<PAGE>
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the Transition period from_____to_____
Commission File Number 0-27558
CYTYC CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 02-0407755
----------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
85 Swanson Road, Boxborough, MA 01719
---------------------------------------
(Address of principal executive offices, including Zip Code)
(508) 263-8000
--------------
(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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: The number of shares of the
issuer's Common Stock, $0.01 par value per share, outstanding as of October 30,
1996 was 13,804,432.
Total Number of Pages: 14
Exhibit Index is on Page 12
- -------------------------------------------------------------------------------
<PAGE>
CYTYC CORPORATION
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets
December 31, 1995 and September 30, 1996 3
Consolidated Statements of Operations
for the three months and nine months
ended September 30, 1995 and 1996 4
Consolidated Statements of Cash Flows
for the three months and nine months
ended September 30, 1995 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Change in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of
Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
</TABLE>
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CYTYC CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, September 30,
1995 1996
---- ----
<S> <C> <C>
Assets:
Current assets
Cash and cash equivalents $ 5,665 $ 29,645
Short-term investments 2,237 14,169
Accounts receivable, net 1,323 2,101
Inventories 753 1,193
Prepaid expenses and other current assets 48 444
-------- --------
Total current assets 10,026 47,552
-------- --------
Property and equipment, net 940 4,425
Other assets 59 795
-------- --------
Total assets $ 11,025 $ 52,772
======== ========
Liabilities:
Current liabilities
Accounts payable $ 1,254 $ 334
Accrued expenses 1,417 1,841
Deferred revenue 276 406
-------- --------
Total current liabilities 2,947 2,581
-------- --------
Stockholders' equity:
Preferred Stock, $.01 par value-
Authorized-5,000,000 shares
No shares issued or outstanding - -
Convertible preferred stock, $.01 par value-
Authorized, issued in series and outstanding-
9,778,326 in 1995 and no shares in 1996 98 -
Common stock
Authorized-30,000,000 shares
Issued 308,506 shares in 1995
and 13,802,932 in 1996 3 138
Additional paid-in capital 43,165 93,301
Accumulated deficit (35,188) (43,248)
-------- -------
Total stockholders' equity 8,078 50,191
-------- -------
Total liabilities and stockholders' equity $ 11,025 $52,772
======== =======
</TABLE>
Page 3
<PAGE>
CYTYC CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- ----------------------------
September 30, September 30, September 30, September 30,
1995 1996 1995 1996
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Net sales $ 887 $ 2,691 $ 2,751 $ 5,485
Cost of sales 454 1,277 1,502 3,102
------------ ---------- --------- ----------
Gross profit 433 1,414 1,249 2,383
Operating expenses:
Research and development 1,095 1,166 2,774 3,343
Sales, marketing and customer support 712 2,704 1,804 6,374
General and administrative 332 796 992 2,235
------------ ---------- --------- ----------
Total operating expenses 2,139 4,666 5,570 11,952
------------ ---------- --------- ----------
Income (loss) from operations (1,706) (3,252) (4,321) (9,569)
Other income (expense) 11 - (14) (14)
Interest income, net 167 624 129 1,523
------------ ---------- --------- ----------
Total other income (expense) 178 624 115 1,509
------------ ---------- --------- ----------
Net income (loss) $ (1,528) $ (2,628) $ (4,206) $ (8,060)
============ ========== ========= ==========
Net income (loss) per share $ (0.14) $ (0.19) $ (0.39) $ (0.63)
============ ========== ========= ==========
Shares used in computing net income (loss) per share 10,868 13,710 10,868 12,737
============ ========== ========= ==========
</TABLE>
Page 4
<PAGE>
Cytyc Corporation
Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------- ----------------------------
September 30, September 30, September 30, September 30,
1995 1996 1995 1996
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (1,528) $ (2,628) $ (4,206) $ (8,060)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 66 139 157 338
Changes in assets and liabilities --
Accounts receivable 304 (1,145) (392) (778)
Inventories (162) (203) (581) (440)
Prepaid expenses and other assets (22) 56 (39) (396)
Accounts payable (21) (1,369) 182 (920)
Accrued expenses (281) (349) (164) 424
Deferred revenue (31) 80 95 130
----------- ----------- --------- ----------
Net cash used in operating activities (1,675) (5,419) (4,948) (9,702)
----------- ----------- --------- ----------
Cash flows from investing activities:
Increase in other assets - (364) (28) (736)
Purchase of property and equipment (93) (780) (118) (3,822)
Purchases of short-term investments - (6,378) - (20,097)
Proceeds from sale and maturity of short-term
investments - 6,697 - 8,165
----------- ----------- --------- ----------
Net cash used in investing activities (93) (825) (146) (16,490)
----------- ----------- --------- ----------
Cash flows from financing activities:
Exercise of stock options - 105 - 186
Sale of stock - - 12,915 49,986
----------- ----------- --------- ----------
Net cash provided by financing activities - 105 12,915 50,172
----------- ----------- --------- ----------
Net increase (decrease) in cash and cash
equivalents (1,768) (6,139) 7,821 23,980
Cash and cash equivalents, beginning of period 12,366 35,784 2,777 5,665
----------- ----------- --------- ----------
Cash and cash equivalents, end of period $ 10,598 $ 29,645 $ 10,598 $ 29,645
=========== =========== ========= ==========
</TABLE>
Page 5
<PAGE>
CYTYC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES
1. Significant Accounting Policies
The accompanying consolidated financial statements are unaudited. They have
been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission and are subject to year end audit by
independent public accountants. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. It is suggested that the financial statements be read in
conjunction with the financial statements and notes included in the Company's
Registration Statement on Form S-1 (File No. 333-00300).
