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, 1999
--------------------
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 000-23143
PROGENICS PHARMACEUTICALS, INC.
-------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3379479
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
777 Old Saw Mill River Road
Tarrytown, New York 10591
---------------------------
(Address of principal executive offices)
(Zip Code)
(914) 789-2800
--------------
(Registrant's telephone number, including area code)
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
----- -----
As of September 30, 1999 there were 9,562,270 shares of common stock, par
value $.0013 per share, of the registrant outstanding.
<PAGE>
PROGENICS PHARMACEUTICALS, INC.
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets............................... 3
Condensed Statements of Operations..................... 4
Condensed Statement of Stockholders' Equity............ 5
Condensed Statements of Cash Flows..................... 6
Notes to Condensed Financial Statements................ 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.... 11
Item 3. Quantitative and Qualitative Disclosures
about Market Risk................................ 15
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................. 16
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<PAGE>
PROGENICS PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEETS
AT SEPTEMBER 30, 1999 AND DECEMBER 31, 1998 (Unaudited)
September 30, December 31,
1999 1998
------------- -------------
ASSETS:
Current assets:
Cash and cash equivalents............... $ 12,756,891 $ 14,437,263
Marketable securities - short term...... 7,862,345 10,212,876
Accounts receivable..................... 3,633,907 1,634,480
Interest receivable..................... 369,841 300,340
Other current assets.................... 216,522 255,522
------------- -------------
Total current assets............... 24,839,506 26,840,481
Marketable securities..................... 2,737,255
Fixed assets, at cost, net of accumulated
depreciation and amortization........... 1,334,435 1,045,389
Investment in joint venture............... 100,000
Security deposits and other assets........ 3,039 13,745
------------- -------------
Total assets....................... $ 29,014,235 $ 27,899,615
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable and accrued
liabilities........................... $ 2,236,633 $ 1,595,665
Amount due to joint venture............. 500,000
Capital lease obligations,
current portion....................... 99,628 107,346
------------- -------------
Total current liabilities.......... 2,836,261 1,703,011
Amount due to joint venture............... 836,141
Capital lease obligations................. 48,053 117,166
------------- -------------
Total liabilities.................. 3,720,455 1,820,177
------------- -------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value,
14,320,174 authorized; none
issued and outstanding
Common stock - $.0013 par value,
40,000,000 authorized; issued
and outstanding - 9,562,270
in 1999, 9,358,207 in 1998............ 12,431 12,166
Additional paid-in capital.............. 45,277,909 44,377,193
Unearned compensation................... (721,111) (1,111,018)
Accumulated deficit..................... (19,227,794) (17,207,993)
Accumulated other comprehensive
(loss)income.......................... (47,655) 9,090
------------- -------------
Total stockholders' equity......... 25,293,780 26,079,438
------------- -------------
Total liabilities and
stockholders' equity............. $ 29,014,235 $ 27,899,615
============= =============
The accompanying notes are an integral part of these statements.
-3-
<PAGE>
PROGENICS PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
September 30, September 30,
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Contract research and development.... $ 5,027,984 $ 3,070,256 $ 9,887,816 $ 8,399,473
Research grants...................... 341,649 390,518 764,649 971,228
Product sales........................ 500 73,759 35,315 110,205
Interest income...................... 301,849 371,078 894,960 1,097,703
----------- ----------- ----------- -----------
Total revenues.................... 5,671,982 3,905,611 11,582,740 10,578,609
----------- ----------- ----------- -----------
Expenses:
Research and development............. 3,112,592 2,142,964 8,433,226 6,054,405
General and administrative........... 762,308 940,007 2,738,976 2,876,990
Loss in joint venture................ 96,753 1,893,687
Interest expense..................... 40,953 13,493 69,458 31,785
Depreciation and amortization........ 162,412 134,973 467,194 362,252
----------- ----------- ----------- -----------
Total expenses.................... 4,175,018 3,231,437 13,602,541 9,325,432
----------- ----------- ----------- -----------
Operating income (loss)........... 1,496,964 674,174 (2,019,801) 1,253,177
Income taxes........................... 86,250 86,250
----------- ----------- ----------- -----------
Net income (loss)................. $ 1,496,964 $ 587,924 $(2,019,801) $ 1,166,927
=========== =========== =========== ===========
Net income (loss) per share - basic.... $0.16 $0.06 $(0.21) $0.13
===== ===== ====== =====
Net income (loss) per share - diluted.. $0.13 $0.06 $(0.21) $0.11
===== ===== ====== =====
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
PROGENICS PHARMACEUTICALS, INC.
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER TOTAL COMPRE-
------------------ PAID-IN UNEARNED ACCUMULATED COMPREHENSIVE STOCKHOLDERS' HENSIVE
Shares Amount CAPITAL COMPENSATION DEFICIT INCOME (LOSS) EQUITY LOSS
--------- ------- ----------- ------------ ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1998 9,358,207 $12,166 $44,377,193 ($1,111,018) ($17,207,993) $ 9,090 $26,079,438
Amortization of unearned
compensation 389,907 389,907
Issuance of compensatory
stock options 48,332 48,332
Sale of Common Stock under
employee stock purchase
plans and exercise of stock
options and warrants 204,063 265 852,384 852,649
Net loss (2,019,801) (2,019,801) ($2,019,801)
Change in unrealized gain on
marketable securities (56,745) (56,745) (56,745)
--------- ------- ----------- ------------ ------------- --------- ------------ ------------
Balance at September 30, 1999 9,562,270 $12,431 $45,277,909 ($ 721,111) ($19,227,794) ($47,655) $25,293,780 ($2,076,546)
========= ======= =========== ============ ============= ========= ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
-5-
<PAGE>
PROGENICS PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
Nine months ended September 30,
-------------------------------
1999 1998
Cash flows from operating activities: ------------- -------------
Net income............................... $ (2,019,801) $ 1,166,927
------------- -------------
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization.......... 467,194 264,857
Amortization of discounts, net of
premiums, on marketable securities.... 95,307 97,395
Net realized gain on sale of
marketable securities................. (36,996)
Amortization of discount on amount due
to joint venture...................... 39,207
Loss in joint venture.................. 1,893,687
Noncash expenses incurred in
connection with issuance of common
stock, stock options and warrants..... 438,239 512,597
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable........................... (1,999,427) (1,741,415)
(Increase) decrease in other current
assets............................... (30,501) (273,220)
(Increase) decrease in security
deposits............................. 10,706 (4,016)
Increase(decrease) in accounts payable
and accrued expenses.................. 585,084 (299,532)
Increase in investment in joint venture (696,753)
Decrease in income taxes payable...... (57,770)
------------- -------------
Total adjustments.............. 802,743 (1,538,100)
------------- -------------
Net cash (used in) operating
activities........................... (1,217,058) (371,173)
------------- -------------
Cash flows from investing activities:
Capital expenditures..................... (700,356) (355,125)
Sales of marketable securities........... 8,640,000 1,345,000
Purchase of marketable securities........ (9,178,776) (9,429,420)
------------- -------------
Net cash used in investing
activities........................... (1,239,132) (8,439,545)
------------- -------------
Cash flows from financing activities:
Proceeds from the exercise of stock
options and other adjustments to
stockholders' equity.................... 852,649 194,402
Payment of capital lease obligations..... (76,831) (78,671)
------------- -------------
Net cash provided by financing
activities.......................... 775,818 115,731
------------- -------------
Net decrease in cash and cash
equivalents......................... (1,680,372) (8,694,987)
------------- -------------
Cash and cash equivalents at beginning
of period............................... 14,437,263 21,737,925
------------- -------------
Cash and cash equivalents at end
of period........................... $ 12,756,891 $ 13,042,938
============= =============
Supplemental disclosure of noncash
investing and financing activities:
Fixed assets acquired with capital
leases.................................. $ 43,254 $ 99,138
============= =============
The accompanying notes are an integral part of these statements.
