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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 2000, or
[ ] Transition Period Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Transition Period From ______ to ______.
Commission file number 0-19591
EPIMMUNE INC.
(Exact name of Registrant as specified in its charter)
Delaware 33-0245076
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(State of Incorporation) (I.R.S. Employer Identification No.)
5820 Nancy Ridge Drive
San Diego, California 92121
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(Address of principal executive offices)
(858) 860-2500
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(Registrant's telephone number)
Indicate by check mark whether the Registrant (1) has filed all reports 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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock: $.01 par value 7,847,343 shares outstanding as of November 10,
2000.
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EPIMMUNE INC.
QUARTERLY REPORT
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<S> <C>
COVER PAGE ........................................................................... 1
TABLE OF CONTENTS .................................................................... 2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets as of
September 30, 2000 and December 31, 1999 ............................ 3
Condensed Consolidated Statements of Operations For the
Three and Nine Months Ended September 30, 2000 and 1999 ............. 4
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2000 and 1999 ............... 5
Notes to Condensed Consolidated Financial Statements ................ 6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................................. 9
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk .......... 13
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings ................................................... *
ITEM 2. Changes in Securities and Use of Proceeds ........................... *
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 .................................... 22
SIGNATURE ................................................................... 23
</TABLE>
* No information provided due to inapplicability of item.
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PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
EPIMMUNE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
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(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,137 $ 1,843
Short-term investments 7,188 6,412
Prepaids and other current assets 474 460
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Total current assets 8,799 8,715
Restricted cash 472 472
Property and equipment, net 999 817
Patents and other assets 2,916 2,701
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Total assets $ 13,186 $ 12,705
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 843 $ 970
Deferred contract revenues - 38
Accrued restructuring cost 130 342
Accrued payroll and related expenses 236 212
Current portion of notes payable 325 230
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Total current liabilities 1,534 1,792
Notes payable, less current portion 404 436
Deferred rent 104 55
Commitments
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000
shares authorized, 1,409,288 shares issued
and outstanding at September 30, 2000 and
December 31, 1999 14 14
Common stock, $.01 par value, 25,000,000
shares authorized, 7,347,343 shares and
6,048,945 shares issued and outstanding at
September 30, 2000 and December 31, 1999,
respectively 73 60
Additional paid-in capital 151,742 147,393
Deferred compensation (9) --
Accumulated deficit (140,661) (136,988)
Unrealized loss on available-for-sale securities (15) (57)
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Total stockholders' equity 11,144 10,422
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Total liabilities and stockholders' equity $ 13,186 $ 12,705
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</TABLE>
See accompanying notes.
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EPIMMUNE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPT. 30, ENDED SEPT. 30,
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2000 1999 2000 1999
------- ------- ------- --------
<S> <C> <C> <C> <C>
REVENUES
Milestone $ -- $ 2,000 $ -- $ 2,000
Research and development -- -- -- 500
Research grants 451 462 1,142 1,365
------- ------- ------- --------
Total revenues 451 2,462 1,142 3,865
COSTS AND EXPENSES
Research and development 1,532 1,597 4,406 7,911
General and administrative 545 519 1,762 2,108
Restructuring costs -- -- -- 3,700
Write-off of in-process
technology -- 3,154 -- 3,154
------- ------- ------- --------
Total costs and expenses 2,077 5,270 6,168 16,873
Loss from operations (1,626) (2,808) (5,026) (13,008)
Minority interest in net
loss of consolidated
subsidiary -- -- -- 523
Interest income, net 120 93 392 287
Other income -- -- 961 550
Gain (loss) on disposal of
assets -- (93) -- 3,218
------- ------- ------- --------
Net loss $(1,506) $(2,808) $(3,673) $ (8,430)
======= ======= ======= ========
Net loss per share -
basic and diluted $ (0.21) $ (0.51) $ (0.54) $ (1.63)
======= ======= ======= ========
Shares used in computing
net loss per share -
basic and diluted 7,063 5,489 6,779 5,160
======= ======= ======= ========
</TABLE>
See accompanying notes.
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EPIMMUNE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
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2000 1999
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<S> <C> <C>
OPERATING ACTIVITIES
Net loss $(3,673) $(8,430)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 388 446
Amortization of deferred compensation 14 --
Deferred rent 49 37
Deferred revenue (38) (515)
Stock warrants relating to severance agreement 29 --
Amortization of premium/discounts on short-term
investments 4 --
Gain on disposal of assets (5) (3,233)
Minority interest in consolidated subsidiary -- (523)
Restructuring operating expenses (212) (1,524)
Write-off of in-process technology -- 3,154
Accrued restructuring costs -- 3,700
Net change in operating assets and liabilities, net
of divestitures:
Other current assets (14) 469
Accounts payable and accrued liabilities (127) (1,463)
Accrued payroll and related expenses 24 (214)
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Net cash used in operating activities (3,561) (8,096)
INVESTING ACTIVITIES
Purchases of available-for-sale securities (3,742) (2,087)
Maturities of available-for-sale securities 3,005 --
Sales of available-for-sale securities -- 4,524
Proceeds from the sale of property and equipment 5 3,681
Proceeds from the sale of patents, net of fees -- 3,035
Purchase of property and equipment (329) (704)
Patents (458) (126)
Deposits and other assets -- 10
Repayment of note -- 519
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Net cash (used in) provided by investing activities (1,519) 8,852
FINANCING ACTIVITIES
Principal payments under equipment notes payable
and note payable to bank (170) (939)
Loan draw proceeds-equipment loan 233 510
Net proceeds from issuance of common stock 4,311 144
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Net cash provided by (used in) financing activities 4,374 (285)
Increase (decrease) in cash and cash equivalents (706) 471
Cash and cash equivalents at beginning of period 1,843 2,594
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Cash and cash equivalents at end of period $ 1,137 $ 3,065
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ 52 $ 97
======= =======
DISCLOSURES OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
Unrealized gains on available-for-sale securities $ 42 $ 49
======= =======
Asset write down in accrued restructuring charge $ -- $ 587
======= =======
Assumption of debt $ -- $ 838
======= =======
Exchange of common and preferred stock $ -- $ 3,096
======= =======
</TABLE>
See accompanying notes.