The information furnished reflects all adjustments which, in the opinion of
management, are necessary for a fair presentation of results for the interim
periods. Such adjustments consisted only of normal recurring items. It should
also be noted that results for the interim periods are not necessarily
indicative of the results expected for the full year or any future period.
The preparation of these consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. Initial Public Offering
On March 8, 1996, the Company sold, through an underwritten initial public
offering, 3,000,000 shares of its common stock at $16 per share. Upon the
closing of the Company's initial public offering, all outstanding shares of the
convertible preferred stock were converted into 9,778,326 shares of common
stock. On April 4, 1996, the underwriters of the Company's initial public
offering exercised their over-allotment option in full to purchase 450,000
shares of its common stock at $16 per share.
3. Net Loss Per Share
Net loss per share for the three months and nine months ended September 30, 1996
is computed based upon the weighted average number of common shares outstanding
during the period. Common stock equivalents consist of stock options and
warrants and are not included in the calculation of earnings per share because
their effect would be antidilutive. Fully diluted earnings per share have not
been presented, as the amounts would not differ significantly from primary
earnings per share.
Net loss per share for the three months and nine months ended September 30, 1995
is computed based upon the pro forma weighted average number of common shares
outstanding during the period. Common equivalent shares are not included in the
per share calculation where the effect of their inclusion would be antidilutive,
except that, in accordance with the Securities and Exchange Commission
requirements, common and common equivalent shares issued during the twelve-month
period prior to the filing of an initial public offering have been included in
the calculation as if they were outstanding for the entire period, using the
treasury stock method and the initial public offering price.
Page 6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The Company designs, develops, manufactures and markets the ThinPrep sample
preparation system for medical diagnostic applications (the "ThinPrep System").
The Company has marketed the ThinPrep System to clinical laboratories and
hospitals for use in non-gynecological testing applications since 1991. On May
20, 1996, the Company was cleared to market and sell the ThinPrep System for
cervical cancer screening by the United States Food & Drug Administration (the
"FDA"). The ThinPrep System includes the ThinPrep 2000 Processor and related
reagents, filters and other supplies. To date, all of the Company's revenues
have been derived from sales of these products.
Since inception, the Company has incurred substantial losses, principally from
expenses associated with seeking FDA approval of the Company's ThinPrep System
for cervical cancer screening, engineering and development efforts related to
the ThinPrep 2000 Processor which was introduced in May 1995 and predecessor
instruments and the establishment of its sales and administrative organization.
The Company expects such losses to continue for the foreseeable future as it
commences market introduction of the ThinPrep Pap Test for cervical cancer
screening, continues its product development efforts, expands its marketing,
sales and administrative activities and initiates commercial-scale
manufacturing. The operating results of the Company have fluctuated
significantly in the past on an annual and a quarterly basis. The Company
expects that its operating results will fluctuate significantly from quarter to
quarter and from year to year in the future and will depend on a number of
factors, including the rate of market acceptance of the ThinPrep System for
cervical cancer screening, reimbursement of the costs of the ThinPrep Pap Test
by insurance providers, and others, many of which are outside of the Company's
control.