-6-
<PAGE>
PROGENICS PHARMACEUTICALS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Interim Financial Statements
The interim Condensed Financial Statements of Progenics Pharmaceuticals,
Inc. (the "Company") have been prepared in accordance with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all information and disclosures necessary for a presentation of the Company's
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. In the opinion of management, these
financial statements reflect all adjustments, consisting only of normal re-
curring accruals, necessary for a fair presentation of the Company's financial
position, results of operation and cash flows for such periods. The results of
operations for interim periods are not necessarily indicative of the results
for the full year. These financial statements should be read in conjunction
with the financial statements and notes thereto contained in the Company's
Annual
Report on Form 10-K for the fiscal year ended December 31, 1998.
2. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses as of September 30, 1999 and
December 31, 1998 consist of the following:
September 30, December 31,
1999 1998
------------- ------------
Accounts payable $2,056,957 $1,156,442
Accrued payroll and related costs 59,312 144,615
Legal and accounting fees payable 120,364 294,608
---------- ----------
$2,236,633 $1,595,665
========== ==========
3. Net Income (Loss) Per Share
The Company's basic net income (loss) per share amounts have been computed
by dividing net income (loss) by the weighted average number of common shares
outstanding during the respective periods. For the three months ended
September 30, 1999 and for the three and nine months ended September 30, 1998,
the Company reported net income and, therefore the calculation of diluted per
share amounts includes all common stock equivalents with exercise prices below
the average per share price of the Company's common stock for the respective
periods. For the nine months ended September 30, 1999, the Company reported a
net loss and, therefore, no common stock equivalents were included in the
computation of diluted per share amounts since such inclusion would have been
antidilutive.
The calculations of basic and diluted net income (loss) per share are as
follows:
Net Income
(loss) Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
1999:
Three months-ended September 30, 1999:
Basic: $1,496,964 9,429,496 $0.16
=====
Effect of Dilutive Securities:
Options 1,535,017
Warrants 211,233
----------
Diluted: $1,496,964 11,175,746 $0.13
========== =====
Nine months-ended September 30, 1999:
Basic and Diluted: ($2,019,801) 9,425,114 ($0.21)
=====
-7-
<PAGE>
Net Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
1998:
Three months-ended September 30, 1998:
Basic: $587,924 9,051,024 $0.06
=====
Effect of Dilutive Securities:
Options 1,437,320
Warrants 169,783
----------
Diluted: $587,924 10,658,127 $0.06
========== =====
Nine months-ended September 30, 1998:
Basic: $1,166,927 9,025,803 $0.13
=====
Effect of Dilutive Securities:
Options 1,621,541
Warrants 200,938
----------
Diluted: $1,166,927 10,848,282 $0.11
========== =====
Options and warrants which have been excluded from the diluted per share
amounts because their effect would have been antidilutive include the
following:
Three Months Ended September 30,
---------------------------------------------
1999 1998
--------------------- ---------------------
Wtd. Avg. Wtd. Avg.
Wtd. Avg. Exercise Wtd. Avg. Exercise
Number Price Number Price
--------- --------- --------- ---------
Options and warrants
with exercise prices
above the average fair
market value of the
Company's common stock
for the respective
periods 13,228 $18.76 204,791 $14.74
Nine Months Ended September 30,
---------------------------------------------
1999 1998
--------------------- ---------------------
Wtd. Avg. Wtd. Avg.
Wtd. Avg. Exercise Wtd. Avg. Exercise
Number Price Number Price
--------- --------- --------- ---------
Options and warrants
with exercise prices
below the average fair
market value of the
Company's common stock
for the respective
periods 3,117,093 $6.83
Options and warrants
with exercise prices
above the average fair
market value of the
Company's common stock
for the respective
periods 34,071 $16.49 14,000 $18.20
-8-
<PAGE>
4. Formation of PSMA Development Company LLC
On June 15, 1999, the Company and CYTOGEN Corporation ("CYTOGEN")
(collectively, the "Members") formed a joint venture in the form of a limited
liability company (the "LLC") for the purposes of conducting research,
development, manufacturing and marketing of products related to prostate-
specific membrane antigen ("PSMA"). In connection with the formation of the
LLC, the Members entered into a series of agreements, including an LLC
Agreement, a License Agreement and a Services Agreement (collectively, the
"Agreements"). Each Member made an initial capital contribution of $100,000.
In general, each Member has equal representation on the LLC's management
committee and equal voting rights and rights to profits and losses of the LLC.
Under the LLC Agreement, as long as the Company is a Member, the Company
is required to pay to the LLC $2.0 million in supplemental capital
contributions at certain defined dates or upon the achievement of defined
milestones by the LLC, $500,000 of which was paid during June 1999. Such
payments will, in turn, be paid by the LLC to CYTOGEN in consideration for
CYTOGEN granting to the LLC, under the License Agreement, an exclusive
worldwide license under certain patents and patent applications to make, use,
develop and sell products. During the nine months ended September 30, 1999,
the Company recognized its allocated share of the LLC's loss of approximately
$1.9 million, representing the present value of the $2.0 million payments in
connection with the LLC Agreement and the operating loss for the period ended
September 30, 1999. The discount on the investment in the LLC is being
amortized as interest expense over the term of the remaining payments.
The Company is engaged in a research program on behalf of the LLC under
the Services Agreement and will be compensated for its services based on
agreed upon terms. The Company is required to fund the cost of research up to
$3.0 million. During the quarter ended September 30,1999, the Company funded
approximately $97,000 of research costs. All inventions made by the Company
in connection with the Services Agreement will be assigned to the LLC for its
use and benefit.
The Agreements generally terminate upon the last to expire of the patents
granted by the Members to the LLC or upon breach by either party, which is not
cured within 60 days of written notice.
The Company accounts for its investment in the LLC in accordance with the
equity method of accounting. Selected operating statement data of the LLC for
the three and nine months ended September 30, 1999 are as follows:
Three Months Ended Nine Months Ended
September 30, 1999 September 30, 1999
------------------ ------------------
Total expenses $ 96,753 $1,893,687
---------- ------------
Net Loss ($ 96,753) ($1,893,687)
========== ============
-9-
<PAGE>
5. Development and License Agreement with Protein Design Labs, Inc.
Effective April 30, 1999, the Company and Protein Design Labs, Inc.