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EPIMMUNE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 2000
1. BASIS OF PRESENTATION
The interim unaudited condensed consolidated financial statements contained
herein have been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In management's opinion, the
unaudited information includes all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the financial
position, results of operations and cash flows for the periods presented.
Interim results are not necessarily indicative of results to be expected for the
full year. The financial statements should be read in conjunction with the
audited consolidated financial statements and footnotes thereto included in the
Company's Form 10-K for the year ended December 31, 1999.
Unless otherwise indicated, all references to "Cytel" are to predecessor Cytel
Corporation, and all references to "Epimmune" are to Epimmune Inc., a
majority-owned subsidiary of Cytel until July 1, 1999, at which time Cytel and
Epimmune merged. All references to the "Company" are to the combined entity of
Cytel and Epimmune.
On July 1, 1999, the Company completed a series of transactions (the "Exchange
Transactions") in which it: (i) transferred all of the outstanding shares of
Epimmune's Series B-1 Preferred Stock then held by Cytel to G.D.Searle & Co.
("Searle") in exchange for all of the outstanding shares of Cytel's Series B
Preferred Stock, (ii) issued 859,666 shares of Cytel's Series S Preferred Stock
and 549,622 shares of Cytel's Series S-1 Preferred Stock to Searle in exchange
for all outstanding shares of Epimmune's Series B Preferred Stock and Series B-1
Preferred Stock and (iii) issued a total of 1,027,782 shares of Cytel's Common
Stock to the holders of Common Stock of Epimmune in exchange for all outstanding
shares of Epimmune's Common Stock. The acquisition of the minority interest in
Epimmune, through the exchange transaction, was accounted for as a purchase. The
Company recorded the acquisition of the minority interest at the fair market
value of the preferred and common stock issued, and determined that the excess
of the purchase price over the identifiable net assets of $3.2 million was
in-process technology based on a discounted cash flow analysis of that
technology. The analysis, with a discount rate of 50%, was based on estimated
research and development costs for nine years and product revenues beginning in
year six, after the assumed completion of clinical trials and product approval
by the FDA. The analysis also considered milestone payments based on scientific
accomplishments and new collaborative revenues based on projected future
collaboration agreements. The value of the technology was charged to acquired
in-process technology because technological feasibility had not been achieved
nor had alternative future uses for the technology been identified. Following
the Exchange Transactions, Cytel merged with Epimmune and changed its name to
Epimmune Inc. As of September 30, 2000, Pharmacia Corporation, the successor to
Searle ("Pharmacia") owned 4.32% of the Company's outstanding common stock and
all of the Company's outstanding preferred stock.
Prior year condensed consolidated financial statements include the accounts of
Cytel and Epimmune. All significant intercompany accounts and transactions have
been eliminated in consolidation. The minority interest calculation was based on
the average quarterly third parties' ownership in Epimmune.
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Basic and diluted net loss per share is computed using the weighted average
number of common shares outstanding during the period, excluding owned but
unvested shares. All potential common shares have been excluded from the diluted
net loss per share calculations, as they are antidilutive.
2. NEW ACCOUNTING STANDARD
In June 1998, the Financial Standards Accounting Board, or FASB, issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities, which
establishes accounting and reporting standards for derivative instruments and
hedging activities. The Statement will require the recognition of all
derivatives on our balance sheet at fair value. The FASB subsequently delayed
implementation of the standard for the financial years beginning after June 15,
2000. We expect to adopt the new Statement effective January 1, 2001. The impact
on our financial statements is not expected to be material.
3. DISCONTINUANCE OF CYTEL OPERATIONS
In the first quarter of 1999, Cytel discontinued its therapeutic
anti-inflammatory business and recorded a restructuring charge of $3.7 million,
an amount that was reduced to $2.7 million in the fourth quarter of 1999. As of
September 30, 2000, the balance of the restructuring charge is $0.1 million
which relates primarily to an IRS assessment of employment and income taxes in
connection with Cytel's Employee Stock Purchase Plan. The accrued restructuring
charge includes the following:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
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<S> <C> <C>
Minimum commitments for lease facilities $ -- $ 56,000
Employee severance -- 10,000
Other loss contingencies 130,000 276,000
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Accrued restructuring costs $130,000 $342,000
</TABLE>
4. SALE OF CYTEL ASSETS
In the first quarter of 1999, Cytel completed two transactions related to the
sale of its Glytec carbohydrate synthesis and manufacturing business. One
transaction included the sale of fixed assets and intellectual property, and
assignment of certain liabilities and transfer of certain personnel relating to
the Glytec business to Baxter Healthcare Corporation's Nextran unit. The other
transaction included the sale of intellectual property to Neose Technologies,
Inc. ("Neose"). Cytel recorded a gain of approximately $3.3 million in
connection with the two transactions. In addition, Neose paid an additional $1.5
million into escrow, the release of which is conditioned on the resolution of
certain matters relating to the patents and licenses acquired by Neose, and may
pay us up to an additional $1.6 million contingent on potential payments and
revenues realized by Neose in connection with certain future corporate
collaborations. On March 29, 2000, $0.5 million was released from escrow to the
Company based on the satisfaction of certain escrow requirements under the
agreement. On October 10, 2000, an additional $0.5 million was released from
escrow to the Company based on satisfaction of certain additional escrow
requirements under the agreement. Concurrent with the October 10, 2000 release
of $0.5 million, the Company signed a letter acknowledging it did not meet the
requirement for the final payment of $0.5 million under the escrow agreement by
the contractual due date of September 26, 2000, and waived its right to any
further payment under the escrow agreement.
On July 10, 2000, we received a contingency payment of $0.3 million from Neose
related to our delivery of certain materials under the Neose agreement. On July
11, 2000, we made payment of $0.3 million to Nextran in satisfaction of our
obligation under the Nextran agreement to pay a residual participating
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interest to Nextran of up to $0.3 million from any contingency payments received
by us in connection with the sale of any assets used in the business acquired by
Nextran.
