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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549
(Mark one)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-16132
CELGENE CORPORATION
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(Exact name of registrant as specified in its charter)
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<S> <C>
Delaware 22-2711928
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7 Powder Horn Drive, Warren, New Jersey 07059
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: 908-271-1001
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
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At April 28, 1995, 7,862,689 shares of Common Stock, par value
$.01 per share, were issued and outstanding.
1
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CELGENE CORPORATION
INDEX TO FORM 10-Q
PART I - FINANCIAL INFORMATION
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<CAPTION>
Page No.
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Item 1 Condensed Financial Statements Page No.
Balance Sheets as of March 31, 1995 3
and December 31, 1994
Statements of Operations -
Three-Month Periods Ended March
31, 1995 and 1994 4
Statements of Cash Flows -
Three-Month Periods Ended
March 31, 1995 and 1994 5
Notes to Unaudited Condensed
Financial Statements 6
Item 2 Management's Discussion and Analysis
of Financial Condition and Results
of Operations 7
PART II - OTHER INFORMATION 9
Signatures 10
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2
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PART I - FINANCIAL INFORMATION
Item 1 - Condensed Financial Statements
CELGENE CORPORATION
BALANCE SHEETS
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<CAPTION>
ASSETS
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March 31 December 31
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1995 1994
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(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 632,360 $ 292,925
Marketable securities available
for sale 6,295,348 8,207,161
Accounts receivable 142,858 623,084
Other current assets 563,161 428,844
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Total current assets 7,633,727 9,552,014
Plant and equipment, net 1,768,234 1,954,666
Other assets 41,250 41,250
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$ 9,443,211 $ 11,547,930
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 171,902 $ 439,189
Accrued expenses 1,351,666 1,104,675
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Total current liabilities 1,523,568 1,543,864
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Stockholders' equity:
Preferred stock, par value $.01
per share. Authorized 5,000,000
shares; issued none -- --
Common stock, par value $.01 per
share. Authorized 20,000,000
shares; issued and outstanding
7,862,689 shares at March 31,
1995 and December 31, 1994,
respectively 78,627 78,627
Additional paid-in capital 70,684,768 70,684,768
Unamortized deferred compensation -
restricted stock (14,736) (19,174)
Accumulated deficit (62,619,459) (60,472,877)
Net unrealized loss on marketable
securities available for sale (209,557) (267,278)
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Total stockholders' equity 7,919,643 10,004,066
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$ 9,443,211 $ 11,547,930
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3
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CELGENE CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three-Month Period Ended March 31
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1995 1994
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<S> <C> <C>
Revenues:
Sales of chemical
intermediates $ 18,588 $ 378,596
Research contracts 140,000 25,000
Investment income 108,390 158,463
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266,978 562,059
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Expenses:
Cost of goods sold 160,377 217,025
Research and development 1,578,072 1,362,257
Selling, general and
administrative 675,111 889,283
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2,413,560 2,468,565
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Loss from continuing
operations ($ 2,146,582) (1,906,506)
Discontinued operations
Loss from operations -- (767,667)
Loss on disposal -- --
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Loss from discontinued
operation (--) (767,667)
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Net loss ($ 2,146,582) ($ 2,674,173)
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Per share of Common Stock
Loss from continuing
operations ($.27) ($.24)
Loss from discontinued
operation (--) (.10)
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Net loss ($.27) ($.34)
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Weighted average number
of shares of common stock
outstanding 7,863,000 7,843,000
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4
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CELGENE CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
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<CAPTION>
Three-Month Period Ended March 31,
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1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Loss from continuing operations ($ 2,146,582) ($ 1,906,506)
Adjustments to reconcile loss from continuing
operations to net cash used in operating
activities:
Depreciation and amortization 191,485 132,073
Amortization of deferred compensation 4,438 15,856
(Decrease) increase in accounts payable
and accrued expenses (20,296) 39,527
Decrease in accounts receivable 480,226 6,518
Increase in other assets (134,317) (52,515)
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Net cash used in continuing operations (1,625,046) (1,765,047)