("PDL") entered into a Development and License Agreement (the "License
Agreement") under which PDL agreed to develop a humanized antibody (the
"Technology") on behalf of the Company and granted to the Company an exclusive
worldwide license under certain patents and patent applications to develop,
use and sell products arising from the Technology ("Products"). PDL also
granted to the Company non-exclusive licenses to PDL technical information, as
defined, and sublicenses to PDL licenses from third parties to the extent
necessary to enable the Company to make, use and sell Products. In addition,
in June 1999 the Company exercised its right under the License Agreement to
acquire an option to obtain a sublicense to certain additional patents and paid
PDL a fee in connection therewith.
Upon the achievement by PDL of certain performance-based milestones, as
defined, the Company is required to make non-refundable payments to PDL. The
Company is also required to pay royalties based on a percentage of net sales,
as defined, of all Products for a specified period and non-refundable annual
maintenance fees under certain conditions. During the nine months ended
September 30, 1999, the Company recognized an expense of $667,000 in connection
with the License Agreement.
The Company has the ability to terminate the License Agreement upon 60
days prior written notice. If terminated prior to payment of the second
milestone, the Company will reimburse PDL for costs and expenses to the date of
termination. Either party may terminate the License Agreement upon 10 or 30
days written notice of default in making scheduled payments or other breach,
respectively, that is not cured by the other party. Otherwise, the License
Agreement will continue until expiration of the Company's obligation to pay
royalties to PDL
-10-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10-Q constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act"). Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company, or industry results, to be
materially different from any expected future results, performance, or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: technological uncertainties
related to early stage product development, uncertainties associated with
preclinical and clinical testing, risks relating to corporate collaborations,
the lack of product revenue and the uncertainty of future profitability, the
need for additional financing and other factors set forth more fully in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998 and other filings with the Securities and Exchange Commission.
The following discussion should be read in conjunction with the Company's
Condensed Financial Statements and the related notes thereto.
General
Progenics is a biopharmaceutical company focusing on the development and
commercialization of innovative products for the treatment and prevention of
cancer and viral and other life-threatening diseases. The Company commenced
principal operations in late 1988 and since that time has been engaged
primarily in research and development efforts, development of its manufacturing
capabilities, establishment of corporate collaborations and raising capital.
In order to commercialize the principal products that the Company has under
development, the Company will need to address a number of technological
challenges and comply with comprehensive regulatory requirements. Accordingly,
it is not possible to predict the amount of funds that will be required or the
length of time that will pass before the Company receives revenues from sales
of any of these products. To date, product sales have consisted solely of
limited revenues from the sale of research reagents. The Company expects that
sales of research reagents in the future will not significantly increase over
current levels. The Company's other sources of revenues through September 30,
1999 have been payments received under its collaboration agreements, research
grants and contracts related to the Company's cancer and HIV programs and
interest income.
To date, a majority of the Company's expenditures have been for research
and development activities. The Company expects that its research and
development expenses will increase significantly as its programs progress and
the Company makes filings for related regulatory approvals. With the exception
of the years ended December 31, 1997 and 1998, the Company has had recurring
losses and had, at September 30, 1999, an accumulated deficit of approximately
$19,228,000. The Company has financed its operations primarily through the
private sale and issuance of equity securities, a line of credit that has since
been repaid and terminated, payments received under its collaboration with the
Bristol-Myers Squibb Company ("BMS") beginning in July 1997, payments received
under its collaboration with F. Hoffmann-La Roche Ltd and Hoffmann-La Roche,
Inc. ("Roche") beginning in January 1998, funding under research grants and
contracts, and the proceeds of the Company's initial public offering in
November 1997 and the proceeds from the exercise of outstanding options and
warrants. The Company will require additional funds to complete the
development of its products, to fund the cost of clinical trials, and to fund
operating losses that are expected to continue for the foreseeable future. The
Company does not expect its products under development to be commercialized in
the near future.
-11-
<PAGE>
Results of Operations
Three Months Ended September 30, 1999 and 1998
Contract research and development revenue increased to approximately
$5,028,000 for the three months ended September 30, 1999 from approximately
$3,070,000 for the three months ended September 30, 1998. The increase is
attributable to the receipt by the Company of a milestone payment during the
third quarter of 1999 pursuant to the Company's collaboration with BMS.
Revenues from research grants decreased to approximately $342,000 for the three
months ended September 30, 1999 from approximately $391,000 for the three
months ended September 30, 1998. The decrease resulted from the funding of
fewer grants in the third quarter of 1999. Product sales decreased to
approximately $1,000 for the three months ended September 30, 1999 from
approximately $74,000 for the three months ended September 30, 1998 resulting
from decreased orders for research reagents. Interest income decreased to
approximately $302,000 for the three months ended September 30, 1999 from
approximately $371,000 for the three months ended September 30, 1998 due to the
decrease in cash available for investing.
Research and development expenses increased to approximately $3,113,000
for the three months ended September 30, 1999 from approximately $2,143,000 for
the three months ended September 30, 1998. The increase was principally due to
the payment of license fees and the hiring of additional scientists as the
Company expanded its research and development programs in 1999 and the
additional costs in 1999 of conducting the Company's Phase III clinical trials,
as the number of patients enrolled in the trials increased significantly.
General and administrative expenses decreased to approximately $762,000
for the three months ended September 30, 1999 from approximately $940,000 for
the three months ended September 30, 1998. The decrease was principally due to
a decrease in legal expenses primarily related to licensing and financing
activities.
The Company recognized a loss in its joint venture with CYTOGEN of
approximately $97,000 for the three months ended September 30, 1999 as the
joint venture commenced research efforts on PSMA.
Interest expenses increased to approximately $41,000 for the three months
ended September 30, 1999 from approximately $13,000 for the three months ended
September 30, 1998. The increase was principally due to the recognition of
interest expense as the Company discounted future capital contributions to the
joint venture.
Depreciation and amortization expense increased to approximately $162,000
for the three months ended September 30, 1999 from approximately $135,000 for
the three months ended September 30, 1998. The increase was principally due to
the purchase of additional fixed assets and leasehold improvements that are
amortized over the life of the lease that expires in December 2000.
The Company's net income for the third quarter of fiscal 1999 was
approximately $1,497,000 compared to net income of approximately $588,000 for
the third quarter of fiscal 1998.
-12-
<PAGE>
Nine Months Ended September 30, 1999 and 1998
Contract research and development revenue increased to approximately
$9,888,000 for the nine months ended September 30, 1999 from approximately
$8,399,000 for the nine months ended September 30, 1998 as the Company received
larger milestone payments pursuant to the BMS agreement in 1999. Revenues from
research grants decreased to approximately $765,000 for the nine months ended
September 30, 1999 from approximately $971,000 for the nine months ended
September 30, 1998. The decrease resulted from the funding of fewer
grants in 1999. Sales of research reagents decreased to approximately
$35,000 for the nine months ended September 30, 1999 from approximately
$110,000 for the nine months ended September 30, 1998 as orders for such
reagents decreased. Interest income decreased to approximately $895,000 for
the nine months ended September 30, 1999 from approximately $1,098,000 for
the nine months ended September 30, 1998 due to the decrease in cash available
for investing.