5. ELAN
On March 7, 2000, the Company received a $0.5 million payment from Elan for the
assignment of a license agreement to which Cytel was a party. The Company
retained an option for a non-exclusive license to certain technology.
6. PRIVATE PLACEMENT
On February 16, 2000, the Company completed a private placement of 1,200,000
newly issued shares of common stock at $3.60 per share, raising proceeds of $4.3
million.
7. EQUIPMENT LOAN AGREEMENT
On April 26, 2000, the Company signed a modification to an existing loan
agreement with Silicon Valley Bank increasing the available credit limit by $0.4
million to be used in 2000. These funds will primarily be used for enhancements
and upgrades of our scientific information management systems and databases. As
of September 30, 2000, $0.2 million had been advanced against this amount.
8. PRIVATE PLACEMENT
On October 16, 2000, the Company completed a private placement of 500,000 newly
issued shares of common stock at $4.00 per share, raising proceeds of $2.0
million.
9. PHARMACIA COLLABORATION
The Company has been notified that Pharmacia has decided to end their
collaboration to develop immune stimulating products for the treatment of
breast, colon, lung, prostate and other cancers. The Company expects to work
with Pharmacia to implement an orderly conclusion to the collaboration and
transfer of applicable materials and documentation to the Company so that the
Company may proceed with the cancer program, either alone or with another
partner. As of September 30, 2000, Pharmacia owned 4.32% of the Company's
outstanding common stock and all of the Company's outstanding preferred stock.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Except for the historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties. Our
actual results could differ materially from those discussed here. Factors that
could cause or contribute to such differences include, without limitation, those
discussed below and in the section entitled "Risks and Uncertainties," as well
as those discussed in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999.
Unless otherwise indicated, all references to "Cytel" are to Cytel Corporation.
Epimmune Inc. was a majority-owned subsidiary of Cytel until July 1, 1999, at
which time Cytel and Epimmune Inc. merged. All references to "we," "us," "our"
or "our company" are to the combined entity of Cytel and Epimmune Inc.
Since Cytel's inception in July 1987, we have devoted substantially all of our
resources to the discovery and development of potential therapeutic and
prophylactic products. To date, we have not received any revenues from the sale
of products. We have funded our research and development primarily from
equity-derived working capital and through strategic alliances with other
companies. We have been unprofitable since our inception and expect to incur
substantial operating losses for the next several years. As of September 30,
2000, our accumulated deficit was approximately $140.7 million.
RESULTS OF OPERATIONS
Three months ended September 30, 2000 ("2000"), as compared with three months
ended September 30, 1999 ("1999").
We had total revenues of $0.5 million in 2000 and $2.5 million in 1999. The
revenue for the 2000 period was all related to research grants. In the 1999
period, $2.0 million of revenue was related to a milestone payment from our
collaborative partner, Pharmacia, and $0.5 million of revenue was related to
research grants. We have been notified that Pharmacia has decided to end our
collaboration in the cancer field, and, accordingly, we will receive no further
revenues from Pharmacia under that collaboration.
Research and development expenses in 2000 decreased to $1.5 million from $1.6
million in 1999. The decrease relates primarily to the recognition of patent
costs as expense when incurred during the 1999 period compared to capitalizing
and amortizing patent costs over ten years during the 2000 period. At the end of
1999, we adjusted the method used to recognize patent costs on a year to date
basis to reflect capitalization and amortization of patent expense. The decrease
in patent costs was partially offset by increased staffing and personnel related
expenses and increased spending in sponsored research during 2000 compared to
1999. We expect to incur additional research and development expenses in
pursuing our cancer program, either alone or with another partner.
General and administrative expenses were approximately $0.5 million in 2000 and
in 1999. Increased spending in 2000, related to increased staffing and
associated expenses for business development, financial and administrative
activities, was offset by lower expenses during the same period for legal and
other outside services.
We had no charges to write-off of in-process technology in 2000. In 1999, we
charged $3.2 million to operations for the write-off of in-process technology
related to the acquisition of the minority interest in Epimmune. The charge was
based on a discounted cash flow analysis prepared to determine the fair value of
the excess of purchase price over the identifiable assets recorded as a result
of the merger of Cytel and Epimmune.
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Net interest income was $0.1 million in 2000 and in 1999.
We had no loss on the disposal of assets during the 2000 period and a loss on
disposal of assets of $0.1 million during 1999 due to the write-off of leasehold
improvements from the early termination of a facility lease.
Nine months ended September 30, 2000 ("2000"), as compared with nine months
ended September 30, 1999 ("1999").
In 2000, we had total revenues of $1.1 million, all related to research grants,
as compared to revenues of $3.9 million in 1999, which included $2.0 million in
revenue related to a milestone payment from our collaborative partner,
Pharmacia, $1.4 million of revenue from research grants and $0.5 million of
revenue recognized in connection with the sale of Cytel's Glytec carbohydrate
synthesis and manufacturing business. We have been notified that Pharmacia has
decided to end our collaboration in the cancer field, and, accordingly, we will
receive no further revenues from Pharmacia under that collaboration.
Research and development expenses in 2000 decreased to $4.4 million from $7.9
million in 1999. The decrease relates to the discontinuation of Cytel operations
during the first quarter of 1999 and the recognition of patent costs as expense
when incurred during the 1999 period compared to capitalizing and amortizing
patent costs over ten years during the 2000 period. At the end of 1999, we
adjusted the method used to recognize patent costs on a year to date basis to
reflect capitalization and amortization of patent expense. We expect to incur
additional research and development expenses in pursuing our cancer program,
either alone or with another partner.
General and administrative expenses were $1.8 million in 2000 compared to $2.1
million in 1999. The decrease relates to the discontinuation of Cytel's
operations during 1999 partially offset by increased staffing and associated
expenses for business development, financial and administrative activities after
discontinuation of Cytel's operations.
