SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter ended July 31, 1996 Commission File Number 0-19122
APHTON CORPORATION
(Exact name of registrant as specified in its charter)
California 95-3640931
(State or other jurisdiction of I.R.S. Employer Identification No.)
incorporation or organization)
PO BOX 1049, Woodland, CA 95776
(address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (916)666-5226
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 14 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 __
The number of shares of Common Stock
outstanding as of the close of
business on July 31, 1996:
Class Number of
Shares outstanding
Common Stock, no par value 12,913,149
APHTON CORPORATION
Index
Page
Part I - Financial Information 3
Item 1. Financial Statements:
Balance Sheets - July 31, 1996 and April 30, 1996 3
Statements of Operations - Three months ended
July 31, 1996 and 1995 4
Statements of Stockholders' Equity - Three months ended
July 31, 1996 and the year ended April 30, 1996 4
Statements of Cash Flows - Three months ended July 31, 1996
and 1995 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
Part II - Other Information
Item 1. Legal Proceedings 7
Item 2. Changes in Securities 7
Item 3. Defaults Upon Senior Securities 7
Item 4. Submission of Matters to a Vote of Security Holders 7
Item 5. Other Information 7
Item 6. Exhibits and Reports on Form 8-K 7
Signature Page 7
APHTON CORPORATION
Part I - Financial Information
The financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the financial statements
include all adjustments necessary to present fairly the financial position of
the Company as of July 31, 1996 and April 30, 1996 and the results of its
operations and its cash flows for the three months ended July 31, 1996 and 1995.
It is suggested that these financial statements be read in conjunction with the
financial statements and the notes thereto included in the Company's latest
annual report on Form 10-K.
APHTON CORPORATION
Balance Sheets - July 31, 1996 and April 30, 1996
July 31, April 30,
1996 1996
Assets
Cash and short-term cash investments $6,964,483 $8,169,368
Other assets 234,599 184,837
------------ ------------
Total assets $7,199,082 $8,354,205
========== ==========
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and other $ 1,538,078 $ 1,312,784
----------- -----------
Total liabilities 1,538,078 1,312,784
------------ ------------
Commitment
Stockholders' Equity:
Common stock, no par value -
Authorized: 20,000,000 shares
Issued and outstanding:12,913,149
shares at July 31, 1996 and
12,911,149 at April 30, 1996 26,665,091 26,664,591
Purchase warrants 147,004 147,004
Accumulated deficit (21,151,091) (19,770,174)
------------ ------------
Total stockholders' equity 5,661,004 7,041,421
------------- ------------
Total liabilities and stockholders' equity $7,199,082 $8,354,205
========== ==========
APHTON CORPORATION
Statements of operations
for the three months ended July 31, 1996 and 1995
Three Months Ended
July 31,
1996 1995
Revenue:
Dividend, interest and other income $74,898 $115,573
------- --------
Total 74,898 115,573
-------- ---------
Costs and Expenses:
Research and development expense 1,275,294 967,179
General and administrative expense 180,521 151,908
--------- --------
Total costs and expenses 1,455,815 1,119,087
--------- ---------
Net loss $(1,380,917) $(1,003,514)
=========== ===========
Net loss per common share $(0.11) $(0.08)
======= =======
Weighted average number of common
shares outstanding 12,912,482 12,379,049
========== ==========
Statements of stockholders' equity
for the three months ended July 31, 1996
and for the year ended April 30, 1996
Purchase Accumulated
Shares Amount Warrants Deficit Total
Balance, May 1, 1995 12,379,049 $21,656,566 $147,004 $(15,059,241) $6,744,329
Exercise of purchase
warrants 32,100 8,025 - - 8,025
Sale of stock, net 500,000 5,000,000 - - 5,000,000
Net loss - - - (4,710,933) (4,710,933)
--------- ---------- ------ ---------- ----------
Balance, April 30,1996 12,911,149 26,664,591 147,004 (19,770,174) 7,041,421
Exercise of purchase
warrants 2,000 500 500
Net loss (1,380,917) (1,380,917)
--------- ---------- ------ ---------- ----------
Balance, July 31, 1996 12,913,149 $26,665,091 $147,004 $(21,151,091) $5,661,004
========== =========== ======== ============ ==========
APHTON CORPORATION
Statements of cash flows for the three months ended July 31,
1996 and 1995 Increase (decrease) in cash and
short-term cash investments
Three Months Ended July, 31
1996 1995
Net cash used in operating activities $(1,142,565) $(998,659)
Net cash used in non-operating activities (62,320) (20,425)
------------ ---------
Net decrease in cash and
short-term cash investments (1,204,885) (1,019,084)
Cash and short-term cash investments:
Beginning of year 8,169,368 7,520,172
---------- ---------
End of period $6,964,483 $6,501,088
========== ==========
Reconciliation of net loss to net cash
used in operating activities
Net loss $(1,380,917) $(1,003,514)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 13,195 11,723
Decrease (increase) in other assets (137) 20,573
Increase (decrease) in accounts payable 225,294 (27,441)
----------- -----------
Net cash used in operating activities $(1,142,565) $(998,659)
=========== ==========
Management's Discussion and Analysis of Financial
Conditions and Results of Operations
General
Aphton Corporation is a biopharmaceutical company developing products using its
innovative vaccine-like technology for neutralizing, or "blocking," hormones.