The Company moved its operations to a larger facility in June 1996 and received
approval from the FDA to manufacture in this facility in July 1996. The Company
believes that the equipment currently installed in its new facility is
inadequate to meet full-scale commercial production demands and has contracted
for custom-built automated equipment which will increase the Company's
production capabilities. The delivery of such custom-built equipment is
currently scheduled for late 1996. FDA approval of such equipment is required
before products manufactured using this equipment may be sold. The Company
anticipates FDA approval of its new equipment in early 1997.
The Company will continue to increase expenditures for sales, marketing and
customer support activities in the fourth quarter and thereafter, principally
for the full-scale commercial launch of the ThinPrep System for cervical cancer
screening expected to occur in early 1997. There can be no assurance, however,
that such investments will result in increased net sales or improvement in the
effectiveness of the COmpany's direct or indirect sales efforts. The Company
expects to increase its expenditures for research and development to fund
development of follow-on products and additional applications. The Company will
also continue to increase the amount of expenditures for administrative
activities, principally for the employment of additional administrative
personnel, increases in professional fees and the incremental costs associated
with being a publicly-held company. While the Company intends to increase the
amount of general and administrative expenses in the future, it expects that
such expenses as a percentage of total revenues will remain approximately the
same or decrease.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1995 and 1996
Net sales increased to $2.7 million in the third quarter of 1996 from $887,000
in the same period of 1995, an increase of 203.4%. This increase in sales was
primarily due to an increase in the number of the ThinPrep Processors sold,
sales of the Company's new ThinPrep Pap Test disposables for cervical cancer
screening, and additional sales and price increases of related reagents, filters
and other supplies for non-gynecological testing. The increase in net sales
during the third quarter of 1996 is also attributable to an initial shipment of
ThinPrep 2000 instruments and ThinPrep Pap Test supplies of approximately
$700,000 to the Company's distributor in Australia. There can be no assurance
that net sales to Australia will continue or increase in future quarters. Gross
profit increased to $1.4 million in the third quarter of 1996 from $433,000 in
the same period of 1995 and the gross margin increased to 52.5% in 1996 from
48.8% in 1995. Management attributes the increase in gross margin in the three
months ended September 30, 1996 to the higher unit margin for the ThinPrep
processor, and initial sales of the new ThinPrep Pap Test and related reagents,
filters and other supplies.
Page 7
<PAGE>
Total operating expenses increased to $4.7 million in the third quarter of 1996
from $2.1 million in the same period of 1995, an increase of 118.1%. Research
and development costs increased to $1.2 million in the third quarter of 1996
from $1.1 million in the third quarter of 1995, an increase of 6.5%, as a result
of employment of additional research and development personnel and engineering
consulting expenses. Sales, marketing and customer support increased to $2.7
million in the third quarter of 1996 from $712,000 in the same period of 1995,
an increase of 279.8%. The increase in sales, marketing and customer support
costs reflects the employment of additional sales and customer support
personnel, increased commissions, increased customer training requirements and
additional marketing consulting costs related to the commercial launch of the
ThinPrep System. Administrative costs increased to $796,000 in 1996 from
$332,000 in 1995, an increase of 139.8%, due to the employment of additional
administrative personnel, increased business insurance costs and expenses
associated with being a publicly-held company. Net interest income increased to
$624,000 in 1996 from $167,000 in 1995, an increase of 373% due to an increase
in the average cash balance available for investment.
Nine Months Ended September 30, 1995 and 1996
Net sales increased to $5.5 million for the nine months ended September 30, 1996
from $2.8 million in the same period of 1995, an increase of 99.4%. This
increase in sales was primarily due to an increase in the number of ThinPrep
Processors sold, sales of the Company's new ThinPrep Pap Test for cervical
cancer screening, and additional sales of related reagents, filters and other
supplies for non-gynecological testing. Gross profit increased to $2.4 million
in the nine months ended September 30, 1996 from $1.2 million in the same period
of 1995, an increase of 100%, and the gross margin decreased to 43.4% in the
nine months ended September 30, 1996 from 45.4% in the nine months ended
September 30, 1995. Management attributes the decrease in gross margin in 1996
to the lower unit margin for unit sales to existing customers upgrading to the
ThinPrep 2000 Processor and the expenses incurred in moving the Company's
operations to Boxborough, Massachusetts during the quarter ended June 30, 1996.