We had no restructuring charges in 2000 compared to $3.7 million in
restructuring charges in 1999 related to the termination of non-Epimmune
operations.
We had no charges to write-off of in-process technology in 2000. In 1999, we
charged $3.2 million to operations for the write-off of in-process technology
related to the acquisition of the minority interest in Epimmune. The charge was
based on a discounted cash flow analysis prepared to determine the fair value of
the excess of purchase price over the identifiable assets recorded as a result
of the merger of Cytel and Epimmune.
We had no minority interest in our company during the 2000 period and had a
minority interest in the net loss of a consolidated subsidiary of $0.5 million
during the 1999 period.
Net interest income was $0.4 million in 2000 compared to $0.3 million in 1999,
based on higher average cash balances during the 2000 period.
Other income was $1.0 million in 2000 compared to $0.6 million in 1999. The 2000
amount represents a payment from Elan of $0.5 million related to the assignment
of a license and the release of $0.5 million from escrow under the Neose
agreement. The 1999 amount relates primarily to $0.5 million from Elan
International Services in consideration for the buyout of certain future
milestone obligations by Elan and $50,000 from the sale of certain patents and
related technology rights to Abaron Biosciences, Inc.
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There was no gain on the disposal of assets during the 2000 period compared to a
$3.3 million gain on disposal of assets in 1999 related to the sale of Cytel's
Glytec carbohydrate synthesis and manufacturing business, offset by the
write-off of leasehold improvements of $0.1 million.
We expect to incur operating losses over the next several years due to
continuing expenses associated with our research and development programs,
including preclinical testing and clinical trials. Operating losses may
fluctuate from quarter to quarter as a result of differences in the timing of
revenues received and expenses incurred, and such fluctuations may be
substantial.
LIQUIDITY AND CAPITAL RESOURCES
We have financed operations since inception primarily through private placements
of our equity securities, two public common stock offerings, revenues under
collaborative research and development agreements, grant revenues, capital and
operating lease transactions, certain asset divestitures and interest income.
Through September 2000, we have raised approximately $149.5 million from the
sale of equity securities.
In February 2000, we raised $4.3 million through the private placement of an
aggregate of 1.2 million shares of our common stock. The purchase price was
$3.60 per share, representing a 15% discount to the prior 30-day trading average
for our common stock. As of September 30, 2000, we had approximately 8,813,720
shares outstanding on an as-converted basis, assuming conversion of preferred
shares held by Pharmacia. Investors in the private placement included the State
of Wisconsin Investment Board and the Biotechnology Value Fund, L.P. and related
funds.
As of September 30, 2000, our cash, cash equivalents, restricted cash and
short-term investments were $8.8 million compared to $8.7 million at December
31, 1999. The increase was primarily due to private placement proceeds of $4.3
million partially offset by cash used for operations. We expect to continue to
use our cash, cash equivalents and short-term investments to fund our ongoing
vaccine research programs. We had net working capital of $7.3 million as of
September 30, 2000 compared to $6.9 million as of December 31, 1999.
Capital expenditures totaled $0.3 million in the first nine months of 2000,
compared to $0.7 million in the first nine months of 1999. Expenditures, during
both periods, were primarily for laboratory equipment. On April 26, 2000, we
signed a modification to an existing loan agreement with Silicon Valley Bank
increasing the available credit limit by $0.4 million to be used in 2000. These
funds will primarily be used for enhancements and upgrades of our scientific
information management systems and databases. As of September 30, 2000, $0.2
million had been advanced against this amount, compared to loan draw proceeds of
$0.5 million for the first nine months of 1999 under the existing original
agreement.
We have financed our laboratory equipment and research and office facilities
primarily through operating lease arrangements and a note payable. During the
first nine months of 2000 we made payments under the notes payable of $0.2
million, primarily for laboratory equipment compared to payments of $0.9 million
during the first nine months of 1999, primarily related to research and office
facilities.
Payments related to capitalized patent expenses for the first nine months of
2000 were $0.5 million compared to $0.1 million during the corresponding nine
month period of 1999. The increase relates primarily to capitalizing and
amortizing patent costs over ten years during the 2000 period compared to the
recognition of patent costs as expense when incurred during the 1999 period. At
the end of 1999, we adjusted the method used to recognize patent costs on a year
to date basis to reflect capitalization and amortization of patent expense.
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We expect to incur substantial additional research and development expenditures
in connection with our ongoing vaccine research programs, including costs
related to preclinical testing, clinical trials and manufacturing, as well as
marketing and distribution expenses. It is our intention to seek collaborative
research and development relationships with suitable corporate partners. There
can be no assurance that any agreements that may result from these discussions
will successfully reduce our funding requirements or will not be terminated. For
example, we have been notified that Pharmacia has decided to end our
collaboration in the cancer field. We will require additional equity or debt
financing in order to pursue our research and development programs, and there
can be no assurance that these funds will be available on favorable terms, if at
all. If adequate funds are not available we may be required to delay, scale back
or eliminate one or more of our drug discovery or development programs or obtain
funds through arrangements with collaborative partners or others that may
require us to relinquish rights to certain of our technologies, product
candidates or products that we would not otherwise relinquish.
We anticipate that our existing resources will enable us to maintain our current
and planned operations through the end of 2001. The estimate for the period for
which we anticipate our existing resources to enable us to maintain our current
and planned operations is a forward-looking statement that involves risks and
uncertainties as set forth herein and in our Form 10-K for the year ended
December 31, 1999.
Our future capital requirements depend on many factors, including continued
scientific progress in our drug discovery programs, the magnitude of these
programs, progress with preclinical testing and clinical trials, the time and
costs involved in obtaining regulatory approvals, the costs involved in filing,
prosecuting and enforcing patent claims, competing technological and market
developments, our ability to establish and maintain collaborative arrangements,
the cost of manufacturing scale-up and effective commercialization activities
and arrangements.