The precisely targeted hormones are those that participate in diseases, both
malignant and non-malignant, in (a) the gastrointestinal system and (b) the
reproductive system. These products, called immunogens, treat the following
diseases: (a) Gastroesophageal Reflux Disease (GERD, or severe heartburn),
ulcers and colorectal, stomach, liver and pancreatic cancers; (b) endometriosis
and prostate, breast, endometrial and ovarian cancers. Aphton has successfully
completed both the safety and dose-ranging phases of its Phase I/II clinical
trial with Gastrimmune(TM) with terminal cancer patients. Aphton demonstrated
"Proof of Concept and Technology in Humans," and "Reduction of Stomach Acid in
Humans," by the desired 90% for GERD applications. Aphton has now started its
Phase III clinical trial program to demonstrate the degree of efficacy of
Gastrimmune(TM) in the treatment of patients with cancers of the
gastrointestinal tract.
Aphton's immunogen, Gonadimmune(TM), which is applicable to breast and prostate
cancer has now successfully completed the toxicology testing (safety) required
for human use. Aphton plans to initiate a Phase I/II clinical trial for both
breast cancer and prostate cancer patients jointly with this immunogen. It will
be a relatively short trial, since much of the dose-ranging data with
Gastrimmune(TM) will be directly applicable to Gonadimmune(TM).
In addition, Aphton has exclusive manufacturing, distribution and sales rights
for an immunocontraceptive product, also utilizing vaccine-like technology,
which is now in Phase II clinical trials by the World Health Organization(WHO).
Operations
Aphton's activities during this quarter focused on: manufacturing immunogens for
the Phase III clinical trial program; starting the Phase III clinical trial
program; manufacturing immunogens for the Phase I/II clinical trial with breast
and prostate cancer patients; further development of the immunocontraceptive
product now in Phase II clinical trial in Sweden; and continuing discussions
with potential corporate partners for marketing one or more products in one or
more countries for both human and for animal applications.
Manufacturing and Marketing
Absent or together with a strategic alliance or corporate partnering
relationship which may impact on the following, Aphton plans to commercialize
its products by executing long-term contracts with third parties, including
major pharmaceutical companies, to manufacture its products and by contracting
with similar drug companies to market, sell and distribute its products. The
contract manufacturing approach utilizes the large and available manufacturing
resources of pharmaceutical companies. Aphton already contracted with drug
manufacturing sources to produce Aphton's immunogens for its toxicology studies
and clinical trials. Aphton's contract marketing, distribution and sales
approach similarly utilizes the large and effective sales forces of the major
pharmaceutical companies. This maximizes Aphton's return on revenues and
minimizes its requirements and risks for capital formation, personnel and plant
and equipment. Aphton's innovative operating and commercialization strategies
since its inception are now being adopted increasingly by others in the
pharmaceutical industry.
Liquidity and Capital Resources
The Company has financed its operations principally through the sale of its
equity securities, both private and public, and, initially, R&D Limited
Partnerships. These funds provided the Company with the necessary resources to
equip and staff its research and development facilities, and acquire capital
equipment, finance product and technology development, complete preclinical
trials and the milestone Phase I/II clinical trials with patients with cancers
of the gastrointestinal tract; and begin its Phase III clinical trial program to
demonstrate the degree of efficacy of Gastrimmune(TM) in the treatment of such
cancers. Aphton anticipates that its existing capital resources, which are
composed primarily of cash and cash equivalents, will enable it to maintain its
current and planned operations through 1997, exclusive of the possibility of
obtaining additional funds through other means or sources, at an appropriate or
opportune time.
PART II - Other information
Item 1. Legal Proceedings. Not applicable.
Item 2. Changes in Securities. Not applicable.
Item 3. Defaults Upon Senior Securities. Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders. Not applicable.
Item 5. Other Information. Not applicable.
Item 6. Exhibits and Report on Form 8-K.
a. Exhibit Numbers
11.l Computation of net loss per common and common stock
equivalent for the three months ended July 31, 1996 and 1995.
b. There were no reports on Form 8-K filed during the quarter
for which this report is filed.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
Aphton Corporation
Date: August 30, 1996 By: /s/ Philip C. Gevas
----------------------------
Philip C. Gevas
Chairman, President and
Chief Executive Officer
APHTON CORPORATION
Reconciliation of shares outstanding for earnings per share calculations
Three Months Ended
July 31,
Primary Earnings Per Share 1996 1995 Note
Balance at the beginning of the period 12,911,149 12,379,049
Weighted average of shares issued
or shares reacquired during the period 1,333 -
Weighted average -
primary earnings per share 12,912,482 12,379,049
========== ==========
Net loss for the period $(1,380,917) $(1,003,514)
============ ============
Net loss per share for the period $(0.11) $(0.08)
======= =======
Fully Diluted Earnings Per Share 1996 1995
Balance at the beginning of the period 12,911,149 12,379,049
Weighted average of shares issued
or shares reacquired during the period 1,333 -
Incremental common stock equivalents
from the treasury stock method (412,365) (129,699) 1
---------- ----------
Weighted average-fully diluted shares 12,500,117 12,249,350
========== ==========
Net loss for the period $(1,380,917) $(1,003,514)
============ ============
Net loss per fully diluted shares $(0.11) $(0.08)
======= =======
Note:
Fully diluted earnings per share includes certain common stock equivalents
that are anti-dilutive and are therefore not reflected in primary earnings
per share. This calculation is provided as required by SEC regulations,
even though the fully diluted earnings per share amounts are not required
to be disclosed in the financial statements.
Exhibit 11.1