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Net cash used in discontinued operation -- (643,946)
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Net cash used in operating activities (1,625,046) (2,408,993)
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Cash flows from investing activities:
Continuing operations:
Capital expenditures (5,053) (158,301)
Proceeds from sales and maturities
of marketable securities available
for sale 2,451,286 6,117,683
Purchases of marketable securities
available for sale (481,752) (3,997,286)
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Net cash provided by investing
activities 1,964,481 1,962,096
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Cash flows from financing activities:
Net proceeds from sale of common stock -- --
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Net increase (decrease) in cash and cash
equivalents 339,435 (446,897)
Cash and cash equivalents at
beginning of period 292,925 789,847
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Cash and cash equivalents at end of period $ 632,360 $ 342,950
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Net increase (decrease) in cash and
cash equivalents $ 339,435 ($ 446,897)
Decrease in marketable securities
available for sale (1,969,534) (2,120,397)
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Net decrease in cash and cash equivalents
and marketable securities available
for sale ($ 1,630,099) ($ 2,567,294)
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Non-cash investing activity - net change
gain (loss) in net unrealized loss on
securities available for sale $ 57,721 ($ 104,411)
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5
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CELGENE CORPORATION
Notes to Unaudited Condensed Financial Statements
March 31, 1995
1. Basis of Presentation
The unaudited financial statements have been prepared from the books and
records of Celgene Corporation (the "Company") in accordance with
generally accepted accounting principles for interim financial
information pursuant to Rule 10-01 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 only of normal
recurring accruals) considered necessary for a fair presentation have
been included. Interim results may not be indicative of the results that
may be expected for the year.
Where appropriate prior period financial information has been
reclassified to conform to the 1995 presentation.
6
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PART I - FINANCIAL INFORMATION
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
On March 31, 1995, the Company had available working capital of
approximately $6,110,000, consisting principally of cash, cash equivalents and
marketable securities available for sale, which represents a decrease of
approximately $1,900,000, or 24%, from December 31, 1994 primarily due to
operating losses.
In August 1992, the Company entered into a two-year research and
development agreement with the Rockefeller University. In July 1994 this
agreement was extended for an additional two years. Under terms of the contract
extension, the Company is committed to an annual fee to Rockefeller University
of $504,000 paid semiannually in April and October.
The Company's financial statements for the quarter ended March 31, 1995
have been prepared on a going concern basis which contemplates the realization
of assets and the settlement of liabilities and commitments in the normal course
of business. The Company incurred a net loss of $2,147,000 for the quarter ended
March 31, 1995 and as of March 31, 1995 had an accumulated deficit of
$62,619,000. The Company expects to incur substantial expenditures to further
its immunotherapeutic program and to expand its chiral business. The Company's
working capital at March 31, 1995 plus limited revenue from product sales and
research contracts from its chiral business will not be sufficient to meet such
objectives as presently structured. Management recognizes that the Company must
generate additional resources or consider modifications to its immunotherapeutic
program or other reductions in operating costs to enable it to continue
operations with available resources. Management's plans include consideration of
the sale of additional equity securities under appropriate market conditions,
alliances or other partnership agreements with entities interested in and
resources to support the Company's immunotherapeutic or chiral programs, or
other business transactions which would generate sufficient resources to assure
continuation of the Company's operations and research programs.
The Company has retained investment banking council to advise it on the
possible sale of equity securities as well as to introduce and assist in the
evaluation of potential merger and partnering opportunities. The Company also
has retained independent consultants to assist it to identify other entities
interested in its immunotherapeutic and chiral programs. Management expects that
these efforts will result in the introduction of other parties with interests
and resources which may be compatible with that of the Company. However, no
assurances can be given that the Company will be successful in raising
additional capital or entering into a business alliance. Further, there can be
no assurance, assuming the Company successfully raises additional funds or
enters into a business alliance, that the Company will achieve profitability or
7
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positive cash flow. If the Company is unable to obtain adequate additional
financing or enter into such business alliance, management will be required to
sharply curtail the Company's immunotherapeutic program and to curtail certain
other of its operations.