As is typical in the biotechnology industry, our commercial success will depend
in part on neither infringing patents issued to competitors nor breaching the
technology licenses upon which our products might be based. Our business is also
subject to other significant risks, including the uncertainties associated with
the lengthy regulatory approval process and with potential competition from
other products. Even if our products appear promising at an early stage of
development, they may not reach the market for a number of reasons. Such reasons
include, but are not limited to our inability to fund clinical development of
such products, or the possibilities that the potential products will be found
ineffective during clinical trials, fail to receive necessary regulatory
approvals, be difficult to manufacture on a large scale, or be uneconomical to
market.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
At September 30, 2000, our investment portfolio included fixed-income securities
of $8.3 million. These securities are subject to interest rate risk and will
decline in value if interest rates increase. Due to the short duration of our
investment portfolio, an immediate 10 percent increase in interest rates would
have no material impact on our financial condition or results of operations.
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RISKS AND UNCERTAINTIES
We wish to caution readers that the following important factors, among others,
in some cases have affected our results and in the future could cause our actual
results and needs to vary materially from forward-looking statements made from
time to time by us on the basis of management's then-current expectations. The
business in which we are engaged is in rapidly changing and competitive markets
and involves a high degree of risk, and accuracy with respect to forward-looking
projections is difficult.
WE ARE AT AN EARLY STAGE OF DEVELOPMENT. IF WE DO NOT SUCCESSFULLY DEVELOP AND
COMMERCIALIZE OUR PRODUCTS, WE MAY NEVER GENERATE SIGNIFICANT REVENUES.
We are a research and development focused company. There are many factors
outside of our control that may effect the timing of commencement and completion
of clinical trials of any of our drug candidates, and we cannot assure you that
clinical trials will commence or be completed within any anticipated timeframe.
We previously indicated that Pharmacia was expected to initiate Phase I/II human
clinical trials of a drug candidate in our cancer program by late 2000 or early
2001. We have been notified that Pharmacia has decided to end our collaboration
in the cancer field. We expect to work with Pharmacia to implement an orderly
conclusion to the collaboration and transfer of applicable materials and
documentation to us so that we may proceed with the cancer program, either alone
or with another partner. Under these circumstances, the clinical trials will not
begin within the previously indicated timeframe. We have not completed the
development of any product and, accordingly, have not begun to market or
generate revenues from the commercialization of any product. We do not expect to
market any of our therapeutic or prophylactic products for a number of years. If
we do not successfully develop and commercialize products we may never generate
significant revenues. Our potential therapies under development will require
time consuming and costly research and development efforts, preclinical studies,
clinical testing, regulatory approvals and additional investment prior to their
commercialization, which may never occur.
We cannot guarantee that our research and development programs will be
successful or that we can show that our products are safe and effective in
humans. For example, in March 1999, Cytel completed its Phase II/III clinical
trial of Cylexin, its lead cell adhesion inhibitor compound. Based on
disappointing results from this Phase II/III clinical trial, Cytel decided to
terminate the clinical trials of Cylexin and discontinue its therapeutic
anti-inflammatory business. Unacceptable toxicities or side effects may occur at
any time in the course of human clinical trials or during commercial use. Delays
in planned patient enrollment in our clinical trials may result in increased
costs, program delays or both. The appearance of any unacceptable toxicities or
side effects could interrupt, limit, delay or abort the development of any of
our products or, if previously approved, necessitate their withdrawal from the
market.
We may never obtain FDA or other necessary regulatory approvals to successfully
commercialize any of our products under development. Further, we may not be able
to manufacture any products in commercial quantities in compliance with
regulatory requirements at an acceptable cost. Even if we successfully develop
and obtain approval for our products, we may fail to achieve the necessary
market acceptance of these products. Our failure to address problems and delays
relating to research and development, regulatory approval, manufacturing and
marketing would harm our business.
PHARMACIA'S DECISION TO END OUR COLLABORATION MAY DELAY OR LIMIT OUR ABILITY TO
DEVELOP OUR CANCER EPITOPE PRODUCTS.
We have entered into a research and development collaboration with Pharmacia
with respect to the production, use and sale of pharmaceutical products derived
from our cancer epitopes and the use thereof in therapeutic vaccines. We have
been notified that Pharmacia has decided to end our collaboration. This
collaboration was our only significant collaboration, and we have been
substantially dependent upon
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it. A significant portion of our revenues for 1999 resulted from payments from
Pharmacia, and we will receive no further revenues from Pharmacia. We expect
that substantially all of our revenues for the foreseeable future will result
from research grants and payments under any future collaborations, including
royalties on product sales and interest income. We cannot be certain that
Pharmacia will perform its obligations under the collaboration or that we will
receive any future milestone payments or other amounts under the collaboration.
In light of the termination of our collaboration with Pharmacia, our preclinical
or clinical development of drug candidates in our cancer program could be
delayed or terminated, which could harm our business.
IF WE CANNOT OBTAIN AND MAINTAIN COLLABORATION OR LICENSE AGREEMENTS ON
ACCEPTABLE TERMS IN THE FUTURE, WE MAY NOT SUCCESSFULLY DEVELOP SOME OF OUR
PRODUCTS.
We expect to rely on collaborative arrangements both to develop and
commercialize pharmaceutical products. We cannot be certain that we will be able
to enter into collaborative arrangements in the future, that any such
arrangements will remain in place or be successful or that we will receive
royalty revenues, license fees or milestone payments from any such collaborative
arrangements. In addition, our collaborative partners may pursue alternative
technologies or develop alternative compounds either on their own or in
collaboration with others as a means of developing treatments for the disease
targeted by any collaborative program with us. In addition, we may be required
to enter into licenses or other collaborative agreements with third parties in
order to access technologies that are necessary to successfully develop certain
of our products. We cannot be certain that we will be able to successfully
negotiate acceptable licenses or other collaborative arrangements that will
allow us to access such technologies. In addition, we cannot be certain that any
technologies accessed through such licenses or other collaborations will
successfully meet our requirements.
OUR ADDITIONAL FINANCING REQUIREMENTS AND LIMITED ACCESS TO FINANCING MAY
ADVERSELY AFFECT OUR ABILITY TO DEVELOP PRODUCTS.