Research and development expenses increased to approximately $8,433,000
for the nine months ended September 30, 1999 from approximately $6,054,000 for
the nine months ended September 30, 1998. The increase was principally due to
the payment of license fees and the hiring of new scientists as the Company
expanded its research and development programs in 1999 and the additional costs
in 1999 of conducting the Company's Phase III clinical trials, as the number of
patients enrolled in the trials increased significantly.
General and administrative expenses decreased to approximately $2,739,000
for the nine months ended September 30, 1999 from approximately $2,877,000 for
the nine months ended September 30, 1998. The decrease was principally due to
a decrease in legal fees partially offset by an increase due to the hiring of
additional administrative staff.
The Company recognized a loss in its joint venture with CYTOGEN of
approximately $1,894,000 for the nine months ended September 30, 1999 as the
joint venture expensed license fees.
Interest expense increased to approximately $69,000 for the nine months
ended September 30, 1999 from approximately $32,000 for the nine months ended
September 30, 1998. The increase was principally due to the recognition of
interest expense as the Company discounted future capital contributions to the
joint venture.
Depreciation and amortization expense increased to approximately $467,000
for the nine months ended September 30, 1999 from approximately $362,000 for
the nine months ended September 30, 1998. The increase was principally due to
the purchase of additional fixed assets and leasehold improvements that are
amortized over the life of the lease that expires in December 2000.
The Company's net loss for the nine months ended September 30, 1999 was
approximately $2,020,000 compared to net income of approximately $1,167,000 for
the nine months ended September 30, 1998.
-13-
<PAGE>
Liquidity and Capital Resources
The Company has funded its operations since inception primarily through
private placements of equity securities, loans that were subsequently converted
into equity securities, a line of credit that was repaid and terminated,
payments received under collaboration agreements including those with BMS and
Roche, an initial public offering, funding under research grants and contracts,
interest on investments, and the proceeds from the exercise of outstanding
options and warrants.
At September 30, 1999, the Company had cash, cash equivalents and
marketable securities, including non-current portion, totaling approximately
$23,356,000 compared with approximately $24,650,000 at December 31, 1998. The
Company's facility lease has been extended to December 2000. In connection with
the extended facility lease, the Company expended approximately $1.5 million for
equipment and leasehold improvements during the period from January 1, 1998 to
September 30, 1999 and expects that an additional $100,000 will be spent to
enhance its manufacturing capabilities for clinical trials during the remainder
of 1999. In addition, the Company is obligated, under the terms of the joint
venture with CYTOGEN, to contribute an additional $1.5 million in license fees
through December 31, 2001 and to fund research and development of up to $3.0
million.
The Company believes that its present capital resources should be
sufficient to fund operations at least through the end of 2000, based on the
Company's current operating plan. No assurance can be given that there will be
no change that would consume the Company's liquid assets before such time. The
Company will require substantial funds to conduct research and development
activities, preclinical studies, clinical trials and other activities relating
to the commercialization of any potential products. In addition, the Company's
cash requirements may vary materially from those now planned because of results
of research and development and product testing, potential relationships with
in-licensors and collaborators, changes in the focus and direction of the
Company's research and development programs, competitive and technological
advances, the cost of filing, prosecuting, defending and enforcing patent
claims, the regulatory approval process, manufacturing and marketing and other
costs associated with the commercialization of products following receipt of
regulatory approvals and other factors. The Company has no committed external
sources of capital and, as discussed above, expects no significant product
revenues for a number of years as it will take at least that much time to bring
the Company's products to the commercial marketing stage. The Company may seek
additional financing, such as through future offerings of equity or debt
securities or agreements with corporate partners and collaborators with respect
to the development of the Company's technology, to fund future operations.
There can be no assurance, however, that the Company will be able to obtain
additional funds on acceptable terms, if at all.
-14-
<PAGE>
Year 2000 Compliance
The "Year 2000" problem relates to many currently installed computers
and software as well as other equipment that relies on embedded computer
technology. If these systems are not capable of distinguishing 21st century
dates from 20th century dates they will experience operating difficulties
subsequent to December 31, 1999 unless they are modified, upgraded, or replaced
to adequately process information involving, related to or dependent upon the
century change. If a system used by the Company or a third party dealing with
the Company fails because of the inability of the system to properly read a
21st century date, the results could have a material adverse effect on the
Company. The Company recognizes the need to ensure its operations will not be
adversely impacted by Year 2000 systems failures. A team of Company personnel
has reviewed the Company's internal infrastructure and identified substantially
all of the major systems, including both information technology systems and
non-IT systems that utilize embedded technology, used in connection with its
internal operations. The Company believes that it has identified and corrected
any potential Year 2000 problems by modifying, upgrading, or replacing the
necessary hardware and software in these major systems. The Company can
provide no assurances, however, that it has identified all Year 2000 non-
compliant business systems on which it relies or that it has adequately
remediated non-compliant systems that it has identified.
Costs incurred to date to correct Year 2000 problems have been immaterial.
While the Company continues to monitor its systems for Year 2000 problems, it
believes the cost to complete any additional modifications, upgrades or
replacements of any affected systems will not have a material impact on the
Company's business or results of operations. This cost estimate is a forward-
looking statement, is based on the Company's current analysis and may be
revised, if necessary, if additional Year 2000 problems are identified. The
Company also recognizes the risk that suppliers of products and services and
collaborators with whom the Company transacts business may not comply with Year
2000 requirements. The Company has had communications with its significant
suppliers to determine the extent of these third parties' Year 2000 compliance
status. The review is ongoing and the Company is unable to determine, at this
time, the probability that any material supplier or any of its collaborators
will not be able to correct any Year 2000 problem in a timely manner. In the
event any such third parties cannot provide the Company with products or
services or cannot continue collaborations with the Company, the Company's
results of operations could be materially adversely affected. Based on the
above, the Company has yet to develop a comprehensive contingency plan with
respect to the Year 2000 problem. The Company will continue to monitor its own
systems and, to the extent possible, evaluate the systems of its third party
suppliers. However, if the Company identifies significant risks related to the
Year 2000 compliance or progress deviates from anticipated timelines, the
Company will develop contingency plans as deemed necessary at that time.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
At September 30, 1999, the Company did not hold any market risk sensitive
instruments.
-15-
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.5 Amended and Restated 1996 Stock Incentive Plan
27 - Financial Data Schedule
(b) Reports on Form 8-K
During the quarter ended September 30, 1999, the Company did not file a
report on Form 8-K.
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.
PROGENICS PHARMACEUTICALS, INC.
