Partnership's portfolio which consists of a money market fund is
managed by Mitchell Hutchins Institutional Investors ("MHII"), an affiliate of
PWDC. PWDC pays MHII a fee with respect to such money management services.
PWDC and Painewebber Incorporated, and its affiliates, have acted in an
investment banking capacity for several of the Sponsor Companies. In addition,
PWDC and its affiliates have direct limited partnership interests in the same
Projects as the Partnership.
5. PRODUCT DEVELOPMENT PROJECTS
The Partnership entered into nine Projects (Cadre Technologies Inc.; Centocor
Partners III, L.P.; Compression Labs, Incorporated; Cygnus; FOCUS Surgery Inc.
(formerly Focal Surgery, Inc. (successor to Diasonics, Inc.)); Genentech
Clinical Partners IV, L.P.; Genzyme Development Partners, L.P.; Rogers
Corporation; and Synergen Clinical Partners, L.P) which have been fully funded.
In addition, the Partnership purchased $5.9 million of common stock of
Alkermes, Inc. which was distributed to its Partners in 1993 and 1994.
On January 31, 1996, Genzyme Corporation ("Genzyme") made an offer (the
"Offer") to the general partner of Genzyme Development Partners, L.P. ("GDP")
(of which the Partnership owns a limited partnership interest) to acquire the
assets of GDP in exchange for common shares of Genzyme (the "Acquisition"). The
Offer was made in lieu of Genzyme's existing option to purchase the outstanding
partnership interests in GDP for a lump-sum cash payment and certain future
royalty payments. The Offer is conditioned upon the approval of the general
partner of GDP, affirmation by a vote of a two-thirds interest of the limited
partners of GDP and certain assurances regarding the accounting treatment of
the Acquisition for Genzyme. If the Acquisition is approved, the common shares
of Genzyme will be distributed to the limited partners of GDP (including the
Partnership). (See Note 8 - Subsequent Event).
In March 1996, FOCUS Surgery, Inc. ("FOCUS") announced the signing of a
letter of intent to Takai Hospital Supply Co. for the sale of all of the assets
of FOCUS. Simultaneously, FOCUS filed for protection under Chapter 11 of the
U.S. Bankruptcy Code. The Partnership will continue to maintain its rights to
the technology under the project agreement with FOCUS but does not anticipate
realizing any further revenues therefrom.
<PAGE> Page 10
PAINEWEBBER R&D PARTNERS II, L.P.
(a Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(NOTE 5 CONTINUED)
If the Projects produce any product for commercial sale, the Sponsor
Companies have the option to enter into joint ventures or royalty agreements
with the Partnership to manufacture and market the products developed. In
addition, the Sponsor Companies have the option to purchase the Partnership's
interest in the technology. In consideration for such purchase options, the
Partnership has received warrants to purchase shares of common stock of the
Sponsor Companies. At March 31, 1996, the market price per share of Cygnus
common stock exceeded the exercise price per share of the warrant and,
accordingly, the Partnership recorded this warrant as an investment with
a carrying value equal to its intrinsic value which approximates fair value
(see Note 3). At March 31, 1996, the Partnership owned the following warrants:
<TABLE>
<CAPTION>
Number of Shares Exercise 3/31/96
that can be Price Exercise Market Price
Purchased per Share Period per Share*
---------------- --------- ------------- -------------
<S> <C> <C> <C> <C>
Cadre Technologies, Inc. 625,000 $ 5.00 Current to 6/97 (A)
Cygnus, Inc. (B) 300,000 $ 9.90 Current to 9/97 $ 20.875
OEC Medical Systems, Inc. (C) 200,000 $ 12.70 Current to 8/97 $ 11.750
</TABLE>
* The share prices of these technology companies are generally highly volatile
and the shares are often thinly traded. The market prices indicated as of
March 31, 1996, may not be indicative of the ultimate values, if any, that may
be realized by the Partnership.
(A) At March 31, 1996, the common stock of Cadre Technologies Inc. ("Cadre")
was not publicly traded. In December 1995, Cadre announced a merger
agreement with Bachman Information Systems, Inc. ("Bachman"). At the time
of the closing of the merger, the Cadre warrants will convert into Bachman
warrants at a conversion ratio of 0.31496 Bachman warrants per Cadre
warrant.
(B) The carrying value of this warrant at its intrinsic value has been included
in Investments in the accompanying Statements of Financial Condition.
(C) In October 1993, Diasonics, Inc. completed a major corporate restructuring
under which Diasonics, Inc. was divided into three separate publicly traded
companies: Diasonics Ultrasound, Inc., FOCUS Surgery Inc. and OEC Medical
Systems, Inc. The Partnership's warrant is to purchase the stock of OEC
Medical Systems, Inc.
6. INCOME TAXES
The Partnership is not subject to federal, state or local income taxes.
Accordingly, the individual Partners are required to report their distributive
shares of realized income and loss on their individual federal and state income
tax returns.
<PAGE> Page 11
PAINEWEBBER R&D PARTNERS II, L.P.