As of September 30, 2000, we had $8.8 million in cash, cash equivalents,
restricted cash and short-term investments. Our future capital requirements will
depend on many factors, including: continued scientific progress in our drug
discovery programs; the magnitude of our drug discovery programs; our ability to
establish and maintain collaborative arrangements; progress with preclinical
testing and clinical trials; the time and costs involved in obtaining regulatory
approvals; the costs involved in filing, prosecuting and enforcing patent
claims; competing technological and market developments; our ability to
establish and maintain collaborative arrangements; the cost of manufacturing
scale-up; and effective commercialization activities and arrangements.
We intend to seek additional funding through collaborative arrangements or
equity or debt financings. If additional financing is not available, we
anticipate that our existing resources will enable us to maintain our current
and planned operations through the end of 2001. The estimate for the period for
which we anticipate our existing resources to enable us to maintain our current
and planned operations is a forward-looking statement that involves risks and
uncertainties as set forth herein and in our Form 10-K for the year ended
December 31, 1999. We may not be able to obtain financing on favorable terms, if
at all, or enter into additional collaborations to reduce our funding
requirements. If we acquire funds by issuing securities, further dilution to
existing stockholders may result. If we acquire funds through additional
collaborations, we will likely have to relinquish some or all of the rights to
products or technologies that we may have otherwise developed ourselves.
OUR HISTORY OF OPERATING LOSSES AND OUR EXPECTATIONS OF CONTINUING LOSSES MAY
HURT OUR ABILITY TO CONTINUE OPERATIONS.
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We have experienced significant operating losses since our inception in 1987. As
of September 30, 2000, we had an accumulated deficit of $140.7 million. We have
not generated revenues from the commercialization of any product. All of our
revenues to date have consisted of contract research and development revenues,
license and milestone payments, research grants, certain asset divestitures and
interest income. We expect to incur substantial net operating losses which may
imperil our ability to continue operations. To achieve profitable operations,
we, alone or with partners, must successfully identify, develop, register and
market proprietary products. We may not be able to generate sufficient product
revenue to become profitable on a sustained basis or at all.
IF WE CANNOT COST-EFFECTIVELY MANUFACTURE OUR PRODUCTS AND THE PRODUCTS OF OUR
PARTNERS IN COMMERCIAL QUANTITIES AND IN COMPLIANCE WITH REGULATORY
REQUIREMENTS, WE MAY NOT BE ABLE TO SUCCESSFULLY COMMERCIALIZE OUR PRODUCTS.
To be successful, our products and the products of our partners must be
manufactured in commercial quantities in compliance with regulatory requirements
and at an acceptable cost. We have not commercialized any products, nor have we
demonstrated that we can manufacture commercial quantities of our product
candidates or our partners' product candidates in accordance with regulatory
requirements. We intend to rely on third party contract manufacturers to produce
materials needed for clinical trials and product commercialization. Third party
manufacturers may not be able to meet our needs with respect to timing, quantity
or quality. If we are unable to contract for a sufficient supply of needed
materials on acceptable terms, or if we should encounter delays or difficulties
in our relationships with manufacturers, it may delay clinical trials,
regulatory approvals and marketing efforts for our products. Such delays could
adversely affect our competitive position and our chances of achieving
profitability. We cannot be sure that we can manufacture, either on our own our
through contracts with third parties, such products at a cost or in quantities
which are commercially viable.
THE LENGTHY APPROVAL PROCESS AND UNCERTAINTY OF GOVERNMENT REGULATORY
REQUIREMENTS MAY DELAY OR PREVENT US FROM COMMERCIALIZING PRODUCTS.
We cannot commercialize our products if we do not receive FDA or foreign
approval for our products. Clinical testing, manufacture, promotion and sale of
our products are subject to extensive regulation by numerous governmental
authorities in the United States, principally the FDA, and corresponding state
and foreign regulatory agencies. These regulations may delay or prevent us from
commercializing products. Noncompliance with applicable requirements can result
in, among other things, fines, injunctions, seizure of products, total or
partial suspension of product marketing, failure of the government to grant
pre-market approval, withdrawal of marketing approvals and criminal prosecution.
The regulatory process for new therapeutic drug products, including the required
preclinical studies and clinical testing, is lengthy and expensive. We may not
receive necessary FDA or foreign clearances for any of our potential products in
a timely manner, or at all. The length of the clinical trial process and the
number of patients the FDA will require to be enrolled in the clinical trials in
order to establish the safety and efficacy of our products is uncertain. The FDA
or Epimmune and its collaborators may decide to discontinue or suspend clinical
trials at any time if the subjects or patients who are participating in such
trials are being exposed to unacceptable health risks or if the results show no
or limited benefit in patients treated with the drug compared to patients in the
control group.
We may encounter significant delays or excessive costs in our efforts to secure
necessary approvals. Regulatory requirements are evolving and uncertain. Future
United States or foreign legislative or administrative acts could also prevent
or delay regulatory approval of our products. We may not receive the necessary
approvals for clinical trials, manufacturing or marketing of any of our products
under development. Even if we obtain commercial regulatory approvals, the
approvals may significantly limit the indicated uses for which we may market our
products. In addition, the FDA may continually review a
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product after its initial approval and commercialization. Later discovery of
previously unknown problems or failure to comply with the applicable regulatory
requirements may result in restrictions on the marketing of a product or
withdrawal of the product from the market, as well as possible civil or criminal
sanctions.
To market any drug products outside of the United States, we are also subject to
numerous and varying foreign regulatory requirements, implemented by foreign
health authorities, governing the design and conduct of human clinical trials
and marketing approval. The approval procedure varies among countries and can
involve additional testing, and the time required to obtain approval may differ
from that required to obtain FDA approval. The foreign regulatory approval
process includes all of the risks associated with obtaining FDA approval set
forth above, and approval by the FDA does not ensure approval by the health
authorities of any other country, nor does the approval by foreign health
authorities ensure approval by the FDA.