Date: November 13, 1999 by /s/ Robert A. McKinney
-----------------------------
Robert A. McKinney
Vice President
(Duly authorized officer of
the Registrant and
Principal Financial
and Accounting Officer)
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<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- ----------------------------------------------
10.5 Amended and Restated 1996 Stock Incentive Plan
27 Financial Data Schedule
-17-
<PAGE>
Exhibit 10.5
PROGENICS PHARMACEUTICALS, INC.
AMENDED AND RESTATED 1996 STOCK INCENTIVE PLAN
(including amendments through June 24, 1999)
1. PURPOSE OF THE PLAN
The purpose of the Progenics Pharmaceuticals, Inc. Amended and Restated
1996 Stock Incentive Plan is to promote the interests of the Company and its
shareholders by strengthening the Company's ability to attract, motivate and
retain employees, directors, advisors and consultants of the Company, and to
provide a means to encourage stock ownership and a proprietary interest in
the Company by the employees, directors consultants and advisors to the
Company upon whose judgment, initiative, and efforts the financial success
and growth of the business of the Company largely depend.
2. DEFINITIONS
(a) "Award" means an award of an Option, Restricted Stock, Stock
Appreciation Right, Performance Award or Phantom Stock granted under the
Plan.
(b) "Award Agreement" means an agreement entered into between the Company
and a Participant setting forth the terms and conditions of an Award granted
to a Participant.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Compensation Committee of the Board, or such
other members of the Board appointed by the Board to administer the Plan from
time to time.
(f) "Common Stock" means the $0.0013 par value common stock of the
Company.
(g) "Company" means Progenics Pharmaceuticals, Inc., a Delaware
corporation.
(h) "Date of Grant" means the date on which an Award under the Plan is made
by the Committee, or such later date as the Committee may specify that the
Award becomes effective.
(i) "Disability" means a "permanent and total disability" within the
meaning of Section 22(e)(3) of the Code.
(j) "Eligible Person" means an Employee, director, advisor or consultant
of the Company or any of its Subsidiaries, including all non employee
directors of the Company.
(k) "Employee" means any person who is an employee of the Company or of
any of its Subsidiaries.
(l) "Fair Market Value" means the last reported sales prices of the Common
Stock on the Nasdaq National Market on the date as of which fair market value
is to be determined or, in the absence of any reported sales of Common Stock
on such date, on the first preceding date on which any such sale shall have
been reported. If Common Stock is not listed on the Nasdaq National Market
on the date as of which fair market value is to be determined, the Committee
shall determine in good faith the fair market value in whatever manner it
considers appropriate.
<PAGE>
(m) "Incentive Stock Option" means an option to purchase Common Stock that
is intended to qualify under section 422 of the Code and the Treasury
Regulations thereunder.
(n) "Nonqualified Stock Option" means an option to purchase Common Stock
that is not an Incentive Stock Option.
(o) "Option" means an Incentive Stock Option or a Nonqualified Stock
Option granted under Section 6 hereof.
(p) "Participant" means any Eligible Person who has received an Award
under the Plan.
(q) "Phantom Stock" means an Award under Section 10 hereof entitling a
Participant to a payment at the end of a vesting period of a unit value based
on the Fair Market Value of a share of Common Stock.
(r) "Plan" means the Amended 1996 Stock Incentive Plan as set forth
herein, as it may be amended from time to time.
(s) "Performance Award" means an Award made under Section 9 hereof
entitling a Participant to a payment based on the value of Common Stock (a
"Performance Share") or based on specified dollar units (a "Performance
Unit") at the end of a performance period if certain conditions as may be
established by the Committee are satisfied.
(t) "Restricted Stock" means an Award under Section 8 hereof entitling a
Participant to shares of Common Stock that are nontransferable and subject to
forfeiture until specific conditions established by the Committee are
satisfied.
(u) "Stock Appreciation Right" or "SAR" means an Award under Section 7
hereof entitling a Participant to receive an amount, representing the
difference between the base price per share of the right and the Fair Market
Value of a share of Common Stock on the date of exercise.
(v) "Subsidiary" means any affiliate of the Company, as determined by the
Committee from time to time; PROVIDED, HOWEVER that with respect to Incentive
Stock Options, "Subsidiary" means a "subsidiary corporation" within the
meaning of section 424(f) of the Code.
3. SHARES OF COMMON STOCK SUBJECT TO THE PLAN
3.1 NUMBER OF SHARES. Subject to the following provisions of this Section
3, the aggregate number of shares of Common Stock that may be issued or
transferred or exercised pursuant to Awards under the Plan is 2,000,000
shares of Common Stock. The shares of Common Stock to be delivered under the
Plan will be made available, at the discretion of the Board or the Committee,
either from authorized but unissued shares of Common Stock or from shares of
Common Stock held in the Company's treasury. If any share of Common Stock
that is the subject of an Award is not issued or transferred and ceases to be
issuable or transferable for any reason, such share of Common Stock will no
longer be charged against such maximum share limitation and may again be made
subject to Awards under the Plan.
3.2 ADJUSTMENTS. If there shall occur any recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
distribution with respect to the shares of Common Stock, or any similar
corporate transaction or event in respect of the Common Stock, then the
Committee shall, in the manner and to the extent that it deems appropriate
and equitable to the Participants and consistent with the terms of this Plan,
cause a proportionate adjustment to be made in (i) the maximum number and
kind of shares provided in Section 3.1 hereof, (ii) the number and kind of
shares, units, or other
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<PAGE>
securities subject to the then outstanding Awards, and (iii) the price for
each share or unit or other right subject to then outstanding Awards without
change in the aggregate purchase price or value as to which such Awards
remain exercisable or subject to restrictions; (iv) the performance targets
or goals appropriate to any other outstanding Performance Awards, or (v) any
other terms that are affected by the event.
4. ADMINISTRATION OF THE PLAN
4.1 COMMITTEE MEMBERS. The Plan will be administered by the Committee
which, to the extent deemed necessary or appropriate by the Board, will
consist of two or more persons who satisfy the requirements for a
"nonemployee director" under Rule 16b-3 promulgated under the Securities
Exchange Act of 1934. The Committee has and may exercise such powers and
authority of the Board as may be necessary or appropriate for the Committee
to carry out its functions as described in the Plan. No member of the Board
nor the Committee will be liable for any action or determination made in good
faith by the Board or the Committee with respect to the Plan or any Award
under it.
4.2 DISCRETIONARY AUTHORITY. Subject to the express limitation of the
Plan, the Committee has authority in its discretion to determine the Eligible
Persons to whom, and the time or times at which, Awards may be granted, the
number of shares, units or other rights subject to each Award, the exercise,
base or purchase price of an Award (if any), the time or times at which an
Award will become vested, exercisable or payable and the duration of the
Award. The Committee also has discretionary authority to interpret the Plan,
to make all factual determinations under the Plan, and to determine the terms
and provisions of the respective Award Agreements and to make all other
determinations necessary or advisable for Plan administration. The Committee
has authority to prescribe, amend, and rescind rules and regulations relating
to the Plan. All interpretations, determinations, and actions by the
Committee will be final, conclusive, and binding upon all parties. The
Committee may delegate to the officers of the Company the authority to award
option grants under the Plan to Eligible Persons, any such delegation to be
subject to such restrictions or limitations as the Committee may from time to
time require.
