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 October 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 October 31, 1996:
Class Number of
Shares outstanding
Common Stock, no par value 12,913,149
APHTON CORPORATION
Index
Page
Part I - Financial Information
Item 1. Financial Statements: 3
Balance Sheets - October 31, 1996 and April 30, 1996 3
Statements of Operations - Three and Six months ended
October 31, 1996 and 1995 4
Statements of Stockholders' Equity - Three and Six months ended
October 31, 1996 and the year ended April 30,1996 4
Statements of Cash Flows - Six months ended October 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 October 31, 1996 and April 30, 1996 and the results of its
operations and its cash flows for the three and six months ended October 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 - October 31, 1996 and April 30, 1996
October 31, April 30,
1996 1996
Assets
Cash and short-term cash investments $5,994,343 $8,169,368
Other assets 222,023 184,837
------------ ------------
Total assets $6,216,366 $8,354,205
========== ==========
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and other $1,947,823 $1,312,784
---------- ----------
Total liabilities 1,947,823 1,312,784
---------- ----------
Stockholders' Equity:
Common stock, no par value -
Authorized: 20,000,000 shares
Issued and outstanding: 12,913,149
shares at October 31, 1996 and
12,911,149 at April 30, 1996 26,665,091 26,664,591
Purchase warrants 147,004 147,004
Accumulated deficit (22,543,552) (19,770,174)
------------- -----------
Total stockholders' equity 4,268,543 7,041,421
------------- ------------
Total liabilities and
stockholders' equity $6,216,366 $8,354,205
========== ==========
APHTON CORPORATION
Statements of operations
for the three and six months ended October 31, 1996 and 1995
Three Months Ended Six Months Ended
October 31, October 31,
1996 1995 1996 1995
Revenue:
Dividend, interest
and other income $78,202 $98,282 $153,100 $213,855
------- ------- -------- --------
Total 78,202 98,282 153,100 213,855
------- ------- -------- --------
Costs and Expenses:
General and administrative 180,606 155,627 361,126 283,878
Research and development 1,290,058 1,090,940 2,565,352 2,081,776
--------- --------- --------- ---------
Total costs and expenses 1,470,664 1,246,567 2,926,478 2,365,654
--------- --------- --------- ---------
Net loss $(1,392,462) $(1,148,285) $(2,773,378) $(2,151,799)
============ =========== =========== ============
Net loss per common share $(0.11) $(0.09) $(0.21) $(0.17)
======= ======= ======= =======
Weighted average number of
common shares outstanding 12,913,149 12,712,382 12,912,816 12,545,716
========== ========== ========== ==========
Statements of stockholders' equity
for the six months ended October 31, 1996
and for the year ended April 30, 1996
Common Stock
Purchase
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 -- -- -- (2,773,378) (2,773,378)
------------- ----------- -------- ---------- ----------
Balance,
October 31, 1996 12,913,149 $26,665,091 $147,004 $(22,543,552) $4,268,543
========== =========== ======== ============ ==========
APHTON CORPORATION
Statements of cash flows
for the six months ended October 31, 1996 and 1995
Increase (decrease) in cash and short-term cash investments
Six Months Ended
October, 31
1996 1995
Net cash used in operating activities $(2,097,770) $(1,963,869)
Net cash provided from sale of stock 500 5,000,000
Net cash used in investing activities
for capital expenditures (77,755) (24,750)
------------- -------------
Net increase (decrease) in cash and
short-term cash investments (2,175,025) 3,011,381
Cash and short-term cash investments:
Beginning of year 8,169,368 7,520,172
------------- -------------
End of period $5,994,343 $10,531,553
========== ===========
Reconciliation of net loss to net cash
used in operating activities
Net loss $(2,773,378) $(2,151,799)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 25,375 22,310
Decrease (increase) in other assets 15,194 (52,375)
Increase (decrease) in accounts payable 635,039 217,995
--------- -----------
Net cash used in operating activities $(2,097,770) $(1,963,869)
=========== ===========
Management's Discussion and Analysis of Financial
Condition 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 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), is applicable to
breast and prostate cancer and has 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. This Phase I/II 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 the Phase III clinical trial
program; manufacturing immunogens and preparing 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. Discussions with a few of such potential corporate partners have
now successfully completed the analyses of market potentials and the long and
intensive scientific due diligence phases. These represent major milestones in
Aphton's corporate development. The corporate alliance discussions are now
centered on the detailed commercial/financial terms and conditions.
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 promote, 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
11.1 Computation of net income per common and common stock
equivalent for the three and six months ended October 31, 1996
and 1995.
27 Financial Data Schedules
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: December 2, 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 Six Months Ended
October 31, October 31,
Primary Earnings Per Share 1996 1995 1996 1995
Balance at the
beginning of the period 12,913,149 12,379,049 12,911,149 12,379,049
Weighted average of shares issued or
shares reacquired during the period -- 333,333 1,667 166,667
--------- ---------- ---------- ----------
Weighted average - primary
earnings per share 12,913,149 12,712,382 12,912,816 12,545,716
========== ========== ========== ==========
Net loss for the period $(1,392,462) $(1,148,285) $(2,773,379) $(2,151,799)
=========== ========== =========== ===========
Net loss per share
for the period $(0.11) $(0.09) $(0.21) $(0.17)
======= ======= ======= =======
Fully Diluted Earnings Per Share 1996 1995 1996 1995
Balance at the
beginning of the period 12,913,149 12,379,049 12,911,149 12,379,049
Weighted average of shares issued or
shares reacquired during the period -- 333,333 1,667 166,667
Incremental common stock
equivalents from the
treasury stock method (412,365) (555,564) (412,365) (555,564)
------------- ----------- ----------- -----------
Weighted average-
fully diluted shares 12,500,784 12,156,818 12,500,451 11,990,152
========== ========== ========== ==========
Net loss for the period $(1,392,462) $(1,148,285) $(2,773,379) $(2,151,799)
============ ============ ============ ============
Net loss per
fully diluted shares $(0.11) $(0.09) $(0.22) $(0.18)
======= ======= ======= =======
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
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED APRIL 30, 1996 AND THE QUARTERLY
REPORT ON FORM 10-Q FOR THE QUARTER AND SIX MONTHS ENDED OCTOBER 31, 1996 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000840319
<NAME> APHTON CORPORATION
<MULTIPLIER> 1000
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-1-1996
<PERIOD-END> OCT-31-1996
<CASH> 5,994
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,216
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 26,665
<OTHER-SE> 147
<TOTAL-LIABILITY-AND-EQUITY> 6,216
<SALES> 0
<TOTAL-REVENUES> 153
<CGS> 0
<TOTAL-COSTS> 2,926
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
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<NET-INCOME> (2,773)
<EPS-PRIMARY> (.21)
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REGISTRANT HAS AN UNCLASSIFIED BALANCE SHEET
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