Among the other requirements for regulatory approval is the requirement that
prospective manufacturers conform to the FDA's Good Manufacturing Practices,
GMP, requirements specifically for biological drugs, as well as for other drugs.
In complying with the FDA's GMP requirements, manufacturers must continue to
expend time, money and effort in production, record keeping and quality control
to assure that the product meets applicable specifications and other
requirements. Failure to comply with the FDA's GMP requirements subjects the
manufacturer to possible FDA regulatory action. If we or our contract
manufacturers, if any, fail to maintain compliance with the FDA's GMP
requirements on a continuing basis, it could materially adversely affect our
operations, commercialization efforts and profitability.
TECHNOLOGICAL CHANGE AND COMPETITION MAY RENDER OUR POTENTIAL PRODUCTS OBSOLETE.
The biotechnology industry continues to undergo rapid change and competition is
intense and is expected to increase. Our competitors may succeed in developing
technologies and products that are more effective or affordable than any of the
products we are developing or which would render our technology and products
obsolete and noncompetitive. We compete with many public and private companies,
including pharmaceutical companies, chemical companies, specialized
biotechnology companies and academic institutions. Many of our competitors have
substantially greater experience, financial and technical resources and
production, marketing and development capabilities than us. In addition, many of
our competitors have significantly greater experience conducting preclinical
studies and clinical trials of new products, and in obtaining regulatory
approvals for such products. Accordingly, some of our competitors may succeed in
obtaining developing and commercializing products more rapidly or effectively
than us, or in developing technology and products that would render our
technology and products obsolete or noncompetitive. We are aware of companies
that are pursuing the development of novel pharmaceuticals which target the same
diseases that we are targeting. These and other efforts by potential competitors
may be successful, and other technologies may be developed to compete with our
technologies. If we cannot successfully respond to technological change in a
timely manner, our commercialization efforts may be harmed.
Our products under development address a range of markets. Our competition will
be determined in part by the potential indications for which our compounds are
developed and ultimately approved by regulatory authorities. For certain of our
potential products, an important factor in competition may be the timing of
market introduction of our products and competitive products. Accordingly, the
relative speed with which we can develop products, complete the clinical trials
and approval processes and supply commercial quantities of the products to the
market are expected to be important competitive factors. We expect that
competition among products approved for sale will be based, among other things,
on product effectiveness, safety, reliability, availability, price and patent
position.
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OUR FAILURE TO OBTAIN ISSUED PATENTS AND, CONSEQUENTLY, TO PROTECT OUR
PROPRIETARY TECHNOLOGY, COULD IMPAIR OUR COMPETITIVE POSITION.
Our success will depend in part on our ability to obtain patent protection for
our products and processes, both in the United States and other countries. The
patent position of biotechnology and pharmaceutical companies is highly
uncertain and involves complex legal and factual questions. There is no
consistent policy regarding the breadth of claims allowed in biotechnology
patents. We intend to file applications and pursue patent prosecution as
appropriate for patents covering both our products and processes. We cannot be
sure that patents will issue from any of the patent applications that we own or
license or that, if patents do issue, that claims allowed will be sufficiently
broad to protect our products and processes. In addition, we cannot be certain
that third parties will not challenge, invalidate or circumvent any patents
issued to us, or that the rights granted under the patents will provide
proprietary protection to us.
We also protect our proprietary technology and processes in part by
confidentiality agreements with our collaborative partners, employees and
consultants. We cannot be certain that our collaborative partners, employees and
consultants will not breach these agreements, that we will have adequate
remedies for any breach, or that our trade secrets will not otherwise become
known or be independently discovered by competitors.
WE MAY NOT BE ABLE TO COMMERCIALIZE OUR OTHER PRODUCTS UNDER DEVELOPMENT IF THEY
INFRINGE EXISTING PATENTS OR PATENTS THAT HAVE NOT YET ISSUED, WHICH WOULD
MATERIALLY HARM OUR BUSINESS.
As is typical in the biotechnology industry, our commercial success will depend
in part on our ability to avoid infringing patents issued to competitors or
breaching the technology licenses upon which we might base our products. If we
fail to obtain a license to any technology that we require to commercialize our
products, or to develop an alternative compound and obtain FDA approval within
an acceptable period of time if required to do so, our business would be harmed.
Litigation, which could result in substantial costs to us, may also be necessary
to enforce any patents issued to us or to determine the scope and validity of
others' proprietary rights. In addition, we may have to participate in
interference proceedings declared by the United States Patent and Trademark
Office which could result in substantial costs to determine the priority of
inventions.
OUR FUTURE SUCCESS DEPENDS IN PART ON THE CONTINUED SERVICE OF OUR KEY
SCIENTIFIC AND MANAGEMENT PERSONNEL AND OUR ABILITY TO IDENTIFY, HIRE AND RETAIN
ADDITIONAL PERSONNEL.
We are highly dependent on the principal members of our scientific and
management staff. We do not maintain key person life insurance on the life of
any employee. Our future success also will depend in part on the continued
service of our key scientific and management personnel and our ability to
identify, hire and retain additional qualified personnel.
There is intense competition for qualified personnel in the areas of our
activities, and we cannot be sure that we will be able to continue to attract
and retain such personnel necessary for the development of our business. Because
of the intense competition, we cannot be sure that we will be successful in
adding technical personnel as needed to meet the staffing requirements of
additional collaborative relationships. Our failure to attract and retain key
personnel could be significantly detrimental to our product development programs
and could harm our business.
IF WE DO NOT DEVELOP A SUFFICIENT SALES AND MARKETING FORCE, WE MAY NOT BE ABLE
TO SUCCESSFULLY COMMERCIALIZE OUR PRODUCTS.
We have no experience in sales, marketing or distribution. Before we can market
any of our products directly, we must develop a substantial marketing and sales
force with technical expertise and supporting
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distribution capability. Alternatively, we may obtain the assistance of one or
more pharmaceutical companies with a large distribution system and a large
direct sales force. Other than our agreement with Takara, we do not have any
existing distribution arrangements with any pharmaceutical company for our
products under development. We cannot be sure that we can establish sales and
distribution capabilities or successfully gain market acceptance for our
products. If we cannot develop sales and distribution capabilities, we may not
be able to successfully commercialize our products.