4.3 CHANGES TO AWARDS. The Committee shall have the authority to effect,
at any time and from time to time, with the consent of the affected
Participants, (i) the cancellation of any or all outstanding Awards and the
grant in substitution therefor of new Awards covering the same or different
numbers of shares of Common Stock and having an exercise or base price which
may be the same as or different than the exercise or base price of the
cancelled Awards or (ii) the amendment of the terms of any and all
outstanding Awards. The Committee may in its discretion accelerate the
vesting or exercisability of an Award at any time.
4.4 DELEGATION OF AUTHORITY. The Committee shall have authority to
delegate to one or more officers of the Company designated by the Committee
the authority to grant Awards under the Plan, subject to such conditions,
limitations or restrictions as the Committee shall specify.
5. ELIGIBILITY AND AWARDS
All Eligible Persons are eligible to be designated by the Committee to
receive an Award under the Plan. The Committee has authority, in its sole
discretion, to determine and designate from time to time those Eligible
Persons who are to be granted Awards, and the type and amount of Award to be
granted. Each Award will be evidenced by an Award Agreement as described in
Section 11 hereof between the Company and the Participant that may include
any terms and conditions consistent with the Plan as the Committee may
determine.
6. STOCK OPTIONS
6.1 GRANT OF OPTION; EXERCISE PRICE. An Option may be granted to any
Eligible Person selected by the Committee; PROVIDED, HOWEVER, that only
Employees meeting the requirements of Treasury Regulation Section 1.421-7(h)
shall be eligible for Awards of Incentive Stock Options. Each Option shall
be designated, at the discretion of the Committee, as an Incentive Stock
Option or a Nonqualified Stock Option. The exercise price of the Option
shall be determined by the Committee; PROVIDED, HOWEVER, that the exercise
price of an Incentive Stock Option shall not be less than 100 percent of the
Fair Market Value of the Common Stock subject to the Option on the Date of
Grant.
3
<PAGE>
6.2 VESTING; TERM OF OPTION. The Committee, in its sole discretion, shall
prescribe in the Award Agreement for a Participant the time or times at
which, or the conditions upon which, an Option or portion thereof shall
become vested and exercisable, and may accelerate the exercisability of any
Option at any time. An Option may become vested and exercisable upon a
Participant's retirement, death, Disability or other event to the extent
provided in an Award Agreement. The period during which a vested Option may
be exercised shall be ten years from the Date of Grant, unless a shorter
exercise period is specified by the Committee in an Award Agreement.
6.3 OPTION EXERCISE; WITHHOLDING. An Option may be exercised in whole or
in part at any time, with respect to whole shares only, within the period
permitted for the exercise thereof, and shall be exercised by written notice
of intent to exercise the Option with respect to a specified number of shares
delivered to the Company at its principal office, and payment in full to the
Company at said office of the amount of the exercise price for the number of
shares of the Common Stock with respect to which the Option is then being
exercised. Payment of the exercise price shall be made (i) in cash or by
cash equivalent, (ii) at the discretion of the Committee, in Common Stock
(not subject to limitations on transfer) valued at the Fair Market Value of
such shares on the trading date immediately preceding the date of exercise or
(iii) at the discretion of the Committee, by a combination of such cash and
such Common Stock. In addition to and at the time of payment of the exercise
price, the Participant shall pay to the Company in cash or, at the discretion
of the Committee, in Common Stock the full amount of all applicable income
tax and employment tax amounts required to be withheld in connection with
such exercise.
6.4 LIMITED TRANSFERABILITY. Solely to the extent permitted by the
Committee in an Award Agreement, a Nonqualified Stock Option (but not an
Incentive Stock Option) may be transferred to members of the Participant's
immediate family, charitable institutions, or trusts or partnerships whose
beneficiaries are any of the foregoing, and/or to such other persons or
entities as may be approved by the Committee, in each case subject to the
condition that the Committee be satisfied that such transfer is being made
for estate or tax planning purposes or for gratuitous or donative purposes,
without consideration (other than nominal consideration) being receive
therefore.
6.5 ADDITIONAL RULES FOR INCENTIVE STOCK OPTIONS.
(a) ANNUAL LIMITS. No Incentive Stock Option shall be granted to a
Participant as a result of which the aggregate fair market value (determined
as of the Date of Grant) of the stock with respect to which incentive stock
options are exercisable for the first time in any calendar year under the
Plan, and any other stock option plans of the Company, any Subsidiary or any
parent corporation, would exceed $100,000, determined in accordance with
section 422(d) of the Code. This limitation shall be applied by taking
options into account in the order in which granted.
(b) TERMINATION OF EMPLOYMENT. Any Incentive Stock Option granted under
the Plan shall be subject to such limitations on the period of exercise
following termination of employment, including such special rules relating to
death and Disability, as shall be determined by the Committee to be
consistent with section 422 of the Code and Treasury Regulations thereunder
and set forth in the applicable Award Agreement.
(c) TEN-PERCENT OWNERS. Notwithstanding any other provisions of this Plan
to the contrary, in the case of an Incentive Stock Option granted to an
Employee who, at the time an Incentive Stock Options is granted, owns stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company, its parent, if any, or any Subsidiary, as
determined under sections 422(b)(6) and 424(d) of the Code, (i) the period
during which any such Incentive Stock Option may be exercised shall not be
greater than five years from the Date of Grant and (ii) the exercise price of
such Incentive Stock Option shall not be less than 110 percent of the Fair
Market Value of a share of Common Stock on the Date of Grant.
4
<PAGE>
(d) DISQUALIFYING DISPOSITIONS. If shares of Common Stock acquired by
exercise of an Incentive Stock Option are disposed of within two years
following the Date of Grant or one year following the transfer of such shares
to the Participant upon exercise, the Participant shall, promptly following
such disposition, notify the Company in writing of the date and terms of such
disposition and provide such other information regarding the disposition as
the Committee may reasonably require.
(e) OTHER TERMS AND CONDITIONS; NONTRANSFERABILITY. Any Incentive Stock
Option granted hereunder shall contain such additional terms and conditions,
not inconsistent with the terms of this Plan, as are deemed necessary or
desirable by the Committee, which terms, together with the terms of this
Plan, shall be intended and interpreted to cause such Incentive Stock Option
to qualify as an "incentive stock option" under Section 422 of the Code.
Such terms shall include limitations on the period of exercise of the
Incentive Stock Option following termination of employment consistent with
Section 422 of the Code. An Incentive Stock Option shall by its terms be
nontransferable otherwise than by will or by the laws of descent and
distribution, and shall be exercisable, during the lifetime of a Participant
only by such Participant.