Three-month period ended March 31, 1995 vs.
Three-month period ended March 31, 1994
Revenues for the three-month period ended March 31, 1995 were
approximately $267,000, which was a decrease of approximately $295,000, or 53%,
over the comparable period in 1994. Chiral intermediate revenues decreased
$360,000 to $19,000 for the three-month period of 1995 as compared to the
comparable 1994 period. This decrease in chiral intermediate revenues was due
primarily to the sporadic nature of orders from the Company's small customer
base. Chiral research contract revenues for the first quarter were $140,000
which was an increase of $115,000 over the first quarter of 1994. This increase
in contract revenues was due to the Company entering into research contracts for
new compounds and for expanding development of existing compounds. Revenue
backlog at March 31, 1995, for 1995 sales, for chiral intermediates and research
contracts was approximately $637,000. The Company is negotiating with new and
old customers for additional chiral intermediate and research contract orders;
however, there is no assurance that these efforts will be successful. Investment
income decreased, $50,000, or 32%, to $108,000 in the first three months of 1995
as compared to the first three months of 1994 due to the decrease in funds
available for investment.
For the first quarter ended March 31, 1995, cost of goods sold
decreased $57,000, or 26%, to $160,000 (which includes certain fixed
manufacturing costs) as compared to the first quarter of 1994, due to the low
volume of chiral intermediate revenues. Research and development expenses for
the three-month period ended March 31, 1995 increased by $216,000, or 16%, to
$1,578,000 as compared to the same period in 1994, primarily due to an increase
in the Rockefeller University expense and clinical trial expenses for the
immunotherapeutic program. Selling, general and administrative expenses for the
three-month period ended March 31, 1995 decreased $214,000, or 24%, to $675,000
as compared to the 1994 comparable period, primarily due to the absence in 1995
of any incentive bonus expense as no cash bonuses are projected to be paid and
lower personnel and facility expenses.
Net loss for the three-month period ended March 31, 1995 was
approximately $2,147,000 which was a decrease of approximately $528,000, or 20%,
over the comparable period in 1994, due primarily to the cessation of the
Company's biotreatment operation at June 30, 1994. Loss from continuing
operations during the three-months period ended March 31, 1995 increased
$240,000, or 13%, over the comparable quarter in 1994, primarily due to reduced
chiral intermediates revenues.
8
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PART II - OTHER INFORMATION
Item 1. - None
Item 2. - None
Item 3. - None
Item 4. - None
Item 5. - None
Item 6. - Exhibits
27 Financial Data Schedule - Article 5 for first quarter
Form 10-Q
9
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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.
CELGENE CORPORATION
DATE May 9, 1995 BY /s/ Richard G. Wright
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Richard G. Wright
Chairman of the Board
Chief Executive Officer
DATE May 9, 1995 BY /s/ Robert B. Eastty
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Robert B. Eastty
Controller
(Chief Accounting Officer)
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 632,360
<SECURITIES> 6,295,348
<RECEIVABLES> 142,858
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,633,727
<PP&E> 8,426,519
<DEPRECIATION> 6,658,285
<TOTAL-ASSETS> 9,443,211
<CURRENT-LIABILITIES> 1,523,567
<BONDS> 0
<COMMON> 78,627
0
0
<OTHER-SE> 7,841,016
<TOTAL-LIABILITY-AND-EQUITY> 9,443,211
<SALES> 18,588
<TOTAL-REVENUES> 266,978
<CGS> 160,377
<TOTAL-COSTS> 160,377
<OTHER-EXPENSES> 2,253,183
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,146,582)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,146,582)
<EPS-PRIMARY> (.27)
<EPS-DILUTED> 0
</TABLE>