ADVERSE DETERMINATIONS CONCERNING PRODUCT PRICING, REIMBURSEMENT AND RELATED
MATTERS COULD PREVENT US FROM SUCCESSFULLY COMMERCIALIZING PRODUCTS.
Our ability to successfully commercialize our products may depend in part on the
extent to which reimbursement for the cost of such products and related
treatment will be available from government health administration authorities,
private health insurers and other organizations. Third-party payors are
increasingly challenging the price of medical products and services. Significant
uncertainty exists as to the reimbursement status of newly approved health care
products, and we cannot be certain that adequate third-party coverage will be
available to enable us to maintain price levels sufficient to realize an
appropriate return on our investment in product development. If we cannot obtain
adequate third-party coverage for our products, it could harm our business.
PRODUCT LIABILITY RISKS MAY EXPOSE US TO SIGNIFICANT LIABILITY.
Our business exposes us to potential product liability risks which are inherent
in the testing, manufacturing and marketing of human therapeutic products. While
we currently have product liability insurance, we cannot be sure that we can
maintain such insurance on acceptable terms or that our insurance will provide
adequate coverage against potential liabilities.
OUR USE OF HAZARDOUS MATERIALS COULD EXPOSE US TO SIGNIFICANT COSTS.
Our research and development processes involve the controlled storage, use and
disposal of hazardous materials, chemicals and radioactive compounds. We are
subject to federal, state and local laws and regulations governing the use,
manufacture, storage, handling and disposal of these materials and some waste
products. Although we believe that our safety procedures for handling and
disposing of these materials comply with the standards prescribed by these laws
and regulations, the risk of accidental contamination or injury from these
materials cannot be completely eliminated. In the event of an accident, we could
be held liable for any damages that result, and any liability could exceed our
resources.
Although we believe that we are in compliance in all material respects with
applicable environmental laws and regulations and currently do not expect to
make material capital expenditures for environmental control facilities in the
near term, we cannot be sure that compliance with environmental laws and
regulations in the future will not entail significant costs, or that our
business will not be harmed by current or future environmental laws or
regulations.
THE VOLATILITY OF THE PRICE OF OUR COMMON STOCK AND OUR DIVIDEND POLICY MAY HURT
OUR STOCKHOLDERS.
The market prices for securities of biotechnology companies, including our
common stock, have historically been highly volatile and currently are of new
record levels, and the market from time to time has experienced significant
price and volume fluctuations that are unrelated to the operating performance of
such companies. The following factors may have a significant effect on the
market price of our common stock:
- announcements of technological innovations or new commercial therapeutic
products by us or others;
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- governmental regulation;
- developments in patent or other proprietary rights;
- developments in our relationships with our collaborative partners,
including the end of our collaboration with Pharmacia;
- public concern as to the clinical results and/or, the safety of drugs
developed by us or others; and
- general market conditions.
Fluctuations in financial performance from period to period also may have a
significant impact on the market price of our common stock.
THE SUBORDINATION OF OUR COMMON STOCK TO OUR PREFERRED STOCK COULD HURT COMMON
STOCKHOLDERS.
Our common stock is expressly subordinate to our Series S and Series S-1
Preferred Stock in the event of our liquidation, dissolution or winding up. If
we were to cease operations and liquidate our assets, there may not be any
remaining value available for distribution to the holders of common stock after
providing for the Series S and Series S-1 Preferred Stock liquidation
preference.
THE EFFECT OF ANTI-TAKEOVER PROVISIONS COULD ADVERSELY AFFECT OUR COMMON
STOCKHOLDERS.
Our certificate of incorporation includes a provision that requires the approval
of holders of at least 66 2/3% of our voting stock as a condition to a merger or
certain other business transactions with, or proposed by, a holder of 15% or
more of our voting stock. This approval is not required in cases where certain
of our directors approve the transaction or where certain minimum price criteria
and other procedural requirements are met. Our certificate of incorporation also
requires the approvals of holders of at least 66 2/3% of our voting stock to
amend or change the provisions mentioned relating to the transaction approval.
Finally, our certificate of incorporation provides that any action required or
permitted to be taken by our stockholders must be effected at a duly called
annual or special meeting rather than by any consent in writing.
Further, pursuant to the terms of our stockholder rights plan, we have
distributed a dividend of one right for each outstanding share of common stock.
These rights will cause substantial dilution to the ownership of a person or
group that attempts to acquire us on terms not approved by the Board of
Directors and may have the effect of deterring hostile takeover attempts.
Concentration of ownership among our existing officers, directors and principal
stockholders may prevent other stockholders from influencing significant
corporate decisions and depress our stock price.
Our officers, directors and stockholders with at least 10% of our stock together
control approximately 46% of our outstanding common stock and preferred stock,
on a combined, as-converted basis. If these officers, directors and principal
stockholders act together, they will be able to exert a significant degree of
influence over our management and affairs and over matters requiring stockholder
approval, including the election of directors and approval of mergers or other
business combination transactions. The interests of this concentration of
ownership may not always coincide with our interests or the interests of other
stockholders. For instance, officers, directors and principal stockholders,
acting together, could cause us to enter into transactions or agreements that we
would not otherwise consider. Similarly, this concentration of ownership may
have the effect of delaying or preventing a change in control of our company
otherwise favored by our other stockholders. This concentration of ownership
could depress our stock price.
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WE HAVE NEVER PAID DIVIDENDS.
We have never paid any cash dividends and do not anticipate paying cash
dividends in the foreseeable future.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS
Exhibit 27.1 Financial Data Schedule
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EPIMMUNE INC.
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.
EPIMMUNE INC.
Date: November 14, 2000 By: /s/ Deborah A. Schueren
--------------------------------
Deborah A. Schueren
President, Chief Executive
Officer and Director
Date: November 14, 2000 By: /s/ Robert De Vaere
--------------------------------
Robert De Vaere
Vice President, Finance and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
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