(a Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
7. LEGAL PROCEEDING
On July 12, 1995, the Partnership commenced an action against Centocor and
Centocor Development Corporation III ("CDC III") in the Chancery Court of
Delaware arising from certain agreements entered into by Centocor and Eli Lilly
& Company ("Lilly") in July 1992. The Partnership's complaint alleges, among
other things that: at least $25 million of the $100 million paid by Lilly
represents profits from the sale of ReoPro, a Centocor drug, that Centocor is
required to share with Centocor Partners III, L.P. ("CP III"); and because of
the Lilly transaction, Centocor is required to increase the percentage of its
profits from ReoPro that it pays to CP III. Centocor, however, has taken the
position that only $500,000 of the $100 million must be shared with CP III and
that Centocor has no obligation to increase the percentage of its ReoPro
profits that it pays to CP III. The Partnership is seeking to proceed on
behalf of itself and all other limited partners of CP III. The complaint seeks
to require Centocor and CDC III to pay damages to CP III and to increase the
percentage of future ReoPro profits that Centocor must pay to CP III. There can
be no assurance that the Partnership's claim will be successful.
PWDC has been advancing, and may continue to advance, the funds necessary to
pay the Partnership's legal fees and expenses relating to this litigation. In
the event of a recovery on behalf of CP III, the court may award legal fees and
expenses to the Partnership's counsel, to be paid out of the recovery. It is
anticipated that: the net proceeds of any recovery will be distributed to the
limited partners of CP III, including the Partnership, on a pro rata basis; the
Partnership and/or its counsel will reimburse PWDC; and any remaining
Partnership proceeds will be distributed to the Partners of the Partnership on
a pro rata basis.
8. SUBSEQUENT EVENT
On May 6, 1996, Genzyme withdrew its Offer to purchase the assets of GDP.
<PAGE> Page 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Partners' capital decreased from $5.1 million at December 31, 1995, to $4.6
million at March 31, 1996, resulting from the recognition of a net loss of $0.5
million for the three months ended March 31, 1996.
The Partnership's working capital is invested in marketable securities and a
money market fund. Liquid assets at March 31, 1996 and December 31, 1995, were
$1.3 million. The balance of liquid assets will be used for the payment of
management fees and administrative costs related to managing the Partnership's
investments.
RESULTS OF OPERATIONS
Three months ended March 31, 1996 compared to the three months ended
March 31, 1995:
The Partnership recognized a net loss for the quarter ended March 31,
1996, of $0.5 million compared to net income of $1.4 million for the same
period in 1995. The unfavorable variance of $1.9 million was due to a
decrease in revenues of this amount.
Revenues for the quarters ended March 31, 1996 and 1995 of $(0.4)
million and $1.6 million, respectively, consisted primarily of the recognition
of unrealized appreciation (depreciation) of marketable securities and
investments. As of March 31, 1996, the Partnership wrote down its investment
in warrants to purchase 300,000 common shares of Cygnus by $0.45 million to
reflect a decrease in the market value of Cygnus common stock from $22.375 at
December 31, 1995, to $20.875 at March 31, 1996. For the three months ended
March 31, 1995, the Partnership recognized unrealized appreciation of $1.5
million with respect to its investment of 1,529,941 common shares of Cygnus to
reflect an increase in the market value of Cygnus common stock from $6.75 per
share at December 31, 1994 to $7.75 per share at March 31, 1995.
<PAGE> Page 13
ITEM 1. LEGAL PROCEEDINGS.
ACTION AGAINST CENTOCOR, INC. AND CENTOCOR DEVELOPMENT CORPORATION III
Information regarding this action was disclosed on the Partnership's
Form 10-K for the year ended December 31, 1995. In April 1996,
Centocor, Inc. amended its pleadings in the Partnership's action, as
well as a second action commenced by another limited partner of
Centocor Partners III, L.P. to, among other things, add third-party
claims against PaineWebber Incorporated.
ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K
a) EXHIBITS:
None
b) REPORTS ON FORM 8-K:
None
<PAGE> Page 14
Pursuant to the requirements of Section 13 or 15(d) 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, on this 15th day
of May 1996.
PAINEWEBBER R&D PARTNERS II, L.P.
By: PaineWebber Technologies II, L.P.
(General Partner)
By: PWDC Holding Company
(General partner of the General Partner)
By: Eugene M. Matalene, Jr. /s/
------------------------------
Eugene M. Matalene, Jr.
President and Principal Executive Officer
By: Pierce R. Smith/s/
------------------------------
Pierce R. Smith
Principal Financial and Accounting Officer
*The capacities listed are with respect to PWDC Holding Company, the Manager,
as well as the general partner of the General Partner of the Registrant.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000814576
<NAME> PAINEWEBBER R&D PARTNERS II, L.P.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 26,210
<SECURITIES> 4,507,387
<RECEIVABLES> 35,626
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,569,223
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,735,498
<CURRENT-LIABILITIES> 101,455
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 4,634,043
<TOTAL-LIABILITY-AND-EQUITY> 4,735,498
<SALES> 0
<TOTAL-REVENUES> (400,869)
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 133,327
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (534,196)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (534,196)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