Total operating expenses increased to $12.0 million for the nine months ended
September 30, 1996 from $5.6 million in the same period of 1995, an increase of
114.5%. Research and development costs increased to $3.3 million in 1996 from
$2.8 million in 1995, an increase of 20.5%, as a result of employment of
additional research and development personnel and engineering consulting
expenses. Sales, marketing and customer support increased to $6.4 million for
the nine months ended September 30, 1996 from $1.8 million in the same period of
1995, an increase of 253.3%. The increase in sales, marketing and customer
support costs reflects the employment of additional sales and customer support
personnel, increased commissions, increased customer training requirements and
additional marketing consulting costs related to the commercial launch of the
ThinPrep System. Administrative costs increased to $2.2 million in 1996 from
$992,000 in 1995, an increase of 125.3%, due to the employment of additional
administrative personnel, increased business insurance costs and expenses
associated with being a publicly-held company. Net interest income increased to
$1.5 million in 1996 from $129,000 in 1995, an increase of 1,180%, due to an
increase in the average cash balance available for investment.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company's expenses have significantly exceeded its
revenues, resulting in an accumulated deficit of $43.2 million as of September
30, 1996. The Company has funded its operations primarily through the private
placement and public sale of equity securities aggregating $93.4 million, net of
offering expenses. At September 30, 1996, the Company had cash, cash
equivalents and short-term investments of $43.8 million. Cash, cash equivalents
and short-term investments increased for the nine months ended September 30,
1996 primarily due to the issuance of 3,450,000 shares of Common Stock for
aggregate net proceeds of approximately $50.0 million. Cash used in the
Company's operations was $1.6 million and $5.4 million for the quarters ended
September 30, 1995 and 1996, respectively, and $4.9 million and $9.7 million for
the nine months ended September 30, 1995 and 1996, respectively. The increase
in cash used in operations in the first nine months of 1996 was due to increased
levels of operating costs and increased capital expenditures for property and
equipment.
The Company's capital expenditures for the quarters ended September 30, 1995 and
1996 were $93,000 and $780,000, respectively and $118,000 and $3.8 million for
the nine months ended September 30, 1995 and 1996, respectively. The increase
in capital expenditures in 1996 was due primarily to amounts paid for customized
manufacturing equipment and leasehold improvements for its new facility.
Additionally, as of September 30, 1996, the Company had commitments for
customized manufacturing equipment of approximately $780,000, and for leasehold
improvements of approximately $94,000.
The Company plans to finance its capital needs principally from its existing
capital resources and interest thereon, and, to the extent available and deemed
appropriate, from bank or lease financing. The Company does not have any bank
or other financing arrangements at this time.
Page 8
<PAGE>
Accounts receivable increased $778,000 to approximately $2.1 million during the
nine months ended September 30, 1996 due to increased sales volume. Inventories
increased approximately $440,000 to $1.2 million from December 31, 1995 to
September 30, 1996 due primarily to the Company's planned sales increase in
ThinPrep 2000 Processors and related reagents, filters and other supplies for
non-gynecological testing. Stockholders' equity increased approximately $42.1
million from December 31, 1995 to September 30, 1996 primarily due to the sale
of 3,450,000 shares of Common Stock which was partially offset by the net loss
of $8.1 million.
The Company believes that its existing capital resources will be sufficient to
fund its operations through at least 1997. However, the Company's future
liquidity and capital requirements will depend upon numerous factors, including
the progress of the Company's research and development programs, the receipt of
and the time required to obtain regulatory clearances and approvals and the
market acceptance of the ThinPrep System for cervical cancer screening. The
Company's capital requirements will also depend on the resources required to
hire and develop a direct sales force in the United States and the resources
required to expand manufacturing capacity and facilities, demand, and other
factors. There can be no assurance that the Company will not require additional
financing or will not in the future seek to raise additional funds through bank
facilities, debt or equity offerings or other sources of capital. Additional
funding may not be available when needed or on terms acceptable to the Company,
which would have a material adverse effect on the Company's business, financial
condition and results of operations.
CERTAIN FACTORS WHICH MAY AFFECT FUTURE RESULTS
The Company does not provide financial performance forecasts. The forward
looking statements in this Form 10-Q are made under the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. The Company's
operating results and financial condition have varied and may in the future vary
significantly depending on a number of factors. Except for the historical
information contained herein, the matters contained in this report include
forward-looking statements that involve risks and uncertainties. The following
factors, among others, could cause actual results to differ materially from
those contained in forward-looking statements made in this report and presented
elsewhere by management from time to time. The Company's risk factors included
its dependence on a single product, uncertainty of market acceptance and
initial higher cost, a limited number of customers, a limited operating history,
risks associated with commercialization, dependence on third-party
reimbursement, limited marketing and sales experience, a history of losses,
potential fluctuations in future quarterly results, intense competition,
uncertainty of additional applications, extensive government regulation, limited
manufacturing experience and capacity, dependence on patents copyrights,
licenses and proprietary rights, risk of third party claims of infringement and
dependence on single source suppliers. Such factors, among others, may have a
material adverse effect upon the Company's business, results of operations and
financial conditions. Because of these and other factors, past financial
performance should not be considered an indication of future performance.