7. STOCK APPRECIATION RIGHTS
7.1 GRANT OF SARS. A Stock Appreciation Right granted to a Participant is
an Award in the form of a right to receive, upon surrender of the right, but
without other payment, an amount based on appreciation in the value of the
Common Stock over a base price established for the Award, payable in cash,
Common Stock or such other form or combination of forms of payout,
exercisable at such time or times and upon conditions as may be approved by
the Committee.
7.2 TANDEM SARS. A Stock Appreciation Right may be granted in connection
with an Option, either at the time of grant or at any time thereafter during
the term of the Option. An SAR granted in connection with an Option will
entitle the holder, upon exercise, to surrender such Option or any portion
thereof to the extent unexercised, with respect to the number of shares as to
which such SAR is exercised, and to receive payment of an amount computed as
described below. Such Option will, to the extent and when surrendered, cease
to be exercisable. An SAR granted in connection with an Option hereunder
will be exercisable at such time or times, and only to the extent, that a
related Option is exercisable, and will expire no later than the related
Option expires. Upon the exercise of an SAR granted in connection with an
Option, the holder will be entitled to receive payment of an amount
determined by multiplying: (i) the difference between the exercise price of
a share of Common Stock specified in the related Option and the Fair Market
Value of a share of Common Stock on the date of exercise of such SAR, by (ii)
the number of shares as to which such SAR will have been exercised.
7.3 FREESTANDING SARS. A Stock Appreciation Right may be granted without
relationship to an Option and, in such case, will be exercisable as
determined by the Committee, but in no event after 10 years from the Date of
Grant. The base price of an SAR granted without relationship to an Option
shall be determined by the Committee in its sole discretion. An SAR granted
without relationship to an Option will entitle the holder, upon exercise of
the SAR, to receive payment of an amount determined by multiplying: (i) the
difference between the base price of the SAR and the Fair Market Value of a
share of Common Stock on the date of exercise of such SAR, by (ii) the number
of shares as to which such SAR will have been exercised.
7.4 PAYMENT OF SARS. Payment of the amount determined under Section 7.2
or 7.3 hereof may be made, in the discretion of the Committee, in cash, in
shares of Common Stock valued at their Fair Market Value on the date of
exercise or in a combination of cash and shares of Common Stock.
5
<PAGE>
8. RESTRICTED STOCK
8.1 GRANTS OF RESTRICTED STOCK. An award of Restricted Stock to a
Participant represents shares of Common Stock that are issued subject to
restrictions on transfer and such other restrictions on incidents of
ownership and forfeiture conditions as the Committee may determine. The
restrictions imposed upon Restricted Stock will lapse in accordance with a
schedule or other conditions as determined by the Committee. The Committee
may, in connection with an award of Restricted Stock, require the payment of
a specified purchase price.
8.2 RESTRICTIONS. Shares of Restricted Stock may not be transferred,
assigned or subject to any encumbrance, pledge or charge until all applicable
restrictions are removed or expire or unless otherwise allowed by the
Committee. The Committee may require the Participant to enter into an escrow
agreement providing that the certificates representing Restricted Stock
granted or sold pursuant to the Plan will remain in the physical custody of
an escrow holder until all restrictions are removed or expire. Each
certificate representing Restricted Stock granted pursuant to the Plan will
bear a legend making appropriate reference to the restrictions imposed. The
Committee may impose such conditions on any shares of Restricted Stock as it
may deem advisable, including, without limitation, restrictions under the
Securities Act of 1933, as amended, under the requirements of any stock
exchange upon which such shares of the same class are then listed, and under
any blue sky or other securities laws applicable to such shares.
8.3 RIGHTS AS STOCKHOLDER. Subject to the foregoing provisions of this
Section 8 and the applicable Award Agreement, Section 8.1 hereof, the holder
will have all rights of a shareholder with respect to shares of Restricted
Stock granted to him or her, including the right to vote the shares and
receive all dividends and other distributions paid or made with respect
thereto, unless the Committee determines otherwise at the time the Restricted
Stock is granted.
8.4 SECTION 83(B) ELECTION. If a Participant makes an election pursuant
to section 83(b) of the Code, the Participant shall be required to promptly
file a copy of such election with the Company.
9. PERFORMANCE AWARDS
9.1 GRANT OF PERFORMANCE AWARDS. The Committee may grant Performance
Awards, which shall be denominated on the Date of Grant either in shares of
Common Stock (Performance Shares) or in specified dollar units (Performance
Units). At the time of a Performance Award grant, the Committee shall
determine, in its sole discretion, one or more performance periods and
performance goals to be achieved during the applicable performance periods,
as well as such other restrictions and conditions as the Committee deems
appropriate. In the case of Performance Units, the Committee shall also
determine a target unit value or a range of unit values for each Award. No
performance period shall exceed ten years from the date of the grant. The
performance goals applicable to a Performance Award grant may be subject to
such later revisions as the Committee shall deem appropriate to reflect
significant unforeseen events such as changes in law, accounting practices or
unusual or nonrecurring items or occurrences.
9.2 PAYMENT OF PERFORMANCE AWARDS. At the end of the performance period,
the Committee shall determine the extent to which performance goals have been
attained or a degree of achievement between maximum and minimum levels in
order to establish the level of payment to be made, if any, and shall
determine if payment is to be made in the form of cash or Common Stock
(valued at its Fair Market Value at the time of payment) or a combination of
cash and Common Stock. In the case of Performance Shares, the Committee may
provide that during a performance period a Participant shall be paid with
respect to each Performance Share a cash amount in the same amount and at the
same time as a dividend is paid on a share of Common Stock.
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10. PHANTOM STOCK
10.1 GRANT OF PHANTOM STOCK. Phantom Stock is an Award to a Participant of
a number of hypothetical share units with respect to shares of Common Stock,
with an initial value based on the Fair Market Value of the Common Stock on
the Date of Grant. Phantom Stock shall be subject to such restrictions and
conditions as the Committee shall determine. On the Date of Grant, the
Committee shall determine, in its sole discretion, the vesting period of the
Phantom Stock and the maximum value of the Phantom Stock, if any. No vesting
period shall exceed 10 years from the date of the grant.
10.2 PAYMENT OF PHANTOM STOCK. At the end of the vesting period applicable
to Phantom Stock granted to a Participant, a cash amount equivalent in value
to the Fair Market Value of one share of Common Stock on the last day of the
vesting period, subject to any maximum value determined by the Committee at
the time of grant, shall be paid with respect to each such Phantom Stock unit
to the Participant. The Committee may provide that during the vesting period
a Participant shall be paid with respect to each Phantom Stock unit, cash
amounts in the same amount and at the same time as a dividend on a share of
Common Stock.
11. AWARD AGREEMENTS
11.1 FORM OF AGREEMENT. Each Award under this Plan shall be evidenced by
an Award Agreement in a form approved by the Committee setting forth the
number of shares of Common Stock, units or other rights (as applicable)
subject to the Award, the exercise, base or purchase price (if any) of the
Award, the time or times at which an Award will become vested, exercisable or
payable, the duration of the Award and, in the case of Performance Awards,
the applicable performance goals. The Award Agreement shall also set forth
other material terms and conditions applicable to the Award as determined by
the Committee consistent with the limitations of this Plan.