Page 9
<PAGE>
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 Reports on Form 8-K.
--------------------------------
(a) Exhibits.
--------
11.1 Statement of Computation of Weighted
Average Shares Outstanding
27 Financial Data Schedule
(b) Reports on Form 8-K.
-------------------
There were no reports on Form 8-K filed by the Company for the
quarter ending September 30, 1996.
Page 10
<PAGE>
SIGNATURE
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.
CYTYC CORPORATION
Date: October 31, 1996 By: /s/ Joseph W. Kelly
--------------------
Joseph W. Kelly
Vice President, Chief Financial
Officer, Treasurer and Secretary
(Principal Financial and Accounting
Officer)
Page 11
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------ ----------- ----
<S> <C> <C>
11.1 Statement of Computation of Weighted Average
Shares Outstanding
27 Financial Data Schedule
</TABLE>
<PAGE>
Cytyc Corporation
Exhibit 11.1
Statement of Computation of Weighted Average Shares Outstanding
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
September 30, September 30,
-------------------------- --------------------------
1995 1996 1995 1996
------------ ----------- ------------ -----------
(pro forma) (pro forma)
<S> <C> <C> <C> <C>
Weighted average Series A-1 Convertible Preferred
Stock outstanding during the period, assuming con-
version to common stock 2,399,573 - 2,399,573 -
Weighted average Series B-1 Convertible Preferred
Stock outstanding during the period, assuming
conversion to common stock (1) 3,569,370 - 3,569,370 -
Weighted average Series C-1 Convertible Preferred
Stock outstanding during the period, assuming con-
version to common stock (2) 3,809,383 - 3,809,383 -
Weighted average Common Stock outstanding during
the period (3) 308,106 13,709,514 307,624 12,737,241
Net share issuable upon exercise of stock options
granted subsequent to January 15, 1992 (2) 782,274 - 782,274 -
----------- ---------- ---------- ----------
10,868,706 13,709,514 10,868,224 12,737,241
=========== ========== ========== ==========
</TABLE>
- ---------------------------------------
(1) All outstanding shares of Series B1 Convertible Preferrred Stock are
assumed to have been converted into shares of Common Stock at the time of
issuance of the four prior series of Convertible Preferred Stock, which
automatically converted into Series B1 Convertible Preferred Stock in 1995.
(2) Common Stock equivalents issued and stock options granted during the twelve
month period immediately prior to the filing of the initial public offering
have been included as outstanding for all periods presented prior to the
initial public offering using the treasury-stock method and the public
offering price.
(3) In March, 1996, the Company sold, through an initial public offering,
3,000,000 shares of its Common stock at $16 per share. All shares of the
Company's Convertible Preferred Stock were automatically converted into
9,778,326 shares of Common Stock at the time of the initial public offering
and are assumed to be issued Common Stock as of January 1, 1996.
Additionally, on April 4, 1996, the Underwriters of the Company's initial
public offering exercised their over-allotment option in full to purchase
an additional 450,000 shares of the Company's Common Stock at $16 per
share.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 29,645
<SECURITIES> 14,169
<RECEIVABLES> 2,221
<ALLOWANCES> 120
<INVENTORY> 1,193
<CURRENT-ASSETS> 47,552
<PP&E> 5,601
<DEPRECIATION> 1,176
<TOTAL-ASSETS> 52,772
<CURRENT-LIABILITIES> 2,581
<BONDS> 0
138
0
<COMMON> 0
<OTHER-SE> 50,053
<TOTAL-LIABILITY-AND-EQUITY> 52,772
<SALES> 0
<TOTAL-REVENUES> 5,485
<CGS> 3,102
<TOTAL-COSTS> 3,102
<OTHER-EXPENSES> 11,952
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,523)
<INCOME-PRETAX> (8,060)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,569)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,060)
<EPS-PRIMARY> (0.63)
<EPS-DILUTED> 0
</TABLE>