11.2 TERMINATION OF EMPLOYMENT. The Award Agreements may include
provisions describing the treatment of an Award in the event of the
retirement, disability, death or other termination of a Participant's
employment with or other services to the Company, including any provisions
relating to the vesting, exercisability, acceleration, forfeiture or
cancellation of the Award in these circumstances, including such provisions
as required for Incentive Stock Options pursuant to Section 6.4(b) thereof.
11.3 CONTRACT RIGHTS. Any obligation of the Company to any Participant
with respect to an Award shall be based solely upon contractual obligations
created by this Plan and an Award Agreement. No Award shall be enforceable
until the Award Agreement or a receipt has been signed by the Participant and
on behalf of the Company by its authorized representative. By executing the
Award Agreement or receipt, a Participant shall be deemed to have accepted
and consented to the terms of this Plan and any action taken in good faith
under this Plan by and within the discretion of the Committee, the Board of
Directors of their delegates.
12. EFFECTIVE DATE, TERMINATION AND AMENDMENT
12.1 EFFECTIVE DATE. The Plan shall become effective on the date of its
adoption by the Board; PROVIDED, HOWEVER, that no Incentive Stock Option
shall be exercisable by a Participant unless and until the Plan shall have
been approved by the stockholders of the Company, which approval shall be
obtained within 12 months before or after the adoption of the Plan by the
Board.
12.2 TERMINATION. The Plan shall terminate on the date immediately
preceding the tenth anniversary of the earlier of the date the Plan is
adopted by the Board or the date the Plan is approved by the Company's
stockholders. The Board may, in its sole discretion and at any earlier date,
terminate the Plan. Notwithstanding the foregoing, no termination of the
Plan shall in any manner affect any
7
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Award theretofore granted without the consent of the Participant or the
permitted transferee of the Award.
12.3 AMENDMENT. The Board may at any time and from time to time and in any
respect, amend or modify the Plan; PROVIDED, HOWEVER, that no amendment or
modification of the Plan shall in any manner affect any Award theretofore
granted without the consent of the Participant or the permitted transferee of
the Award.
13. GENERAL PROVISIONS
13.1 ASSIGNMENT AND TRANSFER. Except as provided in Section 6.3 hereof,
Awards under the Plan shall not be assignable nor transferable, except by
will or by the laws of descent and distribution, and during the lifetime of a
Participant the Award shall be exercised only by such Participant or by his
or her guardian or legal representative.
13.2 RIGHTS AS STOCKHOLDER. A Participant shall have no rights as a holder
of Common Stock with respect to any unissued securities covered by an Award
until the date the Participant becomes the holder of record of these
securities. Except as provided in Section 3.2 hereof, no adjustment or other
provision shall be made for dividends or other stockholder rights, except to
the extent that the Award Agreement provides for dividend payments or similar
economic benefits.
13.3 EMPLOYMENT. Nothing in the Plan, in the grant of any Award or in any
Award Agreement shall confer upon any Eligible Person the right to continue
in the capacity in which he is employed by or otherwise serves the Company or
any Subsidiary.
13.4 SECURITIES LAWS. No shares of Common Stock will be issued or
transferred pursuant to an Award unless and until all then applicable
requirements imposed by federal and state securities and other laws, rules
and regulations and by any regulatory agencies having jurisdiction, and by
any stock exchanges upon which the Common Stock may be listed, have been
fully met. As a condition precedent to the issuance of shares pursuant to the
grant or exercise of an Award, the Company may require the Participant to
take any reasonable action to meet such requirements.
13.5 TAX WITHHOLDING. The Participant shall be responsible for payment of
any taxes or similar charges required by law to be withheld from an Award or
an amount paid in satisfaction of an Award and these obligations shall be
paid by the Participant on or prior to the payment of the Award. The Award
Agreement shall specify the manner in which the withholding obligation shall
be satisfied with respect to the particular type of Award.
13.6 OTHER COMPENSATION AND BENEFIT PLANS. The adoption of the Plan shall
not affect any other stock incentive or other compensation plans in effect
for the Company or any Subsidiary, nor shall the Plan preclude the Company
from establishing any other forms of stock incentive or other compensation
for employees of the Company or any Subsidiary. The amount of any
compensation deemed to be received by Participant pursuant to an Award shall
not constitute compensation with respect to which any other employee benefits
of such Participant are determined, including, without limitation, benefits
under any bonus, pension, profit sharing, life insurance or salary
continuation plan, except as otherwise specifically provided by the terms of
such plan.
13.7 PLAN BINDING ON SUCCESSORS. The Plan shall be binding upon the
Company, its successors and assigns, and the Participant, his executor,
administrator and permitted transferees.
13.8 CONSTRUCTION AND INTERPRETATION. Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun shall include
the feminine gender. Headings of Articles and Sections hereof are inserted
for convenience and reference and constitute no part of the Plan.
8
<PAGE>
13.9 SEVERABILITY. If any provision of the Plan or any Award Agreement
shall be determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable
and enforceable in accordance with their terms, and all provisions shall
remain enforceable in any other jurisdiction.
13.10 GOVERNING LAW. The validity and construction of this Plan and of
the Award Agreements shall be governed by the laws of the State of Delaware.
This Progenics Pharmaceuticals, Inc. Amended 1996 Stock Incentive
Plan was duly adopted and approved by the Board of Directors of this
Progenics Pharmaceuticals, Inc. on the 2nd day of October, 1996.
/s/ ROBERT A. MCKINNEY
--------------------------------------------
Secretary of Progenics Pharmaceuticals, Inc.
This Progenics Pharmaceuticals, Inc. Amended 1996 Stock Incentive Plan
was duly approved by the stockholders of this Progenics Pharmaceuticals, Inc.
on the 2nd day of October, 1996.
/s/ ROBERT A. MCKINNEY
--------------------------------------------
Secretary of Progenics Pharmaceuticals, Inc.
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Financial Statements of Progenics Pharmaceuticals, Inc. at September 30, 1999
and is qualified in its entirety by reference to such Financial
Statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 12,756,891
<SECURITIES> 10,599,600
<RECEIVABLES> 4,003,748
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 24,839,506
<PP&E> 3,194,741
<DEPRECIATION> 1,860,306
<TOTAL-ASSETS> 29,014,235
<CURRENT-LIABILITIES> 2,836,261
<BONDS> 0
0
0
<COMMON> 12,431
<OTHER-SE> 25,281,349
<TOTAL-LIABILITY-AND-EQUITY> 29,014,235
<SALES> 35,315
<TOTAL-REVENUES> 11,582,740
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 13,533,083
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 69,458
<INCOME-PRETAX> (2,019,801)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,019,801)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,019,801)
<EPS-BASIC> (.21)
<EPS-DILUTED> (.21)
</TABLE>
